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Monday, January 3, 2011

Cycling and Taiwan's Tourism Trade Imbalance

Taiwan Insights has a cheery little set of Ma administration talking points regarding Taiwan's expanding role as a tourism center in Asia. And again, the bicycle appears as one of Taiwan's major draws.

Despite the sunny spin this article puts on expanding Taiwan's tourism and the role cycling plays in the government's scheme, there some dark clouds just on the horizon.

At a time when many industries in Taiwan have been hit hard by the worldwide economic slump, Taiwan’s tourism industry has continued to experience double-digit growth and is projected to do even better in the coming year. In 2009, there were 4.4 million foreign tourists visiting Taiwan, a 14.3 percent growth over the number in 2008, ranking No.1 in the Asia-Pacific region.

Currently, Chinese tourists are the largest group of visitors to Taiwan. The steady increase in tourism from China has meant that over 2.01 million Chinese visitors have come to Taiwan, bringing in foreign exchange earnings of close to US$2.10 billion. This is welcome income as Taiwan’s industrial and agriculture sectors decline. In fact, one of the six new industries the government is promoting is tourism since the industry has become an important part of the service sector, accounting for 73 percent of Taiwan’s GDP.

If that figure is correct we can mark 2010 as the year Taiwan gave up its position as an economic center in Asia and became a Chinese periphery... a playground for China's wealthy.

When I first arrived in Taiwan over a decade ago, Taiwan's industrial sector was going strong as the economy shifted from machine tools to information technology. I remember earlier in the 2000's there was heated debate over the matriculation of 12" wafer technology to the Chinese.

The former president Chen Shui-bian touted Taiwan as a "Green Silicon Island".

Those days are over. Taiwan has decided to allow China to be the technology hub of Asia and with ECFA the agricultural sector is nervous.

But at least we have the bicycle... right?

Also, as an island and in keeping with the popularity of a greener way of traveling, Taiwan is promoting “Let’s Bike Taiwan” as another way to experience Taiwan’s magnificent scenery and interact with local people. At a recent “Let’s Bike Taiwan” event, 500 cyclists from Hong Kong, Singapore, Malaysia, Japan, Korea, throughout Europe and the United States, cycled five routes around Taiwan. Besides being a popular leisure activity, Taiwan is also home to many bicycle manufacturers, including Giant Bicycles, the largest quality bicycle manufacturer in the world.

Top two Taiwanese bicycle makers – Giant Manufacturing and Merida Industry – have reportedly been boosting output at their factories across the Taiwan Straits.

According to a report in the Taiwan Economic News, this is in order to ‘cash in on the recovering demand for high-end bicycles worldwide.’

Giant has recently spent US$36 million building its ninth bicycle factory in China, in Kunshan City. This is scheduled to be operational in the third quarter of 2011 and should produce around 1 million to 1.5 million bicycles two years later.

One focus of the Kunshan plant will be electric bicycle manufacturing. Although, the new Kunshan site will also produce bicycle frames and carbon fibre.

A production line for high-end bikes should become operational the second quarter of 2011, with annual output of around 200,000 units in the next three years.

Giant currently produces around 100,000 units of higher-end bikes in Taiwan each year.

Meanwhile, since August 2010, Merida has invested NT$250 million (US$8 million) in expanding its production capacity. At its factories in Taiwan and China, Merida has procured new processing and production equipment and has made improvements to existing production lines.

The latest expansion from Merida is scheduled to be completed in April 2011.

Merida just reported its sales revenue of NT$1.285 billion for November 2010, up 26.27% year on year. This boosted total revenue for the 11 months of 2010 to NT$11.074 billion, up 8.94% year on year.

Taiwan Insights continues with:
Taiwan’s tourism will receive an additional boost when the government increases the daily quota of Chinese tourists to 4,000 per day, with independent Chinese tourists allowed to visit Taiwan by the end of June 2011. Since the lifting of the ban on Chinese tourism in July 2008, the average daily number of visitors from China has steadily increased. In 2009, visitors from China averaged 1,661 per day, but, by the first half of 2010, it jumped to 3,440 per day.
I am sure this is just a figment of my paranoia, but when Taiwan has nothing anyone really wants, the trade imbalance can have far reaching economic and political consequences. Is this part of a greater political plan to integrate Taiwan into China?

What if China gets angry and turns off the tap?

They stand nothing to lose and Taiwan loses everything.


I have been made aware that China is, in fact, using its economy as a political cudgel. This should be no surprise, but what IS surprising is how deep, far reaching, and orchestrated this effort is.

The CCP/Chinese state is creating an artificial demand for Taiwanese goods and tourism to gain greater leverage over Taiwan's local economies and over local politics. This has gotten to the point where Chinese delegations will purchase goods and even provide services to promote annexation policies.