Index of "1996 Country Commercial Guides"
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U.S. Department of State
Taiwan Country Commercial Guide
Office of the Coordinator for Business Affairs




Table of Contents

I.     Executive Summary

II.    Economic Trends and Outlook

III.   Political Environment

IV.    Marketing U.S. Products and Services

V.     Leading Sectors for U.S. Exports and Investment

VI.    Trade Regulations and Standards

VII.   Investment Climate

VIII.  Trade and Project Financing

IX.    Business Travel

X.     Appendices




This Country Commercial Guide (CCG) presents a comprehensive look at 
Taiwan's commercial environment through economic, political and market 
analyses.

The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annually at U.S. Embassies 
through the combined efforts of several U.S. government agencies.  In 
Taiwan, the Country Commercial Guide is prepared by the American 
Institute in Taiwan. 

I.  Executive Summary

Through forty years of hard work and sound economic management, the 
people of Taiwan have built the island into the world's 19th largest 
economy.  Taiwan is an economic powerhouse with the world's second 
largest foreign exchange reserves and over $175 billion in two-way 
trade.  The economy continues to expand at almost 7 percent per year, 
with full employment and low inflation.  Its 21 million people enjoy a 
per capita GDP of $11,600.  As Taiwan has grown richer, the formerly 
authoritarian government has evolved into a democracy.  Opposition by 
the People's Republic of China (PRC) to any recognition of Taiwan as a 
separate political entity has limited Taiwan's official diplomatic 
activity, but Taiwan has broad-based unofficial relationships with most 
of the world's major economies, including the U.S.  An expanding 
democratic government, strong economic performance, and economic 
liberalization shape the Taiwan market.

Taiwan's high level of imports--$85.4 billion in 1994-- reflects its 
status as a resource-poor trading entity.  The island imports nearly all 
of its energy needs, most of the raw materials needed to maintain 
industrial production, and a diversity of manufactured and agricultural 
goods (it is the fifth largest importer of U.S. agricultural products.)  
Taiwan has a tradition of welcoming foreign investment.  Its educated 
workforce, advanced infrastructure, strategic location, and generally 
pro-business attitudes make Taiwan an excellent -- if no longer low-cost 
-- place to invest.  Taiwan is the world's largest supplier of computer 
monitors.  Electronic products, chemicals and industrial production 
machinery are other major exports.

A significant portion of Taiwan's economy is still in public sector 
hands and liberalization is often delayed and incomplete, but the trend 
toward liberalization is clear.  The Taiwan authorities reduced tariffs 
and will do so again as part of Taiwan's expected accession to the World 
Trade Organization.  Accession is also prompting the removal of many of 
the non-tariff barriers that have limited especially agricultural 
imports.  Restrictions on financial institutions are gradually being 
lifted.  Several public sector firms have been privatized, and 
competitors have been allowed to enter former monopolies in power 
generation and oil refining and distribution.

Taiwan has a unique political history.  In 1945, Taiwan was restored to 
Chinese rule after 50 years as a Japanese colony.  In 1949, Chiang Kai 
Shek's Nationalist army retreated to Taiwan and the Nationalist (KMT) 
party has ruled the island ever since.  Until the mid-1980s the KMT 
maintained a single-party rule.  Beginning in the mid 1980's and 
accelerating in the first half of the nineties, however, the political 
system has been transformed into a democracy.  During Legislative Yuan 
(LY) elections in December 1992, the opposition won 31 percent of the 
seats and in late 1994, an opposition member was elected Mayor of 
Taipei, Taiwan's largest city.  Taiwan's first direct presidential 
elections will be held in Spring 1996.  The press is free and political 
debate is unconstrained and vigorous.

Democratization has changed the business climate in Taiwan, but Taiwan's 
legal infrastructure has lagged behind the political changes.  Executive 
officials used to the old, authoritarian ways of getting things done 
find their actions scrutinized by a vigorous press and an aggressive 
legislature.  This scrutiny at times leads to delays and reversals.  
Power -- which used to be concentrated in the KMT and the executive 
institutions it controlled -- is now diffused through several 
institutions.  Accomplishing anything requires talking to many different 
parties, building coalitions and compromising.

Taiwan's relationship with the Peoples Republic of China remains 
problematic.  Both entities have long asserted that there is one China 
of which Taiwan is part. The Taiwan authorities seek recognition as one 
of what they claim are two legitimate political entities, each governing 
part of China, while the PRC regards itself as the sole legal government 
of all of China, and Taiwan a renegade province.  (The largest of 
Taiwan's opposition parties supports independence for Taiwan.)  Despite 
their  long-standing enmity, commercial ties between the two sides of 
the Taiwan straits have grown rapidly since the late 1980s.  Taiwan is a 
major investor in China, and China recently passed the United States as 
Taiwan's largest export market.  Taiwan enjoys a huge trade surplus with 
China.  Its role in the China market could well continue to increase.  
Taiwan wants to establish itself as a regional operation center for 
third country businesses aiming at the greater China market.  Taiwan is 
also an important trading and investment partner for Southeast Asian 
countries.

Taiwan is an excellent market for U.S. Firms.  Taiwan firms and 
consumers are receptive to foreign products, have money and are not 
afraid to spend.  Taiwan is a leading producer of PCs, its chemical, 
steel and IC industries have ambitious expansion plans and the 
authorities are liberalizing the power generation and telecommunications 
markets.  On the consumer front, 60 percent of Taiwan households are 
wired for cable TV; Taiwanese travelers took nearly 5 million trips 
overseas in 1994; and 12 million people now have life-insurance 
policies.
  
U.S. Exports range from steam boilers to soybeans.  U.S. investors 
include giants such as IBM and individuals offering translation and 
legal services.  The competition in the market is fierce, with Japanese 
firms well-entrenched and late-coming Europeans making an aggressive 
push.  Nonetheless Taiwan consumers generally have strong feelings of 
goodwill toward the United States and favorable images of U.S. products; 
U.S. Firms with good products at fair prices will find Taiwan a 
rewarding market.

**Country Commercial Guides are available on the National Trade Data 
Bank on CD-ROM or through the internet.  Please contact STAT-USA at 1-
800-STAT-USA for more information.  To locate Country Commercial Guides 
via the internet, please use the following world wide web address:  
WWW.STAT-USA.GOV.  CCGs can also be ordered in hard copy or on diskette 
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS**



II.  Economic Trends and Outlook


Major Trends and Outlook

Over the past four decades, Taiwan's economy has been one of the star 
performers in Asia, and prospects for its future are bright.  Now a 
developed economy, Taiwan's real GDP grew 6.5 percent in 1994 and is 
expected to grow nearly 7 percent in 1995.  These real GDP growth rates 
for 1994 and 1995 indicate that the island's ambition--first expressed 
about eight years ago--to transform itself from an export platform to a 
high tech production center is proceeding apace.  In the summer of 1994, 
the percentage of Taiwan's exports accounted for by high tech and 
capital-intensive products for the first time exceeded labor-intensive 
exports.  

Principal Growth Sectors

As in other developed economies, services are the sector growing most 
rapidly. Services accounted for 47 percent of GDP in 1986, 59 percent in 
1994 and over 60 percent in the first quarter of 1995.  Many new private 
banks, insurance companies, and securities firms have emerged.  New 
financial services, such as automatic tellers machines and credit cards, 
have become common. A number of new financial products have also been 
introduced. 

Investment in the PRC and Southeast Asia--stimulated in large part by 
lifting the ban on PRC trade in 1987 and relaxed financial regulations 
involving trade with the PRC--has surged.  One consequence of this surge 
in trade and investment is that the United States no longer represents 
Taiwan's largest export market, although it remains the island's largest 
overall trading partner. Exports to the United States dropped from 
nearly half of Taiwan's total exports in 1986 to 26 percent in 1994, 
while the share for exports to Hong Kong (mainly for transshipment to 
the PRC) shot up from seven percent to 23 percent.  In the first five 
months of 1995, Hong Kong supplanted the United States as Taiwan's 
largest export market.  Much of this trade is directly related to 
Taiwan-invested firms (this investment is estimated at $20 billion) on 
the mainland, which has become a major export base for Taiwan.

