The Overseas Buying Trip: The New Edition

Why? Chu Mei-ling studied in America for nine years. Last year Chu and her husband finished their studies and came back to Taiwan to live, and for the trip they specially purchased a large pile of American household goods: from their pots, bowls and ladles to their towels, matching set of bedding and Monet prints, simply all of their original household possessions. The assembled mountain of some 80 pieces of luggage filled a 20-foot container that was shipped by sea back to Taiwan.

"The shipping charges cost NT$40,000, and you can get that back just from the difference on what the same set of China or pots and pans would cost here," she says.

She's not a special case. A reporter for a magazine who has recently decided to get married specially went over to Hong Kong to buy her dowry and bought some 20 pieces of furniture.

She carefully compared prices. Just take a pine bureau from Scandinavia. In a department store in Taipei, they're asking NT$10,000. In Hong Kong? Just NT$$4,000. And for the same sofa and curtain fabric, the price in Hongkong is just half of what it is in Taipei. This furniture was easily folded up and assembled, and the shipping fees and customs charges were minimal. "Isn't it a case where spending more means saving more?" she says only half in jest.

Mo Chi-yong and Wu Yung-hua, under a limited budget, wanted to give their children a comfortable living environment, and so they brought all of their household possessions back from America.

No longer just for the rich:

In the 1980's just after going abroad as a tourist was allowed, travel groups from Taiwan were often called buying tours. The sight at customs of long lines of old ladies carrying hot water makers and rice cookers and suitcases jam-packed with such cosmetics and common over-the-counter drugs as Pond's facial cream and Mentholatum disgruntled the intellectuals, who nevertheless thought it was only a post-prohibition fad that would quickly die out. They didn't expect that rising incomes would make going abroad for business or pleasure so commonplace. These foreign purchasing trips have already become "an activity for everyone."

According to statistics of the Tourism Bureau, as many as 4 million trips abroad were taken by Taiwanese last year--that's one for every five people on the island. Taiwan travellers spent US$7.2 billion, which corresponds to 77 percent of that year's trade surplus. This is to say that more than two thirds of the trade surplus we have struggled to earn is spent by the public on going abroad.

Among these travellers going abroad to make major purchases, besides white-collar workers, professors and high tech experts, even college students make plans to go abroad to use their credit cards.

They still take the well trod path to the former favorite, Japan, and have expanded their shopping horizons to places all over America, Europe and Asia. Among these, the predominately Chinese cities of Hongkong and Singapore are most popular.

Modern people put a lot of emphasis on their life at home. Spending so much time in the kitchen, they're willing to invest in superior imported equipment.

Save NT$90,000 a trip?

Take Hongkong as an example. Last year, the number of people travelling there from Taiwan surpassed 1.6 million, a larger figure than from anywhere else. And the average Taiwanese tourist spent HK$7,700 (about NT$25,000), far exceeding the Japanese, who spent only HK$5, l00 despite having incomes 2.5 times as high.

For its main customers, the Taiwanese, the Hongkong Tourist Association has unveiled a "Hongkong a la Carte" campaign with special low prices and discounts in order to lure the Taiwanese spender.

In the small advertising booklet that they distribute to travel agencies to give to Hong kong-bound tourists, there is a picture of a man covered from head to foot with items bought in Hongkong. To the side is written, "this designer pair of eyeglasses gives me more charm, and I saved NT$2,800 on it" and "I was excited to find that a Sony video recorder was NT$6,600 cheaper here." The headline makes an even better play for consumers: "On this trip, I saved NT$92,900."

And the largest international credit card, Visa, has also held lotteries and sales promotions to encourage Taiwan consumers to go to Hong Kong to buy.

What's worth noticing is that going on these buying trips, which was originally a way of showing off, has in recent years evolved into a penny-pinching measure of economy.

Farmers sell their wax apples for NT$40 a Chinese pound, but by the time they get to Taipei, they're going for several hundred NT.

An imported lifestyle?

Three years ago, Wu Yung-hua's husband received public funds to continue his studies in America, and she went along. In February of this year, they returned to Taiwan with 60 boxes of household goods, including a 19-inch color T.V. that they had used in America for three years and their children's toys.

It wasn't until last month that they had finally gotten everything sorted out. As she rests her tired bones, she is still happy with their original decision. Each month, they spend NT$25,000 on rent, which is about half of their monthly expenditures. Then you have to add on tuition fees and miscellaneous daily expenses. There's not much money left over, and this would have made it very difficult for them to buy ideal furniture and appliances in Taiwan. And after she came back to Taiwan and found that prices for clothing are about twice of what they are in America, she decided that these couple of years she wouldn't spend any money on clothing.

Because people have greater contact with the outside world and easy access to information and because everyone, particularly the middle class, is paying increasing attention to quality of life, when people see that consumer goods in Taiwan are of low quality and high price, they seek happier shopping grounds abroad. This is one method of obtaining more reasonable consumer quality.

