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U.S. Department of State
Taiwan Country Commercial Guide
Office of the Coordinator for Business Affairs
Table of Contents
I. Executive Summary
II. Economic Trends and Outlook
III. Political Environment
IV. Marketing U.S. Products and Services
V. Leading Sectors for U.S. Exports and Investment
VI. Trade Regulations and Standards
VII. Investment Climate
VIII. Trade and Project Financing
IX. Business Travel
X. Appendices
This Country Commercial Guide (CCG) presents a comprehensive look at
Taiwan's commercial environment through economic, political and market
analyses.
The CCGs were established by recommendation of the Trade Promotion
Coordinating Committee (TPCC), a multi-agency task force, to consolidate
various reporting documents prepared for the U.S. business community.
Country Commercial Guides are prepared annually at U.S. Embassies
through the combined efforts of several U.S. government agencies. In
Taiwan, the Country Commercial Guide is prepared by the American
Institute in Taiwan.
I. Executive Summary
Through forty years of hard work and sound economic management, the
people of Taiwan have built the island into the world's 19th largest
economy. Taiwan is an economic powerhouse with the world's second
largest foreign exchange reserves and over $175 billion in two-way
trade. The economy continues to expand at almost 7 percent per year,
with full employment and low inflation. Its 21 million people enjoy a
per capita GDP of $11,600. As Taiwan has grown richer, the formerly
authoritarian government has evolved into a democracy. Opposition by
the People's Republic of China (PRC) to any recognition of Taiwan as a
separate political entity has limited Taiwan's official diplomatic
activity, but Taiwan has broad-based unofficial relationships with most
of the world's major economies, including the U.S. An expanding
democratic government, strong economic performance, and economic
liberalization shape the Taiwan market.
Taiwan's high level of imports--$85.4 billion in 1994-- reflects its
status as a resource-poor trading entity. The island imports nearly all
of its energy needs, most of the raw materials needed to maintain
industrial production, and a diversity of manufactured and agricultural
goods (it is the fifth largest importer of U.S. agricultural products.)
Taiwan has a tradition of welcoming foreign investment. Its educated
workforce, advanced infrastructure, strategic location, and generally
pro-business attitudes make Taiwan an excellent -- if no longer low-cost
-- place to invest. Taiwan is the world's largest supplier of computer
monitors. Electronic products, chemicals and industrial production
machinery are other major exports.
A significant portion of Taiwan's economy is still in public sector
hands and liberalization is often delayed and incomplete, but the trend
toward liberalization is clear. The Taiwan authorities reduced tariffs
and will do so again as part of Taiwan's expected accession to the World
Trade Organization. Accession is also prompting the removal of many of
the non-tariff barriers that have limited especially agricultural
imports. Restrictions on financial institutions are gradually being
lifted. Several public sector firms have been privatized, and
competitors have been allowed to enter former monopolies in power
generation and oil refining and distribution.
Taiwan has a unique political history. In 1945, Taiwan was restored to
Chinese rule after 50 years as a Japanese colony. In 1949, Chiang Kai
Shek's Nationalist army retreated to Taiwan and the Nationalist (KMT)
party has ruled the island ever since. Until the mid-1980s the KMT
maintained a single-party rule. Beginning in the mid 1980's and
accelerating in the first half of the nineties, however, the political
system has been transformed into a democracy. During Legislative Yuan
(LY) elections in December 1992, the opposition won 31 percent of the
seats and in late 1994, an opposition member was elected Mayor of
Taipei, Taiwan's largest city. Taiwan's first direct presidential
elections will be held in Spring 1996. The press is free and political
debate is unconstrained and vigorous.
Democratization has changed the business climate in Taiwan, but Taiwan's
legal infrastructure has lagged behind the political changes. Executive
officials used to the old, authoritarian ways of getting things done
find their actions scrutinized by a vigorous press and an aggressive
legislature. This scrutiny at times leads to delays and reversals.
Power -- which used to be concentrated in the KMT and the executive
institutions it controlled -- is now diffused through several
institutions. Accomplishing anything requires talking to many different
parties, building coalitions and compromising.
Taiwan's relationship with the Peoples Republic of China remains
problematic. Both entities have long asserted that there is one China
of which Taiwan is part. The Taiwan authorities seek recognition as one
of what they claim are two legitimate political entities, each governing
part of China, while the PRC regards itself as the sole legal government
of all of China, and Taiwan a renegade province. (The largest of
Taiwan's opposition parties supports independence for Taiwan.) Despite
their long-standing enmity, commercial ties between the two sides of
the Taiwan straits have grown rapidly since the late 1980s. Taiwan is a
major investor in China, and China recently passed the United States as
Taiwan's largest export market. Taiwan enjoys a huge trade surplus with
China. Its role in the China market could well continue to increase.
Taiwan wants to establish itself as a regional operation center for
third country businesses aiming at the greater China market. Taiwan is
also an important trading and investment partner for Southeast Asian
countries.
Taiwan is an excellent market for U.S. Firms. Taiwan firms and
consumers are receptive to foreign products, have money and are not
afraid to spend. Taiwan is a leading producer of PCs, its chemical,
steel and IC industries have ambitious expansion plans and the
authorities are liberalizing the power generation and telecommunications
markets. On the consumer front, 60 percent of Taiwan households are
wired for cable TV; Taiwanese travelers took nearly 5 million trips
overseas in 1994; and 12 million people now have life-insurance
policies.
U.S. Exports range from steam boilers to soybeans. U.S. investors
include giants such as IBM and individuals offering translation and
legal services. The competition in the market is fierce, with Japanese
firms well-entrenched and late-coming Europeans making an aggressive
push. Nonetheless Taiwan consumers generally have strong feelings of
goodwill toward the United States and favorable images of U.S. products;
U.S. Firms with good products at fair prices will find Taiwan a
rewarding market.
**Country Commercial Guides are available on the National Trade Data
Bank on CD-ROM or through the internet. Please contact STAT-USA at 1-
800-STAT-USA for more information. To locate Country Commercial Guides
via the internet, please use the following world wide web address:
WWW.STAT-USA.GOV. CCGs can also be ordered in hard copy or on diskette
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS**
II. Economic Trends and Outlook
Major Trends and Outlook
Over the past four decades, Taiwan's economy has been one of the star
performers in Asia, and prospects for its future are bright. Now a
developed economy, Taiwan's real GDP grew 6.5 percent in 1994 and is
expected to grow nearly 7 percent in 1995. These real GDP growth rates
for 1994 and 1995 indicate that the island's ambition--first expressed
about eight years ago--to transform itself from an export platform to a
high tech production center is proceeding apace. In the summer of 1994,
the percentage of Taiwan's exports accounted for by high tech and
capital-intensive products for the first time exceeded labor-intensive
exports.
Principal Growth Sectors
As in other developed economies, services are the sector growing most
rapidly. Services accounted for 47 percent of GDP in 1986, 59 percent in
1994 and over 60 percent in the first quarter of 1995. Many new private
banks, insurance companies, and securities firms have emerged. New
financial services, such as automatic tellers machines and credit cards,
have become common. A number of new financial products have also been
introduced.
Investment in the PRC and Southeast Asia--stimulated in large part by
lifting the ban on PRC trade in 1987 and relaxed financial regulations
involving trade with the PRC--has surged. One consequence of this surge
in trade and investment is that the United States no longer represents
Taiwan's largest export market, although it remains the island's largest
overall trading partner. Exports to the United States dropped from
nearly half of Taiwan's total exports in 1986 to 26 percent in 1994,
while the share for exports to Hong Kong (mainly for transshipment to
the PRC) shot up from seven percent to 23 percent. In the first five
months of 1995, Hong Kong supplanted the United States as Taiwan's
largest export market. Much of this trade is directly related to
Taiwan-invested firms (this investment is estimated at $20 billion) on
the mainland, which has become a major export base for Taiwan.
In recognition of the growing importance of trade and investment with
the PRC and ASEAN economies, Premier Lien Chan elaborated on a plan to
turn Taiwan into a "Regional Operations Center." The plan consists of
building six different centers on Taiwan including:
-- a manufacturing center;
-- a marine transshipment center;
-- an air transshipment center;
-- a banking center;
-- a telecommunications center; and,
-- a mass media center.
Although the industrial sector has shrunk in relative terms, capital-
and technology-intensive industries have expanded dramatically. As of
the first quarter of 1995, such industries account for 65 percent of
total manufacturing (in 1986 they accounted for only 48 percent). Since
1986, the production of petrochemicals, basic metals, and machinery has
doubled. The production of electronic components has more than tripled.
In fact, the production of personal computers and related peripherals
has grown so rapidly that Taiwan is now the world's leading supplier of
scanners, mice, motherboards and modems and now accounts for one quarter
of the world market for 8 inch silicon wafers.
By contrast, conventional, labor-intensive industries declined and
emigrated offshore. Output of such products as footwear, garments,
telephones, radios, sporting goods, umbrellas, and toys dropped 50-90
percent from 1986 to 1994 and further fell 10-25 percent in the first
quarter of 1995. This decline of labor-intensive industries has occurred
fairly smoothly without unemployment or social disturbances.
Economic liberalization has made much of this transition possible and
should also prove important for the island's future well being.
Beginning about 18 months ago, the Taiwan authorities accelerated the
pace of reform in order to pave the way to accede to the World Trade
Organization (WTO). Taiwan's goal is to accede to the WTO by the end of
1995. Since submitting an application in January 1990 to the GATT,
WTO's predecessor, Taiwan has engaged in bilateral consultations with 23
countries, including the United States and Japan. By June 1995, Taiwan
had signed agreements with three nations (South Africa, the Czech
Republic, and the Slovak Republic), concluded consultations with three
(Malaysia, the Philippines and Turkey). Significant reforms over this
period include:
--waiving import/export visa requirements for many commodities (permit-
and visa-free products now account for 84 percent of import items,
compared with the previous 65.5 percent). The share of permit- and visa-
free products will rise to 97.4 percent when the customs clearance
system is fully automated in late 1995.
--opening electric power generation and major transportation projects to
domestic and foreign private investors.
--implementing numerous financial reforms such as lifting the limit on
NT dollar deposit taken by foreign banks, allowing the establishment of
new securities finance companies and new bills finance firms, and
introducing new derivative products.
--lowering tariffs on hundreds of industrial and agricultural imports;
--accelerating a long promised privatization program.
To meet its commitments under WTO and realize its ambition of becoming a
regional operations center, further liberalization is needed. After
acceding to the WTO, Taiwan will have to lower import tariffs and open
domestic markets, including rice and many other agricultural goods. It
will have to eliminate import area restrictions for such products as
automobiles. As prerequisites for playing a larger regional role, the
Taiwan authorities have identified 29 laws and 134 administrative
regulations that they must amend by the year 2000, including:
--liberalizing immigration regulations on the hiring of foreign workers;
--relaxing restrictions on capital flows; and,
--liberalizing the flow of information.
Public Role in the Economy
In an effort to reduce the central budget deficit, Taiwan has been
reducing the public sector's role in the economy over the past three
years. The Taiwan authorities are doing this by:
--controlling consumption expenditures tightly;
--canceling pay hikes for public servants; and,
--downsizing the Six-Year Economic Development Plan (inaugurated in
1991) from over 770 public projects to a "priority list" of only 12.
Privatization has been slow, but has reduced the importance of state-
owned enterprises in the economy, cutting the public firms' share of GDP
from 14.3 percent in 1986 to 11.8 percent in 1993. The share may drop
below ten percent of GDP in two years as privatization gains momentum.
The number of parastatals privatized is expected to increase from three
in 1994 to eight in 1995 and eleven in 1996, according to the Council
for Economic Planning and Development.
Meanwhile, the expansion of social welfare benefits, together with a
growing debt servicing payment, are squeezing out other administrative
programs. A universal health insurance program caused the social
welfare expenditure to surge from less than nine percent of the central
budget in FY1994 to nearly 14 percent in FY1995. Another program to
provide living allowances for elderly farmers pushed social welfare
expenditure up to 14.3 percent in FY1996. Over the past three years,
debt servicing payments have climbed from about nine percent of the
central budget to 13.5 percent. As a result of this, expenditures on
economic development will decline from 18 percent of the central budget
to 12 percent, expenditures on educational, scientific, and culturual
activities will decrease from 15.5 to 15.0 percent.
Balance of Payments Situation
Taiwan has maintained a healthy balance-of-payments (BOP) status. The
BOP surplus in 1994 totaled $4.71 billion, double that in 1993. The
current account (c/a) ran its 14th consecutive surplus which, however,
fell 11 percent from 1993 to $5.97 billion in 1994 due to alien workers'
repatriation of earnings. The capital account ran a chronic deficit
which dropped 82 percent in 1994 to $870 million due to an influx of
foreign direct and portfolio investment. Taiwan's foreign exchange
reserves amounted to $99.5 billion sufficient to finance over 12 months
of imports, far higher than 4.9 months for Japan and three months or
less in other developed nations such as the United States, Canada,
Germany, and the United Kingdom. Foreign debt service payments are well
below two percent of Taiwan's exports of goods and services, compared to
an average of 13 percent for nations in the East Asia and Pacific region
and 30 percent in the Latin America and Caribbean Region. Taiwan's
public external debt is very small, standing at $350 million.
