The Republic of China (R.O.C, Taiwan) is one of the Four Asian Tigers that has developed economy rapidly. Its GDP (PPP) ranks 19th for GDP (PPP) per capita in 2018. Taiwan achieved this success by specialising in the manufacturing of information technology products, becoming a global leader for exports of such products. With a strong history of developing high quality technological products, they are a country well-positioned to thrive in this digital era as newer and more sophisticated products are being developed and introduced to consumers.
In recent years, the Taiwanese government has also been promoting projects that are aimed at drawing foreign investment. As such, the SME ecosystem in Taiwan has been receiving support from policymakers, paving the way for these companies to scale rapidly. Coupled with its relatively loose policies for foreign companies, it presents a great opportunity for businesses to enter the country.
The Taiwanese population consists mostly of Chinese with a size of 23.7 million people. While English is a compulsory language in schools, fluency among businessmen is somewhat low as the primary language spoken is Mandarin. Having effective translators can be beneficial especially in technical industries. Similar to many Asian countries, understanding cultural boundaries is extremely important to foster strong relationships that are necessary for doing business.
2. Ease of doing business
Looking closer at the business environment of Taiwan, it ranked 15 among 190 countries in 2019 for the ease of doing business. The process of registering a business in Taiwan is not problematic and there is no restriction of foreign holdings of companies. Furthermore, majority of Taiwanese businesses are SMEs, allowing for an easier market penetration for new businesses. However, as an export dependent country, there are regulations surrounding imports and exports that require permits.
One of the major concerns of entering Taiwan would be the political landscape. The controversy of the Taiwan’s existence as a sovereign state creates political complications with countries that intend to respect one of the superpowers, China. For example, there is no US embassy within Taiwan, which may make US companies think twice before coming to Taiwan due to the lack of support available. US embassies in other countries help connect US companies to suppliers in foreign countries, which would likely not be possible in Taiwan. The political uncertainty also present future risk should China take more drastic actions to claim the island nation.
4. Legal Processes
Another challenge that businesses could face is the duration of processes. Starting a company could take up to 2 months despite the simple process. Enforcing contracts also take an average of 510 days to complete, with filing the cases taking up to a month followed by the trials in court. That said, Taiwan does have a strong intellectual property field with high quality researchers to ensure better protection for technological firms.
Ways to enter
1. Import / Export
As a business looking for manufacturing suppliers, Taiwan would be an excellent choice to find business partners. There are several B2B communities that exist on the internet to continue to link foreign companies to suppliers within the nation. These include TaiwanTrade, Global Sources and other trade shows and events. The Taipei Economic and Cultural Representative Office also plays a similar role to the US embassy for foreign companies to ensure that exports are not hindered by the political situation the nation faces.
2. Local Partner
Looking for a local partner is also a viable option for businesses looking to enter into the country. A local partner would allow negotiations to take place much more effectively as they would have a better understanding of culture and business etiquette in the country. The language barrier would also be reduced significantly during negotiations. As a well-connected country with high internet penetration, there are various websites that would present opportunities to find local partners such as business conventions or even the online platforms themselves.
3. Incubator / Accelerator
Lastly, there are several incubator / accelerator programmes in Taiwan, some of which are government related. These programmes help founders in building their businesses quickly through connections and expert help. It also provides start-ups with a community to develop collaborative solutions and ideas to bring to the market. This would be a viable option for foreign entrepreneurs who are looking to start their businesses, especially if they are looking at the tech-manufacturing industry. Some of the associations that foreign entrepreneurs can look into will be IisC, G Camp (Institute for Information Industry) and IAPS.
While doing business in Taiwan, the most important task is to build good and strong relationships. Relationships are crucial in getting negotiations done, closing deals and moving the business forward. Attending conventions and meeting new people can be an effective way to start. One of the key advantages of having a local partner or joining programmes is that they are able to bring and link their connections to the entrepreneurs which serves as a strong tool in the country.
About BlackStorm Consulting
BlackStorm Consulting is a boutique growth consultancy firm that specialises in corporate strategy, profit management and investment management. We mainly serve clients in four sectors: FinTech, Gaming, Technology, Media and Telecommunications (TMT), and manufacturing.
Our clients and connections are internationally present and range from small and medium sized businesses, MNCs, to government agencies.