In recognition of the growing importance of trade and investment with 
the PRC and ASEAN economies, Premier Lien Chan elaborated on a plan to 
turn Taiwan into a "Regional Operations Center." The plan consists of 
building six different centers on Taiwan including:

-- a manufacturing center;
-- a marine transshipment center;
-- an air transshipment center;
-- a banking center;
-- a telecommunications center; and,
-- a mass media center.

Although the industrial sector has shrunk in relative terms, capital- 
and technology-intensive industries have expanded dramatically. As of 
the first quarter of 1995, such industries account for 65 percent of 
total manufacturing (in 1986 they accounted for only 48 percent).  Since 
1986, the production of petrochemicals, basic metals, and machinery has 
doubled.  The production of electronic components has more than tripled.  
In fact, the production of personal computers and related peripherals 
has grown so rapidly that Taiwan is now the world's leading supplier of 
scanners, mice, motherboards and modems and now accounts for one quarter 
of the world market for 8 inch silicon wafers.

By contrast, conventional, labor-intensive industries declined and 
emigrated offshore.  Output of such products as footwear, garments, 
telephones, radios, sporting goods, umbrellas, and toys dropped 50-90 
percent from 1986 to 1994 and further fell 10-25 percent in the first 
quarter of 1995. This decline of labor-intensive industries has occurred 
fairly smoothly without unemployment or social disturbances.

Economic liberalization has made much of this transition possible and 
should also prove important for the island's future well being.  
Beginning about 18 months ago, the Taiwan authorities accelerated the 
pace of reform in order to pave the way to accede to the World Trade 
Organization (WTO).  Taiwan's goal is to accede to the WTO by the end of 
1995.  Since submitting an application in January 1990 to the GATT, 
WTO's predecessor, Taiwan has engaged in bilateral consultations with 23 
countries, including the United States and Japan.  By June 1995, Taiwan 
had signed agreements with three nations (South Africa, the Czech 
Republic, and the Slovak Republic), concluded consultations with three 
(Malaysia, the Philippines and Turkey).  Significant reforms over this 
period include:

--waiving import/export visa requirements for many commodities  (permit- 
and visa-free products now account for 84 percent of import items, 
compared with the previous 65.5 percent). The share of permit- and visa-
free products will rise to 97.4 percent when the customs clearance 
system is fully automated in late 1995.

--opening electric power generation and major transportation projects to 
domestic and foreign private investors.

--implementing numerous financial reforms such as lifting the limit on 
NT dollar deposit taken by foreign banks, allowing the establishment of 
new securities finance companies and new bills finance firms, and 
introducing new derivative products. 

--lowering tariffs on hundreds of industrial and agricultural imports;

--accelerating a long promised privatization program.

To meet its commitments under WTO and realize its ambition of becoming a 
regional operations center, further liberalization is needed. After 
acceding to the WTO, Taiwan will have to lower import tariffs and open 
domestic markets, including rice and many other agricultural goods.  It 
will have to eliminate import area restrictions for such products as 
automobiles. As prerequisites for playing a larger regional role, the 
Taiwan authorities have identified 29 laws and 134 administrative 
regulations that they must amend by the year 2000, including:

--liberalizing immigration regulations on the hiring of foreign workers;
--relaxing restrictions on capital flows; and,
--liberalizing the flow of information.

Public Role in the Economy

In an effort to reduce the central budget deficit, Taiwan has been 
reducing the public sector's role in the economy over the past three 
years.  The Taiwan authorities are doing this by:

--controlling consumption expenditures tightly;
--canceling pay hikes for public servants; and,
--downsizing the Six-Year Economic Development Plan (inaugurated in 
1991) from over 770 public projects to a "priority list" of only 12.

Privatization has been slow, but has reduced the importance of state-
owned enterprises in the economy, cutting the public firms' share of GDP 
from 14.3 percent in 1986 to 11.8 percent in 1993.  The share may drop 
below ten percent of GDP in two years as privatization gains momentum.  
The number of parastatals privatized is expected to increase from three 
in 1994 to eight in 1995 and eleven in 1996, according to the Council 
for Economic Planning and Development.

Meanwhile, the expansion of social welfare benefits, together with a 
growing debt servicing payment, are squeezing out other administrative 
programs.  A universal health insurance program caused the social 
welfare expenditure to surge from less than nine percent of the central 
budget in FY1994 to nearly 14 percent in FY1995.  Another program to 
provide living allowances for elderly farmers pushed social welfare 
expenditure up to 14.3 percent in FY1996.  Over the past three years, 
debt servicing payments have climbed from about nine percent of the 
central budget to 13.5 percent.  As a result of this, expenditures on 
economic development will decline from 18 percent of the central budget 
to 12 percent, expenditures on educational, scientific, and culturual 
activities will decrease from 15.5 to 15.0 percent.


Balance of Payments Situation

Taiwan has maintained a healthy balance-of-payments (BOP) status.  The 
BOP surplus in 1994 totaled $4.71 billion, double that in 1993.  The 
current account (c/a) ran its 14th consecutive surplus which, however, 
fell 11 percent from 1993 to $5.97 billion in 1994 due to alien workers' 
repatriation of earnings.  The capital account ran a chronic deficit 
which dropped 82 percent in 1994 to $870 million due to an influx of 
foreign direct and portfolio investment.  Taiwan's foreign exchange 
reserves amounted to $99.5 billion sufficient to finance over 12 months 
of imports, far higher than 4.9 months for Japan and three months or 
less in other developed nations such as the United States, Canada, 
Germany, and the United Kingdom.  Foreign debt service payments are well 
below two percent of Taiwan's exports of goods and services, compared to 
an average of 13 percent for nations in the East Asia and Pacific region 
and 30 percent in the Latin America and Caribbean Region.  Taiwan's 
public external debt is very small, standing at $350 million.

Quality of Infrastructure

Taiwan has an extensive infrastructure system.  Two international 
airports are located at the north and south ends of the island.   
Fourteen domestic airports connect major cities and key offshore islets.  
Five international harbors facilitate import and export trade.  Paved 
highways form an extensive inland transport network, including a north-
south freeway.  A round-the-island railway was completed in late 1991.  
The average family has more than one telephone.  Pagers, cellular 
phones, and fax machines are common for business firms.  Virtually every 
family has access to electricity and household tap water, except in 
mountainous and remote areas.

The expansion of this infrastructure system however is not keeping pace 
with the demands of consumers and industry. As a result of rising 
incomes, car ownership more than tripled from 1985 to 1994, causing a 
shortage of parking spaces, especially in urban areas.  Traffic has 
become very crowded in cities and on the freeway as well.  The situation 
is no better on the railways where almost every first-class passenger 
car is overbooked.  Air traffic has also tripled over the past decade, 
making delays in domestic flights common.  Although Kaohsiung Harbor is 
the third largest container port in the world, the average waiting time 
for entry reaches nearly seven hours.  As the reserve capacity of the 
power grid has fallen from over 20 percent to around 5-10 percent, power 
outages occasionaly occur during the summer months. Large industrial 
projects such as the sixth naphtha cracker complex, large steel mills, 
and several electronic plants are putting great strains on the water 
supply.

To step up construction of infrastructure, Taiwan opened power plants 
for private investment in 1994.  A bill passed the Legislative Yuan in 
early 1995 to encourage private participation in transportation 
projects, including a high speed railway, an additional north-south 
freeway, and several east-west freeways.  This, together with the 
development of regional operations centers, may improve Taiwan's 
infrastructure.


III.  POLITICAL ENVIRONMENT

Over the past few years Taiwan has made significant progress in its 
transition from a single-party, authoritarian policy to a democratic, 
multi-party political system.  Martial law, which had been in force 
since the 1940's, was lifted in 1987.  Taiwan's first democratically 
elected legislature was chosen in December 1992.  The democratization 
process continued with the first direct elections of the Mayors of 
Taiwan's two largest cities (Taipei and Kaohsiung) and the Governor of 
Taiwan Province in December 1994.  These officials were previously 
appointed by the central authorities.

