Taiwan Sent Scouts To Urals

14.10.2009 — Analysis

Chinese companies might find themselves facing serious competition in the Urals region - the no less mobile replicators of products developed in Japan, EU, and USA. The RusBusinessNews observer is introducing Taiwanese businessmen who discover the Urals.

Almost all of them speak English and have English names. Their companies feel at home in the North American market. Russia for them, however, is a territory almost unknown. Taiwanese entrepreneurs, representatives of the unrecognised island state of Taiwan in the South East Asia (Russia considers Taiwan an inseparable part of the People's Republic of China), resolved to visit Ekaterinburg in mid-October 2009 to establish links with Urals enterprises.

The Taiwanese business mission consisted of representatives of 15 companies, predominantly small. It is worth mentioning that the majority of them represent the new wave of the Taiwanese economy. While manufacturing of electronics used to be the main area of expertise of the island's companies, now many of them are refocusing on manufacturing automotive parts and accessories - screen wipers, fog lights, shock absorbers, and batteries. Moreover, the Taiwanese offer many types of industrial equipment and consumer goods - from metal machining centres and automatic moulding machines to garments and nappies.

"Representatives of several Taiwanese companies had visited Ekaterinburg ten years ago. This visit, however, is the first visit of a business delegation to the Urals which has been organised by us," said Jack Cheng, the Director of Moscow office of the Taiwan Trade Center. "Many Taiwanese companies have their offices in Moscow and run their operations in Russia through them. Now we recognise the fact that it would be much more efficient to work with Russian regions directly." According to him, the issue of opening an office of the Taiwan Trade Center in Ekaterinburg is being considered currently.

One cannot say that the people of the Urals have never had economic links with Taiwan. According to the official statistics the trade turnover between the Sverdlovsk Oblast and PRC amounted to 778 million US dollars in 2008, this included the turnover with Taiwan amounting to 56.8 million dollars. These relations, however, are generally limited to shipments of metals from the Urals to the island.

"This is our first visit to the Urals. We are interested, first of all, in finding new clients who would be interested in our products. We would also like to gain a better understanding of the Urals market and the market of Russia as a whole. Maybe we could find dealers here or establish a warehouse for our products" Julie Hu, the Director of Flex Wiper Enterprises Co., LTD, told RusBusinessNews.

The Taiwanese came to the Urals not just to promote the finished products but to look for narrow market niches. And, for instance, if Russian companies can not afford to purchase a state of the art metal machining centre today but need a simple coupling bush, you can rest assured that a small company on the island will restructure their production and cover the Urals knee deep in these bushes.

How do you achieve this amazing level of mobility? This is achieved only through the adoption of available technological solutions from Japan, European Union and USA. Undoubtedly the copies' quality differs from that of genuine parts but the price is quite acceptable, be it car mechanic's tools or a mobile telephone. Lawrence Chang, the Head of eLink Corporation Limited, told RusBusinessNews: "Our company is rather small. We have to find a very narrow segment of the market and then work in it. We make several types of automotive components. Our products are not genuine parts, we only make replacements for a whole range of the world's leading manufacturers. Nevertheless, many American companies buy our products as they are much cheaper than genuine parts".

China is using the same approach but the Taiwanese point out one fundamental difference. "Japan's Sony Corporation has plants both in China and in Taiwan. Our products are better quality, though," Joe Hu, the Head of Bao Chuan Industrial Co., LTD, told RusBusinessNews, "Our company makes shock absorbers which initially were made in Japan. The quality of Taiwanese shock absorbers is considered to be the second best in the world."

Taiwan, therefore, positions itself in the world market as a maker of good quality copies. Joe Hu complains that "people in the Urals are not aware of the high quality of products made in Taiwan. Chinese products might be a little cheaper but their quality is much worse."

China, however, has one definite advantage in the Urals, the Great Neighbour has well established old economic links with the region in both trade and implementation of joint projects. "Why did we not come here sooner? Taiwan is quite a conservative country" explains Lawrence Chang. "However, we do recognise the importance of Russia in the world market and this is why we want to be friends with your country. We are very much interested in promoting sales in Russia because opportunities here are great."

Julie Hu points out that "The Urals market has formerly been inaccessible for Taiwan, and the information was minimal. Now, thanks to the information exchange, the cooperation of Chambers of Trade and Industry of the Sverdlovsk Oblast and Taiwan the exchange is growing and literally two to three years ago we developed interest to your market. Why not come and try to promote our products here?"

In the opinion of the Taiwanese the lack of diplomatic relations between Moscow and Taipei will not become a serious obstacle on the way of economic cooperation. "The problem in establishing economic links is not only in politics, it is in the language of communication. Russian language is difficult for us" says Victoria Fang, the Head of Yee Young Industrial Co., LTD.

Would the Urals companies actively purchasing machinery, equipment, and industrial materials in China today be ready to redirect a part of this demand to Taiwan? The situation will be clearer in a year's time when the financial capacities of the island are clearer in regard of financing the Taiwanese products sales to the Urals, when the logistics of the cargo transportation are developed and the service maintenance have been resolved. Otherwise the Urals market will remain at the mercy of Chinese manufacturers.

Pavel Kober