Quality of Infrastructure
Taiwan has an extensive infrastructure system. Two international
airports are located at the north and south ends of the island.
Fourteen domestic airports connect major cities and key offshore islets.
Five international harbors facilitate import and export trade. Paved
highways form an extensive inland transport network, including a north-
south freeway. A round-the-island railway was completed in late 1991.
The average family has more than one telephone. Pagers, cellular
phones, and fax machines are common for business firms. Virtually every
family has access to electricity and household tap water, except in
mountainous and remote areas.
The expansion of this infrastructure system however is not keeping pace
with the demands of consumers and industry. As a result of rising
incomes, car ownership more than tripled from 1985 to 1994, causing a
shortage of parking spaces, especially in urban areas. Traffic has
become very crowded in cities and on the freeway as well. The situation
is no better on the railways where almost every first-class passenger
car is overbooked. Air traffic has also tripled over the past decade,
making delays in domestic flights common. Although Kaohsiung Harbor is
the third largest container port in the world, the average waiting time
for entry reaches nearly seven hours. As the reserve capacity of the
power grid has fallen from over 20 percent to around 5-10 percent, power
outages occasionaly occur during the summer months. Large industrial
projects such as the sixth naphtha cracker complex, large steel mills,
and several electronic plants are putting great strains on the water
supply.
To step up construction of infrastructure, Taiwan opened power plants
for private investment in 1994. A bill passed the Legislative Yuan in
early 1995 to encourage private participation in transportation
projects, including a high speed railway, an additional north-south
freeway, and several east-west freeways. This, together with the
development of regional operations centers, may improve Taiwan's
infrastructure.
III. POLITICAL ENVIRONMENT
Over the past few years Taiwan has made significant progress in its
transition from a single-party, authoritarian policy to a democratic,
multi-party political system. Martial law, which had been in force
since the 1940's, was lifted in 1987. Taiwan's first democratically
elected legislature was chosen in December 1992. The democratization
process continued with the first direct elections of the Mayors of
Taiwan's two largest cities (Taipei and Kaohsiung) and the Governor of
Taiwan Province in December 1994. These officials were previously
appointed by the central authorities.
Taiwan's constitutional system divides the government into five branches
or Yuans. The five branches are the Executive Yuan, the Legislative
Yuan, the Judicial Yuan, the Control Yuan and the Examination Yuan. At
the top of this structure is the President, who has been chosen by the
National Assembly. Taiwan will hold its first popular election for
President in March 1996.
Although Taiwan has progressed rapidly toward full democracy, the
Kuomintang (KMT, or Nationalist Party), which ran the previous
authoritarian government on Taiwan, still holds most of the key
political posts on the island. The KMT currently has a sixty percent
majority in the law-making Legislative Yuan (LY). The President, who
has been chosen by the KMT-controlled National Assembly (NA), is also
the Chairman of the KMT and he appoints the heads of the Yuans,
including the head of the Executive Yuan, the Premier. Factional
fighting and weak party discipline within the KMT limits the Party's
ability to take full advantage of its numerical superiority in the
legislature, but when push comes to shove the KMT has been able to
muster the votes to achieve its most important goals. LY elections
scheduled for December 1995 may affect the KMT's dominance. The first-
ever direct election for the Presidency is scheduled for Spring 1996.
Now that martial law has been lifted, the main opposition party is the
Democratic Progressive Party (DPP). The Party's most salient policy
difference with the KMT has been the controversial issue of Taiwan
independence. As the DPP has matured and gained a significant role in
the LY, where it won 51 of 161 seats in the 1992 election, it has
modified its demand for immediate Taiwan independence and now calls for
the people to decide Taiwan's future through a plebiscite. The DPP has
also staked out generally populist positions of concern for the
environment and for working people.
The KMT, which brought its political power and two million people over
from Mainland China in 1949, was historically associated with the
Mainlanders (i.e., people who fled to Taiwan with the KMT and the
descendants of those people). The DPP has sought to identify itself
with the Taiwanese (ethnic Chinese who immigrated to Taiwan during the
past 300 years, mostly from Fujian Province). Yet a majority of the
officials and members in the KMT, including the President, are now
ethnic Taiwanese. A new opposition party, the Chinese New Party
consisting mainly of second generation "mainlanders" who have grown up
in Taiwan, broke off from the KMT in 1993. It currently holds seven LY
seats. Although ethnic differences are still significant politically,
their importance is declining as younger generations pay less attention
to this question.
The defining characteristic of Taiwan's international relationships is
its lack of diplomatic ties with most nations of the world. The ruling
authorities on Taiwan call their administration the "Republic of China,"
and for many years claimed to be the legitimate government of all China.
Foreign nations wishing to establish diplomatic relations with a
government of China had two choices: to recognize the "Republic of
China" or to recognize the People's Republic of China (PRC). Most chose
to recognize the PRC. The PRC was admitted to -- and Taiwan left -- the
United Nations and most related organizations in the early seventies.
The U.S. switched diplomatic recognition to the PRC in 1979.
The Taiwan authorities several years ago backed away from their stance
of insisting that they are the legitimate rulers of all of China. While
still admitting that Taiwan is part of China, they now seek recognition
as one of two "legitimate political entities" in China, the other being
the PRC. Under this policy, the Taiwan authorities are seeking to join
various international organizations, including the United Nations.
Taiwan has been able to join the Asia-Pacific Cooperation (APEC)
dialogue as on "economy" and is applying to join the World Trade
Organization (WTO) as a "customs territory."
Although the United States does not have diplomatic relations with
Taiwan, the U.S.-Taiwan relationship is generally excellent. The
American Institute in Taiwan (AIT), a private, non-profit institution,
was established in 1979 to maintain the unofficial relations between the
peoples of the United States and Taiwan.
IV. Marketing U.S. Products and Services
Taiwan is the U.S.' seventh largest export market. U.S. goods. U.S.
goods enjoy a reputation for quality on the island; the reputation for
high quality however, is coupled with a reputation for high-cost and,
sometimes, poor service from U.S. vendors. Nearly every type of sales
channel exists on Taiwan: U.S. goods reach end-users through agents,
distributors, franchisees, direct marketing, mail order and almost any
other imaginable means. Distribution policy varies depending on the
type of product and the end-user of the product, but all distribution
channels are changing rapidly under the pressures of new demands from
sophisticated Taiwan consumers, intensified competition from foreign and
domestic rivals and the introduction of new information technologies to
the distribution chain.
Marketing products is too complex a subject to be covered in such a
brief space, so the comments made here are of necessity very general.
Taiwan end-users tend to make purchasing decisions based primarily on
price -- although ironically a higher price may be more attractive to
the Taiwan buyer of certain kinds of consumer goods. A strong local
presence, with a wholly-owned subsidiary, branch office, joint venture
or agent/distributor is another key to success in the market.
Taiwan is a land of small businesses and traders who import from all
over the world. The strength of Taiwan's economy is not in its few
large firms -- although Taiwan has grown a handful of firms whose
presence is beginning to be felt in world markets -- but in its
multitudinous small-to-medium sized firms. There are over 975,000
registered businesses on Taiwan. The island has 97,000 legal factories
and probably another 200,000 illegal factories. To sell to these firms,
a U.S. firm must find a local partner. Although it may be possible to
supply a few types of high-specialized products directly from the U.S.,
most U.S. firms will find it necessary to have some kind of local
presence to market and service their products.
Most firms enter the market with a Taiwan agent. Taiwan firms prefer
the partnering aspect of an agent relationship. Although some firms are
willing to act as distributors, there is a fear that firms seeking
distributors are not serious about the market and will not support their
distributor. Firms selling equipment or machinery frequently find it
necessary to find a partner willing and able to do some assembly or
manufacturing in Taiwan. Although not necessarily a formal joint
venture, these efforts require a higher degree of commitment to the
marketplace. If the size of the market warrants, firms may wish to
consider setting up a branch office or subsidiary in Taiwan. Taiwan
welcomes foreign investments and establishing an office in Taiwan is
relatively easy, if sometimes bureaucratically cumbersome.
There are many ways to find an appropriate agent or distributor in
Taiwan. The Commerce Department's Agent Distributor Service (ADS)
program offers manufacturers a cheap and easy way to identify potential
partners. The Taipei Importers and Exporters Association has over
100,000 members and is well equipped to help foreign exporters find an
agent from among its members. Most Taiwan industry associations publish
lists of their members. The China External Trade Organization (CETRA)
has 4 offices in the United States and these offices contain a wealth of
information on Taiwan. A listing of CETRA's U.S. Offices is included at
the end of this section.
The most important consideration for most Taiwan buyers is initial
price. The most common complaint against U.S. goods is that their price
is too high. Taiwan businesspeople are notoriously short-term oriented
and U.S. firms are frequently frustrated by the fact that most Taiwan
firms do not consider the life-cycle cost of a product when making a
purchase. Although attitudes are slowly changing, most Taiwan firms
will only pay a higher price for a product if they see an immediate
payoff in reduced costs. It is difficult to sell a product that is more
expensive now, but which will be cheaper over two years -- increase the
payback time to four or five years and the sale becomes almost
impossible. After price, the next most important considerations are
quality of the goods and after-sales service.
Taiwan businesspeople are active participants in the global marketplace.
They read trade journals from the U.S., Europe and Japan, participate in
the major international trade events and are well aware of current
trends in their industry. There are local trade shows for most major
industries and CETRA is the co-organizer of many of these shows (usually
in conjunction with the relevant industry association). A local partner
can give the best advice on where and how to advertise, but
participation in the major trade shows and advertisement in the relevant
Taiwan trade journals and industry newspapers is important. More
information on shows can be obtained from CETRA. Taiwan's major
business publications are:
Commercial Times (Daily Newspaper)
Mr. K. H. Yung, Deputy General Manager
Business Service Department
6F, 49 Chunghwa Rd., Sec. 1, Taipei
Tel: 886-2-381-8720
Fax: 886-2-381-0659
Economic Daily News (Daily Newspaper)
Mr. Y. L. Tsiang, Deputy Manager
Business Services Department
8F, 557 Chunghsiao E. Rd., Sec. 4, Taipei
Tel: 886-2-763-7274
Fax: 886-2-764-5344
Business Weekly (Weekly Magazine)
Ms. Carol Cheng, AE
Advertisement Department
5F, 62 Tunhwa N. Rd., Taipei
Tel: 886-2-773-6611
Fax: 886-2-711-0520
Commonwealth (Monthly Magazine)
Ms. Freda Wei, Senior Sales Supervisor
Advertisement Department
4F, 87 Sungkiang Rd., Taipei
Tel: 886-2-507-8627
Fax: 886-2-507-9011
Excellence (Monthly Magazine)
Ms. Sonia Chou, Manager
Advertisement Department
5F, 531 Chungcheng Rd., Hsintien, Taipei Hsien
Tel: 886-2-218-6988
Fax: 886-2-218-6494
Taiwan is well-known as an industrial dynamo that has been racking up
export success for over twenty years. What is less well known is the
fact that that dynamo has produced a domestic consumer market that is
now booming. As noted above, all of the trends in Taiwan point toward a
growing, but fragmenting consumer market. While the specifics of
Taiwan's consumer market are unique, the basics are the same as
anywhere: find out what the consumers want (or create a product that
they will want when they see it), determine what they are willing to pay
for it, research the most efficient means of getting it to them. U.S.
firms wanting to enter the market will find a fairly sophisticated
network of support firms who can help them carry out these tasks.
As in the industrial sector, finding a good local partner -- be they an
agent, distributor, licensee or joint-venture partner -- is essential.
Partners will frequently give guidance on marketing channels, the number
of which is bewildering. Consumer distribution in Taiwan is dominated
by a vast number of small, independent retailers who are served by a
network of wholesalers. As the Taiwan market becomes more attractive to
investors and consumers become more sophisticated, however, this simple
system is breaking down. Larger chains with greater economies of scale
are some of the new players on the scene changing the face of Taiwan's
retail market.
Department Stores: There are over 50 department stores on Taiwan,
concentrated in the large cities. Most of these department stores are
run on a Japanese model, i.e., the bulk of the floor space is rented out
to concessionaires who pay rent and a fixed percentage--about 20 percent
or so--of either their gross or net income. Such arrangements help
department stores avoid risk, and enables replacement of concessionaires
with poor sales. Concessionaires are responsible for decorating and
staffing their sales areas. Although the department stores do purchase
some merchandise on their own account, most of their sales are through
the concessionaires. To compete against the lower priced bulk quantity
selections available in hypermarkets, Taiwan department stores carry a
broad range of high-quality, upscale and expensive merchandise. This
trend should continue. The introduction of computerized systems to
track sales should help department stores in buying and inventory
control to alleviate problems associated with the lack of merchandise
selection. As Taiwan consumers are very aware of customer service and
atmosphere when shopping, department stores will continue to focus on
distinguishing themselves through spacial design, decor, fashion shows,
art exhibitions, VIP cards, in-store child care and food courts, to
attract their target market. Over the next several years, local
developers plan to build approximately 20 shopping centers throughout
the island provided that investors can be identified. The establishment
of shopping centers would be a promising new venue for department stores
and specialty chain stores seeking to branch out.
