As the world becomes increasingly interconnected, the consumer goods industry looks for new opportunities for expansion and growth. One market that is worthy of attention is Taiwan. Often either ignored, only regarded as a political pawn or simply lumped together with the Mainland, Taiwanese business culture is not often discussed. So in this post, I’ll be looking at what makes Taiwan unique based on my own experience and that of colleagues living there such as Michelle Bradley.
Table of Contents
Taiwan Business Culture is Shaped by Geographic Factors
Situated in East Asia, Taiwan boasts a unique blend of geographical factors and a rich historical background that have shaped its distinct business culture.
Taiwan is a fascinating place with its small island charm, and although its population size hovers around 23 million people, it boasts being one of the top 20 economies globally, which is quite impressive.
Taiwan’s geographical location has played a pivotal role in shaping its business culture. Surrounded by the East China Sea, the Philippine Sea, and the Taiwan Strait, Taiwan has developed a maritime-based economy that heavily emphasises international trade. Its strategic position has made it a hub for regional and global commerce, which has significantly influenced its business practices.
Given Taiwan’s mountainous terrain and limited arable land, the island relies on imports to meet the demands of its population. This import-driven nature has created an interesting market for international consumer goods exporters to explore. Understanding the country’s geography and its impact on trade helps establish successful business relationships in Taiwan.
As you can see from the map above, settlement and therefore also industry is confined to the flatter west side of the island, with cities served by both highways and a north-south high speed rail link.
Historical Background Influencing Business Culture in Taiwan
Taiwan’s history is marked by a rich tapestry of influences, including periods of colonisation, migration, and cultural exchange. Over the centuries the island’s society has been shaped by various cultural influences, including Portuguese, Spanish, Dutch, Qing Dynasty, Japanese, and migration from the Mainland among others. As a result, Taiwan’s culture is an eclectic mix, encompassing elements from successive waves of migration and indigenous groups, giving it a unique identity that’s not quite like any other place. Each chapter has left an indelible mark on Taiwanese business culture too.
Impact of Education
One striking feature of the Taiwanese people is their strong work ethic and emphasis on education. These traits can be traced back to the influence of the Confucian education system, which also reflects the impact of the Japanese Colonial period from 1895 to 1945.
At the same time, the Taiwanese are often not 100% convinced of the quality of education in their own country, so you will find many people who have studied abroad: the US, the UK, Australia, Hong Kong and Singapore are all popular destinations which add yet another cultural dimension when doing business in Taiwan.
Note the educational background of the person you’ll be working with. If they studied abroad, it can impact their perspectives and ways of doing business. For instance, studying in places like Hong Kong may not offer as stark a contrast to their home culture compared to studying in Australia, the US, or the UK, where the experience can be quite transformative.
Moreover, the age at which they went abroad for studies also matters. Going during high school or university years can shape their worldview and adaptability in different ways. These factors collectively contribute to the richness of the business environment in Taiwan.
One key aspect to take into account is the level of exposure the group, organisation, or individual you are dealing with has had with overseas clients or customers. This exposure can significantly influence their business approach and practices.
Key Industries in Taiwan
Before delving into business practices, it is essential to grasp the key industries driving Taiwan’s economy. Historically, Taiwan has been known for its manufacturing sector, particularly in electronics, semiconductors, and information technology. This legacy has earned Taiwan the moniker “Silicon Island” and “Tech Island.” Taiwan produces around 60% (as per August 2023) of the world’s semiconductors, and around 90% (!) of the more advanced chips, also giving the industry the nickname of the “silicon shield”.
In recent years, Taiwan has diversified its industries, and today, it offers opportunities for consumer goods exporters in sectors such as food and beverages, healthcare products, cosmetics, and luxury goods. Whilst it isn’t a market with explosive growth, there is growing purchasing power for brands with the right products.
The Traditional Rules: Etiquette for Doing Business in Taiwan
As in many Confucian societies around Asia, these general guidelines belong to knowing how to act politely:
- Business Meetings: Punctuality is highly regarded in Taiwanese culture. Make sure you arrive on time for meetings as a sign of respect. Initial meetings may focus on building rapport rather than delving straight into business matters.
- Business Attire: Dressing professionally is a sign of seriousness and respect. Formal attire is expected, especially in the initial stages of building relationships.
- Business Cards: Exchanging business cards is a common practice. Present and receive cards with both hands as a sign of respect.
- Communication Style: Taiwanese communication is often indirect and reserved. Avoid aggressive or confrontational language during negotiations.
- Gift-Giving: While not mandatory, gifts are appreciated. When offering gifts, ensure they are of good quality and nicely wrapped. Avoid items in sets of four, as the number four is associated with bad luck (& death).
- Dining Etiquette: If invited to a business meal, wait for the host to initiate the seating arrangement and begin eating. Try a bit of everything served as a gesture of appreciation.
The concept of guanxi, deeply rooted in Chinese culture, holds significant importance in Taiwanese business culture. Guanxi refers to the network of relationships and social connections that govern various aspects of life, including business. Building and nurturing strong guanxi with potential business partners is essential for successful dealings in Taiwan. Trust and mutual understanding are often prioritised, and as a foreign exporter you need to be patient and invest time in developing these relationships.
