This document summarizes the results of the 2019 Taiwan Business Climate Survey conducted amongst over 200 key business leaders in Taiwan. The survey found that profitability levels are at their lowest in 9 years, with forecasts for 2019 revenues, profits, and investment declining or flat compared to previous years. Employment growth is also forecast to slow. Issues such as governmental bureaucracy, differences from international standards, protectionism, and inadequate laws continue to negatively impact businesses. Survey respondents see Taiwanese workers as hardworking but lacking creativity and initiative. The outlook for the next 5 years is sluggish, with less than half of respondents optimistic. In summary, the survey finds Taiwan's business climate deteriorating, with recurring issues still not adequately addressed.

1. Copyright © 2019 Independent Marketing & Research Limited. All Rights Reserved.
TAIWAN BUSINESS
CLIMATE SURVEY
2019
Independent Marketing & Research
contact@independentmarketing.com.au

2. Table of Contents
Background..................................................................................................................................................................................... 2
Commentary on the results ........................................................................................................................................................... 2
Summary of Key Financial Indicators with 9-year Trendline ..................................................................................................... 3
2018 Profitability: A major drop................................................................................................................................................5
Forecast for 2019 Revenues and Profits: Declining ...................................................................................................................7
Investment Forecast for 2019: Lowest in 9 years................................................................................................................... 8
Forecast for the next 5 years: Sluggish ...................................................................................................................................... 9
Employment and Human Resources Trends............................................................................................................................... 11
Forecast changes in employment: Growing, but slowing....................................................................................................12
Taiwanese Human Capital............................................................................................................................................................13
Impacts & Issues ...........................................................................................................................................................................16
The major risks confronting business..........................................................................................................................................19
Taiwan Government(s) ................................................................................................................................................................20

3. Taiwan Business Climate Survey 2019
Background
For the last nine consecutive years, it has been our pleasure to conduct the Taiwan Business Climate Survey amongst key
business leaders.
This year’s study again saw over 200 key business leaders - many with job titles such as Chairman, President, CEO,
and Managing Director - give their views and opinions. Collectively, these leaders employ more than 126,000 full-
time equivalent people throughout Taiwan.
Their insights, findings and forecasts should be of interest to all those concerned with Taiwan’s business environment. The
historical trends and recurring issues should be of particular relevance to both legislators and voters.
The survey was conducted from November 1 to December 21, 2018. This period straddled, amongst other things, the local
(nine-in-one) elections and the multi-question referendum, along with significant, and potentially negative, changes in
green energy incentives.
We would like to sincerely thank all those who took part in this study for their time, insights, and comments. We hope you
find the following summary of interest and help.
Please feel free to contact Gordon Stewart if you would like any further elaboration.
Commentary on the results
It is hard to be positive about most of the results of this year’s survey.
Profitability levels are at their lowest in nine years. Forecasts for 2019 revenues and profitability are flat. Investment
forecasts are down. Employment forecasts are slowing.
The same issues, which governments appear reluctant or incapable of fixing (e.g., governmental bureaucracy, differences
between local and internationally accepted standards, domestic protectionism, inadequate/outdated laws, etc.),
continually reappear as causes for concern by employers.
With an otherwise stellar workforce, the same concerns are continually expressed regarding employees lacking in
creativity and innovation.
In addition, the survey also addresses general ‘quality of living’ issues. Again, whilst generally very positive, we find
concerns amongst business leaders remain. For example, pedestrian safety at designated crossings, which have simple
solutions, continue to be ignored year after year.
At Independent Marketing & Research, we sincerely hope that this year the government listens, and more importantly,
acts towards removing some of these issues. There is a time for polite, politically correct speech and there’s a time for
action.
Now, more than ever, is the time for government to do something.

4. Summary of Key Financial Indicators with 9-year Trendline
To track changes and detect trends over the past 9 years, we have asked identical questions each year relating to Taiwan
enterprises’ current and forecasted financial performance. They are:
➢ How would you characterize your Taiwan business' financial performance in 2018?
➢ What is likely to happen to your entity's level of investment in Taiwan over the next 12 months?
➢ What are your Taiwan business' revenue and profit forecasts for next year (2019) compared to this year?
➢ How would you describe your five-year business outlook for Taiwan?
Business in Taiwan remains in the “Relatively Profitable” to “Very Profitable” zone for more than half of the companies.
However, this is a statistically significant drop from the prior eight years, when more than two-thirds of respondents
traditionally reported a profit.
There has also been a disconcerting nine percent drop in forecasted investment levels.