Specialty Chain Stores: A relatively new phenomenon in Taiwan is the
specialty chain store. U.S. based chains such as Pearle Vision Center
and Toys 'R Us have set up outlets in Taiwan as have firms from other
foreign countries, such as Aoyama Suits and Joshin of Japan. These
chain stores combine the advantages of central purchasing (nearly all
operate their own central warehouses) with product specialization and
are gaining market share rapidly.
Hypermarkets and Supermarkets: In addition to department stores and
specialty chain stores, supermarkets and hypermarkets are proliferating
in Taiwan. The largest supermarket chain on the island is Wellcome,
with over 100 stores. Eventually, Wellcome plans to have over 500
outlets on the island. Hypermarkets are larger stores carrying a
diversified range of products at cut-rate prices. While supermarkets
carry a small range of non-food products, hypermarkets carry a much
broader range of casual clothing, household consumer goods, automotive
accessories and other products in addition to produce normally purchased
in a U.S. supermarket. Although Taiwan's largest hypermarket chain, the
Dutch-invested Makro, was recently forced to close two stores in a
zoning dispute with local authorities, other hypermarket chains are
entering the market and this channel should continue to expand.
Convenience Stores: Now over 1000 strong island wide, convenience
stores, which offer food products and toiletries 24 hours a day, are
major outlets for consumer food items, such as snack foods, beverages,
and juices.
Franchising: Although relatively new in Taiwan, franchising suits the
entrepreneurial spirit of the people on the island. A variety of
franchise arrangements exist on the island ranging from equally shared
joint venture partnerships to the Pizza Hut model where stores are
managed and operated by a "master franchise" or a regionally based
conglomerate. As Taiwan lacks legal expertise on franchise operations,
it is crucial that contractual arrangements entered into by U.S.
companies stipulate adherence to corporate policy. To gain a foothold
in the market and ensure successful performance, franchises must stress
management, personnel training, customer service, consistency in product
quality, and seek guarantees for reliable distribution channels. Vital
to the successful operation of a franchise in Taiwan is identifying a
reliable intermediary capable of enhancing and reinforcing technology
transfer. To date most franchise operations have been fast food
restaurants such as MacDonalds, Kentucky Fried Chicken, TGIF, Pizza Hut,
Burger King, etc. Should the establishment of shopping centers take off
as planned greater opportunities for franchise operations will abound.
Direct Marketing: The direct marketing channel is still relatively
underdeveloped in Taiwan. One exception, however, is "multi-level
marketing" which is becoming more popular as a second job to supplement
household income. Recent figures indicate that there are more than 1.6
million people working for the 183 "multi-level marketing" businesses in
Taiwan which specialize primarily in health foods, skin care products,
and cleaning products. Firms such as Avon, Amway and Nu Skin have taken
advantage of the sales skills of ambitious, well-educated Taiwan women
to become very successful. Direct marketing techniques such as mail-
order and television marketing are still very rare.
In contrast to the industrial/commercial market Taiwan consumers in many
cases prefer to pay more for goods that they purchase. Conspicuous
consumption is rampant in Taiwan society and consumers are eager to pay
top-dollar for the right brand of watch, car, cognac or necktie. While
consumers are willing to pay more for perceived value, price competition
in the marketplace can be brutal. Firms that charge too much for their
products in Taiwan can expect to find parallel importers undercutting
their efforts. Consumers are extremely brand-conscious, but they are
willing to shop around to find the lowest price on their favorite brand.
Moreover, when brand is not important, consumers buy on price.
Selling to the Taiwan authorities deserves a special mention as there
are both excellent opportunities and major obstacles for U.S. firms
interested in Taiwan authority procurement. Most large, technically
complex tenders are let by the Central Trust of China (CTC), a quasi-
statal organization that has procurement and other responsibilities.
Agencies that need to purchase equipment inform CTC of their
requirements, CTC announces and administers the tender procedures; any
technical evaluations are performed by the purchasing entity or its
surrogates. CTC tenders may be local (limited to firms with a Taiwan
office or representative) or international (open to firms outside of
Taiwan), but both kinds of tenders are generally conducted fairly and
openly. U.S. firms have a well-established record of success in winning
CTC-administered tenders.
While CTC handles a large portion of Taiwan authority purchases of
advanced equipment, the bulk of Taiwan authority purchases are
administered by the purchasing entities themselves. Nearly all of these
tenders are open only to firms with a local presence, and it can be
difficult for outsiders to obtain advance information on such tenders.
CTC itself estimates that they procure less than 10 percent of the
authorities total procurement. In addition to the authorities'
extensive infrastructural spending, portions of the economy are still in
the hands of authority owned entities -- telecommunications, and the
production of liquor and tobacco products are authority monopolies or
near monopolies.
U.S. firms have scored some major successes in authority procurement,
but U.S. companies also have serious complaints about the system. The
contracting entities tend to wield excessive power over the contractor:
exorbitant potential liabilities, cumbersome change order procedures,
expensive bonding requirements are common. Contracting entities tend to
view contractors as adversaries, which can make normal business dealings
strained. Taiwan bureaucrats tend to believe that the penalty for
making no decision is always less than the penalty for making the wrong
decision and this attitude can result in frustrating delays or
unreasonable demands on the contractor as bureaucrats seek to take the
safest course of action. Conflict of interest laws in Taiwan are not as
fully developed as those in the United States. Firms employing
relatives of existing officials and/or retired officials have an inside
track on Taiwan authority contracts. However, as Taiwan bids to join
the WTO and sign on to the Agreement for Government Procurement,
Taiwan's procurement practices will need to be more transparent and fall
in line with international standards.
CETRA OFFICES IN THE UNITED STATES
U.S.A. - Chicago
Far East Trade Service Inc.
Director: J.S. Pan
Branch Office in Chicago
225 North Michigan Ave. Suite 333
Chicago, IL 60601
Tel: 312-819-7373
Fax: 312-819-7377
U.S.A. - Miami
Taiwan Trade Center,
Miami Inc.
Deputy Director: Carlos Liu
8491, N.W. 17 St., Suite 107
Miami, FL 33126
Tel: 305-477-9696
Fax: 305-477-9031
U.S.A. - New York
CETDC, Inc., New York
Director: Robert Wang
420 5th Avenue, 28 Fl.
New York, N.Y. 10018-2702
Tel: 212-730-4466
Fax: 212-730-4370
U.S.A. - San Francisco
Far East Trade Service Inc.
Branch Office in San Francisco
Director: Eugene I.J. Chen
555 Montgomery St.,
Suite 603
San Francisco, CA 94111-2564
Tel: 415-788-4304
Fax: 415-788-0468
V: Leading Sectors for U.S. Exports and Investment
A. Best Prospects for Non-Agricultural Goods and Services
Est. 2-Year
Dollar Growth
in U.S. Exports
Rank Industry Sector (1995-1996)*
---- ----------------- -------------
1. Electronic Components 629
2. Travel and Tourism Services 175
3. Aircraft and Parts 167
4. Insurance Services 110
5. Computer Software 100
6. Electronics Ind. Prod./Test Equip 70
7. Electric Power Systems 56
8. Education and Training 55
9. Laboratory Scientific Instruments 51
10. Plastic Materials and Resins 50
11. Household Consumer Goods 46
12. Process Control - Industry 45
13. Pollution Control Equipment 41
14. Medical Equipment 40
15. Chemical Production Machinery 40
* in US$ millions
1 - Electronic Components (ELC)
1994 1995 1996
------- ------- -------
A. Total Market Size 15,019 17,300 19,800
B. Total Local Production 11,500 13,400 15,500
C. Total Exports 7,435 8,700 10,200
D. Total Imports 10,954 12,600 14,500
E. Total Imp from the U.S. 2,371 2,700 3,000
Narrative: Taiwan electronic firms are importing leading edge
components -- especially integrated circuits (ICs) -- from foreign
suppliers to maintain the competitiveness of their assembly operations.
The expected expansion in the use of advanced components will lead to
increased imports from U.S. companies because of their superior
technology. U.S.-made semiconductors are very competitive, ICs in
particular. American firms face their stiffest competition from
Japanese companies which have led the passive component and display/tube
markets. Taiwan-produced components are suitable mainly for consumer
electronic product applications.
2 - Travel/Tourism Services (TRA)
1994 1995 1996
------ ------ -------
A. Total Sales 8,435 9,290 10,200
B. Sales by Local Firms 85 90 100
C. Oseas Sales by 8,350 9,200 10,100
Local Firms
D. Sales by U.S.-Own Firms 845 930 1,020
Narrative: Taiwan's overseas travel has been growing steadily with a
yearly increase of about 20 percent since 1990. The United States
remains the most popular destination outside of Asia, with 453,924
visitors in 1994 (an increase of 22.1 percent from 1993) according to
Taiwan statistics. The long-standing commercial ties between the United
States and Taiwan will continue to generate repeat visits between the
two destinations. Many airlines plan to increase flights this summer to
meet peak season demand. Fierce competition has forced Taiwan travel
agencies to offer more attractive package tours at competitive prices.
Twelve-day tours to the West Coast, including two nights in Hawaii,
continue to be the most popular tours.
3 - Aircraft/Parts (AIR)
1994 1995 1996
------ ------ ------
A. Total Market Size 1,133 1,220 1,350
B. Total Local Production 22 25 30
C. Total Exports 4 5 7
D. Total Imports 1,115 1,200 1,327
E. Total Imp from the U.S. 853 920 1,020
Narrative: Eva Airlines plans to purchase fourteen MD-11, eight Boeing
747-400, and two Boeing 767-300 ER aircraft from 1994-97. China
Airlines (CAL) will add one Boeing 747-400 and three A-300 aircraft in
1996 and 1997 respectively. Eva and CAL have recently signed letters of
intent to buy 12 Boeing 777s, worth an estimated USD 1.12 billion.
Great China Airlines will purchase three MD-90 aircraft in 1995-96.
Other smaller domestic airlines, such as Mandarin and Far East, will
procure one Boeing 747-400 and one MD-82 in the next few years. The
planned purchases of these aircraft will allow the United States to
maintain its leadership position in this market.
4 - Insurance Services (INS)
1994 1995 1996
------ ------ ------
A. Total Premium Income 12,925 14,850 17,000
B. Premium Income by Local 12,385 14,250 16,350
Firms
C. Overseas Premium Income 0 0 0
by Local Firms
D. Premium Inc by Foreign 540 600 650
Firms
E. Premium Inc by U.S.-Own 540 600 650
Firms
Narrative: Due to an increase in per capita income, the desire for more
life and property insurance is growing steadily. Holding more than one
insurance policy is increasingly popular, creating a surge in insurance
policy purchases. Since Taiwan opened its insurance market to U.S.
firms in 1987, 22 U.S. insurance companies (14 life and eight non-life)
have been licensed to operate in Taiwan. The potential on the life
insurance side is very great, but competition is growing as more firms
enter the market. U.S. firms will face strong competition from local
conglomerates that already have a strong sales network, as well as from
aggressive Japanese firms with competitive advantages of similar culture
and customs. Fewer foreign firms are interested in the casualty market.
In 1994, the life insurance subsector generated about USD 10.3 billion
in premium income on Taiwan, up 17.2 percent from the previous year.
5 - Computer Software (CSF)
1994 1995 1996
------ ------ ------
A. Total Market Size 528 630 755
B. Total Local Production 253 300 350
C. Total Exports 70 80 95
D. Total Imports 345 410 500
E. Total Imp from the U.S. 245 290 345
Narrative: Because of growing awareness of intellectual property
rights, Taiwan purchases of foreign-developed software have expanded
rapidly in recent years. The United States is the unchallenged leader,
with an import share of over 70 percent. Strong demand for personal
computer installations by households and private business firms is
propelling the market expansion of PC-based software products. Sales of
networking and application software have excellent prospects. Companies
should consider localization of their products for Chinese language
users.
6 - Electronics Industries Prod/Test Equipment (EIP)
1994 1995 1996
------ ------ ------
A. Total Market Size 1,700 1,850 2,000
B. Total Local Production 780 850 870
C. Total Exports 330 350 370
D. Total Imports 1,250 1,350 1,500
E. Total Imp from the U.S. 350 380 420
Narrative: With several on-going and proposed high-tech investment
projects and growing production of advanced electronic products and
components, sales prospects for advanced EIPT equipment are bright.
Most advanced EIPT equipment must be imported to meet domestic demand
since Taiwan-produced equipment is still limited to simple, low-value
added products. The United States leads the market for semiconductor
EIPT equipment, while Japan controls the EIPT markets in finished
electronic products and passive components. Japanese EIPT firms are
taking a very aggressive approach to the fast growing and lucrative
semiconductor market. Nevertheless, U.S. EIPT suppliers can be expected
to continue as a major source of specialized EIPT equipment for the
industrial/commercial electronics and active components industries due
to their excellent performance, high reliability and durability.
