Voluntary Report - public distribution

**Date:** 11/13/2006

**GAIN Report Number:** TW6042

TW6042

**Taiwan**

**Market Development Reports**

**Taipei City Profile**

**2006**

**Approved by:**

![](media/image1.wmf)Keith Schneller, Director

ATO Taipiei

**Prepared by:**

Sarah Hutt

**Report Highlights:**

With a GDP of US\$353 billion in 2006, Taiwan will continue to be a
stable but dynamic export market for US agricultural products. Taipei is
the champion of Taiwan's highly liberalized, globalized, and transparent
trade environment. High growth in the convenience store and hypermarket
sectors provide exciting opportunities for new U.S. products. Driving
trends of this industry include shopping convenience, high emphasis on
nutrition, health, and safety, new customer services, and increasing
product variety, particularly for private labels.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Taipei ATO \[TW2\]

\[TW\]

# ![](media/image2.png){width="2.375in" height="3.8020833333333335in"}I. TAIPEI -- GATEWAY TO TAIWAN 

Taiwan's bustling capital city is surrounded by lushly forested mountain
ranges, sandwiched between the Xindian River to the south and the
Danshui River to the north. Taipei is by far the largest city in Taiwan,
home to nearly 2.6 million city residents and 3.7 million in the greater
metropolitan area, making it the largest and most economically important
to Taiwan. Taipei has experienced heavy cultural influences from
Mainland China, Japan, and indigenous Taiwanese minority groups;
although the official language is Mandarin Chinese, Hakka, and southern
Fukian dialects are also spoken. Taipei's vibrant blend of traditional
culture and cosmopolitan lifestyle makes the city a thriving
metropolitan hotbed. Unlike southwest Taiwan, where most agriculture
production and processing centers are located, Taipei is the financial,
investment, trading, and technological center of Taiwan. With
agricultural imports totaling US\$9.3 billion in 2006, Taiwan will
continue to be a stable but dynamic export market for US agricultural
products.

**1. Premier International Destination**

One of Asia's famed "Four Little Dragons," Taiwan's high economic growth
rate and rapid levels of industrialization has thrust Taipei onto the
main stage of the international business community. Since the 1960s,
Taiwan has rapidly transformed from an agrarian based economy to a
high-performing, technology-based, service-driven economy. As of 2005,
the service sector composed 70% of Taiwan's GDP. As a result, Taipei is
home base for local industries, internationally competitive high-tech
products, high-quality human resources, a large capital market, and
extensive global trade networks.

![](media/image3.jpeg){width="2.5833333333333335in"
height="1.7194444444444446in"}Home to Taiwan's largest international
airport, Taiwan Taoyuan International, most foreign businesspersons,
dignitaries, and tourists pass through Taipei. A major tourism hub,
Taipei arguably offers the best of Taiwan's culture, food, nightlife,
and leisure. Among the main attractions are the National Palace Museum,
home to an astonishing range of ancient Taiwan and Chinese artworks and
artifacts, the grandiose Chiang Kai-Shek and Sun Yat sen Memorial Halls,
lively Buddhist and Daoist temples, and Taipei 101, currently the
world's tallest building at 508 meters. Taipei hosts numerous upscale
dining establishments and a solid community of 5- and 6-star hotels.
Perhaps the best feature, Taipei's tourist industry serves as a
launching point to the island's other scenic destinations.

Within one hour of Taipei, one can relax at hot springs resorts of
Beitou and Wulai, day hike at heavily forested Yangmingshan Mountain
national park, and peruse traditional Taiwan trinkets of the old streets
lining the banks of Danshui. Taipei Main Station, located in the heart
of Taipei, carries tourists and residents daily by train to a host of
popular Taiwan destinations. A new high-speed bullet train, scheduled to
open late 2006, will further enable quick and convenient island travel.

**2. Political** **Background**

![](media/image4.jpeg){width="3.0833333333333335in"
height="2.1666666666666665in"}

A basic understanding of Taiwan's complex political history is necessary
to conduct trade to this important export market. At its earliest,
Taiwan was populated by Austronesian natives, first colonized by the
Dutch, followed Spain in the 17^th^ century. During that time, a large
flux of Han immigrants immigrated to Taiwan from south China. However,
China ceded the island to Japan after the Sino-Japanese War of 1895. It
was returned to China in 1945 after Japan's defeat in World War II.

