Taiwan
Why taiwan?
2
6th largest textile exporter globally
Vertically integrated supply chain
Labor force of 11.3 million people
Innovation in textiles & technology
4,375 textile & apparel manufacturers
The US is Taiwan’s 2nd largest trading partner
Government
Country Traits
Taiwan’s government is a multiparty democracy that consists of five government branches: the Legislative Yuan, the Executive Yuan, the Judicial Yuan, the Examination Yuan and the Control Yuan. The president and members of the Legislative Yuan are elected by popular vote.
president Ma Ying-jeou
education The educational system in Taiwan is the responsibility of the Ministry of Education of Republic of China. Although current law mandates only nine years of schooling, 95% of students go on to high school, trade school or college. Taiwan’s literacy rate is 96.1% as of 2015.
language Standard Mandarin
Religion Taiwan has 3 major religions: Buddhism, Taoism, and Confucianism. Other religious practices include Christianity, Mormonism, the Unification Church, Islam, and Hinduism, as well as native sects such as Yiguandao.
flag
Location The island of Taiwan, in Eastern Asia, is about 100 miles away from the southeast part of mainland China and about 300 miles north of the Philippine island of Luzon. The East China Sea forms the northern border of Taiwan, the Taiwan Straits are to the west, the Philippine Sea to the south, and the Pacific Ocean on the east coast.
country size Taiwan is slightly smaller than the combined area of Maryland and Delaware in the United States and occupies a total area of 13,892 square miles. Its capital city, Taipei, is in the northeast, and is the most densely populated area in the territory.
population 23.46 million
3
Country stability
Political - The One-China policy restricts Taiwan from becoming an independent state, but it doesn’t object Taiwan to conduct economic and cultural exchange with other countries - Taiwan maintains its offices in most nations under various names such as Taipei Economic and Cultural Office - Taiwan has built good diplomatic and economic relationship with the U.S. - Taiwan is one of the best places for investment partially due to its stable political situation - A country based on rule of law - With good relationships with many Asian countries, Taiwan has excellent manufacturing and industries network in Asian market - For some investors, Taiwan seems to be a risky place due to strained relationship with China
Economic
4
- Small country but has a strong economic presence - In 2010, Taiwan was the world’s 16th-largest exporter and 17th-largest importer of merchandise (according to World Trade Organization) - Trade value expanded 39% year-on-year to US $526 billion, with exports rising by 34.8% to US $274.60 billion - Import grew by 44.1% to reach a number of US $251.24 billion in 2010 - 1 new Taiwan dollar equals 0.031 US dollar - Consumer prices in Taiwan unexpectedly rose 0.28 percent year-on-year in September of 2015, following a 0.45 percent decline in the preceding month - It is the first increase since December 2014, mainly due to a rise in cost of food and a slower decline in cost of transport and communication - The common household in Taiwan earns more than enough to support their daily needs - This is reflected by the 10.78 million who are in the labor force and 4.27% unemployment rate
Country stability
Social - Almost all of the populace lives on limited amount of land placing Taiwan among countries with the highest population density in the world - The overall population density in Taiwan was 616 persons per square kilometer in 2002 - Average life expectancy of a Taiwanese person is 78 years - Taiwanese consider losing one’s temper in public or openly expressing anger a definite way to lose face, and will think of you as an uncivilized and undeserving of future attention or assistance - Taiwan has an aging population and a status of possessing one of the world’s lowest fertility rates - Taiwan is gradually emerging as a multicultural society - In 2014, for the first time, the number of first and second-generation immigrants living in Taiwan exceeded the population of Taiwan’s indigenous peoples
Technological - Taiwan has a stable technological infrastructure that could support the marketing needs of a company - Taiwan’s information and communications technology companies play a key role in the global supply chain for electronics products - Taiwan companies are also among the world’s leaders in products that save energy and reduce carbon emissions - Taiwan has technological strengths in biotechnology, food technology, nano technology, textile technology, percision machinery, and metal industry - Taiwan has one of the most advanced telecommunications networks in Asia - 85% of households have a computer, 79% have internet access, 75% has broadband access, and 95% uses broadband connection
5
lead time on production factors
natural disasters Typhoon, flood, land slide, draught, and earthquake are the most happening natural disasters in Taiwan. According to Natural Disaster Hotspots – A Global Risk Analysis published by the World Bank 2005, Taiwan is an area at high risk for natural disaster in the world.