7 - Electric Power Systems (ELP)
1994 1995 1996
------ ------ ------
A. Total Market Size 2,100 2,300 2,500
B. Total Local Production 1,543 1,650 1,800
C. Total Exports 705 750 800
D. Total Imports 1,263 1,400 1,500
E. Total Imp from the U.S. 354 380 410
Narrative: In addition to the controversial fourth nuclear power plant
(Dragongate), the Taiwan Power Company (Taipower) plans to upgrade
existing generation facilities and to build new fossil fuel plants.
Since Taiwan has an electricity shortage, local manufacturing industries
plan to invest in electricity cogeneration and the authorities have
given initial approval for 15 independent power plants (IPPs). U.S.
service and equipment suppliers are in a strong competitive position,
though European and Japanese firms are fighting for a greater market
share. Taiwan-produced electrical generating systems are mostly
assembly products.
8 - Education/Training (EDS)
1994 1995 1996
------- ------- -------
A. Total Expenditures 17,775 18,950 20,140
B. Spending at Home 17,100 18,200 19,300
C. Expenditures on Abroad 675 750 840
D. Spending in the U.S. 285 310 340
Narrative: In 1989, Taiwan relaxed "Rules Governing Advanced Study
Abroad" and reopened overseas study to senior high school graduates.
Due to rising family incomes, the number of students pursuing study
abroad on a self-financed basis has been on the increase in recent
years. According to Taiwan statistics, 40-45 percent of students
pursuing study abroad have gone to the United States. In recent years,
short-term language study and overseas summer camp have been in great
demand. In recognition of the market, and the value placed on English
language skills in Taiwan, the U.K., Canada, and Australia have stepped
up marketing to attract students.
9 - Laboratory Scientific Instruments (LAB)
1994 1995 1996
------ ------ ------
A. Total Market Size 1,050 1,130 1,210
B. Total Local Production 365 400 430
C. Total Exports 197 220 240
D. Total Imports 882 950 1,020
E. Total Imp from the U.S. 339 365 390
Narrative: In recent years Taiwan has made great efforts to improve its
R&D environment. Public R&D expenditure on a wide range of projects has
increased yearly. By 2002, more than USD 13.8 billion (NTD360 billion),
almost triple 1992's USD 3.6 billion (NTD94.8 billion) R&D budget, will
be devoted by the authorities to science and technology development.
The authorities have also provided the private sector with attractive
R&D tax incentives and other support. High-end laboratory scientific
instruments are all imported, and American companies are particularly
strong in this area. Sales of U.S.-made chemical analytical and
electronic instruments are expected to remain high. Japanese suppliers,
by offering low prices, dominate the medium range market sector. German
firms -- although the third leading supplier -- are playing an
increasingly active role in supplying laboratory supplies to Taiwan.
10 - Plastic Materials/Resins (PMR)
1994 1995 1996
------ ------ ------
A. Total Market Size 7,095 7,900 8,800
B. Total Local Production 7,308 8,300 9,400
C. Total Exports 2,110 2,400 2,700
D. Total Imports 1,897 2,000 2,100
E. Total Imp from the U.S. 380 405 430
Narrative: Although Taiwan is a major manufacturer and exporter of
plastic products, increasing land and labor costs are leading
manufacturers to move offshore, thereby depressing this market.
However, with industrial upgrading and a higher level of technology,
Taiwan's demand for advanced or sophisticated items, such as engineering
plastics, should increase substantially, especially in the automobile,
electronics, electric, information products, and building supplies
industries. Most local manufacturers lack the necessary technology to
expand or to move into the engineering plastics market. American firms
-- which are very competitive in engineering plastics -- are expected to
enjoy brisk sales in this fast growing market.
11 - Household Consumer Goods (HCG)
1994 1995 1996
------ ------ -------
A. Total Market Size 3,107 3,460 3,800
B. Total Local Production 4,560 5,100 5,500
C. Total Exports 2,508 2,800 3,000
D. Total Imports 1,055 1,160 1,300
E. Total Imp from the U.S. 220 240 266
Narrative: Consumer purchasing power continues to rise dramatically.
Distribution systems are becoming more efficient due to the introduction
of large stores, such as hypermarkets. American suppliers have gained
brand name recognition and have established strong service networks. In
this sector, sales of small appliances will probably grow at the fastest
rate. Sales growth for large appliances is expected to be in rural
areas, especially in the south. In the north, the market for home
furnishings is improving as consumers upgrade and replace household
items.
12 - Process Controls - Industrial (PCI)
1994 1995 1996
------ ------ ------
A. Total Market Size 1,010 1,090 1,200
B. Total Local Production 400 430 460
C. Total Exports 320 340 360
D. Total Imports 930 1,000 1,100
E. Total Imp from the U.S. 300 320 345
Narrative: Taiwan's manufacturers continue to modernize their
production equipment to speed up the shift toward automation, leading to
increased demand for more advanced industrial process controls. U.S.
suppliers are highly competitive in the growing markets for electronic
and computer-based control systems. More than 80 percent of the U.S.-
made process control systems sold in Taiwan go to state-run firms and
large-scale private enterprises. Private industrial firms are major
purchasers of Japanese systems because of their lower selling price and
good after-sales service. There is little competition from local
manufacturers due to insufficient R&D and lack of technical know-how.
Process control systems used in the chemical industry have the highest
growth potential.
13 - Pollution Control Equipment (POL)
1994 1995 1996
------ ------ ------
A. Total Market Size 700 770 840
B. Total Local Production 365 400 440
C. Total Exports 155 170 190
D. Total Imports 490 540 590
E. Total Imp from the U.S. 139 160 180
Narrative: Strong political pressure from environmental groups and
private citizens has forced the Taiwan authorities to launch several
environmental improvement projects. In 1992, Taiwan EPA initiated a
five-year (1992-96) Green Plan calling for implementation of a number of
pollution control initiatives and measures. The authorities have also
provided attractive tax and financial incentives to encourage private
firms to install proper pollution control facilities. American firms,
with a technological lead, have dominated the public sector while
Japanese equipment is particularly preferred by private firms because of
lower prices and better customer service. Taiwan manufacturers, through
technical cooperation with foreign firms, are capable of producing some
products that meet the domestic needs of small and medium size
industrial firms.
14 - Medical Equipment (MED)
1994 1995 1996
------ ------ ------
A. Total Market Size 600 650 700
B. Total Local Production 254 275 300
C. Total Exports 106 120 140
D. Total Imports 452 495 540
E. Total Imp from the U.S. 155 175 195
Narrative: Taiwan began implementation of an island-wide public health
care insurance system in March 1995. A total of USD 3 billion has been
set aside for health and medical care network projects. Senior
citizens' health care continues to be a major issue in Taiwan. More
than 22 large-scale hospital investment projects will be undertaken by
1999. Projected health care expenditures will double, to reach USD 4
billion by 1996. American firms have been very competitive in the high-
end of this market. Japanese suppliers hold a strong position in the x-
ray diagnostic sector. Local medical equipment manufacturers are
capable of supplying most disposable appliances and supplies used in
hospitals.
15 - Chemical Production Machinery (CHM)
1994 1995 1996
------ ------ ------
A. Total Market Size 940 1,000 1,070
B. Total Local Production 470 495 520
C. Total Exports 160 170 175
D. Total Imports 630 675 725
E. Total Imp from the U.S. 220 240 260
Narrative: Taiwan has a very large and sophisticated chemical industry.
Taiwan's sixth naphtha cracker plant is now under construction by the
Formosa Plastics Group. Older chemical facilities are being expanded
and/or replaced with modern pollution control and process control
equipment. Total investment in chemical materials production in 1994-97
is estimated at USD 13 billion. American-made chemical machinery has a
strong reputation and is well accepted by local users. Japan is the
major competitor for the United States, while Germany and the United
Kingdom are more minor. Most Taiwan-produced equipment is less
sophisticated.
Note: The above statistics are unofficial estimates
Exchanged rates used:
Year Imports Exports Production
----- ------- ------- ----------
1994 26.50 26.40 26.45
1995(e) 26.00 26.00 26.00
1996(e) 26.00 26.00 26.00
B. Best Prospect Agricultural Sectors for U.S. Exporters to Taiwan
(Metric Tons unless otherwise noted)
1 - Red Meat (Beef and Pork)
1994 1995 1996
A. Total Consumption 940,429 944,000 965,000
B. Tot Loc Prod 1,208,785 1,200,000 1,200,000
C. Total Exports* 330,776 320,000 300,000
D. Total Imports * 62,420 64,000 65,000
E. Tot Imp from U.S. 8,443 10,000 10,500
*trade figures are converted to CWE (carcass weight equivalent)
Comments: Australian and New Zealand beef dominate the import
market as price, not quality, is still the major factor in
purchasing decisions. However, U.S. high-quality grain-fed beef
is gaining growing recognition on Taiwan as the superior beef
import product.
2 - Hides and Skins, Bovine
1994 1995 1996
A. Total Consumption 112,167 115,500 120,500
B. Tot Loc Prod 500 500 500
C. Total Exports 0 0 0
D. Total Imports 111,667 115,000 120,000
E. Tot Imp from U.S. 82,872 80,000 80,000
3 - Seafood
1994 1995 1996
A. Total Consumption 1,480,000 1,550,000 1,550,000
B. Tot Loc Prod 1,255,000 1,250,000 1,225,000
C. Total Exports 88,000 80,000 75,000
D. Total Imports 313,000 380,000 400,000
E. Tot Imp from U.S. 228,000 270,000 300,000
Comments: Best Seafood prospects include fresh and frozen lobster
and crab; fresh and frozen roe; surimi; fresh and frozen salmon
and halibut; fresh and frozen scallops and abalone. The import
ban on catfish was lifted in June 1994.
4 - Fresh and Dried Fruits
1994 1995 1996
A. Total Consumption 2,690,000 2,735,000 2,740,000
B. Tot Loc Prod 2,434,000 2,500,000 2,500,000
C. Total Exports 144,000 140,000 140,000
D. Total Imports 400,000 375,000 380,000
E. Tot Imp from U.S. 245,000 250,000 255,000
Comments: The U.S. is the major supplier of fresh fruit to Taiwan
with 74 percent market share in 1993. This mainly reflects
Taiwan's position as the number one market for U.S. apples.
Other major U.S. fruit exports to Taiwan include grapes, plums,
grapefruit, other citrus, cherries, kiwifruit, nectarines, pears
and prunes.
5 - Beer
1994 1995 1996
A. Total Consumption 517,000 660,000 685,000
B. Tot Loc Prod 455,000 450,000 425,000
C. Total Exports 600 600 600
D. Total Imports 62,600 210,600 260,600
E. Tot Imp from U.S. 34,000 67,000 100,000
Comments: Imports of beer continue to grow at a fast pace as the
local market adapts to liberalization. At present, imported beer
has a market share of about 12%. Among imported beers, "Miller"
from the United States ranks No. 1 with 32% of the import market,
followed by Michelob (17%), Beck's (14%) Heineken (9%), Kirin
(5%), San Miguel (4%) and Budweiser (3%).
VI. Trade Regulations and Standards
Tariffs and Import Taxes
Recently, Taiwan has made significant progress in reducing its tariff
level on products of export interest to the United States. On June 23,
1995, the Legislative Yuan (LY) passed the long awaited tariff reduction
bill sent on May 12, 1994 by the Executive Yuan (EY). This new
legislation calls for a reduction of import duties on a total of 758
industrial and agricultural products, by an average of 2.8 percent. The
average nominal and effective tariff rates on affected commodities
ranging from farm products to industrial raw materials, and
pharmaceuticals will be lowered from 8.89 percent and 4.99 percent to
8.64 percent and 4.69 percent respectively, saving exporters US$ 96.2
million. Thirty import categories including soybeans will be exempted
from import duties. This is the first time that Taiwan authorities have
cut tariffs on fresh fruits and vegetables which are grown on the
island.
In addition to import duties, importers must also pay a 0.5 percent
harbor construction fee and a 5 percent value-added tax. Goods entering
Taiwan by air freight or parcel post are exempt from harbor fees. A
commodity tax ranging from 2-60 percent must be paid if an imported
product falls into one of seven commodity categories including: rubber
tires, cement, beverages, oil and gas, electric appliances, flat glass,
and automotive products. The tax is assessed on the C.I.F. and duty-
paid value of affected imports.
Customs Valuation
Taiwan revised its Customs Law in July 1986 in order to implement
procedures consistent with the "Agreement on Implementation of Article
VII of the GATT." This article refers to the valuation of all imports
for the assessment of duties. The Taiwan authorities have stated that
upon its accession to WTO, it will fully adhere to the Customs Valuation
Code.
The dutiable value of an import into Taiwan is defined as its cost,
insurance, freight (C.I.F.) value. If customs officials consider an
invoice's transaction value to be too low, they will value the item
based on the actual transaction value.
