Mon, Jun 09, 2008 page11

• INTERVIEW: Europe sees bright prospects in Taiwan

  With 40 billion euros in bilateral trade last year, EU-Taiwan trade has reached record levels, and investors from the EU account for the single largest source of foreign direct investment in Taiwan. Last week, contributing reporter Mac William Bishop spoke with Guy Ledoux, head of the European Economic and Trade Office in Taiwan, about the EU’s role in Taiwan’s economy

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  Taipei Times: I notice that your office’s publications have been putting a lot of emphasis on education and students, particularly on Taiwanese students going to Europe.

  Guy Ledoux: This is a very important and crucial element ... As you will hear from the rest of my interview, Taiwanese students going to Europe is an investment for the future, so Taiwanese will better understand Europe. Until now, most Taiwanese students have gone to the US, and of course they have the impression that the US is similar to Europe. But they’re not exactly the same.

  TT: One of your publications says that the number of students studying in non-English speaking countries, such as Germany and France, from Taiwan is at an all time high. What’s driving that interest?

  

  Guy Ledoux, head of the European Economic and Trade Office in Taiwan, smiles during an interview last week.

  PHOTO: CHIEN RONG-FENG, TAIPEI TIMES

  Ledoux: I think Europe is growing on the world stage. We have now 27 member states; we have the largest economy in the world. So that is something that is attractive. As far as economy and trade is concerned, there is one set of rules governing Europe and its markets. Once you know the rules for one country, you know the rules for the whole EU.

  TT: The administration of President Ma Ying-jeou (馬英九) has pledged to improve ties with China, and is seeking to increase direct transportation links between the two sides of the Taiwan Strait. How is this going to affect European companies doing business in Taiwan?

  Ledoux: We are looking forward to the announced direct weekend flights and hope that European businesspeople will be able to board those planes. I think, of course, the highlight of the new administration is the promotion of direct flights between Taiwan and the mainland. We have been told by the new administration that [direct flights] will start on the fourth of July. We will certainly welcome this development.

  One thing that will be very important for us to make sure that European businesspeople can also benefit from these direct flights. Of course, you have many European companies that have investments here in Taiwan and also have investments in the mainland. There are often meetings between managers from both sides of the Strait, and it would be extremely helpful if they could save time when traveling to such meetings.

  TT: Some observers are concerned that increased access to China will have a detrimental effect on local businesses. How do European companies interpret that? Do you think they view this as something of which to be wary?

  Ledoux: My answer to that question is that there are many European companies that are interested in the lifting of the import ban. There are currently 2,000 items that are banned from import from China, and this creates difficulties for some European companies. Many European companies are global with global supply chains. For example, companies producing electrical equipment have one factory supplying one type of component for their worldwide customers. If the factory is based in China, the company cannot supply its customers in Taiwan.

  TT: EU member states together comprise the largest source of Foreign Direct Investment (FDI) in Taiwan. What areas are European companies particularly interested in, and what can Taiwanese companies do to attract more attention from European investors, consumers and businesses?

  Ledoux: European companies are strong in the services sectors: banking, insurance, retail, engineering; and we have witnessed even in the recent past the interest of European companies in Taiwan with the acquisition of two Taiwanese banks by Standard Chartered and HSBC.

  I do not think Taiwanese companies have to do something. Rather it is the Taiwanese administration that has to ensure that the legal framework is attractive enough for European investors.

  TT: You also recently said that Taiwanese companies and investors should look to Europe. What opportunities in Europe do you see for Taiwanese businesses?

  Ledoux: I would highlight three major points. The first is that the EU is a safe and secure market:

  The EU legal framework provides for a clear set of rules and standards with an emphasis on fair competition that provides a level playing field for businesses from all around the world. European rules are established in a transparent process where all stakeholders are consulted well in advance and are given plenty of time to adjust to new measures. The EU has sound macro-economic policies that guarantee stability. The current high level of the euro (as well as other European currencies) demonstrates the high level of confidence of the financial community.

  Second, the EU is equipped with super infrastructure:

  From modern airport to high-speed train, from motorway corridors to waterways, the EU has a highly efficient transport system. Member states have invested successfully more than 200 billion euros [US$315 billion] in the last 10 years to increase the quality of the European transport network and to ensure the interconnection between all 27 member states. This equipment is complemented by a high quality telecommunications network.