Taiwanese Holidays
6
New Years Day - January 1 Chinese New Year Eve - February 18 Chinese New Year - February 19 Peace Memorial Day - February 28 Lantern Festival - March 5 Children’s Day - April 4 Tomb Sweeping Day - April 5 Labor Day - May 1 Dragon Boat Festival - June 19 & 20 Mid Autumn Festival - September 28 National Day - October 10 Double Ninth Day - October 21
conducting business Taiwanese attitudes in the business arena can be traced back over the centuries to the influence of the Confucian philosophies of obedience, hard work, and respect for education. Taiwan is a place of ambiguity where traditional Confucian values compete with rampant capitalism and opportunism and where relationships are all-important, yet negotiations can often stick on the smallest of points.
Meetings
Relationships are of primary importance in business dealings. Meetings tend to be formal with the two heads of delegation sitting opposite each other, flanked by colleagues. All comments should be made to the senior manager who will bring in experts when and where necessary. Do not be tempted into talking only to the best English speaker. They may only be present because they speak good English. It would be disrespectful to ignore the key player.
Gifts
The giving and receiving of gifts is part of the all important ritual of business relationship development, and in a country where relations are placed firmly before business, gifts are an important business tool. If individual gifts are to be given, ensure all present receive one with a slightly more impressive gift going to the senior person. Single malt whiskey or cognac is always appreciated in Taiwan. Gifts should be wrapped and are often refused two or three times before being accepted. They are rarely opened in front of the giver.
Dress Code
Dress codes vary slightly according to the size of the company and industry sector. Men can wear dark suits, shirts and ties and women can wear conservative business suits.
7
taiwanese exports Taiwan’s textile and apparel industry is focusing on design and creativity as well as gaining more trade agreements in efforts to boost its competitiveness. Because the Taiwanese textile and apparel industry has continually invested in new machinery and developed new products, it has built a comprehensive production system that has enabled it to become a major global supplier of textile products. According to the Taiwan Textile Federation (TTF), Taiwan is the 6th largest textile exporter globally. The textile and apparel industry also is a significant contributor to Taiwan’s economy and is the region’s 4th largest foreign exchange earner. Taiwan’s textile and apparel production in 2012 totaled approximately US $15.54 billion, of which textiles accounted for US $14.74 billion; and apparel, US $796.7 million. As of 2012, Taiwan’s fashion manufacturering industry comprised of 4,375 manufacurers. The Taiwanese textile and apparel industry is highly export-oriented. Taiwan exported more than 77 percent of its total production from 2001 to 2012. Fabric represented the largest share of the industry’s exports in 2012, at 61.3%, followed by yarn, 18.9%; fiber, 10%; apparel, 6.4%; and miscellaneous, 3.4%.