Mianzi or Saving Face
Another crucial aspect is the idea of “saving face” or maintaining one’s dignity and reputation. In Taiwanese culture, avoiding public embarrassment or confrontation is highly valued. When doing business in Taiwan, be mindful of how your actions and words may impact the reputation of your Taiwanese counterparts. Not only that, but remember that even if they are not saying anything negative, that doesn’t mean there aren’t any challenges in your relationship.
Taiwanese Business Culture isn’t just about Sticking to a Strict Rule Book
When it comes to doing business in Taiwan, the approach can vary depending on the industry you’re involved in. In more traditional sectors such as finance, pharmaceuticals, law, and government, things tend to be formalised and follow strict protocols. The attire also leans towards the formal side in these environments.
However, the scenario changes significantly in industries like the creative arts and design, where Taiwan thrives and has a vibrant presence, especially among the younger generation (those under 45 years of age). In such domains, the business culture is more relaxed, and the hierarchy may not be as pronounced as in traditional sectors. It’s crucial to consider the boss’s age and whether the company is local (Taiwanese SME) or international (like working with a company such as Nike, which can have a different culture altogether). Doing some research and understanding these aspects can greatly help you adapt and navigate the business landscape more effectively.
Taiwan is a dynamic blend of various cultural influences, and its unique business landscape demands an awareness of both traditional and contemporary approaches. Adapting your strategies based on the industry, company type, and the age group of your counterparts can go a long way in building successful professional relationships.
Less Hierarchical than Japan, more Traditional than Hong Kong
In general, Taiwanese people are wonderful to work with, and the whole process can be enjoyable. However, for those who come from Western environments with different education systems, it’s essential to be aware of certain nuances.
While Taiwan shares cultural elements with Mainland China and Japan due to historical ties, there are distinct differences in the business landscape. Taiwan’s business culture is generally compared to Mainland China’s although I find there are significant differences. The emphasis on guanxi and maintaining harmonious relationships is also shared but might differ in execution.
Compared to Japan, Taiwanese business culture may be less formal and structured, but respect for hierarchy and seniority remains significant in both countries. Understanding these nuances will help international business people navigate the different expectations and approaches when conducting business in Taiwan.
Maybe it’s because they are one of the smaller regions in Asia population size, or their geopolitical position as a pawn between China and the US, but many Taiwanese businesspeople are often convinced that Taiwan isn’t successful economically. You will often hear pessimistic statements about how bad the economy is doing, whereas in fact the country is one of the richest as I mentioned earlier.
Maybe it’s because of this that they tend to be cautious about investing in projects be they large or of the “additional marketing campaign” example. This can be frustrating to exporters, so you may need to plan exactly how you will demonstrate what the return on investment will be, if you are looking for your Taiwanese business partner to put their hands in their pocket. They need to be really convinced that it’s worthwhile and can be very risk averse.
Intricacy and Details of Doing Business in Taiwan
The quote above from my discussion with Michelle Bradley in episode 16 of International Expansion Explained captures the essence of working in a Taiwanese business environment. It can indeed feel slow and methodical to those who are not accustomed to it. The meticulous checking of details and involving various levels of hierarchy, especially in larger retail groups, can be a daunting process. On the contrary, it’s more manageable when dealing with smaller companies where decision-making involves fewer individuals.
When facing such a situation, it’s essential to remind yourself that this approach is not a challenge to one’s professionalism. Instead, it’s a reflection of the high-context cultural environment in Taiwan. Taking time to build relationships, thoroughly discussing and negotiating all details are ways of showing respect and ensuring a smooth, respectful collaboration in the future. It’s about laying a solid foundation for a long-lasting and successful partnership.
This emphasis on relationship-building and attention to detail is also a glimpse into the future. It’s a way of testing the waters for potential future collaborations. Once the baseline for the relationship is established, subsequent projects or collaborations can indeed speed up significantly, thanks to the trust and understanding that has been built over time.
The transition from the initial slow phase to the faster pace can indeed be disorientating, but it’s a testament to the effectiveness of the relationship-building process. Once the rapport is established, the efficiency and effectiveness of working together can be truly remarkable.
It’s Worth Investing Some Time & Effort Learning about Business Culture in Taiwan
Taiwanese business practices often emphasise detailed discussion, putting everything in writing, and organizing plans thoroughly. Once agreements are made, they tend to stick to them, unlike in some other regions, such as Greater China, where there might be more flexibility and changes later on.
Initially, this level of detail-oriented approach might be unfamiliar and even slightly challenging for those used to a more flexible and adaptable way of doing things. However, embracing patience and immersing yourself in this method will yield valuable insights and growth. Over time, you may find yourself becoming a more well-rounded and understanding person through the experience.
So, when venturing into the business landscape of Taiwan, be prepared to adapt to their approach, stay patient, and learn from the process. The rewards are not only professional but also personal growth that enriches your overall journey.
Overall, doing business in Taiwan requires a respectful, patient, and adaptive approach. Embracing the cultural nuances and understanding the significance of relationship-building and detail-oriented negotiation can lead to fruitful and rewarding partnerships. With time and experience, navigating the Taiwanese business landscape becomes more comfortable, and the benefits of this unique cultural approach become evident.
One thing is for sure, it’s not the fastest paced market to do business in, but it’s a great place for learning about working in Asia, and the people are open for imported consumer goods so what are you waiting for?
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