Taiwan
An Offshore Dynamo
International communications have a decidedly political slant in Taiwan, the Republic of China. From the outset of the founding of its present government — that is, from the time Chiang Kai-shek's Nationalist Party lost China's civil war to Mao Zedong's Communist Party in 1949 and retreated to Taiwan — Taiwan claimed to be the true government of all of China. In earlier years, Taiwan frequently and steadfastly invoked its policy of the "Three No's" toward mainland China, the People's Republic of China: No Negotiation, No Compromise, No Contact. Today, however, the leaders of Taiwan call for open economic and cultural exchanges with the PRC and give tacit approval to Taiwan citizens increasing their contacts with mainland China through indirect investments (primarily through Hong Kong) and family visits. But the reunification of China remains high on the national agenda.
The catalyst for this move towards expanded communications overseas was Taiwan’s economic success, fueled by the power of the global marketplace. Now the world's seventeenth largest trading economy, Taiwan began its long march to economic prominence when the United States began pouring military aid into the country during the Korean War (1950-1953). Taiwan's leaders took the opportunity to move the country swiftly toward an export-driven, free enterprise economy. Large government-owned corporations were set up to develop strategic industries such as steel, petrochemicals, shipbuilding, and energy. New airports, highways, railways, seaports, and communications systems were built. Foreign investment was encouraged, and the economy thrived.
For its part, the PRC refused to acknowledge Taiwan's growth, and its claim to status as an independent nation. However, the PRC is now softening its own rigidity on the subject. At the 1993 summit of members of the Asia Pacific Economic Cooperation organization in Seattle, the PRC posed no objection to Taiwan's inclusion in the meetings, and with the PRC’s own bold economic reforms rapidly moving toward a market economy, there is growing respect for Taiwan on the mainland. Taiwan has been a member of APEC ever since.
[Tip — National Sensitivities: Although relations between Taiwan and the PRC are warming, outsiders should faithfully observe the autonomy of Taiwan in their communications with Taiwanese. For example, references to the PRC should be avoided, and one should never refer to Taiwan as the People's Republic of China. Taiwan's official name is the Republic of China.]
Westerners once knew Taiwan as Formosa, the name given it in the 1600's by the Portuguese, for whom Ilha Formosa meant "Beautiful Island." Its present name, Taiwan, means "Terraced Bay" in Chinese. Owing to its proximity to trade routes (it lies off the east coast of China, between Japan and the Philippines), Taiwan was occupied from time to time by the Dutch, the Spanish, and the French. In 1894 it was invaded by the Japanese and remained under Japanese control until the end of World War II, when it was returned to Chinese rule. Culturally, politically, and economically, Taiwan has remained predominantly Chinese throughout its history. Some 80 percent of its inhabitants are descendants of emigrants from mainland China's neighboring Fukien and Guangdong provinces; the remainder of the population are "mainlanders" who have arrived from various Chinese provinces since 1949.
Although Taiwan is Westernized in many ways, it does remain fundamentally traditionally Chinese. Age is venerated; social and organizational hierarchy is carefully observed; men dominate the senior levels of business and government (although there are many professional women, and family businesses are sometimes headed by a daughter and only child of the patriarch). Nonetheless, Taipei, Taiwan's capital city and commercial heart, is a lively, energetic city bursting with vitality. Its traffic jams and sprawling growth are characteristic of Taiwan's urgent quest for achievement.
[Tip — Business Style: Business in Taiwan is fast paced, and Taiwanese are often blunt and direct. However, international business people, in communicating with Taiwanese, should use a fairly formal style. For example, they should address Taiwanese by their family names until invited to use a given name.]
This ethnic and cultural homogeneity aside, Taiwan is an island state of great diversity. There are both high mountains and open seas; half of the island is covered with forests, so there are both forestry and fishery industries. One-third of the land is arable, producing rice, wheat, corn, and other crops, as well as supporting livestock. However, agriculture now accounts for only about two percent of Taiwan's gross national product. Manufacturing accounts for about 25 percent and services for about 73 percent. Manufacturing now produces virtually everything from low tech garments to high tech computers, from household television sets to industrial shipbuilding.
Personal computer manufacturing is a major industry in Taiwan. Taiwan companies manufacture about one-third of the world's computer chips, 60 percent of its laptops and 70 percent of its motherboards. General Kuo Yun, former vice chairman and president of the Institute for the Information Industry in Taipei, often joked that "R.O.C. stands for Republic of Computers, not Republic of China."
Despite the significant influence of Taiwan's large, government-owned corporations, the strength of its economy lies principally in small, entrepreneurial firms. In the manufacturing sector, fully 90 percent of Taiwan's business enterprises employ fewer than 50 workers. The Taiwanese are especially proficient in product development, designing new products and bringing them to market faster than anywhere else in the world. Where they are weak, in the view of some observers, is in marketing and advertising. Also, according to some observers, Taiwan manufacturers need to sharpen their international product services, in particular by providing better manuals and instructions with their products.
A major impediment to communications with Taiwan business enterprises is that so many of them are small in size. Another is that there are so many players in a given industry. Consequently, international firms have difficulty in approaching potential Taiwanese suppliers and customers in an efficient manner.
[Tip — Introductions: Ask a Taiwan government office to assist you with your initial contacts. For example, the China External Trade Development Council in Taipei can introduce you to firms that specialize in establishing appropriate business connections.]
To help make this complex economy more manageable, the government has taken steps to encourage Taiwan businesses to move more rapidly into high tech, value-added activities, and to invest in production facilities in countries (largely in Southeast Asia) where labor costs are lower. Steps have also been taken to privatize some of Taiwan's government-owned industries. Government-held stock in the China Steel Corporation and several public commercial banks was sold to the public. Other industries, including paper, chemicals, and construction, were targeted for privatization.
The government's ambitious six-year national development plan for 2002–08 was estimated to cost $75 billion and had seven specified goals: 1) expanding the number of products and technologies that meet the world's highest standards; 2) doubling the number of foreign visitors; 3) increasing expenditures on research and development to 3% GDP; 4) reducing unemployment to less than 4%; 5) increasing the average growth rate to over 5%; 6) increasing the number of broadband internet users to over 6 million; and 7) creating about 700,000 jobs. There were to be 10 major areas of emphasis, including cultivating talent for the E-generation (with a special emphasis on mastering English); developing the cultural arts industry; developing a digital Taiwan, using information technologies to make government more efficient and industries more competitive; developing Taiwan as a regional headquarters for multinational corporations; and constructing culturally rich hometown communities as a means of retaining talent, in addition to more standard goals of increasing value-added services, improving the transportation infrastructure, conserving water resources and doubling the number of tourists. Substantial progress in meeting these goals was made, but the current global recession halted further progress.
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