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As a relatively long term resident of Taiwan, I have some interest in its economy. Especially now that I’m involved in business here, it isn’t wise to ignore what I read and hear. One thing I’ve heard again and again is anguish at how much we’re falling behind our closest rival, Korea.

I suppose comparisons between Taiwan and South Korea are inevitable. Both were colonized by the Japanese early last century, people of both were split from their families as a result of World War II, and both went on to become booming manufacturing centers in the 80’s and 90’s. Right now, Korea and Taiwan are each involved in electronics markets and both invest heavily in China. Korea is China’s #1 foreign investor, and the Taiwanese are putting even more money into the mainland than the Koreans are, via 3rd parties (since direct investment is restricted by the Taiwanese government). Comparisons are inevitable.

The most logical place to start is with GDP growth.

GDP Growth

GDP per capita, in US dollars
2000200120022003200420052006
Taiwan14,42613,02813,09313,25414,20515,20315,472
Korea10,89010,17811,48212,71014,14216,30818,015

All data from the IMF, 2006 data are estimates.

In terms of annualized nominal growth, that gives Taiwan slightly less than 1.2% per year, and Korea over 8.6% per year. However, the major factor for this difference has been the precipitous drop in the value of the Taiwan Dollar. Over the last several years, the US dollar has weakened abysmally, but the Taiwan dollar has been losing ground even against the US dollar. The following graph charts the strength of the Taiwanese and Korean currencies against the USD:

Currency

currency graph

This is bad, but it isn’t all bad. A weaker currency means that people will be paying more for imports (as well as domestic products that compete with them), and that their savings are worth less. It is a boon for exporters, though, and exports make up a crucial portion of Taiwan’s economy. All things considered, I’d much prefer to have Korea’s economy, but they do have other problems, such as high housing and labor costs.

Unemployment

Unemployment Rate
2000200120022003200420052006
Taiwan3.04.65.25.04.44.13.9
Korea4.44.03.33.63.73.73.5

All data from the IMF, 2006 data are estimates.

Possible Explanations

The most common explanation I see in Taiwanese media is that Taiwan’s small business-based economy can’t keep up with Korea’s huge conglomerates. There are many reasonable arguments to make for economies of scale, but while Korea was suffering through the SE Asian economic crisis in 1998, their newspapers were full of stories about how much more flexible Taiwan’s small business-driven model was.

One other thing that comes up is the huge amount of turnover in Taiwanese government positions after the DPP took power in 2000. It definitely had some economic cost, and a similar though smaller phenomena may repeat itself if 馬英九 wins the 2008 elections. However, any sort of cost to that sort of turnover would has been minimal. In fact, South Korea’s political scene has been more volatile, particularly in regards to Roh’s impeachment.

One thing that really is costing Taiwan, is the regulations on investment in China. Since direct trade is illegal in many cases, companies work via shell companies in Hong Kong, Macau, Singapore, or other areas. Every time business is done in that way, the intermediary takes a cut. With the volume of business the Koreans and Taiwanese do in mainland China, Taiwan’s extra frictional costs add up. Not being able to make direct flights results in a cost, too, and it’s the Taiwanese business that has to bear the weight of it.

Other thoughts

The three-links problem will likely be dealt with soon, regardless of the result of next year’s elections, but barring any surprises, Korea’s economy will probably continue to pull ahead. Their free trade agreement with the US will only accelerate their already impressive growth.

Related Post: Salary stagnation: The reason Taiwan’s middle class suffers
Related Post: TSMC CEO Morris Chang on Taiwan

I haven’t written about Tudou.com sooner because I figured it was old news, but at the Beer Factory meet-up, David, Todd, and some other Taiwan bloggers told me they hadn’t heard of Tudou.com. I guess the Taiwan websphere and the mainland websphere really are cut off from each other. So, here it is: Tudou is a copy of YouTube done Chinese-style. YouTube has plenty of copyrighted materials, but there’s at least the appearance that they don’t allow them. Tudou, on the other hand has things you’d never see on YouTube- things like all the Star Wars movies streamed back-to-back, Friends episodes, and a ton of other movies and TV programs. It’s amazing. It’s like Tudou has no fear of Hollywood, whatsoever.

Friends on tudouFriends on tudou Hosted on Zooomr


Notes:
[1] 土豆网 (tu2dou4 wang3) means “Potato net”
[2] You vote up videos by clicking on the orange button with 挖 (wa1), which means “dig”. Remind you of anything?

