beyondbrics

How many Chinese tourists can you fit in a Taiwanese taxi? The answer, apparently, is no more than five before someone calls the cops. Taiwan police last week chased a taxi for 3km on a highway to stop an apparent kidnapping, after a motorist saw a hand waving from the taxi’s half-open trunk.

Fortunately, it turned out not to be Taiwan’s notorious gangsters at work, but only thrifty Chinese tourists who thought getting two cabs for six people was too expensive.

Such a scene would not have been possible just a month ago, before Taiwan began allowing individual Chinese tourists to visit the island at the end of June. The liberalisation had been awaited since the political relationship between China and Taiwan began improving three years ago and has been seen as one of the key ways in which Taiwan is reaping economic gains from better ties with China.

For most investors and economists, then, the question isn’t about Chinese tourists’ choice of transport but rather how much spending they could bring to help boost Taiwan’s economy. This question is likely to become increasingly important as Taiwan heads into presidential elections early next year, and as exports are expected to slow in the second half of this year.

The scheme is currently limited to a daily quota of just 500 people but is expected to be gradually expanded, as was the case with earlier ‘Free Individual Travel’ schemes for Hong Kong and Macao.

It comes at a time when general outbound tourism from China is booming. According to figures from China’s ministry of public security, Chinese residents made 32.2m overseas trips in the first half of this year, a fifth more than a year ago.

Analysts at Macquarie point out that this is partly due to rising household disposable income in China, and partly to relaxations of restrictions on Chinese overseas travels such as Taiwan’s individual travel scheme.

It is not just visits either.

“A stronger Renminbi and increasingly convenient transnational payment methods (e.g. UnionPay cards) have also made overseas travels and associated purchasing easier,” the analysts wrote.

To take Hong Kong as an example, from 2006 to 2010 Chinese tourists’ spending grew 22 per cent annually, compared with a 13 per cent annual growth rate for the number of visitors.

Should Chinese tourism to Taiwan surge as it had with Hong Kong and Macau, the island could hope to reap secondary benefits as well. In an interview with Want China Times, Pansy Ho, daughter of Macao gaming mogul Stanley Ho and chairwoman of MGM China, said she was interested in investing in Taiwan, although she has no concrete plans at the moment.

“Now is a good time . . . I can function as a bridge between Taiwan, Hong Kong and Macao, and assist some other companies who are also interested in either investing in Taiwan or forming new strategic partnerships with Taiwanese companies,” she said.

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