Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
The most common distribution route in Taiwan moves products from suppliers to distributors, from distributors to retailers, and then from retailers to consumers. Some suppliers shorten distribution channels by distributing products directly through retailers. Multi-level marketing is common in Taiwan and direct selling organizations are well established. Foreign firms, especially those selling high-end merchandise, often rely on agents to connect them with distributors. However, for certain products, such as apparel, distribution channels tend to be more complex.
Among Taiwan’s seven major ports, Kaohsiung and Keelung are the biggest, handling the bulk of traded goods and serving as the starting point for island-wide distribution networks. Also important is the Port of Taichung, which handles raw materials and commodities for energy and heavy industry
Using an Agent or Distributor
Most foreign firms gain their initial foothold in the Taiwan market by appointing a local agent. The prospect of an agent relationship appeals to many Taiwan firms, which are well-known for their trade prowess. If the size of the market warrants, companies may consider setting up a branch office or subsidiary in Taiwan.
The American Institute in Taiwan’s (AIT) Commercial Section provides several services to help U.S. firms export their goods and services to Taiwan. Through our office in Taipei (covering northern and central Taiwan) and a branch office in Kaohsiung (covering southern Taiwan), we offer a variety of resources and services to help U.S. companies successfully enter the Taiwan market, including market research, agent or distributor searches, trade missions, trade shows, business matchmaking, due diligence checks on potential business partners, product launches, and commercial advocacy. The first step is to contact your local U.S. Export Assistance Center to discuss what services you may require. These offices can help U.S. exporters determine which international markets are suitable for their products and services.Alternatively, contact information for the AIT Commercial Section is as follows:
AIT Commercial Section (Taipei)
AIT Commercial Section (Kaohsiung)
Establishing an Office
Establishing a subsidiary, branch, or representative office in Taiwan is relatively straightforward. However, there are setup and logistical issues to consider and an array of forms and procedures to complete in the process. In addition, a Chinese language company name is required. It is strongly recommended that new firms consult with local attorneys and accountants in order to identify relevant industry issues and complete all necessary steps for establishing a new entity.
The Ministry of Economic Affairs (MOEA) provides information on investing and setting up a company in Taiwan through the InvesTaiwan office. In addition to the link, InvesTaiwan can be reached by telephone at +886-2-2311-2031.
Taiwan is well-known for its high concentration of franchises throughout multiple industries, including dining, shopping, beauty and health, real estate, technology, and education. According to the Taiwan Chain Store and Franchise Association’s Taiwan Chain Store Almanac, the United States is the leading supplier of goods and services for foreign franchises. As of February 2020, the top ten U.S. franchises in Taiwan by number of stores were Starbucks (512), McDonalds (398), Pizza Hut (246), Domino’s (157), Kentucky Fried Chicken (168), Subway (130), Burger King (49), Haagen-Dazs (37), and Cold Stone Ice Creamery (33).
The food and beverage franchise market in Taiwan is highly saturated and extremely competitive. Fierce local competition and the dominance of well-known brands make it difficult for new foreign firms to enter the market unless the brand is very well-positioned. Taiwan’s consumers enjoy a moderately high standard of living and pay close attention to famous or high-end brand names, as well as exciting new products coming into the market. Consumers often line up for hours to attend the grand openings of internationally recognized franchises that are new to Taiwan. Another challenge is high real estate prices, particularly in Taipei, which can cause difficulties when negotiating reasonable rent and lease terms with local landlords.
In recent years, due to high initial capital investment costs and increasing competition from local franchises, Taiwan’s investors have adopted a more conservative attitude toward new foreign franchises. To succeed in the Taiwan market, U.S. franchises should provide considerable support to their local partners by implementing best-practices, systems integration, personnel and customer service training, and quality assurance protocols.
Multi-level marketing has become a lucrative second job for many Taiwan professionals, with revenue per salesperson ranked fourth in the world. Recent figures indicate that more than 3 million (13%) of Taiwan’s total population of 23 million work for multi-level sales businesses. These firms mainly specialize in healthcare, skincare, and household products. (Source: Fair Trade Commission)
Foreign investors who wish to establish new enterprises in Taiwan through joint ventures, technical licensing, or other methods must file an application for approval by the Investment Commission (IC) of the Ministry of Economic Affairs (MOEA). The IC should issue a decision within two months of receiving a completed application. Capital should not be remitted for a joint venture investment until approvals have been obtained. Information regarding regulations for approval and consideration of foreign investment or technical cooperation is available at the Investment Commission website.
Express delivery is commonly used in Taiwan. The fastest door-to-door services may take as few as two to three business days to reach Taiwan from major U.S. cities. On average, express delivery takes about three to five business days.
Major Express Delivery Companies in Taiwan
1F, No. 8, Lane 389, Sec. 5, Nanking E. Rd., Taipei 105, Taiwan
2F, No. 158, Sec. 1, Xinsheng S. Rd., Taipei 10061, Taiwan
No. 129, Xintai St., Nanzi Dist., Kaohsiung 81147, Taiwan
1F, No. 82, Sec. 2, Jianguo N. Rd., Zhongshan Dist., Taipei 10416, Taiwan
Email (web portal): http://www.dhl.com.tw/exp-en/contact_center/contact_express.html
9F, No. 162, Sec. 2, Chang’an E. Rd., Zhongshan Dist., Taipei 10491, Taiwan
Email (web portal): https://www.fedex.com/en-tw/customer-support/write-to-fedex.html
2F, No. 361, Danan Rd., Shilin Dist., Taipei 11161, Taiwan
Email (web portal): https://www.ups.com/upsemail/input?loc=en_TW
1F, No. 105, Sec. 2, Jiuzong Rd., Neihu Dist., Taipei 11494, Taiwan
Prior to establishing a relationship with an unknown Taiwan company, it is wise to conduct a background check on the company. However, Taiwan’s privacy laws often make it difficult to collect background information on individuals. Local attorneys, accountants, and trade/industry associations can be excellent sources of information.
The AIT Commercial Section offers the International Company Profile (ICP) service to help U.S. firms conduct background checks in Taiwan. Click here for further details.