Monthly Archives: July 2013

Swiss institution recommends strengthening Taiwan’s competitiveness

At a time of slow global economic recovery, Taiwan is well placed in the worldwide competitive index, ranked 11th out of 60 economies, according to the World Competitiveness Scoreboard 2013. Released by the International Institute for Management Development (IMD) located in Lausanne, Switzerland, the 25th perspective on world competitiveness has the island listed as one of the “winners”. The island has moved up the rankings since 1997 when IMD first produced a unified ranking of advanced and emerging economies. China and South Korea also ranked highly, but behind Taiwan.

Better performing than South Korea

Stephane Garelli, head of IMD’s World Competitiveness Center, told Commonwealth monthly that the frequent winners in the World Competitiveness Scoreboard, such as Switzerland, Sweden and Germany, share common characteristics. They focus on manufacturing industries, export trade, and small and medium sized businesses. Garelli adds, “All these are the strengths of Taiwan too.”

South Korea, one of Taiwan’s main regional competitors, has not done well in the last five years, coming in 22nd in the World Competitiveness Rankings. Garelli noted that the South Korean economy depends entirely on big conglomerates, while Taiwan has many small and medium sized businesses which are more energetic and diversified.

Commonwealth reported that in the last five years, Taiwan has experienced an annual average commodity price increase of 1.38 percent while that for South Korea was 3.32 percent. Besides, Taiwan’s GDP, based on the rate of purchasing power parity (PPP), was US$37,252 in 2012, US$7,000 more than that of South Korea.

In the questionnaire indexes of labor/management relations and employee dedications, ranked Taiwan 14th and eighth respectively while those for South Korea were way behind at 56th and 42nd.

In other words, despite South Korea’s promising export performance, it is facing a rising rental market and commodity prices, and poor labor/management relations.

Taiwan’s weakness analyzed

According to Commonwealth’s analysis, in the four categories of competitiveness rankings, Taiwan dropped the most in business efficiency. With poor product innovation and little increase in added value, showing that Taiwan is certainly at a disadvantage.

Taiwan is advised by Garelli to develop more medium-sized businesses, like core German businesses with about 100 employees, focusing on technology and exports. If they can achieve the best in each field, they would do well in terms of competitiveness, he said.

Secondly, he suggests that the island should diversify its products and export markets. High-tech products account for 46.4 percent of Taiwan’s exports, the highest in the world. Besides that, Garelli suggests that Taiwan should also develop its biotechnology and healthcare.

He added, Taiwan’s exports focus on the US, European and Chinese markets. With the subprime mortgage crisis and European bond crisis, in addition to the slow growing Chinese market, Taiwan’s exports are bound to be impacted.

Alan Eusden, chairman of the American Chamber of Commerce in Taipei, also suggests that the Taiwan government ought to improve the process for foreign investment on the island, including an easier application process. “There is more for Taiwan to do to attract foreign investment, compared with other Asian countries,” he said.

The Commercial Times pointed out that the fundamental reason for Taiwan’s weak economy is a result of insufficient investment. Here, investment does not refer to the stock market or the housing market, but real capital formation of fixed assets.

As for the ratio of private investment in GNP, Taiwan has dropped to 14.9 percent in 2012 from 15.4 percent in 2011, lower than the 17-18 percent during the years of the global financial tsunami, and far less than the average 24 percent level of South Korea. Although South Korea’s economic growth was poorer than that experienced by Taiwan in the first quarter of this year, South Korean private investment was still higher, which means South Korea is not worried about a short term recession.

The Taiwanese government has always paid more heed to private investment in the manufacturing industry, but less so to the service industry, which is severely underfunded. Taiwanese investment in restaurants and hotels accounts for 12.9 percent of GDP (2008), 11.1 percent (2009), 12.5 percent (2010) and 11.7 percent (2011). As an industry with priority development from the government, it is not sufficient. How can more foreign tourists be attracted to Taiwan?

The service industry accounted for almost 70 percent of Taiwan’s GDP, creating almost 60 percent of the job opportunities. Proportionally speaking, Taiwan’s government is not providing enough attention and resources to the service industry.

Setting up Asia’s NASDAQ

The Economic Daily News said in an editorial that Taiwan’s current domestic investment is not just lower than that of foreign competitors, but even lower than in previous years. This is the key element of Taiwan’s slow economic growth.

