You’d like your career to be a more global experience. You’re thinking of getting a MBA in Asia. And, you’re ready to commit to living and working in the Far East. If so, than maybe a MBA in Taiwan is also for you. Because of its high-tech industries and educated workforce, business in Taiwan is a future direction for Asia.
Taiwan is like Switzerland, in some ways. Both punch above their weight class.
- At $529B USD, Taiwan’s GDP is the global 22nd (Switzerland is 19th)
- Taiwan’s GDP is bigger than Hong Kong’s $309B, and Singapore’s $293B
- Comparing Taiwan to Japan, it’s almost as productive per square kilometer
I’ll go over considerations for a global career around business in Taiwan. This mostly means its links to China and Asia. I’ll avoid talking about personalities and culture shock. These are big topics and we already know Taiwan is a nice and safe place to live. In this series, I’ll discuss:
- The business case for and against Taiwan
- Reasons you should and shouldn’t consider a MBA in Taiwan
- Why I decided to go for it, anyway
Advantage: Taiwan, Greater China, and Asia
Taiwan has a few strengths other Asian economies don’t.
Getting a handle on Asia doesn’t have to mean going to mainland China, even if it’s the biggest piece not named India. Japan, South Korea, Hong Kong, Singapore are all their own things, for example. All of them have good business schools. Have their own culture and economies. And, deal with China.
If you’re looking for a stronger Chinese and Asian connection, Taiwan has a few strengths other Asian economies don’t. In fact, Taiwan gets a lot of credit for preserving Chinese traditions.
- “Dalai Lama praises Taiwan for preserving Chinese culture“
- “Chinese culture is the basis of Taiwanese culture” – Emilie Shen, minister for the Council for Cultural Affairs
- “A ‘living museum’, exhibiting social models long since extinct on the Chinese mainland.” – Taiwan in Comparative Perspective
Taiwan is Chinese without China, but not more China than China. Figuring Taiwan out gives you a framework for accepting China. Relating to the average Zhou. But, this also means they are still two different cultures. Recognizing what’s what is key to figuring out how Taiwan fits in.
Advantage: Taiwan’s Chinese Role in Asia
Taiwan is more Chinese. Waves of Chinese immigrants have been coming to Taiwan for centuries. This is also true of other places in Asia. Singapore is one of the first Chinese colonies outside China. However, after the Communists won China after WW2, the exiled Chinese government set up in Taiwan. They are the Republic of China (R.O.C.).
In some ways, Taiwan connects to Asia in a way that China doesn’t. Japan-Taiwan relations are pretty good. Taiwan was part of China for hundreds of years, then part of Japan for about 50 years, before the R.O.C. came around. Japan-China aren’t doing so great. If you need to connect to the Far East, but don’t actually need to be in China, Taiwan is more business and investment friendly.
Taiwan can also provide a Chinese perspective from the outside-in. There’s a kind of nationalism and group dynamic (thanks, Confucious) in Asian countries that makes it difficult for foreigners to learn what’s really going on. It’s easier to figure out what you’re dealing with when you’re in the middle of things, and not the thick of it.
Your idea of China (and Asian companies) might actually be Taiwan. Major Taiwanese companies include Foxconn (they make your iPhones), HTC (they make other phones, and VIVE), TSMC, Viewsonic, Delta Electronics, the power convertor module in Tesla cars is made by Chroma, Pou Chen Group is the world’s largest manufacturer of branded shoes. So on and so forth.
Advantage: Taiwan’s Business Legal Environment
More protections than China. The mainland has weaker patent protection, so innovations have a better chance in Taiwan. A typical strategy is a Taiwan company will build factories in China, but keep their most proprietary manufacturing in Taiwan. Bicycle maker Giant is one example.
Taiwan is now more open to foreign investment than China, even if it’s not quite sure how to get it. Leu Horng Der is a professor in the Department of Business Administration at Chung Yuan Christian University.
“In the past China’s approach to soliciting foreign investment was to ‘draw in’ capital. Now the approach is to ‘choose’ foreign investors.” – CommonWealth magazine
Government programs like Contact Taiwan and Invest Taiwan talk up strengths, even if they don’t present many real differentiators. There’s an underutilized Taiwan Entrepreneur Visa program. Taiwan is positioning itself as a gateway to Asia, and is pursuing foreign direct investment.