The Taiwanese textile and apparel industry’s biggest export market is Mainland China, which in 2012 accounted for US $2.53 billion, or 21.4% of total export volume; followed by Vietnam, US $1.77 billion, or 15%; Hong Kong, US $1.18 billion, or 10%; the United States, US $942 million, or 8%; and Indonesia, US $596 million, or 5.1%. Like many major textile-manufacturing countries, Taiwan has been impacted by the uncertainty in the world markets following the global financial crisis. Increasing labor costs have caused it to lose some of its competitive advantage and have driven many of its manufacturers to relocate production to nearby low-labor-cost countries. To stay competitive, the Taiwanese textile and apparel industry is differentiating itself by continually investing in R&D and developing innovative, high-valueadded products. Taiwanese textile and apparel manufacturers have also seen increasing consumer awareness of the importance of environmental stewardship, and are focusing more on incorporating eco-friendly materials and processes into the functional textiles they develop. The Taiwanese government plays a big role in supporting the region’s textile and apparel industry. Most recently, it implemented the Textile Export Promotion Project (TEPP) in an effort to increase the industry’s competitiveness in the global textile market. The Taiwanese government now is aiming to increase Taiwan’s textile production value to more than US $18 billion in 2015 and more than US $23 billion in 2020.
8
Trade Agreements Currently, only twenty-two countries recognize Taiwan diplomatically making it hard for the country to form trade agreements. However, Taiwan has trade agreements of marginal dollar value with several of these twenty-two countries including the Asia-Pacific Economic Coorperation (APEC). Outside of this small circle of what Taiwan calls its “diplomatic allies,” its negotiating partners require tacit approval from mainland China before embarking on trade with Taiwan. As a result, except for recent agreements with Singapore and New Zealand, Taiwan has been a bystander as Asian FTAs proliferated. While Taiwan joined the WTO in January 2002, the growing global trade that is now subject to preferential treatment under FTAs is undermining the value of its WTO membership. Where Taiwanese trade and investment has been flourishing, however, has been with the mainland. China is Taiwan’s largest trading partner, accounting for 40% of Taiwan’s exports. Taiwan ran a $77 billion trade surplus with China in 2013. The Cross-Straight Service Trade Agreement (CSSTA) is a treaty between mainland China and Taiwan which was signed in June 2013.
Taiwan & The u.s. The discussion around a possible bilateral free trade agreement between Taiwan and the US has been drawn out for years, with Taiwan requesting and the US being hesitant toward the idea. This is because an FTA with the US and Taiwan would amount to US recognition of Taiwan’s sovereignty and independence from China. This goes against Chinese policy and could trigger military action. The US adheres to Beijing’s “one China” policy while it maintains unofficial relations with Taiwan. Taiwan is the US’ 8th largest trading partner, and 6th largest importer of US agricultural goods, and wants its own terms of access to US markets. However, as of right now, Taiwan and the US have signed a sort of Trade and Investment Framework Agreement in 1994 and conduct discussions through the TIFA Council.
9
10
suppliers JO-YUAN INDUSTRIAL CO., LTD.
Main Products: Sleepwear, Children’s Wear, Knits, and Pajamas Location: Taiwan Year Estsblished: 2007 Number of Employees: 500 Main Markets: North America, Eastern Europe, Western Europe, Northern Europe, and Southern Europe Customers: JC Penny, Family Dollar, Wal-Mart, Sears, and Target Website: http://www.taiwantrade. com.tw/EP/jacksintl/
MIROSA INTERNATIONAL CO., LTD.
Main Products: Sportswear, Outerwear, and Intimates Location: Taiwan Year Established: 2003 Number of Employees: 50 Main Markets: Eastern Europe, Western Europe, South America, Southeast Asia Customers: Wal-Mart and Sears Website: http://variwis.en.forbuyers. com/
BOURTEX, INC.
