2013 Taiwan Business Climate Survey Jan 17 2013

Marketing Independent Marketing Independent

AmCham Taipei

2013 Business Climate Survey

Marketing Independent 2

Chairman’s Message

Marketing Independent

Message from 2013 AmCham Chairman Alan Eusden

• Our 2013 Business Climate Survey asked 407 voting representatives from AmCham member companies – mainly CEOs – to answer about 20 questions via an online questionnaire.

• 269 members took part - a 66% response rate. • The results will help AmCham craft effective

policy and advocacy positions in line with members’ needs and interests.


Message from the Chairman (Cont’d)

• The survey results show the government deserves commendation for achievements in cross-Strait relations, tax reform, and IPR protection.

• But a number of other areas – notably HR-related – still need improvement. Constraints on hiring from abroad are a burden, and the workforce (while excellent in many respects) is not yet “world-class” in initiative and creativity.



• In his 2013 New Year Address, President Ma acknowledged “a clear mismatch between how we are training students and what industry is actually calling for” as one his four key challenges to be addressed by his administration.

• Encouragingly, Premier Chen has also directed all ministries to speed up their respective reform measures to better address the needs of the nation.



• The high personal taxation rate is also a problem in attracting the best talent.

• Other topics of concern are government inefficiency, inconsistent regulatory interpretations, and outdated or inadequate laws and regulations.

• In closing, thanks to Gordon Stewart of Independent Marketing Limited for his professional assistance with this project.


Executive Summary


2012 Profitability - Reduced

2013 Forecast for Revenue & Profit Growth –

Modest

2013 Investment Forecast - Up slightly

5-Year Business Outlook –

Significantly Down

Disconcerting!

Executive Summary – Key Indicators


Executive Summary – Key Indicators

*Note! Statistically significant change from 2012

74% 72%

81%

54%

81%

66% 59%

43%

70% 69%

52% 56%

Profitability Forecast for Revenue& Profit Growth

Investment 5 Year BusinessOutlook

2010 2011 2012 2013

Note!

Note! Note!


Executive Summary - Key Takeaways

AmCham’s Business leaders saw a general softening in their profitability levels in 2012, with a significant rise in the number expecting only to break even or have a small profit/loss. They are forecasting a modest improvement in results for 2013, however. Many say they will increase their investment in Taiwan during 2013, but only slightly. Of greatest concern is the continuing drop in the 5-year business outlook.



Bureaucracy is a common and persistent negative issue. It is cited throughout this survey (and the ones in the past two years) as having a negative impact. It is the major point companies want the Taiwanese government to tackle aggressively. While recognizing the progress made by the Taiwanese government in other areas, respondents say more can and must be done to streamline procedures and to simplify and clarify regulations.



AmCham business leaders acknowledge the benefits that ECFA has brought to Taiwan as a whole, and to their own businesses. They see advantages in further broadening and speeding-up the ECFA process. They also see disadvantages for both Taiwan and the U.S. in the continued lack of re-engagement on TIFA talks; absence of a bilateral investment (BIA); and to a lesser extent, the lack of a bilateral taxation agreement (BTA).


In 2012 the Net effect on…

-500

-400

-300

-200

-100

0

100

200

300

ECFA No TIFA No BIA No BTA

We

igh

ted

sco

re

My Business Taiwan U.S.



Among other issues, those related to Human Resources are the major concerns for our business leaders. Specifically, they point to shortcomings with the quantity and quality of the workforce and the costs associated with employment.


Detailed Findings


2012: A Relatively Good Year for Business But ...

Two out of three (66%) of respondents say their business in Taiwan was either “relatively” or “very profitable” in 2012. This level is lower than in previous years – a drop that was accurately forecasted in last year’s survey, which predicted a significant drop in both revenue and profit growth for 2012.


2012: A Relatively Good Year for Business But ...

Of particular concern is the statistically significant increase in the number of companies saying that would have only break-even performance or a relatively small profit or loss in 2012. The industries appearing to be most affected are the Pharmaceutical/ Health-care, Consulting, and Transportation/ Ware-housing sectors.


How would you characterize your Taiwan business' s financial performance in 2012?

