Guidance

Overseas Business Risk: Taiwan

Updated 6 June 2023

Politics

Taiwan is a stable, vibrant democracy with a free press and independent judiciary. It holds presidential and legislative elections every four years, the next being in January 2024. There are also city mayor and prefecture magistrate elections every four years, the last being held in November 2022. Taiwan has a population of 23.37 million.

Tensions across the Taiwan Strait have continued to increase, including a rise in Chinese military activity around Taiwan’s Air Defence Identification Zone (ADIZ). The Chinese military conducted live-fire exercises around Taiwan in August 2022.

Elections

In the January 2020 presidential and legislative elections, President Tsai Ing-wen’s Democratic Progressive Party (DPP) won re-election, retaking both the Presidency and the majority in the Legislative Yuan. Voter turnout was 75%, with Tsai winning 57% of the vote (8.2 million votes). The main issue at stake during the presidential election was how to deal with the increasingly difficult relationship with China. President Tsai is in her second and final term. Attitudinal surveys have shown that people in Taiwan continue to develop their sense of “Taiwanese” identity.

The next presidential and legislative elections will be held on 13 January 2024. The main political parties have nominated candidates for the presidency and started campaigning.

Domestic Policies

President Tsai has said that she intends to pursue a range of social reforms to improve living standards during her final term in office. For her final year in office, she set out her priorities as maintaining Taiwan’s position in global supply chains and strengthening economic resilience, and managing cross strait risks.

Taiwan continues to accelerate the development of six core strategic industries: information/digital industries, cybersecurity, biotech and medical industries, defence, green and renewable energy, and strategic stockpile industries.

Cross-Strait Relations

Managing the cross strait relationship with China remains a high political priority for the current administration, and an important issue in the campaign for the 2024 elections.

The People’s Republic of China (PRC) has claimed sovereignty over Taiwan since the end of the Chinese civil war in 1949, when the defeated Chinese Nationalist Party (Kuomintang or KMT) government fled to the island. The PRC maintains its threat of forceful unification if Taiwan ever declares independence.

However, over the last thirty years, cross strait links have grown. There are direct flights and shipping links across the Taiwan Strait (although these were affected by COVID-19), trade and investment in both directions, and large numbers of Taiwanese businesspeople studying and working in the PRC.

Following the 2016 election of the DPP, the Chinese government broke off official contact between the two sides of the Strait, setting DPP acceptance of China’s “One China” framework as a precondition for resumption of contacts. The Tsai administration has said it will work to maintain peace and stability and is willing to engage in dialogue with China, but Tsai has also reiterated the willingness of Taiwan to defend itself. Taiwan does not accept the “one country two systems” framework proposed by China.

Chinese pressure on Taiwan has continued to increase. PLA air incursions into Taiwan’s Air Defence Identification Zone (ADIZ) - an area where air traffic controllers ask incoming aircraft to self-identify - have now become a near-daily occurrence. A total of 1727 entered in 2022 compared to 961 in 2021. Chinese military activities around Taiwan have increased around the time of recent political events: In August 2022, following Nancy Pelosi’s visit to Taiwan, China conducted live fire exercises around Taiwan. Following President Tsai’s transit through the USA and meeting with Speaker McCarthy in April 2023, the PLA simulated surrounding and attacking Taiwan.

The UK, like the United States, Australia, EU partners and others, does not have diplomatic relations with Taiwan. Only 14 countries, mainly in the South Pacific and Latin America, formally recognise Taiwan (as the “Republic of China”). The PRC does not object to other countries’ commercial, cultural and other non-political links with Taiwan, but protests against anything it views as formal official contact.

Information on political risk, including political demonstrations, is available in FCDO Travel Advice.

COVID-19

Taiwan’s initial COVID-19 pandemic response is globally recognised as one of the most successful in the world. Taiwan was one the first places to respond to COVID-19 in late 2019, and its rapidly introduced counter-measures allowed it to remain largely COVID-free between late 2019 and May 2021. By reaching an 80% booster or third dose vaccination rate among the population as of 10 April 2023, Taiwan has continued to relax its COVID-19 public health measures, it scrapped mandatory quarantine for arrivals from October 2022. Mild cases are no longer required to be reported since March 2023, Taiwan lifted mask mandate on public transportation in April 2023.

Economy

Taiwan is the world’s 21st largest economy, with an advanced high-tech industry and a key role in global supply chains.

Taiwan’s economy experienced a period of rapid industrialisation in the decades after the end of the Chinese civil war with GDP growth rates approaching 8% on average between 1958 and 2008. During this period, building on foundations established during the Japanese colonial era (1895-1945), Taiwan’s economy diversified away from the previously dominant agricultural sector towards greater industrial development – it geared up to meet external demand and the economy became increasingly export-orientated.

