AmCham Taipei2012 Business Climate Survey                           Independent   Marketing
Chairman’s Message2                Independent   Marketing
“Basic Message from 2012 AmCham Chairman Billimprovements.”           optimism, but spotlighting areas needing Wiseman    ...
Message from 2012 AmCham Chairman Bill WisemanIf views of the business outlook are slightly less rosythan a year ago, the ...
Message from 2012 AmCham Chairman Bill WisemanBut the survey also pinpoints areas where furtherefforts are needed to remov...
Message from 2012 AmCham Chairman Bill Wiseman  • Bureaucratic inefficiencies. Among the problems cited are  inconsistent ...
Message from 2012 AmCham Chairman Bill WisemanWe offer the findings of the survey as reference for thegovernment as Presid...
Executive Summary8               Independent   Marketing
Executive Summary – Key Indicators                2012 Forecast                                                           ...
Executive Summary - Key Takeaways• AmCham’s Business leaders had a reasonably good  2011 and are focused on (almost 74% of...
Executive Summary - Key Takeaways• Bureaucracy! Bureaucracy! Bureaucracy! Is a  common and persistent negative issue for o...
Executive Summary - Key Takeaways• Inter-governmental relations: Our leaders  would like to see, and believe it would be  ...
Detailed Findings13                Independent   Marketing
2011: A Relatively Good Year for Business.Almost three out of four (71.9%)of our businessleaders assert that their busines...
How would you characterize your Taiwan business’ financial                             performance?                       ...
2012: More of the same…The majority of our business leaders areforecasting and expect 2012 to also be arelatively good yea...
What is your Taiwan business’ Revenue & Profits forecast for 2012 compared to                                   2011?     ...
Short-term investment : Softening?There does appear to be some softening/flattening in planned investment levels - withonl...
What is likely to happen to your entity’s level of investment                     in Taiwan over the next 12 months? Subst...
Unfortunately, or realistically……Taiwan is generally viewed as “Not a high priority”back at the global head office. Perhap...
How does Taiwan fit into your global entity’s investment plans?                                                           ...
Looking forward five years…Whilst the vast majority (70%) are “optimistic” or“slightly optimistic” about their five-year b...
How would you describe your five-year business outlook for Taiwan?         Optimistic                                27.6%...
What impacts their business?Not surprisingly, given their Taiwan market focus,changes in local demand have the single grea...
Which of the following impacts your operation in Taiwan, and how much of an                           impact do they have?...
Average values only shown on 4 point scale where 4 = extreme impact and 1 = no impact                                     ...
Independent   Marketing
Progress (and the lack of it) in TaiwanSome great strides have been made in the pastthree years to help business – especia...
‘Significant” & “Some” Progress over 2009-2011 in Taiwan                                        Direct flights to the Main...
“No Progress” made over 2009-2011 in Taiwan                                              Personal Taxation levels         ...
“Significant” & “Some” Regress over 2009-2011 in Taiwan                                          Governmental Bureaucracy ...
Much more needs to be doneThe survey asked about the main things theTaiwan government could do in the next 12months to hel...
What are the top things the Taiwan Government could do to help                          your entity in the next 12 months?...
Notes on “Other” items mentioned (12.8% in total)These mostly related to topics about: Transparency in both government and...
The major worries confronting               businessAsked about the major risks facing their entity inthe coming years, mo...
What are the major risks facing your entity in the coming years?                 Global economic slowdown                 ...
Human Resources – A big issueDeficiencies in the quantity and quality ofavailable human resources are one of the highestri...
Taiwanese Human Resources are seen              as ……Hard-working, very trustworthy, extremely well-educated, highly produ...
How would you describe the quality of available Human Capital in Taiwan?                     Hardworking              Very...
Human Capital in Taiwan - Net Scores                              Hardworking                                             ...
However……They are not perceived as being of “World-class”standard, nor displaying a great deal of creativity.They are also...
ECFA…Business leaders are (still)      bullish on ECFA but…Last year when asked what impact they feltECFA would have on th...
ECFA’s effect on My Business         Very Positive Effect                     8.7%                                        ...
ECFA’s effect on Taiwan         Very Positive Effect                                              30.1%                   ...
ECFA’s effect on the U.S.A.                           (NB: New Question in 2012)                                          ...
TIFA…Business leaders want an          updated one.This year we asked about the lack of an updatedTrade and Investment Fra...
Independent   Marketing
The lack of a Bilateral Investment           Agreement…This year we also asked who, if anyone, wasdisadvantaged by a lack ...
Independent   Marketing
The lack of a Bilateral Taxation            Agreement…This year we also asked who, if anyone, wasdisadvantaged by a lack o...