Import Licenses
Taiwan continues to maintain an import licensing system, but the number
of items requiring import licenses is being gradually reduced. In
January, 1993, the Legislative Yuan passed a Trade Act that simplifies
import procedures by replacing the import licensing system with a
"negative list" reducing the number of items subject to licensing.
Local authorities finalized the "negative list" in July, 1994. As of
June, 1995, 8,645 items, or 92.5 percent of the 9,349 items in Taiwan's
tariff schedule, can be imported without a license. Of the 465 items
that do require some kind of license, 139 require only pro-forma
notarization from local commercial banks and 326 require import permits
from the Board of Foreign Trade (BOFT). Imports of another 239 items,
largely arms, munitions, and several important agricultural products,
including rice, are banned outright. While the Department of Health
(DOH) has made efforts to reduce the number of items prohibited from
import, a few problems remain in the pharmaceutical industry, where
import licenses are not granted for four specific products including:
eye drops, topical dermatological preparations & antiseptics,
analgesics, and digestants & antacids.
In other cases where licenses are required, the importer may need to
first obtain the authorization of numerous agencies, such as Taiwan's
Department of Health for medical equipment, and the Council of
Agriculture for fishing and sporting boats--in the rare instances where
import licenses have been granted--and many agricultural items. Often
these additional approvals and documentary requirements add to the
administrative burdens of importing the products into Taiwan and cause
long delays, creating a defacto ban. As part of Taiwan's WTO accession,
the United States is requesting the elimination of import bans, quotas,
and other non-tariff restrictions, mostly on agricultural imports, that
are prohibited by WTO rules. The United States is also seeking Taiwan's
adherence to the Tokyo Round negotiated licensing code and customs
valuation code.
Export Controls
Of the total 9,349 items in Taiwan's current tariff schedule (HS), 7,544
or 80 percent may be exported. In the past, most exports required
export permits. As of June 1995, 1,805 items require export licenses.
Licenses are required for the following reasons:
o Implementation of quantitative restriction arrangements on export of
textile and garment products to the U.S., Canada, the European
Communities (EC).
o National security, i.e. to ensure the security of supply of certain
daily necessities and important industrial materials, including rice,
salt, coal and uranium.
o Implementation of trade and social policies, i.e. the export of
munitions and armaments, high-tech equipment and supplies, and
narcotics.
o Protection of intellectual property and endangered species of wild
fauna and flora.
o Concern over hygiene and health of certain products.
Import/Export Documentation
A foreign supplier's proforma invoice (quotation) is required for
application of an import permit. Documents required for shipments to,
or from Taiwan include the commercial invoice, bill of lading or air
waybill, packing list, and certificate of origin. Shipments of
agricultural products, plants, and animals to Taiwan may require
certificates of inspection or quarantine issued in the country of origin
and are subject to inspection and quarantine upon importation into
Taiwan.
The commercial invoice must show the import license number; F.O.B., C&F,
or C.I.F. value; insurance; freight; and discounts or commissions, if
any. The commodity description and value shown on the commercial
invoice must agree with those on the import license. No requirements
exist as to the form of a commercial invoice or a bill of lading. In
addition to the information generally included in a standard bill of
lading, all marks and case numbers appearing on packages must be shown.
Customs does not permit the grouping of marks or numbers on a shipment
of mixed commodities.
Temporary Entry
Taiwan is not a member of ATA carnet system due to the lack of
diplomatic relations with ATA carnet members. However, Taiwan has
signed bilateral agreements with 20 nations including 12 EU countries,
South Africa, Singapore, Korea, New Zealand, Australia, Finland, Sweden,
and Switzerland to implement ATA carnet. These agreements grant
temporary customs exemptions for a wide range of products such as test
instruments, scientific equipment, exhibition goods, etc. which are
brought into Taiwan for sales promotion and exhibition purposes on a
temporary basis. Upon conclusion of the event, items must be shipped
out of Taiwan within a year to avoid imposition of harbor taxes and
tariffs. Such an agreement with the United States is still under
discussion.
Labeling, Marking requirements
Taiwan labeling regulations require that the net contents of packaged
goods shall be shown in metric units. Dual labeling in metric and
nonmetric units is permitted. Measurements calibrated in nonmetric
units must show metric equivalents. On March 7, 1995, Taiwan tightened
regulations on Chinese labeling for food items, expanding coverage to
all food products sold at retail (but allowing exemptions for some food
service items) and requiring the labels to be affixed prior to customs
clearance. Required information includes name and address of
manufacturer or importer, date of production and/or expiry date and list
of ingredients. Taiwan's new Consumer Protection Law requires that all
imported goods have Chinese language labels and instructions which shall
be at least as comprehensive as the language-of-origin labels and
accompanying instructions.
Prohibited Imports
Narcotics are barred from entry into Taiwan. Arms, munitions, and
several important agricultural products, including rice, animal offal,
and sugar, are banned outright. Problems still remain in the
pharmaceutical industry, where import licenses are not granted for four
specific products. In addition, Taiwan maintains a de facto ban on the
importation of fishing boats (including sport fishing boats), which has
frustrated the efforts of several U.S. firms.
Standards (E.G. ISO 9000 Usage)
Taiwan's standards are generally not a problem for U.S. exporters.
"Chinese National Standards (CNS)", written and published by the
National Bureau of Standards of the Ministry of Economic Affairs, list
relevant standards requirements for imported products into Taiwan. CNS
are similar to or in conformity with international standards such as ISO
and IEC. The Bureau of Commodity Inspection and Quarantine carries out
necessary commodity inspection measures according to the Commodity
Inspection Law. The purpose of this inspection is to promote the
quality of commodities, ensure product safety, and protect consumer
interests. The methods of commodity inspections generally conform to
international standards.
Regarding food products, Taiwan authorities maintain a restrictive list
of food additives and colorings and allowable tolerances for chemical
residues on fresh fruits and vegetables. Imported products can only
contain approved ingredients, substitutes are not allowed entry. This
regime can impede the importation of fresh and processed U.S. food
products.
Free Trade Zones/Warehouses
Taiwan's three export processing zones (EPZs) were established in order
to encourage investments, and to expand the export of products and
services. Therefore, all products imported by enterprises located in
EPZs for their own use are exempt from customs duties. The products of
the manufacturing industry in the EPZs are normally for export.
However, 50 percent of their annual production are allowed for sale on
the local market after the payment of customs duties. If the quantity
to be sold locally is over 50 percent of annual production, then
approval must be sought from the Export Processing Zone Investment
Screening Board.
Opened in 1980, the Hsinchu Science-Based Industrial Park is Taiwan's
most visible attempt to move into technology-intensive industries.
Firms investing in the park enjoy substantial tax benefits,
concessionary public financing, low land cost, and support services such
as warehousing, factories, and telecommunications facilities. Customs
duties must be paid if the finished product is sold domestically.
Bonded factories may be established anywhere in Taiwan. Bonded factory
companies produce primarily for export markets and may import their
manufacturing components and raw materials duty free. However, the
authorities will not extend duty-free treatment to items whose duty rate
is already considered minimal, materials known to pollute the
environment, and items for which a domestic source is readily available.
Bonded storage facilities are available in Taiwan and are limited almost
entirely to those warehouses under the direct supervision of the
Directorate General of Customs. Goods may be entered into bonded
warehouses on arrival in Taiwan, provided the consignee has made prior
application customs for such entry.
Special Import Provisions
For political, diplomatic, or economic reasons, the authorities have
placed restrictions on the imports of certain permissible goods from
designated procurement areas. To counter its chronic trade deficit with
Japan and its trade surpluses with the United States and the EC
countries, Taiwan frequently excludes Japan and favors North America and
Western Europe through regional restrictions in import licensing
procedures and in public procurement tenders. However, the area import
restrictions will no longer apply after Taiwan joins the World Trade
Organization (WTO). Also restricted and/or controlled is the
importation of certain products on the grounds of national security,
maintaining the public order, or preserving human, animal or plant
health. All require a prior import permit issued by the Board of
Foreign Trade. Taiwan authorities have recently lifted the ban on
importation of several raw food products from mainland China, based on
the needs of the food processing industry in Taiwan.
Membership in Free Trade Arrangements
Although Taiwan is currently not a member of any free trade
organizations, it has made some progress in its attempt to join
international organizations in recent years. Taiwan has applied to join
the WTO and its application is being handled by a WTO working party.
Taiwan is now holding bilateral talks with WTO members on tariff
reductions and market liberalization issues. Taiwan became a member of
the Asia Pacific Economic Cooperation (APEC) in November, 1991. Taiwan
is a member of the Asian Development Bank and became a member of the
Central American Bank for Economic Integration in 1992.
VII. Investment Climate
Taiwan has taken a number of steps to liberalize its economy and improve
its investment environment as part of its dual push to enter the World
Trade Organization (WTO) and develop the island as an Asia-Pacific
Regional operations center. Partly as a result of these efforts,
foreign investment in Taiwan increased significantly in 1994, reversing
a four-year decline. Foreign invested firms are generally accorded
national treatment. Trade-related capital flow is relatively free.
Investment disputes are rare. Most export performance, local content
requirements and foreign ownership limits have been removed. A number
of restrictions on foreign institutional investment and banking,
however, remain in place. Taiwan has a comprehensive legal system to
protect foreign investments and property rights and ensure fair
competition. Taiwan is a stable multi-party democracy. Due to labor
shortages and a new national health insurance plan, wage and benefit
costs are rising. Labor disputes are relatively rare.
A1. Openness to foreign investment
Taiwan has long encouraged and facilitated direct foreign investment.
Regulations affecting foreign-invested enterprises are thus generally
transparent and non-discriminatory. The authorities have taken a number
of steps in the past two years to improve the investment climate,
especially for service industries. Most ownership restrictions in the
securities trading, insurance and banking industries, for example, have
been removed. In its negotiations to enter the World Trade Organization
(WTO) as a developed economy, Taiwan has committed to bring its trade
and investment regimes into full compliance with all international
standards. Taiwan's plan to develop the island into a regional
operations center for domestic and foreign businesses should result in
further liberalization measures over the next few years. Plans call for
the gradual easing of quotas on the hiring of foreign workers and
liberalization of restrictions on telecommunications, banking, and
shipping.
The Taiwan authorities permit foreign direct investment through new
investment, acquisitions, mergers and takeovers as stipulated by the
Statute For Investment By Foreign Nationals (SIFN) and the Statute For
Investment By Overseas Chinese (SIOC). The vast majority of industrial
categories are open to foreign investment. A "negative list" adopted in
1990 clearly specifies industries closed to foreign investment. Foreign
investment is prohibited in such industries as agriculture, cigarette
manufacturing, liquor distilling, petroleum refining, basic
telecommunications, broadcasting, and electricity distribution. Foreign
ownership is restricted in such industries as general construction,
shipping, mining, legal and accounting services. Some restrictions on
foreign participation in construction projects are being lifted.
Private and foreign participation in power generation projects, for
example, is now allowed. New amendments to the SIFN and SIOC now under
consideration in the Legislative Yuan will, if passed, permit foreign
investors to invest in NT dollars, relax restrictions on repatriation,
and waive joint ventures with foreign ownership below 20 percent from
restriction by the negative list.
Applications for investment approvals, acquisitions and mergers are
screened by the Foreign Investment Commission (FIC), Ministry Of
Economic Affairs (MOEA), to determine whether the investment project is
subject to the above mentioned restrictions. FIC approval is generally
granted within 4-5 working days. Investments eligible for tax breaks or
other incentives, and investments in restricted or pollution-prone
industries are screened by an inter-ministerial commission. Processing
generally takes about two-three weeks. Screening is routine and non-
discriminatory.
Both the SIFN and the SIOC specify that foreign-invested enterprises
must receive the same regulatory treatment as that accorded their local
counterparts. Foreign companies may invest in firms undergoing
privatization. They are eligible to participate in public-financed
research and development programs.
Taiwan offers a number of incentives to encourage investment, including
accelerated depreciation and tax credits for investment in pollution
control systems, production automation and energy conservation.
Equipment for R&D purposes can be brought into Taiwan duty-free. Other
incentives include interest-free or low-interest NT dollar and/or
foreign currency loans for developing new and/or leading products,
upgrading traditional industries, and importing automation or pollution
control equipment. A broad five-year tax holiday for new investments,
abolished in January 1991, was re-instituted in January, 1995.
A2. Conversion and transfer policies
There are relatively few restrictions on converting or transferring
funds associated with a direct investment. Approved foreign investments
can readily obtain foreign exchange from a large number of designated
banks. The remittance of invested capital into Taiwan is made according
to a schedule submitted by the company and approved by the FIC.
