For most mainland-bound businesses, the plan has been to move low-cost production overseas while keeping sales, marketing, product design, and administration in Taiwan. Can such a system work in the long term? What happens when Mainland China upgrades its technology, banking, and marketing channels—will management and design functions follow the production side of the business?
TTMA chairman Arthur Wang (王雲平) is not worried, at least for the next decade. He stresses that Mainland China is the right site for low-end production. “Mainland China is now the world’s main production base for consumer products,” he says. “Price, delivery, and quality are now based on China levels.” He adds that although developing countries such as Sri Lanka, India, and Vietnam offer even cheaper wages, the infrastructure is too weak to compete with the mainland. “I don’t think China will be replaced in the short- or mid-term,” Wang says.
In fact, to make the most of the benefits offered by mainland operations, TTMA is now building a toy industrial park in Yuyao near the east coast port city of Ningbo. Wang expects to attract one hundred local and foreign toy makers to the park. Fifty Taiwan companies had joined as of late 1993. Besides its port, Ningbo also offers Taiwan toy makers access to well-developed plastics and molding industries.
Perhaps best of all, the project will allow industrial park members to lobby as a group. “Before, people went to the mainland individually and they had big problems and many headaches there,” Wang says. “If we go there as an alliance, then we have more power and we can address problems together, such as import and export operations, transportation, public relations.” By joining forces, Taiwan toy makers can also negotiate jointly for better rates when purchasing supplies, and better terms for selling within the mainland. Construction of the industrial park is slated to begin this April, with operations starting in 1995.
But even in such advanced mainland operations, Wang stresses that Taiwan will continue to play a vital role. He expects travel restrictions and limited access to international information to hinder mainland businesspeople for at least another ten years, forcing toy manufacturers to continue relying on Taiwan banking, technology, and inter national communications and marketing channels. “For sales, financial work, and R&D, I don’t think [the mainland] can avoid using us,” Wang says. “In thirty or fifty years, I don’t know. But for the next ten years, I don’t think they’ll have that kind of ability.”