Asia's little dragon has plenty of firepower

Indeed, for western enterprises who may find the giant dragon of the mainland too daunting, Taiwan is a dragon but on a smaller scale.

"We don't get a lot of New Zealand firms giving Taiwan the attention and time it deserves."
Dean Prebble, Director of the NZ Trade Development Centre in Taipei

Taiwan is not just smaller but more Westernised with excellent links into other Asian markets. For New Zealand exporters, now the countries share a free trade deal, it looks even better.

The night market in downtown Taipei looks like a night market in any other Asian country. But get in among the stalls and it becomes clear some things are different.

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It is spotlessly clean and there are no touts or hard sell. The quality of goods on sale is a notch above the rows of fake running shoes and headphones found almost everywhere else in the region while the freshly cooked Japanese and Korean-influenced food is incredible.

Yet when the story of Asia's Dragon economies is told, Taiwan seldom gets top billing as a market exporters and investors must be in.

"We don't get a lot of New Zealand firms giving Taiwan the attention and time it deserves because they're attracted by China, the big guy next door," says Dean Prebble, Director of the New Zealand Trade Development Centre in Taipei.

"The fact is China does offer more opportunity but it also carries greatly increased risk. It's easy to think of Taiwan as a developing country, but when you arrive here you find it is a very developed country with sophisticated consumers. It's good to test what we've got in a market like this."

Seven years after New Zealand's world-first Free Trade Agreement with China, there is a growing club of Kiwi companies that have cracked the market but few have found it easy going. The cultural, regulatory, bureaucratic and language barriers are high and a torture test of any firm's resources and adaptability.

In May ANZ NZ took a group of New Zealand food and beverage, education, engineering and forestry producers (along with three Australian companies) to Shanghai and Taipei, Taiwan, to see those markets first-hand. The week-long tour was an intense program of workshops with experts in the market, meetings with potential customers and contacts, visits to the frontlines of retail.

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The businesses that went along were top of their game in New Zealand and serious about exploring opportunities in both markets. For many, Taiwan was an unknown quantity but it held interest not just as a sizeable standalone market but a stepping stone to China.

Increasingly, Asia entrants, along with a few who are in market but finding China a handful, look to Taiwan as a market that offers many of the opportunities of Mainland China - but with a simpler to navigate business environment.

"Doing business in China is like swimming in the sea - it's big and deep but there's also a lot of variables. Taiwan is like a pool - easy to see the sides and where to get in and out," says Royal Reed, a Taiwan-born Kiwi lawyer whose firm specialises in Taiwan-NZ trade relationships.

While China's economy has been subject to decades of political restrictions and control, the more free-wheeling Taiwan has been an active participant in the global economy. As such, its norms and practices are more in line with other modern market economies.

"China is making fast progress, but still has a lot of catching up and adjustment to do which brings cost and risk for business," Reed says.

With negotiations for other Western FTAs in the early stages, New Zealand exporters have what Prebble estimates to be a handy two-year window to make the most of their tariff advantage.

But exports to the Taiwan market - sizeable at 23 million people and $USD500 billion GDP per annum - is only part of the opportunity. Taiwan has been active in signing FTAs with other Asian economies, including Mainland China.

A growing opportunity exists for businesses to utilise Taiwan as a way-station into the wider region or partner with Taiwanese companies taking advantage of Taiwan's preferred tariff status.

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With widespread and well-founded concern throughout the region about food security, the food and beverage sector potentially stands to benefit most, says Raymond Yeung, ANZ's senior economist for Greater China and Taiwan.

"The food and beverage industry has been one of the main drivers of growth in Taiwan manufacturing," he says. "It's seen as premium in the eyes of Asian consumers, but there is a need to continue improving food safety.

“Countries such as New Zealand can work with Taiwan food and beverage to continue upgrading the industry by providing high-quality components and supplies."

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For many of the ANZ business tourists, Taiwan was a revelation in being a well-developed, advanced but intensely competitive market.

“Taiwan is a very unsung opportunity," says Mark Ward, Director of Business Engagement Massey University and Programme Director for Food HQ - an international centre for food research.

“One of the key messages I'll take back is to be niche and be very focussed. It looks like it's pretty easy to do business here but you have a good value proposition."

Stefan Herrick - Senior Manager External Communications, Corporate Affairs ANZ NZ.