Taiwan As A Country For International Business

Taiwan as a Nation for International Business

Executive Summary

A large Canadian organization is considering growing its foreign procedures to incorporate Taiwan. This has an rough size of thirty six, 200 square kms. Consequently, this nation is an appealing market due in order to its large populace of 23. five million people. Within this market, the particular Canadian company will be expected to encounter fewer challenges due to the fact of Taiwan’s great regulatory mechanisms, the strong adherence in order to the rule associated with law, low problem levels, the advertising of open marketplaces, the prevailing politics stability, and the particular availability of highly knowledgeable human resources, especially in the IT sector. Taiwan has a high GDP (PPP) per capita. It is rated as a wealthy nation because of its low unemployment levels. This Canadian company is expected to perform remarkably due to the high buying potential of Taiwan’s citizens. However, as it will be revealed in this paper, while the move by the Canadian company to expand its business to Taiwan is recommended, it should be prepared to face the risk of labor regulations that may be unfriendly for such a highly knowledge-based organization.

Taiwan’s Macro-Environment

Country Description

Nations such as Canada, Japan, the UK, Italy, and France have GDPs that are lower compared to that of Taiwan. This country is not only wealthy but also highly developed. According to Heritage Foundation (2018), it has an unemployment level of 4. 0% and a GDP (PPP) of 1. 1 trillion U. S. dollars. Taiwan has elaborate and interconnected modern road networks and railway lines. Considering that this country’s economy mainly depends on exports, its government has consistently invested in shipping and air infrastructure to ensure a smooth flow of all produced goods to various overseas markets and destinations. In particular, Taiwan’s investments in hi-tech transfer from nations such as the U. S., its advanced information technology infrastructures, and the construction of IT incubation hubs, including southern, northern, and Hsinchu Science Parks, explain its domineering nature (Ministry of Foreign Affairs, 2017). Appendix 2 shows business turnovers in these parks.

Agriculture is an important industry that has significantly influenced Taiwan’s economic development. This country is a global leading manufacturer and supplier of various THIS products such because computer chips, FLAT SCREEN panels, electronics, plus networking appliances amongst others (Ta-Shun ainsi que al., 2016). Taiwan is an associate of the Globe Trade Organization (WTO) as well as the Asia-Pacific Financial Cooperation (APEC). This is also section of the Asian Development Lender (ADB). In inclusion to being an essential observer for OECD, it has solid ties with the particular International Chamber associated with Commerce (George plus Serret, 2011). Taiwan has established zwei staaten betreffend free trade contracts with New Zealand and Singapore.

Based on 2017 figures, the country’s inward FDI experienced risen by around 320 million Circumstance. S. dollars prior to May 2018 (Trading Economics, 2018). They have maintained a just mean foreign direct expense of roughly 506 million American bucks from 1996 in order to 2018. However, this reached the greatest amount of 3953. 79 million Circumstance. S. dollars 5 years ago. In 2003, it recorded the lowest average investment of 81. 58 million American dollars (Trading Economics, 2018). Taiwan is a destination of many multinational organizations. For instance, Air Products & Chemicals Company, incorporated in the U. S., finds Taiwan attractive because of its powerful semiconductor operations. Other transnational companies that have significant operations in this country include Ford, Corning Display Technologies Taiwan, Dell, Dow Chemical, Proctor & Gamble, and Micron. In the list of the least corrupt 175 nations that Transparency International had access to their data from 1995 to 2017, Taiwan was ranked position 29 (Trading Economics, 2018). Corruption perceptions of the nation stood at about 31. 7 from 1995 to 2017. The lowest record made in 1995 was 25 while the highest level of 39 was recorded in 2008.

Political Situation and Stability

Taiwan enjoys a stable political atmosphere. From the data provided by the World Bank, it recorded an average of 0. 77 points between 1996 and 2016 as indicated in the political stability index where -2. 5 refers to a weak situation while 2. 5 denotes strong steadiness (The World Bank, 2018). This indicator measures the absence or the existence of acts of violence and terrorism that have the potential of not only destabilizing a government but also leading to its overthrow via unconstitutional means. This stability supports Taiwan’s strong and sound legal frameworks that protect people’s property rights while at the same time ensuring their strict adherence to the rule of law. Indeed, as shown in Appendix 1, the nation’s scores in business, labor, monetary, trade, investments, and financial freedom are well above 50 (Heritage Foundation, 2018).