Political tensions between Taiwan and Mainland China began in 1949.
After losing China's Civil War to the Communists, the Kuomingtang
Nationalists (KMT) withdrew to Taiwan and established the Republic of
China (ROC). The People's Republic of China (PRC) was also founded in
1949, unwavering in its resolution not to recognize Taiwan as a separate
country. Until the 1970s, the ROC was recognized as the only legitimate
government of China by the United Nations and advanced Western nations.

The turning point came in October 1971 when the UN passed **Resolution
2958**, expelling the ROC from the UN and replacing the "China" seat
with the PRC. In 1979, the United States ended formal diplomatic
relations with ROC to establish them with the PRC. To avoid cutting all
ties with Taiwan, U.S. Congress passed the **1979** **Taiwan Relations
Act,** making provisions for quasi-diplomatic relations, a de facto
embassy (the American Institute in Taiwan, or AIT), and defense
provisions for Taiwan's security, including arms sales. Currently, the
U.S. adopts a **One China policy**, although different from that of the
PRC. Although the U.S. "acknowledges" the PRC's position regarding
Taiwan, the U.S. has declared that it "will not accept Chinese
sovereignty over Taiwan" as part of the Six Assurances offered to Taiwan
in 1982. Taiwan held its first direct democratic election in 1996. In
2006, the U.S. continues to trade with the entity of Taiwan, despite
maintaining a carefully balanced status quo with the PRC.

# 

# ![](media/image5.wmf)II. RETAIL SECTOR

Taipei is the champion of Taiwan's highly liberalized, globalized, and
transparent trade environment. High growth in the convenience store and
hypermarket sectors provide exciting opportunities for new U.S.
products. Driving trends of this industry include shopping convenience,
high emphasis on nutrition, health, and safety, new customer services,
and increasing product variety, particularly for private labels.

According to Taipei City City Hall statistics, consumption expenditures
for Taipei residents on food and beverages averaged 20% of total
consumption income for 2005. Taipei's low Engel's Coefficient - the
proportion spent on food of the total consumption expenses -- reflects a
high standard of living, especially compared with Beijing (32%) and
Seoul (28%). Taipei residents face tight living spaces and busy work
schedules, resulting in a plethora of high quality restaurants and
cafes.

  --------------------------------------------- ----------- ----------- ----------- -----------
  **Taipei 2005 Average Food & Beverage                                             
  Spending per Month (\$US)**                                                       

                                                **2002**    **2003**    **2004**    **2005**

  **Main Food Total**                           **\$140**   **\$140**   **\$144**   **\$152**

  1\. Rice & byproducts                         \$31        \$30        \$32        \$32

  2\. Wheat Noodles                             \$34        \$34        \$36        \$38

  3\. Pastry & bakery snacks                    \$54        \$56        \$52        \$59

  4\. Other Grains                              \$20        \$20        \$20        \$22

  **Supplementary Food Total**                  **\$284**   **\$292**   **\$304**   **\$307**

  1\. Meats                                     \$112       \$114       \$116       \$119

  2\. Shellfish & aquatic products              \$82        \$84        \$88        \$83

  3\. Eggs                                      \$6         \$8         \$8         \$7

  4\. Oils                                      \$8         \$8         \$8         \$9

  5\. Vegetables                                \$68        \$70        \$76        \$81

  **Other Foods**                               **\$418**   **\$406**   **\$406**   **\$421**

  1\. Fruits                                    \$86        \$84        \$88        \$90

  2\. Cheese                                    \$38        \$34        \$32        \$31

  3\. Tea, coffee, cocoa                        \$10        \$12        \$14        \$11

  4\. Sugar                                     \$2         \$2         \$2         \$2

  5\. Other types of food                       \$22        \$22        \$20        \$21

  6\. Outdoor cafeteria expenditures            \$256       \$252       \$254       \$266

  **Beverages Total**                           **\$36**    **\$34**    **\$34**    **\$37**

  1\. Non-alcoholic beverages                   \$26        \$22        \$22        \$25

  2\. Alcoholic beverages                       \$12        \$12        \$12        \$12

  **Food Total**                                **\$842**   **\$838**   **\$854**   **\$880**

  **Beverages Total**                           **\$36**    **\$34**    **\$34**    **\$37**

  **Grand Total**                               **\$878**   **\$872**   **\$888**   **\$917**
  --------------------------------------------- ----------- ----------- ----------- -----------

According to a Survey of Family Income and Expenditure conducted by
Taipei City Hall, the table above outlines Taipei's average food and
beverage spending for July through December. Note: this data has been
extrapolated by the ATO Taiwan to reflect an average food and beverage
spending for a full year, and may not include spending hikes in
January-February during the Spring Festival. Although total spending
decreased slightly in 2003, overall spending has grown 4% since 2002.