More freedoms than China. Like, being able to take U.S. dollars out of the country, and no Great Firewall. A free flow of information is important for knowledge sharing. Taiwan is also more open, politically. When Hong Kong’s Umbrella movement organized protests to demand free elections, they were advised by Taiwan’s Sunflower Movement.
Taiwan is also #1 in media freedom, according to Reporters Without Borders’ World Press Freedom Index. Media freedom isn’t the same as a commitment to media truth. This, and a lot of other moves, are steps in the right direction.
Disadvantage: It’s (like) China
Taiwanese may not seem as aggressive as mainland Chinese. But, much of what happens in China goes on at a scaled-down level here. Let’s just stick to some key points about doing business in Taiwan.
Taiwan talks up its capital markets. However, local accounting standards are very different from the West in generally accepted principles. Capital markets also serve publicly-traded firms — 70% of the TAIEX is family businesses and 10 families run 25% of it. This matters to you because Confucian societies are insider-outsider arrangements, and local capitalism works the same way.
“It’s like X, but in Taiwan.” Venture capital often skews toward C2C (copied-to-China) or, copied-to-Taiwan ideas. This works way better in China, because Taiwan has fewer consumers. Proposals like these are easy to understand for practical, less technically sophisticated investors. While innovation can happen incrementally, there’s such a thing as inching the wrong direction.
The high-margin innovations Taiwan is known for require timing, patience, and risk capital. More than what investors are willing to give — but it’s possible. Apple’s OLED facility, for example. Government funds research. Family money. Some set up incubators, which leads to companies like Taiwan Mobile.
Pressure to deliver fast, if it’s not your money. Taiwanese sometimes take severe shortcuts. Like, New Taipei City’s pay.taipei — an online payment system for utility bills. If only pay.taipei wasn’t insecure and didn’t ignore basic protocols.
“pay.taipei app does not send HTTPS traffic, sends plain text passwords and uses fixed IPs for traffic…” – Thomas Kuiper
In some cases, fast makes sense. A lot of business in Taiwan is high-tech and tech has fast product development cycles. However, being practical doesn’t always mean doing things the cheapest way possible.
Disadvantage: It’s Not Modern China
People say Taiwan is the way westerners wish China were. But most Taiwanese haven’t been to China. So they don’t know. People might give you Chinese perspective, but it’s not based on experience. Taiwan also has its own quirks.
Taiwan is culturally ambiguous. Chinese and Taiwanese culture are patchworks of different groups. However, because of Taiwan’s 20th century, management styles run the gamut from Japanese tactics to Chinese habits to clan politics.
Taiwanese businesses don’t operate like Chinese businesses. They can’t, because the laws are different. You can’t directly apply what you’ve heard about Chinese businesses with Taiwanese businesses. This goes from land ownership to human rights to labor laws. Yes, there’s less rule-of-law in China, though plenty gets swept under the rug in Taiwan.
Getting past law enforcement, China changes quickly, and a lot of Taiwan businesses aren’t up-to-date on new Chinese requirements. Wenhsiung Tseng is with Deloitte China. “Taiwanese employers used to enjoy saying ‘I’m firing you.’ But this kind of phrase can’t be recklessly used in the future…” Now, if you fire workers arbitrarily, companies must pay twice the normal compensation.
Many large multi-national corporations (MNC) are zeroed-in on China. Earlier, we pointed out China simply has more consumers. The population and size makes a case for itself to shareholders.
Taiwan is a good proving ground or staging area. But for companies like Frito-Lay that spent years trying to figure out how to grow potatoes in China so they could sell chips to Chinese consumers, Taiwan’s a sideshow. Big investments in infrastructure and production were made, and they’re staying put.
Finally, Chinese government policy shapes economic development to an enormous degree. Every bureaucracy speaks its own language. In short, there’s no better way to get to know the Chinese government than being in China.
Summary: Doing Business in Taiwan
- Taiwan is not exactly China. But, being there gives you a baseline and some tools for making sense of Chinese thinking and behavior.
- The talent, companies, and connections for bringing any kind of high-tech idea to life, are here.
- The good news. Legally and socially, it’s easier for outsiders to figure out what they’re dealing with. The bad news? You’re not an insider.
I have some solutions for you in Part 2.