Independent   Marketing
Still not much happening in M&AFew businesses pursued any form of merger andacquisition (M&A) activity during 2010. Of tho...
Did your entity pursue, or consider, a merger or acquisition of a Taiwanese                       entity in the past 12 mo...
Sound business reasons for M&AWhile only a few companies did attempt the M&Aroute in the past 12 months, their reasons for...
Independent   Marketing
But (again) finding an appropriate   target was the single major barrier…Along with negotiating the valuation gap andcondu...
Independent   Marketing
However, still some ongoing M&A          interest for 201222% of all entities in our survey would either“possibly” or “def...
Independent   Marketing
And finally…”The Living is Easy”When asked about the quality of life in Taiwan*,corporate leaders strongly agree that Taiw...
The Top Ten Benefits of living in Taiwan (Net Promoter Score)2012 Ranking   2011 Ranking    Benefits      1               ...
Living in Taiwan…The not so great                 things.• Water runoff from storms is not controlled and  results in floo...
The Bottom Ten Least appreciated aspects of living in Taiwan (Net Promoter Score)  2012 Ranking    2011 Ranking    Concern...
Independent   Marketing
About our sample65               Independent   Marketing
Who, When and How• The survey was addressed, via email, to the 387 voting  representatives – usually the CEO – among AmCha...
Industry Classifications• Our respondents identified their industry  classification based upon the one which best  describ...
Industry Classifications (Cont’d.)• Our sample is more skewed towards ‘Manufacturing’,  ‘Professional Scientific and techn...
Sample      Total Taiwan (source: Statistical Yearbook of The Republic of China 2010, Edited 2011)Agriculture, forestry, f...
Type of legal entity• Unsurprisingly, the vast majority of businesses in this  sample are wholly foreign-owned through a  ...
Independent   Marketing
Time in Taiwan• Our sample is split between those who are relatively  new to Taiwan (less than 15 years with a physical  p...
How long has your business been in Taiwan?25%                                                                    22.0%    ...
Number of Full Time Equivalent          Employees (FTEE)• Our sample covers a wide spectrum of employers -  from the very ...
Independent   Marketing
Business Focus• The business leaders surveyed are clearly focused on  Taiwan as the primary goal for nearly 74% of the  en...
What is your business primary goal in Taiwan?                                       Provide goods/service for Taiwanese   ...
Statistical Testing for Significance• When comparing the results against last year’s survey  we performed a Chi-square tes...
For more details, contact…• American Chamber of Commerce in Taipei  Suite 706, Worldwide House, 129 MinSheng  East Road, S...
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AmCham Taipei 2012 Business Climate Survey January

  1. 1. AmCham Taipei2012 Business Climate Survey Independent Marketing
  2. 2. Chairman’s Message2 Independent Marketing
  3. 3. “Basic Message from 2012 AmCham Chairman Billimprovements.” optimism, but spotlighting areas needing Wiseman “ Message from 2012 AmCham Chairman Bill WisemanOur 2012 Business Climate Survey asked 387 votingrepresentatives from AmCham member companies –mainly CEOs – to answer about 20 questions in anonline questionnaire. 232 members took part - a 60%response rate.In general, the results of the 2012 survey were closelyaligned with those of 2011. Members expressedoptimism about the economy and business prospects inTaiwan, with nearly half citing plans to increaseinvestment in the coming year. Independent Marketing
  4. 4. Message from 2012 AmCham Chairman Bill WisemanIf views of the business outlook are slightly less rosythan a year ago, the driving factor seems to be globalmacroeconomic uncertainty and its expected impact onTaiwans economy.Once again, the survey results show that the Taiwangovernment deserves commendation for a number ofachievements, including progress in cross-Straiteconomic relations, adjustment of the corporate taxrate to make Taiwan more competitive within the Asianregion, and further strengthening of IPR protection. Independent Marketing
  5. 5. Message from 2012 AmCham Chairman Bill WisemanBut the survey also pinpoints areas where furtherefforts are needed to remove what are currentlyperceived as serious obstacles to economic growth: • Human Resources. Shortages of talent are developing in certain sectors, while constraints remain on hiring professionals from abroad. More also needs to be done to cultivate creativity and initiative-taking in the Taiwan workforce. Independent Marketing