The paper noted that Taiwan’s real capital formation of fixed assets and private investment in the last five years is lower than that for 2007, and net investment measured last year was only 60 percent of that in 2007. In recent years, the government and the financial industry spared little effort to provide funding to domestic production investment while mostly working on expanding the financial business and profits only. Scarce attention was put on the financial industry’s main mission to support domestic investment. The government’s policies of setting up an international financial center and Asia-Pacific-capital-raising plan are all to serve foreign investors, not to improve domestic investment.

Taiwan is rich in capital because its savings rate and export trade account for seven percent of its GDP. Taiwanese scholars proposed to take advantage of the local capital to set up a NASDAQ in Asia to provide baited capital to attract foreign high-tech companies to carry out manufacturing and R&D in Taiwan before going public there. The government and financial industry should also come up with similar active methods to use the rich Taiwanese capital to invest domestically so as to promote economic growth.

By implementing FEZ, Taiwan aims to be a free trade island

On July 12, President Ma Ying-jeou said that the free economic zone (FEZ) initiative is a central plank in Taiwan’s national development strategy and will create favorable conditions for the island’s expanded participation in regional economic integration. “We believe the FEZ project will help boost the local economy and expand Taiwan internationally. It is a policy-making goal the country must not fail to achieve,” Ma said.

”By increasing administrative efficiency and easing regulatory flow on capital, goods and talent, the initiative will fast-track Taiwan’s effort in joining regional trade blocs such as the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP).”

The president made the remarks while receiving representatives from local business associations.

Generated values estimated

Kuan Chung-ming, minister of the Council for Economic Planning and Development (CEPD), said that due to implementing the FEZ, it is estimated that the volume of ocean freight will grow by 41 percent in the next two years, and airport shipments will increase by 35 percent.

And in the area of international medical care, Health Minister Chiu Wen-ta added the FEZ will focus on “critical illness”, setting up initial test sites in Taoyuan, Taichung, and Kaohsiung. It is expected that these “International Medical Services Centers” will be ready by the end of this year. He is confident that medical services will perform well, estimating that over 170,000 people will come to Taiwan for medical treatment within two years, bringing in US$30 million.

In relation to “value added agriculture”, the Ping-tung Agricultural Biotechnology Park in eastern Taiwan alone will generate value from the originally planned NT$4 billion (US$133.4 million) to NT$10.8 billion (US$360 million) by 2017. Industrial cooperation will bring in private investment of NT$6-11 billion (US$300-366.7 million).

President Ma stressed that “we do not need to debate whether Taiwan will reach the world through mainland China or join the world to get to the mainland, as both routes can be taken simultaneously. This is not an issue of either-or.”

Taiwan has been an active proponent of trade liberalization for over three decades, especially since President Ma took office in May 2008. Efforts by the government to improve cross-strait relations in the past five years have seen Taipei and Beijing conclude the FTA-like Economic Cooperation Framework Agreement (ECFA) in June 2009 and Trade in Services Agreement last June, with another trade pact set to be completed by year-end.

Marching toward goal of free trade island

Recently, Japan’s Prime Minister Shinzo Abe launched the “three arrows”, including reversing the depreciation of the Japanese Yen, promoting financial growth and structural adjustment, so as to boost the island’s long sluggish economy. Nicknamed “Abenomics”, it has won some approval. Similarly Taiwan’s government also introduced the FEZ project, using internationalization and trade liberalization to inject new momentum to counter Taiwan’s economic downturn.

Given the lack of consensus from the Taiwanese people on the liberalization of the economy, the government planned to set up the FEZ in specific areas. If the implementation of the FEZ proves to have little negative impact on domestic industries, and can help to attract investment and enhance the competitiveness of Taiwan’s economy as a whole, they will be extended to the whole country, further accelerating Taiwan’s goal to become a free trade island.

For this purpose, the government launched a plan of “five sea ports and one airport,” designating harbors in Suao, Keelung, Taipei, Taichung and Kaohsiung, as well as Taoyuan International Airport as free trade areas, integrating and extending the industrial zone connections to further attract domestic and foreign investment. The choice of industries in the first stage will include transnational industrial cooperation, smart logistics, international medical care and value added agriculture.

Matching measures in the FEZ policy package include no tax on overseas profits used as real investment in the FEZ, R&D tax credits, tax breaks and other business tax incentives. Further enhancing Taiwan’s attractiveness are new measures making talent recruitment easier, with no residency restrictions for white-collar workers coming to Taiwan, no report of overseas income, and no tax on half of the pay in the first three years.