0%

3%

24%

53%

21%

1%

3%

24%

58%

14%

1%

3%

31%

56%

10%

Very Large Loss

Relatively Large Loss

Break-even or small Profit/Loss

Relatively Profitable

Very Profitable

2013

2012

2011

Note!



2013: A bit better?

The majority of our business leaders are forecasting an improvement, if only a modest one, in their Revenue and Profits for 2013.


6%

0%

3%

3%

8%

54%

3%

8%

17%

10%

0%

2%

3%

23%

46%

0%

2%

11%

6%

1%

2%

2%

19%

53%

1%

2%

13%

Modest decline in both Revenues & Profits

Modest decline in Revenues & modest growth in Profits

Modest growth in Revenues & modest decline in Profits

Modest growth in Revenues & no change in Profits

Remain the same

Modest growth in both Revenues & Profits

Modest growth in Revenues & substantial growth inProfits

Substantial growth in Revenues & modest growth inProfits

Substantial growth in both Revenues & Profits

What is your Taiwan business’s Revenue & Profits forecast for 2013 compared to 2012? (Top responses only)

2013

2012

2011


Short-term investment : Some recovery?

Some recovery over 2012 levels is forecast, with a narrow majority suggesting that investment will increase in 2013. It should be emphasized, however, that the most frequently selected option was for only a “slight increase” in investment spending.


1%

3%

5%

36%

38%

16%

2%

2%

13%

41%

33%

10%

1%

2%

6%

39%

42%

11%

Don't know/can't say

Substantial Decrease

Slight Decrease

No Change

Slight Increase

Substantial Increase

What is likely to happen to your entity’s level of investment in Taiwan over the next 12 months?

2013

2012

2011

Note!

Note!



Unfortunately, or realistically …

Taiwan is generally viewed as “Not a high priority” back at the global head office. Perhaps this fact also inhibits greater investment.

As we noted in previous years, Taiwan needs to better position and market itself to try and gain more global attention. Changes to taxation rates; improvements in foreign direct investment rules and incentives; better research & development incentives; and lowering some of the bureaucratic barriers would also help enhance the environment.


10%

3%

54%

11%

10%

7%

5%

10%

3%

46%

15%

7%

10%

10%

10%

4%

45%

13%

10%

9%

8%


Looking to reduce investment/disinvest

Not a high priority

In the top 10

In the top 5

In the top 3

#1 Priority

How does Taiwan fit into your global entity’s investment plans?

2013

2012

2011


Looking forward five years …

While a majority (56%) are “optimistic” or “slightly optimistic” about their five-year business outlook in Taiwan, this is the second consecutive, statistically significant, year-on-year drop in this score. It suggests continuing and growing cautiousness about future business prospects in Taiwan.


Looking forward five years…

Of the industries that were more pessimistic, Pharmaceuticals/Healthcare, Consumer Packaged Goods, Retail, Accounting Services, and Semiconductor/Other Electronic Component Manufacturing were the most prominent.


How would you describe your five-year business outlook for Taiwan?

3%

10%

7%

52%

29%

1%

7%

22%

43%

28%

3%

16%

26%

37%

19%

Pessimistic

Slightly Pessimistic

Neutral

Slightly Optimistic

Optimistic

2013

2012

2011

*Note!



What impacts their business?

Since most (70%) of our leaders are primarily focused on the Taiwan market, changes in local demand not surprisingly have the single greatest impact on their businesses. But there are several areas where the Taiwan government can have a direct and substantial influence, including:

• Greater consistency in regulatory interpretations

• Reduction in bureaucratic red tape


What impacts their business?

• Revision of inadequate or outdated laws • Adjustment of personal taxation levels.

Indeed, reducing taxation levels may well release more money into the economy and help stimulate the area of largest impact – domestic demand.


