The streets of Taipei are decorated by glamorous windows displaying designer
clothes, shiny jewellery, shoes, and handbags. At the same
time, the TV wall announces the news of Yang Huay-ju, who
turned shopping into a way to make money.
Using her platinum credit
card, Yang bought £100,000-worth of refundable gift certificates from
a home shopping channel and earned 20 first-class air tickets
from the credit points she made from the purchase. She sold
the tickets for £750 each and refunded the certificates and
made a net profit of £15,000.
However, not all Taiwanese
are as skilful as Yang. Instead of taking advantage of
the banks, over 100,000 people age 20 to 30 are in
debt, that is one fifth of total card debtors in Taiwan.
Joyce, 24, is just one example. She makes £520 a month and
has been in debt ever since she graduated from university.
In 2003, Taiwan started
issuing student credit cards to people above 18 years old.
Employment was not required and the maximum credit limit was
£400. Banks have been setting up booths on campus grounds
ever since. In 2003 alone, credit card spending soared by a
quarter to £2 billion.
Towards the end of 2005, the
average interest rate of major banks' credit cards was 25%,
and Joyce needed to pay twice of what she earns every month
in
interest alone.
Consumer happiness
This trend appears to be
a consequence of economic growth. Taiwan has been
booming since 2001. GDP has increased 18% in these five
years, while the interest rate has been consistently low;
bottoming out at 1.37% in 2002.
As a result, the retail
market has flourished. High-class foreign boutiques and
department stores have mushroomed, and transformed the
eastside of the capital into a “Taipei Manhattan”,
generating more than £10 billion in 2003 alone, boosting the
service and retail industry, which now accounts for 70% of
GDP.
Since 2003, young
people in Taiwan have had access to credit cards.
Moreover, they have been encouraged by the banks. Slogans
like “borrowing money is a noble act” emphasized the virtue
of borrowing but not the consequences of repaying. The young
minds have been following the street
fashions rather than their bank accounts. As a result, if one card
is maxed out, people just get another. The average number of
cards for a young card debt holder is now 10.
The booming economy has
contributed to the trend. The consumer price index was negative from
2001 to 2003. But a steep rise in inflation - to 1.62% -
occurred in
2004, possibly due to the oil shortage resulting from the
Iraq War along with the SARS panic in 2003. In order to
prevent inflation, the government lifted the interest rate
from 1.37% to 1.75%.
Surprisingly, this did
not slow spending. Numbers of issued credit card and
cash cards doubled in the next two years. From 2003 to 2005,
credit card spending shot up 84% to more than £24 billion,
and cash card spending more than doubled to £3.5 billion. At
the same time, national income per capita grew by a mere
1%. Spending money that people do not have has become a new
phenomenon.
Cable
connections
One contributory factor
is the growth of cable TV. More than 98% of
households in Taiwan now have cable TV, which provides six
major news channels running 24-hour news. Besides
current affairs, they tell consumers where to get the best
food, holiday locations, shopping deals, and so on.
Cable TV also became the incubator for
home shopping channels and infomercials. Instead of going to
the shops, the shops come to you; this has revolutionised the shopping habits of the Taiwanese.
The biggest
home shopping channel is ETmall, part of the Eastern
Broadcasting Company (1)
and sells clothes, household goods, health products, jewellery
and much more. One can buy a £400 emerald at 11pm with a
quick phone call. The company now has 2.6 million
registered members in Taiwan since they launched in 2001 – now one
in ten Taiwanese is a member.
Pop culture
programs like MTV are more about image than
music. Celebrities and fashion advisors ‘educate’ young
people on how to dress, wear make up, slim down, and follow
fashion. Young people in Taiwan are bombarded by all sorts
of information telling them what is the next ‘in’ thing to
buy and the ‘essential’ items they must have in their
closet.
Convenient expenditure
MTV and shopping channels
are mere tips of the media iceberg. The countless local and
foreign glossy magazines, that dominate the shelves of every convenience
store, echo the same message.
