Taiwan Business Guide - Management and Business Studies Portal

Market Entry
Establishing a presence
Direct sales into Taiwan can be difficult.
For most UK companies, it is more effective
to approach the market through local
business partners (agents and distributors),
who have the ability to distribute and
provide locally based technical support.
Licensing and franchising are also
increasingly popular options.
It is possible to set up a company office,
branch office, representative office,
job‐site office or joint venture in Taiwan.
Mergers and acquisitions are also an
option, although you need to be aware of
fair trade and anti-trust issues. Refer to
page 26 for full descriptions of each of
these options. If you are planning to do
business in Taiwan, consult a lawyer about
the possible options and how you plan
to conduct the operation. UKTI can help
you to identify local and international law
and consultancy firms who can help. We
can also provide validated lists of agents/
potential partners, key market players and
potential customers; approach contacts on
your behalf to establish if they are interested
in working with you; as well as arranging
appointments and organising events.
Agents and distributors
An agent is a company’s direct
representative in a market and is paid
commission, whereas a distributor buys
products from the manufacturer and sells
them on to customers. The difference
between the cost of purchasing products
and selling them on (the profit) forms the
distributor’s income.
Entering a market by working with an agent
or distributor can have several advantages.
It reduces time and costs, and companies
gain the local knowledge and networks of
the agent/distributor in question. However,
there are also some drawbacks. Employing
a third party results in an additional cost
to your products and you may also lose
some control and visibility over sales and
marketing. It can also have implications
for intellectual property rights protection,
increasing the risk of your product being
copied or counterfeited.
In Taiwan, the Statute for Encouraging
Foreign Profit-Seeking Enterprises to
Establish Distribution Centres was passed
in 2001. This sets out the regulations for
establishing international distribution
agreements and logistics centres and
authorises tax incentives for foreign
investors. The Taiwanese Civil Code and the
Fair Trade Law govern the management of
distributorships, while agency agreements
are governed by the Civil Code alone. You
need to ensure that you organise tax affairs
correctly, as agents are considered business
agents for income-tax purposes if they sign
contracts, accept purchase orders and store
and dispatch goods on behalf of a foreign
company. A business agent is subject to
24