Short content summaries of the 81-page Taiwan Commercial Guide for U.S. Exporters are offered below. For free access to the report (U.S. companies only), please kindly register your company.

Chapter 1: Doing Business In Taiwan

Taiwan, a small mountainous island with a population of only 23 million and few natural resources, has become a high-tech powerhouse boasting the world’s nineteenth-largest economy. It is a major trading partner of the United States, and ranks among our top ten export markets for both agricultural and non-agricultural products. Per capita GDP and household disposable income rank among the highest in Asia, making Taiwan an attractive consumer goods market despite its relatively small population.

Chapter 2: Political and Economic Environment

Political Establishment
Type: Multi-party democracy. There are four major parties forming two alliances known as Pan-Blue and Pan-Green. The Pan-Blue includes the Kuomintang (KMT) and the People First Party (PFP). The Pan-Green includes the Democratic Progressive Party (DPP) and the Taiwan Solidarity Union (TSU). The Pan-Blue coalition holds a slight majority of seats in the Legislative Yuan (LY).
Constitution: December 25, 1946; last amended 2005.
Branches (Yuan): Executive, Legislative, Judicial, Control, Examination.
Major political parties: Democratic Progressive Party (DPP); Kuomintang (KMT or Nationalist Party); People First Party (PFP); Taiwan Solidarity Union (TSU).
Suffrage: Universal over 20 years of age.
Central budget proposed (FY 2005): $50.1 billion.
Defense (2005): 15.90 % of entire budget.

Chapter 3: Selling U.S. Products and Services

Most foreign firms gain their initial foothold in this market by using a Taiwan agent. Many Taiwan firms prefer the partnering aspect of an agent relationship. Although some companies are willing to act only as distributors, there is concern that foreign firms that are merely seeking distributors may not be serious about the market and will not support their distributors. Some U.S. exporters that sell equipment or machinery may find it necessary to locate a partner willing and able to do some assembly or manufacturing in Taiwan. Although not necessarily formal joint ventures, these efforts require a higher degree of commitment to the market than simply selling through an agent. If the size of the market warrants, companies may wish to consider setting up a branch office or subsidiary in Taiwan. Taiwan officially welcomes foreign investment and establishing an office in Taiwan is relatively easy, even if the procedures are sometimes bureaucratic.

Chapter 4: Leading Sectors for U.S. Export and Investment

Capital spending for semiconductor production capacity expansion – particularly for specialty, high value-added processes such as 12-inch wafer production, advanced semiconductor packaging and testing services, and large-sized flat panel display (FPD) production – is expected to continue to grow for the coming years. Combined with the expanding production of advanced electronic products and components, this has meant continued demand for advanced EIP equipment. Most Taiwan-produced equipment is relatively basic, so advanced products must be imported. The United States has led the market for semiconductor equipment, while Japan controls the EIP markets in finished electronic products and passive components. Japanese firms are taking a very aggressive approach to the promising semiconductor market. However, U.S. suppliers are expected to remain a major source for specialized EIP equipment due to their reputation for excellent performance, reliability and durability.

Chapter 5: Trade Regulations and Standards

Taiwan promulgated a comprehensive tariff schedule revision schedule on January 1, 2004 in compliance with Taiwan’s Free Trade Agreement with Panama, and Taiwan’s accession commitments to the World Trade Organization (WTO). Tariffs on pharmaceuticals, pulp/paper, iron/steel, construction equipment, agricultural equipment, medical equipment, furniture and toys were eliminated starting on January 1, 2004. As a result of this revision, Taiwan’s average nominal tariff rate on imported goods in 2004 was approximately 5.7 percent and is expected to fall to 5.5 percent by 2007. However, U.S. industry continues to request that Taiwan lower tariffs on imports of many products, including large motorcycles, wine, canned soup, cookies (sweet biscuits), savory snack foods, vegetable juices, potatoes and potato products, grapes, apples, fresh vegetables, and citrus products.

Chapter 6: Investment Climate

Taiwan officially welcomes foreign direct investment, which at the end of 2004 amounted to 19.8 percent of GDP. Although authorities have taken steps to improve the investment climate, U.S. firms report that impediments remain in some sectors, especially services. Rules on local licensing of professionals are cited as a barrier to foreign providers of some services. Taiwan’s science-based industrial parks and export processing zones by contrast offer streamlined procedures. While Taiwan has made significant improvement in protecting intellectual property, some foreign firms still cite inadequate protection as a deterrent to investing.

Chapter 7: Trade and Project Financing

Bank-to-bank Letters of Credit (L/C) constitutes Taiwan’s most important import-payment vehicle. Company-to-company payments are also made via two other methods: open account (O/A) and documentary collections, such as 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/Cs. A large majority of Taiwan’s importers utilize L/Cs with validity of up to 180 days. On the whole, U.S. companies find Taiwan’s trade finance system to be efficient and report no widespread pattern of deferred payment.

Chapter 8: Business Travel

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 (using traditional Chinese characters, not simplified). There are numerous printers in Taiwan specializing in printing these indispensable business aids. They offer accurate, low-cost service, with card orders normally being filled within days. Since cards are required on nearly every business occasion, it is a good idea to carry a number of them at all times. The New Taiwan Dollar (NT$) is the official currency. It is circulated in one-, five-, ten-, twenty- and fifty-dollar coins, and one hundred, two-hundred, five-hundred, one-thousand, and two-thousand dollar notes. Since the relaxation of foreign currency controls in 1987, exchange between foreign currency and the NT$ has become relatively free, although it is still limited to authorized banks and dealers.

Chapter 9: Contacts, Market Research, and Trade Events

Access to the U.S. Commercial Service Market Research Library containing more than 30 industry and country-specific market reports for Taiwan market for the year of 2005 and U.S. Trade Related Contacts, including: Washington, D.C.-Based Country Contacts, AmCham and/or Bilateral Business Councils, Trade or Industry Associations, Public Agencies, and other U.S. Government Contact Numbers.

Chapter 10: Guide to Our Services

The U.S. Commercial Service offers customized solutions to help U.S. exporters' business enter and succeed in markets worldwide. Our global network of trade specialists will work one-on-one with U.S. exporters through every step of the exporting process, helping U.S. exporters to: target the best markets with our world-class research, promote their products and services to qualified buyers, meet the best distributors and agents for their products and services and overcome potential challenges or trade barriers.

For free access to the report (U.S. companies only, please) kindly register your company.