Upon passing the FEZ special law in the Legislature, the government would carry out the second stage of development work. In addition to zones established by the central government, local governments will be able to apply to set up pilot zones according to areas available for development and transportation conditions.

As for concerns about the standard of imported mainland Chinese agricultural products, and whether international medical care services would affect the rights and interests of Taiwanese locals, the CEPD has considered these worries. In response, they said that fully processed agricultural products are for export only, and are not allowed to enter the Taiwan market. Furthermore, international medical services will only cater to visiting foreign patients, and will not take any patients with Taiwanese health insurance or take money for the national health care program.

Enjoying some advantages, injecting new momentum

Minister Kuan said with its different strengths, Taiwan should take a different route from mainland China, and not compete with the Chinese on land size, wages and production costs. Taiwan should strengthen the business environment by doing its best to make business requirements as transparent as possible.

China is actively working to attract more foreign investment by granting tax incentives and fees concessions. However, Kuan noted that Taiwanese businessmen are fully aware that there are a lot of unwritten rules and hidden costs of doing business in China.

The Taiwanese business community is are excellent at putting ideas or innovations into the market and have more knowledge about China’s market and better marketing experience than foreign merchants. Kuan believes that in light of the strategic layout and planning, foreign investors would much rather cooperate with Taiwanese companies when investing in China.

Though foreign companies might want to set up factories in China, they are also worried that the Chinese do not have sufficient mechanisms to protect intellectual property rights and hence are reluctant to leave key technology in China. Meanwhile Taiwan offers more protection of intellectual property, a real advantage for the island.

The promotion of the FEZ is part of Taiwan’s trade liberalization policies since joining the World Trade Organization ten years ago. This policy direction will help attract investment and create more employment opportunities, thus injecting new momentum into Taiwan’s economic growth, Minister Kuan stressed.

Kuan said that although there might not be immediate economic benefits from setting up the FEZ, experience garnered from many countries that have done so has shown that a more open market will certainly be helpful to Taiwan’s long-term economic growth.

Opportunities, challenges in Service Trade Agreement with China

On July 8, President Ma Ying-jeou said the newly signed cross-strait Service Trade Agreement is very important to Taiwan because it will serve as an example for other countries as they look to trade with Taiwan in the future. The international community will see how determined Taiwan is to promote free trade and its willingness to maintain high quality commitments, reported the United Daily News. The president was responding to the agreement signed between Taiwan and China on June 21, the first free trade pact between the two sides since executing the FTA-like Economic Cooperation Framework Agreement (ECFA) three years ago.

Marginal benefits now, bigger rewards down the line

President Ma pointed out that mainland China is Taiwan’s largest trading partner. Chinese capital has amounted to almost US$800 million since it was permitted, and has created 6,700 job opportunities in Taiwan so far. So this should allay concerns expressed by people in Taiwan about the risks of closer business ties with the mainland.

The cross-strait service trade agreement was negotiated based on the fourth article of the ECFA. Under the agreement, the mainland will open 80 service sectors to Taiwanese firms, while Taiwan will open 64 sectors to mainland businesses. The sectors to be opened relate to commerce, telecommunications, construction,  the environment, health, society, tourism, entertainment,  ransportation and finance.

However, according to analysis by the Chung-Hua Institution for Economic Research in Taipei, GDP is projected to increase by US$97 million to US$134 million, translating into about 0.025 percent to 0.034 percent of Taiwan’s GDP, reported the Central News Agency. Furthermore, Taiwan’s service sector export value is projected to increase by US$378 million, and the total import value will go up from US$61 million to US$63 million, showing that the open market pact will increase exports of Taiwan’s service sector industries. Also, employment in the service sector is predicted to increase up to 11,923 people, translating into a 0.15 percent to 0.16 percent hike in Taiwan’s total employment.

The Taipei-based China Times reported that the opposition Democratic Progressive Party (DPP) caucus whip Ker Chien-ming criticized the pact by saying it will only increase Taiwan’s GDP by a marginal 0.025 to 0.034 percent. However, Economics Minister Chang Jia-juch believes that even though the benefits of signing the pact are not immediately apparent, the cross-strait economic agreement is an important step toward Taiwan’s continuing liberalization and internationalization. “If trade between Taiwan and China is not normalized, it is impossible for Taiwan to become an active member of the global community, much less to sign free trade agreements with other countries, or to join the regional economic integration such as the Trans-Pacific Partnership (TPP),” he said.

