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How Taiwan became Asia’s island of industry

Despite mounting tensions with China cutting off a major source of travellers, tourist numbers in Taiwan are on the rise. The island nation is now on track to become Asia’s newest and brightest hub for business

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How Taiwan became Asia's island of industry
A view of the bamboo-shaped Taipei 101 skyscraper in Taipei, Taiwan 

Though Taiwan has a relatively short history, it is one that is deeply intertwined with that of its colossal neighbour, China. Since 1683, when the Qing Dynasty annexed the island, the two countries have had a desperately tumultuous relationship – one filled with war and occupation, struggle and contention.

The end of the Chinese Civil War in 1949 was another pivotal point in this relationship, wherein the defeated Kuomintang Party and some two million refugees retreated to Taiwan. With them, they took China’s intellectual elite, as well as a vast bounty of priceless artefacts. This episode, together with the cultural remnants left over from Japanese and Dutch occupation and the island’s aboriginal communities, have created a truly unique country – one that is undeniably distinct from China. Today, Taiwan is a hi-tech, liberally minded nation with a growing economy, making it an increasingly popular destination for travellers of every kind.

Indeed, despite China’s attempts to persuade individuals, companies and even foreign governments to boycott Taiwan, its favourable business climate, high living standards and enviable range of sights and experiences saw the country achieve a record-breaking year for international tourists in 2016.

A complex relationship
In a historical anomaly of sorts, cross-strait relations between the two states were fairly normalised between 2008 and 2016. This can be attributed to the reign of the Kuomintang Party, which at the time unofficially hinted at Taiwan’s eventual return to the mainland. The opinion of the current ruling Democratic Progressive Party (DPP), however, differs on this highly contentious point, advocating instead for the independence of Taiwan, officially called the Republic of China. And so, when President Tsai Ing-wen and the DPP were elected last year and began to reassert Taiwan’s national identity, China responded with a full-throttle reversion to its One China Policy, which stipulates that there is only one China – Taiwan being but a rogue, breakaway state.

Chinese tour groups are no longer a top priority for Taiwan’s growing tourism industry – tourists have flocked from elsewhere in Asia and beyond

One aspect of this strategy includes pressuring Chinese tour companies into no longer promoting travel to Taiwan. With Chinese visitors being the biggest source of tourism for the island, many expected dire consequences for the industry following this announcement.

Unsurprisingly, the number of Chinese tourists has fallen distinctly since Tsai’s inauguration in May 2016: according to the Tourism Bureau, Republic of China, the volume of Chinese group tours shrunk by around 30 percent, while the number of overall arrivals from China decreased by 16 percent from 2015. However, what has come as a surprise is that this decline did not actually impact Taiwan’s overall tourism numbers. In fact, Taiwan hosted some 10.7 million visitors in 2016 – a healthy increase from 10.4 million in the previous year.

On February 9 2017, Tsai herself tweeted about Taiwan’s record year, giving her particular thanks to tourists from Japan, India, South Korea, Thailand, Malaysia, Vietnam and the Philippines, in addition to those few from China. Chinese tour groups are therefore no longer a top priority for the country’s growing tourism industry – instead, it is now targeting tourists from elsewhere in Asia and beyond.

While this shift is pertinent for political reasons, there is also a sound financial argument as to why the change is a positive thing: according to Taipei Times, surprisingly little money is made from Chinese tour groups visiting Taiwan. The majority of fees are paid to the tour companies themselves, while tourist spending is limited to just a few select venues, thereby greatly reducing any positive impact on local services.

Setting up shop
The arrival figures from 2016 can be explained in part by the number of people who visited Taiwan on business during the year, as well as by the increasing number of international companies that decided to set up shop there. Given Taiwan’s world-leading technology industry and reputation as a key link in the global supply chain for electronics, computers, semiconductors and mobile phones, start-ups in particular are now flocking to the country. Consequently, the government is currently investing more than $350m into what it has called Asian Silicon Valley, an IT zone it hopes will further Taiwan’s position in the global tech market.

Fred Chak, an entrepreneur who recently moved to Taipei to expand his modular smart watch brand Blocks Wearables, told Business Destinations what drew him to Taiwan: “Labour is relatively cheap – around one fifth of [that in California’s Silicon Valley] – and rent is a steal.” He continued: “Although they require direction and training, there is a sizable experienced software and hardware talent pool. Also, Taiwan’s concentration of huge tech ODMs [original design manufacturers] offer opportunities for hardware and software start-ups if they can find synergy [with one another].”

Elisa Chiu, Founder and CEO of Anchor Taiwan, an organisation that assists foreign companies establishing their businesses in Taiwan, agreed: “If you are looking for suppliers or talent, Taiwan is such a forgotten treasure, with a long heritage of hardware capacity, the biggest ICT trade show in Asia (Computex), and [one of the highest numbers of] patents per capita in the world.”

