Taiwan, “gateway” to Southeast Asia

Last October and November we went with a group of 25 students for our studytour to Taiwan. During this trip we visited several companies and organizations to find answers to our main question why Taiwan is an attractive country to do business. The aim of the study tour is to discover business in another country in combination with enjoying the nature and culture of a country.

The main question we would like to answer during our study tour is which factors influence the decision to do business in Taiwan. To answer this question, we looked at economic and political factors. We have been to several companies such as PwC, Grant Thornton and the Shanghai Commerical & Savings Bank. We have also been to the Taiwan Stock Exchange, the Dutch trade office and the university and these visits have helped us to learn more about doing business in Taiwan.

“Economic power is shifting from the Atlantic to the Pacific Rim and Taiwan is seen as a gateway to Southeast Asia.”

Taiwan is a country that is located next to the east coast of China and  in between Japan and the Philippines. That immediately leads us to the first advantage of doing business in Taiwan, the central location in Asia. Economic power is shifting from the Atlantic to the Pacific Rim and Taiwan is seen as a gateway to Southeast Asia. In addition, Taiwan is high on all kinds of lists, such as ‘the ease of doing business’ and purchasing power. Which indicates that Taiwan has a developed and open economy. Taiwan has a high production and export capacity, particularly in the area of ​​high-tech and knowledge-intensive industry.

For specific Dutch companies is good help available to start doing business in Taiwan. The NTIO, Netherlands Trade & Investment Office, is a kind of embassy and helps companies with all kinds of Taiwanese rules and helps them with the right connections. During our study trip we had the opportunity to visit the NTIO. An example of what the NTIO does was the visit of a Dutch delegation a week after our visit. This delegation included the CEO of Philips, Frans van Houten, and the mayor of Almere. The goal was to connect the Taiwanese and Dutch business community. Other countries such as Germany and France have also such trading offices in Taiwan.

“The Taiwanese government is trying to make the country as attractive as possible for companies.”

The Taiwanese government is trying to make the country as attractive as possible for companies. One of the most important buttons that politicians can turn in order to achieve this are taxes. In 2010, the government decided to reduce the corporate tax rate from 25% to 17% in order to attract more foreign companies and become more competitive. The tariff is therefore lower than the average rate in Asia. Taiwan also tries to cluster all kinds of companies that are in the same industry in the country, such as in the Netherlands in Eindhoven with technological companies.

Another factor that influences the business climate is political stability. Although the situation with China is still very complex and Taiwan is politically a stable country and comparable to the Netherlands. Taiwan has a parliamentary democracy and politics is not corrupt. The country is on the international list of political stability over other Asian countries such as China and South Korea. Another political factor is how much the government tries to intervene in the business climate with all kinds of rules. Taiwan is 13th on this rankings above China, South Korea, Japan and even the Netherlands. In Taiwan, companies therefore have great economic freedom.

Historically, Taiwan is known for its political relationship with the People’s Republic of China. The People’s Republic of China still claims that Taiwan is part of China and it is also called Republic of China. In contrast to China, Taiwan argues that it has all the characteristics of its own state. The China-one rule applies to every country in the world. If a country officially recognizes Taiwan, then China will break all trade relations. Economic cooperation, however, is allowed by China and this means that the tension between China and Taiwan is irrelevant to business as long as all countries respect the China-one rule. At present, Tsai Ing-wen is the Taiwanese president and she is certainly not pro-China. She thinks that Taiwan has all the characteristics of an independent state. She is also not a fan of communistic China, but she recognises the importance of the trade between Taiwan and China. The bond with the US, on the other hand, is good and she called with Donald Trump after his election and that was the first time since 1979.

In short, given the economic and political factors, Taiwan is a favourable country to start or expand your business. The location is very centrally located in Asia making it a gateway to the Southeast Asian market. The economy of Asia is ‘booming’ at the moment. The NTIO plays an important role in entering the Taiwan market for Dutch companies. Finally, the Taiwanese government plays an important role in making the business climate for businesses as favourable as possible, for example through low taxes and the clustering of companies.