Declared earnings, capital gains, dividends, royalties, management fees
and other returns on investments can be repatriated at any time. The
invested principal can be freely repatriated in whole or in part at any
time one year after the venture goes into operation. Repatriation of
invested principal at an earlier date is subject to FIC approval. As
noted in section A1 above, proposed amendments to the SIFN and SIOC
would remove restrictions on repatriation. Capital movements arising
from the trade of merchandise and services as well as from debt
servicing are not restricted. For purposes other than trade, no prior
approval is required if the cumulative amount of inward or outward
remittances is less than $5 million for a resident or $10 million for a
corporation (including foreign-invested enterprises). No delay in
remitting investment returns or principal through legal channels has
been reported.
A3. Expropriation and compensation
Taiwan law stipulates that no venture with 45 percent or more foreign
investment can be nationalized for a period of 20 years after the
venture is established. Further, Taiwan law stipulates that
expropriation can be based only on national defense needs, and that
"reasonable" compensation shall be given. No foreign-invested firm has
ever been nationalized or expropriated. No examples of "creeping
expropriation" or official actions tantamount to expropriation have been
reported.
A4. Dispute settlement
Investment disputes are not common. Taiwan is not a member of the
International Center for the Settlement of Investment Disputes nor the
New York Convention of 1958 on the recognition and enforcement of
foreign arbitrage awards. Normally, Taiwan resolves disputes based on
domestic laws and regulations.
Taiwan has comprehensive commercial laws, including a Company Law,
Commercial Registration Law, Business Registration Law, Commercial
Accounting Law, and laws for specific industries. Taiwan's Bankruptcy
Law guarantees that all creditors have the right to share the assets of
a bankrupted debtor, on a proportional basis. Secured interests in
property, both chattel and real, are recognized and enforced through a
reliable registration system.
Taiwan's court system is independent and free from interference from the
Executive Branch. Judgments of foreign courts are enforced by the local
courts on a reciprocal basis on the condition that the foreign courts
have jurisdictional authority.
A5. Performance requirements and incentives
The Taiwan authorities impose few performance requirements on foreign-
invested firms. There are, for example, no requirements that firms
transfer technology, locate in a specified location, or hire a certain
number of local employees in exchange for permission to invest. Like
domestic firms, however, foreign-invested companies are subject to
restrictions on the number of foreign laborers that can be hired and
must locate in areas zoned for appropriate industrial or commercial use.
Tax credits are offered to encourage locating in less-developed areas of
Taiwan. Tax credits and tax breaks are offered to encourage the
introduction of new technology into Taiwan. Subsidies of up to one-half
of total expenditures are offered for R&D that results in the
development of new products.
Manufacturing firms located in export processing zones and the Hsinchu
Science-Based Industrial Park are, in principle, required to export all
of their production in exchange for tariff-free treatment of production
inputs. These firms may, however, sell up to 50 percent of their
production on the domestic market upon payment of relevant import
duties.
Local content requirements, abolished for most industries in 1986,
remain in place for motor vehicles. Thirty-one percent local content is
required for heavy-duty vehicles over 10 tons, 37 percent for heavy-duty
vehicles 3.5-10 tons, 50 percent for passenger cars, small trucks and
vans, and 90 percent for motorcycles.
A6. Right to private ownership and establishment
Private investors have the general right to establish and own business
enterprises except in industries involving national security and state-
owned monopolies. Private entities have the right to freely acquire and
dispose of interests in business enterprises. Except in sectors
controlled by state monopolies, firms have the same access as state-
owned companies to markets, credit, licenses and supplies.
A7. Protection of property rights
Taiwan has a comprehensive legal system that protects and facilitates
acquisition and disposition of property rights. A full range of criminal
and administrative relief is available to rights holders. Criminal
sentences, including jail terms for egregious cases, are routinely meted
out by Taiwan courts in intellectual property rights (IPR) related
cases. Civil damages are also available. Newly instituted export
monitoring procedures for computer software products and for trademarked
goods appear to have helped deter the export of pirated and counterfeit
goods. Taiwan is not a member of the Bern or Paris Conventions,
although it generally adheres to the principles embodied in those
agreements.
Taiwan's copyright, patent and trademark laws already provide a level of
protection for rights holders that meets most international standards.
Those laws are now being further amended to bring them into conformity
with all TRIPS standards. The scope of amendments required are the
subject of WTO accession negotiations with the United States and other
trading partners. Draft trade secret and integrated circuits laws are
expected to pass the legislature as part of Taiwan's WTO accession
package.
A8. Regulatory system: laws and procedures
Taiwan's laws and policies generally foster competition. Taiwan has a
set of relatively comprehensive laws and regulations to govern taxes,
labor, health and safety.
Bureaucratic procedures associated with investment applications are
relatively streamlined and transparent. The Industrial Development and
Investment Center (IDIC) functions as the coordinator between investors
and all agencies involved in the investment approval process.
The work permit issuance procedure for foreign white-collar employees
has been improved. For most foreign-invested manufacturing firms, the
permits, issued by the Foreign Investment Commission, can be obtained in
one to two weeks. Investors in non-manufacturing enterprises are
required to obtain work permits through the agency in charge of that
particular sector (e.g., the Ministry of Justice is responsible for
issuing work permits for foreign legal consultants). The different
standards and procedures used by the various authorities responsible for
issuing work permits can cause confusion and processing delays.
A9. Capital markets and portfolio investment
A wide variety of credit instruments, all allocated on market terms, are
available to both domestic and foreign invested firms. Legal and
accounting systems are transparent and consistent with international
norms. The regulatory system is generally fair. Foreign investors
remain subject to some restrictions: individual foreign investors may
not trade in Taiwan's securities markets, and institutional investors
are subject to ownership and investment fund limits as well as
repatriation restrictions. The Taiwan authorities have taken a number
of steps over the past two years, however, to encourage the more
efficient flow of financial resources and allocation of credit.
International banks are now allowed to accept NT dollar deposits.
Limits on branch banking have been partially lifted. The insurance and
securities industries have been liberalized and opened to foreign
investment. Access to Taiwan's securities markets by foreign
institutional investors has increased.
Taiwan has a complicated regulatory system governing portfolio
investment. Only officially-approved "Qualified Foreign Institutional
Investors (QFII's)," including large banks, insurance companies,
securities firms, and mutual funds can engage in portfolio investment.
The QFII's must obtain this permission from the Securities and Exchange
Commission and the Central Bank of China. Each QFII is limited to a
ceiling of $200 million. Foreign institutional investors may not freely
repatriate invested principal until three months after the investment is
made. QFII's may, however, move funds out of Taiwan temporarily, as
long as the money is brought back into Taiwan within the three-month
period. Earnings may not be repatriated until 12 months after the
principal arrives in Taiwan.
Legal restrictions on foreign ownership in a company listed on the
Taiwan Stock Exchange (TAIEX) prevent foreign acquisition. Foreign
ownership in a TAIEX listed company is limited to 5 percent for a single
foreign investor and 10 percent overall. The limits will be raised to 6
and 12 percent, respectively, when amended regulations are promulgated.
On a case-by-case basis, foreign investors may request approval from the
Foreign Investment Commission to exceed these limits. There have been
no reports of private or official efforts to restrict the participation
of foreign-invested firms in industry standards-setting consortia or
organizations.
Taiwan has a tightly regulated banking system. The financial sector as
a whole has, however, been steadily opening to private investment since
the middle of the 1980's, although the foreign presence remains small.
The establishment of many new securities firms, banks, and insurance
companies has underscored this liberalization trend and enhanced
competition. The five largest banks, however, are still owned by the
public authorities. As of March 31, 1995, these five had combined
assets of $318 billion, accounting for 44 percent of the total assets of
all domestic and foreign banks.
A10. Political violence
Taiwan is a multi-party democracy, with a stable, though still evolving,
democratic political institutions. Major civil disturbances,
insurrections or other serious threats to the political system are
unlikely. There have been no reports of politically-motivated damage to
foreign investment. Both local and foreign-invested companies have,
however, been subject to protests and demonstrations related to
environmental issues.
B. Bilateral investment agreements
Taiwan has concluded bilateral investment protection agreements with the
following countries: Argentina, Indonesia, Latvia, Malaysia, Malawi,
Nicaragua, Nigeria, Panama, Paraguay, the Philippines, Singapore, and
Vietnam.
Under the terms of the 1948 Friendship, Commerce and Navigation Treaty
with the United States, U.S. investors are generally accorded national
treatment and are provided a number of protections, including protection
against expropriation. Taiwan and the United States also have an
agreement pertaining to investment guarantees, which serves as the basis
for the U.S. Overseas Private Investment Corporation (OPIC) program in
Taiwan. In September 1994, representatives of the United States and
Taiwan signed a bilateral Trade and Investment Framework Agreement
(TIFA) to serve as the basis for consultations on trade and investment
issues.
C. OPIC and other investment insurance programs
OPIC programs are available to U.S. investors. U.S. investors have
never filed an OPIC insurance claim for an investment in Taiwan. Taiwan
is not a member of the Multilateral Investment Guarantee Agency.
D. Labor
Taiwan has an ample supply of well-educated and skilled workers though
shortages exist in specific fields like computer software design,
securities brokerage, and foreign exchange dealing. The supply of
unskilled workers for such labor-intensive industries as garments and
apparel, footwear, dyeing and finishing, consumer electronics, pottery,
metal pressing, and construction is very tight. Turnover of unskilled
labor is high. Because of labor shortages, 73 manufacturing industries
and major public construction projects are allowed to import alien
workers. As of March 31, 1995, approximately 170,000 alien workers were
in Taiwan, representing about two percent of the labor force.
There are no special hiring practices, but wages include at least a one
month bonus at the end of the year; fringe benefits often include
meals, transportation and sometimes dormitory housing. A standard Labor
Insurance program is mandatory. The program provides maternity,
retirement and other benefits. A new National (universal) Health
Insurance System that went into effect in March 1995 replaces the health
insurance aspects of the Labor Insurance program. The new system
expands coverage to include the entire families of employees. The
combined premium costs of the two programs to an employer is, on
average, two to three times greater than the former cost of the Labor
Insurance program alone (costs vary according to workers' monthly
salaries.)
Taiwan does not have unemployment insurance, although a limited
unemployment relief program is run by the Council of Labor Affairs
(CLA). The Labor Standards Law sets a standard eight-hour work day and
48-hour work week. The law restricts child labor, and requires the
employer to provide overtime pay, severance pay and retirement payments.
Taiwan's minimum wage is set at NT $14,010 (about $530) per month which
the CLA plans to raise to NT $14,880 (about $562) in August of 1995.
Current manufacturing wages average about NT $31,000 (approximately
$1,170). The minimum wage is adjusted in August every year, based on
the inflation rate (measured by the Consumer Price Index) plus half of
the increase in labor productivity. The law mandates criminal penalties
(fines) for labor law violations.
Independent labor unions have been permitted since martial law was
lifted in 1987. Their membership is limited and declining, down by more
than half to 4,000 or 0.04 percent of the work force in 1994. According
to official statistics, workers involved in labor disputes in 1994
numbered 30,500, down 20 percent from 37,900 in 1993. Taiwan is not a
member of the International Labor Organization (ILO), but it generally
adheres to the ILO convention protecting worker rights.
E. Foreign trade zones and free ports
Taiwan has no duty-free foreign trade zones or free ports. It has three
export processing zones and a science-based industrial park where
imports to be used in the manufacture of exports are duty free. Up to
50 percent of the output of firms in these zones may be sold locally,
after import duties and other taxes are paid. Foreign-invested firms in
the zones operate under the same regulations as local firms located
there.
F. Capital outflow policy
Capital movements arising from the trade of merchandise and services are
not restricted. For purposes other than trade, no approval is required
for capital inflows or outflows below $1 million per transaction, with
an annual cumulative limit of $5 million per resident or $10 million per
registered business firm. An outward investment may not exceed 40
percent of the investing company's paid-in capital unless such an
investment project is approved by its shareholders. A local company is
not required to obtain prior approval for overseas investments of less
than $10 million. Taiwan has put in place, however, a number of
specific registration/approval requirements for investments in mainland
China.
The Taiwan authorities actively encourage investment into Southeast
Asian nations (as part of Taiwan's strategy to diversify outward
investment away from mainland China), and into a number of countries
with which Taiwan has diplomatic relations. Incentives include loans
and/or overseas investment insurance with the Export-Import Bank of
China.
G. Foreign direct investment statistics
Statistics on foreign direct investment in Taiwan are available from two
sources. The Foreign Investment Commission (FIC) publishes monthly and
yearly foreign investment approval statistics by industry and by
country. The Central Bank of China (CBC) publishes foreign direct
investment arrivals on a quarterly and yearly basis. CBC data,
contained in balance of payments statistics, are not further classified
by industry or country.
According to FIC statistics, foreign investment approvals rose 34
percent in 1994 to $1.6 billion, reversing a decline over four
consecutive years. In the first five months of 1995, foreign investment
approvals surged 82 percent from the corresponding period of 1994,
reaching $800 million.
Cumulative foreign investment approvals from 1952-1994 totaled $19.3
billion. Of this amount, one-quarter was directed toward the
electronics and information industries. Other industries with
relatively heavy foreign investment include chemicals, machinery and
basic metals, and more recently trade, banking and insurance.
