Taiwan – international trade options

Little island is an economic powerhouse
With a territory less than one-fourth the size of Wisconsin’s, but more than four times the population, the crowded island of Taiwan has developed into an economic powerhouse in East Asia over the last 50 years. In more recent times, Taiwan has experienced rapid economic expansion (6% growth in 2000), low inflation, and nearly full employment. Initial figures for 2001 indicate slower growth and rising joblessness. Taiwan’s 23 million people enjoy a per capita Gross National Product of over $14,000.
Taiwan’s $140 billion of imports in 2000 in part reflects its lack of indigenous resources. It imports nearly all of its energy, most raw materials, and a diversity of manufactured and agricultural goods. It is the fifth largest importer of US agricultural products. Taiwan’s educated workforce, advanced infrastructure, strategic location, and generally pro-business attitudes are viewed as positive factors with regard to foreign investment.
Taiwanese authorities continue to reduce tariff and non-tariff barriers to trade as part of the move toward membership in the World Trade Organization in late 2001 or early 2002: restrictions on financial institutions are gradually being lifted, several public firms have been privatized, and private sector competition is being introduced in telecommunications, power generation, and oil refining and distribution.
Taiwan’s economy is increasingly high-tech oriented. It produces the majority of the world’s computer peripherals and accounts for over 5% of global semiconductor output. The recent global downturn in the PC and IT industries is considered a major factor in the downward trend in Taiwan’s stock market and diminished growth estimates for 2001.
One area of particular concern involves Taiwan’s relationship with mainland China. Despite those political problems, however, commercial ties between the two sides have expanded dramatically since the late 1980s. Taiwan is a major investor in the Mainland, and the People’s Republic of China is Taiwan’s largest export market after the US. This year, Taiwan relaxed its prohibition on direct trade, shipping, and air links with the PRC.
Taiwan is America’s seventh largest export market and historically one of the faster-growing economies in Asia. International competition is keen, with Japanese firms well-entrenched and European companies continuing to capture market share. Nevertheless, Taiwan’s population generally has feelings of goodwill toward the US and a favorable opinion of US products. US firms with quality goods at competitive prices have found Taiwan to be a rewarding market.
Taiwan is a land of small businesses and traders who import from all over the world. There are more than one million registered businesses on Taiwan. To sell to those firms, the US firm must find a local partner. Although it may be possible to supply a few types of highly specialized products directly from the US, most US firms will find it necessary to have some kind of local presence to market and service their products.
The most common distribution route in Taiwan moves products from suppliers to distributors, from distributors to retailers, and then from retailers to consumers. Some suppliers use shorter distribution channels, distributing products directly through retailers or directly to the consumer. Foreign firms, especially small and medium-sized companies, generally rely on a local agent to sell their merchandise to distributors.
There are many ways to find an appropriate agent or distributor in Taiwan. The Commerce Department’s International Partner Service (IPS) program offers US firms an easy way to identify potential partners. The Taipei Importers and Exporters Association has about 7,400 members and is well-equipped to help foreign exporters find an agent from among its members. Most Taiwanese industry associations publish lists of their members, also. The China External Trade Development Council (CETRA) has an office in Chicago which contains a wealth of information on Taiwan.
Taiwan continues to have significant potential for US exporters despite the recent downturn. Many forecasters see a pick-up in economic growth in late 2001 or early 2002. The Taiwan market has proven its ability to weather various external shocks, such as the Asian financial crisis and a devastating earthquake. Taiwanese are not only plugged into global business, but are also a powerful force in regional sales and marketing and in global technology development.
The above article is based on information provided by the American Institute in Taiwan (AIT). For more information about doing business with Taiwan, please contact the U.S. Export Assistance Center in Milwaukee at 414-297-3473 or visit AIT’s web site at http://ait.org.tw
TAIWAN AT A GLANCE
National capital: Taipei
Form of government: Multiparty democracy
Official language: Mandarin Chinese
Population: 21.9 million (1998 est.)
Population growth rate: 0.94%
GDP per capita: $14,200
Literacy rate: 93% of people age 15 and over can read and write
Major industries: Electronics, textiles, chemicals, clothing, food processing, plywood, sugar milling, cement, shipbuilding, petroleum refining
Exports to: United States 24%, Hong Kong 23%, Europe 15%, Japan 10%
Imports from: Japan 25%, United States 20%, Europe 19%, Hong Kong 2%
Source: CIA World Factbook
Best Prospects for US Exports:
– Electronics Industry Production and Test Equipment – Electronic Components
– Laboratory and Scientific Instruments
– Telecommunications Equipment
– Computer Software
– Electrical Power Equipment
– Plastic Materials and Resins
– Travel and Tourism Services
– Computer Services
– Computers and Peripherals
– Education and Training Services
– Automobiles
– Process Controls
Source: American Institute in Taiwan, Commercial Section, 2001
August 31, 2001 Small Business Times, Milwaukee