THE PERSONAL CONSEQUENCES OF GLOBALIZATION IN TAIWAN 1

Yung-mei Tsai Texas Tech University Mei-lin Lee Asia University Temu Wang National Chung Cheng University

Accelerated globalization in Taiwan has affected the work, jobs, and lives of people since the 1970s. Examples reported here are from in-depth interviews with eight principal income earners selected from a sample of 1,000 households during 2000. Among them were more losers than winners. Those hardest hit were people whose work or business was in the informal, traditional economic sectors. (Globalization, Taiwan, personal economic consequences)

This article describes how internal economic growth and external globalization forces have jointly affected the lives of ordinary people in Taiwan. Toward the end of the last millennium, Taiwan faced domestic political and economic turbulence. The major economic problems centered on the outflow of capital and industries, mostly to mainland China. The total amount of Taiwans FDI (Foreign Direct Investment) in China in 2004 ($3.18 billion) was far less than that of South Korea, Japan, and the U.S. (US-China Business Council 2004), but a perception of a massive exodus of capital and industry to China shook consumer and investor confidence. The Taiwan Stock Market Index dropped to nearly half of its valuation in one year in 2001, from 7847 to 4907, although it has since recovered to a high of 6842 in 2006 (Taiwan Stock Exchange). Unstable political conditions involving the transfer of power from the ruling party, the Kuomintang (KMT), to an opposition party added to a heightened sense of anxiety. All these conditions are part of the context of rapid globalization affecting Taiwan. As a nation with scarce natural resources, the Taiwanese economy depends a great deal on international trade. The labor-intensive textile industries that brought foreign currency into Taiwan in the 1970s and 1980s was followed in the 1990s by capital-intensive electronics industries. These export industries were highly successful (Derber 2003) but also brought problems for subsequent development. Success in economic development created a rising standard of living. At the same time, labor costs concomitantly increased for four successive

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decades. The increasing cost of labor put many employers at a disadvantage in the world market for their products. One consequence of the political liberalization in the late 1980s was an increasing demand for a safer and cleaner environment. Today, the Taiwanese governments standards for environmental protection are said to be higher than those of China, Korea, and Japan (Liberty Times on the Net). To meet government environmental safety regulations, industries, especially those whose products involve the use of chemicals that generate toxic waste, face additional operating costs. The affluence brought about by economic development also created a generation of young people who are disinclined to work as hard as their parents. Population growth has accelerated urban and suburban development. Land for development thereby becomes increasingly scarce, and the demand for limited land increases the cost of building factories and office space. Last but not least, increasing demands for energy for homes and industry escalate production costs, especially with industries that use large amounts of energy. These problems are primarily domestic. Other problems are external or supranational in origin, and are best considered under the general concept of globalization. Unfortunately, globalization has become a very popular academic term in recent years, which has resulted in vagueness and imprecision. In this article it refers to an accelerated process in recent years (Polanyi 1957, Mittelman 2000). During the past two decades, globalizations rapid development increased with computer-mediated communication technology, which made the digitalization of economy possible (Tapscott 1996). Rapid globalization has also increased with the establishment of regional and international express transports, such as Federal Express and United Parcel Service. These technologies made the global spatial restructuring of labor and production a reality, and generated a new and intense competition (Castells 2000 [1996], Sassen 1999, Mittelman 2000). This restructuring has created widespread dislocations, but it also has helped open new opportunities for many previously impoverished regions of the world and, as in Taiwan, raised the standard of living for many. As Taiwans economy became a part of the globalization process, its industries had to compete ever more intensely with those elsewhere in the world. Taiwanese industrialists increasingly had to wrestle with the cost of domestic labor, environmental safety and health constraints, workforce attitudes, increased energy needs, and escalating land values, all of which prompted them to relocate their factories and invest capital in foreign countries for cheaper labor, lower environmental costs, more docile workers, and cheaper energy sources. Workers whose factories were relocated lost their jobs. The observations reported here are part of a two-year study on income and occupational dynamics of the principal income earners of 1,000 randomly selected households from Chia-yi City and Chia-yi County in southwest Taiwan.

