Taiwan turns to China in plight to boost top brands

Taiwan's top brands, worth more than $50 billion in combined annual sales, are turning to China to boost their name recognition as traditional low-profile contract work struggles in overseas markets. Consumers in China, already Taiwan's top export destination, look up to made-in-Taiwan brands while shoppers elsewhere may associate the same names with cheap or poor-quality merchandise based largely on a reputation from 20 years ago.
Chinese-language names of major Taiwan firms such as notebook PC maker Acer and instant noodle giant Uni-President also catch on easily among hundreds of millions of consumers in China, said Chao Yuen-chuan, president of the government-sponsored Taiwan External Trade Development Council. China considers self-ruled Taiwan a breakaway province, eventually to be unified with the mainland, by force if necessary, but trade and business ties are blossoming.
"It's easier to go into a country where there's a similar culture and everyone understands one another," Don Schultz, marketing professor at North-western University in the United States, told a conference in Taipei. A trade deal that lowers import tariffs on 539 items bound for China and 267 headed the other way will let Taiwan brands sell at lower prices, a advantage impossible for Taiwan firms in other major world markets.
The economic co-operation framework agreement (ECFA) also stands to make Taiwan brands more attractive to foreign partners that want to reach Chinese consumers without establishing themselves in China. "As China moves much faster than some have expected from a manufacturing to a consumer economy, lowered costs generated by lower tariffs could drive brand establishment opportunities," said Martin de Jonge, marketing manager with TNS Research International in Taipei.
Without stronger overseas brand recognition, world economic slumps will continue to hurt the many Taiwan firms that still rely largely on contract work, the trade council fears. Even in better times, original equipment manufacturer (OEM) contract profit margins that have been the lifeblood of Taiwan's numerous but relatively small-scale firms are shrinking as rival contractors multiply in cheaper developing countries.