Is Taiwan about to experience the ‘Hong Kong effect’? The resumption of regular scheduled flights to the mainland on 4 July has provided a much-needed fillip for Taiwan’s beleaguered marketing community, which is licking its lips at the prospect of an influx of moneyed tourists.
At least one observer, though, calls the development more of a “political show” than something that will bring real benefits to the island’s economy.
For Hong Kong, of course, this trend helped the city’s economy recover from a serious downturn in the wake of Sars.
If history repeats itself, Saatchi & Saatchi Taiwan CEO Christopher Fay points out that primary sectors like cosmetics, fashion, hotels, restaurants and shops will be the first to see “indirect benefits” from the resumption of flights.
“The Taiwan consumer economy has been hit hard in recent years,” says Fay. “Everyone is hopeful that an increase in tourists from the mainland will offer help to retailers and hoteliers in particular.”
Taiwan’s adspend dropped over six per cent in 2007, on the back of significant cutbacks from local advertisers.
Spend reached NT$45 billion (US$1.3 billion) compared to $48 billion one year earlier. Over the past four years, meanwhile, a number of MNC brands have slashed advertising spend.
“I do not think agencies in Taiwan will see a positive impact just because of the opening of the weekend charter flight,” claims Sean Chang, former managing director of OMD Taiwan.
“It will take a little time before we see direct flights from Monday to Sunday. As for the tourist benefit, the Government in Taiwan still highly regulates mainland tourist activities and stays in Taiwan. I do not think the benefit will be truly on the ground and will result in an investment boom for the Taiwan economy until they open up individual visas.”
The resumption of direct flights is also, of course, a boon to the large Taiwanese business community that currently lives in China. And MEC Taiwan managing director Vince Cheng expects that it will also stimulate more business investment by Taiwanese into the mainland.
Tsuyoshi Suganami, president of Media Palette Taiwan (Dentsu Media Group), added: “For agencies, the influence of direct flights will not only be on tourism accounts, but also on financial accounts such as Taiwanese local banks. They want to extend their business too.”
While airlines, credit cards and tourism agencies are all poised to reap benefits, not everyone is convinced that the development should be greeted with too much jubilation just yet. Given the volume of press coverage the flights have already attracted, Initiative Taiwan managing director Steve Kuo wonders if travel advertising will necessarily see a major boost.
“Taiwanese travellers are quite familiar with China, so clients may not be so keen to advertise,” he points out. “Travel agents are likely to promote the flights online all year round.”
Taiwanese carriers - China Airlines, Eva Air and Uni Air - continue to face unforgiving market conditions, driven by soaring fuel prices.
In this environment, it appears unlikely they will increase their marketing investment because of the onset of direct flights, particularly as they will have few problems filling their flights from the Taiwanese side.
In terms of mainland tourists, moreover, travelling costs to Taiwan remain considerably more expensive than those of Hong Kong or even Southeast Asia, and a complex visa application process is also likely to stymie many.
Live Issue... StrugglingTaiwan brands hope for the 'Hong Kong effect'
Despite the resumption of flights from China, Taiwanese brands may have to wait to feel the benefits.
