Discussions about Taiwan’s stagnant economy and how it causes countless young Taiwanese to seek better opportunities overseas are no longer news these days. While most media outlets are quick to throw criticism at the government, not much about Taiwan’s potential to attract high-value foreign labor and creative talent has been mentioned in local media coverage.
Once dubbed one of the Four Asian Tigers alongside Hong Kong, Singapore and South Korea, Taiwan’s glory days may be over and the country can no longer satisfy its own people.
At a time when the number of young Taiwanese people establishing their careers overseas is at a record high, it is critical to see how Taiwan can reverse its fortune through progressive mechanisms such as lowering the threshold for foreign talent to work in Taiwan, a move championed by several labor rights groups.
Create a More Competitive Workforce Through Diversification
Holly Harrington, the General Manager of Taiwan Startup Stadium, probably never thought that she would spend more than a year in Taiwan when she arrived here 12 years ago. When asked about what has made her decide to stay for more than a decade, Harrington simply said that she likes her life here.
“I don’t have to fear for my life here,” Harrington said. “Comparing [Taipei] to other cities, the environment in Taipei is pretty clean, and there is a lot of nature outside of Taipei.”
However, Harrington thinks that these aren’t things that will convince anyone to move to a new place, since most people consider factors such as whether the new place offers a salary comparable or higher than their residing country, or whether it has opportunities for growth when deciding on a move. These are things that Taiwan currently can’t offer. Despite the lack of these decisive factors, many Taiwanese workers have been expressing concerns over the potential threat that can come with growing influx of foreign talent in Taiwan.
“Some people are worried about Taiwan being overwhelmed by foreign talent, but it’s actually not something to worry about,” Harrington said. “If you can attract that many foreign talent to come to Taiwan, that would actually be an achievement.”
And the statistics support her statements. In 2016, less than 40 foreigners applied for the entrepreneur visa, which has a cap of 2000 accepted applicants.
The low application rate reflects Taiwan’s lack of recognition among internationally mobile talents in general. Harrington believes that opposition to allowing more foreign talent come to Taiwan usually stem from those who don’t have experience competing internationally.
“To me, the solution isn’t blocking foreign talent, but rather, looking at ways to make local talents better,” Harrington explained. “You can’t do that without competition. If Taiwanese people have to go up against foreign talent, they will actually be more motivated and think more creatively.”
Because of her role at Taiwan Startup Stadium, Harrington knows all too well why protectionism is never going to work. She argues that the reason behind Silicon Valley’s success is its large number of immigrants who bring talent from around the world, and such an open culture helps to attract some of the world’s best minds. It has also enabled companies in Silicon Valley to be more globally aware. According to her, Taiwan needs to change faster and show its commitment to being more foreigner friendly.
“If you change so slowly, then it tells people that the bad things now might change but it’s going to take a long time,” Harrington said. “If Taiwan takes quick actions to show that it is committed to becoming more foreigner friendly, then people will be more interested in coming to Taiwan.”
Harrington believes that by having more foreign talent in Taiwan, Taiwan can build up a strong group of international allies who can help introduce the island nation to the world. “Most of the foreigners that have lived or are currently living in Taiwan are the best ambassadors for Taiwan,” Harrington said. “Because they go around telling people how great Taiwan is.”
Taiwan as Asia’s Social Innovation Hub
However, not everyone believes that actively recruiting more foreigners should be Taiwan’s priority. Instead, working on how to retain local talents by building a supportive environment for them, while increasing Taiwan’s exposure internationally are what some entrepreneurs believe can benefit Taiwan more in the long run.
As Taiwan’s affordable living standards and healthcare have repeatedly been praised by foreigners in Taiwan, Jane W. Wang, an entrepreneur in Taipei, thinks that Taiwan possesses the potential to become a social innovation hub in Asia.
“Taiwan has the hospitality, civic trust and the desire to fix social problems that are key to launching successful social innovation initiatives,” Wang said. “These are the reasons why a lot of foreigners come here not knowing much about Taiwan, [but] they stay for a long time.”