Which of the following impacts your operation in Taiwan, and how much of an impact do they have? Top Ten Responses Overall

2013 Ranking 2012 Ranking 2011 Ranking Issues

1 1 1 Changes in local demand

2 2 3 Inconsistent regulatory interpretations

3 4 2 Governmental bureaucracy

4 6 5 Inadequate/outdated laws

5 3 4 Ability to recruit appropriate new personnel

6 New in 2013 New in 2013 Insufficient notice before changes to regulations or laws are introduced

7 5 7 Currency exchange rate fluctuations

8 8 9 Changes in employment expenses

9 10 10 Lack of transparency

10 New in 2013 New in 2013 Government reform/restructuring


Which of the following impacts your operation in Taiwan, and how much of an impact do they have? (Continued)


11 9 6* Corporate taxation levels

12 12 12 Domestic protectionism

13 7 8 China-Taiwan government relations

14 15 15 Intellectual Property Rights infringement

15 11 16 Customs & trade regulations

16 21 18 Changes in overseas demand

17 14 28 Direct flights to/from Mainland

18 22 6* Personal taxation levels

19 17 22 Corruption

20 23 23 Financial industry reform

*Combined in 2011


Which of the following impacts your operation in Taiwan, and how much of an impact do they have? (Continued)


21 20 24 Changes in tariffs

22 16 19 USA - Taiwan government relations

23 24 New in 2012 Changes in financing costs

24 25 26 Changes in raw material costs

25 19 17 Changes in transport costs

26 27 21 Inadequate infrastructure (Power, Water, Telecommunications, Transport, etc.)

27 26 25 Government procurement procedures

28 18 14 Economic Cooperation Framework Agreement (ECFA)

29 28 27 EU - Taiwan government relations

30 29 29 Illegal imports


Progress (and the lack of it) in Taiwan

Strides have been made in the past three years to help business – especially in connection with China (e.g. direct flights and ECFA). There has also been some recent progress on Taiwan-USA relations. But these gains are overshadowed by issues where no progress has been discerned (e.g. infrastructure development), and worse where there has been perceived regression (e.g. inconsistent regulatory interpretations).


Significant Regress

Some Regress

No Change

Some Progress

Significant Progress

Ability to recruit appropriate new personnel

Changes in tariffs Intellectual Property rights infringement

Economic Cooperation Framework Agreement (ECFA)

Direct flights to the Mainland

Inconsistent regulatory interpretation

Transparency EU - Taiwan government relations

USA - Taiwan government relations

China - Taiwan government relations

Strengthening local demand Currency exchange rate fluctuations

Infrastructure (Power, Water, Telecommunications, Transport, etc.)

Governmental bureaucracy Illegal imports Customs and trade regulations

Changes in employment expenses

Governmental reform/restructuring

Corporate taxation levels

Domestic protectionism Inadequate/Outdated laws

Corruption

Changes in raw material costs Financial industry reform

Changes in transport costs Strengthening overseas demand

Government procurement procedures

Personal taxation levels

Changes in financing costs

Over the past three years (2010-2012), how would you describe the progress made in Taiwan in each of the following?


Much more needs to be done

The survey asked: What are the main things the Taiwan government could do in the next 12 months to help business? There is a remarkable consistency in replies over the past three years. They key points are:

– Simplify government bureaucracy

– Increase incentives for foreign direct investment

– Lower personal taxation and further reduce corporate rates


Main things Taiwan Government could do to help. (Ranked in order)

Issue 2013 2012 2011 Simplify government bureaucracy 47% 44% 47%

Increase foreign direct investment incentives 29% 25% 25%

Reduce personal taxation 24% 21% 33%

Reduce corporate taxation further 21% 20% 20%

Liberalize the labor market 20% 16% 15%

Sign bilateral trade pacts with other (non-USA) countries 15% 11% 19%

Speed up ECFA 15% 15% 19%

Improve Research & Development incentives 14% 17% 17%

*Re-engage in TIFA talks with the USA 13% 14% na

Broaden ECFA 13% 16% 19%

Introduce stronger corporate governance rules 12% 11% 16%


Main things Taiwan Government Could do to Help. (Ranked in order) – Continued.

Issue 2013 2012 2011

Tighten enforcement of illegal imports 11% 7% 6%

Reduce tariffs 11% 10% 9%

Tighten enforcement of intellectual property rights 11% 11% 9%

Improve training incentives 9% 9% 8%

*Negotiate and sign a Bilateral Investment Agreement with the USA

7% 7% na

Increase direct flights to/from the Mainland 7% 13% 12%

*Negotiate and sign a Bilateral Tax Agreement with the USA

5% 5% na

Open up the tertiary education market to foreign players 3% 4% 2%

*Tighten enforcement of trade secrets protection 2% 7% na

* New Question in 2012


Issue 2013 2012 2011

+Others. These mostly related to topics about: Rule of Law, Transparency in both government and private dealings , to reduce corruption; and specific laws and regulations, (e.g., in the Health care, Agriculture, Financial services, and Food markets). Typical of responses were the following statements: “More transparent laws and regulation, in compliance with WTO and other existing international agreements and consistent with the rule of law.” “Strengthen the rule of law in purchasing decisions (anti-corruption). Streamline regulatory processes and shorten approval timeframes Increase use of proper ‘cost effectiveness’ models in making government investment decisions.” “1. Return to Rule of law Environment. 2. Improve competence at the top.” “Reduce incentives that are mainly focused on domestic manufacturers.”

