Taiwan is a growing powerhouse of startups in the Asia Pacific region, and investors and aspiring entrepreneurs are taking notice. The 2021 Taiwan Startup Ecosystem Survey conducted by PwC and the Taiwan Institute of Economic Research shows that there are high hopes for entrepreneurship in Taiwan, with two-thirds of the survey’s respondents from the startup ecosystem composed of first-time founders. As such, while some have expressed their concerns about language and cultural barriers, the environment is leaning more towards encouraging growth rather than hostility for small to medium businesses, especially for those in tech.
These concerns and opportunities, among other topics, were discussed in the Taiwan leg of the Market Access Series in partnership with Globalization Partners. Three panellists — Jun Wakabayashi, Associate and Investor at AppWorks; Kuan-Yu Lin, International Business Development Director of NiEA; and Charles Ferguson, Asia Pacific General Manager at Globalization Partners — discussed their takes on the Taiwanese startup ecosystem, its market, and how to get started.
Site for a Lucrative Business Expansion
Before companies expand to Taiwan, they need to have a solid reason to do so. Kuan-Yu addresses this by noting that Taiwan produces quality engineering talent yearly, which is in line with rapid global deployment. Despite this, what makes the talent in Taiwan truly remarkable is most of its talents’ willingness to take risks in smaller companies. Kuan-Yu connects this with the notion that most talents prefer to see their workplace as their own, and not just function as a cog in a bigger corporation.
Adding to that, the Taiwanese government has several key policies encouraging work on the Internet of Things, Green Energy, and Artificial Intelligence. The tech manufacturing industry in particular has seen quite some growth despite the COVID-19 pandemic due to the demand to carry forward digital transformation on a larger scale. Because of this, the government has been looking at collaborating with startups in these areas.
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At the same time, blue-chip companies aren’t blindsided by the resources available in Taiwan. On his end, Wakabayashi shared that Taiwan is like the “Wakanda of Asia,” a small and hidden, yet incredibly resource-plenty part of the world. He noted that big conglomerates have also set up their R&D hubs in Taiwan due to Taiwan’s rich technological landscape. Wakabayashi explained that Taiwan is one of the biggest markets with a GDP rivalling that of Indonesia in Southeast Asia.
Business and fundraising considerations
Given these reasons, one may feel more at ease in placing their bets on Taiwan. Still, certain considerations need to be made, particularly in terms of business and fundraising opportunities for startups. When asked about this, Ferguson outlined a few of the advantages of setting up a company in Taiwan including its strategic location in the entirety of the Asia Pacific region, and its incredible connectivity within its city and provinces, as well as with the rest of the region and the world.
Ferguson also shared that Taiwan’s policies, both through its economic partnerships and agreements and its recent New Southbound policy which has made it more connected to 18 countries, including the 10 ASEAN member-states and 8 other countries in South Asia and Australasia, have made it easier to secure preferential arrangements in terms of trade.
In terms of fundraising, Wakabayashi gave an honest picture of the situation. Although Taiwan struggled in 2010 back when startups were still finding their way into the mainstream, its startup system has since grown tremendously. Certain paradigm shifts have placed Taiwan in the global limelight, attracting a pool of global investors, especially for industries such as AI and blockchain.
Scaling quickly and effectively
All three panellists agreed that scaling can be effectively done by teaming up with a local partner. Ferguson takes this a step further by explaining that gaining the trust of a local partner would lessen or even completely remove certain cultural and language barriers that make startups second guess Taiwan as one of their destinations. To do this, startups must be able to foster smart and genuine relationships by offering value from their works to these partners. Kuan-Yu builds on this by noting that as in any expansion, a local partner or team is necessary.
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Regarding the anxiety of setting foot in uncharted waters for some startups expanding to Taiwan for the first time, Ferguson added that logistical concerns should be the least of entrepreneurs’ worries. As Taiwan is an extremely business-friendly climate, startups should focus on more practical concerns, such as looking at product-market fit, tapping into the local talent pool, and finding the appropriate entry points for business.
The key is also to focus on areas where one’s business would have the most impact and gain the most traction in a “post-pandemic” world. Ferguson calls this TTV––time to value––and commented on how fast startups can infiltrate their chosen market to make a difference if they were more circumspect.
Challenges to market access and tech’s role
This doesn’t completely remove a few considerations for investors and entrepreneurs alike. One of the questions that had been raised during the open forum of the panel was regarding the tensions between mainland China and Taiwan. Ferguson responded to this, explaining that putting politics aside, the two are not necessarily on opposite sides of the fence in terms of economic goals.
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Pointing to other apprehensions about going to an unfamiliar market with possibly different demands that may pose a challenge to a new startup in Taiwan, Wakabayashi draws attention to technology as a point of leverage. He explained that technology allows entrepreneurs to probe the market without necessarily setting foot in it first, noting that this has been a strategy of some of the startups they’ve worked with out of Taiwan.
Technology allows remote basic market validation and the conduct of online surveys. Afterwards, startups can get a product-market fit or hire an engineer or a local team there.
Final words of advice
To cap off the discussion, the panellists shared a few final words of wisdom. While the panellists acknowledged that doing a startup can be a long journey especially if they are expanding to foreign territory, it was also noted that for Taiwan specifically, the government has plenty of resources to assist even foreign startups. There are also mergers and acquisitions in the local landscape, and, as Ferguson explained, if the talent pool in Taiwan is deep enough for blue-chip companies to invest in, startups could also learn a thing or two by looking in that direction.
To learn more, view the webinar here.
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This article is produced by the e27 team, sponsored by Globalization Partners
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