Taiwan's consumer boom gains speed

Business America, Feb 26, 1990 by Shirley Wang, Craig Allen

Over the New Year's holiday, approximately 100,000 Taiwanese consumers visited an American home appliance show sponsored by the American Institute in Taiwan (AIT). Held in Taipei, this show generated more than $2 million in off-the-floor sales. The enormous turnout, equal to 5 percent of Taipei's population, is indicative of the continuing consumer boom in Taiwan. This island, known as a prolific exporter, is also becoming an important import market for many U.S. consumer good manufacturers.

There are a number of factors that explain the success of American consumer products in Taiwan. Most importantly, the Taiwanese are newly rich. In 1988, monthly disposable income per household grew nearly 37 percent over the previous year to US$1,343. Simultaneously, the percentage of income saved or invested is shrinking. In 1988, the average propensity to consume was 0.76 compared to 0.71 in 1987. Although 1989 figures are not yet available, it is clear that the strong trend toward increased spending for current consumption is continuing.

Demographics also help explain Taiwan's emergence as a strong consumer market. The baby boom in this part of Asia followed that in the United States by seven or eight years, as a result of protracted fighting after World War II. In addition, the family size is decreasing and the number of women in the work force is rising rapidly. In 1983, there were only 2.5 million females employed in the labor force. By 1988, the figure had reached 3.1 million, accounting for 37.2 percent of total employment. This not only leads to greater household disposable income, it also promotes the sale of cosmetics, processed foods, automobiles, and laborsaving appliances.

American firms often have the inside track in the competition for Taiwan's consumer dollar. The 60 percent appreciation of the New Taiwan Dollar relative to the U.S. currency since 1985 has made U.S. imports inexpensive relative to either local products or third-country competition. Also, declining tariffs have helped spur strong import growth. Finally, American consumer products are simply very well regarded by the average consumer. Taiwanese accept as a truism that Americans live very comfortably. They correctly believe that American-made goods are among the finest luxury items available anywhere in the world.

The AIT Trade Center is dedicated to assisting U.S. consumer product firms to enter this lucrative market. Detailed market studies prepared by AIT on the following industries are available at any Department of Commerce district office: building materials and construction equipment; household consumer products; cosmetic products; and autos, parts, and accessories.

In addition, the Trade Center, regularly holds vertical shows that assist American companies to expand sales in Taiwan. Following is the show schedule for 1990: Taipei International Auto Show, May 14-18; building materials, July 4-8; and cosmetics and toiletries trade mission, November.

Any firm interested in joining one of these events is encouraged to contact Craig Allen, Manager, AIT Trade Center, at fax number 886 (02) 757-7162. For general information on Taiwan, contract the Commerce Department's Taiwan Desk, (202) 377-4957.