17% 18% 25%

Main things Taiwan Government Could do to Help. Continued.


The major worries confronting business

Asked about the major risks facing their entity in the coming years, most responses related to economic slowdowns, whether internationally or in Taiwan.

The other main concerns related to fears of increased governmental interference in business and human resources issues.


The major worries confronting business

The results this year are remarkably close to last year’s. The one exception, which is statistically significant, is that there is much less concern about “increased domestic political unrest” compared to last year (an election year).


What are the major risks facing your entity in the coming years?

2%

4%

22%

10%

18%

20%

33%

19%

36%

28%

27%

28%

64%

69%

2%

4%

17%

15%

24%

16%

32%

22%

35%

36%

34%

40%

41%

54%

74%

2%

4%

15%

16%

18%

18%

22%

26%

35%

35%

39%

41%

42%

58%

72%

Increased imports

Other*

Taiwan Dollar (TWD) appreciation

Decreased exports

Taiwan Dollar (TWD) depreciation

Taiwan Unemployment rising

Increased domestic political unrest

Taiwan Inflation rising

Inadequate Human Resources

Economic slowdown in Europe

Increased Governmental interference

Economic slowdown in US

Economic slowdown in Mainland China

Economic slowdown in Taiwan's domestic consumption

Global economic slowdown

2013

2012

2011

Note!



Human Resources – A big issue

Deficiencies in the quantity and quality of available human resources are one of the highest risk factors seen as confronting businesses in the future.

We asked our corporate leaders to give us their impressions of the quality of available human capital in Taiwan. First the positives…


Taiwanese employees are seen as …

Hardworking, very trustworthy, extremely well-educated, very loyal, highly productive, easy to develop or train, generally showing a high degree of emotional intelligence quotient (EQ), and generally well-rounded. A very positive profile of the workforce.

No major changes were seen in this year’s survey compared to the past two years.


However…

Taiwan workers are not perceived as displaying a great deal of creativity nor of being of “world-class” standard. There are also concerns over their ability to display initiative. In addition, good employees are increasingly difficult to recruit. Opinion was mixed over whether they are easy to retain.


Perception of Human Capital in Taiwan - Net Promoter Scores (net difference of positive scores minus negative scores)

-100 0 100 200 300 400

Show a good deal of creativity

Of 'World class' standard

Easy to recruit

Show a great deal of initiative

Easy to retain

Well-rounded

Show a high degree of EQ

Easy to develop/train

Highly productive

Very loyal

Extremely well educated

Very trustworthy

Hard working


ECFA … Business leaders are (still) bullish on ECFA

ECFA is generally perceived has having a positive effect on Taiwan as a whole, and positive for our members’ businesses. The effect on the U.S. is more neutral, with many apparently unsure what, if any, impact it has or will have on the U.S.


8%

2%

7%

27%

42%

15%

7%

1%

3%

41%

38%

9%

10%

2%

2%

37%

44%

5%


Very Negative Effect

Some Negative Effect

Neither Positive nor Negative

Some Positive Effect

Very Positive Effect

2013

2012

2011

ECFA effect on my business


ECFA’s effect on Taiwan

2%

2%

5%

3%

49%

40%

9%

3%

2%

11%

46%

30%

9%

1%

4%

13%

60%

13%







2013

2012

2011

Note!

Note!



ECFA’s effect on the U.S. (New question in 2012)

27%

2%

8%

32%

27%

5%

25%

2%

6%

35%

30%

3%







2013

2012


TIFA … Business leaders want to see talks resumed. Now!