In order to better leverage these unique advantages that Taiwan possesses, Wang founded her own startup, BGBridges, which grew from a community hub that works to connect people who want to solve problems facing Taiwan.
“I want to create a community of thinkers and doers,” Wang said. “If these people care about Taiwan, they can come to Taiwan to solve the problems or solve them from wherever they are.”
Unlike some who argue that attracting more foreign talent can help improve Taiwan’s economic situation, Wang believes that Taiwan should make retaining local talent its priority. According to Wang, instead of focusing on how to attract foreigners, the Taiwanese government should think about how to build a society that can convince overseas Taiwanese talent to return to Taiwan.
“I don’t think more foreigners is necessarily a good thing,” Wang explained. “I believe it is only better if the government figures out a way to integrate them better in Taiwan. The government needs to create a roadmap that allows foreigners to not only thrive in their own little bubbles, but also to really interact with Taiwanese people.”
To help transform Taiwan into Asia’s social innovation hub, BGBridges aims to unite existing institutions, organizations and people, multiply their impacts and connect resources and information. “We are building a platform that’s going to connect individuals and form a community, and that will connect them to solve problems in society,” Wang said.
Better Marketing and Branding for Taiwan
Taiwan is often known among foreign visitors for its hospitable and friendly people, something that Elisa Chiu, an entrepreneur, always feels proud about. But, internationally, certain obstacles remain in place that often prevent Taiwan from being discovered by more people around the world. One of the contributing factors is Taiwanese people’s inability to market Taiwan effectively. This, plus the political pressure coming from China, results in a low international visibility.
“I really feel like we are not very good at marketing ourselves,” Chiu said. “I think it might be partly due to our humble nature. Because of that, we usually are not putting ourselves out there.”
Hoping to help expose Taiwan to a wider international audience, Chiu began her startup, Anchor Taiwan, which aims to bring entrepreneurs from other parts of the world to Taiwan. She believes that Taiwan can not only benefit from their visits, but that the island also has the right resources to help many of these foreign entrepreneurs.
“I think this is a mutually beneficial situation,” Chiu said. “I don’t see bringing foreigners here as a way to beg for their money and contracts. I believe that we can also offer them a lot of stuff that can help them to be successful in their businesses too.”
Chiu thinks that Taiwan’s unique advantages, such as its hospitable people, can be the decisive factors to convince foreign entrepreneurs to set up their businesses here. However, in order for this to happen the government needs to create some incentives to benefit foreign entrepreneurs.
“When you look at countries like New Zealand, they offer incentives to entrepreneurs such as providing flights for tech talents that have already secured interviews,” Chiu stated. “For countries lacking resources, they know using different incentives to attract foreign talent is their only chance. Chiu added, “I really think that part of the Taiwanese government should operate more like a startup, which always stays on top of the latest global trends. Otherwise, they just can’t keep up with the speed that the world is moving.”
In order to help Taiwan build a more visible and unique image, Chiu plans to dedicate some efforts to identify more Taiwanese entrepreneurs, and unite them together through Anchor Taiwan. The ultimate goal is to create a comprehensive and unique Taiwanese experience for foreign visitors.
“My goal is to give them a stage to shine,” Chiu said. “We, as a platform, unite them together so they can focus on what they are really good at. And together, we can create really cool experiences for foreign friends.”
While the debate over international talent recruitment is likely to go on for quite some time, local efforts to help reform Taiwan’s economic system are already well underway. With plans to unite local resources by forming a community and create a uniquely Taiwanese experience for foreign visitors, Taiwan’s future may look promising even before official plans to increase the number of foreign workers allowed in the country.
I was the first to obtain an Entrepreneur Visa in Taiwan based upon the fact that my U.S.-based social enterprise had won acceptance from an internationally recognized business incubator (Start-up Chile) and our registered branch office in Kaohsiung. I had chosen Kaohsiung instead of Taipei because of its logistical advantages – one of the best harbors in the world; easy access to its international airport; a well-developed international banking center; sophisticated public transportation and telecommunications infrastructure; low cost of living; low crime rate and ease of living; strategically located as a hub for easy access to other Far East countries; darling, friendly, helpful people, etc. I soon found out, however, the astonishing number of hoops the government requires an entrepreneur to jump through in order to startup a business in Taiwan.