Indeed, the rise of
convenience stores has further fuelled the feeding frenzy. Within
every three square kilometres in Taiwan, there is one 7-Eleven, along with four other major
convenience store chains. Like
cable channels, these stores are open 24/7, rain
or shine. Consumerism has now been unleashed from time and
space.
While people spend more, their work
ethic has dwindled. The percentage of
Taiwanese unemployed who lost their jobs due to cost cutting in 2001
was 50%. In 2005 it was 37%.
Those stating “unsatisfied with work” as a reason was less than a quarter in 2001
but
increased to 40% in 2005.
Also, since 2001, people under 30 have
the highest unemployment rate - 40% - among all age
groups (2).
Needless to say, working hard is out of fashion among modern day youth.
With the media promoting vanity, it is not
surprising that young Taiwanese are thriving on shopping but
unaware of being in debt. According to the National Youth
Commission of Taiwan, the average debt of those under 30 is more than £2600 while the average wage is
around £500 per month. The simple reason is
overspending.
Strawberry tragedy
Higher incomes, less responsibility, more
choice, less incentive to save and seductive advertisements
is a potent mix. The result is that the young
Taiwanese are becoming more insecure and desperate to
find their identities via consumerism.
In Taiwan, such young people have been
nicknamed the ‘strawberry group’ or ‘emptied by month group’
by the Taiwanese media.
They are categorized by age and their
ability to pamper themselves. They are willing
to spend lots of money on shopping, unable to hold a job for
an extended period of time and take frequent personal leave.
They are
unable to deal with pressure or authority. They spend more
than they earn and end up in the red every month (3).
This trend is also shared by the youth in neighbouring
countries like Japan and South Korea.
As a result, an inability to
manage their finances and being massively in debt have
evolved into the main tragedies of Taiwanese society. Some 1,546
people between 25 and 44 committed suicide in 2006,
according to the Department of Health, Taiwan. The main
reasons were: emotional issues, relationship issues, and
credit card debts.
This age group is not particularly young,
yet they are the economic pillars of the country. Their
plight
indicates serious social issues that are damaging psychological health
in Taiwan.
In response, the government set up a Suicide
Prevention Centre, under the Department of Health, at the
end of 2005. The same time, the Bankers Association of the
Republic of China and Youth Hub launched a special debt plan
for young debtors.
Remedial
action
The aim is to help debt
owners to reach an agreement with the banks or comply with
the association’s rules. They provide lawyers, doctors, and
accountants with the facilities to help young people to
overcome the pressure from being in debt. So far, 80% of
people who consulted have resolved their debts.
Youth Hub has also set up
a “Three step council for youth and card debts” in order to
give Taiwanese youth the knowledge to manage their wealth and
finances. Help and support groups, speeches and activities
are aimed at rebuilding their knowledge of money.
Credit card debt has been an issue
since 2003 (4)
and is both a symptom and a cause of a booming economy, but
it is tragic that the government did not react until people started
taking their own lives. It
failed to serve as a watchdog when the banks were lending
large amounts of money with high interest rates.
The media is also at
fault. The news organisations in particular need to be more critical of government and
damaging societal trends. They should act less as passive observers
and become more questioning. At present, the Taiwanese media
simply focuses on the sensationalism of individual tragedies
and provides a vehicle for
advertisers. This attitude simply compounds the problems.
However, the economy
depends on consumption, so some debt is
inevitable. But to discourage excessive debt by raising interest rates would reduce
investment, which would also strangle Taiwan’s economy.
From a macroeconomic
perspective, of course, this is unacceptable; economic
growth is paramount. But until the ethos of rampant
consumerism is challenged, more
young people like Joyce will fall into the debt trap and
more Taiwanese families will suffer the tragedies that
inevitably follow.
References
1
- Eastern Broadcasting Company has
eight program channels, two shopping channels and
two regional channels for foreign viewers. It is the
biggest cable company in Taiwan. -
http://www.gio.gov.tw/
