Taiwan’s small size does not match the enormity of its business opportunities
The interest of the Western world in the People’s Republic of China (PRC) is understandable, given its population of over one billion people and explosive economic growth dominating global economic data. Within the shadow of China, however, is a far smaller country with a robust economy. Taiwan is an economic powerhouse that holds many opportunities for aboriginal and visible minority owned businesses (AVMs).
Located off the southeast shore of mainland China, Taiwan has easy access to seven major cities, including Hong Kong and Sydney. While European countries have faced economic difficulties in recent years, Taiwan has experienced impressive GDP growth. The ability of this small country to continue economic expansion despite a weak global economy makes it tremendously appealing to foreign investors, particularly AVMs interested in business growth and expansion.
The U.S. has maintained strong commercial ties with Taiwan since 1979. Though Taiwan, now called the Republic of China (ROC), is officially recognized as belonging to the People’s Republic of China, the status of Taiwan’s economic relationship with the U.S. has strengthened and not weakened. Taiwan is interested in expanding its economic position and so promotes overseas private investments and global imports and exports. It is in the enviable and unique position of having ready access to both U.S. and Chinese markets, giving AVMs a remarkable route for business expansion.
Powering Up the Economy
Taiwan is not a country to sit still, as evidenced by its 4.27 percent unemployment rate as of November 2012. Clearly, the low unemployment rate is indicative of its successful economy, spurred on by Premier Sean Chen’s “Economic Power-Up Plan” designed to address the industrial structure, labour supply and demand, and exports. The ultimate goal of the plan is to promote sustained economic growth, meaning the time is ripe for AVMs interested in international expansion.
According to the July 2012 Taiwan Economic Planning and Development statistical data book, the ROC economy grew by 4.9 percent in 2011, compared to 1.7 percent in the United States and 9.2 percent on mainland China. As AVMs face domestic economic uncertainties, there appears to be almost unlimited opportunities in Taiwan. They include importing inexpensive goods from Taiwan to increase price competitiveness, exporting goods and services to Taiwan and to mainland China through Taiwan, and forming partnerships with Taiwanese businesses.
If one economic sector had to be named as the most productive, it would be technology. Taiwan holds the top spot as the world’s largest producer of 22 technology products, including notebook PCs, tablet personal computers, desktops, and a host of computer components, and cables. However, Taiwan is also the top producer of golf heads, power wheelchairs, and instant noodles. Another 12 items, most of which are technology, hold second place ranking. Overall, Taiwan accounts for more than 70 percent of the global market share of semiconductor, information, optoelectronic, and telecommunication and communication products. This industry has sizable needs for research and development, and for material resources.
Giving AVMs an idea of the sectors Taiwan considers important for development and the economy is the way the 2011 government development assistance was distributed. Some of the main areas are education, health and medical, social infrastructure and services, transportation, and agriculture. The ROC has also supported sustainable development and tourism. In other words, AVMs can choose from among a wide range of industries from software development to health care.
Taiwan has always been synonymous with technology, but other sectors of the economy are also growing in importance. The health care industry, particularly long term care and nursing, are focal points for government investment. Taiwan is also seeing significant expansion in the entertainment industry, which includes television, film, digital content, and popular music. Taiwan hopes to eventually turn the entertainment industry into a trillion dollar segment of the economy.
Taiwan’s access to mainland China also creates important opportunities to AVMs willing to partner with Taiwanese businesses. In fact, Taiwan serves as a testing ground for the many ethnic Chinese markets. U.S. businesses also get the advantage of important cultural training imperative to master before dealing with Chinese markets.
Recognizing Cultural Issues
Forming partnerships or creating joint ventures with existing Taiwanese businesses makes perfect sense. Before attempting to do business in Taiwan, it is important to understand the culture, which is quite different from Westernized cultures. Using Confucian philosophies to guide capitalistic activities, Taiwan business people place emphasis on developing relationships, paying attention to small details, maintaining industriousness, and maintaining respect.
Though there are large corporations, much of Taiwan operates as small to medium sized businesses, usually family owned and managed. Since this a similar demographic for AVMs, there is common ground. This characteristic of the Taiwan economy also means there are fewer barriers to market entry because markets are not controlled by a handful of major players.
One very important feature of the business culture is the fact Taiwan is male dominated. Women are generally not given the same status as men, and in Taiwan they tend to hold lower level positions. Western women used to equal treatment may be taken aback by the fact some Taiwanese (and Chinese) businessmen will ignore seniority and give preferential attention to male business associates. It is essential to work closely with the patriarchs of Taiwan businesses, who are not only protective of their staff, but are also the decision makers. Though the Taiwanese culture is slowly changing, Western business women must be willing to defer to men in business meetings.
Taiwan is a value-added economy in that it relies heavily on foreign trade and investments for economic success. AVMs interested in pursuing business opportunities will find a wealth of assistance. The World Bank International Finance Corporation, the International Chamber of Commerce, the U.S. State Department, and the American Institute in Taiwan are excellent places to start discussions concerning business opportunities and partnerships.
Taiwan is a country of proud, industrious, and successful people. As it looks ahead to the future, there is no doubt of its success. AVMs ready to expand or looking for new markets will find plenty of opportunities in Taiwan. Best of all, Taiwan will greet them with open arms.