Mon, Sep 06, 1999 page18

• Small businesses realize big profits

  Street vendors and business stalls are largely untaxed in Taiwan, and these small operations offer strong profitability and flexibility, attracting an increasing number of well-educated owners

  • By Tu Po-heng / STAFF REPORTER
  • • 
    • 
    • 

  Huang Li-ping (洪麗平) used to have a nine to five office job at a trading company that offered her NT$25,000 a month. Three years ago, her company run into financial difficulties and started downsizing, forcing her to think seriously about becoming a street vendor.

  "Originally I thought I would just do it for a while. But, after a while, I found that if I have the guts, I can make NT$70,000 a month. So, I decided to stay with this job," says Huang, who now sells watches, pendants and hair decorations at Taipei's Shihlin Night Market (士林夜市).

  Huang is just one of hundreds of thousands of street vendors in Taiwan. According to the Directorate General of Budget, Accounting & Statistics (DGBAS), there were 390,487 people in the stall and street-vendor business, accounting for 4.20 percent of the nation's workforce. The number was up 3.11 percent from a similar survey done in 1993.

  

  Business stalls and night markets have become major tourist attractions. As of August 1998, there were 263,290 stalls in Taiwan, generating NT$392.62 billion in sales revenue for the year. With very low overheads, such operations can yield profits that are much greater than the average montly pay here.

  PHOTO: GEORGE TSORNG; TAIPEI TIMES

  In line with a growing workforce, the total number of small vendors around the island also edged up, rising 2.79 percent from 1993, to 263,290 stalls in1998. This is according to the DGBAS, which conducts a thorough assessment and survey of the stall sector every five years.

  Nonetheless, in the wake of the increasing popularity of convenience stores and supermarkets, the growth rate has slowed down markedly from a robust 9.30 percent growth rate during the 1988-1993 period.

  Sales and profits rising

  The majority of Taiwan's stall vendors sell cooked food and beverages, or 50.35 percent of the sector in 1998. And it is the only sector among all categories registering an increase in absolute size, up nearly 17.60 percent from 1993 -- or nearly 20,000 stalls.

  In spite of the fact that not all stall keepers make as much as Huang earns a month, the average income was NT$37,302 in 1998, or about NT$5,000 higher than the average monthly salary received by a worker in the manufacturing sector. Sales revenue generated by all stalls in 1998 totaled NT$392.62 billion, an increase of 29.94 percent from 1993. About 54 percent of stalls earned more than NT$1 million a year, up 14 percent from 1993.

  Moreover, the gross production (the difference between the amount earned and the amount spent on materials) amount realized by all stalls also increased, rising a staggering 41.29 percent from 1993 to NT$155.98 billion in 1998. The food and beverage sector registered the largest profit growth, 80.77 percent. Per stall, the average monthly profit was NT$38,337, up 40 percent from NT$27,372 in 1993.

  Some may think these figures have been overestimated, but Huang thinks that the statistics reflect business' capacity for profitability due to it's low-overhead-cost characteristics.

  "Many people underestimate this business' profitability. For example, I can get watches or pendants for NT$150 per piece and sell them for about NT$250 to NT$300 a piece. If customers don't bargain, I usually can make a profit of 50 percent on every piece I sell."

  Educated owners

  Such levels of profitability have apparently lured many people, even those who have received higher education, to work in this area. Although nearly 68.65 percent of stall owners still have just a junior high school education or less, the number of stall owners with high school and college diplomas increased by 10 percent from 1993 to 1998.

  Teng Chien-hua (鄧建華), a graduate of National Taiwan Ocean University (國立海洋大學), is a typical example. He gave up a job as a seaman that paid him US$3,000 a month five years ago and opened a food stall in Taipei.

  "After I graduated, I tried to be a sailor, but it's very boring. I hardly had time to be with my family. So, I quit and opened a stall with my wife here," Teng said. "I like what I am doing now. I am my own boss. I don't have to take orders from bossy supervisors. I have plenty of time to do what I like."

  Like Teng, many stall owners chose this occupation because it gives them greater flexibility. According to the DGBAS, 38.47 percent of stall owners surveyed said they chose such work because of its flexibility, followed by 23.56 percent who said that there's no other proper job for them.

  The survey also showed that the majority of stall owners were happy with their jobs, with only 18 percent saying that they were thinking about changing jobs in the next year.

  The DGBAS carried out the survey in Aug. 1988, collecting more than 10,000 valid questionaires from stall owners around the island.

  Untaxed

  Of the nearly 270,000 stalls in Taiwan, only around 20,000 of them pay taxes, or just 8.25 percent. Taking Taipei City as an example, a survey done by the city government in May showed that there were 5,600 legal stalls. Yet at the same time, there were 14,940 illegal stalls, accounting for nearly 60 percent of all stalls in Taipei.

  "These illegal vendors play hide-and-seek with the police and of course, they don't pay taxes," said Feng Chiu-huo (馮秋火), director of the Taipei City Market Administration.

  Certainly, the problem has become a concern of the government, but it seems that no effective measures have been implemented. "It's really very difficult to get these stalls taxed as they are illegal and most of them move around periodically," Feng explained.

  A taxation official who asked to remain anonymous also said that if all these illegal stalls paid taxes, it would add more than NT$1 billion to the nation's coffers every year. Of course, it would require a lot of manpower and capital to ensure effective taxation of the sector.

  But from an illegal stall owner's point of view, they do pay taxes -- in their own way. Huang said illegal owners usually give "tacit support" to each other about the movements of nearby police. "If unfortunately, I am caught by the police, I will think that the fine I am going to pay is the tax that I have to pay."

  Proper pricing

  From her three-year experience, Huang says some business rules can always be applied to different business sectors and one of them is a good pricing strategy. She saw some stall owners who couldn't sell their products simply because they didn't realize that prices should be varied according to the location of the stall.

  She explains that, for example, a pendant sold at the wholesale price of NT$100 per piece can later be sold at NT$200 in the Shihlin Night Market, which young families and students like to frequent. But the same type of pendant could be sold for NT$350 along Chunghsiao East Road, where young working people are the major customers.

  If you are making only NT$35,000 a month and feel tired of your nine-to-five office job, opening a stall might be a positive career move. However, if you are contemplating taking the plunge, take heed of the DGBAS' report and open a food, beverage or fresh meat stall, which are said to have the highest levels of profitability.
• Most Popular

  • 1

    Palmeiras hopes for club cup win

  • 2

    Magnitude 6.4 earthquake hits Hualien County

  • 3

    Hegseth outlines Chinese threat

  • 4

    Taiwan to see nine extended holidays in 2026

  • 5

    Pegatron ranks last in Greenpeace report