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Chia-yi County is one of the most heterogeneous and also one of the most impoverished counties in Taiwan. This article presents the results of in-depth interviews with eight respondents. The results of the survey, currently still going on, will be reported elsewhere. The three authors conducted interviews during the summer of 2000 with respondents chosen to cover the occupational categories of employers, employees of private industries, the self-employed, and those who worked in the public sector. They were selected after a preliminary analysis of the data determined them to be representative of the categories. In their 40s and 50s, these middle-age respondents are well suited for the research as they had much work experience, were years away from retirement, and were assumed to be concerned about their future. TAIWANESE LIVES The Oyster Fisherman Mr. Tsai, in his early 50s, was a middleman in the oyster business and had been an oyster fisherman all his life. His father, grandfather, and greatgrandfather were all in the oyster business, either as wholesalers, middlemen, or fishermen. Oyster fishing is the most important industry in Tung-shih village, on the coast of Chia-yi County. Piles of oyster shells abound around the village. The young, elderly, and many women work next to the oyster piles, stringing shells on long plastic lines. Oyster fishermen plant these on the shallow ocean bed for young oysters to occupy. Mr. Tsai retired recently because oyster fishing had sharply declined following the establishment of a petrochemical plant in a nearby town several years ago. The villagers believe that chemicals discharged from this plant polluted the coastal waters and diminished marine life there. Inviting the petrochemical plant to locate there was part of an effort of many county commissioners to attract businesses and capital investment to the area. Only three oyster fishing businesses remain in the village, and Mr. Tsais wife strings oyster shells for one of them to make a little money. Mr. Tsai explained that oysters are still consumed locally but production and competition have become global in scope.
W e are not producing enough oysters from our sea today. W e imported more than half of what we sold from New Zealand. Restaurants in Taiwan are still buying from us because we have been doing that for many years. W e know each other and can trust each other. But things may change. They may buy directly from New Zealand companies in the future.

Mr. Tsai said that the government is trading the fishermens livelihood for chemical plants, and mentioned that several formerly prosperous fishing villages

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on Taiwans west coast are in deep trouble. He dreads the time when another petrochemical facility under construction at a nearby village is completed and starts operating, as this will cause the entire areas marine life to vanish. Since many of the villagers know no other trade, they will be forced to buy oysters from other countries. China has become one of the major oyster exporters for Taiwanese customers. The problem of doing business with China, Mr. Tsai said, is that Taiwan does not have direct trade relations with China, so oysters from China must be imported through a third country. This increases costs, and sometimes an entire shipment can be ruined due to transport delay. Furthermore, Taiwan cannot compete with China because China is much bigger, and has fewer legal restrictions. The fishermen there use artificial techniques to produce more and larger oysters. Tung-shih village oyster fishermen know no other way of making a living. Their life and work in the oyster business is hard but they manage. Mr. Tsai wants the Taiwan government to help the villagers produce more of their own oysters and to open direct trade between Taiwan and China. He and many of his cohorts never went to school, but they are aware of what is happening to them. They do not know the term globalization, but they do know that with modern transportation technologies, oysters can be produced almost anywhere in the world. They also know that the petrochemical plants employing neighboring villagers are taking away their livelihood and their future. A Textile Factory Foreman A foreman in a textile factory in Yi-tzu village, Mr. Ong had worked for this factory for the past 20 years. He looks forward to retiring in five years, when he will be eligible for a pension. But he fears that some of his fellow workers, many of them in their seventeenth or eighteenth year working for the factory, would lose their eligibility for a pension if the factory were soon to close. Mr. Ong said that the boss is a very nice person who moved to Taiwan from Shanghai in 1949, after the Communist Revolution, but that he could be forced to close the plant. The wages in Taiwan are getting too high for him to compete with other countries. In a hedge against the future, the boss recently returned to China to set up several textile plants there. The labor cost in China is about one-tenth that of Taiwan (Liberty Times on the Net). Mr. Ong did not blame his boss for considering closing the plant. Instead, he blamed the labor laws that require workers to be employed by the same company for 25 years in order to receive pension benefits. Mr. Ong does not know what his co-workers would do without pensions. They are his friends and neighbors, and some are his relatives. The plight of Mr. Ong and the villagers who work in the textile factory is a consequence of Taiwans industrial dynamics during the past four decades.