5. The pattern across all measures is at best flat or trending in the wrong direction. Other recent published results and forecasts
support the direction and sentiment of this study.

6. 2018 Profitability: A major drop
In 2017 over two thirds (68%) of our business leaders said their entities experienced either a “relatively” or “very
profitable” year. However, in 2018 only 54% were able to claim that.
There was also a statistically significant increase in those entities reporting just “breaking even or making a small profit or
loss” – up from 28% to 42% in 2018.
These results are contrary to prior years and reflect that profitability in Taiwan has been subjected to some adverse
impacts by, amongst other things, rising labour costs.

7. Only 45% of entities experienced profit growth in 2018. Down from 54% in 2017. A quarter of all entities also reported an
absolute decline in profits.

8. Forecast for 2019 Revenues and Profits: Declining
The outlook for 2019 revenue and profits is weaker than in previous years but generally is still positive - with a slight
majority of our business leaders forecasting growth in their revenues and profits.
17% expect a decline in both measures – a jump compared to prior years.

9. Investment Forecast for 2019: Lowest in 9 years
Forecasted levels of investment are lower for 2019 than they were for 2018. This is the first time in the nine years of this
survey that less than forty percent (38%) of entities said they would increase their investment in Taiwan next year.

10. Forecast for the next 5 years: Sluggish
This year less than half (49%) of our business leaders are saying they are either “slightly optimistic” or “optimistic” about
the next 5 years of business in Taiwan. This sluggish result should be a major cause of concern for the government, as
should the steady year-on-year decline of the sum of the “slightly optimistic” and “optimistic” scores.

11. We asked our respondents if they would like to comment on their forecasts; just under a third chose to.
Most (49%) of those expressed slightly optimistic or optimistic ratings and sentiments.
[However, we caution that several of these positive ratings were made prior to some negative news/decisions being
made regarding green energy. Consequently, this optimism may be overstated.]
A third (34%) expressed what could be described as negative or pessimistic comments/ratings.
Neutral comments were made by 17%.
Examples of each type are shown below.
Positive rating Neutral rating Negative rating
“Circular Economy trends
promote the material recycling
and waste to energy industry.
i.e. Green Energy.”
“A 5-year boom market.
Taiwan's offshore wind market
is entering the construction
phase and bringing up
collateral markets with it.”
“US-China trade war and
increased uncertainty in China
will cause supply chain to leave
China and possibly return to
Taiwan.”
“Benefiting from various
tariffs/sanctions/anti-dumping
imposed on goods made in the
PRC to Europe and USA.”
” Economic conditions and
lack of investment in the
country will lead to a neutral
business outlook.”
“Taiwan may benefit slightly
from the tension between the
U.S. and China, but that may
be offset by a general reduction
in trade and investment.
Domestically, Taiwan still
hasn't found its ‘next big thing’
“
“A lot depends on the China
situation.”
” Taiwan is losing its
competitiveness in the region.”
“Government not willing to
make decisions to move ahead
in Fintech. “
“The US-CN Trade War, the
economic cycle, no innovative
attractive products, ageing in a
developed economy, Brexit,
etc.”
“Taiwan increasingly
becoming irrelevant compared
to most other markets in Asia
and Africa.”

12. Employment and Human Resources Trends
DEFINITION: Full-Time Equivalent Employees (FTEE) are determined by counting part-time employees as half an
employee and adding them to the number of full-time employees
40% of all companies surveyed increased their employment numbers “slightly” or “significantly” during 2018.
Whilst a positive result, this is the lowest level of growth reported in 6 years.
Taiwan Labor Standards Act
Several changes to the labour laws in late 2016/early 2017 had a profound
impact, resulting in increased management effort and costs of compliance.
Further amendments took effect in March 2018, which seem to have,
generally speaking, rolled back or relaxed changes made earlier, and have to
some extent clarified the situation – if not necessarily reduced the financial
impost on companies.

13. Forecast changes in employment: Growing, but slowing
Employment growth is forecast for 2019 by only 38% of all entities. This is the first time in the 6 years we have been
measuring this that forecast growth has been recorded at below 40%.
When those who say they will reduce headcount are removed from those who have, or will, increase their employee
numbers, the weighted results show a slowing in the rates of growth – both in actual numbers employed and levels of
forecast growth.

