Firms slowing down but optimistic in Taiwan

By Annie Huang

KAOHSIUNG, Taiwan (AP): The Asian crisis never threw Taiwan into recession.

The key to the island's success is a backbone of small and medium size businesses that are big enough to keep the economy sound but small and nimble enough to change with the times.

Take Kwang Yang Motor Co., a motorcycle manufacturer that had just finished a US$20 million plant in Indonesia last May when riots broke out, forcing the company to put off operations indefinitely. At the same time, revenues at its seven factories in mainland China were down 20 percent.

Kwang Yang bounced back by exploiting the drop in value of the Taiwanese dollar to double sales in Europe.

"When the market is down, we try to outdoor competitors with better marketing," sales manager Su Kuo-chang said.

Kaohsiung is the hub of hundreds of fastener makers and several steel mills that helped win Taiwan the nickname "the kingdom of fasteners."

Despite a slow Asian market, Taiwan's fastener exports grew 10 percent last year to 1.1 million tons, about 20 percent of world output.

Anchor Fasteners Industrial Co., which makes custom-designed goods, has intensified its efforts to develop better and higher- end products to invade the Japanese market.

Japan's "production costs are still much higher than ours," said James Lee, Anchor's vice president.

Still, Taiwan's total exports fell 9.4 percent last year to $110.6 billion, the biggest drop in 43 years. And bad loans held by banks soared and tightened bank credit has led to a string of corporate failures.

But analysts say the economy remains sound.

"Taiwanese have learned to do belt-tightening well," said Johnny Ni, director of the Small and Medium Business Administration. "In hard times, they cut costs, develop new products and look for new markets to prepare for the better times to come."