Fri, Jul 09, 2010 - Page 3 News List

FEATURE: Traditional merchants bracing for ECFA

DIHUA DESPAIRWhile the government has talked up the possible benefits of the pact, firms in what was once Taipei’s busiest shopping hub have little hope for the future

By Vincent Y. Chao  /  STAFF REPORTER

A quick walk around Dihua Street, formerly one of Taipei City’s most bustling shopping areas, shows boarded up windows, empty buildings and half-finished store displays.

There are fewer than a dozen customers in sight, a figure vastly outnumbered by the number of stray dogs prowling the streets. It’s a sorry sight for a street famous for its Chinese medicine, Lunar New Year products and traditional foodstuffs.

Business picks up around temple festivals, holidays and especially the week before Lunar New Year when hundreds of frantic shoppers line up for the most popular stores amid scores of street hawkers. However, business owners say that figure has been in constant decline over the past three years.

“Business here has been slow, but we don’t expect things to pick up. Not with Chinese competition just around the corner,” said Tailor Yeh (葉信成), the owner of a small clothing manufacturer.

Small businesses like Yeh’s company, Ying Shiang Fabric, dot the tiny nooks and crannies off Dihua Street. It’s a mix of wholesalers, small manufacturers and refiners. Most are found inside bland concrete buildings and few have been open for anything less than 60 years.

The area is one of the last holdouts still producing tea leaves, foodstuffs, traditional medicine, fabrics, clothes and household items — goods identified as part of Taiwan’s traditional industries — in modern Taipei.

However, some business owners are worried that this era could be coming to an end because of the Economic Cooperation Framework Agreement (ECFA) signed with China last week. There are fears that the pact will lead to a continued increase in low-cost Chinese competition in the next few years.

President Ma Ying-jeou’s (馬英九) administration says the trade pact will help Taiwan’s export-reliant economy and maintains that through the ECFA, Taiwanese goods will flow more freely to China; already one of Taiwan’s largest trading partners.

However, the owner of a herbal medicine company, surnamed Lu (呂), says that the flip side of that claim is that small businesses like his will now face increasing competition from Chinese products as trade is liberalized.

His company both manufactures and sells its own brand of traditional herbal medicine. Most of his original materials are imported from China and other Southeast Asian countries and are refined and sold on the market. Lu says that recently he has felt he has no choice but to also carry a number of Chinese brands as they gain in popularity in other stores because of their low prices.

While traditional medicine was not included among the first wave of cross-strait tariff reductions announced on Tuesday last week, officials have not ruled out including it as part of further negotiations, scheduled to take place every six months.

“That’s the problem … no one of us knows for certain which industry is next,” said Lu, who did not want to give his full name.

“In the meantime, many of [Taiwan’s] companies are already packing up and moving to China as they don’t feel our economy is getting any better,” he said.

Yeh said his orders for custom-made suits have virtually dried up in the past two years. He used to make suits and uniforms in batches for schools and companies. Now he says he is lucky to receive even one order.

“The government is crazy if it thinks that more competition will help us,” Yeh said. “I’ll tell you what will happen in the coming years: Our businesses here will fold and so will the small clothing companies in Wufenpu (五分埔) and Ximending (西門町).”

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