Taiwan's constitutional system divides the government into five branches 
or Yuans.  The five branches are the Executive Yuan, the Legislative 
Yuan, the Judicial Yuan, the Control Yuan and the Examination Yuan.  At 
the top of this structure is the President, who has been chosen by the 
National Assembly.  Taiwan will hold its first popular election for 
President in March 1996.

Although Taiwan has progressed rapidly toward full democracy, the 
Kuomintang (KMT, or Nationalist Party), which ran the previous 
authoritarian government on Taiwan, still holds most of the key 
political posts on the island.  The KMT currently has a sixty percent 
majority in the law-making Legislative Yuan (LY).  The President, who 
has been chosen by the KMT-controlled National Assembly (NA), is also 
the Chairman of the KMT and he appoints the heads of the Yuans, 
including the head of the Executive Yuan, the Premier.  Factional 
fighting and weak party discipline within the KMT limits the Party's 
ability to take full advantage of its numerical superiority in the 
legislature, but when push comes to shove the KMT has been able to 
muster the votes to achieve its most important goals.  LY elections 
scheduled for December 1995 may affect the KMT's dominance.  The first-
ever direct election for the Presidency is scheduled for Spring 1996.

Now that martial law has been lifted, the main opposition party is the 
Democratic Progressive Party (DPP).  The Party's most salient policy 
difference with the KMT has been the controversial issue of Taiwan 
independence.  As the DPP has matured and gained a significant role in 
the LY, where it won 51 of 161 seats in the 1992 election, it has 
modified its demand for immediate Taiwan independence and now calls for 
the people to decide Taiwan's future through a plebiscite.  The DPP has 
also staked out generally populist positions of concern for the 
environment and for working people.

The KMT, which brought its political power and two million people over 
from Mainland China in 1949, was historically associated with the 
Mainlanders (i.e., people who fled to Taiwan with the KMT and the 
descendants of those people).  The DPP has sought to identify itself 
with the Taiwanese (ethnic Chinese who immigrated to Taiwan during the 
past 300 years, mostly from Fujian Province).  Yet a majority of the 
officials and members in the KMT, including the President, are now 
ethnic Taiwanese.  A new opposition party, the Chinese New Party 
consisting mainly of second generation "mainlanders" who have grown up 
in Taiwan, broke off from the KMT in 1993.  It currently holds seven LY 
seats.  Although ethnic differences are still significant politically, 
their importance is declining as younger generations pay less attention 
to this question.

The defining characteristic of Taiwan's international relationships is 
its lack of diplomatic ties with most nations of the world.  The ruling 
authorities on Taiwan call their administration the "Republic of China," 
and for many years claimed to be the legitimate government of all China.  
Foreign nations wishing to establish diplomatic relations with a 
government of China had two choices:  to recognize the "Republic of 
China" or to recognize the People's Republic of China (PRC).  Most chose 
to recognize the PRC.  The PRC was admitted to -- and Taiwan left -- the 
United Nations and most related organizations in the early seventies.  
The U.S. switched diplomatic recognition to the PRC in 1979.

The Taiwan authorities several years ago backed away from their stance 
of insisting that they are the legitimate rulers of all of China.  While 
still admitting that Taiwan is part of China, they now seek recognition 
as one of two "legitimate political entities" in China, the other being 
the PRC.  Under this policy, the Taiwan authorities are seeking to join 
various international organizations, including the United Nations.  
Taiwan has been able to join the Asia-Pacific Cooperation (APEC) 
dialogue as on "economy" and is applying to join the World Trade 
Organization (WTO) as a "customs territory."

Although the United States does not have diplomatic relations with 
Taiwan, the U.S.-Taiwan relationship is generally excellent.  The 
American Institute in Taiwan (AIT), a private, non-profit institution, 
was established in 1979 to maintain the unofficial relations between the 
peoples of the United States and Taiwan.


IV.  Marketing U.S. Products and Services


Taiwan is the U.S.' seventh largest export market.  U.S. goods.  U.S. 
goods enjoy a reputation for quality on the island; the reputation for 
high quality however, is coupled with a reputation for high-cost and, 
sometimes, poor service from U.S. vendors.  Nearly every type of sales 
channel exists on Taiwan:  U.S. goods reach end-users through agents, 
distributors, franchisees, direct marketing, mail order and almost any 
other imaginable means.  Distribution policy varies depending on the 
type of product and the end-user of the product, but all distribution 
channels are changing rapidly under the pressures of new demands from 
sophisticated Taiwan consumers, intensified competition from foreign and 
domestic rivals and the introduction of new information technologies to 
the distribution chain.

Marketing products is too complex a subject to be covered in such a 
brief space, so the comments made here are of necessity very general.  
Taiwan end-users tend to make purchasing decisions based primarily on 
price -- although ironically a higher price may be more attractive to 
the Taiwan buyer of certain kinds of consumer goods.  A strong local 
presence, with a wholly-owned subsidiary, branch office, joint venture 
or agent/distributor is another key to success in the market.

Taiwan is a land of small businesses and traders who import from all 
over the world.  The strength of Taiwan's economy is not in its few 
large firms -- although Taiwan has grown a handful of firms whose 
presence is beginning to be felt in world markets -- but in its 
multitudinous small-to-medium sized firms.  There are over 975,000 
registered businesses on Taiwan.  The island has 97,000 legal factories 
and probably another 200,000 illegal factories.  To sell to these firms, 
a U.S. firm must find a local partner.  Although it may be possible to 
supply a few types of high-specialized products directly from the U.S., 
most U.S. firms will find it necessary to have some kind of local 
presence to market and service their products.  

Most firms enter the market with a Taiwan agent.  Taiwan firms prefer 
the partnering aspect of an agent relationship.  Although some firms are 
willing to act as distributors, there is a fear that firms seeking 
distributors are not serious about the market and will not support their 
distributor.  Firms selling equipment or machinery frequently find it 
necessary to find a partner willing and able to do some assembly or 
manufacturing in Taiwan.  Although not necessarily a formal joint 
venture, these efforts require a higher degree of commitment to the 
marketplace.  If the size of the market warrants, firms may wish to 
consider setting up a branch office or subsidiary in Taiwan.  Taiwan 
welcomes foreign investments and establishing an office in Taiwan is 
relatively easy, if sometimes bureaucratically cumbersome.

There are many ways to find an appropriate agent or distributor in 
Taiwan.  The Commerce Department's Agent Distributor Service (ADS) 
program offers manufacturers a cheap and easy way to identify potential 
partners.  The Taipei Importers and Exporters Association has over 
100,000 members and is well equipped to help foreign exporters find an 
agent from among its members.  Most Taiwan industry associations publish 
lists of their members.  The China External Trade Organization (CETRA) 
has 4 offices in the United States and these offices contain a wealth of 
information on Taiwan.  A listing of CETRA's U.S. Offices is included at 
the end of this section.