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Labor-intensive jobs, as in this factory, were the major factor from the 1960s to the early 1980s which helped Taiwan become one of the four little dragons in Asia. In the last two decades, however, Taiwan has changed from a laborintensive to a capital-intensive and technology-intensive economy (Chang and Tsai 2002). It is only a matter of time before the factory where Mr. Ong works will close and more than 200 of its workers dismissed without a pension. The entire village will be affected. At one time, textile industries in Taiwan were producing 10 percent of the national GDP (Liberty Times on the Net), but a few years ago they began to experience a sharp downturn. The competition from Southeast Asian nations and China, all with much lower labor costs, was a major factor. Taiwanese textile industries cannot compete with countries such as Japan in producing upscale products. The owners of textile plants in Taiwan realize that to compete in the manufacturing of garments sold in Wal-Mart and K-Mart, they need to bring in cheap labor from other countries, such as Indonesia. They must also raise the productivity of their workers, improve management skills, automate their production processes, and have government assistance with long-term low-interest loans and a change in labor policies (Liberty Times on the Net). If the Taiwan government makes these changes, what will happen to people like Mr. Ong and his fellow workers? But if the changes do not occur and the factory moves to China, as Mr. Ong thinks it will, what will become of the people who do not know the term globalization but certainly know its implications? A Flower Farmer Mr. Chang has a small plot of land on the fringe of Chia-yi City. There he built a two-story house for his parents after his father retired and took ownership of the family farm, growing flowers. It is a small business with little capital. He works long hours, and when the flowers are ready he must harvest them within three days. His business has become increasingly uncertain since the florists in Taipei began to import flowers from elsewhere around the world. Mr. Chang regrets that his floral farm will have to end when he retires. Eventually, he will sell his land and it will be transformed by developers into apartment complexes or small high-tech factories. It saddens him to be the last in his familys business. None of his children would consider a career doing physical labor. However, Mr. Chang takes pride in his children being well educated and having professions. Like his father and grandfather, Mr. Chang learned horticulture by working alongside his parents. They worked hard but earned enough for a decent living. Things changed when shipping flowers around the world could be done expeditiously and inexpensively, and the floral industry became global. Using the

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internet, many of Mr. Changs clients buy products where the prices are lowest, invest their money where it will generate the highest returns, and make rational economic changes at the first sign of advantage or trouble. Mr. Chang would not have believed, years ago, that one day he would be competing with floral farmers in the Netherlands. Yet, Mr. Chang is more fortunate than other self-employed persons because he has some land where he can grow produce. Other respondents in the survey must rely solely on their labor to make a living. The Seamstress and Her Husband Mrs. Chens small tailor shop for custom-made clothes lies hidden amid hundreds of other small shops and food stalls selling traditional dishes. These shops and stalls fill the narrow streets branching away from the avenues of highrise buildings, modern businesses, and condominiums in Chia-yi City. The contrast is stark. Street vendors in Taiwan began as immigrants from China over three hundred years ago. Most of them, like Mrs. Chen and petty farmers like Mr. Chang, have been doing small-scale trade in a traditional economy that persists. But changes are on the horizon. The future can be seen on the main streets, where department stores sell merchandise from all over the world and restaurants serve international cuisine. The latter include a McDonalds, where the children of newly affluent parents insist on being taken. Despite its size, Mrs. Chen said she had run a successful shop for many years based on a group of faithful clients. This encouraged Mr. Chen to quit his hightech sales job and join his wife as a self-taught designer, even though he had been making good money. He changed jobs because he did not want the stress that came with his former work, which required traveling and being away from his wife, family, neighbors, and friends. He wanted a life with a genuine sense of friendship and community. Mr. and Mrs. Chen love their work and are much happier being able to spend more time together. Business has dropped in the last few years. Customers still come, but a lot less frequently, and while they used to order a half-dozen dresses, now they order one or two. The Chens are sure the business will survive because their customers are their friends. Their business is personal, flexible, and client-oriented, and every transaction is a renewal and a strengthening of friendship. Traditional tailor shops are being threatened by the mega-department stores featuring international designers clothing. Despite the pressure of such global forces, it appears that local traditional commerce will survive for as long as people continue their previous way of life. But that may not last long. It is clear that as the new generation grows up with exposure to the world through television with its hundreds of channels from all over the world, the niches for traditional businesses will dry up.2