Need not worry about competition from the mainland

The Economic Daily News said in an editorial that at a time of rapid global economic integration, Taiwan has to be active in joining the ranks, and the signing of the cross-strait pact is an important step in this process. Generally speaking, the signing of the service trade pact will do more good than harm to Taiwan’s national interests, according to the commentary.

The paper said in an analysis that it is worth noting that some areas opened to China in the pact are significant, including the fact that Taiwanese banking firms will be allowed to set up local branches in China. Depending on the type of businesses, Taiwanese companies may now hold a majority stake of between 51 to 75 percent of their business in China. The agreement permits Taiwanese stock brokerage firms to achieve a 51 percent stake, and to further broaden their businesses. E-commerce companies are allowed to set up outlets in China with 55 percent majority ownership, allowing Taiwan’s PC Home, an opportunity to compete directly with China’s Taobao. Large retail chain stores from Taiwan can also acquire 75 percent ownership, allow them better control and a greater return on their investment. Furthermore, Taiwan’s movie industry can enter the Chinese market without restrictions, as can the medical industry, by opening privately owned hospitals in more provinces in China.

All these measures are far more extensive than concessions given to foreign enterprises from other countries, allowing Taiwanese service firms greater opportunities in China. On the other hand, Taiwan is also opening some service industries to Chinese investors, a move that will bring competition for Taiwanese firms.  However, the maturity and competitiveness of Taiwan’s service sector is more advanced than those of their Chinese counterparts. The targeted capital and investors are from high-level Chinese executives, not from low-paid laborers. Taiwanese workers need not worry about losing their jobs to their Chinese counterparts, noted the Economic Daily News.

Inconvenient hidden facts

Business Weekly commented by saying China seems to give Taiwan special treatment on the surface, but the cross-strait service trade pact hides some “tricks” in its contents.

First, the pact gives Taiwan access to the Chinese market and special privileges, but the final say is still controlled by China. For example, China allows Taiwanese operators to set up privately owned hospitals, but approval is needed from different levels of the Health Ministry, from the central government to ranking officials of the provincial health authorities.

How difficult can this be? An actual case involves a Taiwanese application to set up a hospital specializing in handling test tube babies, one of Taiwan’s medical strengths. Approval from the central government was obtained in 2008, but it was blocked at the city and provincial level. The local level finally approved it in 2011, but a license was issued for in-patient care, not allowing the company to engage in actually creating test tube babies. In the end, this process was a waste of five years for those involved.

Furthermore, more lead-time and strategic planning is required to enter China’s domestic market. Another example involves the travel business. The pact allows Taiwanese people to run travel agencies in China, but they are required to limit their operations by only planning domestic trips for their travelers at first. The Chinese government will judge them on this first before allowing them to apply to run an international travel agency.

Also, another key stipulation is that the service trade pact only allows businesses to operate in certain locations and provinces. As a result, China’s e-commerce market is open only to those Taiwanese who have invested in Fujian, the coastal province close to Taiwan. Taiwanese banks can set up branches in Fujian only. With the exception of those Taiwanese who want to invest in the nursing home business can do this in Fujian and Guangdong provinces in the South only, although three licenses are needed for stock brokerage firms setting up in Shanghai, Shenzhen (Guangdong) and Fujian.

The ECFA is an economic contest for both Taiwan and China. The next five years will take the competitors to half time, giving benefits to Taiwan on the one hand, while also attracting more Taiwanese talent, capital and businesses to work and invest in China. In another five years, the second half of the game will take place, Taiwan’s agricultural products will be thrown into the mix, and the complete opening of the service market will be achieved. At that time weaker industries needing protection will also be put on the bargaining table with China. Will Taiwan be ready then, Business Weekly asked.

Taiwan’s Miniwiz promotes recycled waste for building materials

You probably have never heard of Arthur Huang, but maybe you have heard of his creation EcoArk, the main exhibition hall at the Taipei International Flora Exposition. EcoArk, a nine-story green structure built using 1.5 Polli-Brick was a resounding hit upon its unveiling and has since earned many top international prizes in the green building arena. Huang and the company he founded, Miniwiz, are now internationally known to be on the forefront of creating stellar installations made from recycled materials.

Given his reputation, his projects are now closely followed by the international press and designers. EcoArk’s creation was featured in an hour-long documentary by National Geographic. Last year, New York City’s Mayor Bloomberg awarded him the coveted New York City Economic Development Corporation’s Venture Fellow and this year, his Feather Pavilion won the 2013 International Design Excellence Awards® (IDEA).

