Taiwan Weighs Lifting Ban on Chinese Product Ads
Taiwan's local authorities are weighing lifting a ban
on advertising Chinese products in the Taiwan domestic
market.
Even though Taiwan companies have been the leading investor
in China, until very recently, Taiwan factories were not
allowed to import products made in Chinese factories to
the Taiwan market. The Taiwan authorities, wary of their
hostile relationship with China, have been reluctant to
become more closely integrated with the Chinese market.
While the relationship on the government level has been
hostile, Taiwan investors have been active and are welcomed
in China, and it is estimated that there are 400,000 Taiwanese
living in Shanghai alone.
However, membership in the World Trade Organization,
which both China and Taiwan joined in 2002, requires that
Taiwan remove trade barriers to products made in China.
In addition, the Taiwan authorities have also faced increased
pressure from local Taiwan companies who want to sell
China-made products on the Taiwan market.
Taiwan has been in a period of weak economic growth for
the past three years. Consumer confidence and land prices
have shown steady decline as more businesses have headed
to China. The local advertising market has been stagnant.
In the past month, Taiwan has been hit hard by the SARS
crisis. The administration of Chen Shuibian, who is also
chairman of the Democratic Progressive Party (DPP), has
been pushing for China to negotiate with it as an equal
trade partner. The Chinese government, which sees this
as a plan to push for de facto recognition of Taiwan's
independence, has refused to do so.
During the nineties, after Taiwan introduced presidential
and local elections, and lifted the ban on establishment
of new media enterprises, a large number of new newspapers,
magazines and TV stations were founded. The result of
this has been a fragmented marketed in which very few
companies have sufficient ad revenues to cover costs.
Taiwan has a population of 23 million people.
If Taiwan's government does allow Chinese products to
advertise, as is likely to be the case, the beneficiaries
would be the local advertising and media players, as this
would release new spending into the local Taiwan market.
In the medium term, Chinese brands would also benefit
by gaining market share in the Taiwan market.
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