TAIWAN
Economic Data
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Total GDP: Purchasing power parity = $362 billion
GDP Growth: 4.8%
Per Capita GDP: $16,500
Inflation Rate: 2.1%
Trade Balance: $7.7 billion (surplus)
Trade with RI: Taiwan is Rhode Island’s 12th largest trading partner, with $18.99 million in exports in 1998.
Exports: $122.1 billion; machinery and electrical equipment, electronic products, information/communications, textile products. Export trading partners: U.S., Hong Kong, Europe, Japan.
Imports: $114.4 billion; machinery and electrical equipment, electronic products, chemicals, precision instruments. Import trading partners: Japan (25.4%), US (20.3%), Europe (18.9%).
Best Prospects for Exports: Electronic Components, Electric Industrial Products/Test Equipment, Telecommunications Equipment, Electrical Power Equipment, Computer Software, Pumps/Valves/ Compressors, Computer Services, Travel/Tourism Services, Pollution Control Equipment, Medical Equipment, Laboratory Scientific Instruments, Education/Training, Computers/Peripherals, Plastic Materials/Resins, Cosmetics/Toiletries.
Pawtucket firm makes Taiwan major customer
By Bethany Costello
Staff Writer
Few Rhode Islanders are familiar with Pawtucket-based UltraFine Powder Technology, but the company’s commitment to exporting has made it among the most significant companies in its field.
The 12-year-old company, with 25 employees, has become an international leader in supplying high-technology companies from around the world with material to make small high-energy magnets, and a very fine stainless steel powder used in a process known as “metal injection molding.”
Philip E. Jones, company president and CEO, said the magnets are used in things like computer disc drives, power tools and small motors and the metal injection molding process is used to make surgical devices and watches.
“We use a rare earth magnet material that creates a product five to ten times stronger than a regular refrigerator magnet,” he said. “With injection molding we provide customers with a powder that they bring near the melting point and it becomes a solid form. The process is often less expensive than traditional manufacturing in certain products.”
The company, which was started though venture capital funding, moved to Rhode Island in its infancy more than a decade ago.
”We moved to Rhode Island primarily because we needed a larger place,” Jones said. “The state provided us with incentive through industrial and revenue bonds, and the Woonsocket Industrial Corporation was also crucial.”
Still, about 60 percent of the company’s products aren’t used in the Ocean State and are in fact sent overseas. One of the company’s major exporting areas in Taiwan.
”We serve an international market,” Jones said. “That is where the majority of these types of products are being used.”
Jones said the only problem with exporting to countries in the Far East like Taiwan is the time delay.
”It takes 30, 45 or even as many as 90 days before you get your money,” he said. “And for a small business like ours it can take a toll.”
Jones said his company has gotten some help in the financing department from the Pennsylvania-based company Teleflex. Initially one of the venture firms supporting UltraFine, two years ago Teleflex bought a majority share in the company.
”It helps with the stability and financing on the corporate side,” Jones said.
According to Jones, the major competition for his company overseas in the growing number of alternative technologies.
”If someone can make a machine that can produce things cheaper than our technologies, that is competition,” Jones said. “That competition comes mainly through new technologies at the customer level.”
Still, Jones is confident his company is capable of supplying foreign markets, with an inexpensive, quality product.
”People come to us because they know we are the place to be,” he said. “We are not a huge industry– under a billion dollars– but we’ve got our niche and we are doing quite well.”
Key Contacts
John H. Chafee Center for International Business and World Trade Center, Bryant College
Raymond W. Fogarty, Director
Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416
E-Mail: postoffice@itdn.net
Web site: http://www.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, Intn’l Trade Director
Telephone: 222-2601, ext. 123
E-Mail: mmezei@riedc.com
American Institute in Taiwan (AIT)
Commercial Section Chief: Terry Cooke
Suite 3207, 333 Keelung Road, Sec. 1, Taipei
Tel: 886-2-2720-1550, ext. 383
Fax: 886-2-2757-7162
Web site: http://ait.org.tw
AIT/Washington
Trade and Commerce Programs
Director: Rick Ruzicka
1700 N. Moore Street, Suite 1700
Arlington, Va. 22209
Tel: (703) 525-8474 Fax: (703) 841-1385
China External Trade Development Council
Secretary-General: Ricky Y.S. Kao
3-8F, 333 Keelung Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-2725-5200, Fax: 886-2-2757-6653
Web site: http://tptaiwan.org.tw
English Language Publications
Commercial Times (Daily Newspaper)
Economic Daily News (Daily Newspaper)
Business Weekly (Weekly Magazine)
Commonwealth (Monthly Magazine)
Directory of Taiwan (Annual soft cover book)
Tarriffs, Trade,Taxes, Trademarks
Trade Regulations and Tariffs: In May 1998, Taiwan began implementing tariff cuts on a wide range of items, many of specific interest to U.S. industry, such as buses and camera film. An additional 777 items are slated for tariff cuts. Taiwan’s current average nominal tariff rate is 8.3 percent. Taiwan is a participant in the Information Technology Agreement (ITA). Under the ITA, Taiwan has agreed to phase out tariffs on information technology products. In addition to the import duty, importers must also pay a 0.3 percent harbor construction fee and a 5 percent value-added tax (VAT). Goods entering Taiwan by airfreight or parcel post are exempt from harbor fees. A commodity tax must be paid if an imported product falls into one of seven commodity categories, at rates ranging from 2 to 60 percent. The tax is assessed on the C.I.F. and duty-paid value of affected imports. The seven commodity categories include rubber tires, cement, beverages, oil and gas, electric appliances, flat glass, and automotive products.