In an area where environmentally friendly buildings can be tagged onto a building simply using solar panels or built using energy efficient green materials, Huang goes much further. He is a purist and insists on using materials made of 100 percent waste. Case in point is the Nike Flyknit Collective, the Feather Pavilion was designed and constructed using 100% recycled materials. By using recycled polyethylene terephthalate (PET) bottles, Huang developed a material with similar strength, firmness and flexibility.

Born in Taiwan, Huang left to study in the United States at 11. Back then, he was the stereotypical Asian nerd, with overly large glasses dominating his face and high water pants. His gentle geekiness did not make him very popular. Although scholastically strong, he was physically lacking. Cognizant of his image, he shed his glasses and started exercising daily.

At 18, he entered Cornell University to study architecture and became drawn to environmental protection. After obtaining a Masters of architecture degree from Harvard University, he launched his Miniwiz business in New York City.

Upon returning to Taiwan, Miniwiz built a cooperative relationship with Nike. In building the Feather Pavilion, he used Polli-Bricks and yarn extracted from PET bottles that Nike also used in its closely woven sneakers. This public space would win the distinguished Gold prize from the Industrial Designers Society of America this year, and now permanently displayed in Shanghai.

Today, Miniwiz has an annual business of NT$300 million (US$10 million), of which foreign customers account for over 50 percent. Taiwanese customers are still not comfortable with the higher expense tagged onto building materials from recycled wastes, so Miniwiz is more popular outside of Taiwan.

Roan Ching-yueh, a Taiwanese architect and writer, told Commonwealth that Huang has challenged the current frame of the world. He continues to break the stereotypes imposed upon him in by race, culture and industry. “He has a vision. If Taiwan can’t take advantage of his vision, I would feel sorry for Taiwan,” Roan said.

Trust index places families, doctors, teachers top

As Taiwan becomes more populated and increases its level of international engagement, one might expect the leading moral and ethical issues governing trust to decrease, but that apparently is not the case. Since 2001, the Ethical Promotion Association has conducted a bi-annual survey of social confidence in an effort to gauge the level of trust among Taiwanese people, with the results indicating an upsurge in trust.

In the 2001 survey, 34 percent of respondents said they trusted the “majority of people in society.” While this year’s survey indicates that this has increased to 64.5 percent.

In ethnic Chinese societies, more importance is generally paid to relationship dynamics of the so-called five ethics: father to son, brothers, husband to wife, friends and between a king and his subjects. Of lesser importance is the relationships between individuals and unknown strangers, which is considered the sixth ethic or public morality.

Teng Pei-yu, secretary general of the Ethical Promotion Association, believes that Taiwanese people have made much progress in society. Foreign observers have the impression that Taiwanese people are willing to help, are kind and warm. This has been reinforced by following recent natural disasters in China and Japan, when Taiwan’s people were very generous with their donations and in showing their concerns for the welfare of these neighboring countries.

With regards to the degree of trust conferred on certain people in Taiwanese society, the survey showed that family members ranked consistently at the top for the last six surveys, while doctors and teachers come in second and third.

Government officials and legislators are the least trustworthy, followed by real estate agents and financial advisors respectively. The last two have only recently been added in this survey.

In a cross analysis of people’s political tendencies, plus a comparison of previous surveys, regardless of political affiliation, trust in government officials has dropped three to four percent on average.

Despite ranking officials having come in lower on the trust index, the confidence placed in ordinary civil servants has risen year to year, now coming in as the fifth most trusted people. This was likely influenced by improved customer service training at the local level, generating a positive impression from survey respondents.

According to Global Views, the internet was also included in this year’s survey, with those surveyed expressing a high level of mistrust in the internet. Specifically, 87.8 percent of citizens are suspicious of dating or social networking sites, 75.8 percent do not trust the messages circulating on the internet, 59.5 percent do not have confidence in credit payments and monetary transactions via websites, and 49.6 percent do not trust internet purchases.

As for the media, the public expressed more confidence in print media, and more doubts about the trustworthiness of television. In fact, 45.1 percent do not trust news coverage on TV, compared with the survey results from 2001, showing that the confidence rate has dropped by 18.3 percent.

Sun Chen, former chairman of the Ethical Promotion Association, said in an analysis that the level of trust in a society is a “social asset.” With long observation of Taiwanese ethical changes, Sun concluded the “relationship between parents and children is now (in Taiwan) not so close as before, but the relationship between individuals and social groups has improved somewhat,” reported Global Views.