Let me first qualify what I’m about to say by stating that I do appreciate the reluctance of taking in foreign talent to fill an existing job position. Taiwan citizens should have priority for such jobs, and employers should have to demonstrate that they’ve conducted an exhaustive search for such talent among the citizenry before being allowed to fill such a position with foreign talent. However, foreign entrepreneurs do not take existing jobs but create new jobs for local talent, and should be facilitated in making that happen – particularly in service industries since Taiwan’s future is not in manufacturing but in providing services to a global audience.
Having said that, the barriers that must be overcome for a potentially job-creating startup are unnecessarily onerous, particularly when compared to South Korea or Singapore. I believe this is based upon two factors: 1) Lack of familiarity with the development stages a startup must go through in order to achieve market penetration and start generating revenue, and 2) Seeming paranoia about money laundering.
Registering a company or branch office is unnecessarily complex and expensive. When I started inquiring about registering a foreign branch office so that I could have a legal corporate presence and open corporate bank accounts, I was invariably told by friends and government officials, “Oh, you need to hire a CPA for that.” This was surprising to me because creating a legal entity in the U.S. is simply a matter a filing a DBA (Doing Business As), or submitted an online corporate registration form with the Secretary of State along with a filing fee (around US$100 depending upon which state). With a validated DBA or corporate registration certificate, you can open corporate bank accounts and be on your way. And that registration lasts until you actively dissolve the company.
Startup entrepreneurs notoriously have very little money in the R&D stage (Research & Development). So, paying 750NT an hour for a CPA to do what should be a simple registration seemed unnecessary. Having a paralegal background and having registered many U.S. companies in the past, I decided to do it myself, which I did. I found, however, that couldn’t do it online. I first had to get a personal stamp (which is required in lieu of one’s signature) and a corporate stamp made. I also had to provide evidence of a foreign transfer of funds of at least 250k NT$ into my Taiwan corporate account. But how can you open a corporate account if you don’t yet have a legally registered corporate entity? And who has that kind of money when starting a new business idea?
Well, you have to open a temporary corporate account first under a proposed corporate name that may or may not be acceptable to the Ministry of Commerce. What? Acceptable name? That’s right. You can’t just translate your existing foreign corporate name into Chinese because there are certain words that are prohibited within Taiwan corporate names. For example, my U.S. corporate name includes the word “cooperative”, which I could not use in the name of my Taiwan branch office. Why? I have no idea. So, I had to get my Taiwan investor to transfer over 250kNT into my U.S. bank account and then have my U.S. partner transfer that to our temporary Taiwan branch office bank account in Kaohsiung (losing the currency conversion and transfer fees both ways in the process) to meet the arbitrary “foreign transfer” criteria. Moreover, the registered address for the corporate entity must be at commercial building, and you must provide documentation signed by the commercial building owner.
In view of the fact that most global corporations these days started in someone’s garage or home office, this is another arbitrary requirement which most commercial building owners are reluctant to do because just having another business registered at their address could have additional tax ramifications.
After jumping through all these arbitrary hoops, I then had to take my personal and corporate stamps, the bank’s foreign transfer receipt, the documented commercial address, and the completed branch office registration form with a new Chinese corporate name physically to the Ministry of Commerce in Taipei (yep, couldn’t submit it in Kaohsiung), resubmit it several times until they were happy with it, and pay the 1,000NT filing fee (which is reasonable).
When I had told locals that I had registered the branch office myself, they were astonished and sought my advice on doing it themselves. The point here is that registering a legal entity in Taiwan should be a fast, simple, online procedure with no commercial address or minimum money transfer required. (Earlier, this had been lowered from 500kNT to 250kNT, which is a step in the right direction, but still unnecessary.) Why unnecessary? Because starting a potentially scalable startup service company is entirely different from starting up a local brick & mortar “Mom & Pop” shop, for which the existing procedures seem to be geared exclusively (i.e. rent a store, stock it, man it, advertise, and hope it will be profitable).