  Third, the European workforce has high productivity:

  I would like to correct the wrong perception of an expensive workforce in Europe. There is currently a trend towards increasing working hours in many members states as European labor legislation are getting increasingly flexible. In addition and more importantly, the European workforce is often highly qualified and has a high productivity. This results in very competitive labor costs.

  TT: In remarks to the press last week, you talked about the need for Taiwanese manufacturers to take advantage of the design and branding expertise of European companies. Can you give me a recent example of an instance of this cooperation?

  Ledoux: Taiwan’s Compal Electronics Inc (仁寶電腦), (an ODM, or original design manufacturer) the world’s second-largest contract notebook computer maker, plans to build a notebook computer plant in Poland, Compal president Ray Chen (陳瑞聰) said. Compal is investing in Poland because these newly emerged markets are the source of fast-growing demand for notebook computers, he said.

  Compal is the world’s second-largest contract notebook computer maker after Quanta Computer Inc (廣達電腦), also of Taiwan. It means Compal makes notebook computers which bear the brand names of large international companies like Apple, Dell or Microsoft.

  Also, the Loyal Group (見龍集團), the world’s largest producer of expandable polystyrene (EPS), headquartered in Taiwan, is to build a new plant in Poland at an investment outlay of 20 million euros. The new EPS plant, to be located in the town of Police, is estimated to start up in 2010. This will be the first investment by the Loyal Group in Europe.

  TT: Taiwanese barriers to the import of European consumer goods, particularly foodstuffs, is often cited as a “weak link” in trade relations. What barriers are currently in place? Has the Ma administration made any comments about addressing the issue?

  Ledoux: President Ma said at the occasion of his inauguration ceremony speech: “Islands like Taiwan flourish in an open economy and wither in a closed one. Therefore we must open up and deregulate the economy to unleash the vitality of the private sector. This will strengthen Taiwan’s comparative advantages.”

  This is a policy comparable to the EU economy policy even though the EU is not an island. The EU believe that opening the economy is the best approach to stimulate economic growth.

  The EU is a large exporter of agricultural products at a part with the US. I do not have the latest statistics but I know that in 2004 the US was exporting US$76 billion and the EU US$73 billion.

  The EU represents only 13 percent of Taiwan’s import of agricultural products while the US represents 40 percent.

  EU exporters are successfully exporting to the US, Japan and China, we are surprised that to note that our meat export to Taiwan remain negligible.

  European member states who are interested in exporting meat face considerable problems with the certification procedures. This is not related to legislation but to issues of length of procedures. Exporters have to fill up questionnaires and then often when that is done there are more questions asked.

  TT: Obviously it would vary from sector to sector, but are there any general recommendations you would give to European companies seeking to partner with Taiwanese firms?

  Ledoux: The main recommendation we do give to European business people looking for a partner is to inform them that many Taiwanese managers have been educated in the US and assume that doing business with Europe is the same. This can lead to misunderstandings, as business practices in Europe are different.

  TT: What is the single biggest issue adversely affecting EU-Taiwan trade and economic ties?

  Ledoux: I would certainly say the Government Procurement Agreement. I don’t know if you are familiar with it. Taiwan joined the WTO in 2002. In the accession documents to join the WTO, Taiwan made a commitment to join a separate agreement on public procurement, and that is called the GPA, or Government Procurement Agreement. It is within the framework of the WTO. In January 2003, Taiwan should have joined the GPA. It has not yet done so.

  If and when Taiwan joins the GPA, that means that Taiwan, above a certain threshold, needs to open up public tenders to international bids — they cannot be restricted to Taiwanese companies.

  For the moment, Taiwan has not joined the GPA, so they are not obliged legally to do that [open public tenders to international bids], and sometimes they do not. I don’t say that they never allow international bidding; but if they feel they don’t want to do it, they don’t do it.

  This is a sensitive issue ... One of the reasons [joining the GPA] was delayed is because of cross-strait relations.

  The accession documents need to use the proper phrasing [when describing Taiwan] ... We call that the nomenclature issue. The documents need to be written in a way that will not create difficulties between China and Taiwan ... This is a big issue. I heard a government minister say in 2006 that the total value of government procurement in Taiwan was US$25 billion. So it is very significant.
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