Vox Nativa Children’s Choir visits the Bay Area

On July 6, Bay Area audiences had the rare privilege of hearing the Vox Nativa Children’s Choir at Jubilee Christian Center. Made up of Taiwan’s aboriginals who are known for having great rhythm, strong vocals and unique harmonies, their singing is well appreciated in any culture. Their visit was sponsored by the Wisdom Culture Education Organization (WCEO) in the Bay Area.

Founded in 2008, Vox Nativa is a nonprofit special weekend music school in Hsing-yi Village of Nan-tao County (central Taiwan) with the goal of achieving social reform in the aboriginal community through nurturing gifted aboriginal children. At the same time, they hope to preserve and promote aboriginal culture, and instill a sense of cultural pride and identity. The singers are made up of aboriginal children aged 9 to 13 years old selected from the poverty stricken villages in the foothills of Jade Mountain, the highest peak in East Asia.

The pictures were taken by Ben Hwang during the performance at the Jubilee Christian Center.

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Taiwan’s Meimen Kungfu Art Troupe performs at SF Main Library

Taiwan’s Meimen Kungfu Art Troupe has high aspirations. They don’t merely wish to entertain with stellar martial arts, acrobatic, sword play, music, song, dance and magic, but they also want to teach their audience how to cultivate inner harmony. Their July 22 performance in the Koret Auditorium of the San Francisco Main Library was a thrilling feast for the senses, while the second part of the program was more reflective, offering a brief course on the practice of Qigong.

Yemila Alvarez, the library’s director of programming, welcomed the troupe and the 400-plus audience, which also included a kindergarten class as well. Manfred Peng, the director of the Press Division of Taipei Economic and Cultural Office (TECO) in San Francisco, also welcomed the audience. On behalf of TECO, he introduced the troupe and talked briefly about the practice of Qigong.

Qigong is an ancient Chinese health-preserving exercise that has existed for at least 2,000 years. As practitioners of Qigong, all the performers in the Meimen Kungfu Art Troupe at one time or another have experienced ailments that were helped by Qigong.

Founded by Master Lee Feng-san in Taiwan, he and his troupe dedicate themselves to spreading the beauty of martial arts and to achieve harmony between external form and internal energy (aka chi) through the practice of Qigong.

Besides San Francisco, the troupe’s tour includes Orlando, Houston, Los Angeles, San Diego, Seattle and Vancouver, Canada.

Taiwan’s Grandriders tours CA in August

Starting August 15, ten of the original grandriders from Taiwan will be touring California to promote their movie Go Grandriders and also to ride with their American counterparts. In November 2007, 17 octogenarians motorcycled around Taiwan on a grand tour organized by the Hondao Senior Citizens Welfare Foundation. Over the course of some 730 miles, through foul weather and health challenges, they prevailed. Go Grandriders is a documentary about their journey. First screened in Taiwan in 2012, it quickly broke box office records for a documentary film in Taiwan.

Next month, the grandriders from Taiwan will join American seniors and ride in tandem, from Northern California to Southern California. The group’s kick off ceremony will take place in front of the Santa Clara County Hall on August 20. They will ride to Cambria, Santa Barbara before arriving in Arcadia, Los Angeles.

On August 16 at 4:00pm, The Sequoias, a senior community in the heart of San Francisco, and the Taipei Economic and Cultural Office in San Francisco will co-host a reception for the group at the Art Gallery in The Sequoias.

In an effort to match like-minded seniors who are not letting age stop them from living a full life, these seniors will have a chance to meet at the reception before the screening of Go Grandriders at 5:00pm in the Community Auditorium.

“How to Start a Business in Taiwan” made easy

Taiwan Insights recently interviewed entrepreneur Elias Ek about the rewards to be gained and the pitfalls to avoid when starting a business in Taiwan. Ek has been teaching a seminar on this topic to foreign entrepreneurs in Taiwan since 2006. Recently, he published a book, How to Start a Business in Taiwan to consolidate his wealth of knowledge.

According to Ek, who is originally from Sweden but has lived in the US, Japan and Taiwan since 1994, Taiwan is the ideal country to start a business because of its high-tech capability, high standard of living and democratic environment. Moreover, Taiwan is the best test market for companies wishing to enter the China market. “Taiwan is the perfect stepping stone if you want to do business with China. It is the most similar market, with strong cultural links, and is a great place to test new product – or your own cross-cultural business skills – before heading across the Taiwan Strait,” he said.