  6. 6. Message from 2012 AmCham Chairman Bill Wiseman • Bureaucratic inefficiencies. Among the problems cited are inconsistent regulatory interpretations, inadequate or outdated laws, and lack of transparency. • Tax structure. Although the corporate tax rate has been reduced, the high personal income tax rate discourages foreign experts from accepting assignments in Taiwan. The incentive system for encouraging R&D also needs review.High-level government officials have indicated toAmCham that they recognize these problems and areworking on finding solutions. Independent Marketing
  7. 7. Message from 2012 AmCham Chairman Bill WisemanWe offer the findings of the survey as reference for thegovernment as President Ma Ying-jeou prepares for hissecond term.In closing, I would like to extend the Chamber’s heartythanks to Gordon Stewart of Independent MarketingPty Limited for his invaluable guidance in the planningand execution of this project.Bill Wiseman2012 AmCham Taipei Chairman Independent Marketing
  8. 8. Executive Summary8 Independent Marketing
  9. 9. Executive Summary – Key Indicators 2012 Forecast Increased 5 Year 2011 for Revenue Investment in BusinessProfitability & Profit 2012 Outlook Growth2010 2011 2011 2012 2011 2012 2011 201273.5% 71.9% 81.2% 58.4% 54.3% 42.9% 81.0% 70.3% Alert! Alert! *Alert! Statistically significant change from 2011 Independent Marketing
  10. 10. Executive Summary - Key Takeaways• AmCham’s Business leaders had a reasonably good 2011 and are focused on (almost 74% of companies have a primary focus on the domestic market), and generally optimistic, about the future of their businesses in Taiwan.• Many will increase their investment in Taiwan during 2012. But there is some softening or leveling-off in their forecasts for longer-term investment levels and in their prospects for growing revenues and profits in the short-term. However, the good news is that these softer forecasts are counter-balanced by either “Neutral”, or “Remain the same” forecasts, rather than by negative ones. Independent Marketing
  11. 11. Executive Summary - Key Takeaways• Bureaucracy! Bureaucracy! Bureaucracy! Is a common and persistent negative issue for our business leaders. It is cited throughout this (and last year’s) survey as having negative impacts, being a barrier to success and the one major thing companies want the Taiwanese government to aggressively tackle. While recognizing the progress made by the Taiwanese government in other certain areas, their belief is that more can be done to reduce, simplify and clarify government bureaucracy. Independent Marketing
  12. 12. Executive Summary - Key Takeaways• Inter-governmental relations: Our leaders would like to see, and believe it would be advantageous if there was: a broadening and speeding-up of ECFA; a re-engagement on TIFA talks; a bilateral investment and a taxation agreement between Taiwan and the U.S.A• Outside of macro-economic risks, issues surrounding Human resources are of the most concern to our business leaders. Specifically, the quantity, quality and costs associated with their employment. Independent Marketing
  13. 13. Detailed Findings13 Independent Marketing
  14. 14. 2011: A Relatively Good Year for Business.Almost three out of four (71.9%)of our businessleaders assert that their business in Taiwan waseither “relatively” or “very profitable” in 2011. Avery similar response to the one we received in2010. Independent Marketing
  15. 15. How would you characterize your Taiwan business’ financial performance? 14.3% Very Profitable 20.5% 57.6% Relatively Profitable 53.0% 23.8%Break even or small profit/loss 23.9% 3.0% Relatively Large Loss 2.6% 1.3% Very Large Loss 0.0% 2012 Column1 2011 Independent Marketing
  16. 16. 2012: More of the same…The majority of our business leaders areforecasting and expect 2012 to also be arelatively good year. However, growth inrevenues & profits are forecast to occur at alesser rate than was forecast last year (from 81%to 58%). The balance to this is that many moreexpect to “Remain the same” for 2012 – ratherthan indicating a decline in either revenues orprofits. Independent Marketing
  17. 17. What is your Taiwan business’ Revenue & Profits forecast for 2012 compared to 2011? Substantial growth in both Revenues & Profits 11.0% 17.1% Substantial growth in Revenues & modest growth in Profits 1.8% 7.7% *Alert!...Modest growth in Revenues & substantial growth in Profits 0.4% 2.6% Modest growth in both Revenues & Profits 45.2% 53.8% Remain the same 22.4% *Alert!... 7.7% Modest growth in Revenues & no change in Profits 3.1% 2.6% Modest growth in Revenues & modest decline in Profits 1.8% 2.6% No change in Revenue & modest decline in Profits 0.9% 0.0% Modest decline in Revenues & modest growth in Profits 0.4% 0.0% Modest decline in both Revenues & Profits 9.6% 6.0% Modest decline in Revenues & substantial decline in Profits 0.4% 0.0% 2012 Substantial decline in Revenues & modest decline in Profits 0.4% 0.0% 2011 Substantial decline in both Revenues & Profits 1.3% 0% 0% 20% 40% 60% *Alert! Statistically significant change from 2011 Independent Marketing