OK, so now I was ready to do my Taiwan R&D, a stage which can last up to three years if done properly in order to determine exactly what has the best market fit for Taiwan, and develop a Minimum Viable Product (MVP). That’s usually done through “Bootstrapping” (the founders using their own money). But if by the end of one year, you’re not done bootstrapping the R&D stage and haven’t incurred 1M NT$ of exclusively business expenses, you can’t renew your Entrepreneur Visa! So, you never get the change to complete your R&D stage in Taiwan, produce an MVP for which you can attract “Friends & Family” investment funds, nor achieve market penetration and revenue generation to qualify for the “Seed Money” stage from accredited investors.
The point here is that foreign entrepreneurs with a credible globally scalable service business model should be allowed at least three years to produce an MVP, the proof of which is market penetration and revenue generation of some kind, NOT the arbitrary 1M NT$ in business expenditures. That will attract foreign entrepreneurs and foreign investment in those new Taiwan startups, which will enable them to proceed onto the “Growth” stage, creating lots of new service industry jobs for Taiwan citizens.
Really, there’s no need for Taiwan to be so dependent upon China’s economy if the Taiwan government would just wake up, model their startup ecosystem and procedures after Singapore or South Korea, and facilitate 21st Century online global service entrepreneurs, foreign and domestic.
Sounds like an American casting his U.S. centric point of view over how a foreign country works without giving any thought to the rationale behind such foreign country’s system. You do realize that Taiwan has one of the largest concentration of small-medium business – the mom & pop stores. Most businesses in Taiwan are sole proprietorships where owners are personally liable for the business’ debt. By legal entity-you’re focusing on creating a corporation that shields the owner from personal liability – not exactly a popular concept in Taiwan. In fact, most investors prefer personally liability instead of investing into a shell company – precisely what a corporation is. A potential scalable startup to you necessitates the creation of a corporation because you don’t want to be personally liable yet you want to take risks (with your Taiwan investors’ money of course. In fact, you’ve admitted to fraud, since you’re purported foreign business is actually funded by a domestic investor. shocking!!
1M NT is $30k USD. If a business is spending less than $2.5k in business expense per month, what exactly is the business doing and why should it continue to operate.
Your last comment is most certainly a political statement. When Taiwan shares the same language as PRC, why not take advantage of it. Sure Singapore and Korea are great in their own way, it’s only made possible by 1) dictatorship, and 2) chaebols neither of which exists in Taiwan (to a certain extent it does, but not to the same pervasiveness).
This has all the hallmarks of a Mainland 50 cent army rebuttal – an anonymous keyboard warrior hiding behind an online pseudonym, not putting any of his personal story or experience out in public; the usual “foreign devils” xenophobia theme; discreditable allegations of criminality based upon assumption; ignorance of the globally scalable startup development cycle outside the Mom & Pop shop paradigm; risk fear mongering; defense of the status quo dependence upon China despite the brain drain situation of Taiwan talent to Mainland global enterprises, Taiwan’s loss of “Asian Tiger” status and declining economy based upon the very issues and outdated paradigm under discussion; no constructive solutions towards improving Taiwan’s economic independence while bashing those offered, etc.
Just ask yourself who would have a vested interest in denigrating the economic development successful actions of other nations while defending the status quo of Taiwan’s declining economic self-reliance and global economic footprint and you’ll recognize where this type of thinking comes from.
Taiwan is usually very good at analyzing and adopting the best parts of successful systems of other nations, as demonstrated by it semiconductor industry, its healthcare system, its public transportation system, its system of government, etc. It needs to do the same for creation of a thriving global startup ecosystem if it’s to regain its Asian Tiger status. Anyone who would detract from that does not have Taiwan’s best interests at heart.
Time to wake up, Taiwan.
https://asia.nikkei.com/magazine/20170831/On-the-Cover/How-Singapore-is-going-from-trade-hub-to-innovation-hub