Ek points out other factors that make Taiwan an ideal location for starting a business, ranging from its favorable legal environment, quality workforce and its central location in the Asia-Pacific region. Also, compared to other Asian countries, Taiwan is pretty transparent, with the process of starting a business being pretty straight forward, usually taking 4-8 weeks.

During the interview, he also suggested that Taiwan ought to follow Chile’s example by marketing its startup advantages. “I would love for Taiwan to follow in the footsteps of Startup Chile ( and promote Taiwan as a place for foreigners to come and start innovative companies. The quality of life here is great, people are friendly and for certain industries like technology hardware, there’s probably no better place to develop a business anywhere on the planet” he said.

Motivation for writing the book

Ek says his motivation in writing the book stems from his desire to help foreign entrepreneurs and also to “help Taiwanese government, banks and other service providers know there are many foreign entrepreneurs in Taiwan, they deserve good services and they provide value to Taiwan.”

With years of experience and now a consulting business specializing in helping other people set up a business in Taiwan, Ek is a treasure chest of information. The book gives its readers clear steps, not only in how to go about setting up a business, but also in navigating certain immigration issues most expats face when they relocate to Taiwan.

In comparing setting a business in Taiwan with the process in other countries, Ek believes the island comes out very favorably. “I actually think Taiwan has fewer hoops than many other countries. In some countries like for example Thailand, a foreigner cannot own 100% of a company. This is a fact we should advertise? Let the world know they should come to Taiwan!”

Hurdles include visas, ARC, banking

Among Ek’s stories collected from fellow entrepreneurs include stories about the difficulty in getting an Alien Resident Certificate (ARC) or visa. “There is always a lot of griping about VISA/ARC issues but I think it is a bit unfair. Most people who are setting up a serious business would have no problem getting a visa. That being said, I was so so so relieved when I received my Permanent ARC because the 3 times I renewed my ARC before that, the lady at the immigration bureau told me ‘you have been here a long time, why don’t you go home.’” Did she really think I should fire 40 people and leave?”

Another issue that might vex expats is when they try to open a bank account and apply for a credit card. “A bigger issue has to do with banking. Often if a foreigner walks into a Taiwanese bank to apply for a credit card or other services, they are met with a blank stare and the news that ‘government regulations do not allow us to issue a credit card to foreigners.’ Well, this is untrue.” So it’s important to know this so the applicant can advocate for themselves.

Cultural difference in doing business

Along with the step by step regulations, he also offers some cultural tips and traditional norms of doing business on the island which are very useful for people new to Taiwan.

One particular difference is the preferred methods of payment used in Taiwan which is not the norm in the United States. Whereas Americans, whether they have a business or not, might prefer using their credit and debit cards, this is not the custom in Taiwan. Since “most companies in Taiwan do not have credit cards. Direct deductions, Paypal or similar modern payment methods are quite uncommon.”

When Taiwan Insights asked: what was the most surprising aspect of doing business in Taiwan, Ek related a “surprising” lesson he learned in starting his own company.  “When we started Enspyre we knew that phone answering services already were a very very popular service in other countries. In the US and UK for example there are companies that service tens of thousands of companies as their virtual secretary. So considering that we could not find any high quality providers in Taiwan, we figured we would quickly sign up many Taiwanese businesses as customers. We were completely wrong. Taiwanese bosses rarely outsource. So 11 years later, Enspyre is the biggest player in a small phone answering service industry. Fortunately we did listen to our customers and added B2B telemarketing and are now the biggest in the much bigger industry as well. The lesson here is that what works in one country doesn’t always work in another country.”

Taiwan Trade Center in San Francisco provides help

For entrepreneurs in the Bay Area who might like to learn more about doing business in Taiwan, they can also visit the Taiwan Trade Center (TTC) located in Santa Clara. As an overseas office of the Taiwan External Trade Development Council, one of its main functions is to help Taiwanese manufacturers develop new markets and also to assist Americans in investing in Taiwan. The center also maintains information binders on suppliers and manufacturers in Taiwan to help American companies with their sourcing needs.

According to Jerchin Lee, the director of the TTC, “With a wealth of high-tech companies and talented people in the Silicon Valley, Taiwan Trade Center has been successful in helping Supermicro, Neurosky, InvenSense to find partnership in recent years.” In addition, it also helped Landway, Sunwell, and Talent Basket to sign Letters of Intent with Taiwanese businesses last year. This year, the center has found matching partnerships for AFS BioOil, Peter Stathis & Virtual Studio, and Geoproteck Solar.

