Challenges in Taiwan and Opportunities for Japanese Companies
Author - Hsin Ho
Introduction of Taiwan
According to official data, in 2017, the GDP of Taiwan is 572 billion dollars, the 22nd of the world, and we are an export-driven country, exporting 317 billion dollars the 17th of the world. Additionally, our economy relies on industrial and service industry which accounts 37% and 61% of GDP separately. Our major trading partners are China, the US and Japan. Among these three countries, recently, especially this three year, Japan has a close business relationship with Taiwan. The investment from Japan increased by 237% from 2016 to 2018. Next, talking about industrial development, the government has set 3 goals for future development. Firstly, the government will focus on building green energy environment. By using solar power and wind power, we plan to remove nuclear power by 2025. Secondly, in order to catch up the age of AI and IoT, we will work on developing the newest information and communications technology. Lastly, the government will expand infrastructure investment, especially transportation investment such as railway and MRT. So, in the near future, we can expect that there will be a huge amount of investment from the Taiwanese government.
SDGs practice in Taiwan
Public sector After checking the government website and other media, I found that the Taiwanese government did a lot for SDGs. For examples, during the international conference on sustainable development in New York in 2017, the Taiwanese government summit its VNR (voluntary national review), showing the support by practical moves. Apart from that, by establishing the committee in Congress, the government planned to further introduce SDGs movement through legislation. Moreover, in 2017, the same year summit VNR, during the national day of Taiwan (10th, October) address, our president said that being a part of the world, Taiwan will follow the SDGs and do our best to build a sustainable environment for the next generations. Hence, based on the 17 SDGs, our government made the corresponding policies for future developments (see reference).
-Private sector In the private sector, an organization which is called the Institute for Sustainable Energy has held the Taiwan Corporate Sustainability Awards for 11 years to encourage firms understanding the importance of CSR (corporate social responsibility). And, prior participating firms total operating income constituted 88.12% of 2015 Taiwanese GDP, which means that most companies in Taiwan are willing to take social responsibility and care about sustainability. Besides, this organization has announced that, in order to connect with the trend of the world, since 2016, the examination has been according to the SDGs. Also, the concept of SDGs is well-received by Taiwanese firms. For example, Taiwan mobile, the earnest telecommunication company in Taiwan. Showing their action on achieving SDGs on the official website. When we get in its page, it clearly shows what is working on for SDGs. In this case, Taiwan mobile dedicates to solving 7 of 17 goals in SDGs. Similar to Taiwan mobile, Sinyi Realty, the biggest real estate agency company in Taiwan, shows its contribution toward SDGs. But, a little bit different with Taiwan mobile, on the website, it gives a clear response and practical solution to achieve SDGs.
To sum up, we can say that although due to political issues, Taiwan now is not a part of United Nations, being a world citizen, no matter Taiwanese government or corporations, they try their best to contribute the world.
Challenges in Taiwan
In addition to following the SDGs, after seeing the incident of radioactive isotopes releasing from the Fukushima Daiichi Nuclear Power Plant following the 2011’s earthquake and tsunami in Japan, with the same geographical situation with Japan, Taiwanese government decided to remove all 3 nuclear power plants by 2025 in order to have a safe living environment. This strategy has a good purpose but it lacks the complementary measures, cause in the past few years, there were so many days which the electric storage is insufficient. More seriously, on August 15th, 2017, A big blackout happened, and over 6 hours, people and companies could not use electricity, leading to million dollars of losses for the business. Other than poor electricity storage, Taiwanese people also concerned that the massive increase of electricity price seriously will affect their lives and business because the electricity which was produced by alternative energy such as wind power and solar power is much more expensive than by nuclear power. The situation will cause more risks in Taiwan than in other countries because the GDP of Taiwan heavily relies on IT industry which consumes huge amounts of electricity every year. If the government cannot provide these companies stable electricity, they must look for other countries for further investment. More seriously, it will cause more and more people to lose their jobs, leading to a serious national problem. Hence, the Taiwanese government must have more complementary measures against this issue.
Opportunities for Japanese Company
The business advantage of Taiwan To be honest, Taiwan and Japan have a close business relationship for the long-term, and in this section, I am going to explain why so many Japanese firms would like to expand into Taiwan. The first reason is the excellent location in Taiwan. Because Taiwan is in the middle of east Asia (from Taiwan to other Asian major cities (Tokyo, Shanghai, Hong Kong, Seoul, Singapore), the time by taking airplane is all within 4 hours), it is very suitable to be a hub to be an overseas branch for foreign firms. The second one, as I know, Japanese companies are well-known for their training for employees, so people’s education level would be an important element. Since over 50% of Taiwanese labor has at least a college degree, with high education, it is easy for them to pass those training, successfully helping Japanese companies save costs. Next one is the sound infrastructure. Taiwan has a dense, comprehensive transportation network. By taking high-speed rail, it only takes 90-minute travel from Taipei to Kaushion, which is the other major city in the south of Taiwan. Due to the convenient transportation system, the urban-rural gap is not a big problem in Taiwan, and therefore it is the benefit to develop business in Taiwan. Last and the most important thing is that Taiwan has a sound IP protection environment. Taiwan's intellectual property laws are open and transparent. This environment can encourage companies to focus on R&D instead of worrying about the IP would be stolen by competitors.
Historical advantage of Japan In the past, Taiwan was colonized by Japan for 50 years, and during that time Japanese modernize the infrastructure of Taiwan, such as modern railway and hygiene system, causing Taiwanese people can have a better life in the future. Although nowadays, people in the world hates colonialism, most Taiwanese appreciate the Japanese for their contribution. Another strength is that because Taiwan and Japan have had close interaction since before, our culture is quite similar. Being a leader in East Asia, Japanese culture affects Taiwanese culture a lot. Apart from English, Japanese becomes the most popular language in Taiwan, and this condition allows the Japanese company to find employees without a language barrier. Last strength is Japanese product always give Taiwanese people good images with modern design and high quality. People are willing to buy Japanese product with higher price, and we trust the Japanese brand more than Taiwanese one. As a result, Japanese firms can save a lot of budgets on promoting their products. These three strengths make Japanese firms stronger than other foreign competitors.
Recommended investment in Taiwan As I mentioned in the section "Challenges in Taiwan”, in order to remove nuclear power, the demand for alternative energy must increase. And, because Taiwan has similar geographical features as Japan, I think that Japanese firms are leading in the industry of alternative energy, such as solar, wind and geothermal energy. Then, according to German experience, when a country would like to build a nuclear-free environment, the inevitable thing is the increase in electricity price. I believe that this is the best timing for Japanese firms which specialize in producing energy efficient products. Apart from the above opportunities, on the way to achieve the nuclear-free goal, recent years, most cities in Taiwan faced a serious issue of air pollution. This is because, in order to satisfy the increasing demand for electricity and achieve nuclear-free homeland at the same time, the government decided to use more thermal power. As I know, Japan had suffered from the dirty air which is made by China in the past. Hence, I think Japanese firms which are about air purification can get huge benefits by expanding into Taiwan.
In conclusion, we all know that prior to executing any investment, there is a lot of things, such as local law, workers, culture, transportation conditions and economic environments companies should consider. On top of these, I believe that following the policy of the government is another key to be successful. As I discussed in the previous part, Taiwan now is facing a big transformation of energy supply, and we are welcoming other countries provide their latest technology and experience to us. If Japanese firms can catch up the trend, it will help them easily develop the business in Taiwan.
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