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Increasing business with Taiwan

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Increasing business with Taiwan

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Over the past ten years, UK goods exports to Taiwan have remained relatively stable while exports of services have grown steadily. Following a decline in the 2009 recession, UK exports to Taiwan rebounded sharply in 2010, up 55% to a historic high of £2.3 billion. UK exports of services led the way, rising 73% year on year. The bilateral trade in goods between the UK and Taiwan in 2012 was £5.13 billion, the highest figure ever.

Actions

The British Trade & Cultural Office (BTCO) champions the UK’s reputation as a place to do business, to broker commercial partnerships and to increase Taiwan investment in UK companies and projects.

  • UKTI Taiwan supports UK exports to Taiwan across a range of sectors, and backs inward investment into the UK.

  • priority sectors include infrastructure, environment and energy, financial services, ICT, life sciences and creative industries.

  • the BTCO supports these sectors through providing market introduction services to UK companies, working with Taiwan to improve the environment for international business, and bringing senior representatives from the UK to increase trade opportunities in both directions

UK Trade & Investment services

UK Trade & Investment (UKTI) offers expertise and contacts through its extensive network of specialists in the UK and in British Embassies and other diplomatic offices around the world. It provides companies with the tools they require to be competitive on the world stage.

You can contact UKTI officials working in Taiwan to find out more about these services.

Background on the Taiwan Economy

Over the last three decades, Taiwan has averaged 6% annual GDP growth and has transformed into a dynamic capitalist economy.

As a small open economy, Taiwan depends heavily on exports, which contribute 60-70% of its GDP. 40% of Taiwan’s exports go to China, other key export destinations are the US, ASEAN countries, Japan and Europe. Taiwan’s status as an exporter means it is among the economies most affected by global downturns.

Taiwan’s population is comparatively well off. Taiwan’s has the 18th largest GDP in the world on a purchasing power basis. The average Taiwanese person has more disposable income than their counterparts in Japan, France and the UK. Their growing wealth continues to drive the growth of internal consumption including demand for foreign imports.

Sector opportunities in Taiwan

Taiwan’s economic success was initially based on the manufacture of low-technology goods. Such labour intensive industries have increasingly re-located to lower cost bases, primarily in China. High-tech and capital intensive manufacturing has taken its place.

High-tech products account for about 35% of Taiwan’s exports (up from 18% in 1991), a higher proportion than its competitors (Japan is 20% and South Korea 29%). Outside of the high-tech sector Taiwan produces a wide variety of other goods, in particular shoes and chemical products.

Economic recovery

Taiwan suffered a significant economic downturn as a result of the financial crisis from late 2008, but it is recovering well. In 2010 GDP growth hit an all-time high, a 10.8% year-on-year increase. The exports sector has also grown, 12.3% in 2011. The headline inflation rate remains low at a forecast 2% in 2012.

In 2013, the European debt crisis and global manufacturing output have led the pace of economic growth to slow. Taiwan has cut its forecast for GDP growth twice. It now forecasts 1.66% growth for 2012. Exports were down 4.7% in the first half of the year, the first fall since the global financial crisis.

The Taiwanese administration recognises that Taiwan faces economic challenges. It has set out a programme of economic reforms:

  • sign free trade agreements
  • reform its taxation, land regulation, service sector and national health system,
  • liberalise cross-straits (mainland China/Taiwan) economic policies

Fiscally, Taiwan remains in solid position. Having historically enjoyed substantial trade surpluses, in March 2012, Taiwan’s foreign reserves were the fourth largest in the world at US$404billion. Taiwan’s currency, the New Taiwan Dollar, floats freely but the role of the Central Bank in managing the currency by buying and selling currency and controlling the flow of foreign capital into Taiwan remains significant.

International business ties

The administration continues to promote closer economic ties with mainland China. Around 80,000 Taiwanese companies operate in China. Economists estimate that cumulative Taiwanese investment in China is more than $200 billion US.

Taiwan has already signed 18 economic agreements with China including Economic Cooperation Framework Agreement (ECFA). The talks have led China to cut tariffs on 539 items exported from Taiwan to China. Over the next two years China and Taiwan plan to sign a goods agreement, leading to further cuts in tariffs and a separate services agreement which opens up the sector. This should pave the way for closer economic ties.

Taiwan’s strong cultural and business links with China make it a good gateway to China. Taiwan’s base companies benefit from preferential tariffs, investment and IPR protection. So far Japanese companies have used Taiwan as a base and partner for entry into China more than other countries.

Taiwan has set out a list of other economies with which it would like to sign Free Trade Agreements, including the EU, US, Japan, New Zealand and Singapore. Formal talks are ongoing with Singapore.

Taiwan is open to investment. The economy has progressively liberalised over the past decade and now boasts 54.5%. The current Administration has said that it is seeking to attract international investment across the whole economy but, in particular, the service sector. It has targeted total foreign investment in 2012 of US$1 billion.

Background on business between Taiwan and the UK

The UK’s open, transparent and business-friendly system makes it easy to start up a new company and there are no separate rules for foreign business entities. Read more about the reasons to set up your business in the UK.

The UK is Taiwan’s third largest trading partner in Europe. The bilateral trade in goods between the UK and Taiwan in 2012 was £5.13 billion, the highest figure ever (beating £4.88 billion in 2011). UK goods exports to Taiwan totalled £1.15 billion, the second highest figure ever (down from 2011’s £1.39 billion).

UK service exports to Taiwan have grown at an average of 14% per year over the last decade and reached £1 billion in 2011, the last year for which we have records. The UK’s exports of goods and, in particular, services is expected to continue to grow steadily as the Taiwanese economy grows and its service sector develops.

There are approximately 300 UK companies located in Taiwan, across a variety of sectors. These include financial and business services, ICT, telecommunications, infrastructure, environmental technology, creative industries and marine industries.

Taiwanese companies are realising the benefits of setting up in the UK, where they can source high-quality skills, products, services and technology. Currently over 180 Taiwanese companies have a presence in the UK and are using it as a springboard for global growth, you can read more about the success stories on the UKTI website.

The UK offers economic stability, low inflation and low levels of taxation. It also offers support with research and development and access to a highly talented and cost-effective workforce. The UK and Taiwan hold regular bilateral trade talks at which we discuss the promotion of trade and investment as well as the business environment and market access issues.

The UKTI Guide to Doing Business in Taiwan provides further detailed information on Taiwan’s economy.

Taiwan Britain Business Council

The Taiwan Britain Business Council (TBBC) is an annual business to business event that alternates between Taipei and London. Business leaders from the UK and Taiwan, supported by the authorities from both sides, meet to discuss potential opportunities in each other’s markets and to share their experiences. The 15th TBBC was held in Taipei in June 2013. There were four working groups: travel & tourism, ICT, financial and professional services and rail infrastructure.

Cultural relations with the UK

The British Council is the United Kingdom’s international organization for educational opportunities and cultural relations. It currently operates in 110 countries and territories and has over 70 years’ experience.

In Taiwan our aim is to build lasting relationships between the UK and Taiwan by connecting people with learning opportunities and creative ideas from the UK.

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