The most important consideration for most Taiwan buyers is initial 
price.  The most common complaint against U.S. goods is that their price 
is too high.  Taiwan businesspeople are notoriously short-term oriented 
and U.S. firms are frequently frustrated by the fact that most Taiwan 
firms do not consider the life-cycle cost of a product when making a 
purchase.  Although attitudes are slowly changing, most Taiwan firms 
will only pay a higher price for a product if they see an immediate 
payoff in reduced costs.  It is difficult to sell a product that is more 
expensive now, but which will be cheaper over two years -- increase the 
payback time to four or five years and the sale becomes almost 
impossible.  After price, the next most important considerations are 
quality of the goods and after-sales service.  
Taiwan businesspeople are active participants in the global marketplace.  
They read trade journals from the U.S., Europe and Japan, participate in 
the major international trade events and are well aware of current 
trends in their industry.  There are local trade shows for most major 
industries and CETRA is the co-organizer of many of these shows (usually 
in conjunction with the relevant industry association).  A local partner 
can give the best advice on where and how to advertise, but 
participation in the major trade shows and advertisement in the relevant 
Taiwan trade journals and industry newspapers is important.  More 
information on shows can be obtained from CETRA.  Taiwan's major 
business publications are:

  Commercial Times (Daily Newspaper)
  Mr. K. H. Yung, Deputy General Manager
  Business Service Department
  6F, 49 Chunghwa Rd., Sec. 1, Taipei
  Tel: 886-2-381-8720
  Fax: 886-2-381-0659

  Economic Daily News (Daily Newspaper)
  Mr. Y. L. Tsiang, Deputy Manager
  Business Services Department
  8F, 557 Chunghsiao E. Rd., Sec. 4, Taipei
  Tel: 886-2-763-7274
  Fax: 886-2-764-5344

  Business Weekly (Weekly Magazine)
  Ms. Carol Cheng, AE
  Advertisement Department
  5F, 62 Tunhwa N. Rd., Taipei
  Tel: 886-2-773-6611
  Fax: 886-2-711-0520

  Commonwealth (Monthly Magazine)
  Ms. Freda Wei, Senior Sales Supervisor
  Advertisement Department
  4F, 87 Sungkiang Rd., Taipei
  Tel: 886-2-507-8627
  Fax: 886-2-507-9011

  Excellence (Monthly Magazine)
  Ms. Sonia Chou, Manager
  Advertisement Department
  5F, 531 Chungcheng Rd., Hsintien, Taipei Hsien
  Tel: 886-2-218-6988
  Fax: 886-2-218-6494

Taiwan is well-known as an industrial dynamo that has been racking up 
export success for over twenty years.  What is less well known is the 
fact that that dynamo has produced a domestic consumer market that is 
now booming.  As noted above, all of the trends in Taiwan point toward a 
growing, but fragmenting consumer market.  While the specifics of 
Taiwan's consumer market are unique, the basics are the same as 
anywhere:  find out what the consumers want (or create a product that 
they will want when they see it), determine what they are willing to pay 
for it, research the most efficient means of getting it to them.  U.S. 
firms wanting to enter the market will find a fairly sophisticated 
network of support firms who can help them carry out these tasks.

As in the industrial sector, finding a good local partner -- be they an 
agent, distributor, licensee or joint-venture partner -- is essential.  
Partners will frequently give guidance on marketing channels, the number 
of which is bewildering.  Consumer distribution in Taiwan is dominated 
by a vast number of small, independent retailers who are served by a 
network of wholesalers.  As the Taiwan market becomes more attractive to 
investors and consumers become more sophisticated, however, this simple 
system is breaking down.  Larger chains with greater economies of scale 
are some of the new players on the scene changing the face of Taiwan's 
retail market.

Department Stores:  There are over 50 department stores on Taiwan, 
concentrated in the large cities.  Most of these department stores are 
run on a Japanese model, i.e., the bulk of the floor space is rented out 
to concessionaires who pay rent and a fixed percentage--about 20 percent 
or so--of either their gross or net income.  Such arrangements help 
department stores avoid risk, and enables replacement of concessionaires 
with poor sales.  Concessionaires are responsible for decorating and 
staffing their sales areas.  Although the department stores do purchase 
some merchandise on their own account, most of their sales are through 
the concessionaires.  To compete against the lower priced bulk quantity 
selections available in hypermarkets, Taiwan department stores carry a 
broad range of high-quality, upscale and expensive merchandise.  This 
trend should continue.  The introduction of computerized systems to 
track sales should help department stores in buying and inventory 
control to alleviate problems associated with the lack of merchandise 
selection.  As Taiwan consumers are very aware of customer service and 
atmosphere when shopping, department stores will continue to focus on  
distinguishing themselves through spacial design, decor, fashion shows, 
art exhibitions, VIP cards, in-store child care and food courts, to 
attract their target market.  Over the next several years, local 
developers plan to build approximately 20 shopping centers throughout 
the island provided that investors can be identified.  The establishment 
of shopping centers would be a promising new venue for department stores 
and specialty chain stores seeking to branch out.   

Specialty Chain Stores:  A relatively new phenomenon in Taiwan is the 
specialty chain store.  U.S. based chains such as Pearle Vision Center 
and Toys 'R Us have set up outlets in Taiwan as have firms from other 
foreign countries, such as Aoyama Suits and Joshin of Japan.  These 
chain stores combine the advantages of central purchasing (nearly all 
operate their own central warehouses) with product specialization and 
are gaining market share rapidly.

Hypermarkets and Supermarkets:  In addition to department stores and 
specialty chain stores, supermarkets and hypermarkets are proliferating 
in Taiwan.  The largest supermarket chain on the island is Wellcome, 
with over 100 stores.  Eventually, Wellcome plans to have over 500 
outlets on the island.  Hypermarkets are larger stores carrying a 
diversified range of products at cut-rate prices.  While supermarkets 
carry a small range of non-food products, hypermarkets carry a much 
broader range of casual clothing, household consumer goods, automotive 
accessories and other products in addition to produce normally purchased 
in a U.S. supermarket.  Although Taiwan's largest hypermarket chain, the 
Dutch-invested Makro, was recently forced to close two stores in a 
zoning dispute with local authorities, other hypermarket chains are 
entering the market and this channel should continue to expand.

Convenience Stores: Now over 1000 strong island wide, convenience 
stores, which offer food products and toiletries 24 hours a day, are 
major outlets for consumer food items, such as snack foods, beverages, 
and juices.

Franchising:  Although relatively new in Taiwan, franchising suits the 
entrepreneurial spirit of the people on the island.  A variety of 
franchise arrangements exist on the island ranging from equally shared 
joint venture partnerships to the Pizza Hut model where stores are 
managed and operated by a "master franchise" or a regionally based 
conglomerate.  As Taiwan lacks legal expertise on franchise operations, 
it is crucial that contractual arrangements entered into by U.S. 
companies stipulate adherence to corporate policy.  To gain a foothold 
in the market and ensure successful performance, franchises must stress 
management, personnel training, customer service, consistency in product 
quality, and seek guarantees for reliable distribution channels.  Vital 
to the successful operation of a franchise in Taiwan is identifying a 
reliable intermediary capable of enhancing and reinforcing technology 
transfer.  To date most franchise operations have been fast food 
restaurants such as MacDonalds, Kentucky Fried Chicken, TGIF, Pizza Hut, 
Burger King, etc.  Should the establishment of shopping centers take off 
as planned greater opportunities for franchise operations will abound.  

Direct Marketing:  The direct marketing channel is still relatively  
underdeveloped in Taiwan.  One exception, however, is "multi-level 
marketing" which is becoming more popular as a second job to supplement 
household income.  Recent figures indicate that there are more than 1.6 
million people working for the 183 "multi-level marketing" businesses in 
Taiwan which specialize primarily in health foods, skin care products, 
and cleaning products. Firms such as Avon, Amway and Nu Skin have taken 
advantage of the sales skills of ambitious, well-educated Taiwan women 
to become very successful.  Direct marketing techniques such as mail-
order and television marketing are still very rare.  

In contrast to the industrial/commercial market Taiwan consumers in many 
cases prefer to pay more for goods that they purchase.  Conspicuous 
consumption is rampant in Taiwan society and consumers are eager to pay 
top-dollar for the right brand of watch, car, cognac or necktie.  While 
consumers are willing to pay more for perceived value, price competition 
in the marketplace can be brutal.  Firms that charge too much for their 
products in Taiwan can expect to find parallel importers undercutting 
their efforts.  Consumers are extremely brand-conscious, but they are 
willing to shop around to find the lowest price on their favorite brand.  
Moreover, when brand is not important, consumers buy on price.