This year saw increased conviction that the lack of Trade and Investment Framework Agreement (TIFA) talks between Taiwan and the U.S. is harmful to all parties. Our members believe it disadvantages Taiwan the most (79% ) and to a lesser extent the U.S. (67%). There is also a growing belief that it disadvantages their businesses (up from 53% last year to 62% this year). It is now time for the two countries to seriously re-engage and conduct TIFA negotiations.


Impact of lack of TIFA talks on my business. (New question in 2012)

22%

25%

22%

23%

8%

18%

21%

24%

29%

9%


Not a Disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage

2013

2012

Note!



Impact of lack of TIFA talks on Taiwan. (New question in 2012)

20%

7%

11%

40%

22%

15%

6%

13%

41%

25%


Not a Disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage

2013

2012


Impact of lack of TIFA talks on the U.S. (New question in 2012)

25%

14%

22%

27%

12%

22%

11%

22%

35%

9%


Not a Disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage

2013

2012

Note!



The lack of a Bilateral Investment Agreement

Much like the response received last year and like the question on TIFA, Taiwan is perceived as the biggest loser – followed by the U.S. and to a lesser extent the respondents’ individual businesses – as a consequence of there being no Bilateral Trade Agreement between Taiwan and the U.S.


Effect on my business of a lack of a Bilateral Investment Agreement between Taiwan and the U.S. (New question in 2012)

22%

25%

22%

23%

8%

20%

21%

22%

28%

9%


Not a Disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage2013

2012


Effect on Taiwan of a lack of a Bilateral Investment Agreement with the U.S. (New question in 2012)

20%

7%

11%

40%

22%

16%

6%

13%

44%

22%


Not a disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage

2013

2012


Effect on the U.S. of a lack of a Bilateral Investment Agreement with Taiwan (New question in 2012)

25%

14%

22%

27%

12%

21%

10%

20%

39%

9%


Not a Disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage

2013

2012

Note!



The lack of a Bilateral Taxation Agreement

Much like the two earlier responses, Taiwan is perceived as being disadvantaged the most by the absence of a Bilateral Taxation Agreement, followed by the U.S. and to a lesser extent the individual businesses.


Effect on my business of a lack of a Bilateral Taxation Agreement between Taiwan and the U.S. (New question in 2012)

25%

25%

20%

21%

10%

22%

28%

19%

24%

7%


Not a Disadvantage

Slight Disadvantage

Disadvantage


2012


Effect on Taiwan of a lack of a Bilateral Taxation Agreement with the U.S. (New question in 2012)

26%

10%

20%

29%

15%

22%

13%

17%

36%

13%


Not a disadvantage

Slight Disadvantage

Disadvantage

Major Disadvantage

2013

2012


Effect on the U.S. of a lack of a Bilateral Taxation Agreement with Taiwan (New question in 2012)

29%

10%

23%

26%

12%

28%

12%

22%

29%

10%


Not a Disadvantage

Slight Disadvantage

Disadvantage


2012


Still not much happening in M&A

Over the past three years, about 10% of our companies each year engaged in merger and acquisition (M&A) activity with a Taiwanese entity. Of those, around half completed the exercise, while the rest are still in the process. Some tried and failed (about 4% a year), and some considered M&A but didn’t pursue it (23%). But M&A simply wasn’t on the radar for most of the business leaders (more than 71%).


Did your entity pursue, or consider, merger/acquisition activity with a Taiwanese entity in the past 12 months?

5% 7%

4%

23%

61%

4% 4% 4%

17%

71%

5% 5% 2%

18%

71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes, and completedmerger/acquisition

Yes, and still in theprocess of

merger/acquisition

Yes, but failed tocomplete

merger/acquisition

Considered but did notpursue

No, did not consider

2011 2012 2013


However, one-in-five still interested in M&A for 2013

In any given year, it seems, approximately twice as many respondents say they would “definitely” or “possibly” consider M&A in the next 12 months (22%), compared with the number that actually get an opportunity to pursue M&A.


Likelihood to consider M&A in the next 12 months (i.e., in 2013)

7%

22%

20%

20%

21%

11%

5%

17%

18%

28%

19%

13%

7%

16%

22%

27%

17%

11%

Definitely consider M&A activity in next 12months

Possibly consider M&A activity in next 12months

Unlikely to consider M&A in next 12 months

Definitely not consider M&A activity in next 12months

Don't know

Prefer not to answer2013

2012

2011


But when it happens, there are sound business reasons for M&A

While only a few companies did pursue M&A deals in the past 12 months, their reasons for doing so were primarily to enlarge their customer base, increase local market access, and otherwise gain synergies (by reducing costs and improving profits).