  18. 18. Short-term investment : Softening?There does appear to be some softening/flattening in planned investment levels - withonly 43% saying they will increase their entity’slevel of investment in 2012 either “slightly” or“substantially”. This compared to 54% last year.Statistically, this is bordering on a significantdrop. Independent Marketing
  19. 19. What is likely to happen to your entity’s level of investment in Taiwan over the next 12 months? Substantial Increase 10.0% 16.4% Slight Increase 32.9% 37.9% No Change 40.7% 36.2% Slight Decrease 12.6% 5.2%Substantial Decrease 2.2% 3.4%Dont know/cant say 1.7% 0.9% 2012 2011 Independent Marketing
  20. 20. Unfortunately, or realistically……Taiwan is generally viewed as “Not a high priority”back at the global head office. Perhaps this alsoinhibits greater investment. We said last year thatTaiwan needs to better position and market itself totry and gain some more global attention. Changesto: taxation rates; improvements to direct foreigninvestment rules and incentives; research &development incentives; and lowering some of thebureaucratic barriers, may go a long way here. Independent Marketing
  21. 21. How does Taiwan fit into your global entity’s investment plans? 2012 #1 Priority 10.3% 5.2% 2011 In the top 3 9.9% 6.9% In the top 5 6.9% 9.5% In the top 10 14.7% 11.2% Not a high priority 45.7% 54.3%Looking to reduce investment/disinvest 2.6% 2.6% Dont know/cant say 9.9% 10.3% 0% 10% 20% 30% 40% 50% 60% Independent Marketing
  22. 22. Looking forward five years…Whilst the vast majority (70%) are “optimistic” or“slightly optimistic” about their five-year businessoutlook in Taiwan, there has been a statisticallysignificant drop in this score compared to a yearago, with many taking a more “Neutral” position.Further suggesting that there is a growingcautiousness in regards to their future businessprospects. Independent Marketing
  23. 23. How would you describe your five-year business outlook for Taiwan? Optimistic 27.6% 29.3%Slightly Optimistic 42.7% 51.7% Neutral 21.6% *Alert! Statistically significant change from 2011 2012 6.9% 2011Slightly Pessimistic 7.3% 9.5% Pessimistic 0.9% 2.6% 0% 10% 20% 30% 40% 50% 60% Independent Marketing
  24. 24. What impacts their business?Not surprisingly, given their Taiwan market focus,changes in local demand have the single greatestimpact on their businesses.However, there are several areas where theTaiwanese government can have a direct andsubstantial influence. These include governmentbureaucracy, inconsistent regulatoryinterpretation, inadequate or outdated laws, andcompany and personal taxation levels. Indeed,reducing taxation levels may well release moremoney into the economy and help stimulate thearea of largest impact – domestic demand. Independent Marketing
  25. 25. Which of the following impacts your operation in Taiwan, and how much of an impact do they have? Top Ten Responses overall2012 Ranking 2011 Ranking Issues 1 1 Changes in local demand 2 3 Inconsistent regulatory interpretation 3 4 Ability to recruit appropriate new personnel 4 2 Governmental Bureaucracy 5 7 Currency Exchange rate fluctuations 6 5 Inadequate/Out-dated laws 7 8 China-Taiwan government relations 8 9 Changes in employment expenses 9 6 Corporate Taxation levels 10 10 Lack of transparency Independent Marketing
  26. 26. Average values only shown on 4 point scale where 4 = extreme impact and 1 = no impact Independent Marketing
  27. 27. Independent Marketing
  28. 28. Progress (and the lack of it) in TaiwanSome great strides have been made in the pastthree years to help business – especially inconnection with China, like direct flights, bettercross-Strait government relations, and of courseECFA. There has also been some progress onimportant issues such as Corporate Taxation.But there are also areas where no progress hasbeen made (e.g., personal taxation), and worsewhere there has actually been some perceivedregression (e.g., employment expenses anddomestic protectionism). Independent Marketing