14. Taiwanese Human Capital
Over the past 9 years, Taiwanese workers have consistently been perceived as being: Hard-working; Very trustworthy;
Good team players; Very loyal; Extremely well-educated; Easy to develop/train; Highly productive; Showing a high degree
of Emotional Intelligence (EQ); and Easy to retain. All of these are wonderful characteristics for employees to have.
The following table expresses the weighted index scores given on each criterion. The higher the number the more strongly
positive the sentiment.
Attribute 2019 2018 2017 2016 2015 2014 2013 2012 2011 Average
Hard-
working
111 111 112 107 112 104 120 119 129 114
Very
trustworthy
93 103 95 95 95 87 89 84 91 93
Good team
players
84 78 Attribute first introduced in 2018 81
Very loyal 61 64 70 60 70 52 55 52 61 61
Extremely
well-educated
55 67 85 58% 85 57 76 79 80 72
Easy to
develop/
train
50 62 75 68 75 50 40 46 49 57
Highly
productive
34 55 67 65 67 47 43 54 49 53
Show a high
degree of
Emotional
Intelligence
(EQ)
30 28 46 21 46 26 24 26 18 29
Easy to retain 29 39 26 26 26 22 2 -16 -14 15

15. Sadly, however, Taiwanese workers are also perceived as showing: a lack of initiative; of not being innovative; not showing
a great deal of creativity in problem solving; not being of 'world class' standard; failing to have good English language
skills (if required for role and/or promotion); being difficult to recruit; and not being ‘well-rounded’.
The lack of initiative and low creativity scores are reminiscent of the problems experienced by Singapore more than two
decades ago when the Singaporean government recognized that students were academically sound but lacking in creative
and creative abilities. As stated by the then Prime Minister in 1997 “A nation's wealth in the 21st Century will depend on
the capacity of its people to learn. Their imagination, their ability to seek out new technologies and ideas, and to apply
them in everything they do will be the key source of economic growth. Their collective capacity to learn will determine
the well-being of a nation.” Consequently, the Singaporean government instituted ‘creativity and innovation classes’ into
its school curriculum. *
Singapore is today ranked number 5 in the World after Switzerland, Netherlands, Sweden, and the UK, on the Global
Innovation Index (GII) 2018.** Singapore is the only Asian country to feature in the top 10, well ahead of the Republic of
Korea (12), Japan (13), Hong Kong (14) and China, for the first time featured onto the top 20 list, at position 17.
Is it time for Taiwan to adopt a similar education strategy as Singapore?
*For further references please see: “Shaping our future: Thinking Schools, Learning Nation” speech by Prime Minister Goh Chok Tong on 2 June 1997
and “The education system in Singapore.” Tan, Charlene & Koh, Kim & Choy, William. (2016).
**Released jointly by WIPO (World Intellectual Property Organization), Cornell University, INSEAD and the 2018 GII Knowledge Partners.

16. Taiwanese Human Capital is NOT seen as…
Attribute 2019 2018 2017 2016 2015 2014 2013 2012 2011 Average
Show a
great deal
of initiative
-55 -20 -8 -8 -8 -17 -3 7 3 -12
Innovative -47 -28 -9 -22 -9 Attribute first introduced in 2015 -23
Show a
great deal
of
creativity
-45 -39 -23 -10 -23 -17 -21 -17 -10 -23
Of 'world
class'
standard
-34 -26 -15 -24 -15 -26 -20 -14 -22 -22
Good
English
language
skills (if
required
for role
and/or
promotion)
-33 -14 2 -15 2 -26
Attribute first introduced in
2014
-14
Easy to
recruit
-18 -5 4 -27 4 -6 -16 -11 -11 -10
Well-
rounded
-6 8 34 18 34 1 19 11 12 15
Some additional comments from our business leaders…
“We notice a decline in the quality of younger graduates. In particular, when it comes to English and most
surprising, computer skills (other than gaming).”
“Young people are pessimistic about their future. Too many college graduates, low wages, poor quality of high
education.”
“The ability to innovate, train and develop is inversely proportional to the age of the person. Creativity in
problem-solving is in the same bucket.”
“English and international skills and exposure are not here to become a regional hub resulting in losing
competitive advantage.”
“Not aggressive enough to compete in other countries.”
“Have difficulty filling direct labor (factory floor/manufacturing) jobs. “

17. Impacts & Issues
58 issues, across 6 broad categories, have been found to impact businesses in Taiwan today.
The largest concern for our respondents is a decline in their sales resulting from either changes in local demand (83%) or
changes in overseas demand (26%).
The fact that the primary focus of most of our businesses is to provide/source goods or services for the Taiwanese market
(71%), ties in with the concern over local demand.
The current and historical ranking of the specific impact items follows.

