Competitive Advance of Nations Taiwan has been ranked 6th in “World Competitiveness Report” published on April 13, 2011. Taiwan has an intellectual advantage; in this country about 43. 7% of the workforce is higher educated (graduate from college and university everywhere in the world). Taiwan workforce represents about 10 million people, accounting for 48% of the total population. Every year 320 thousand students are graduated from college and university, which make sufficient workforce supply to the industry.
Also, Taiwan has abundant Capital Funds and Relatively Low Cost. From 1998 to 2007, the pproved outward investment value by Taiwan businesses was USD 40 billion. By the end of 2007, Taiwan’s holdings of foreign financial assets reached USD 850 billion and the deposit of the banking system reached 25 trillion. Over the past few years, Taiwan’s annual interest rate has been lower than other Asian markets. Taiwan’s listing cost is as low as about 10 million, which is far lower than Hong Kong and Singapore.
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Taiwan also has infrastructure and technology materials ready for industries. Taiwan has experienced rapid economic expansion, as well as a significant increase in local consumer buying power. With an increasing demand for quality products and services, the concept of using modern retail channels such as supermarkets and hypermarkets for daily purchases of household necessities and personal food stuffs has been widely adopted by local consumers.
Retailers must now offer a wide variety of products, excellent service and convenience to attract and keep customers. Purchases of household products make by women are increased by over 40 percent from IJS$10. 5 billion in 2002 to IJS$14. 9 billion in 2006. The second largest category is food products and groceries, which accounted for approximately IJS$8 billion in 2006, an increase of 26 percent from IJS$6. 4 billion in 2002. In the last 10 years, modern retail stores have been experienced rapid growth and have captured significant market share.
Demand in technology in Taiwan still strong, Steve Jobs had said that market demand for Apple’s product in Taiwan remains strong and he believes that when iPhone 5 will be launched, consumers will still line up to purchase the products. Taiwanese really like new technology. The 2010 international comparison of Economic Growth Rates has shown that Taiwan has an increase of 10%. This is due to the fact that lot of industries such as electronics, communications and technology products, petroleum refining, chemicals, textiles, food processing, and many others.
Those industries and companies have to face competition because every company wants to take advance on the Taiwan’s business market. Also, the fact that multinational industries choose to come in Taiwan, put pressure on local industries; and competition in Taiwan became big. Industries fght for prices, human resources and ideas. Some industries and companies hire foreign qualify managers and engineers to be more effective. Local rivalry encourages innovation and sustained upgrading. industrial environment suitable for IT development.
Currently, Taiwan has the highest industrial cluster density. Taiwan’s IT competiveness mainly relies on superior high-tech infrastructure and R&D talents. Taiwan has become the global supply base for high-tech products. Taiwan’s industrial cluster development ranks number one in the world in “World Competitiveness Report 2008-2009”. Over the past few years, Taiwan government has effectively promoted the formation and development of industrial clusters and encouraged innovation, which has won ecognition by international institutions.
Taiwan seem to have a great business policy, Taiwan government has continuously implemented the deregulation policy to make the laws and regulations more stable and transparent than before. The laws and regulations for foreign investment have been amended according to international practices to liberalize investment activities and create a business environment which makes the value manufacturers stand out. Taiwan government has understood the importance of opening its door to people that want to invest in Taiwan, government made thing easy for businesses.
The government also tries to reduce tax in order to attract more industry in Taiwan. The taxation environment in Taiwan is sound and friendly; filing procedures are simple and easy; tax collection procedures are public and transparent; and the communication channels with tax bureaus are smooth. Resident and non-resident companies are charged in the same way concerning taxation, 17%. If a person resides in Taiwan less than 90 days in a year, the tax rate will be 20%. Over 90 days, the tax rate is the normal tax rate for local residents, no matter whether Taiwanese or foreigners.
Capital gains are taxed in the same way as ordinary income, and the fiscal year begins on January 1st and end on December 31st of the same year. Taiwan’s accounting principle follows the accounting standards promulgated by the International Accounting Standards Board. They establish the cross-strait industrial cooperation platform, promote a more liberal system for Taiwan capitals, talents, products, and information, and attract foreign investors to participate in cross-strait projects. The cross-strait relation has been gradually improved, which helps develop a good business environment.
In 2002 Taiwan Joined he World Trade Organization and after that, they revised relevant laws and regulations for collection of customs duties according to regulations and standard announced by WTO. Taiwan is also part of the ASEAN and has a Bilateral Investment Conventions signed with: Argentina, Belize, Burkina Faso, Costa Rica, Dominica, El Salvador, Guatemala, Honduras, India, Indonesia, Liberia, Malaysia, Macedonia, The Marshall Islands, Nicaragua, Nigeria, Panama, Paraguay, the Philippines, Saudi Arabia, Senegal, Singapore, Swaziland, Thailand, Malawi, and Vietnam.
Taiwan is an important destination for Foreign Direct Investment (FDI). The World Investment Report reported Taiwan as 1 5th in term of FDI attractiveness for 2011-2012. The island enjoys strong growth sustained by the dynamism of the entire region, a population with high purchasing power and economy with high technological focus. After FDI declined due to the world economic crisis, growth resumed in 2011 and should be maintained despite the unfavorable global economic situation.
The accepted approach is to try to take advantage of the strengths and make up for the weaknesses. Afterward, on the basis of one’s strengths, the principle of omparative advantage can be applied. Taiwan’s strength lies in its use of manpower, which is characterized by great diligence, a system of universal education, and an adventurous spirit of developing new markets.
Over the past five decades, Taiwan has effectively used its labor force not only to overcome the disadvantages imposed by its lack of natural resources, but also to maintain a high degree of economic growth. In addition, it has employed overseas contract workers to open overseas markets. Taiwan then has some economic risk; even if the risks are low, businessmen still ave to look at it. Taiwan is small island economy that has strong economic, political, and historical ties with Hong Kong, Macau, and Mainland China.
It is an export- oriented economy, making it particularly vulnerable during times of global economic downturn. The central bank had been gradually raising interest rate in order to curb mild inflation which is now on hold as the country and world monitors the Euro-zones sovereign debt crisis and financial market volatility. The economic recovery is continuing in 2012 at a much slower rate as external risks persist, including weak lobal demand, Japan’s struggling economy, and the uncertainties regarding the future of Eurozone.
Another risk is the fact that The Island is considered seismologically unstable. Taiwan has recorded 19 quakes measuring over 7 on the Richter scale since 1906. The most recent earthquake that hit Taiwan was late 1999 measuring 7. 4 on the scale. Before investing in Taiwan, you have to know that natural disaster may happen at anytime and you may lose your investment, lose everything. Works Cited Global Trade portal. 2011. 14 October 2011 . Government Information Office. 2010. 14 October 2011 .