  29. 29. ‘Significant” & “Some” Progress over 2009-2011 in Taiwan Direct flights to the Mainland 85.4% China - Taiwan government relations 83.2% The Economic Cooperation Framework Agreement (ECFA) 72.1% Corporate Taxation levels 50.0%Infrastructure (Power, Water, Telecommunications, Transport, etc.) 45.1% Corruption 42.9% USA - Taiwan government relations 42.5% EU - Taiwan government relations 42.0% Strengthening Local Demand 41.6% Intellectual Property rights infringements 41.2% Governmental reform/restructuring 40.7% Transparency 38.1% Strengthening Overseas Demand 34.1% Customs and trade regulations 34.1% Currency Exchange rate fluctuations 32.3% Governmental Bureaucracy 32.3% Changes in Tariffs 30.5% Financial Industry Reform 26.1% Inadequate/Out-dated laws 25.7% Personal Taxation levels 24.3% Ability to recruit appropriate new personnel 22.6% Inconsistent regulatory interpretation 20.8% Changes in Transport costs 20.4% Changes in Financing costs 19.9% Illegal imports 19.5% Government procurement procedures 19.0% Changes in Employment expenses 18.1% Domestic protectionism 17.7% Changes in Raw Material costs 15.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Independent Marketing
  30. 30. “No Progress” made over 2009-2011 in Taiwan Personal Taxation levels 59.3% Changes in Financing costs 52.7% Changes in Employment expenses 50.4% Changes in Transport costs 49.6% Government procurement procedures 48.7% Illegal imports 47.8% Ability to recruit appropriate new personnel 47.3% Inconsistent regulatory interpretation 46.5% Domestic protectionism 45.6% Inadequate/Out-dated laws 44.7% Currency Exchange rate fluctuations 43.4% Customs and trade regulations 42.0% Changes in Tariffs 41.6% Financial Industry Reform 41.2% Transparency 39.8%Infrastructure (Power, Water, Telecommunications, Transport, etc.) 37.6% Changes in Raw Material costs 36.7% Strengthening Local Demand 36.7% Strengthening Overseas Demand 36.3% Governmental reform/restructuring 36.3% Corporate Taxation levels 35.8% Governmental Bureaucracy 35.4% EU - Taiwan government relations 35.0% Intellectual Property rights infringements 34.1% USA - Taiwan government relations 32.3% Corruption 31.4% The Economic Cooperation Framework Agreement (ECFA) 12.8% China - Taiwan government relations 9.3% Direct flights to the Mainland 7.1% 0% 10% 20% 30% 40% 50% 60% 70% Independent Marketing
  31. 31. “Significant” & “Some” Regress over 2009-2011 in Taiwan Governmental Bureaucracy 24.3% Changes in Employment expenses 22.1% Inconsistent regulatory interpretation 21.7% Changes in Raw Material costs 21.2% Ability to recruit appropriate new personnel 20.8% Domestic protectionism 20.4% Inadequate/Out-dated laws 14.6% USA - Taiwan government relations 14.6% Currency Exchange rate fluctuations 13.7% Transparency 13.7% Changes in Transport costs 13.3% Financial Industry Reform 12.4% Strengthening Local Demand 11.9% Strengthening Overseas Demand 11.9% Governmental reform/restructuring 10.2% Corruption 10.2% Government procurement procedures 8.4% Customs and trade regulations 8.4% Personal Taxation levels 7.1% Changes in Financing costs 7.1% Intellectual Property rights infringements 6.6% EU - Taiwan government relations 6.2% Changes in Tariffs 5.3%Infrastructure (Power, Water, Telecommunications, Transport, etc.) 5.3% Illegal imports 4.0% Corporate Taxation levels 4.0% The Economic Cooperation Framework Agreement (ECFA) 4.0% Direct flights to the Mainland 1.8% China - Taiwan government relations 1.3% 0% 5% 10% 15% 20% 25% 30% Independent Marketing
  32. 32. Much more needs to be doneThe survey asked about the main things theTaiwan government could do in the next 12months to help business. The top replies: – Simplify government bureaucracy – Increase incentives for foreign direct investment – Lower personal taxation and further reduce corporate rates. Independent Marketing
  33. 33. What are the top things the Taiwan Government could do to help your entity in the next 12 months? Simplify Government Bureaucracy 43.8% 46.7% Increase Direct Foreign Investment incentives 24.7% 25.2% Reduce Personal Taxation 21.5% *Alert!... 32.7% Reduce Corporate Taxation further 20.1% 19.6% Improve Research & Development incentives 16.9% 16.8% Liberalize the Labor market 16.4% 15.0% Broaden ECFA 15.5% 18.7% Speed-up ECFA 15.1% 18.7% 2012 *Re-engage in TIFA talks with the USA 14.2% 2011 Increase direct flights to/from the Mainland 13.2% 12.1%Introduce stronger Corporate Governance rules 11.4% Tighten enforcement of Intellectual Property… 11.0% 9.3%Sign bilateral trade deals with other (non-USA)… 10.5% 18.7% Reduce Tariffs 10.0% 9.3% Improve Training Incentives 8.7% 8.4% 0% 10% 20% 30% 40% 50% *Alert! Statistically significant change from 2011 Independent Marketing
  34. 34. Notes on “Other” items mentioned (12.8% in total)These mostly related to topics about: Transparency in both government and private dealings ,to reduce corruption; and specific laws and regulations, e.g., in the Health care, Energy,Financial services , Food safety, Environmental safety and Broadcast markets Independent Marketing
