Information and communications technology to Taiwan

(Last updated: 12 Jul 2007)

Trends and opportunities

The market

Taiwan market growth can be attributed to several factors:

• Taiwan has the fourth highest penetration rate of broadband facilities and ranked second in the online games market in the world
• The aggressive deployment of global logistical support systems by Taiwan firms
• The growing importance and awareness of e-commerce
• The heightened use of information technology, particularly in the areas of web-based applications and electronic commerce
• Recognition of the attributes of the B2B EC business model and its capabilities
• The Taiwan Government’s promotional plans and strategies
• The global logistics and supply chain management system requirements of foreign business partners of Taiwan hi-tech manufacturers
• WTO accession for both Taiwan and mainland China
• The necessity of appropriate information systems to manage migration of various industries to mainland China

Hardware

Greater focus is expected in both IA products and wireless/WAN application products in the future as Taiwan strives to keep abreast of changes to requirements in ICT Hardware.

Over the last two years, Dell, Microsoft and Sony have all announced the establishment of R&D centres in Taiwan and currently 20 of the world’s top ICT OEM’s operate International Procurement Offices in Taiwan. Significant orders have been placed by OEM’s for notebooks and a wide range of peripherals including mobile phones, wireless access cards and scanners.

Software

The total Taiwan software and information services market was valued at around A$42.5 billion. Within the packaged software market, almost A$900 million of this was in enterprise application software (EAS) representing almost 30.5 per cent of the total.

The Taiwanese Government’s strong push and focus on e-commerce development combined with the online integrated supply chain management system between major OEM’s and Taiwanese hardware manufacturers, which has now been extended to include full vertical integration of smaller component and systems suppliers to Taiwanese OEM’s, is expected to fuel the demand. Add to this the need for Taiwanese manufacturers in China to have efficient management systems in place and there are further factors  which are expected to accelerate growth. In general, output is generated by three main software categories:

• Industry-specific computer software
• Key software tools and components
• Embedded software

Over the last two years, we have seen an accelerated development of locally developed software by Taiwanese companies, particularly in the multimedia sectors. Taiwanese games companies are now the biggest players in the Greater China region with increased local development in global logistics where locally developed software has better mirrored internal management systems and practices.

Taiwan’s digital content production industry is forecast to grow at an annual rate of 20 per cent to reach $15 billion in 2006. Gaming, digital animation and e-learning are expected to be the major drivers of the industry. Opportunities exist for Australian companies to provide and create digital content with and/or for broadcasters, mobile and wireless platforms, Internet platforms and multimedia software firms.  In additional to co-operative arrangements, there are opportunities in human resource development.

Australian links into the software and hardware sectors have been enhanced by the signing of the following MOU’s:

• The Taiwan Electronic and Electrical Manufacturer’s Association and the Australian Electronic and Electrical Manufacturers Association (AEEMA)
• Australia’s IT Security Forum (under AEEMA) and Taiwan’s National Information Infrastructure Enterprise Promotion Association

The largest project for the ICT industry in Taiwan from now to 2008 is the 'e-Taiwan' project, which is one of the 10 major national projects of Taiwan authorities’ Challenge 2008—The Six Year National Development Plan. According to the authority, over A$1.83 billion has been allocated in the budget for the 'e-Taiwan' project. It is aimed to improve the IT environment in Taiwan in order to enhance its competitiveness in the global market. Under the project, there will be 39 sub-projects within five major sectors:

• E-government
  

  The Taiwan Government will invest approximately A$1 billion in this sector. It is estimated 60 per cent of all administrative work will function online, including taxation services, land, population administrations, transportation services, and government online trading system. It is estimated that the market value created from this sub-project will be at least A$5 billion by 2008.
  
  

• E-life
  

  The rate of companies that apply e-business is expected to rise from 26 per cent in 2002 to 60 per cent over the next six years, and the percentage of turnover from e-business is seen to grow from the current 1.5 per cent of total GDP to 15 per cent by 2008. On the other hand, the sub-project of e-life will focus on the development of industries, including digital entertainment and online learning.
  
  

• E-business
  
  
• E-transport
  
  
• Broadband available in six million households
  

  To achieve the target of over six million household access to broadband by 2008, the Executive Yuan is to amend the current regulations and laws to lift more obstacles to accelerate the fixed network developments. It is estimated from MOTC that the fixed-line service providers will further invest A$18 billion to enhance the construction within the coming six years.

