The Europeans' interest in the ROC is strictly business. "Taiwan seems to be a place that can supply any and every commercial product," a Dutch businessman says. The ROC's abundant exports, including textiles, electronics, footwear, toys and athletic equipment, exceeded US$52 billion last year. This figure is not only more than the mainland's, which has a population 54 times greater, but also far surpasses every other Southeast Asian nation except Singapore.

Europe, in turn, is a tempting target for Chinese enterprises. The Common Market is home to over 40 percent of the world's trade. Per capita income exceeds US$9500. And the total population is one and a half times that of the U.S.

Overreliance on the American and Japanese markets--the ROC sends over half its total exports to the U.S. and maintains a US$7 billion trade deficit with Japan--increases the attractiveness of European trade to the Chinese.

Finally, the Europeans can supply Taiwan with advanced industrial technology and equipment. Recent high-tech deals include the purchase by China Airlines of France's Airbus and the government's purchase of Dutch submarines. Cooperative ventures include nuclear plants, the Taipei rapid transit system, biochemicals and computers.

ROC trade with Europe has in fact continued to grow ever since it took off in the early 70's. Volume last year reached US$5.4 billion, 14 times more than in 1971. Nonetheless, European trade still represents only a tenth of the ROC's total foreign trade. Even more disturbing is the fact that trade grew only 10 percent with Europe last year, compared to 31 percent with the U.S. and 28 percent with Japan.

What's the problem? The biggest, according to Wellington Tsao, head of the Euro-Asia Trade Organization, is distance. Europe is some 11,000 miles away and most sea freight going there from Taiwan must pass through Singapore or Hong Kong first, further increasing costs. The psychological distance may be even greater than the physical. The 18 European democracies have different languages, organizations and regulations, making it more difficult to get started in Europe than in other areas. The R.O C. also faces obstacles because of political complications, making it ineligible for the preferential tariff treatment accorded other developing nations.

Another barrier is differences in business practices. Tsao explains that Europeans, because of the Common Market and close business ties, handle international trade in practically the same way as domestic. "Europeans like to order by telephone or have a salesman come right to their door. They notify the bank to send payment after they get the goods," he says. This cash-on-the-barrelhead approach is different from the payment methods common in Japan and the U.S., such as the commercial letter of credit.

Americans and Japanese faced these same difficulties in entering the European market and overcame them. They opened up distribution warehouses in the major cities, learned the Europeans' ways, established close relations with them and eventually set up overseas branches to produce and distribute along European lines.

Chinese who wish to follow suit may first ask, "Where should the warehouses be put?" "Rotterdam," advises Tsao. Two hundred million people with an annual consumption of US$400 billion live within a 500-km. radius of the world's busiest port. What's more, the Netherlands offers subsidies and long-term, low-interest loans for investments in storage and other business facilities. And products kept in bonded Dutch warehouses can forego import duties and be shipped duty-free to eleven other European countries. Kennex, Multitech Computers and Collins Trading Company have all set up distribution centers in Holland.

A bigger problem than distance or distribution is the current strength of the U.S. dollar, to which the New Taiwan dollar is closely linked. Chou Hao, general manager of the Tai Huang Corporation, points out that in the late 70's, when the German mark was very strong, the growth in exports to Europe was largest. When the dollar picked up in 1980, exports gradually slowed until they are now just barely holding their own. Economist Hou Chiachu thinks the ROC should consider adjusting the value of the NT dollar: "This would not only encourage our businesses to open up the European market but it would also avert the shock we would get if the U.S. dollar should ever collapse."

When the European Parliament passed its resolution to encourage trade with Taiwan this July, it offered the ROC preferential tariff treatment on 125 products and asked the ROC to simplify its trade and investment regulations in return. Economist Hou thinks this shows that Europe has recognized the importance of the ROC market and that the opportunity should not be lost. The door to the European market is opening. Now is the time to enter.

(Peter Eberly)

[Picture Caption]

When KLM Airlines opened a new flight route from Taipei to Europe in May last year, it turned over a new page in the history of transportation between China and Europe.

Since the ROC began opening up the European market, European banks have come to Taiwan in droves. Shown here is the Bank of Holland's Taipei office.

With ships arriving from countries around the world, Rotterdam is the world's largest port of transit.

Setting up a distribution warehouse is a shortcut to opening up European trade. Here Collins Co., a large Chinese trading firm, signs a contract with the City of Rotterdam.

Containers belonging to an ROC firm, the Evergreen Co..

A genuine Greek dish in downtown Taipei--souvlaki.

Since the ROC began opening up the European market, European banks have come to Taiwan in droves. Shown here is the Bank of Holland's Taipei office.

With ships arriving from countries around the world, Rotterdam is the world's largest port of transit.

Setting up a distribution warehouse is a shortcut to opening up European trade. Here Collins Co., a large Chinese trading firm, signs a contract with the City of Rotterdam.

Containers belonging to an ROC firm, the Evergreen Co..

A genuine Greek dish in downtown Taipei--souvlaki.