The United States and Japan are the two main sources of Taiwan's foreign
investment, jointly accounting for over half of cumulative foreign
investment approvals. Approvals for Japanese investments amounted to
$5.5 billion or 28 percent of total foreign investment. Of total
Japanese investment, 25 percent was placed in electronic and information
industries with another 25 percent in financial and trade industries.
Approvals for U.S. investments totaled $5.0 billion, or 26 percent of
total foreign investment. Forty percent of U.S. investment was directed
toward electronic and information industries, with another 20 percent
in chemicals.
From 1952 to 1994, Taiwan firms entered into 4,100 technical cooperation
agreements with foreign companies. Of these agreements, 60 percent were
signed with Japanese firms. About 24 percent of such agreements were
with U.S. firms. Taiwan is aggressively pursuing cooperation agreements
with foreign companies to encourage those firms to make Taiwan their
"regional operations centers" for East Asia. Of the 25 "strategic
alliance agreements" reached with multinational firms (many of which
have a technology cooperation component), 14 have been signed with U.S.
companies.
The appreciation of the NT dollar and rising land and labor costs have
spurred a surge in outward investment. As of 1994, cumulative approvals
for outward investments totaled $13.4 billion, according to Taiwan
statistics. Most observers believe this figure far underestimates the
actual amount of outward investment. According to PRC figures, Taiwan's
cumulative contracted investment in mainland China was almost $24.3
billion by the end of 1994. According to recipient country statistics,
cumulative Taiwan contracted investment in Southeast Asian countries
exceeded $21.6 billion by the end of 1994.
Tables under Apppendix D.
VIII. Trade and Project Financing
The Banking System
Taiwan has a Central Bank, 34 domestic banks (with 1,259 branch
offices), eight "medium" business banks (with 419 branch offices), and
37 foreign banks (with 57 local branches). There are also 74 credit
cooperatives, 285 farmers' credit units, and 27 fishermen's credit units
on the island. These banks, cooperatives, and credit unions have
traditionally played a dominant role in finance in Taiwan.
The Central Bank performs all of the functions normally associated with
central banks. It is entrusted with responsibility for issuing
currency, managing foreign exchange reserves, handling treasury receipts
and disbursements, setting interest-rate policy, overseeing the
operations of other financial institutions, and serving as a lender of
last resort.
Taiwan's 34 commercial banks offer a wide range of services including
receiving deposits, making loans, handling trade financing and providing
guarantees, and discounting bills and notes. Most are also involved in
the securities business, underwriting and trading securities and
managing bond and debenture issues, as well as in providing savings-
account facilities. The Chiao Tung Bank assists with long-term
financing for industries and projects, while the Export-Import Bank and
the Farmers' Bank focus respectively on trade financing and agricultural
development.
Foreign banking institutions are playing an increasingly important role
on the financial scene. Foreign banks are essentially treated as
domestic commercial banks -- are permitted to engage in trade financing,
foreign exchange dealings, lending to individuals and corporations, and
various kinds of trust business. Currently, many foreign institutions
are concentrating on the development of consumer-loan and credit-card
business in order to build greater overall market presence.
Foreign Exchange Controls
There are no foreign exchange (FX) amount limitations for transactions
for trade, insurance and authorized investment. Similarly, there are no
FX limitations on repatriating capital and profits related to direct
investments or trade, providing that the investment is approved by the
Taiwan authorities. There are, however, FX controls on portfolio
investments. All other transactions involving inward or outward
remittances for domestic firms have a $10 million annual ceiling per
account. Individuals are allowed to remit a maximum of $5 million
yearly to or from overseas.
Financing Availability
Importers are usually responsible for arranging their own financing.
The Taiwan Authorities' assistance is, however, available in certain
cases. The Export-Import Bank, for instance, provides loans of up to 85
percent of the total contract value on sophisticated machinery and other
high-technology items. Loans are also available for imports of natural
resources, raw materials, and spare parts. Such loans can be granted
for equipment and materials employed in the manufacture of goods for
export, as well as for those used in the production of sophisticated
equipment and the development of advanced technologies.
Methods of Payment
Bank-to-bank Letters of Credit (L/C) constitute Taiwan's most important
import payment process. In 1994, Taiwan imported $85.3 billion, of
which $54.1 billion were financed through L/C's. On a lesser scale,
company to company payments are made via Open Account (O/A), documents
against Payment (D/P) and Documents Against Acceptance (D/A). The AIT
Commercial Section recommends that U.S. exporters minimize financial
risk by requiring their Taiwan trading partners to finance their imports
through L/C's. A large majority of Taiwan's importers utilize usance
L/C's with validity of up to 180 days. On the whole, U.S. companies
find Taiwan's financing system to be efficient, and report no widespread
pattern of deferred payment.
Any banks authorized to handle foreign exchange may issue L/C's. This
includes local banks (and their branch offices), 11 U.S. banks and their
branches, and 26 third-country banks. All banks on Taiwan that are
authorized to handle foreign exchange have extensive ties with one or
more U.S. banks. This relationship includes test key exchanges.
Types of Available Export Financing and Insurance
In 1987 Taiwan's EXIMBANK (EXIMBANK/T) established a $200 million fund
to assist U.S. firms exporting goods and services to Taiwan. EXIMBANK/T
provides funds to commercial banks in the U.S. on a fixed interest rate
basis. The U.S. banks then use this "loan" to finance U.S. exporters
via such instruments as D/A, Usance L/C, Deferred Payment L/C, Standby
L/C, or Letter of Guarantee. American exporters seeking competitive
financing terms to export goods to Taiwan may contact U.S. commercial
banks or their associates which are members of the Taiwan EXIMBANK Fixed
Rate Relending Facility Program (FRRP). The program provides financial
assistance for American exporters by extending trade credit to Taiwan
importers. Because U.S interest rates tend to be lower than those
offered through Taiwan's EXIMBANK, however, this resource is not heavily
used by U.S. exporters.
Project Financing
Taiwan does not rely on money from multilateral institutions to
facilitate investment projects. In the public sector, Taiwan
authorities rely heavily on bond issuance to cover the huge outlays
connected with the Six-Year Development Plan. In addition, the
authorities also initiated an energy tax and a pollution tax to help
protect the environmental problems. Private investment projects can be
easily financed through banks on the island. Moreover, many Taiwan
investors, especially large-sized companies, employ financial
instruments to raise funds in capital markets both at home and abroad.
List of Banks with Correspondent U.S. Banking Arrangement
- Bank of Taiwan
- Chang Hwa Commercial Bank, Ltd.
- Chiao Tung Bank
- Chinatrust Commercial Bank
- Export-Import Bank
- Farmers Bank of China
- First Commercial Bank
- Hua Nan Commercial Bank, Ltd.
- International Commercial Bank of China
- Land Bank of Taiwan
- Shanghai Commercial & Saving Bank, Ltd.
- Taipei Bank
Chapter IX. Business Travel
Business Customs
Formal business introductions in Taiwan are not complete without an
exchange of business cards. It is advisable for foreign visitors to
have their cards printed in both English and Chinese. There are
numerous printers in Taiwan that specialize in printing these
indispensable business aids. They offer accurate, low-cost service,
with card orders normally being filled within only a few days. Since
cards are required on nearly every business occasion, it is a good idea
to carry sizable numbers of them at all times.
The New Taiwan dollar (NTD) is the official currency. It is circulated
in one-, five-, ten-, and fifty-dollar coins, and fifty, one-hundred,
five-hundred, and one-thousand dollar notes. Since the relaxation of
foreign currency controls in 1987, exchange between foreign currency and
the NTD has become relatively free although exchange is still limited to
authorized banks and dealers.
Up to NTD 40,000 and USD 5,000 can be brought into Taiwan by a foreign
visitor. It should, however, be declared on the customs slip that must
be filled out upon entering the island. Foreign currency can be
exchanged at the airport, as well as at authorities-designated banks,
hotels, and shops. In addition, internationally-recognized credit cards
are accepted in many hotels, restaurants, and shops. It should be noted
that a surcharge is sometimes added when payment is made by credit card.
In most instances, tipping is not necessary. A 10 percent service
charge is usually added to restaurant and hotel bills, eliminating the
need for gratuities in such situations. It is, however, relatively
common to leave the change when a bill is paid.
Porters at hotels and airports customarily receive tips for their
services. Approximately NTD 50-NTD 100 per item of luggage is
acceptable. It is not necessary to tip in taxis unless assistance with
luggage is rendered, but most drivers do appreciate being allowed to
keep small change.
Travel Advisory and Visas
Taiwan has an extremely low-level of violent crime. Although normal
precautions should be taken by visitors, the streets of Taipei and other
cities are safe at any hour. While violent crime is rare, Taiwan's
pickpockets and thieves are extremely clever, so valuables should be
properly secured. Taxi drivers, restaurateurs, store clerks and other
service people are normally quite honest and often solicitous of the
needs of the non-Chinese speaking foreign guest. The people of Taiwan
are generally outgoing toward foreigners and often will go out of their
way to assist visitors.
U.S. citizens and citizens of fourteen other nations may visit Taiwan
for up to fourteen days without a pre-arranged visa, providing they have
a return plane ticket off the island with reservations and more than 6
months of validity left on their passport. Other visitors to Taiwan are
required to have valid Taiwan visas. These can be obtained from
authorized representative offices in the United States. Two basic types
of non-official visas are available to foreign visitors, depending upon
the nature and duration of intended visits.
Extensions of visitor visas may be granted up to a maximum of two
extensions of sixty days each, provided applicants have valid grounds
for making such requests. Applications for extensions are administered
by the city/county police headquarters. No extensions are granted to
those who enter Taiwan without a pre-arranged visa except in the event
of force majeure or matters of vital importance.
Foreign visitors from nations with which Taiwan has reciprocal visa
agreements receive visitor visas free-of-charge. The visa fee for those
from other countries is NTD 500 for a single-entry visa and NTD 1,000
for a multiple-entry visa.
A one-year multiple-entry visitor visa is available to a representative
of a foreign company that has recorded total import and export
transactions with Taiwan amounting to USD 600,000. Up to four such
visas can be granted to foreign employees of any one company, with an
additional USD 600,000 in total transactions being necessary to qualify
for each of these visas. Six-month and three-month multiple-entry
visitor visas are available for respective transaction amounts of USD
300,000 and USD 100,000. Applications for multiple-entry visitor visas
must be referred to the Ministry of Foreign Affairs. Normally, foreign
nationals make application through their domestic Taiwan agents,
representatives, or affiliates of their firms.
Holidays
There are 10 holidays and three festivals in Taiwan. Dates for the
three festivals -- which include Chinese Lunar New Year day, Dragon Boat
Festival, and Mid-Autumn (Moon) Festival -- change with the lunar
calendar. The following is a list of the 10 holidays and three
festivals in Taiwan:
Holidays Date
-------------------------------------- --------------
Founding Day January 1
Spring Festival (Chinese New Year) Late Jan. - Mid Feb.
Youth day March 29
Women and Children's Day April 4
Tomb Sweeping Day and President Chiang April 5
Kai-Shek day
Dragon Boat Festival Late May - Mid June
Mid-Autumn Festival September
Confucius' Birthday September 28
Double Ten National Day October 10
Taiwan Retrocession Day October 25
President Chiang Kai-Shek's Birthday October 31
Dr. Sun Yat-Sen's Birthday November 12
Constitution Day December 25
Business Infrastructure
A. Transportation
Taiwan has two international airports, Chiang Kai-shek International and
Kaohsiung International. Both offer regular flights to major
destinations around the world. There are also several domestic airports
and domestic airlines that provide fast and convenient connecting
flights between Taiwan's larger cities, as well as outlying islands.
For travel within Taipei and various other major cities, taxi drivers
are obliged to use the meter to calculate the fare. The basic charge is
NTD 50 for the first 1.65 kilometers, with an additional NTD 5 for every
additional 350 meters. There is also an additional NTD 5 charge for
every three minutes the vehicle travels below a speed of five kilometers
per hour. All taxis have a surcharge of NTD 10 for luggage service.
Since most taxi drivers cannot speak English, the visitor should always
carry Chinese-language versions of both his hotel namecard and desired
destination.
Bus services in major cities are quite extensive, but can be
incomprehensible to the foreign visitor. A comprehensive long distance
bus system run by the Taiwan Auto-Transport Company and Tong-Lieng Bus
Company enables people to travel virtually anywhere on the island
quickly, comfortably, and at reasonable cost. The Taiwan Railway
Administration operates an extensive rail network that is more than
1,000 kilometers in length.
B. Language
Mandarin is the official language. Taiwanese, a variant of the Fukien
dialect, is also commonly spoken, especially in the southern and rural
areas. English is by far the most popular foreign language, and large
numbers of people speak it with fluency. In particular, those working
in hotels, business, or public organizations are likely to have a good
command of the language. Moreover, many people, especially those
educated before the Second World War, can also speak Japanese.
