Chapter 11 : Commerce

Commercial Activities

        In our daily lives, we consume many different kinds of food and use goods and services. Many of these we cannot supply ourselves. We must buy them from others. When we buy and sell things and services, we are engaging in commerce or trade to satisfy our needs and wants. Transactions involving goods or services are included in commerce. Individuals or companies make a profit by providing services or exploiting commodity price differences. The transport, distribution and sale of goods as well as the provision of services belong to the tertiary sector of industry, also known as the service sector.

 

Domestic Commerce

        In the past few decades, the rapid industrial development of Taiwan has brought prosperity to society and increased purchasing power. Profits from wholesale and retail commerce have increased significantly. A wholesale merchant purchases large quantities of commodities from producers and resells them to retailers. Retailers then sell small amounts of commodities to consumers at higher unit prices. Traditionally, retailers specialized in a certain good or service. People bought clothes at one store and computers at another store. But recently, large general merchandising stores or warehouses have become more and more popular. Most general merchandising stores are located in the suburbs in places where there is convenient transportation. Consumers can buy almost anything at these stores. They can often get discounts by buying in bulk. Another recent trend is Internet retailing.

 

International Trade

        Commerce between countries is international trade. We divide international trade into import and export. Import means purchasing commodities from foreign countries. Export means selling domestic commodities to foreign countries. When the total value of imports is larger than exports, the country has a trade deficit; but when imports are less than exports, the country has a trade surplus. Since the 1970s, Taiwan has had a trade surplus. This surplus has allowed us to accumulate a considerable amount of foreign exchange. Foreign exchange means foreign money. If Taiwan had a trade deficit, this foreign exchange would slowly drain away.

    Taiwan imports commodities that it needs. Businesses in other countries compete to sell their products to Taiwan. Taiwan also exports commodities other countries need. Businesses in Taiwan compete with businesses all over the world. Taiwan’s total international trade is considerable. Taiwan has many trading partners. In fact, Taiwan’s success as a major trading nation is a big part of the economic miracle.

Different places have different resources. Different countries are good at producing different kinds of products. In other words, we all have to cooperate through trade to get all the resources and products we need. We rely on each other economically. The countries of the world are interdependent. Taiwan has limited natural resources. We have to import agricultural and industrial raw materials from all over the world if we wish to produce industrial commodities. But once we have produced those commodities, we can sell them for a profit on the international market. Taiwan’s imports mainly come from Japan and US. Most of Taiwan’s exports are shipped to the US, Hong Kong, and Japan. Therefore, we can say that Taiwan’s closest trading relationships are with the US, Japan, and Hong Kong.

 

The Future of Commerce

        The Asia-Pacific region has abundant natural resources and manpower. The people here are hard-working. This is the reason why this region has enjoyed the highest level of economic growth of all the regions of the world. Other regions are North America and Europe. There is a lot of trade within these regions. The Asia-Pacific region is expected to have the third largest volume of regional trade (following North America and Europe).

        Taiwan’s thriving domestic commerce and international trade ensure that Taiwan’s economy will also grow, at a very high rate indeed. Taiwan is sure to remain one of the major economic powers within the Asia Pacific trading bloc. To make sure that Taiwan industry can maintain its economic position, the government has a new policy, which is turning Taiwan into an “Asia-Pacific Regional Operations Center” (APROC). To achieve this goal, we need to build better public infrastructure to increase the efficiency and competitiveness of Taiwan industries.