Top 3 Objectives of M&A

0% 5% 10% 15% 20% 25%

To eliminate competition

To gain taxation advantages

To acquire key local brand(s)

A defensive move to counter competitor(s)

To improve IPO possibility

To acquire capacity

To acquire management team

To gain access to Mainland market

To acquire technology

To acquire business license

Ability to gain synergies e.g.,reduce costs

To gain greater local market access

To enlarge customer base

Primary Objective Secondary Objective Tertiary Objective


Negotiating Target Valuation was the single Major Challenge to M&A

Difficulty negotiating the target valuation was cited as the single biggest challenge in conducting M&A, followed by carrying out due diligence and finding an appropriate target.

Lack of transparency and inconsistency in interpretation of government regulations were other major challenges standing in the way of mergers and acquisitions.


Major Challenges for M&A

0% 5% 10% 15% 20% 25%

Obtaining permission for target to be sold

Language issues

Negotiating the letter of intent

Obtaining government approvals

Cultural issues

Financial issues

Post-deal restructuring

Inconsistent regulatory interpretations

Transparency of regulations

Finding an appropriate target

Conducting due diligence

Negotiation of valuation gap

Major Challenge Second Third


Quality of Life findings


*While we use the term “Taiwan” it should be remembered that most of our leaders live in the Taipei area and many of their comments will reflect “living in Taipei”.

And finally … ”The Living is Easy”

When asked about the quality of life in Taiwan*, corporate leaders strongly agree that Taiwan is a place where: “Taiwanese people are extremely nice, ” “My family feels safe,” and “Taiwan is an easy country to live in.”

Interestingly, however, the ranking of “Internet connectivity is excellent,” which was # 8 on last year’s list and #9 in 2011, has dropped to #14.


The Top Ten Benefits of Living in Taiwan (Net Promoter Score)

2013 Ranking

2012 Ranking

2011 Ranking

Benefits

1 1 2 Taiwanese people are extremely nice

2 2 1 My family feels safe in Taiwan

3 4 3 Taiwan is an easy country to live in

4 3 4 Taiwan provides quality Health/Medical/Dental services

5 5 6 Taiwan delivers reliable electricity.

6 7 7 Taiwan provides adequate shopping opportunities

7 6 5 Alternative transportation options are usable and provide options to driving my car (i.e., buses, bike lanes, taxis, trains, sidewalks).

8 10 10 The postal service is excellent

9 9 8 Mobile telephone coverage is excellent

10 11 16 Recycling and trash services meet needs


Living in Taiwan … The not so great things.

• Taiwan is not an English-friendly environment

• Water runoff from storms is not well controlled and may result in flooding.

• Taiwan doesn’t provide quality drinking water.

• Banking and other financial services are seen as sub-par.

• The sewage system is seen as not working reliably.


The Bottom Ten Least appreciated aspects of living in Taiwan (Net Promoter Score) #1 =The Worst Aspect

2013 Ranking

2012 Ranking

2011 Ranking

Concerns

1 1 New in 2012

Taiwan provides an 'English-friendly' environment for me and my family

2 2 1 Water runoff from storms is controlled and minimizes flooding

3 3 3 Taiwan provides quality drinking water.

4 6 4 Banking and other financial services are excellent

5 8 7 The sewer system in Taiwan works reliably

6 4 2 Taiwan provides quality youth activities

7 5 4 The library services provided to our community are current and meet our needs

8 7 15 Street surfaces are drivable and safe.

9 10 8 The standard of schooling is excellent

10 12 17 The Taiwan government is approving measures that enhance the quality of life in our community


About our sample

http://www.sxc.hu/browse.phtml?f=download&id=1319105&redirect=photo


Who, When, and How.

• The survey was addressed, via email, to the 407 voting representatives – usually the CEO – among AmCham’s Corporate Sustaining and Company membership.

• The survey invitation was sent out on November 20, 2012, and the last response was accepted on December 12, 2012.

• The 22-question survey was conducted online with each respondent receiving a unique link.

