Friday, October 8, 2010

WHY BELIZE DOES NOT HAVE MORE MANUFACTURING INVESTORS?

WHY BELIZE DOES NOT HAVE MORE TAIWANESE INVESTORS?
Saw the new Chinese Ambassador on tv the other day, in a CHANNEL 5 TV personal appearance. He is a very nice man. Sort of a desk man, kind of wimpy, but sharp in the mind and always smiling. I liked him instantly. What was so impressive was his sincerity and well meaning intention to do things to help Belize get on it´s economic feet. Unlike CANADA our Commonwealth cousin to the North on this American continent, there is no foreign aid program in this country, from anywhere else in the world, that can rival the intense interest and devotion to helping Belize develop, than that coming from Taiwan. You would sort of expect something like what Taiwan is doing in Belize - from CANADA, but amazingly enough, it is this small Chinese nation (Taiwan) across the world, that is doing more than any other group of countries summed together, to help our country develop.
The whole situation developed during the military invasion scares long ago, when mainland communist China were threatening to invade the island of TAIWAN, protected then by the USA. Now MAINLAND CHINA has turned capitalist, the reapproachment between Taiwan and Mainland China has blossomed. Over a million Taiwanese business people now do capitalist business in the former Stalinist/Maoist dictatorship. Times have changed everything. You would wonder why Taiwan would maintain the friendships she has formed with countries like small Belize? Once of course we would have been a refuge if there had been a military invasion by mainland China of Taiwan. This no longer though is true, or even likely. The Taiwanese Ambassador wants to improve relations with Belize and tourism and do away with the VISA requirements Belize currently has. Taiwanese are welcomed in over 97 countries without a visa requirement. Our government gets about a $100 for each visa to enter here as a tourist though.
Interestingly enough we have a large, compared to our own population size, Taiwanese immigrant investment community. We even have a small growing group of Chinese investors from the now capitalist mainland China as well. Usually we cannot tell locally which are speaking Mandarin, or Cantonese, or some of the other dialects in Chinese. The Chinese immigrants know, but we ordinary Belizeans don´t; speaking Maya, Spanish, Creole and International English as we do.
What was of interest to me in the interview was the explanation by the new Taiwanese Ambassador of why more Chinese investors are not staying in Belize. He explained that over 7000 Taiwanese had come to investigate the LIGHT MANUFACTURING prospects in Belize, but decided the local internal population market was too small to support them.
A light bulb went off in my head of comprehension. The Taiwanese investors came to do what they do in Taiwan, which is mainly start light manufacturing business, serving internal final assembly exporters of goods from Taiwan. In Belize, we do not have a large enough population market to support service a light manufacturing businesses here , based on a local market. Indeed, we do not even have the materials to create businesses. Our situation in Belize for developing LIGHT MANUFACTURING industries, is not orientated on the local internal market, but rather needs to be targeted to the EXPORT market. The over 7000 Taiwanese manufacturing investors that came, and then left behind just their grocery supermarket type compatriots. At least with food it is a local market and a store can do better than being a lawyer in Belize, as people always have to eat, and a decent sized supermarket can produce anything from a few hundred dollars a day, up to two thousand dollars a day, to re-invest in their CLAN type three generational family business system. A new similar Salvadoranean such supermarket just opened at the foot of my hill here in Santa Elena town.
Apparently those light manufacturers from TAIWAN were not EXPORT ORIENTATED. They were looking for the impossible, a good sized local market to start up with. Of course that is the changeover mentality every new generation now in College and University must face for the future here. Our manufacturing development cannot be based on a local internal market, because we do not have the population. A manufacturing industry must concentrate almost solely on the EXPORT markets of the world. Identifying those is only part of the problem. The problem is sort of huge and only the Mennonites have grasped the thorns by the nettles. They are importing machinery, like the recent acquisition of Brazilian machinery to make export orientated corn meal and corn grits. The citrus factory is an export orientated market for concentrates and juices. The sugar factory has not yet developed export type VALUE ADDED PRODUCTS such as sugar cubes and 5 lb bags of brown sugar, to be shipped around the world. Most of the light manufacturing development is occurring in agro processed products. There is certainly room for export finished milk chocolates and unique cheese products, which we do not yet even produce, but could.
I am reminded of my own foray into selling Galileo telescopes. Marketing has identified a market of 20,000 a month in the $14.95 usa range. But you need materials. I need lenses, an objective lense, a focal lense and two different size cardboard tubes, a cap of metal that to make would require a hydraulic punch press and a crimper and cutter. The lenses need a grinder of glass and plastic, the lenses need blanks, the cardboard tubes would have to be imported and the whole thing would have to be kept under $4 usa, in order to stay within the target retail price on the internet. Once you jump that price, you lose your marketing EDGE and start competing with industrialized countries. A losers game. You have distributor, wholesaler and retail mark ups, you have to meet, which in the chain of distribution around the world, take about 33% for each step in the price increases and which govern the manufacturing costing process. It is possible of course, but requires somebody young and more energetic than me. The kicker is the need to import EVERYTHING, from tooling machinery, and materials to do the assembly here and provide the labor jobs. Is it possible? Of course it is, but takes a small investment and a heck of a lot of sweat equity to even get off the ground. The next problem is with the government tax system, and I suppose a one room warehouse EPZ would be necessary to import your materials to manufacture and assemble. On a small scale I would imagine the paper work bureaucratic costs for a small EPZ would make the investment prohibitive. Recognizing this; apparently over 7000 Taiwanese manufacturers decided they didn´t want the headaches involved in such a difficult project inside Belize. They could do it easier from Taiwan, where there are material suppliers and sub contractors they can get the stuff they need to assemble the finished product.
So light manufacturing in Belize for entrepreneurs is a different mind set, from experienced manufacturers in an industrialized heavily populated country like TAIWAN. Different skills of a more investigative type and adventure being in the blood and an ability to enjoy solving challenges. Can we create those in our school system is the question? The Mennonites have it naturally through their culture. But can the new generations in Belizean tertiary education do it? That is the question?

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