## 

## ![](media/image6.wmf)

## *1. Traditional* *Retail* *Markets*

Shopping trends are shifting away from traditional "wet" markets for
fresh produce, meat, and seafood. Since the new millennium, typically
steady wet market sales have experienced slight but noticeable decline
in Taipei, losing sales to convenience stores and hypermarkets.
Especially since the 2003 SARS scare, a renewed consumer focus on health
and hygiene has strongly influenced shopping decisions. Despite plans to
remodel and update these markets, numbers of traditional street stands
have decreased by 13% since 2000. Note: these figures include
neighborhood markets, night markets, and street vendors.

## *2. Convenience* *Stores*

![](media/image7.wmf)

Posting a US\$175 million profit for 2005 and averaging nearly a 9%
growth rate, the convenience store sector is characterized by fierce
competition. According to a survey by AcNeilsen, Taiwan has the highest
convenience store density in the world, with one store per 2,800 people.
In 2006, Taiwan reached 9,000 convenience stores. Aside from basic food
and beverages, these stores also offer bill paying services, in-home
delivery, and box lunches for working professionals. This chart outlines
the outstanding growth achieved by the top five convenience store
chains.

####### 3. Hypermarkets

Taipei's retail market is led by foreign markets. These stores highlight
produce freshness, shopping convenience, product variety, and
competitively low prices. Numerous mergers and acquisitions have quickly
expanded leading hypermarkets Carrefour (France), Auschan (France),
RT-Mart (France & Taiwan joint venture), and Costco (US). As Taiwan's
hypermarkets serve about 200,000 residents per store (European stores
serve 30,000-50,000), long-term expansion is widely expected. Although
Taipei is already a fairly established market, there is much room for
growth and expansion is expected into Tainan and Kaohsiung.

For more information on HRI Food Service and Retail Sector trends,
please refer to Marketing Specialist Amy Hsueh's GAIN reports TW6008 and
TW5405.

# 

**III**. **HRI SECTOR**

**1. Hotel Dining**

Part of Taiwan's "Challenge 2008" economic development plan, over NT\$75
billion (US \$2.3 billion) has been invested in developing new sites,
tour packages, and increasing the "meeting, incentive, conference, and
exhibition" (MICE) industry. Demand for ecotourism, cultural tourism,
youth travel, long stay, and medical tourism are all forecasted to
increase, driving positive growth for hotel, restaurant, and airline
sectors.

Taipei's international five- and six-star tourist hotels serve as
popular venues for hosting not only business colleagues, but also
friends and family on holidays, weddings, and birthdays. International
chefs of the hotel restaurants aggressively promote a set menu for these
occasions, providing an excellent opportunity for introducing and
pairing U.S. products.

According to Food Industry Research & Development Institute (FIRDI),
Taiwan citizens have increased spending on eating out from 25% to nearly
33% as a share of total food and beverage spending. Consequently, high
demand for fast food, ready-to-eat meals, frozen produce, and
family-style restaurants also provide opportunities for U.S.
agricultural exports.

## 2. Youth Market

In 2005, the Ministry of Education reported a total of 449,040 students
and 28,700 teachers, the bulk of students in high school. For this
group, social and weekend outings revolve around trendy shopping areas,
spacious and noisy restaurants, and arcades. Note: Taiwan has three
types of high schools -- senior high schools, vocational high schools,
and junior high school.

![](media/image8.jpeg){width="2.097916666666667in"
height="2.875in"}Taipei, Taiwan's largest education and cultural center,
hosts several famous universities, including National Taiwan University.
All universities enjoy excellent locations within Taipei city; student
life centers on local restaurants, cafes, snack shops, and street
vendors.