18. Issues are ranked based upon the greatest percentage of those businesses citing an issue as impacting their operation in
Taiwan
Issue
2019
Ranking
2018 2017 2016 2015 2014 2013 2012 2011
Ability to recruit
appropriate new personnel
1 8 9 7 6 9 5 3 4
Governmental bureaucracy 2 1 1 4 3 1 3 4 2
Differences between local
and internationally
accepted standards
3 7 10 8 7 7 New in 2014
Domestic protectionism 4 10 16 16 15 11 12 12 12
Inadequate/Out-dated
laws
5 6 7 1 4 5 4 6 5
Lack of flexibility in labour
laws
6 3 New in 2018
Inconsistent application of
the Rule of Law
7 11 6 6 5 4 New in 2014
The increasing cost of
labour (including labour
insurance, national health
insurance,
pension/retirement
benefits)
8 9 New in 2018
Political turmoil 9 16 5 11 10 13 New in 2014
PRC-Taiwan government
relations
10 5 2 12 11 16 13 7 8

19. Labour issues, understandably, have a major effect on business. An ability to recruit appropriate new personnel; the lack
of flexibility in labour laws; and the increasing cost of labour (including labour insurance, national health insurance,
pension/retirement benefits), are all having major impacts.
A persistent issue over the years has been and still is: Governmental Bureaucracy. All levels of government need to make
conscientious and continuous efforts to reduce unnecessary, time-consuming, and costly bureaucratic processes. There is
a need for governments to consistently question their processes and procedures.
Somewhat aligned with bureaucracy are differences between local and internationally accepted standards. Does Taiwan
really need to have different rules or standards from other sophisticated and well-regulated markets?
The belief that Taiwan has “Inadequate or Out-dated law” and the inconsistent application of laws contribute to the
negative perception of Taiwan’s bureaucracy.
On the political front, business wants a good deal less turmoil and better relations with the PRC.
Other topical issues affecting operations include:
Issue
2019
Ranking
2018 2017 2016 2015 2014 2013 2012 2011
Lack of transparency 11 13 13 10 9 8 9 10 10
Insufficient notice before changes to
regulations or laws are introduced
12 12 10 5 8 6 6 New in 2013
Lack of clarity in labour laws 13 2 3 New in 2017
Inconsistent regulatory interpretation 18 4 4 2 1 2 2 2 3
On a positive note, the one labour issue which has had a dramatic improvement is that there appears to be greater clarity
in the Labor Standards Act – presumably as a result of the amendments made in March 2018. This may also have helped
reduce the issue of “Inconsistent regulatory interpretation.”

20. The major risks confronting business
A slowdown in Taiwan’s domestic or in the global economy is of the greatest concern for our business leaders.
Concerns about increased government regulation and compliance costs; uncertainty/lack of flexibility in Taiwan's labour
laws; and uncertainty in the PRC-Taiwan relationship, lead the other major worries confronting business going into 2019.
Concerns about energy shortages make it into the top 10 risks (at position 9), for the first time. This issue is only likely to
grow as a matter of concern for business over the next few years.
Other risks. Some direct quotations:
“Ruling party is too ideological on political agenda, on the opposition, on China.”
“Our financial health relies on infrastructure and industrial growth and if regulations squeeze private
investment and Government slows down its spend in major projects (power, transportation, energy, etc.), then
we will suffer.”
“Oil price/cost of transportation & air travel.”
“Environmental (extreme weather, earthquake, etc.)”
“Lack of highly competitive talent pool.”
“US Tariffs on China-manufactured goods.”
“Changes in tax laws”

