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A businessman's adventures

By Derek Lee
STAFF REPORTER
Sunday, Aug 21, 2005, Page 18

Businessman Chen Pin has written several books on business and his experiences in China. PHOTOS: DEREK LEE, TAIPEI TIMES

Chen Pin (陳彬) is becoming a big talk-show star in Taiwan. Every morning he gets up at 6 and prepares himself well to speak on TV or radio talk shows or at private gatherings. He impresses his talk-show hosts and their audiences by detailing his dramatic experience of doing business in China for the past 10 years. While most of the other talk-show guests speak from observation and analysis, Chen gives personal examples to prove his points. He is sharp and goes straight to the point.

Chen, now in his fifties, was born to a Hakka family in Sinpu (新埔), Hsinchu County. He studied economics in college and after graduating ran a stainless-steel factory in Taipei. Out of curiosity, he went with a small group of Taiwanese friends to China shortly after the Tienanmen Square Massacre in June, 1989, at a time when China was facing international boycott from most democratic countries in the world. After that China visit, he decided to fold up his business in Taipei and he moved to Shanghai the next year.

Chen has since published nine books in the last five years, all dealing with his adventurous business experience in China. His latest, titled Changing Your Head to Find the Money's Way (換個腦袋找錢途) hit the market in May and has again generated a discussion both in Taiwan and in China about his viewpoints. Furthermore, several of his books, such as Immigrating to Shanghai and My Experience in Shanghai have been bestsellers in Taiwan. On top of that, government officials and brain trusts on both sides of the Taiwan Strait have privately asked him to give lectures after having read his publications.

By the time he got settled in Shanghai, Chen again set up a stainless-steel factory there with friends from Taiwan. After a couple of years, the friendship went sour and his partners ganged up with the Shanghainese to take over his company. A few months later, he invested in a bakery chain operation with people he met in a private club in Shanghai only to find out later that the woman managing the entire business was the girlfriend of a well-known Taiwanese gangster. His investment capital of a few million NT dollars evaporated into thin air not long after. These are just two incidents among others that cause his temper to flare up every time he recalls his days in Shanghai.

Chen never took legal actions against his Taiwanese compatriots in a Chinese court. He believes taking those actions would be a complete waste of time, energy and money. In fact, he did seek legal advice from nine different lawyers in China at that time and every one of them advised him not to take his cases to the court for the simple reason that the Chinese court does not process business dispute cases between Taiwanese residents in China unless there is homicide involved. Nobody knows exactly why.

After Chen folded up most of his business ventures in China, he focused on writing about his experiences, mainly in Shanghai. Although he is now shuttling between Taipei and Shanghai, he is quite outspoken on topics relating to China -- except, perhaps, on Chinese Communist party politics.

One of the most heated debates in Taiwan in the past weeks concerns the export of Taiwan's agricultural products to China. Beijing made an official announcement on July 28 offering Taiwanese farmers a total custom tax exemption for 15 agricultural products importing from Taiwan: pineapples, papayas, star fruits, mangos, guavas, grapefruits, coconuts, plums, peaches, persimmons, loquats, Chinese dates, sakyas (or custard apples), wax apples and bethel nuts. Upon examining the list, Chen came right out to call it a foul. The act surprised many, even Taiwanese officials in charge of the China affairs.

Chen pointed out that all the above-listed fruit products except pineapple belong to woody -- as opposed to creeping -- plants and would take around three years to grow and be ready to export to the Chinese market. By that time, Beijing could use the import of these fruits as a political weapon to manipulate Taiwanese farmers' votes in the 2008 presidential election in Taiwan. Beijing could easily make up excuses to reverse its policy and stop fruit imports from Taiwan should the ruling Democratic Progressive Party's (DPP) candidate win the election. The future DPP government would then have to face the imminent danger of a peasant revolt as a backlash for not being able to sell their excessive products in enormous quantity to China. In Chen's view, the policy is a very well calculated scheme designed by agricultural experts in China.

Worse even, there are many hidden costs which may cut the competitive edges of the Taiwanese fruit products. For instance, local governments in China are entitled to impose a 17 percent sale tax on any goods sold in the market. Even if some Chinese Nationalist Party (KMT) officials claimed that they have bargained down the tax to 13.5 percent, the extra cost might minimize the farmers' profits.

Moreover, overhead costs to sell products through supermarkets and discount stores in China can be intimidating as well. As many as 17 items of charges at fixed rates would add up the farmers' cost of production to be 17 percent higher. If Taiwanese farmers sell their products through street vendors and free markets, which are a major sales channel in China, collecting money becomes a serious problem.

As a matter of fact, all the fruits listed as import-tax-free items have mostly already been grown all over China by Taiwanese farmers residing there. Some are also being imported from Thailand, Vietnam, Cambodia or Hainan, China.

Chen thus cautioned that "while the quality of the locally grown or imported fruits may not be able to match Taiwan's, their sale price is attractive enough to lure the Chinese consumers back once the craze for fruits of Taiwan subsides."

Chen also made his opinion clear on the WTO issue. According to the WTO regulations, every third year from the time a member joins the international trade body, the member is required to hold a general review session on every trade issue concerned. Taiwan was granted WTO membership on Jan. 1, 2003. In other words, Taiwan has to hold such a session by the beginning of next year. So the catch is, as Chen pointed out, if the government of Taiwan formally accepts the 15 custom-tax-free fruit products, Taiwan will have to grant China the same tax treatment in 2006.

Chen thus concluded by saying, "There is no need for China to export 15 agricultural products, just 5 items such as rice, egg, watermelon, bethel nut and tomato would knock out Taiwan's farm industry completely. The nearly as good quality and five-to-ten times lower price of their foodstuffs are something that can never be matched by those in Taiwan."

Chen even went so far as to predict that those who are enthusiastic about promoting the agricultural product trade between Taiwan and China are in fact hoping to import farm products back to Taiwan after three or four years if the pan-blue camp recaptures the ruling throne in the 2008 presidential election. If that happens, it would make many a pan-blue businessmen a pretty penny since China has around 800 farm products to export abroad with very competitive prices.

The only price that Taiwan would have to pay is having its agricultural sector and probably its entire economy ruined.
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