Taipei Times: What impact will Taiwan's WTO entry have on the country's retail sector and President Chain Stores (
James Hsieh (謝健南): The Taiwanese government has been quite open to commercial activities and foreign businesses have long been allowed to enter this market without special requirements. Foreign companies don't have to seek a local partner to operate in Taiwan but they do need to do so in compliance with mainland regulations.
While the domestic retail market is bound to face foreign competition after entry, we are not really worried about it, given our experience over the last 22 years running 2,893 stores in Taiwan. So I don't think there will be any impact on commercial activities or retail business following the nation's WTO entry.
On the other hand, entry does allow local retailers to diversify their supply of both commodities and raw materials. Following WTO entry, President Chain Store can introduce commodities from a wider range of countries.
TT: Will President Chain Store import products that were processed in China?
Hsieh: China's agricultural products are still prohibited from entering Taiwan market, despite the fact that many of those products were processed by Taiwan businesses in China. Using China's lower labor and land costs, they are able to produce goods for only one-third or a quarter of the cost compared to Taiwan.
It is my understanding that the prices of China-made instant noodles to be distributed in Taiwan are much lower than those processed in Taiwan. Therefore, if China-made products are allowed to enter Taiwan's market, it seems likely to trigger a price war among local instant noodle makers. Consumers stand to benefit the most.
TT: So you're implying that President Chain Store may import goods that were produced by affiliates of the President Group (統一集團) in China?
Hsieh: We are studying the idea as we have manufacturing sites on both sides of the Taiwan Strait. It's easy to market these China-made goods domestically through our convenience-store network. There is no doubt that it would have a big impact on our domestic manufacturing. But business is business. Companies need to consider what their real competitive advantage is and reallocate resources accordingly.
TT: When will US-based 7-Eleven announce itsdecision on franchises in China? What are the odds President will stand out from the competition to win the bid?
Hsieh: The US-based 7-Eleven is scheduled to complete a reevaluation of the China market in the first quarter of next year. Ahead of that, we have no idea whether we will win the bid or not. But we are confident in ourselves, especially with more than 20 years of business experience in Taiwan. Take Japan, where only some 8,400 7-Eleven stores exist for a population of more than 120 million. In Taiwan we have set up more than 2,800 stores to serve the nation's 22 million people.
Compared to other competitors, I'd say we are also good at shifting our business strategy to adapt to market changes, including selling more fresh food and products under our brand name to increase profit margins. Actually, the Chinese government also favors us and is quite aware of where our competitive advantages are. But so far we don't know what decision 7-Eleven is going to make. (Hong Kong-based Dairy Farm International Holdings Ltd and 7-Eleven Japan Co are competing with President Chain Store for China rights. Dairy Farm already operates 7-Eleven stores in Guangdong, China.)
RSS