How to Start a Business in Taiwan
Table of Contents
- 1 Why Start A Business In Taiwan?
- 2 Getting Started
- 3 Finding Employees, Salaries and Wages
1 Why Start A Business In Taiwan?
I came to Taiwan for my own personal reasons, but if you are not here already, why is Taiwan an attractive place to start a business?
Hi-tech, Wealthy, Democratic Environment
Taiwan is a modern first-world country with excellent infrastructure and a good quality of life. Everyone in Taiwan has access to good healthcare, corruption is rare, and there is strong commitment to human rights and freedom of speech.
For decades, Taiwan has been one of the ‘Asian Tigers’ boasting a strong manufacturing industry with expertise in electronics and technology. Today, there is an increasing focus on software and creative industries.
If you need to build a hardware product, Taiwan is a wonderful place because you can go out and find high quality suppliers and partners offering a whole buffet of components and systems at various levels of completeness.
Something like 25% of China’s exports are actually sales by Taiwanese companies operating subsidiaries in China. Many companies also have factories in other countries in the region, so sourcing in Taiwan gives you a diversified supply chain.
Gateway To China
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 products - or your own cross-cultural business skills - before heading across the Taiwan Strait.
The contacts that you make in Taiwan will be invaluable when you enter the China market, as Taiwanese businesses with connections on the mainland will be able to help you in this very difficult environment.
Fantastic Hardware Eco-system In Taiwan
I am involved in a new start-up that is developing a proprietary tablet PC that will run our own software for a specific vertical market.
We have easily found suppliers of LCD screens, motherboards, and all the other components and a company to assemble it all. I am not saying that it would be impossible to do this in other countries, but I think it is much easier in Taiwan.
Favorable Legal Environment
Getting permission to invest in Taiwan is a process that takes 4-8 weeks, but it is very straight forward with few surprises.
Unlike some other countries like Thailand, as a foreigner in Taiwan you are free to own your own business 100%, and generally have the same rights as any local person. If you need to go to court for any reason, you can be reasonably confident of a fair hearing without anyone asking for bribes.
Taiwan is at the heart of the Asia-Pacific region, and has excellent transportation links to everywhere. The average flying time from Taiwan to the seven major cities in the Western Pacific is merely 2 hours and 55 minutes.
The average sailing time from Taiwan’s largest international harbor in Kaohsiung to the 5 major Asia-Pacific harbors is only 53 hours.
For years there were no direct flights between Taiwan and China due to the political situation. To fly to China, you had to go via Hong Kong, which cost more money and time. From 2008, it became possible to fly directly from Taipei to Beijing or Shanghai. There are now many flights daily and immigration formalities are kept to a minimum.
According to the World Economic Forum’s “2011 World Competitiveness Report” Taiwan ranks number six globally for R&D talent. According to the National Science Council, Taiwan has 10.6 researchers per one thousand employees. This is behind only Finland, equal to Japan, and slightly higher than the US1.
Looking at the numbers, Taiwan also has an advantage from a highly educated workforce. 43.7% of the workforce has a college degree, university or higher education background. Taiwan has a workforce of about 10 million people, accounting for about 48.07% of the total population. Every year, 320,000 students graduate from college, university or higher education.
Internet usage is very high in Taiwan. Seventy percent of all households have internet access, 90% of all homes in Taiwan own PCs, and more than 65% of homes have broadband.
Add to this that more and more people are going online with their smart phones using fast and reliable mobile internet. Coverage is very good. There are few places where you can’t use your phone to get online.
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.
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
3 Finding Employees, Salaries and Wages
Every entrepreneur and business consultant would undoubtedly agree that one of the most important aspects in developing your business is to build a good team. This team could be directly employed by your company, or outsourced; this team could sit in the same office as you, or they could be spread out all over the world. Nonetheless, as you are a business owner-to-be based in Taiwan, this chapter will focus on resources to find employees in Taiwan.
Most companies in Taiwan use online human resource banks, as well as the Bulletin Board System (BBS), to find employees.
The biggest and most famous recruitment website in Taiwan is 104 Job Bank. The website has some English content and has the largest database of job seekers and job opportunities. You need to have a company set up already to register as an employer. If you need any help, you can send an email to - <firstname.lastname@example.org>.
Another noteworthy online resource is HiRecruit Services. Developed and managed by the government, there are Chinese, English and Japanese versions of the website. HiRecruit has a more multi-lingual / international focus than 104, but also a smaller database.
Other sites that are worth checking out are:
Bulletin Board System (BBS)
BBSs are text-based tools, also known as Telnet, which were often used before the invention of the World Wide Web and graphic-based Internet browsers. While these systems have mostly died out in other countries, Taiwan is unique in having around 1,500,000 Telnet or BBS users, mostly university students. The increased usage in recent years of Facebook has decreased PTT use but it is still a useful tool to reach students.