Opportunities

It is estimated that considerable opportunities of roughly A$5.6 billion will be generated from the projects listed above.  Opportunities for Australian business exists in the relevant areas, especially in the software, digital content providing, databases, and relevant service areas. Capturing these opportunities will require strong links with local players in the market and there is already intense competition from established local and global vendors for major business opportunities in this national strategy.

The best opportunities in Taiwan's ICT industry for Australian exporters are:

• Innovative software applications, particularly in games, and management application software
• E-commerce and digital content for e-commerce, e-security, e-government and e-learning
• Mobile games, content and applications
• Intelligent transport systems

Tariffs, regulations and customs

Taiwan’s tariff system is based on cost, insurance, and freight (CIF) prices. With no non-tariff barriers on Australian products and no import duties for software products.

The current Taiwan tariff system is based on the Harmonized System. Duties payable on imported products are defined on an ad valorem basis. Taiwan is a signatory to the Information Technology Agreement (ITA). Under the ITA, Taiwan has phased out tariffs on information technology products since January 1 2002. 

A harbour construction fee, amounting to 0.3 per cent of declared value, is levied on all goods arriving by ocean carrier.  In addition, a five per cent sales tax (value added tax, VAT) is levied on all products sold in the domestic market.

Industry standards

‘The Internet and Its Legal Ramifications’ published by the Science and Technology Law Centre covers issues and laws concerning Internet use and e-commerce practices.

Marketing your products and services

Market entry

Two main courses of action are recommended:

• Identify a local agent or partner to distribute or license your products, this is common practice for in-market assistance, support, and advice on issues such as language barriers and marketing techniques. 
• Taiwanese vendors often ask for domestic/local implementation reference sites for technical assessments and marketing strategies.

Emerging small-medium sized companies in other Asia-Pacific nations are actively emulating the development model of Taiwanese firms, so a joint venture with a Taiwan software manufacturer is certain to help you make the most of market opportunities.

Chinese character software is important in the domestic market and Taiwanese software firms ability to develop Chinese language products is widely recognised.

Customise your products for Chinese consumers and get your brochures, catalogues, company profiles, capability statement and other promotional materials printed in traditional Chinese character formats. In software, it is important to offer two byte character capability if localisation is to be easily achieved.

Australian companies in the ICT sector are best advised to offer:

• Flexible and competitive pricing strategies
• Scalable capability
• Strong local support and after sales service and working closely with a qualified local partner who can offer Mandarin speaking support

Among the most notable of Taiwan's ongoing business-to-business (B2B) projects is the formation of supply-chain systems linking leading international IT firms and their domestic suppliers, together with the supply chains connecting leading domestic IT firms and their supporting factories. Those systems are being built up with subsidies from the Industrial Development Bureau (IDB) of the Ministry of Economic Affairs.

Some e-marketplaces that have started up include:

• com2B.com  – established by Compaq, with a number of leading local firms, with the goal to develop an e-marketplace for a number of Taiwan’s major industries.
• e2Open – with a capital of US$200 million, it was established in mid-2000 as a joint venture between Acer Inc., IBM, Nortel, Toshiba, Hitachi, LG, Seagate, Lucent, and Solectron, which together boast a trading volume of US$700 billion annually.
• Converge (formerly known as eHitex.com) – set up as a joint venture with a capital of US$100 million by Mitac, Tatung, Compaq, AMC, Gateway, Infineon Technology, NEC, and Samsung, which among them have a total trading volume of US$650 billion a year.

Many of Taiwan's IT firms are expected to join at least one of these marketplaces to take advantage of the rich business opportunities they will offer.

Links and industry contacts

ICT–related resources

com2B.com - www.com2b.com
e2Open - www.e2open.com
Science and Technology Law Centre - http://stlc.iii.org.tw/stlc_e.htm
Taipei Computer Association  - www.tca.org.tw
Taiwan Electronic and Electrical Manufacturer’s Association - www.teema.org.tw

Media

Asia IT Report - http://mic.iii.org.tw (Monthly, in English)
Computerworld/InfoWorld Taiwan - http://cw.infopro.com (Weekly, in Chinese)
DigiTimes - www.digitimes.com.tw (Weekdays, in Chinese)
eBusiness Executive Report - www.arcknows.com (Monthly, in Chinese)
Info.Com - www.digi-age.com.tw  (Monthly, in Chinese)