Manufacturer outlets sell household items at discounts. Many consumers visit them regularly, jumping at the chance to get out from the pressure of high prices. (photo by Pu Hua-chih)

A dreamless middle class:

Clothing and jewelry are the classic examples. With domestically designed products no cheaper than those from abroad, many white-collar workers have already developed the habit of regularly going abroad to shop.

In addition, houses in Taiwan are expensive, particularly in Taipei. On average, people will have to save for 30 years before they can buy a standard apartment of 1080 square-feet. And crowded living conditions and congested traffic all add to the heavy pressure and sense of failure borne by people in Taipei. This has led many people to feel that "with no control over the world outside their home, at least they can dictate what they put in it," and so they spend money decorating, buying matching furniture and display pieces, delicate china and silverware.

The products being purchased have turned from the over-the-counter drugs, cosmetics, cigarettes, alcohol and watches of the early period to today's clothing, leather goods, and even durable and practical large pieces of furniture, as well as other necessities. Undeterred by the shipping costs, they send them from thousands of miles away.

The high price of goods in the country is a main reason for this trend becoming so prevalent. It's especially the case for the price of foreign goods in the country.

A professor gives an example from her own experience: This year in Taiwan she installed an imported faucet in her bathtub, and the plumbing and electrical supply store charged her NT$2,800. Not long after, she went to Hawaii on vacation and, much to her surprise, stumbled upon a similar faucet selling for only US$20--or NT$500. The experience made her resolve to go to the United States and send back a container of things she needs before settling into a new house.

"Why is it that in a country with average incomes that are twice as high as ours, a faucet costs one-fifth of what it does here?" Not an economist, she is baffled.

Growing bean sprouts and alfalfa at home is a convenient and healthy way to save on food costs.

A curve that only rises:

Chan Te-sung, the head of the third office of the Directorate General of Budget, Accounting and Statistics at the Executive Yuan, points out that when talking about why things are so expensive here, you've got to discuss foreign and Taiwan-made goods separately.

In the past, Taiwan was trying to stimulate exports and reduce imports. With high tariffs and an undervalued currency, the prices for foreign goods were naturally high, and these goods became status symbols. In recent years, tariffs have gone down and the value of the currency has risen and so the price of foreign goods should have gone down. But prices have a one-way inflexibility about them. It's easy for them to go up but hard to come down. Secondly, the image of imported products as being high cost is already established. With the prices set high, the products will still sell as always. And the more expensive something is, the more people believe that it is a good product.

People used to think that "made in Taiwan" meant that a product was cheap, but as land, rent, and labor costs have risen, low prices for domestically made goods have become a thing of the past. Add onto this problem with marketing, circulation and production efficiency, and prices become very difficult to stabilize. "Take agriculture, for instance. The production and marketing structure is not complete, which leads to fruit and vegetables having to go through seven or eight middlemen. This naturally provides an opportunity for inflated prices," he says.

For example, Pingtung farmers sell wax apples to the wholesaler at NT$40 a Chinese pound; by the time they get to the consumer, they're going for a dear NT$160.

The rise in productivity can't keep pace with the rise in labor costs. This is invariably reflected in the prices from the factory and in the stores, which means that if the cost of raw materials or payrolls rise, then everything else does too.

The weak consumer:

The Consumers' Foundation believes that collusion by the industry associations is also one factor. "If industry wants to hike prices--particularly for standard consumer goods," says Chang Le-chi, chairman of the Consumers' Foundation, "consumers have no power to fight back."

Food prices, for instance, are extremely volatile. For the director of the nutrition department at Veterans General Hospital, they're a big headache. Every day she's got to adjust 13,000 meals. Even the Consumers' Foundation has no way to control this kind of phenomenon. "Furthermore, the price fluctuations all start from the small stores, and there's no way to investigate it properly. Unless it's a price rise across the industry, the consumer has no recourse under the Fair Trade Law. If a store individually raises its prices, the government can't do anything about it either."

Confronted with Taiwan's high prices, consumers are left to their own devices. One of the ways they deal with it is going abroad. But for the things that they've got to pay for in Taiwan--like food, housing, transportation, education and entertainment--there's no way to import these themselves.

"Import foreign attitudes," says Chu Li-Chang, a member of the Homemakers Union and Foundation. The countries with high incomes have high labor costs, so they do a lot of things themselves--cutting and curling their own hair, assembling their own furniture and appliances and even making curtains and clothing. How they differ from us, letting restaurants do our cooking and cabbies our driving.

The rational consumer:

"Reducing demand" is another strategy. A university professor once planned to take his wife out to eat shark fin soup, thinking the price was NT$1,200 instead of NT$12,000. When he discovered the mistake, he was annoyed, but his wife didn't care that she missed the soup. "If we stay home and eat pig's rib soup," she said, "we won't get any less protein."

There are even signs of progress. With shopping trips to Hongkong so prevalent, cosmetic prices here have fallen. And hypermarkets and manufacturer's outlets offering lower prices have become popular.

Perhaps the question consumers should really be asking themselves is, are we choosing our lives or are our lives choosing us?