Taiwan's Latin American Trade Mission Yields Rich Harvest

To help Taiwan's manufacturers weather the global economic downturn and strengthen their position o the world stage, the Bureau of Foreign Trade (BOFT) under the Ministry of Economic Affairs (MOEA) has launched a "New Zheng He Plan" to tap emerging markets in China, India, Russia, Central and South America, and the Middle East.

Zheng He was a legendary Chinese mariner, trader, and adventurer of the Ming Dynasty (1368-1644 A.D.) who is famous for leading a 260-ship armada with a crew of some 30,000 throughout Asia and Africa. The BOFT has chosen him as a model in the hope that Taiwanese manufacturers will emulate his enterprising spirit by bravely exploring world markets.

The first target of this BOFT initiative is Latin America. A trade promotion mission, organized jointly by the BOFT and the Taiwan External Trade Development Council (TAITRA) visited Brazil, Chile, Peru, and Columbia in the last half of March.

The delegation was composed of more than 70 domestic manufacturers and led by ranking economic officials including Deputy Economics Minister Lin Sheng-chung, BOFT Deputy Director General Chiang Shih-huang, and TAITRA Executive Vice President Walter Yeh. The mission, which returned to Taiwan last week, is reported to have won orders worth an estimated US$75 million. This achievement seems to have encouraged TAITRA to decide to organize another South American mission for the second half of this year.

Most members of the delegation, Yeh said, were from high-tech and traditional industries and were anxious to explore Latin American markets for their products. During the recent mission, TAITRA organized several sessions of trade talks between the delegation members and more than 2,000 local buyers.

In Brazil, for example, some 600 local buyers attended the trade talks and placed on-site orders worth more than US$5 million. In addition, an exhibition of "best small-sized Taiwan products" in Sao Paulo, the largest city in Brazil, showed off the sophisticated high-end products offered by some of Taiwan's leading IT and fitness equipment manufacturers: Asustek Computer Inc., D-Link Corp., Genius KYE Systems Corp., Micro-Star Int'l Co., and Johnson Health Tech Co. The quality products drew intense attention at the showground, and follow-up orders are expected.

The trade talks attracted many leading enterprises in the four countries visited. In Brazil the local participants included numerous large manufacturers, including Volkswagan (Brazil), Votorantim Metais, Delphi (the world's largest auto-parts maker), Brasil & Movimentos (Brazil's largest bicycle producer), Elgin (a leading assembler of 3C products), and Lorenezetti (a manufacturer of heaters and bathroom facilities), as well as leading telecoms firms such as Urmet Daruma, Visum, and Leucotron.

In Chile the leading firms attending the trade talks included Sodimac (the country's largest household products and building materials chain), Grupo GTD (Chile's No. 1 household Internet service company), Vinilit S.A. (a leading plastic-tube manufacturer), Garmendia Matus S.A., (a maker of keys and locks for industrial safety products), Equipos Industriales S.A. (a major agent for machines and related items), and Laboratorios Davis S.A. (a prominent drug-store chain).

Prominent companies also attended the talks in Peru, including Solitec S.A.C. (a telecom operator), Frenosa, (a leading building materials provider), and LYS Filtros (a big auto parts firm).

During the trip, TAITRA signed a cooperation agreement with the general association of industries in Peru to enhance trade between the two sides, and the International Commercial Bank of China (ICBC), a member of the delegation, inked an accord with Corpbanca, a prominent Chilean bank, to serve mutually as agents in the handling of corporate loans. Under this accord manufacturers in Chile can, for instance, apply for low-interest loans for the purchase of Taiwan-made machines.

Yeh indicated that Latin American markets have good potential. At the present time 40% of the people living there earn between US$500 and US$1,000 a month, and 15% have a monthly income above US$3,000. Taiwan-made products, such as computers, electronic devices, auto parts, and hand tools, are quite popular among Latin American consumers, and their market niche in the region is growing.

Brazil, with population of more than 180 million, is the largest country in Latin America, and so has a highly attractive market. Brazil alone accounted for more than half of the US$11 billion worth of computers and related products sold in the region last year.

Argentina, the region's second-largest country, has been trying to boost the living standard of its people in recent years through such means as the provision of shopping coupons to retired elders, the lowering of tariffs on such agricultural produce as wheat and maize, and the expansion of loans to small- and medium-sized enterprises. The success of these efforts makes this a good time for Taiwanese manufacturers to promote their products to consumers there.

Chile, considered the richest nation in Latin America, has signed 21 free trade agreements with countries around the world. Its market is relatively open, and foreign investors are welcome. Market experts suggest that Taiwan's manufacturers can use Chile as a base for the marketing of products not only to Latin America but also to North America.

Peru has been developing very rapidly in recent years, achieving an economic growth rate of 9.8% in 2008, and has a vigorous trade relationship with Taiwan. Taiwan is now Peru's sixth largest source of imports, and Peru's market has plenty of room for more Taiwan products.

Officials at BOFT note that Taiwanese manufacturers may have language problem in Latin America, since the people of most countries there speak Spanish or Portuguese instead of English. To help them overcome the communications barrier, the BOFT plans to have TAITRA offices in the relevant countries recruit Taiwanese people who were born or live there and can speak the local languages fluently to help Taiwanese enterprises with trade promotion.

In light of the success of their recent mission to Latin America, the BOFT and TAITRA are planning to launch another trip there this year and to speed up the development of other emerging markets in the Middle East, India, China, and Russia.

Trade between Taiwan and Latin America in 2008
	Brazil	Argentine	Chile	Peru	Paraguay	Mexico
Population (million)	180	39.75	16.8	28.22	6.05	150
Economic growth rate (%)	5.1	7.1	3.2	9.8	5.8	1.3
Imports from Taiwan (US$M)	3,530	306	304	240	59.31	1,840
Exports to Taiwan (US$M)	1,470	130	2,020	590	6.74	580
Taiwan's Trade balance	Positive	Positive	Negative	Negative	Positive	Positive

Source: BOFT