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The Chens business is hampered by the status symbols that come with renowned designer labels that have entered Taiwan. In response, Mrs. Chen tries to keep up with changing fashions by reading clothing design magazines from abroad. But status-conscious affluent clients want to wear Ann Taylor designer clothes regardless of the price, and the masses purchase their clothing made in China from the street vendors or the discount chain-stores that have sprung up in the suburbs. This McDonaldization of society (Ritzer 2000) is killing traditional businesses in Taiwan. The Chens, hard working and in their early 40s, are aware of how globalization affects their business and consequently their lives. As the government envisions a future Taiwan based on high-tech industries and high finance, workers in the traditional economic sector and small-business people whose pension is their personal savings will have a hard time surviving. An Animal-Feed Wholesaler A wholesaler of animal feed, Mr. Tsai of Chia-yi City hopes someday to establish his business in China. Hindering this plan and making his business difficult is the problem of direct transportation between Taiwan and China. He now uses Hong Kong, Vietnam, and even Thailand as transfer points for his shipments, which creates additional costs and risks. Mr. Tsais business had been dwindling because farmers requiring feed moved to China or Southeast Asian countries, or simply folded. Ranching and animal husbandry are labor-intensive, high-risk, low-margin businesses. They also require large parcels of land. In Taiwan, where land is scarce and expensive, husbandry faces a dead end. It is cheaper to import higher quality beef from Australia and pork from China or Vietnam. Mr. Tsais only realistic option is to establish his business in China or Vietnam. But small investors like him, whose businesses are low-tech, are not important to China, which is more interested in high-tech industries and capitalintensive investments, or those who will establish factories with expansive infrastructure. Thus the government is promoting high-tech development and high finance for Taiwans future. On an island that has relatively few natural resources, and a constantly threatening China across the Formosa Strait, development of human capital is the alternative the Taiwanese government has chosen. This strategy raises the question of what will become of those with traditional economic pursuits, who may be marginalized as irrelevant and excluded from the rewards of a high-finance economy (Beck 2000b, Castells 2000 [1996], Burawoy et al. 2000).3

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An Auto Repair Shop Owner Mr. Kang and four of his brothers followed their father in the automotive repair business. After finishing his military service at age 21, Mr. Kang went to Taipei to learn computerized wheel-balancing techniques from his fathers friend. Today he owns a wheel-balancing and tire repair shop located at a busy provincial highway. The shop also sells new tires from all over the world. With only several employees, the shop is small, but business is good. It is one of the few garages in Chia-yi City that uses computerized wheel-balancing machines and mechanized tire-repair procedures. Mr. Kang is a member of an automotive business association that provides information on new equipment, business opportunities, and world news of the automotive business. The shop services commercial vehicles, mostly trucks and buses, but also autos from car dealerships. Mr Kangs customers, especially drivers of large vehicles, prefer his service because his shop does jobs much faster than those still using manual procedures. He said time running on the road is critical for bus and truck owners, and added that his competitors must mechanize and computerize their operations or go out of business. About 90 percent of his customers are regulars. A lot of his trade is from car dealerships because, as land is expensive, dealerships are small and each is likely to have only one or two franchises. This is not enough to generate a volume of business sufficient to warrant having an expensive wheel-balancing machine and a qualified technician. Mr. Kang said that without his wifes help he could not have been successful. She cares for the home and does his books in the office. The business, as he said, is highly competitive and requires keeping the shop open on Sundays and responding quickly to those needing emergency service. The business is thriving in part because in Taiwan today, ownership of an automobile is no longer a luxury but a necessity as well as a status symbol. Although his business is technologically modern, it is run in a traditional way; e.g., employees eat lunch together in the shop and are treated like family members, with the owner as a father figure (Redding 1993). All the technicians are either friends or the children of friends. It is unlikely that Mr. Kangs only son, in graduate school studying electrical engineering, will take over the business. An Auto-Parts Shop Owner A devoted Buddhist and family man, Mr. Lin has had a small auto-parts shop for 20 years. He and his wife believe that his wifes miraculous recovery from a coma was Buddhas blessing for all the good deeds they have done for their customers and their neighbors. Mr. Lin studies Buddhist teachings every day. His philosophy, he says, is to satisfy his customers needs and not to make a large