Selling to the Taiwan authorities deserves a special mention as there 
are both excellent opportunities and major obstacles for U.S. firms 
interested in Taiwan authority procurement.  Most large, technically 
complex tenders are let by the Central Trust of China (CTC), a quasi-
statal organization that has procurement and other responsibilities.  
Agencies that need to purchase equipment inform CTC of their 
requirements, CTC announces and administers the tender procedures; any 
technical evaluations are performed by the purchasing entity or its 
surrogates.  CTC tenders may be local (limited to firms with a Taiwan 
office or representative) or international (open to firms outside of 
Taiwan), but both kinds of tenders are generally conducted fairly and 
openly.  U.S. firms have a well-established record of success in winning 
CTC-administered tenders.

While CTC handles a large portion of Taiwan authority purchases of 
advanced equipment, the bulk of Taiwan authority purchases are 
administered by the purchasing entities themselves.  Nearly all of these 
tenders are open only to firms with a local presence, and it can be 
difficult for outsiders to obtain advance information on such tenders.  
CTC itself estimates that they procure less than 10 percent of the 
authorities total procurement.  In addition to the authorities' 
extensive infrastructural spending, portions of the economy are still in 
the hands of authority owned entities -- telecommunications, and the 
production of liquor and tobacco products are authority monopolies or 
near monopolies.

U.S. firms have scored some major successes in authority procurement, 
but U.S. companies also have serious complaints about the system.  The 
contracting entities tend to wield excessive power over the contractor:  
exorbitant potential liabilities, cumbersome change order procedures, 
expensive bonding requirements are common.  Contracting entities tend to 
view contractors as adversaries, which can make normal business dealings 
strained.  Taiwan bureaucrats tend to believe that the penalty for 
making no decision is always less than the penalty for making the wrong 
decision and this attitude can result in frustrating delays or 
unreasonable demands on the contractor as bureaucrats seek to take the 
safest course of action.  Conflict of interest laws in Taiwan are not as 
fully developed as those in the United States.  Firms employing 
relatives of existing officials and/or retired officials have an inside 
track on Taiwan authority contracts.  However, as Taiwan bids to join 
the WTO and sign on to the Agreement for Government Procurement, 
Taiwan's procurement practices will need to be more transparent and fall 
in line with international standards.

CETRA OFFICES IN THE UNITED STATES



U.S.A. - Chicago 
Far East Trade Service Inc.
Director: J.S. Pan
Branch Office in Chicago
225 North Michigan Ave. Suite 333
Chicago, IL 60601
Tel: 312-819-7373
Fax: 312-819-7377

U.S.A. - Miami
Taiwan Trade Center, 
Miami Inc.
Deputy Director: Carlos Liu
8491, N.W. 17 St., Suite 107
Miami, FL 33126
Tel: 305-477-9696
Fax: 305-477-9031

U.S.A. - New York
CETDC, Inc., New York
Director: Robert Wang
420 5th Avenue, 28 Fl.
New York, N.Y. 10018-2702
Tel: 212-730-4466
Fax: 212-730-4370

U.S.A. - San Francisco
Far East Trade Service Inc.
Branch Office in San Francisco
Director: Eugene I.J. Chen
555 Montgomery St., 
Suite 603
San Francisco, CA 94111-2564
Tel: 415-788-4304
Fax: 415-788-0468




V:  Leading Sectors for U.S. Exports and Investment


A.  Best Prospects for Non-Agricultural Goods and Services
  
  
      Est. 2-Year
     Dollar Growth
    in U.S. Exports
Rank Industry Sector    (1995-1996)*
---- -----------------  -------------
 1.  Electronic Components              629
 2.  Travel and Tourism Services        175
 3.  Aircraft and Parts                 167
 4.  Insurance Services                 110
 5.  Computer Software                  100
 6.  Electronics Ind. Prod./Test Equip   70
 7.  Electric Power Systems              56
 8.  Education and Training              55 
 9.  Laboratory Scientific Instruments   51
10.  Plastic Materials and Resins        50
11.  Household Consumer Goods            46
12.  Process Control - Industry          45
13.  Pollution Control Equipment         41
14.  Medical Equipment                   40
15.  Chemical Production Machinery       40


* in US$ millions



1 - Electronic Components (ELC)

                               1994   1995   1996
                            -------  -------  -------
A.  Total Market Size          15,019  17,300  19,800
B.  Total Local Production     11,500  13,400  15,500
C.  Total Exports               7,435   8,700  10,200 
D.  Total Imports              10,954  12,600  14,500
E.  Total Imp from the U.S.     2,371   2,700   3,000  

Narrative:  Taiwan electronic firms are importing leading edge 
components -- especially integrated circuits (ICs) -- from foreign 
suppliers to maintain the competitiveness of their assembly operations.  
The expected expansion in the use of advanced components will lead to 
increased imports from U.S. companies because of their superior 
technology.  U.S.-made semiconductors are very competitive, ICs in 
particular.  American firms face their stiffest competition from 
Japanese companies which have led the passive component and display/tube 
markets.  Taiwan-produced components are suitable mainly for consumer 
electronic product applications.


2 - Travel/Tourism Services (TRA)

                             1994   1995   1996
                           ------  ------  -------
A.  Total Sales             8,435  9,290  10,200
B.  Sales by Local Firms       85     90     100
C.  Oseas Sales by          8,350  9,200  10,100
      Local Firms
D.  Sales by U.S.-Own Firms   845    930   1,020

Narrative:  Taiwan's overseas travel has been growing steadily with a 
yearly increase of about 20 percent since 1990.  The United States 
remains the most popular destination outside of Asia, with 453,924 
visitors in 1994 (an increase of 22.1 percent from 1993) according to 
Taiwan statistics.  The long-standing commercial ties between the United 
States and Taiwan will continue to generate repeat visits between the 
two destinations.  Many airlines plan to increase flights this summer to 
meet peak season demand.  Fierce competition has forced Taiwan travel 
agencies to offer more attractive package tours at competitive prices.  
Twelve-day tours to the West Coast, including two nights in Hawaii, 
continue to be the most popular tours.


3 - Aircraft/Parts (AIR)

                                1994   1995   1996
                               ------  ------  ------
A.  Total Market Size          1,133  1,220  1,350
B.  Total Local Production        22     25     30
C.  Total Exports                  4      5      7
D.  Total Imports              1,115  1,200  1,327
E.  Total Imp from the U.S.      853    920  1,020

Narrative:  Eva Airlines plans to purchase fourteen MD-11, eight Boeing 
747-400, and two Boeing 767-300 ER aircraft from 1994-97.  China 
Airlines (CAL) will add one Boeing 747-400 and three A-300 aircraft in 
1996 and 1997 respectively.  Eva and CAL have recently signed letters of 
intent to buy 12 Boeing 777s, worth an estimated USD 1.12 billion.  
Great China Airlines will purchase three MD-90 aircraft in 1995-96.  
Other smaller domestic airlines, such as Mandarin and Far East, will 
procure one Boeing 747-400 and one MD-82 in the next few years.  The 
planned purchases of these aircraft will allow the United States to 
maintain its leadership position in this market.


4 - Insurance Services (INS)

                               1994   1995   1996
                             ------  ------  ------
A.  Total Premium Income     12,925  14,850  17,000
B.  Premium Income by Local  12,385  14,250  16,350
      Firms  
C.  Overseas Premium Income       0       0       0
      by Local Firms
D.  Premium Inc by Foreign      540     600     650
      Firms
E.  Premium Inc by U.S.-Own     540     600     650
      Firms

Narrative:  Due to an increase in per capita income, the desire for more 
life and property insurance is growing steadily.  Holding more than one 
insurance policy is increasingly popular, creating a surge in insurance 
policy purchases.  Since Taiwan opened its insurance market to U.S. 
firms in 1987, 22 U.S. insurance companies (14 life and eight non-life) 
have been licensed to operate in Taiwan.  The potential on the life 
insurance side is very great, but competition is growing as more firms 
enter the market.  U.S. firms will face strong competition from local 
conglomerates that already have a strong sales network, as well as from 
aggressive Japanese firms with competitive advantages of similar culture 
and customs.  Fewer foreign firms are interested in the casualty market.  
In 1994, the life insurance subsector generated about USD 10.3 billion 
in premium income on Taiwan, up 17.2 percent from the previous year. 


