2 Getting Started

Once you decide to open a business in Taiwan, you will encounter many new and potentially confusing situations, which we try to explain in this book. It will definitely be an adventure. We’ve tried to make everything as clear as we can. But if your business does not succeed, the most important thing for you to remember is that you are not alone and not the first. Every experience is valuable.

Everything described in this book has been done by others who are now running profitable businesses in Taiwan. They found it worthwhile to deal with the complications in order to enjoy the benefits, and we hope you will too. Taiwan is, after all, a great place to live and do business.

Please note that we have largely ignored start-up issues that are not particular to Taiwan.

A Brief Look At Some Key Points

You need to get permission to invest in Taiwan, permission to be in Taiwan, permission to work in your business, and then, of course, you will need to obtain an Alien Resident Certificate, or ARC. The types of business entity which are legal in Taiwan may be different from your own country, and you should be wary of superficial similarities. You also need to apply for a business license. It’s also important that you understand the concept of the ‘Fuzeren,’ the person who is legally responsible for the company.

Banking, terms and methods of payment, and access to finance can all be challenging at first. Instead of a signature, you will need a chop/stamp with your Chinese name on it. The Taiwanese ‘fapiao,’ a combined invoice and receipt, is a new concept to westerners and impacts all your business processes. Taiwan operates a sales tax system, which we refer to as VAT (Value Added Tax) in this book. And then there are the inevitable differences in the way you are expected to manage your relationships with customers, staff and suppliers.

Being Foreign Is Not Enough

Some foreigners come to Taiwan and think that just because they are importing something foreign it will automatically be special and attractive to the Taiwan market. Or they might think that there are big numbers of Taiwanese people just waiting to learn whatever language they can teach.

I am sorry to say it is not that easy.

You have to do your research to identify the size of your market in Taiwan. Research might cost you some money but it will be worth it in the end.

Other Legalities

While Taiwan is very open to foreign investment, it is similar to many other countries in that there are restrictions relating to sensitive industries2.

Foreigners are generally prohibited from investing in industries involving national security, public order, national health, agriculture and animal husbandry, bus services, postal services, and radio broadcasting/television industry.

You should also obtain official approval from the relevant authorities before becoming involved in electricity and gas supply, medical goods manufacture, or financial intermediation.

Education is also a sensitive industry where there are lots of specific rules. Since this is an industry that many foreigners would like to get into, we plan to cover this information more completely in a separate publication in the future.

These restrictions still leave foreigners with lots of opportunities to make money in Taiwan. And one of the things I have found in Taiwan’s favor is that when I visit a government office, I am usually greeted by smiling people who are very friendly and helpful. Their English might not be great but they try really hard to communicate and help out as far as the rules allow them. And there are no bribes expected or asked for. Some friends of mine who come from countries where bribes are part of life have expressed their appreciation of this.

Starting a business here might not be quite as fast and easy as for example in the UK or US, it will likely take you much more time, but it is still fairly straight-forward. If you get the paperwork in order and have a friendly smile, the process is quite painless.

Six Pieces Of Advice For Startups

Self-taught entrepreneur Cédric Alviani has been living and working in Asia for almost 15 years. In 2005, he created Infine Art & Culture Exchange together with a local partner. It specializes in international art and design projects operated for local government organizations or real estate companies. Cédric is also the former CEO of business organization France Taiwan Chamber of Commerce and Industry (CCIFT). Cédric offers the following advice:

When I started my company, I had no experience in business and therefore made all the possible mistakes, and thus company growth was slow and painful. After years of effort, it turned out rather well but I have seen many entrepreneurs being less lucky. Some companies failed because the business model just wasn’t viable; some of them got amazing sales but ran out of cash; in some cases the partners couldn’t get along or the owner just got tired of working for nothing for years… I gained experience through a very painful process that involves a great deal of effort, time, money, and discouragement… I hope this advice can help future entrepreneurs.

Bad Reasons To Start A Business

I hear too many bad reasons why people want to start a business: “to get a resident visa”, “because I can’t find a job”, “because I want to be my own boss”… Starting a business is a serious commitment that implies financial, legal and sometimes even penal liability. If you want a visa, it’s cheaper to register as a Chinese language student. If you can’t find a job, maybe you are not qualified enough, don’t have enough connections, or are not patient enough to consider starting your own business.

If you are tired of being an employee, remember that your new business will soon put you under a lot of pressure and may jeopardize your family or private life. Many first-time entrepreneurs become slaves to their businesses, accepting risks and responsibilities that far outweigh the money they make. And think about the timeline: a new business will take on average 3 to 5 years to become stable, so you can’t just “give it a try” for six months or one year.

If You Want To Get Rich, Be Prepared To Lose Money

So, if you are still reading this, what are the good reasons to start a business? Basically, you have identified a real and solid business opportunity, which is confirmed by in-depth talks with professionals in the sector. Your skills and past experience, knowledge of the industry or the local market allow you to turn this opportunity into reality. If you don’t know Taiwan and don’t know the industry, you are likely to fail. The local competition is smart and has an advantage. Last, you must have enough money to invest and even though you expect to get rich in the long run, you are ready to risk losing it.

A Business Model Is Not A Gadget

A business model is not a gadget, it’s the basic operating system for your business. It identifies what you do and how you make money from it. Your business model will determine whether your business works or not in the long term. It must be as detailed as possible. Get advice from professionals.

The business must be scalable (you work once and the result of your works keep on making money) and I think it is important that you set up your business so you do not need to work full time as an employee in your own business. Your business must be able to grow and in the end become independent. Some businesses need more and more cash as you get more and more clients. If so, make sure you are prepared.

Some businesses depend on conditions you can’t control. Implementing a good business model is hard enough, having to fix a bad business model while operating your company is much harder.

The Two Faces Of Partnership

Make sure you know what you are doing when getting into cooperation with other persons. Starting a business together with a partner (spouse, local friend, foreign professional) feels reassuring, especially when you don’t know much about the country or are not familiar with the language. But working with them is a totally different relationship and may reveal hidden aspects of their personality. There can be many complications: decisions need consensus, people learn at different paces, have different purposes in life, get advice from different sources, etc.

In my experience, trust and friendship are well protected by contracts. Partners must have clearly-defined roles and each of them should bring added value that is agreed and identified, with ideally the same level of commitment. You also need to plan the closing or the end of cooperation if a relationship turns bad. A business relationship is healthier when everything is written down in advance.

The choice and creation of the legal entity isn’t that important. It is used to sign contracts, recruit staff, make invoices, and collect money. It is merely a tool serving your business plan, not more or not less important than your computer or your telephone, but as for any tool it must be chosen after careful consideration of your needs. Don’t do it too early. Get advice, get organized, plan the growth, and come up with your financials and figures. Then set up your business according to the law and make sure that you know personally what options you have. Many SMEs in Taiwan make arrangements without knowing what is legal or not.

Follow The Law

I highly recommend going by the law at every step of your business development, so you don’t get any nasty surprises. For example, many entrepreneurs focus on tricks in order to pay less taxes… Honestly, in Taiwan taxes are more than reasonable and, as an entrepreneur, I would prefer to focus on running my business and pay a bit more in taxes from my much-increased profits.

Up next

3 Finding Employees, Salaries and Wages