Why are computers, cell phones, LCD TV’s noticeably pricier in Taiwan, when compared to the US or even Canada?
I know that a lot of the large Taiwanese companies have the products manufactured in China. But with the cost of shipping and applicable duties, I would have thought Taiwan would have much more competitive prices due to it having so many technology production facilities. Even if they based the TWD retail price at 35:1 to the USD, its still higher. Now with the strengthening TWD, its just not worth buying stuff here (other than for warranty and support).
[quote=“Yazzy”]Why are computers, cell phones, LCD TV’s noticeably pricier in Taiwan, when compared to the US or even Canada?
I know that a lot of the large Taiwanese companies have the products manufactured in China. But with the cost of shipping and applicable duties, I would have thought Taiwan would have much more competitive prices due to it having so many technology production facilities. Even if they based the TWD retail price at 35:1 to the USD, its still higher. Now with the strengthening TWD, its just not worth buying stuff here (other than for warranty and support).
Or is it basically price fixing over here?[/quote]
That’s what I originally thought, but smaller population places like Hong Kong and Singapore have much more competitive prices. Maybe because they’re generally tax-free ports?
Some stuff is cheap in Taiwan. Electronic “components” in particular. I like that I can go to Guang Hua and get really cheap cables, screws, adapters, etc. If you build computers or mess around with audio, this can be a godsend.
Shipping within Taiwan is also much cheaper. I buy a lot of stuff through Yahoo and Ruten. Compared to eBay in the US, shipping in Taiwan is much more efficient for small stuff like CPUs, RAM, etc.
It also helps to buy local brands when possible. Sony, LG, etc. are way cheaper in the US. Asus, less of a difference. Every once in a while, one of these Taiwanese companies will put out a good product!
But yes, electronics here are quite pricey and I am regularly asking family members and friends to bring me back something that is way cheaper in the US or not available in Taiwan at all (even when the manufacturer is a Taiwanese company).
If you want to know more about pricing of Chinese goods you should read this book Poorly Made in China: An Insider’s Account of the Tactics Behind China’s Production Game .
[quote=“Yazzy”]Why are computers, cell phones, LCD TV’s noticeably pricier in Taiwan, when compared to the US or even Canada?
I know that a lot of the large Taiwanese companies have the products manufactured in China. But with the cost of shipping and applicable duties, I would have thought Taiwan would have much more competitive prices due to it having so many technology production facilities. Even if they based the TWD retail price at 35:1 to the USD, its still higher. Now with the strengthening TWD, its just not worth buying stuff here (other than for warranty and support).
Or is it basically price fixing over here?[/quote]
The US is a super efficient retail machine, having pretty much invented the modern mail order business over 100 years ago. Taiwan is an island of 22 million people so it doesn’t have the domestic scale, it’s also fairly isolated politically and economically so it plays by it’s own rules. Some multinationals have been able to do well in Taiwan but you will notice not many in reality. Any company that succeeds is usually in partnership with Taiwanese companies e.g. 7-11, Mister Donut, Starbucks, Nissan/Ford/Hyundai, Sogo and Shingong Mitsukoshi etc. In oil you’ve got Formosa Oil (private) and China Oil (public) Then you’ll notice the airline sector is also protected with China Airlines (public) and EVA (private) dominating cross strait routes. Banking is dominated by local companies aswell. It is a fairly corrupt country in a way and that may feed into a lack of competition (although there are 20- 30 something banks but they all charge 17 NTD per transaction and 200-300 ntd for international transfer and roughly the same amount of interest on credit cards). But the government subsidises many basic living costs unlike the US or Canada etc.
Still most things in Taiwan are still pretty cheap and economic (high speed rail travel/domestic trael for example), it’s just with certain things like air travel that you can get price gouged. You’ve also got to compare like with like, while it may be possible to get fast food cheaper in the US or mass produced milk or eggs you won’t get fresh food cheaper there, fresh food is cheaper here. I think Taiwanese have a finely tuned sense of things they expect the government to take care…if gas or electricity or food starts getting expensive no government will last long around here!
Finally for electronics, most are produced and assembled in China now, they price by unit orders of 100,000s to millions, no way Taiwanese retailers can compete with large volume orders of single items, at least with the brand stuff that has a market in big Western markets.
Besides Taiwanese are used to paying more, something not lost on merchants!!
Taiwan used to make everything in the world. Now most are made by (a lot of them Taiwanese) companies in China.
Taiwan used to have Export Processing Zones that made products for the world but were not allowed to be sold on the island itself (stupid policy). Taiwanese never got to buy tons of excellent products that were all exported.
It is not only about per unit cost. Often times companies will bid low on a contract to produce a product if they find that producing the product would have a strategic advantage. Thus Chinese companies in the past produced American products for next to nothing to gain technical information or product details. The information was used to copy the product and sell the product in what used to be called 2nd World countries. I am not sure how one refers to second world countries today.
This is very true, there are quite a few reasons why businesses bid for business that they don’t actually make a profit on, even where I work, we have some substantial loss-making accounts for many many years, nobody wants to face the music and drop their business, it will impact the revenue report negatively.
-Top line revenue (not profit), the shareholders/investors like to see revenue growth every year (rightly or wrongly).
-Chance to open channels, learn business secrets etc (as mentioned above)
-Executives getting bonus and pay related to revenue growth
-Chance to skim money off large value contracts
-Keep factories and business turning over
I think second world countries are emerging markets, Taiwan is still classified as such I believe. It’s a bogus idea anyway, with globalisation the differences within countries can be greater than differences between countries AND so called first world countries in Europe and North America have massive debts they need to contend with.
[quote=“tommy525”]Besides Taiwanese are used to paying more, something not lost on merchants!!
Taiwan used to make everything in the world. Now most are made by (a lot of them Taiwanese) companies in China.
Taiwan used to have Export Processing Zones that made products for the world but were not allowed to be sold on the island itself (stupid policy). Taiwanese never got to buy tons of excellent products that were all exported.[/quote]
Yes, culture and perception of value and service and willingness to pay is important. For instance a warranty in Taiwan is just not going to be seen as solid as a warranty in the US (rightly or wrongly). Also there are many examples of small companies suddenly closing and taking your money or cheating you, in actuality it may be the same probability as the West but the media here sure make a big deal everytime a gym closes down and owes people money etc etc. Taiwanese are quite conservative when it comes to some things. For instance air travel, many many Taiwanese will not fly a budget airline to this day due to perceptions that they are unsafe (heck many won’t even fly China Airlines). Also, many Taiwanese won’t travel alone, again lack of confidence and feelings of insecurity. This is where cultural attitudes are very important to understand if you want to operate business in different markets. It doesn’t mean these attitudes can’t change but you could fighting an uphill battle or get the timing wrong.
I think they still have those export processing zone, Taoyuan airport zone will be/is one right?
I think as Taiwan and China integrate economically that will also help Taiwanese a lot as they can leverage the size of the Chinese market to get the product cheaper and cut out the middle-man or introduce more competition in the market. A similar phenomenon occurs in the EU, for instance in Ireland a lot of people buy products from UK websites due to the relative cheapness there. The fear of ECFA is really exaggerated, on the whole (discounting dodgy food) it should be a good thing as Taiwanese can get stuff that is manufactured or sold in China cheaper and Taiwanese products are very popular on the mainland so it should be win-win in general.