10.4m

Total tourist arrivals in
Taiwan (2015)

10.7m

Total tourist arrivals in
Taiwan (2016)

16%

The reduction in Chinese tourists visiting Taiwan between 2015
and 2016

30%

The reduction in Chinese tour groups between
2015 and 2016

Taiwan’s remarkable level of innovation is highlighted by various global rankings: the country tops the list for innovation capacity in Asia in the World Economic Forum’s Global Competitiveness Report 2016-2017. It also ranks first in Asia in the GEDI Institute’s Global Entrepreneurship Index 2017.

“More and more companies see the potential of hardware start-ups,” said Ellen Pi, International Partnership Project Manager at the government-affiliated Taiwan Rapid Innovation Prototyping League for Entrepreneurs. As Pi explained, a growing number of multinationals are now seeking to establish dedicated teams in Taiwan to support such start-ups and work with them on “high mix, low volume innovation”.

She added: “As hardware start-ups own the core technology, [foreign] companies would like to leverage Taiwan’s design and manufacture capabilities… It’s a small island that has over 70 hi-tech clusters in the north region, which can be accessed within one hour. This places us in a unique position for high-quality and customised innovation, and cross-industry integration, such as textiles and [accompanying] electronics, bikes and [accompanying] electronics, and medical devices and [accompanying] electronics.”

Accordingly, the country is now becoming a business hub for the entire region. “Its strategic location, with direct flights to more than 120 cities and the new Taoyuan Airport MRT – an express train to the city centre – making it an ideal gateway to Asia,” said Chiu. This reputation is aided further by the ease of doing business in the country, in which Taiwan was ranked fourth in the region for 2016. It is also ranked fourth in Asia for intellectual property rights protection.

“Taiwanese people are acclimatised to western standards when it comes to business conduct, hospitality and daily etiquettes for a developed and civilised society,” Chiu told Business Destinations. “The openness, modern infrastructure and decades of experience of doing business with its neighbouring countries, especially China, make Taiwan an ideal base.”

Chak added: “And things are cheap, [which] helps keep a start-up’s burn rate low.”

Convenient lifestyle
A factor that makes choosing Taiwan as a regional base even easier is the surprisingly high standard of living on the island. In 2016, the InterNations Expat Insider report rated Taiwan as the number one place to live in the world. In addition to ranking first in the report’s ‘quality of life’ and ‘personal finance’ indices, it is also the top-rated country in the ‘friendliness’ category, while 99 percent of those surveyed rated their personal safety favourably.

Taiwan is also the report’s strongest performing country for health and wellbeing, with Taiwan’s universal healthcare system often dubbed the best on the planet. For one, there are no restrictions in terms of residence – citizens can visit any specialist in the country, and anywhere they do go, doctors have access to their medical records through a smart card and can prescribe medicine without the need to consult a specified practitioner. Even when visiting a different doctor, all payments are directly billed to the National Health Insurance Administration, which also happens to have one of the lowest administrative costs in the world.

Aside from friendly locals, consistently great weather and excellent healthcare, what many expats and visitors love about the island is the fact that, in Taiwan, convenience is king. “Taiwan is one of the safest and most convenient places to live – literally, as it has the highest density of convenience stores in the world,” said Chiu. With one such shop for every 2,304 local residents (according to Taiwan’s Ministry of Economic Affairs), the stores take convenience to a new level. Not only do they offer the usual assortment of soft drinks, snacks and personal essentials, they also sell hot beverages and meals, and the majority are open 24 hours a day, seven days a week, every day of the year.

What’s more, Family Mart and 7-Eleven, the two biggest convenience store chains in Taiwan, seem to be in a constant process of rolling out more services, now allowing customers to buy train tickets, collect online orders, post packages, pick up library books, print concert tickets, pay bills and fines, print photos, and photocopy and scan documents, all in one place.

Public transport is another great example of Taiwanese efficiency and expediency. The MRT system is remarkably punctual, making it the fastest way to get around the island’s major cities. In fact, Wired magazine stated that, in the period from 1996 to 2008, Taipei’s MRT service had a mere 36 delays, which accounts for one of the world’s highest customer satisfaction ratings for public transportation.

Despite China’s attempts to persuade people to boycott Taiwan, its favourable business climate saw it achieve a record-breaking year for international tourists in 2016

Moreover, the subways themselves are remarkably clean, and commuters are polite and patient – they wait in orderly queues to board, while those alighting have a separate lane, making the process all the more efficient. Stations also feature real time information, user-friendly maps and on-board announcements in both Mandarin and English, making the system a breeze for visitors.

Another pleasant surprise is that the country is one of the only nations in the world to have access to a free public Wi-Fi network. The service, iTaiwan, was first rolled out in 2011 to all Taiwanese citizens, and since June 2013 it has been available to tourists in four of the country’s five biggest cities – Taipei, Taichung, New Taipei and Tainan – through the use of more than 4,400 hotspots. Visitors simply open an iTaiwan account using their passport at one of the tourism bureau’s numerous offices and centres.