An interesting feature of Taipei's highly educated university students
is the rate of international exchange. According to the American
Institute in Taiwan (AIT), 2005 alone brought 15,525 students to the
U.S. As a result, many Taiwan students return from U.S. universities and
graduate institutions demanding American brand names and products.
Taiwan students focus intensely on learning English at all scholastic
levels, obtaining a tremendous amount of U.S. culture by default.
Visiting Taipei, you will assuredly be surprised by the number of
near-fluent English speakers. This exposure to western cultures,
products, and business practices makes Taipei and excellent location to
find business partners interested in further developing the Taiwan
market and opportunities in the PRC.

**III**. **SUPPLY ROUTE**

# 1. Keelung Port -- Dynamic Free Trade Zone 

The island's second largest port to Kaohsiung, is conveniently located
to the northeast of Taipei. Keelung is a main international port that
handles traffic volume from northern Taiwan and serves as a shipping
line to the world. Although Keelung's main business is container
operation, operations also involve general cargo and bulk shipping. In
order to increase international investment and create employment
opportunities, Taiwan established its first Free Trade Zone (FTZ) at
Keelung Port in October, 2004. At Keelung, imported goods undergo
warehousing, transshipment and value-added operations, while enjoying
exemptions from customs tariffs, commodity taxes, business taxes, wine
and tobacco taxes, and trade promotion fees.

Su-Ao and Taipei Ports both help to offset Keelung's tremendous trade
volume. Taipei Port was established as an auxiliary port to Keelung,
intended to share the general cargo and bulk traffic volume, handle
ships and cargos unsuitable for Keelung docking, and to serve as a hub
for main shipping lines that operate large container vessels. On the
other hand, Su-Ao Port, located 50 nautical miles from Keelung Port,
takes in most general cargo and bulk goods.

# 

# IV. Markey Entry Tips

[]{.mark}

-   Taipei's HRI businesses do not import directly. Instead, they place
    orders with local distributors who are able to meet the high demand
    of small, frequent orders. U.S. businesses should concentrate on
    establishing relationships with a reliable and efficient importer
    and distributor. ATO Taipei maintains a list of these importers.

-   Maintain a good relationship with business contacts in Taipei.
    Whether sending short emails, sample products, or inviting
    counterparts to visit the U.S., developing a strong personal
    relationship is extremely important to Taiwan businesspersons. Also,
    these relationships can eventually open doors to increased volume of
    trade.

# V. Contact Information

There are three USDA offices based in Taipei to assist with your
agricultural trade/export needs to Taiwan.

The **Agricultural Trade Office (ATO)** works with more than 20 US
producer associations represented in the Taiwan market and is constantly
developing new marketing activities for Taipei and other key cities in
Taiwan. Please contact the ATO for basic market information reports and
updates on promotional activities including food shows and buyer
missions:

# 

# Agricultural Trade Office, Taipei

Rm. 704, 7^th^ Fl., Lotus Bldg.

No. 136 Ren-ai Rd., Section 3

Taipei, Taiwan

Office (P): (886-02)2705-6536

Office (F): (886-02) 2706-4885

Email: <ATOTaipei@usda.gov>

Website: <http://www.ait.org.tw/en/agriculture/ato/>

The **Agricultural Affairs Office (AAO)** is located in the American
Institute of Taiwan and is responsible for reporting and dealing with
market access issues. Please contact the AAO for any regulatory or
market access type questions:

# American Institute in Taiwan

# Agricultural Affairs Office

No. 7, Lane 134, Hsin-Yi Rd., Sec. 3

Taipei, Taiwan

Office (P): (886-02)2162-2316

Office (F): (886-02) 2162-2238

Email: <AGTaipei@usda.gov>

Website: <http://www.ait.org.tw/en/agriculture/ato/>

The AAO also hosts two representatives from USDA's **Animal and Plant
Health Inspection Service (APHIS)**. This office deals with bilateral,
sanitary and phytosanitary issues related to agricultural trade.

# American Institute in Taiwan

# Animal and Plant Health Inspection Service

No. 7, Lane 134, Hsin-Yi Rd., Sec. 3

Taipei, Taiwan

Office (P): (886-02)2162-2221

Office (F): (886-02) 2162-2215

# Email: elia.p.vanechanos@aphis.usda.gov