The biggest and most famous is PTT BBS, maintained by the National Taiwan University. As the bulk of BBS users are university students and relatively recent graduates, BBS is a great place to look for young graduate and/or part-time employees. There are hundreds of categorized forums in PTT, covering almost every conceivable topic.
The content is virtually all in Chinese. In order to use it, you need to use a special browser. Safari, Internet Explorer, Firefox, etc. are not able to access PTT. We suggest you download PCMan or KKMan.
You can download PCManX from the web.
After installing the program, open it, and type in the following address: “telnet://ptt.cc”. To gain access to the messaging service and forums, you will need to create an account.
In order to create an account, you will need a non-free email address (that is, not a Gmail, Yahoo, Hotmail, etc., email address). If you are a Taiwanese university student, you can use your university account.
To use PTT to find employees, there are two useful boards, titled “job” and “part-time” (located under the 求職 Qiúzhí section), where you can post advertisements looking for employees. You can simply post information about your company and job description.
Big companies like General Electric, Microsoft, Intel, etc., are running internship programs and internal “universities” to train their people, but small companies often reject these recruitment and training programs as too costly. But is it really? One really good employee who can take initiatives and work independently is worth training another 9 interns that go on to do other things. It’s a long-term commitment but it is worth it.
How to set up your own internship program:
- Think long and hard about what kind of students you want to attract.
- Think about what you can teach this student and what he or she can learn from your internship. This is the reason why they do it. There are too many programs out there that are just cheap labor abuse disguised as an internship.
- Come up with a clear program description that includes start and end time, location, tasks, classes, teachers/managers and whether you will pay them or not. I usually do NOT pay any salary. Instead I promise lots of learning opportunities and a possible job at the end.
- Contact the universities within travel distance and ask them to post your info to their websites or career news. They will likely ask you to submit your company license and all sorts of info since they don’t want to get sued for sending students to get robbed or raped. It takes time but it only has to be done once - a good investment.
- Once the program is up and running I suggest you ask your interns to blog about it so potential future interns can get an even better idea of the opportunity you offer.
- The Enspyre Internship program has its own Facebook group which is a useful way to stay in contact with people.
AIESEC is an international, student-run organization for students. It has a presence in over 110 countries, and has a membership numbering tens of thousands. AIESEC is a great way to find interns from all around the world, check their International site or Taiwan site.
How Much To Pay and Salary Surveys
So you have decided to hire someone. What should you offer in terms of salary and benefits?
Of course this should be determined in a negotiation between you and the employee, but here are some thoughts. Taiwanese people, especially younger ones, are very likely to just accept or reject your salary offer without attempting to negotiate. This means that you might lose an otherwise valuable employee because you bid a bit too low.
Average Starting Salaries in Different Job Positions
|Job Position||Average salary NT$/month|
|Secretary||22,000 - 28,000|
|Sales||25,000 - 33,000|
|Marketing||25,000 - 33,000|
|Accounting||30,000 - 37,000|
The average salaries3 will be influenced by the location of the company (Taipei, Taichung, Kaohsiung, etc.), education requirements, experience and the job tasks. What we provide here can only serve as reference. Adjust according to your situation and remember to make sure you make your company and the job opportunity attractive to the people you want to hire.
Average Salary in Different Industries
|Industry||Average Salary NT$/month|
|Finance and Insurance||67,000|
|Information and Communication||59,000|
|Arts, Entertainment and Recreation||31,000|
|Hotel and restaurant||29,000|
|Clothing Accessories Manufacturing||33,000|
The Taiwanese government provides an interesting online salary database. Select the time period, industry class and press “GO”; the average salary will show up right away. And it is in English!
The biggest Human Resource Bank, 104, provides two functions providing salary information. The first one is for applicants, and the second is for companies, all in Chinese. For more help, you can call them at +886-2-2912-6104#8986.
Yes123 is another Taiwanese job bank. They have a service that was originally designed to let people compare their expected salary with the average industry salary. You can use it as another reference. Select the job category, location and type the expected salary and you can compare with the average salary. It is in Chinese only.
Minimum Salary for Foreigners
For most foreigners with an Alien Resident Certificate the government requires that you earn at least NT$48,000. Read more about this in Chapter 19: Visa, ARC and Work Permits.
- Taiwan’s National Science Institute, Statistics Division http://www.startabusinessintaiwan.tw/book/link#a1↩
- Negative List for Investment by Overseas Chinese and Foreign Nationals http://www.startabusinessintaiwan.tw/book/link#a5↩
- National Statistics (Chinese) http://www.startabusinessintaiwan.tw/book/link#a6↩