Japanese weekly highlights Taiwan role in tapping into China market

2011/09/27 Tokyo, Sept. 27 (CNA) Toyo Keizai, a well-known Japanese business magazine, has touted the advantages for Japanese enterprises of going through Taiwan to make inroads into China's market. The latest edition of the weekly devoted more than 50 pages to introducing Taiwan's economy and analyzing the approaches available to Japanese companies in trying to capture a share of the Chinese market. The magazine first analyzed major risks at the national, management and security levels Japanese businesses must overcome in trying to expand into China. At a national level, the risks involve general political, social and economic issues. Management risk refers to potential managerial problems such as exchange rate volatility, quality control issues, rampant counterfeiting and high staff turnover that Japanese businesses could face in China. Security risk refers to issues such as anti-Japanese demonstrations, worsening social order, security management of the staff, new contagious diseases and information security. Taiwan's economic strengths could be grouped into three major trends that could minimize those risks and be exploited by Japanese businesses as they look to China's market, the weekly said. They are: Japan-Taiwan cooperation is the key to success in tapping into China's market; Taiwan's three major food brands have satisfied 1.3 billion Chinese consumers; and Taiwanese businesses are no longer just downstream manufacturers. The reports said Japan has become more interested in Taiwan after the March 11 earthquake, partly because Taiwan donated more than 18 billion Japanese yen (US$235.77 million) for post-quake relief and reconstruction -- more than any other country -- leaving the Japanese both surprised and grateful. At the same time, many factories had their supply chains disrupted by earthquake and tsunami damage, prompting them to consider diversifying production of basic items overseas, with Taiwan a prime destination. Panasonic, Canon, Hitachi and Elpida have already begun to move some of their production to Taiwan or set up new plants in the country. The magazine also looked at President Ma Ying-jeou's economic policy, which revolves in part around making use of the growing Chinese market to expand Taiwan's economic strength. It pointed to other core policies, such as Taiwan's support for six emerging sectors -- tourism, health care, biotechnology, green energy, creative and cultural industries, and specialty agriculture -- and the signing of the Economic Cooperation Framework Agreement with China last year, that were also favorable for Japanese businesses. If Japanese businesses look at Taiwan's investment course and the ECFA, they will find considerable opportunities, the magazine said. The special feature also noted that foreign countries have mocked Japanese businesses for operating comfortably at home but being timid at venturing overseas and warned they could easily miss big opportunities because of their overly cautious attitude. For Japanese small- and medium enterprises that have the capability to produce value-added products, the magazine suggested that they find Taiwanese partners to help expand their marketing and distribution. Japanese businesses should not only view China's market from a two-way Japan-China perspective, but should also incorporate Taiwan in charting new strategies that could lead them to new opportunities for growth.