  35. 35. The major worries confronting businessAsked about the major risks facing their entity inthe coming years, most responses related toeconomic slowdowns, whether globally, in Taiwan,along with growing concerns about the China andthe U.S.A. markets.“Europe” was added this year as an option and isthe 5th greatest concern.Outside of economic slowdowns, HumanResources remain the largest concern for businessleaders. Independent Marketing
  36. 36. What are the major risks facing your entity in the coming years? Global economic slowdown 73.5% 69.2%Economic slowdown in domestic consumption 54.3% 63.6% Economic slowdown in Mainland China 40.6% *Alert!... 28.0% Economic slowdown in USA 39.7% *Alert!... 27.1% Economic slowdown in Europe* 35.6% Lack of Human Resources 35.2% 35.5% Increased Governmental interference 34.2% 28.0% Increased domestic political unrest 32.4% 32.7% TWD depreciation 24.2% 17.8% Taiwan Inflation rising 21.5% 18.7% TWD appreciation 17.4% 21.5% 2012 Taiwan Unemployment rising 16.4% 19.6% 2011 Decreased exports 14.6% 10.3% Increased imports 1.8% 1.9% Other 3.7% 3.7% 0% 10% 20% 30% 40% 50% 60% 70% 80% *Alert! Statistically significant change from 2011 Independent Marketing
  37. 37. Human Resources – A big issueDeficiencies in the quantity and quality ofavailable human resources are one of the highestrisk factors seen as confronting businesses in thefuture.We asked our corporate leaders to give us theirimpressions of the quality of available humancapital in Taiwan. First the positives… Independent Marketing
  38. 38. Taiwanese Human Resources are seen as ……Hard-working, very trustworthy, extremely well-educated, highly productive, very loyal, and easyto develop or train. A very positive profile of theworkforce. Understandably, no major changeswhere seen in this year’s survey compared to last. Independent Marketing
  39. 39. How would you describe the quality of available Human Capital in Taiwan? Hardworking Very Trustworthy Extremely well-educated Highly Productive Very Loyal Easy to develop/trainShow high degree of emotional… Show a great deal of initiative Well-rounded Easy to recruit Easy to retainShow a great deal of creativity Of World class standard-60% -40% -20% 0% 20% 40% 60% 80% 100% Disagree Strongly Disagree Agree Strongly Agree Independent Marketing
  40. 40. Human Capital in Taiwan - Net Scores Hardworking 82.7% Very Trustworthy 72.3% Extremely well-educated 65.7% Highly Productive 44.8% Very Loyal 45.2% Easy to develop/train 41.6%Show high degree of emotional intelligence… 24.1% Show a great deal of initiative 9.6% Well-rounded 9.5% Easy to recruit -5.4% Easy to retain -10.5% Show a great deal of creativity -10.9% Of World class standard -12.3% -20% 0% 20% 40% 60% 80% 100% Independent Marketing
  41. 41. However……They are not perceived as being of “World-class”standard, nor displaying a great deal of creativity.They are also not easy to recruit and retain. Thereare also concerns over their inability to displayinitiative. Our respondent leaders were alsosomewhat divided over whether they are “well-rounded” enough and generally display a highemotional intelligence quotient (EQ). Independent Marketing
  42. 42. ECFA…Business leaders are (still) bullish on ECFA but…Last year when asked what impact they feltECFA would have on their business and onTaiwan as a whole, the response wasoverwhelmingly positive. However, a year on, itseems that their experience/knowledge of ECFAhas pushed many more into a more neutralposition with regards to their perceived impacton the country and on their businesses.In terms of the perceived impact on the U.S.A.,many seem unsure what, if any, impact it has, orwill have, on the U.S.A. Independent Marketing
  43. 43. ECFA’s effect on My Business Very Positive Effect 8.7% 15.0% Some Positive Effect 38.4% 42.1%Neither Positive nor Negative Alert! Statistically significant change from 2011 40.6% 27.1% Some Negative Effect 2.8% 6.5% Very Negative Effect 0.9% 1.9% 2012 Dont know/cant say 7.3% 2011 7.5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Independent Marketing
  44. 44. ECFA’s effect on Taiwan Very Positive Effect 30.1% 40.2% Some Positive Effect 45.7% 48.6%Neither Positive nor Negative 11.0% Alert! Statistically significant change from 2011 2.8% Some Negative Effect 1.8% 4.7% Very Negative Effect 2.7% 1.9% 2012 Dont know/cant say 8.7% 2011 1.9% 0% 10% 20% 30% 40% 50% 60% Independent Marketing
  45. 45. ECFA’s effect on the U.S.A. (NB: New Question in 2012) 2012 Very Positive Effect 5.0% Some Positive Effect 26.5%Neither Positive nor Negative 31.5% Some Negative Effect 7.8% Very Negative Effect 2.3% Dont know/cant say 26.9% 0% 5% 10% 15% 20% 25% 30% 35% Independent Marketing
  46. 46. TIFA…Business leaders want an updated one.This year we asked about the lack of an updatedTrade and Investment Framework Agreement(TIFA), between Taiwan and the U.S.A.Generally, there was a strong belief that thisdisadvantages Taiwan (greatly) and to a slightlylesser extent, the U.S.A. However, whilst also adisadvantage to their businesses, it is seen asmore disadvantageous to the two countries. Independent Marketing