5 - Computer Software (CSF)

                                 1994   1995   1996
                                ------  ------  ------
A.  Total Market Size             528    630    755
B.  Total Local Production        253    300    350
C.  Total Exports                  70     80     95 
D.  Total Imports                 345    410    500
E.  Total Imp from the U.S.       245    290    345

Narrative:  Because of growing awareness of intellectual property 
rights, Taiwan purchases of foreign-developed software have expanded 
rapidly in recent years.  The United States is the unchallenged leader, 
with an import share of over 70 percent.  Strong demand for personal 
computer installations by households and private business firms is 
propelling the market expansion of PC-based software products.  Sales of 
networking and application software have excellent prospects.  Companies 
should consider localization of their products for Chinese language 
users.   


6 - Electronics Industries Prod/Test Equipment (EIP)

                                 1994   1995   1996
                               ------  ------  ------
A.  Total Market Size           1,700  1,850  2,000   
B.  Total Local Production        780    850    870 
C.  Total Exports                 330    350    370
D.  Total Imports               1,250  1,350  1,500
E.  Total Imp from the U.S.       350    380    420

Narrative:  With several on-going and proposed high-tech investment 
projects and growing production of advanced electronic products and 
components, sales prospects for advanced EIPT equipment are bright.  
Most advanced EIPT equipment must be imported to meet domestic demand 
since Taiwan-produced equipment is still limited to simple, low-value 
added products.  The United States leads the market for semiconductor 
EIPT equipment, while Japan controls the EIPT markets in finished 
electronic products and passive components.  Japanese EIPT firms are 
taking a very aggressive approach to the fast growing and lucrative 
semiconductor market.  Nevertheless, U.S. EIPT suppliers can be expected 
to continue as a major source of specialized EIPT equipment for the 
industrial/commercial electronics and active components industries due 
to their excellent performance, high reliability and durability. 


7 - Electric Power Systems (ELP)

                                1994   1995   1996
                               ------  ------  ------
A.  Total Market Size           2,100  2,300  2,500
B.  Total Local Production      1,543  1,650  1,800
C.  Total Exports                 705    750    800
D.  Total Imports               1,263  1,400  1,500
E.  Total Imp from the U.S.       354    380    410

Narrative:  In addition to the controversial fourth nuclear power plant 
(Dragongate), the Taiwan Power Company (Taipower) plans to upgrade 
existing generation facilities and to build new fossil fuel plants.  
Since Taiwan has an electricity shortage, local manufacturing industries 
plan to invest in electricity cogeneration and the authorities have 
given initial approval for 15 independent power plants (IPPs).  U.S. 
service and equipment suppliers are in a strong competitive position, 
though European and Japanese firms are fighting for a greater market 
share.  Taiwan-produced electrical generating systems are mostly 
assembly products.


8 - Education/Training (EDS)

                                1994   1995   1996
                              -------  -------  -------
A.  Total Expenditures         17,775  18,950  20,140     
B.  Spending at Home           17,100  18,200  19,300 
C.  Expenditures on Abroad        675     750     840  
D.  Spending in the U.S.          285     310     340    

Narrative:  In 1989, Taiwan relaxed "Rules Governing Advanced Study 
Abroad" and reopened overseas study to senior high school graduates.  
Due to rising family incomes, the number of students pursuing study 
abroad on a self-financed basis has been on the increase in recent 
years.  According to Taiwan statistics, 40-45 percent of students 
pursuing study abroad have gone to the United States.  In recent years, 
short-term language study and overseas summer camp have been in great 
demand.  In recognition of the market, and the value placed on English 
language skills in Taiwan, the U.K., Canada, and Australia have stepped 
up marketing to attract students.


9 - Laboratory Scientific Instruments (LAB)

                               1994   1995   1996
                            ------  ------  ------
A.  Total Market Size         1,050  1,130  1,210        
B.  Total Local Production      365    400    430 
C.  Total Exports               197    220    240
D.  Total Imports               882    950  1,020
E.  Total Imp from the U.S.     339    365    390

Narrative:  In recent years Taiwan has made great efforts to improve its 
R&D environment.  Public R&D expenditure on a wide range of projects has 
increased yearly.  By 2002, more than USD 13.8 billion (NTD360 billion), 
almost triple 1992's USD 3.6 billion (NTD94.8 billion) R&D budget, will 
be devoted by the authorities to science and technology development.  
The authorities have also provided the private sector with attractive 
R&D tax incentives and other support.  High-end laboratory scientific 
instruments are all imported, and  American companies are particularly 
strong in this area.  Sales of U.S.-made chemical analytical and 
electronic instruments are expected to remain high.  Japanese suppliers, 
by offering low prices, dominate the medium range market sector.  German 
firms -- although the third leading supplier -- are playing an 
increasingly active role in supplying laboratory supplies to Taiwan.   


10 - Plastic Materials/Resins (PMR)

                              1994   1995   1996
                              ------  ------  ------
A.  Total Market Size       7,095  7,900  8,800          
B.  Total Local Production  7,308  8,300  9,400    
C.  Total Exports           2,110  2,400  2,700
D.  Total Imports           1,897  2,000  2,100     
E.  Total Imp from the U.S.   380    405    430    

Narrative:  Although Taiwan is a major manufacturer and exporter of 
plastic products, increasing land and labor costs are leading 
manufacturers to move offshore, thereby depressing this market.  
However, with industrial upgrading and a higher level of technology, 
Taiwan's demand for advanced or sophisticated items, such as engineering 
plastics, should increase substantially, especially in the automobile, 
electronics, electric, information products, and building supplies 
industries.  Most local manufacturers lack the necessary technology to 
expand or to move into the engineering plastics market.  American firms 
-- which are very competitive in engineering plastics -- are expected to 
enjoy brisk sales in this fast growing market.

11 - Household Consumer Goods (HCG)

                               1994   1995   1996
                               ------  ------  -------
A.  Total Market Size         3,107  3,460   3,800          
B.  Total Local Production    4,560  5,100   5,500    
C.  Total Exports             2,508  2,800   3,000    
D.  Total Imports             1,055  1,160   1,300     
E.  Total Imp from the U.S.     220    240     266    

Narrative:  Consumer purchasing power continues to rise dramatically.  
Distribution systems are becoming more efficient due to the introduction 
of large stores, such as hypermarkets.  American suppliers have gained 
brand name recognition and have established strong service networks.  In 
this sector, sales of small appliances will probably grow at the fastest 
rate.  Sales growth for large appliances is expected to be in rural 
areas, especially in the south.  In the north, the market for home 
furnishings is improving as consumers upgrade and replace household 
items.

12 - Process Controls - Industrial (PCI)

                               1994   1995   1996
                              ------  ------  ------
A.  Total Market Size         1,010    1,090  1,200
B.  Total Local Production      400      430    460
C.  Total Exports               320      340    360
D.  Total Imports               930    1,000  1,100
E.  Total Imp from the U.S.     300      320    345

Narrative:  Taiwan's manufacturers continue to modernize their 
production equipment to speed up the shift toward automation, leading to 
increased demand for more advanced industrial process controls.  U.S. 
suppliers are highly competitive in the growing markets for electronic 
and computer-based control systems.  More than 80 percent of the U.S.-
made process control systems sold in Taiwan go to state-run firms and 
large-scale private enterprises.  Private industrial firms are major 
purchasers of Japanese systems because of their lower selling price and 
good after-sales service.  There is little competition from local 
manufacturers due to insufficient R&D and lack of technical know-how.  
Process control systems used in the chemical industry have the highest 
growth potential.