The topic of promoting tourism seems to come up pretty frequently in the papers. Due to the fact that it’s an island, and that there are much less expensive options nearby, I don’t really think it’s that likely that Taiwan will ever be a top tourist destination for westerners. It already is a top tourist destination for the Japanese, but the vast majority of its tourism promotion is aimed at westerners. Here is a video from Taiwan’s “Touch your heart” campaign:

In contrast, China’s “China Forever” video is very focused on natural scenery, history and culture:

Korea’s new “Dynamic Korea” is pretty impressive all around:

The Japanese “Yokoso!” (welcome) campaign is split into three separate branches.

Beautiful Japan:

Cool Japan:

Delightful Japan:

Of all of the videos, I think the strongest are Delightful Japan and Dynamic Korea. They really got me to thinking about what exactly I would want to experience as a tourist somewhere.


Hat tip to Fili for digging up the first three videos. He’s also written about Israel’s unique tourism campaign.

John’s observations on Malaysia’s “truly Asia” campaign are worth a read, too.

Recently, Lonnie (of OMBW) wrote about a pretty nice web tool that tests to see if a site is blocked in China or not. It’s free, and you can check your site’s accessibility from servers in Hong Kong, Shanghai, and Beijing. The name of the site is Website Pulse.

It’s been pretty accurate as far as I can tell. I had been getting about 30% of my traffic from China, until the past couple of weeks, during which that percentage fell to about 1%. During this time, the tool has been saying I was blocked. Now, it says I’m no longer blocked, and my traffic logs seem to confirm it.

Why I was blocked briefly, and then unblocked is a mystery.

This is a recent test used in England:
a diagnostic math test for first year university students in England
Royal Society of Chemistry

Here’s a Chinese math test:
a math question from a Chinese college entrance test
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MSG must be one of the most maligned and misunderstood food components of the modern world. Superstition and fears about it are ubiquitous in the west, and yet, as Jeffery Steingarten, the great American food critic once put it,

“If MSG is bad for you, then why doesn’t everyone in China have a headache?”

Or perhaps a better question would be, “How is it that the inventors of it, the Japanese, outlive everyone else on the planet?”
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In Taiwan, it seems that media is even more partisan than it is back in the States. Recently, the Liberty Times, a pro-Taiwan independence newspaper, suggested that English speakers not use the phrase “Chinese New Year” and that they replace it with “Lunar New Year. Here is an excerpt from the article:
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Here’s a Danwei video interview with the two founders of Antiwave, arguably China’s most influential podcast. “When I was a kid, my father used to tell me stories about the Japanese during the war. But history sometimes should just be left as history.”Pingke, a veteran of over a decade in the traditional radio business and Flypig, a popular blogger, explain how they created the Antiwave podcast to get around the traditional restrictions of the media. While they obviously still have to obey they law, they can say things and address topics that nobody in the traditional media would touch… such as the extreme anti-Japanese sentiments now so common in Chinese youth.

David, turned up a surprisingly balanced article from the Taipei Times about learning Chinese in Taiwan. In the past, I’ve found most of that papers pieces about tourism or learning Chinese in Taiwan to be little more than advertisements, this one was long and pretty well thought-out.

Learning Chinese is hot, but you would hardly know it here in Taiwan, where many people want to speak English. From kindergarten to business school they believe it is the key to higher earnings. They may be right, but the gains of teaching the world to speak their own language have been relatively neglected and the government is scratching its head and wondering what to do about it.

Taipei Times: Chinese, if you please

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When John recently designed a “please speak Chinese” T-shirt, I was immediately tempted to buy one. I always love it when locals talk to me in Chinese, instead of trying to use English first.

普通话

Putting this on a shirt worn by a foreigner is cool on multiple levels. Not only does it demonstrate that the foreigner can speak Chinese, but it is also a play on a PRC campaign that used the exact same line to encourage the Chinese to use Mandarin as opposed to Cantonese or any other local dialects. The only problem is that the shirt would be weird to wear in Taiwan. Nobody here uses the phrase 普通话, or even simplified characters for that matter.

As usual, John had a great idea that was in serious need of some Taiwan-ification. That’s where TC came in. He reminded me that there’s a completely analogous phrase that was plastered all over Taiwan for decades. It was even used for the same reason- getting Taiwanese people to speak in Mandarin instead of the Minnan, or “Taiwanese” dialect.

國語

I decided on the spot that it was time to design a Speak Mandarin shirt that can be worn with pride on either side of the strait. And in TC’s honor, I made one more shirt fitting for a foreigner who actually became Taiwanese.
(Readers have pointed out that former president Lǐ Dēnghuī introduced this phrase 新台灣人. Later, Mǎ Yīngjiǔ, a Hong Kong man by birth, gained popularity in proclaiming himself to be “New Taiwanese”.)

台灣

New Taiwanese Person
Speak Mandarin

You can see a full list of my designs at the newly created Toshuo Shop.