  47. 47. Independent Marketing
  48. 48. The lack of a Bilateral Investment Agreement…This year we also asked who, if anyone, wasdisadvantaged by a lack of a BilateralInvestment Agreement between the U.S.A. andTaiwan. Much like the response to the questionon TIFA, Taiwan is perceived as the biggest loser,followed by the U.S.A. and to a lesser extenttheir individual businesses. Independent Marketing
  49. 49. Independent Marketing
  50. 50. The lack of a Bilateral Taxation Agreement…This year we also asked who, if anyone, wasdisadvantaged by a lack of a Bilateral TaxationAgreement between the U.S.A. and Taiwan.Much like the two earlier responses, Taiwan isperceived as the most disadvantaged, followedby the U.S.A. and to a lesser extent theirindividual businesses. Independent Marketing
  51. 51. Independent Marketing
  52. 52. Still not much happening in M&AFew businesses pursued any form of merger andacquisition (M&A) activity during 2010. Of thosethat did, a few completed the exercise (4%), a fewmore are still in the process (4%), some tried andfailed (less than 4%), and some considered it butdidn’t pursue it (23%). However, for the vastmajority of business leaders (more than 71%),M&A simply wasn’t on their radar for 2011. Independent Marketing
  53. 53. Did your entity pursue, or consider, a merger or acquisition of a Taiwanese entity in the past 12 months?80% 71.2%70% 61.3%60%50%40% 201230% 2011 23.4%20% 17.3%10% 7.2% 4.0% 4.5% 4.0% 3.5% 3.6%0% Yes, and completed Yes, and still in the Yes, but failed to No, but considered No, did not consider merger/acquisition process of complete merger/acquisition merger/acquisition Independent Marketing
  54. 54. Sound business reasons for M&AWhile only a few companies did attempt the M&Aroute in the past 12 months, their reasons fordoing so again, as in 2010, show sound businesslogic: To enlarge their customer base; increaselocal market access; acquire capacity; andotherwise gain synergies (by reducing costs andimproving profits), were the major drivers behindM&A, as they were 12 months ago. Independent Marketing
  55. 55. Independent Marketing
  56. 56. But (again) finding an appropriate target was the single major barrier…Along with negotiating the valuation gap andconducting due diligence. Whilst it would beinappropriate to statistically analyze these resultsagainst last year’s, it is interesting to note a subtlechange in the order of issues, e.g., the risingimportance of ‘post-deal restructuring’ and‘cultural’ issues which have emerged this year asbarriers to M&A - both ranked much lower asissues in 2010. Independent Marketing
  57. 57. Independent Marketing
  58. 58. However, still some ongoing M&A interest for 201222% of all entities in our survey would either“possibly” or “definitely” consider M&A in thenext 12 months. Independent Marketing
  59. 59. Independent Marketing
  60. 60. And finally…”The Living is Easy”When asked about the quality of life in Taiwan*,corporate leaders strongly agree that Taiwan isa place where:– “My family feels safe.”– Taiwanese people are extremely nice.– Taiwan provides quality healthcare services.– Taiwan is an easy country to live in. *Whilst 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”. Independent Marketing
  61. 61. The Top Ten Benefits of living in Taiwan (Net Promoter Score)2012 Ranking 2011 Ranking Benefits 1 1 My family feels safe in Taiwan 2 2 Taiwanese people are extremely nice 3 3 Taiwan provides quality Health/Medical/Dental services 4 6 Taiwan delivers reliable electricity. 5 4 Taiwan is an easy country to live in 6 5 Alternative transportation options are usable and provide options to driving my car (i.e., buses, bike lanes, taxis, trains, sidewalks). 7 7 Taiwan provides adequate shopping opportunities 8 9 Internet connectivity is excellent 9 10 Mobile telephone coverage is excellent 10 8 The Postal service is excellent Independent Marketing
  62. 62. Living in Taiwan…The not so great things.• Water runoff from storms is not controlled and results in flooding.• Taiwan doesn’t provide quality activities for youths.• Taiwan doesn’t provide quality drinking water.• Banking and other financial services are seen as sub-par.• Library services provided to their community are insufficient. Independent Marketing