13 - Pollution Control Equipment (POL)

                                1994   1995   1996
                              ------  ------  ------
A.  Total Market Size           700    770    840
B.  Total Local Production      365    400    440
C.  Total Exports               155    170    190
D.  Total Imports               490    540    590
E.  Total Imp from the U.S.     139    160    180

Narrative:  Strong political pressure from environmental groups and 
private citizens has forced the Taiwan authorities to launch several 
environmental improvement projects.  In 1992, Taiwan EPA initiated a 
five-year (1992-96) Green Plan calling for implementation of a number of 
pollution control initiatives and measures.  The authorities have also 
provided attractive tax and financial incentives to encourage private 
firms to install proper pollution control facilities.  American firms, 
with a technological lead, have dominated the public sector while 
Japanese equipment is particularly preferred by private firms because of 
lower prices and better customer service.  Taiwan manufacturers, through 
technical cooperation with foreign firms, are capable of producing some 
products that meet the domestic needs of small and medium size 
industrial firms.


14 - Medical Equipment (MED)

                              1994   1995   1996
                             ------  ------  ------
A.  Total Market Size         600    650    700        
B.  Total Local Production    254     275     300
C.  Total Exports             106    120    140
D.  Total Imports             452    495    540
E.  Total Imp from the U.S.   155    175    195

Narrative:  Taiwan began implementation of an island-wide public health 
care insurance system in March 1995.  A total of USD 3 billion has been 
set aside for health and medical care network projects.  Senior 
citizens' health care continues to be a major issue in Taiwan.  More 
than 22 large-scale hospital investment projects will be undertaken by 
1999.  Projected health care expenditures will double, to reach USD 4 
billion by 1996.  American firms have been very competitive in the high-
end of this market.  Japanese suppliers hold a strong position in the x-
ray diagnostic sector.  Local medical equipment manufacturers are 
capable of supplying most disposable appliances and supplies used in 
hospitals. 


15 - Chemical Production Machinery (CHM)

                             1994    1995   1996
                            ------  ------  ------
A.  Total Market Size         940  1,000     1,070
B.  Total Local Production    470    495     520
C.  Total Exports             160    170     175
D.  Total Imports             630    675     725
E.  Total Imp from the U.S.   220    240     260

Narrative:  Taiwan has a very large and sophisticated chemical industry.  
Taiwan's sixth naphtha cracker plant is now under construction by the 
Formosa Plastics Group.  Older chemical facilities are being expanded 
and/or replaced with modern pollution control and process control 
equipment.  Total investment in chemical materials production in 1994-97 
is estimated at USD 13 billion.  American-made chemical machinery has a 
strong reputation and is well accepted by local users.  Japan is the 
major competitor for the United States, while Germany and the United 
Kingdom are more minor.  Most Taiwan-produced equipment is less 
sophisticated.

Note:  The above statistics are unofficial estimates

Exchanged rates used:

Year      Imports    Exports    Production
-----     -------    -------    ----------
1994       26.50      26.40       26.45
1995(e)    26.00      26.00       26.00
1996(e)    26.00      26.00       26.00



B.  Best Prospect Agricultural Sectors for U.S. Exporters to Taiwan
           (Metric Tons unless otherwise noted)


1 - Red Meat (Beef and Pork)

                           1994          1995       1996
A.  Total Consumption     940,429     944,000     965,000
B.  Tot Loc Prod        1,208,785   1,200,000   1,200,000
C.  Total Exports*        330,776     320,000     300,000
D.  Total Imports *        62,420      64,000      65,000
E.  Tot Imp from U.S.       8,443      10,000      10,500 

*trade figures are converted to CWE (carcass weight equivalent)

Comments:  Australian and New Zealand beef dominate the import
market as price, not quality, is still the major factor in
purchasing decisions.  However, U.S. high-quality grain-fed beef
is gaining growing recognition on Taiwan as the superior beef
import product. 


2 - Hides and Skins, Bovine

                           1994          1995       1996

A.  Total Consumption     112,167       115,500     120,500
B.  Tot Loc Prod              500           500         500
C.  Total Exports              0              0           0        
D.  Total Imports         111,667       115,000     120,000
E.  Tot Imp from U.S.      82,872        80,000      80,000


3 - Seafood
  
                           1994          1995       1996

A.  Total Consumption    1,480,000   1,550,000  1,550,000
B.  Tot Loc Prod         1,255,000   1,250,000  1,225,000
C.  Total Exports           88,000      80,000     75,000
D.  Total Imports          313,000     380,000    400,000
E.  Tot Imp from U.S.      228,000     270,000    300,000

Comments: Best Seafood prospects include fresh and frozen lobster
and crab; fresh and frozen roe; surimi; fresh and frozen salmon
and halibut; fresh and frozen scallops and abalone.  The import
ban on catfish was lifted in June 1994. 


4 - Fresh and Dried Fruits

                           1994          1995       1996

A.  Total Consumption      2,690,000   2,735,000   2,740,000
B.  Tot Loc Prod           2,434,000   2,500,000   2,500,000
C.  Total Exports            144,000     140,000     140,000
D.  Total Imports            400,000     375,000     380,000
E.  Tot Imp from U.S.        245,000     250,000     255,000

Comments: The U.S. is the major supplier of fresh fruit to Taiwan
with 74 percent market share in 1993.  This mainly reflects
Taiwan's position as the number one market for U.S. apples. 
Other major U.S. fruit exports to Taiwan include grapes, plums,
grapefruit, other citrus, cherries, kiwifruit, nectarines, pears
and prunes. 


5 - Beer

                           1994            1995       1996

A.  Total Consumption     517,000        660,000     685,000
B.  Tot Loc Prod          455,000        450,000     425,000
C.  Total Exports             600            600         600
D.  Total Imports          62,600        210,600     260,600
E.  Tot Imp from U.S.      34,000         67,000     100,000

Comments: Imports of beer continue to grow at a fast pace as the
local market adapts to liberalization.  At present, imported beer
has a market share of about 12%.  Among imported beers, "Miller"
from the United States ranks No. 1 with 32% of the import market,
followed by Michelob (17%), Beck's (14%) Heineken (9%), Kirin
(5%), San Miguel (4%) and Budweiser (3%).



VI. Trade Regulations and Standards

Tariffs and Import Taxes

Recently, Taiwan has made significant progress in reducing its tariff 
level on products of export interest to the United States.  On June 23, 
1995, the Legislative Yuan (LY) passed the long awaited tariff reduction 
bill sent on May 12, 1994 by the Executive Yuan (EY).  This new 
legislation calls for a reduction of import duties on a total of 758 
industrial and agricultural products, by an average of 2.8 percent. The 
average nominal and effective tariff rates on affected commodities 
ranging from farm products to industrial raw materials, and 
pharmaceuticals will be lowered from 8.89 percent and 4.99 percent to 
8.64 percent and 4.69 percent respectively, saving exporters US$ 96.2 
million.  Thirty import categories including soybeans will be exempted 
from import duties.  This is the first time that Taiwan authorities have 
cut tariffs on fresh fruits and vegetables which are grown on the 
island.  

In addition to import duties, importers must also pay a 0.5 percent 
harbor construction fee and a 5 percent value-added tax.  Goods entering 
Taiwan by air freight or parcel post are exempt from harbor fees.  A 
commodity tax ranging from 2-60 percent must be paid if an imported 
product falls into one of seven commodity categories including: rubber 
tires, cement, beverages, oil and gas, electric appliances, flat glass, 
and automotive products.  The tax is assessed on the C.I.F. and duty-
paid value of affected imports.  
 
Customs Valuation

Taiwan revised its Customs Law in July 1986 in order to implement 
procedures consistent with the "Agreement on Implementation of Article 
VII of the GATT."  This article refers to the valuation of all imports 
for the assessment of duties.  The Taiwan authorities have stated that 
upon its accession to WTO, it will fully adhere to the Customs Valuation 
Code.

The dutiable value of an import into Taiwan is defined as its cost, 
insurance, freight (C.I.F.) value.  If customs officials consider an 
invoice's transaction value to be too low, they will value the item 
based on the actual transaction value.

