Agreement with China can help Taiwan export services: economist

Taipei, June 23 (CNA) Taiwan's agreement with China on the service industry is good news for Taiwan as it will serve as a facilitator in the island's efforts to export its services, a prominent economist said Sunday. The latest agreement, signed June 21 in Shanghai, could be helpful as Taiwan moves in that direction, according to Wang Jiann-Chyuan, vice president of the Chung-Hua Institution for Economic Research (CIER). Export is the only engine left that Taiwan can depend on for economic growth when the country's manufacturing industry has hit a bottleneck, Wang told CNA. Taiwan's manufacturing industry mainly produces semi-finished goods such as components, which means the companies do not have a high profit margin and they are replaceable, he explained. What Taiwan needs to think about, therefore, is whether it has the ability to be a service exporter and how to achieve that purpose through concerted efforts, he said. The agreement with China signed on Friday means a window was being opened even though Taiwan businesses trying to sell their services on the mainland will run into challenges, given the unwritten rules there, he added. The new accord will impact domestic businesses because, unlike the Economic Cooperation Framework Agreement (ECFA) signed in 2010, it is a two-way and reciprocal agreement, said Wang. It is impossible for Taiwan to export its services while keeping its market closed to service companies of foreign countries, but the government will try to lower the impact by opening up only businesses in which Taiwanese companies have a competitive edge, he said. The service industry accounts for up to 70 percent of Taiwan's gross domestic product. Wang said that Taiwan should be more confident because most service industry companies in China cannot compete with their Taiwanese counterparts, adding that Taiwanese companies cannot possibly cope with international competition if they are fearful of challenges posed by the Chinese. Taking the much-talked-about business of hairstyling as an example, Wang said that Chinese stylists offer different hairstyles in a different attitude so they and their Taiwan competitors will likely cater to different groups of customers. He said, however, that the government should listen to people working in business and perhaps offer to assist them in their effort to differentiate in order to cope with the impact of opening up the domestic market. (By Lin Hui-chun and Jay Chen)