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profit. His shop and home are typical of small businesses in Taiwan where the shop is on the first floor and the second floor is a residence. The shops inventory consists of thousands of parts and Mr. Lin knows exactly where each is. His wife helped him run the business before she was hospitalized for an extended time. His daughter, after graduating college, decided to stay home to help in the shop. The family hopes that she might soon attract a young man, marry, and that the husband could, as a family member, help run the business. When asked if another auto-parts store located near his shop might be a threat to his business, Mr. Lin replied, not at all. He thinks that it will bring more business to both of them, and believes that as long as he works hard, serves his customers well, and is not greedy, he will survive. The shop is typical of the general way of doing business in Taiwan. It is based on trust, familiarity, and personal social networks. It is doubtful that this traditional way of doing business, especially in the auto-parts trade which is changing almost daily, will remain viable in the face of the more efficient, impersonal, mass-consumption ways of the international chain stores, such as Wal-Mart. A Fruit Farmer After completing his military service, Mr. Kuo took over the family farm. Following Chinese tradition as the eldest son, Mr. Kuo felt obliged to maintain the farm. It was not large enough to support more than one family, so his younger siblings left to find work in various cities in Taiwan. One went to China to start his own business. Mr. Kuo and his neighbors harvest their crops at different times and help each other harvest by bartering and exchanging work hours. They do not make precise calculations about these exchanges because they are friends and do whatever is needed for each other. Mr. Kuo is doing well. His large, modern brick house of two stories is adjacent to his warehouse. When the crops are harvested with help from neighbors and temporary workers, most of them village women, they are brought to the warehouse, packaged by machine, and trucked away. Some of Mr. Kuos orange trees come from foreign countries, primarily the U.S. Most of his crop is exported, but some goes to restaurants in Taiwan. All sales are through middlemen. The Farmers Association provides information about improved technologies and world market conditions. They advise on what, when, and how much to plant. Despite this help, every year is a gamble. Some crops do well in the market and others do not, but overall risks and rewards even out. Mr. Kuos farm, though small by Western standards, is relatively large in Taiwan. Its size allows him to plant different types of oranges to reduce the risk of uncertain market conditions.

