Information and communications technology to Taiwan

(Last updated: 27 Aug 2008)

Trends and opportunities

The market

Taiwan market growth can be attributed to several factors:

• Taiwan has the 79.3 per cent penetration rate of computer coverage and 71.7 per cent household Internet coverage.
• 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.
• 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 past few 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 OEMs operate International Procurement Offices in Taiwan. Significant orders have been placed by OEMs 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.

In 2007, Taiwan’s digital content production industry grew at an annual rate of 5.7 per cent to reach approximately A$13 billion. 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 cooperative arrangements, there are opportunities in human resource development.

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 businesses 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.
• E-learning projects in Third World countries – Taiwan is keen to work with Australian software players as a consortium to bid for international projects sponsored by the UN or other international banking organisations.

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

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.

The two most important issues to be addressed in marketing your IT products and services in Taiwan are to 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

All the leading computer players work very closely with Taiwan’s ICT hardware manufacturers. Taiwan companies provide not only the OEM but indeed the ODM – including product design and manufacture service for the world leading ICT brands.  Australian players will compete with the world software companies in bundling their software/application into the hardware manufacture. 

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
Institute for Information Industry – www.iii.org.tw
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)

Contact details

The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.

Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.

Austrade:

• Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
• Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
• Administers the Export Market Development Grants scheme.
• Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
• Provides advice to the Australian Government on its trade and investment development activities.
• Delivers consular, passport and other government services in designated overseas locations.

A list of Austrade offices (in alphabetical order of country) is available.

More information

For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au