Since the US has been Taiwan’s most important source of foreign investment and technology, ranking first with the cumulative amount of foreign investment. In order to enhance Taiwan’s technological level, the center assists foreign entrepreneurs seeking to invest or establish a company in Taiwan, including helping them with legal issues related to visas, their search for office space and land, accounting and tax issues.

Even for Bay Area entrepreneurs considering doing business in Taiwan, it would be beneficial to pick up Ek’s book, since it is easy to read. Readers can scan the book for general information and also read different sections with more care, depending on their needs. Each chapter also includes personal stories from different entrepreneurs who have faced similar challenges and their advice. The book is not too difficult to finish, marrying the regulations, personal experiences and stories with incremental steps that the entrepreneur should take to achieve their goals.

When Taiwan Insights asked Ek to share some overall impressions, he said, “Overall my experience being an entrepreneur in Taiwan has been good. At least in the industries that I have been involved with there is little government red tape to overcome. Just pay the relatively low taxes (corporate income tax is only 17%) on time and things are good.”

For readers interested in learning more about starting a business in Taiwan or Ek’s book, please visit

President Obama supports Taiwan’s ICAO bid

On July 12, President Barack Obama signed Bill HR 1151 expressing American support for Taiwan’s bid to join the International Civil Aviation Organization (ICAO), a UN agency promoting air safety. According to the Central News Agency, Taiwan’s Transportation Minister Yeh Kuang-shih greeted the news with excitement, saying that “US support is critical to our appeal to join the ICAO as an observer to boost air travel safety.”

Taiwan’s presence is necessary for ICAO to realize its goal of achieving seamless global airspace, Yeh said. Noting that Taiwan maintains air links with 117 countries around the world, Yeh said Taiwan’s exclusion from the ICAO is in conflict with the organization’s efforts to promote flight safety.

With 50 airlines worldwide flying to and from Taiwan, and with more than 30 million international passengers a year, Taiwan needs to be included in the ICAO. Just between the US and Taiwan, there are over 400 flights a week. After reciprocating visa-free status in the last few years, more visitors from the EU, the United States and other major countries are visiting Taiwan as well. With increased visitor numbers, the governments of these countries have more at stake in ensuring flight safety in Taiwan.

The United Daily News reported that Shen Chi, director-general of the Civil Aeronautics Administration, stressed that if Taiwan is allowed to join the ICAO as an observer, it would help the island keep pace with the international civil aviation system, further increasing aviation safety, air traffic control communications and pilot management. Taiwan could then take part in the Conference of Directors General of Civil Aviation, Asia and Pacific Regions to exchange information on traffic flow and flight route management.

Shen said Taiwan has been rejected by the ICAO outright, probably due to political pressure from China. But with more cross-strait interaction in recent years and 616 weekly flights between the two sides, China should face the necessity of Taiwan’s participation in ICAO. Shen said Taiwan’s chances are optimistic with the support of a big aviation country like the US, adding that she hopes the process would start, “The sooner the better.”

Taiwan was an ICAO founding member, but was barred from access to the organization when it lost its UN seat in 1971. As a result of improved relations with Beijing in recent years, Taiwan has managed to take part in the annual World Health Assembly (WHA) – the decision-making arm of the World Health Organization (WHO) – since 2009. Taiwan has also been lobbying to gain greater international support for its participation in the ICAO as an observer in recent years.

Taiwan’s bid for observer status in the ICAO received unanimous legislative backing from the US Senate and House of Representatives in June. After completing Congress administrative procedures, HR 1151 was sent to President Obama to sign into effect, according to Taiwan Today.

The European Parliament’s Taiwan Friendship Group chaired by Charles Tannock sent a letter signed by parliamentarians to ICAO Secretary General Raymond Benjamin petitioning them to admit Taiwan as an observer. As of July 7, the petition campaign has collected 79 signatures, representing members from 20 countries. More EP members are expected to add their signatures to the petition after the parliament’s summer break, reported Taiwan Today.

The ICAO assembly is an UN-affiliated organization’s governing body. Its 38th session will be held from September 24 to October 4 in Montreal, Canada. According to the Taipei-based China Times, either the US or the EU would likely take the lead to present the proposal to the General Assembly for a vote on Taiwan’s observer status.