  63. 63. The Bottom Ten Least appreciated aspects of living in Taiwan (Net Promoter Score) 2012 Ranking 2011 Ranking Concerns 1 New in 2012 Taiwan provides an English-friendly environment for me and my family 2 1 Water runoff from storms is controlled and minimizes flooding 3 3 Taiwan provides quality drinking water. 4 2 Taiwan provides quality youth activities 5 4 The library services provided to our community are current and meet our needs 6 4 Banking and other financial services are excellent 7 15 Street surfaces are drivable and safe. 8 7 The sewer system in Taiwan works reliably 9 6 Taiwan provides quality Police services 10 8 The standard of schooling is excellent Independent Marketing
  64. 64. Independent Marketing
  65. 65. About our sample65 Independent Marketing
  66. 66. Who, When and How• The survey was addressed, via email, to the 387 voting representatives – usually the CEO – among AmCham’s Corporate Sustaining and Company membership.• The survey invitation was sent out on December 6, 2011, and most responses were received by January 10, 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 232 responses, representing a 60% response rate. Independent Marketing
  67. 67. 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)’• Our sample draws from all of the major industrial classifications in Taiwan. Independent Marketing
  68. 68. Industry Classifications (Cont’d.)• Our sample is more skewed towards ‘Manufacturing’, ‘Professional Scientific and technical services’, and the ‘Finance and Insurances’ industries. And it is under- weighted in the ‘Wholesale and Retail Trade’ industry – by virtue of the fact there are some 627,000 of these businesses registered in Taiwan, representing 52% of all business numbers. With these covenants, we believe the sample to be a fairly good representation of business in Taiwan and an extremely good sample of AmCham’s corporate membership. Independent Marketing
  69. 69. Sample Total Taiwan (source: Statistical Yearbook of The Republic of China 2010, Edited 2011)Agriculture, forestry, fishing, & animal husbandry 1.3% 1.0% Mining & quarrying 0.4% 0.1% Manufacturing 24.7% 10.7% Electricity, gas supply 1.7% 0.0% Water supply & remediation services 0.4% 0.6% Construction 0.9% 7.3% Wholesale & retail trade 2.1% 51.6% Transportation & storage 5.2% 2.5% Accommodation & food services 6.0% 8.9% Information & communication 5.6% 1.3% Finance & insurance 11.6% 1.9% Real estate 2.6% 1.8% Professional, scientific & technical services 22.0% 2.8% Support services 2.6% 2.2% Education 1.7% 0.1% Arts, entertainment & recreation 2.6% 1.7% Other services 8.6% 5.6% Independent Marketing
  70. 70. 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, NGO’s, and not-for-profit organizations Independent Marketing
  71. 71. Independent Marketing
  72. 72. Time in Taiwan• Our sample is split between those who are relatively new to Taiwan (less than 15 years with a physical presence here) at 33%, those who are established 15-30 years at 39%, and those who are well- established (more than 30 years) at 29%. The most frequent length of a physical presence in Taiwan is 21 to 25 years.• There seems to have been a ‘graduation’ since the 2011 survey, up one level, as last year the 16-20 year olds were the most frequent respondents. Independent Marketing
  73. 73. How long has your business been in Taiwan?25% 22.0% 21.4% 201220% 2011 17.9% 15.9%15% 14.5% 13.8% 12.5% 11.6% 11.1% 10.3%10% 9.1% 9.4% 9.1% 8.5% 5.6% 6.0%5% 0.4% 0.9%0% Less 6-10 11-15 16-20 21-25 26-30 31-50 51-75 76-100 More than 5 years years years years years years* years* years than 100 years years Independent Marketing
  74. 74. Number of Full Time Equivalent Employees (FTEE)• Our sample covers a wide spectrum of employers - from the very small to the very large. However, 50% employ less than 100 FTEE, 29% employ between 100 and 500, and a further 21% employ more than 500. Independent Marketing
  75. 75. Independent Marketing
  76. 76. Business Focus• The business leaders surveyed are clearly focused on Taiwan as the primary goal for nearly 74% of the entities is to supply the Taiwan market with goods or services. This makes their comments and observations especially pertinent to the Taiwan government. Independent Marketing
  77. 77. What is your business primary goal in Taiwan? Provide goods/service for Taiwanese 0.0% market 1.3% 8.6%3.4% Provide/source goods/services for the Greater China market 12.9% Provide/source goods/services for export to the U.S.A. 73.7% Provide/source goods/services for export to markets other than Greater China or U.S.A Provide/source goods/services for export to Mainland China Other (mostly global services) Independent Marketing
  78. 78. 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 an ‘Alert!’ symbol when we have detected a significant change. Independent Marketing
  79. 79. 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 amcham@amcham.com.twOr:• Gordon Stewart of Independent Marketing Limited at: gordon@stewartconsult.com Independent Marketing
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