Legislation that Affects Inward Foreign Investment in Taiwan

Taiwan promotes inward FDI policies due to its low domestic investments of about 3. 3% (Lin, 2013). It achieves this goal by establishing industrial parks, export dispensation bases, setting free trade avenues, and providing tax enticements to overseas investors. However, incentives mainly target the manufacturing sector. Taiwan’s negative investment legislation in some key sectors such as public utilities, telecommunication, sea transportation, power distribution, and natural gas limits the level of inward FDIs in these types of industries (Lin, 2013). America faces critique for achieveing inflexible work policies and laws and regulations, that do not effectively favor the particular operations of any kind of highly knowledge-based organization. Authorities are eager when approving opportunities from foreign companies, which target revolutionary industries like all those that deploy the particular sharing economy business structure. For Taiwan, these types of frameworks are bothersome. Indeed, such opportunities are approved without having elaborate and obvious regulatory procedures. This case introduces both politics and dogmatic dangers to investors.

Economic Conditions plus Stability

Despite the strong business connections with other countries, Taiwan’s economy continues to be at crossroads given that it experiences marginalization levels that prevent its full possible of taking part in the particular global economy (George and Serret, 2011). Due to the particular government’s support associated with businesses, a scenario which has paved the particular way for great economic conditions plus stability, many United states multinational corporations presently regard Taiwan because one of their own most preferred freelancing destinations.

Taiwan’s stability is obvious upon viewing this one of the particular richest nations within the world. Centered on the data provided by the Global Finance, this country stood at the 22nd position in a list of the richest nations across the world (“Taiwan Ranked as 22nd Richest Country in the World, ” 2017). This directory, which was compiled by the end of 2016, deployed International Monetary Fund’s GDP data adjusted for purchasing power parity (PPP) from 189 nations. Indeed, Taiwan had a GDP (PPP) per capita of close to 48, 000 as measured by the IMF. This country’s stable economy enhances the thriving of open markets.

Cultural Issues Affecting Businesses in Taiwan

Taiwan is located in East Asia. Based on 2018 statistics, this country currently has a population of about 24 million people who are accommodated in an area of roughly 36, 200 km2 (Heritage Foundation, 2018). These people embrace a culture that may affect business operations and social stability. Taiwan values respect for organizational positions held, especially based on an individual’s age. Hence, youthful Taiwanese people are likely to object to being led by younger or same-aged expatriate leaders or managers. Many Taiwanese businesses embrace small and medium-sized structures managed by one male, usually the older family member. Hence, business establishments are operated as benevolent dictatorships.

Taiwan has a highly knowledgeable workforce, especially in IT (“Taiwan Ranked as 22nd Richest Country in the World, ” 2017). Consistent with the Confucian culture, issues such as respect and loyalty to senior management are important. Managers are expected to serve the interest of all staff members within or outside the workplace setting. Nevertheless, business constructions in Taiwan are much less hierarchical compared in order to what exactly is upheld within Parts of asia such because South Korea plus Japan.

Factor Endowments

Factors associated with production include property, labor, capital, plus entrepreneurship. Nevertheless, understanding is another component that a nation should effectively handle to enhance the comparative advantage. Property harbors various organic resources which are crucial to production procedures (Nasr et ing., 2014). Given that property does not boost with an increase in industrial results or population stress, it is the scarce resource. As a result, Taiwan focuses upon seeking techniques for enhancing the production result capacity within the limited land sources. Labor refers in order to all works plus people performing varied tasks at various levels inside an organization (Nasr et ing., 2014). In Taiwan, it includes workers working for international and locally founded organizations.

Labor forms key sources that primarily figure out the achievements of an international organization that desires to begin operations within Taiwan. De-internationalization associated with labor, low wages and wages, plus uncertainties related in order to personal promotions associated with employees pose substantial challenges towards the continuing availability of highly knowledgeable human resources in Taiwan. These obstacles have led to the massive relocation of talented employees to other nations, especially those in the Asia-Pacific region, in search of more attractive career opportunities (Ta-Shun et al., 2016). The pressure to increase salaries in the attempt to retain top talent produces significant effects on small and medium-sized organizations. These business ventures have weak revenue generation abilities. They also experience hectic operations due to the limited land, which hinders their further expansion to reap from economies of scale.