Main Products: Dancewear, Fitnesswear, and Yogawear Location: Taiwan Year Established: 1992 Number of Employees: 200 Main Markets: North America, Southeast Asia, Oceania, Eastern Asia, Western Europe Customers: Bourdance Website: http://bourdance. en.alibaba.com/company_profile. html#top-nav-bar
transportation shipping Company Departure
Arrival
Price
Travel Time
Evergreen Line
Kaohsiung
Los Angeles
$1,600
18 days 4 hours
Evergreen Line
Keelung
New York
$3, 775
32 days
ZIM Taiwan
Taichung
Miami
$3, 500
29 days 17 hours
taiwan Ports Keelung, Taiwan (Suao & Taipei) Taichung, Taiwan Kaohsiung, Taiwan Hualien, Taiwan
11
12
risks & benefits
1. The US is Taiwan’s 1. Taiwan’s textile and second largest trading apparel industry is at partner. risk to lose more than 2. Taiwan has a labor $60 million in business to force of 11.3 million South Korea. people. 2. Trade agreements 3. Taiwan has innovation between Taiwan and coming out of its Taiwan the US have been stalled Textile Research Institute. due to governmental 4. Taiwan is vertically and legal conflicts integrated throughout between China and the supply chain. Taiwan. 5. Taiwan is the 6th 3. Taiwan is an area largest textile exporter at high risk for natural globally. disaster in the world. 6. Taiwan has 4,375 textile and apparel manufacturers.
work cited “Business Culture in Taiwan.” World Business Culture. Web. 26 Oct. 2015. < http://www.world businessculture.com/Taiwanese-Business-Dress-Style.html>. “Company Overview - BOURTEX, INC.” Alibaba. Web. 27 Oct. 2015. < http://bourdance. en.alibaba.com/company_profile.html#top-nav-bar>. “Extreme Events and Disasters Are the Biggest Threat to Taiwan.” Web. 26 Oct. 2015. < http:// unfccc.epa.gov.tw/unfccc/english/_uploads/downloads/01_Extreme_Events_and_Di sasters_from_Typhoon_Morakot-the_Biggest_Threat_ever_to_Taiwan.pdf>. “JO-YUAN INDUSTRIAL CO., LTD.” Taiwan Trade. Web. 27 Oct. 2015. < http://www.taiwan trade.com.tw/EP/jacksintl/>. Kuo, Chung Hwa Min. “Taiwan.” Country Overview. Web. 25 Oct. 2015. < http://www.nation sencyclopedia.com/economies/Asia-and-the-Pacific/Taiwan.html>. “Mirosa International Co., Ltd.” Mirosa International Co., Ltd. Web. 27 Oct. 2015. < http://vari wis.en.forbuyers.com/>. Prowse, Sinclaire. “Taiwan’s Growing Multiculturalism.” The Diplomat. Web. 26 Oct. 2015. < http://thediplomat.com/2015/02/taiwans-growing-multiculturalism/>. “Public Holidays in Taiwan in 2015.” Office Holidays. Web. 26 Oct. 2015. < http://www.office holidays.com/countries/taiwan/>. “Taiwan Inflation Rate.” Trading Economics. Web. 26 Oct. 2015. < http://www.tradingec nomics.com/taiwan/inflation-cpi>. “Taiwan International Ports Corporation.” Port of Keelung. Web. 28 Oct. 2015. < http:// kl.twport.com.tw/en/>. “Taiwan Literacy.” Demographics. Index Mundi. Web. 25 Oct. 2015. Thomasson, Sarah. “Taiwan: Innovating & Evolving.” Textile World Asia. 1 Sept. 2013. Web. 27 Oct. 2015. < http://www.textileworldasia.com/Issues/2013/July-August-September/Fea tures/Taiwan-Innovating_and_Evolving>. “Top Ten Shipping Companies.” Digital Supply Chain. Web. 28 Oct. 2015. < http://www.sup plychaindigital.com/top10/2523/Top-ten-shipping-companies>. “US-Taiwan.” Bilaterals. 1 May 2012. Web. 27 Oct. 2015. < http://www.bilaterals.org/?-US-Tai wan->. Wilson, William. “America’s Secret Weapon to Secure Taiwan’s Future: Trade.” The National Interest. 18 Sept. 2014. Web. 27 Oct. 2015. < http://nationalinterest.org/feature/ameri cas-secret-weapon-secure-taiwans-future-trade-11305>.
13
Jenn Campbell FASM 420 Global Sourcing Professor Donald Levy Fall 2015