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This farming village is located in the foothills, away from highways, factories, and petrochemical plants. It is near the forest and surrounded by fruit and tea farms. However, even with its relative isolation, the village feels the effects of globalization. It competes with citrus farmers in Florida, Texas, Australia, New Zealand, and elsewhere. Its livelihood depends on markets in Singapore, Hong Kong, and Southeast Asian countries. For the moment, it appears to be in good shape. CONCLUSION Taiwan, along with China, recently joined the World Trade Organization, and for many businessmen like Mr. Tsai, who is trying to establish a feed business in China, this is a welcome change. To politicians whose mission is to make Taiwan globally visible, it is a major achievement. Those in the high technology fields and those in the import-export businesses have benefitted from globalization, but for many in the more traditional economic sectors, globalization has reduced their income or terminated their livelihood (cf. Aristide 2000, Friedman 2000). Many of our respondents perceive the economy as poor in recent years and cannot understand why the news media portray Taiwans economy as healthy. The examples in this article for whom globalization has been detrimental include the unemployed tailor, the workers in the textile factory who may lose their pensions, Mr. and Mrs. Chen, the custom-tailor store owners, and the entire oyster fishing village of Tung-shih. The effects of globalization for Taiwan are a mixed blessing. On the one hand, Taiwan has changed to a high-tech, capital-intensive economy to be competitive in regional and international markets. More than half its high school graduates enter college, and the number of graduate schools in all fields is increasing rapidly. On the other hand, there are those who were too late to enter college and be trained for the knowledge economy of the 21st century. Polarization and income inequality are part of the cost of this rapid transformation.
NOTES 1. An earlier version of this paper was presented at the American Sociological Association 99 th Annual Meeting in Anaheim, California, August 1821, 2001. This paper is part of a research project funded by the Chiang Ching-kuo Foundation for International Scholarly Exchange and the National Science Council of the Republic of China in Taiwan. W e wish to thank Dr. Phil Dennis of Texas Tech University for his very helpful comments and editorial assistance. 2. Dunkin Donuts, recently established in Taipei, is doing a thriving business, and Japans Mister Donut has been in Taiwan since 2004.

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3. An unemployed tailor, not the Mr. Chen depicted previously, provides an ominous answer to this question. He had been doing alterations but there is no need for this line of work anymore. The mass-produced clothing, mainly from China, Indonesia, and even Costa Rica, destroyed his business. Mr. Chen had to sell his house and is living on the proceeds of the sale. He gets some help and handouts from neighbors, especially from Mr. Tsai from time to time. He said that he has been eating rice with salty water. In his 40s, he is too old to get a new skill, and has all but given up looking for work. BIBLIOGRAPHY Aristide, J-B., and L. Flynn (ed.). 2000. Eyes of the Heart: Seeking a Path for the Poor in the Age of Globalization. Common Courage Press. Beck, U. 2000a. W hat is Globalization? Trans. P. Camiller. Polity Press. 2000b. The Brave New W orld of W ork. Polity Press. Burawoy, M., et al.. 2000. Global Ethnography, Forces, Connections, and Imaginations in a Postmodern W orld. University of California Press. Castells, M. 2000 (1996). The Rise of the Network Society. The Information Age: Economy, Society, and Culture, Vol. 1. Blackwell Publishing. Chang, Y., and Y. Tsai. 2002. The Impacts of Information Age on Urban Development and Transformation in Taiwan. American Journal of Chinese Studies 9:179201. Derber, C. 2003. People before Profit: The New Globalization in an Age of Terror, Big M oney, and Economic Crisis. Picador. Friedman, T. L. 2000. The Lexus and the Oliver Tree: Understanding Globalization. Anchor Books. Lee, M., Y. Tsai, and T. W ang. 2000. Market, Industries, Firms, Occupational Dynamics, and Earnings: A Case Study from Taiwan. Paper presented at the annual meeting of the Eastern Sociological Society. Liberty Times on the Net. 2000. Special Series on Taiwanese Industries I, II, and III. October. http://www.libertytimes.com.tw/. Mittelman, J. H. 2000. The Globalization Syndrome: Transformation and Resistance. Princeton University Press. Polanyi, K. 1957. The Great Transformation: The Political and Economic Origins of Our Times. Beacon Press. Redding, S. G. 1993. The Spirit of Chinese Capitalism. W alter de Gruyter. Ritzer, G. 2000. The McDonaldization of Society. Pine Forge. Sassen, S. 1999. Globalization and Its Discontents: Essays on the New M obility of People and Money. New Press. Taiwan Stock Exchange. http://www.tse.com.tw/en/. Tapscott, D. 1996. The Digital Economy. McGraw-Hill. US-China Business Council. 2004. http://www.uschina.org/statistics/fdi_cumulative.html.