C. Communications
In general, Taiwan's telecommunications systems are efficient and
convenient. Cities in Taiwan are plentifully supplied with blue public
phones that can be used for both local calls and domestic long-distance
calls. Facsimile is widely used everywhere in Taiwan. Direct
transmission is available to many countries in the world as well. Most
major companies, hotels, and business service centers have facsimile and
telex services. In addition, the International Telecommunications
Administration (ITA) also has extensive videoconference facilities in
its Taipei Communications Building.
D. Accommodations and Housing
Taiwan has a large number of international- and domestic-standard
hotels, hostels, and inns. For those who plan to stay in Taiwan on a
long-term basis, a wide selection of apartments and houses is available.
Rental costs vary considerably, depending on location and size.
Typically, rents in Taipei and environs are far higher than those in
other parts of the island. Landlords frequently require deposits of up
to two months' rent, and tenants are usually responsible for utilities.
E. Health information
As in many other tropical and sub-tropical areas, tap water in Taiwan
should be boiled before drinking. Hotels and restaurants do provide
drinking water, and bottled mineral water is widely available. Visitors
should also take special care to wash all fruits and vegetables before
eating and avoid eating in any of the island's countless street stalls,
at least during the first few weeks of their stay.
There are numerous international-standard private and public hospitals
and clinics. Taiwan also offers high quality dental care, with most
clinics being privately operated. The majority of doctors and dentists
in Taiwan speak English well.
Many western brand-name pharmaceuticals are sold in Taiwan, often
without prescription. In addition, a wide range of foreign and domestic
over-the-counter non-prescription drugs is available. Visitors should,
however, bring sufficient supplies of any specific medications they
might require. Emergency medical treatment can be obtained by dialing
119.
G. Food
Chinese cuisine ranks among the best in the world, and there is no
better place to sample it in all its infinite variety than in Taiwan.
In the countless large and small restaurants, specialties from almost
every region can be found. Major regional styles include the Peking,
Cantonese, Shanghai, Szechwan, and Hunnan cuisines. The local Taiwan
cuisine and traditional Buddhist vegetarian restaurants are also well
represented.
Western food is gaining in popularity, as can be seen from the many
western-style restaurants and foreign fast food chains that have set up
branches in Taiwan's large cities in recent years. Visitors will find
everything from hamburgers, pizza, and steaks to the finest European
cuisine.
Establishments serving other Asian cuisines can also be found in growing
numbers in Taipei. Vietnamese, Thai, Indian, Malaysian, Korean and
Japanese food are all big favorites with the city's residents, with the
latter two being particularly popular.
Foreign visitors should not overlook the fragrant teas for which Taiwan
is justly famous. These teas can either be purchased in attractive
packages for use at home or sampled in one of the island's many
traditional Chinese-style tea houses.
CHAPTER X: APPENDICES
Appendix A: Country Data
Population: 21.13 million (on 12/31/94)
Population Growth Rate: 0.87 percent
Religions: Buddhism, Confucianism, Taoism, Christianity
Government System: Democracy
Languages: Mandarin (official), Taiwanese, Hakka. Frequent use of
English and Japanese in business settings.
Work Week: Monday - Saturday morning.
Appendix B: Domestic Economy
(USD millions, except where noted)
1994 1995(e) 1996(f)
-------- --------- ---------
GDP (current) 241,209 271,471 299,000
GDP Growth Rate (percent) 6.5 6.9 6.4
GDP Per Capita (USD) 11,604 12,944 141,000
Government Spending as
Percent of GDP 23.7 23.0 23.2
Inflation (percent) 4.1 3.9 3.5
Unemployment (percent) 1.6 1.6 1.6
Foreign Exchange Reserves 92,454 100,000 110,000
Average Exchange Rate for
USD 1.00 26.45 25.61 25.35
Debt Service Ratio (as percent
of exports of goods &
services) 1.83 1.80 1.78
U.S. Economic/Military
Assistance 0 0 0
Sources:
1. Directorate General of Budget, Accounting and Statistics
2. Central Bank of China
3. AIT/T
Appendix C: Trade
(USD millions, except where noted)
1994 1995(e) 1996(f)
-------- --------- ---------
Total Country Exports (fob) 93,049 110,600 124,000
Total Country Imports (cif) 85,349 104,600 120,000
Trade Balance 7,700 6,000 4,000
U.S. Exports to Taiwan (cif) 18,043 19,900 27,600
U.S. Imports from Taiwan (fob) 24,337 26,600 22,800
Trade Balance with U.S. 6,294 6,700 4,800
Sources:
1. Ministry of Finance
2. Directorate General of Budget, Accounting and Statistics
3. AIT/T
Appendix D: Investment Statistics
-------------------------------------------------------
- Table 1
- Foreign Investment Approvals By Year and By Area
- (1952-1994) (unit: U.S. dollar million)
-------------------------------------------------------
Year Japan U.S.A. Hong Kong Europe others total
---- ------- ------ --------- ------ ------ ------
52-79 415 763 301 265 508 2,252
1980 89 190 40 15 132 466
1981 66 206 35 13 76 396
1982 152 92 41 47 48 380
1983 198 99 24 21 63 405
1984 115 241 65 91 47 559
1985 146 341 29 100 87 703
1986 256 147 76 135 156 770
1987 432 447 181 214 145 1,419
1988 445 161 157 98 322 1,183
1989 668 381 248 315 806 2,418
1990 839 581 236 283 363 2,302
1991 535 612 129 165 337 1,778
1992 421 220 213 165 442 1,461
1993 278 235 169 215 316 1,213
1994 396 327 251 245 412 1,631
------ ---- ----- ------ ------ ----- ------
52-94 5,452 5,043 2,195 2,385 4,261 19,336
---------------------------------------------------------
Source: Foreign Investment Commission
---------------------------------------------------------
Table 2
Foreign Investment Approvals by Industry and by Area
(1952-1994) (unit: U.S. dollar million)
---------------------------------------------------------
Industry Hong Total
Japan U.S.A. Kong Europe Other
Total 5,452 5,043 2,195 2,385 4,261 19,336
Electronic 1,344 1,986 295 549 378 4,551
and electric
appliances
Chemicals 540 999 230 699 353 2,820
Other Services 649 414 253 131 766 2,213
Banking and 124 180 222 289 618 1,433
Insurance
Trade 601 235 237 124 216 1,413
Machinery 670 261 96 100 286 1,413
Basic metals 492 258 118 121 247 1,237
and metal
products
Food and 173 189 91 90 309 852
beverage
processing
non-metallic 129 163 76 71 180 620
minerals
rubber 216 53 65 54 170 494
products
Transportation 31 41 116 1 277 466
Textiles 114 70 59 23 104 370
Wholesale and 60 11 18 29 200 319
retail
Construction 43 15 82 9 45 194
Transport 53 5 77 23 22 181
equipment
Others 212 163 161 72 152 760
-------------------------------------------------------
- Table 3
- Outward Investment Approvals by Year and by Area
- (1952-1994) (unit: U.S. dollar million)
-------------------------------------------------------
- mainland other n/s
Year China U.S.A. ASEAN America others total
---- -------- ------ -------- ------ ------ ------
52-79 n.a. 9 31 5 15 59
1980 n.a. 35 3 0 4 42
1981 n.a. 2 3 0 6 11
1982 n.a. 3 9 0 0 12
1983 n.a. 3 6 0 2 11
1984 n.a. 31 7 2 1 39
1985 n.a. 36 4 0 2 41
1986 n.a. 46 8 1 2 57
1987 n.a. 70 16 10 6 103
1988 n.a. 123 59 7 29 219
1989 n.a. 509 282 116 25 931
1990 n.a. 429 567 410 146 1,552
1991 174 298 703 361 295 1,830
1992 247 193 289 256 149 1,134
1993 3,168 529 275 211 646 4,829
1994 962 144 289 844 340 2,579
------ ---- ----- ------ ------ ----- ------
52-94 4,552 2,458 2,551 3,223 1,667 13,449
---------------------------------------------------------
Source: Foreign Investment Commission
Note: A new registration requirement for PRC investments went into
effect in 1993. 1993 statistics thus include investments made prior to
1993 but not previously registered.
---------------------------------------------------------
Table 4
Outward Investment Approvals by Industry and by Area
(1952-1994) (Unit: U.S. dollar million)
---------------------------------------------------------
Industry Mainl. USA ASEAN Other Other Total
China N/S
Amer.
Total 4,552 2,458 2,551 2,223 1,666 13,449
Banking and 2 560 91 1,392 259 2,304
Insurance
Electronic 668 476 712 146 117 2,120
and electric
appliances
Chemicals 291 672 316 42 17 1,338
Basic metals 367 18 477 - 26 888
and metal
products
Food and 536 160 56 - 61 814
beverage
processing
Other services 88 215 20 174 272 770
Trade 37 126 33 184 333 714
Textiles 257 - 251 5 110 623
Non-metallic 278 5 197 1 59 540
minerals
Plastic 517 - 9 - 2 528
products
precision 353 3 2 1 9 367
instrument
Transport 177 2 1 - 176 356
Equipment
Paper 116 4 108 - 115 343
products
and printing
Rubber 187 49 88 9 8 342
products
Other 676 165 190 268 102 1,402
--------------------------------------------------------
Table 5
- Technical Cooperation Projects by Year and by Area
- (1952-1994) (unit: number of projects)
-------------------------------------------------------
Year Japan U.S.A.. Europe others total
---- ------ -------- ------ ------ ------
52-79 926 253 116 22 1,317
1980 84 43 13 3 143
1981 55 36 26 7 124
1982 78 39 24 3 144
1983 83 29 28 1 141
1984 99 42 26 1 168
1985 118 49 26 4 197
1986 105 41 37 9 192
1987 185 53 45 12 295
1988 154 71 40 13 278
1989 109 72 31 28 222
1990 106 54 30 10 200
1991 80 65 33 8 186
1992 193 50 19 10 175
1993 85 50 34 12 181
1994 70 39 24 6 139
------ ----- ------ ------ ----- ------
52-94 2,433 986 552 131 4,102
---------------------------------------------------------
Source: Foreign Investment Commission
---------------------------------------------------------
Table 6
Technical Cooperation Projects
by Industry and by Area
(1952-1994)
(Unit: number of projects)
---------------------------------------------------------
Industry Japan U.S.A. Europe Others Total
Total 2,433 986 552 131 4,102
Electronics and 693 400 103 14 1,210
electric appliances
Chemicals 407 196 157 27 787
Machinery 363 66 97 9 535
Basic metals and 323 53 53 6 435
metal products
Other services 111 105 26 41 283
Rubber products 131 32 21 4 188
Non-metallic 96 22 23 2 143
minerals
Food and beverage 80 38 12 9 139
processing
Others 63 13 20 - 96
Textiles 47 21 8 2 78
Construction 35 5 10 4 54
Garment and footwear 18 14 4 3 39
Paper products 19 13 4 - 36
and printing
Transport 17 1 7 1 26
equipment
Others 30 7 7 9 53
--------------------------------------------------------
Table 7
Selected Major U.S. Investments in Taiwan
-------------------------------------------------------
- U.S..
- Registered Investor
U.S. Investor/ Capital Share Major
Local investment (U.S. dollar mil.) (percent) Products
---------------------- ---------- --------- ---------
Ensite limited (ford motor)/ 21 70 Autos
Ford lio ho motor co.
Texas Instruments Inc./ 28 100 Semi-
Texas Instrument Taiwan, ltd. Conductors
Texas Instruments Inc./ 167 26 drums
Ti-acer inc.
General Instrument Corp./ 47 100 Semi-
General Instrument of Taiwan Conductors
Ltd. Converters
AMOCO Chemical Corp./ 122 50 Petro-
China American Petrochemical Chemicals
Co., Ltd.
AETNA Life Insurance Co./ 112 100 Insurance
Taiwan branch
Motorola Inc./ 39 100 Integrated
Motorola Electronics Taiwan Circuits
E. I. Dupont de Nemours/ 92 100 Industrial,
Dupont Taiwan Electronic
- & Agricul-
- tural
- Products
IBM Corp./ 14 100 Computers:
IBM Taiwan Sales and
- Services
Goodyear Int'l Corp./ 8 76 Tires/Tubes
Goodyear Taiwan
Uniroyal Inc./ 15 80 Anti-
Premier Chemical Co. Oxident
-------------------------------------------------------
Source: AIT/Taipei
-------------------------------------------------------
- table 8
- Selected Major Japanese Investments in Taiwan
-------------------------------------------------------
Japanese Investor/ Major
Investment Products
-------------------------- --------------------------
Aankyo co./ Pharmaceuticals
Sankyo co. Taipei
Idemitsu co/ Petrochemicals
Shinkong Idemitsu corp.
Nissan Motors/ Autos
Yue Loong Motors
Sanyo Electric c./ Electrical appliances
Sanyo Electric (Taiwan)
Mitsui co./ Trading
Mitsui (Taiwan)
Takashimaya co./ Department stores
Ta-ya Takashimaya Dept. Store
Toshiba co./ Compressors
Toshiba Compressor (Taiwan)
Sumitomo co./