The semiconductor business forms part of Taiwan’s flagship industry. However, it now faces intense competition from other countries, including the U. S. Such rivalry threatens to absorb the best Taiwanese talent in the industry (Ta-Shun et al., 2016). Taiwan has scarce natural resources, which are inadequate to drive its island economy or meet the aggregate demand in its domestic market. However, its highly innovative and educated human resources entail an important resource that multinational corporations can tap to achieve success in business. Such foreign organizations are also likely to succeed when operating in Taiwan since it has a low cost of labor compared to nations such as the UK, Canada, and America.

Analysis

Taiwan enjoys the availability of reasonable production expenses and a highly talented workforce. However, such expertise presents risks such as the possibility of turnover due to salary and wage dissatisfaction and the need for advancing in individual careers. Therefore , establishing operations in Taiwan requires a foreign company to seek mechanisms for ensuring that workers do not consider quitting their jobs. Since Taiwan’s rate of unemployment stands at 4. 0%, chances are that employees who leave their jobs will secure opportunities elsewhere both locally and in other regions, especially in the Asia-Pacific zone (Hamilton and Webster, 2014). Consequently, an organization seeking to commence operations in this country faces the risk spending hugely in employee-retention programs. For instance, it may need to establish and implement a tripartite model to guide industrial relations and human resource management approaches (Hamilton and Webster, 2014).

Taiwan’s low level of corruption compared to other economies implies low start-up requirements for an organization that plans to expand its businesses to this country. Companies that are strict in terms of their corporate governance principles, especially corruption intolerance, can easily start up and operate in Taiwan. High scores in property rights imply that the Canadian company may not encounter the risk of losing its intellectual and patent rights while in Taiwan. Additionally, from Appendix 1, the company has the benefit of trading freely due to the prevailing business freedom, the possibility of external funding, and limited regulatory requirements. Indeed, open markets make Taiwan the country which is appealing for establishing international operations (Heritage Basis, 2018). The truth that this has a fairly stable political weather implies that an expense decision with this nation should rely on strengths and weaknesses of its prevailing macro-environment and factor endowments.

Recommendation and Conclusion

Organizations that will engage in worldwide businesses encounter numerous risks. When setting up new bazaars, particularly in the global domain, difficulties such as remaining from the prevailing company cultures, policies, plus economic and politics environments pose substantial threats. Therefore, the particular large Canadian organization that is wanting to expand its procedures to Taiwan to get a competitive benefit should be conscious of these dangers. Nonetheless, expanding in order to Taiwan is suggested with this Canadian organization. Actually Taiwan’s steady political climate, regulating freedoms, highly educated and talented human being resources, inexpensive associated with production compared to Canada, and the lack of restrictions to open markets are important benefits that this foreign organization will experience.

References

George, C. and Serret, Y. 2011. Regional Trade Agreements and the Environment: Developments in 2010.  Web.

Hamilton, L. and Webster, P. 2015. The International Business Environment, 3rd edition. Oxford, England: Oxford University Press.

Heritage Foundation. 2018. 2018 Index of Economic Freedom. Web.

Lin, Y. (2013). Wage Effects of Employment Protection Legislation in Taiwan. Asian Economic Journal, 27(2): 145–161.

Ministry of Foreign Affairs. 2017. Science and Technology. Web.

Nasr, W., Salameh, M. and Moussawi-Haidar, L. 2014. Integrating the Economic Production Model with Deteriorating Raw Material Over Multi-Production Cycles. International Journal of Production Research, 52(8): 2477-2489.

“Taiwan Ranked as 22nd Richest Country in the World. ” 2017. Taiwan Today. Web.

Ta-Shun, C., Chiou, M. and Feng-Ming, L. 2016. Semiconductor Industry Network Evaluation of Directors plus Supervisors. International Diary of Organizational Development, 8(3): 52-63.

The World Financial institution. 2018. Taiwan: Political Stability. Web.

Trading Economics. 2018. Taiwan Direct International Investment. Internet.

Appendices

Appendix 1

Figure one: Taiwan economic freedom’s scores for 2018 (Heritage Foundation, 2018).

Appendix 2

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