Taiwan became known as one of Asia’s “Four Tiger” economies in the 1980s as it focused on hi-tech industries. This transition was driven by the establishment of world-class industrial clusters, beginning with Hsinchu Science Park (today one of the leading global semi-conductor industry hubs), and policies aimed at liberalising the economy.

Taiwan’s 2002 accession to the WTO increased exports and improved foreign firms’ market access to Taiwan. This development stemmed from Taiwan’s success as one of Asia’s most dynamic and innovative economies, which created a favourable business environment for both internal and overseas investment.

Taiwan today is an advanced, export-orientated economy, with exports equivalent to 65% of GDP in 2022. GDP growth was 2.45% in 2022. The official forecast for growth in 2023 is 2.12%.

Taiwanese firms are world leaders in several high-tech manufacturing sectors, such as semiconductors, laptops, servers, LCD panels, smartphone components, and machine tools. Taiwanese firms are also renowned for providing contract manufacturing services, with the most famous examples being Taiwan Semiconductor Manufacturing Company (TSMC) and Foxconn Hon Hai. TSMC is the most valuable semiconductor manufacturer in the world, with 58.5% of the global foundry market share in the fourth quarter of 2022. Foxconn, Apple’s main contract manufacturer for iPhones, is China’s largest private sector employer with over one million employees. Taiwan’s ASUS and Acer are ranked as the top 5th and 6th for global PC shipments, respectively. Having historically enjoyed substantial trade surpluses, Taiwan’s foreign exchange reserves are the fourth largest in the world. Taiwan is a major regional investor, particularly in China and Southeast Asia. Taiwan was China’s sixth largest source of FDI in Asia in 2021 with US$939 million of investment according to the Chinese National Bureau of Statistics. An estimated 80,000 Taiwanese companies are located in China, accounting for approximately 70% of China’s electronics manufacturing. According to the results of China’s 2020 census, around 160,000 Taiwanese residents live in China.

Taiwan’s economy is facing some significant long-term challenges, including a rapidly aging population, a shortage of skilled labour, stagnating wages, an overdependence on key export sectors, periodic droughts, and challenges around energy security. To address these, Taiwan has introduced an industrial innovation programme aimed at promoting sectors that are seen as key to future economic development. The areas include biomedicine, defence, green energy, the Internet of Things and smart machinery.

Soon to be the world’s largest offshore wind market outside of China or Europe, Taiwan aims to reach 5.6 GW of offshore wind-powered generating capacity by 2025 and is planning for 20.6GW capacity by 2035. The sector is forecast to create foreign and domestic investment exceeding NTD$2.6 trillion (£65 billion) and bring more than 57,000 new jobs. Taiwan is now the UK’s largest offshore wind market in Asia Pacific region with over 40 UK offshore wind companies setting up offices in Taiwan, many of these offices serving as the regional Asia-Pacific hub.

UK-Taiwan trade and investment

British businesses are highly visible in the Taiwanese domestic market while trade links continue to grow. In the four quarters to the end of Q3 2022, Taiwan was the UK’s 33rd largest trading partner globally. In this time period, the UK-Taiwan bilateral trade in goods and services increased 1.7% (£143 million) year-on-year to £8.5 billion.

There is a substantial market for infrastructure consultancy and products, financial services, high-value manufacturer supply chain, chemicals and green technology and services. Taiwan also has a sophisticated market for consumer goods, particularly for international designer labels.

Taiwan is performing strongly as a top 20 export market for UK food & drink, reaching £378.6 million in 2022, growing 33% year-on-year. Taiwan was the fourth largest market for Scotch whisky exports in 2022 by value, with a strong demand for single malt brands. Taiwan is also a top six market for Scottish salmon.

Investment in Taiwan

Taiwan ranks 15th in the World Bank’s Ease of Doing Business Rankings (2020), scoring well above the regional average for East Asia and the Pacific.

In 2020, the stock of FDI from the UK in Taiwan was £2.9 billion, 59.1% higher than in 2019. There is a large British business presence in Taiwan, covering a wide range of sectors from financial services to pharmaceuticals, from ICT to offshore wind. British companies operating in Taiwan include ARM, Diageo, GSK, AstraZeneca, Standard Chartered Bank, HSBC, Macquarie Green Investment Group, Oxford Instruments and Bechtel.

Business and Human Rights

Taiwan has constitutional protections for civil rights. The constitution protects the right to unionise.

The Labour Standards Law (LSL) provides for minimum employment standards, including minimum working age and standards for working conditions and health and safety.

Taiwanese law provides for gender equality with regard to salaries, promotions, and assignments, though men still dominate senior positions. For more information on labour regulations, contact the British Office’s DBT team.

On 17 May 2019, Taiwan’s parliament passed a law to recognise same-sex marriage. The rights of married same-sex couples are the same as those of heterosexual couples, except that same-sex couples can only adopt a child who is biologically related to one partner and that marriage to a same-sex partner from overseas is only possible if that country also recognises same-sex marriage.

Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, or a body incorporated in the UK, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. It does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Taiwan was scored 68 out of 100 (0 is highly corrupted and 100 represents very clean) in the Corruption Perceptions Index 2022. While there have been high-profile cases of corruption involving major contracts in Taiwan, the large majority of business transactions take place without corruption. Read the information provided on our Bribery and corruption page.

Security

Terrorism Threat

For the most up-to-date information on terrorism see the terrorism section of the FCDO Travel advice for Taiwan.

Protective Security Advice

Taiwan is generally a safe place to live and do business. Small-scale petty crime affecting foreign nationals is not commonplace, but exists. Read the information provided on our safety and security page on the FCDO Travel Advice.

The Centre for the Protection of National Infrastructure (CPNI) also provides protective security advice to businesses.

Cyber Security

British companies, whatever their size, may be subject to cyber attacks. Thefts of money, customer data or IP damage company profits and reputation. As a deterrent we advise companies to get their cyber security right. This is a board-level issue that all businesses need to deal with, and the 10 Steps to Cyber Security guidance provides Government advice on how to protect your business. Smaller firms starting out with implementing cyber security measures may find the related Cyber Security: what small businesses need to know guidance more useful, as well as visiting the Government’s advisory website Cyber Streetwise.

Businesses wishing to implement the most important technical controls, and demonstrate that they take cyber security seriously can apply to be assessed under the Cyber Essentials Scheme, leading to the Cyber Essentials or Cyber Essentials PLUS badge. Companies may also wish to consider joining the Cyber Information Sharing Partnership, which shares real-time cyber threat information on cyber threats.

Organised Crime

Taiwan remained in Tier 1 of the 2022 Trafficking in Persons report, meaning that Taiwanese authorities fully meet the minimum standards for the elimination of trafficking.

Commercial Disputes

While the majority of foreign-owned businesses in Taiwan operate successfully, disagreements and disputes can occur, particularly involving small companies which may be perceived as vulnerable to pressure.

What we can do

We can offer basic advice and information on the local legal system in Taiwan.

We have prepared a limited list of English-speaking lawyers which is available via the British Office Taipei website. This list includes lawyers who specialise in commercial law and trade disputes.

We advise that you read the legal disclaimer on this list before using this service.

What we cannot do

Business disputes are primarily a matter for arbitration or the courts. We cannot get involved (including offering advice) in private disputes over property, employment, commercial or other matters.

Your first point of contact should be a reputable lawyer with appropriate experience and knowledge of law and business practice in Taiwan. We are not qualified to offer you legal advice. We cannot pay your legal fees, undertake an investigation or guarantee your safety in Taiwan, nor can we get you special treatment because you are a British citizen. We also do not provide dedicated translation services or other notarial services.

If you require a UK document to be legalised for use in Taiwan, this cannot be done at the British Office Taipei. You should use the service provided by the Legalisation Office in London. Legalised UK documents must also be authenticated by the Taipei Representative Office (TRO) before they are valid for use in Taiwan.

Intellectual Property

The intellectual property framework in Taiwan is well developed and the local authorities have adopted a number of measures in recent years to strengthen IP protection. According to the International Institute of Management Development’s World Competitiveness Ranking 2022, Taiwan was ranked 19 out of 63 economies for intellectual property protection.

The establishment of a dedicated IP Court in 2008 was widely welcomed by the business community. The website of the Taiwanese Intellectual Property Office (TIPO) contains useful information in English. Recent amendments to Taiwan’s IP system can be found in the TIPO 2021 Annual Report.

According to the TIPO 2021 Annual Report, the average waiting time to acquire a new invention patent in Taiwan was 14 months, 2.7 months for a utility model patent, 7.3 months for a design patent, and 6.2 months for trademarks.

The UK and Taiwan have regular constructive dialogues on intellectual property issues. On 1 December 2017 the UK Intellectual Property Office signed a Memorandum of Understanding to make it easier for UK and Taiwanese businesses in biotechnology and pharmaceutical fields to protect their intellectual property. In another positive move, Scotch Whisky was registered as a trademark in both English and Mandarin in Taiwan in 2016. This was a major breakthrough for the industry in one of its most important global markets.

Further information is provided on the GOV.UK Intellectual Property page.

Department for Business and Trade Contact

For information regarding conducting business in Taiwan, contact the Department for Business and Trade team.

The British Chamber of Commerce in Taipei

The British Chamber of Commerce in Taipei has 150 members at the time of writing and continues to grow as UK business interests and investment in Taiwan increase.

Useful Links

British Office Taipei

Taiwan Market Guide

FCDO Travel Advice

World Competitiveness Centre - Global Competitiveness Ranking

World Bank - ‘Ease of Doing Business’

Anti-bribery policy