• Certain question choices were randomized - to avoid bias.

• The survey received a total of 269 responses, representing a 66% response rate.


Industry Classifications

• Our respondents identified their industry classification based upon the one which best described their principal business in Taiwan.

• We have reclassified our sample according to the STANDARD INDUSTRIAL CLASSIFICATION SYSTEM OF THE REPUBLIC OF CHINA（Rev.9 , 2011) and used the STATISTICAL YEARBOOK OF THE REPUBLIC OF CHINA 2011, EDITED 2012 for the number of businesses.

• Our sample draws from all of the major industrial classifications in Taiwan.


Industry Classifications (Cont’d.)

• Our sample is more skewed towards ‘Manufacturing, ’ ‘Professional Scientific and Technical Services,’ and the ‘Finance and Insurance’ industries. And it is under-weighted in the ‘Wholesale and Retail Trade’ industry – as there are more than 632,000 such businesses registered in Taiwan, representing 51% of all business entities. With these qualifications, we believe the sample to be a fair representation of business in Taiwan and an extremely good sample of AmCham’s corporate membership.


1.1%

0.4%

26.7%

1.1%

0.0%

0.7%

2.6%

5.5%

2.2%

3.4%

11.2%

1.9%

29.3%

1.9%

3.0%

4.1%

4.8%

1.0%

0.1%

10.9%

0.0%

0.6%

7.5%

50.8%

2.4%

9.0%

1.3%

1.9%

2.0%

2.9%

2.2%

0.1%

1.6%

5.7%

Agriculture, forestry, fishing, & animal husbandry

Mining & quarrying

Manufacturing

Electricity, gas supply

Water supply & remediation services

Construction

Wholesale & retail trade

Transportation & storage

Accommodation & food services

Information & communication

Finance & insurance

Real estate

Professional, scientific & technical services

Support services

Education

Arts, entertainment & recreation

Other services

2013 Sample Total Taiwan (Number of profit-seeking enterprises)


Type of legal entity

• Unsurprisingly, the vast majority of businesses in this sample are wholly foreign-owned through a combination of subsidiaries, branch offices, and wholly-owned full companies.

• A few of those surveyed also have R&D centers and some have regional HQ’s and even global HQ’s located in Taiwan. Consequently, the results in the next chart show multiple responses and total more than 100%.

• The “Other” entities relate mostly to: Law firm partnerships, NGOs, and not-for-profit organizations



Time in Taiwan

• Regarding the length of time of the entities’ physical presence in Taiwan, our sample is split roughly into four sections:

– Those who are relatively new to Taiwan (less than 10 years of physical presence) at 22%

– Those who have been established 11-20 years at 25%

– 21-30 years at 26%

– And those who are long-established (more than 30 years) at 27%.



Number of Full Time Equivalent Employees (FTEE)

• Our sample covers a wide spectrum of employers - from the very small to the very large.

– 23% employ fewer than 20 FTEE

– 25% employ between 21 and 75

– 25% employ between 76 and 350

– 27% employ more than 350 (11% of whom employ more than 1,000).



Business Focus

• The business leaders surveyed are clearly focused on Taiwan, as the primary goal of over 70% of the companies is to supply the Taiwan market with goods or services. As a result, their comments and observations are especially pertinent to the Taiwan

government. Those selecting “none of the above” are looking to service multiple markets other than those specified.



Statistical Testing for Significance

• When comparing the results against last year’s survey we performed a Chi-square test for the comparison of two proportions (from the two independent samples), expressed as a percentage. Note that for this Chi-square test, Yates' correction for continuity is applied, and that P-values are two-sided (or two-tailed). When the calculated P value is less than 0.05, the conclusion is that the two proportions are significantly different.

• Throughout the results, we have displayed the difference between the two proportions (at the 95% confidence level) with a ‘Note!’ symbol when we have detected a significant change.


For more details, contact…

• American Chamber of Commerce in Taipei Suite 706, Worldwide House, 129 MinSheng East Road, Section 3, Taipei 10596, Taiwan

Tel: +886-2-2718-8226 Fax: +886-2-2718-8182

[email protected]

Or:

• Gordon Stewart of Independent Marketing Limited at: [email protected]

mailto:[email protected]

2013 Taiwan Business Climate Survey Jan 17 2013

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