Communal experiences
As great as Taiwan is for expats, it also has much to offer those travelling in and out for business, leisure or both. Perhaps at the top of this list is a food culture that’s deeply embedded in Taiwanese society. Night markets are a huge attraction for residents and tourists alike, with rows of stalls offering Taiwanese delicacies alongside fusion fast food in all the big cities, and even in many of the smaller towns dotted around the country.

From stir-fried chicken feet and deep-fried octopus balls to Taiwanese-invented bubble tea and luscious papaya milk, there is something for everyone to enjoy at Taiwan’s al fresco bazaars. Alongside these food stalls are stores and vendors selling high-quality clothing, toys and household items, making night markets a fun evening experience even for less adventurous eaters. They are such a delight that, according to the Tourism Bureau, Republic of China, more than 70 percent of tourists choose to visit one of Taiwan’s 300 night markets during a trip. And yet, despite the throngs of people that transverse them, roads and pathways are pleasantly clean and tidy, thanks to a strong anti-littering culture.

For more formal affairs, there are countless restaurants to choose from in any one of Taiwan’s major cities. What is most notable about them – aside from the incredibly reasonable prices, even in Michelin-starred restaurants – is the social aspect of the restaurant scene. One of the most popular offerings is the ‘hot pot’, a dish that is also extremely popular in China.

Hot pots are steaming broths that can be divided into two sections, which helps diners avoid the difficult question of spicy or non-spicy for a group with different tastes. After ordering from a massive selection of different types of meat, fish, vegetables and dumplings, diners then cook such components themselves, making this a brilliant social experience, ideal for ice breaking and relationship building.

Along a similar vein are the all-you-can-eat barbecue restaurants, which are also exceedingly popular. Rather than standing in queues, this type of buffet experience allows guests to cook the food for themselves. Again at the centre of a table – this time a round, charcoal barbecue with its own extractor overhead – diners can take turns to grill meat, fish and vegetables, making it a night full of fun – especially for the less experienced.

Taiwan is famous for its al fresco bazaars

Tickling your fancy
In Taiwan, there is truly something for everyone. “There is no shortage of independent cafés, live music and art exhibitions,” Chiu told Business Destinations. There is also a vast range of upmarket shopping centres, boutique shops and high-quality but inexpensive department stores, making Taiwan a brilliant shopping destination.

But as much as Taiwan is about urban life, efficiency and convenience, it is also a haven for natural beauty. In addition to the warm waters and serene beaches enclosing the island, there are mountain ranges and simply breathtaking forests. The country has nine national parks, which account for 8.6 percent of its landmass. Among the most popular is Alishan Mountain, a range famous for its tea plantations, thousand-year-old trees and spectacular scenery during cherry blossom season.

For nature lovers wishing to unwind, Taiwan has one of the highest concentrations – as well as the greatest variety – of natural hot springs on the planet. With a whole sub-industry set up around them, tourists and locals alike love to take short trips to the mountains to relax in luxury hotels featuring these unique baths.

As much as Taiwan is about urban life, efficiency and convenience, it is also a haven for natural beauty

Other major tourist attractions include: a plethora of striking temples; the picturesque Sun Moon Lake; the National Palace Museum, which is home to the world’s biggest collection of Chinese artefacts; Chiang Kai-shek Memorial Hall; and, of course, Taipei 101, formerly the world’s tallest building.

As appealing as this rich culture and long list of attractions is for visitors, it is also a huge plus point for expats. “Many of our members believe in the importance of cultural competency, not only for their personal growth, but also for business development,” Chiu explained. “Working remotely while living like a local through the Anchor Taiwan programme gives them a much deeper understanding of business protocols and norms. Through the events we curate with numerous local communities and partners, they also have instant access to the start-up and business ecosystem upon their arrival.”

When asked if she expects more individuals and companies to visit and eventually move to Taiwan, Chiu was certain that the trend is set to continue. “Taiwan is still a hidden gem on the world map, so there is a lot of potential. As technology facilitates more remote working arrangements, we are already seeing more interest through our programme. So far we’ve hosted members from the US, Canada, Russia, Belarus, Ukraine, Brazil and Iran. We are looking forward to many more from other parts of the world.”

Its geographic positioning, political stability, highly educated workforce, reputation for hi-tech development and renowned ease of doing business make Taiwan a worthy hub for the entire Asia region. Known as one of the four Asian Tigers, Taiwan is as such an ideal place for expanding businesses – and this reputation grows with each passing year. As evidenced by Taiwan’s best year yet for tourism – even in spite of political pressure from China – more individuals and enterprises are beginning to see this too.

Aided further by a fantastic standard of living, über-friendly people, world-leading convenience and an endless list of things to see, do, eat and drink, Taiwan may just be the best place you haven’t yet explored.

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