Foreign Investment: Over the last few years, Taiwan has acted to liberalize its economy and improve its investment environment in a manner consistent with its goals of joining the World Trade Organization (WTO) and developing the island into an Asia-Pacific regional operations center. Cross-strait tension in 1996 did not discourage foreign investors from coming to Taiwan, but the Asian financial crisis did contribute to a slowdown in capital inflows during 1998. Foreign firms investing in Taiwan are generally accorded national treatment; trade-related capital flows are basically unrestricted. Most export performance and local-content requirements have been removed.
Free Trade Zones: Three export processing zones (EPZs) have been established to encourage investments and expand the export of products and services. All products imported by enterprises located in EPZs for their own use are exempt from customs duties. The products of the manufacturing industry in the EPZs are normally for export. However, 100 percent of their annual production may be allowed for sale on the local market after the payment of customs duties.
Trade Finance and Payment Methods: Taiwan has 45 domestic banks (with 2,115 branch offices), six medium business banks (with 355 branch offices) and 46 foreign banks. The Export-Import Bank focuses on trade finance. Foreign banking institutions are playing an increasingly important role on the financial scene. They are treated essentially as domestic commercial banks, permitted to engage in trade financing, foreign- exchange dealings, and lending. Importers are usually responsible for arranging their own financing. The Export-Import Bank provides loans for sophisticated machinery and other high-technology products. Letters of Credit (L/Cs) are the most frequently used import-payment instrument. The American Institute in Taiwan (AIT) Commercial Section recommends that U.S. exporters minimize financial risk by requiring their Taiwan trading partners to finance their imports through L/Cs.
Marketing and Selling Factors: Taiwan end-users tend to make purchasing decisions based primarily on price, although ironically a higher price may be more attractive to the Taiwan buyer of certain kinds of consumer goods. A strong local presence, with a wholly owned subsidiary, branch office, joint venture or agent/distributor, is key to success in the market. Most foreign firms enter the market through a Taiwan agent.
Taiwan
Location: Eastern Asia, islands bordering the East China Sea, Philippine Sea, South China Sea, and Taiwan Strait, north of the Philippines, off the southeastern coast of China.
Geographic Area: 35,980 square kilometers, about the size of West Virginia.
Climate: Maritime subtropical, cloudy all year
Major Cities: Taipei (capital), Kaohsiung, Taichung.
Population: 22.1 million (July 1999).
Ethnic Groups: Taiwanese (including Hakka) (84%), Mainland Chinese (14%), aborigine (2%).
Languages: Mandarin (official), Taiwanese, Hakka. English and Japanese in business settings.
Workweek: Monday – Saturday morning, every second and fourth Saturday of the month off.
Type of Government: Multi-party democracy. Constitution: December 25, 1947; last amended 1997. Major administrative subdivisions: Taiwan Province, Fujian Province (for Kinmen and Matsu and nearby smaller islands), Taipei and Kaohsiung Special Municipalities.
Head of State: President Chen Shui-bian.
Currency: 1 New Taiwan dollar (NT$) = 100 cents.
Exchange Rate: 30.76 New Taiwan dollars per U.S.$1 (June 23, 2000)
Current Economic and Political Conditions: During the 1990s, Taiwan made the transition from a single-party, authoritarian polity to a democratic, multi-party political system. Taiwan now has three major parties and more than 70 registered parties. Martial law, which had been in force since the 1940s, was lifted in 1987. In March, Taiwan elected Chen Shui-bian, an openly pro-independence president. Despite Chinese statements that Chen was unacceptable, he gained 39 percent of the vote in a three-way race, more because of his stance on internal corruption than his position on China. On June 20, Chen moderated his “One China” position, calling for a Korean-style diplomatic meeting.
The defining characteristic of Taiwan’s international relationships has been the lack of diplomatic ties with most nations of the world. Taiwan authorities called their administration the “Republic of China,” and for many years claimed to be the legitimate government of all China. As of July 1, 1999, only twenty-eight countries maintained diplomatic relations with Taiwan. Several years ago, Taiwan authorities shifted policies, no longer insisting that they are the sole legitimate rulers of all of China.
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