21. Taiwan Government(s)
Please note: When the term “Taiwan government” is used it is generally thought to relate to the central government, but in
some circumstances, it may also encompass local governments.
For the past nine years, we have asked” What are the three top things that the Taiwan government could do to help your
entity in the next 12 months? “Responses were then ranked based upon the greatest percentage of those businesses citing
an issue as impacting their operation in Taiwan.
Sadly, little progress has ever been made on these issues and when it does, as with corporate taxation, the progress is
reversed at a later date.
There was some progress in relation to clarifying the Labor Standards Act with the amendments made in March 2018 -
improving this issue by dropping it from 5th place a year ago to 34th place currently.
Issue
2019
Ranking
2018 2017 2016 2015 2014 2013 2012 2011
Increase flexibility of labour laws 1 1
Simplify government bureaucracy 2 2 5 1 2 2 1 1 1
Reduce political turmoil in Taiwan 3 4 2 2 1 1
Resolve inadequate/out-dated laws 4 14 6 3 3 7
Remove differences between local & internationally accepted
standards
5 3 4 7 4 5
Improve research & development incentives 6 11 11 10 15 20 8 5 9
Devise plans to stimulate local demand 7 6 8 5 6 3
Improve inadequate infrastructure (power, water,
telecommunications, transport, etc.)
8 8 23 17 25 27
Reduce tariffs 9 31 37 27 24 25 12 15 14
Reduce domestic protectionism 10 18 18 12 9 13

22. Issue
2019
Ranking
2018 2017 2016 2015 2014 2013 2012 2011
Provide sufficient notice before changes to regulations or
laws are introduced
11 7 3 6 8 8
Allow PRC personnel to travel to Taiwan 12 34 29 35 31 28
Devise plans to slow the human talent ‘Brain Drain’ 13 17
Increase direct foreign investment incentives 14 26 13 11 14 10 2 2 3
Reduce employment expenses 15 32 19 30 11 24
Educate civil servants on international regulatory best
practices
16 12
Remove or loosen prohibitions or restrictions on foreign
investment into Taiwan
17 16 22
Reduce corporate taxation further 18 38 32 18 20 17 4 4 4
Liberalise the labour market 19 21 20 15 12 22 5 6 11
Negotiate and sign more bilateral trade deals with other
countries
20 10 17 14 18 11 6 14 7
Other issues experiencing major changes in ranking importance
Issue
2019
Ranking
2018 2017 2016 2015 2014 2013 2012 2011
Maintain reasonable and stable energy costs 24 33 28 34 22 19
Consistent application of the Rule of Law 25 9 1 8 7 4
Reduce personal taxation 27 19 7 5 5 6 3 3 2
Clarify labour laws 34 5 9
Introduce stronger Corporate Governance rules 38 42 27 36 32 26 11 12 10

23. Quality of Living
Business leaders consider Taiwan to be a safe, easy place to live, with nice people and a good healthcare system.
The main negatives were the safety of pedestrian (Zebra) crossings when there are no traffic lights, and as in previous
years poor air quality, far from excellent banking and financial services, and the lack of an English-friendly environment.

24. We asked if people agreed, or disagreed, with the statement "Where there are no traffic lights, pedestrian (Zebra)
crossings are a safe place to cross the road.”
They disagree. It received the most strongly negative response we have seen in nine years.
This public safety issue is something that the government and the police need to address as a priority.

25. A little bit more information…
The respondents to this survey represent a truly diverse group of businesses with their headquarters spread among North
American, European and Asia Pacific locations.
Size is chiefly determined by the number of full-time employee equivalents (FTEE) - and the respondents include
enterprises with FTEE from 1 to 25,000.
The mean average number employed across the group was 628.5 FTEE’s and the most frequently occurring size (the
mode) was 300.
An equivalent of more than 126,300 FTEE’s is represented by this sample.
The country where most of the companies had their global headquarters was in Taiwan, followed by the U.S.A.

26. The business leaders surveyed are clearly focused on Taiwan; the primary goal of most entities is to supply the Taiwan
market with goods or services. As in prior studies, this makes their comments and observations especially pertinent to:
1) the Taiwan government at the central and local level;
2) the governments of Taiwan's major trading partners, including those in the Comprehensive and Progressive Agreement
for Trans-Pacific Partnership (CPTPP), which Taiwan is hoping to join;
3) companies that currently, or plan to, supply goods and services to companies that already supply the Taiwan market
with goods and services;
4) trade associations both inside and outside Taiwan; and
5) scholars.
The remaining companies are primarily interested in exporting globally (12%), or to other specific markets.
In conclusion…
Business in Taiwan is suffering and is concerned that the government is not doing enough to alleviate many long-standing
issues. Some of which could be easily and quickly addressed. Others are long-term and therefore necessitate careful
thought and execution, but nonetheless, urgent immediate action is needed. The clarion call has sounded!
For more details please contact Independent Marketing & Research via
contact@independentmarketing.com.au