Import Licenses

Taiwan continues to maintain an import licensing system, but the number 
of items requiring import licenses is being gradually reduced.  In 
January, 1993, the Legislative Yuan passed a Trade Act that simplifies 
import procedures by replacing the import licensing system with a 
"negative list" reducing the number of items subject to licensing.  
Local authorities finalized the "negative list" in July, 1994.  As of 
June, 1995, 8,645 items, or 92.5 percent of the 9,349 items in Taiwan's 
tariff schedule, can be imported without a license.  Of the 465 items 
that do require some kind of license, 139 require only pro-forma 
notarization from local commercial banks and 326 require import permits 
from the Board of Foreign Trade (BOFT).  Imports of another 239 items, 
largely arms, munitions, and several important agricultural products, 
including rice, are banned outright.  While the Department of Health 
(DOH) has made efforts to reduce the number of items prohibited from 
import, a few problems remain in the pharmaceutical industry, where 
import licenses are not granted for four specific products including: 
eye drops, topical dermatological preparations & antiseptics, 
analgesics, and digestants & antacids.  

In other cases where licenses are required, the importer may need to 
first obtain the authorization of numerous agencies, such as Taiwan's 
Department of Health for medical equipment, and the Council of 
Agriculture for fishing and sporting boats--in the rare instances where 
import licenses have been granted--and many agricultural items.  Often 
these additional approvals and documentary requirements add to the 
administrative burdens of importing the products into Taiwan and cause 
long delays, creating a defacto ban.  As part of Taiwan's WTO accession, 
the United States is requesting the elimination of import bans, quotas, 
and other non-tariff restrictions, mostly on agricultural imports, that 
are prohibited by WTO rules.  The United States is also seeking Taiwan's 
adherence to the Tokyo Round negotiated licensing code and customs 
valuation code.

Export Controls

Of the total 9,349 items in Taiwan's current tariff schedule (HS), 7,544 
or 80 percent may be exported.  In the past, most exports required 
export permits.  As of June 1995, 1,805 items require export licenses.  
Licenses are required for the following reasons:

o  Implementation of quantitative restriction arrangements on export of 
textile and garment products to the U.S., Canada, the European 
Communities (EC).

o  National security, i.e. to ensure the security of supply of certain 
daily necessities and important industrial materials, including rice, 
salt, coal and uranium.

o  Implementation of trade and social policies, i.e. the export of 
munitions and armaments, high-tech equipment and supplies, and 
narcotics.

o  Protection of intellectual property and endangered species of wild 
fauna and flora.

o  Concern over hygiene and health of certain products.


Import/Export Documentation

A foreign supplier's proforma invoice (quotation) is required for 
application of an import permit.  Documents required for shipments to, 
or from Taiwan include the commercial invoice, bill of lading or air 
waybill, packing list, and certificate of origin.  Shipments of 
agricultural products, plants, and animals to Taiwan may require 
certificates of inspection or quarantine issued in the country of origin 
and are subject to inspection and quarantine upon importation into 
Taiwan.

The commercial invoice must show the import license number; F.O.B., C&F, 
or C.I.F. value; insurance; freight; and discounts or commissions, if 
any.  The commodity description and value shown on the commercial 
invoice must agree with those on the import license.  No requirements 
exist as to the form of a commercial invoice or a bill of lading.  In 
addition to the information generally included in a standard bill of 
lading, all marks and case numbers appearing on packages must be shown.  
Customs does not permit the grouping of marks or numbers on a shipment 
of mixed commodities.

Temporary Entry

Taiwan is not a member of ATA carnet system due to the lack of 
diplomatic relations with ATA carnet members.  However, Taiwan has 
signed bilateral agreements with 20 nations including 12 EU countries, 
South Africa, Singapore, Korea, New Zealand, Australia, Finland, Sweden, 
and Switzerland to implement ATA carnet.  These agreements grant 
temporary customs exemptions for a wide range of products such as test 
instruments, scientific equipment, exhibition goods, etc. which are 
brought into Taiwan for sales promotion and exhibition purposes on a 
temporary basis.  Upon conclusion of the event, items must be shipped 
out of Taiwan within a year to avoid imposition of harbor taxes and 
tariffs.  Such an agreement with the United States is still under 
discussion.
 
Labeling, Marking requirements

Taiwan labeling regulations require that the net contents of packaged 
goods shall be shown in metric units.  Dual labeling in metric and 
nonmetric units is permitted.  Measurements calibrated in nonmetric 
units must show metric equivalents.  On March 7, 1995, Taiwan tightened 
regulations on Chinese labeling for food items, expanding coverage to 
all food products sold at retail (but allowing exemptions for some food 
service items) and requiring the labels to be affixed prior to customs 
clearance.  Required information includes name and address of 
manufacturer or importer, date of production and/or expiry date and list 
of ingredients.  Taiwan's new Consumer Protection Law requires that all 
imported goods have Chinese language labels and instructions which shall 
be at least as comprehensive as the language-of-origin labels and 
accompanying instructions.


Prohibited Imports

Narcotics are barred from entry into Taiwan.  Arms, munitions, and 
several important agricultural products, including rice, animal offal, 
and sugar, are banned outright.  Problems still remain in the 
pharmaceutical industry, where import licenses are not granted for four 
specific products.  In addition, Taiwan maintains a de facto ban on the 
importation of fishing boats (including sport fishing boats), which has 
frustrated the efforts of several U.S. firms.  

Standards (E.G. ISO 9000 Usage)

Taiwan's standards are generally not a problem for U.S. exporters.  
"Chinese National Standards (CNS)", written and published by the 
National Bureau of Standards of the Ministry of Economic Affairs, list 
relevant standards requirements for imported products into Taiwan.  CNS 
are similar to or in conformity with international standards such as ISO 
and IEC.  The Bureau of Commodity Inspection and Quarantine carries out 
necessary commodity inspection measures according to the Commodity 
Inspection Law.  The purpose of this inspection is to promote the 
quality of commodities, ensure product safety, and protect consumer 
interests.  The methods of commodity inspections generally conform to 
international standards.

Regarding food products, Taiwan authorities maintain a restrictive list 
of food additives and colorings and allowable tolerances for chemical 
residues on fresh fruits and vegetables.  Imported products can only 
contain approved ingredients, substitutes are not allowed entry.  This 
regime can impede the importation of fresh and processed U.S. food 
products.
 
Free Trade Zones/Warehouses

Taiwan's three export processing zones (EPZs) were established in order 
to encourage investments, and to expand the export of products and 
services.  Therefore, all products imported by enterprises located in 
EPZs for their own use are exempt from customs duties.  The products of 
the manufacturing industry in the EPZs are normally for export.  
However, 50 percent of their annual production are allowed for sale on 
the local market after the payment of customs duties.  If the quantity 
to be sold locally is over 50 percent of annual production, then 
approval must be sought from the Export Processing Zone Investment 
Screening Board.

Opened in 1980, the Hsinchu Science-Based Industrial Park is Taiwan's 
most visible attempt to move into technology-intensive industries.  
Firms investing in the park enjoy substantial tax benefits, 
concessionary public financing, low land cost, and support services such 
as warehousing, factories, and telecommunications facilities.  Customs 
duties must be paid if the finished product is sold domestically.

Bonded factories may be established anywhere in Taiwan.  Bonded factory 
companies produce primarily for export markets and may import their 
manufacturing components and raw materials duty free.  However, the 
authorities will not extend duty-free treatment to items whose duty rate 
is already considered minimal, materials known to pollute the 
environment, and items for which a domestic source is readily available.  
Bonded storage facilities are available in Taiwan and are limited almost 
entirely to those warehouses under the direct supervision of the 
Directorate General of Customs.  Goods may be entered into bonded 
warehouses on arrival in Taiwan, provided the consignee has made prior 
application customs for such entry.
    
Special Import Provisions

For political, diplomatic, or economic reasons, the authorities have 
placed restrictions on the imports of certain permissible goods from 
designated procurement areas.  To counter its chronic trade deficit with 
Japan and its trade surpluses with the United States and the EC 
countries, Taiwan frequently excludes Japan and favors North America and 
Western Europe through regional restrictions in import licensing 
procedures and in public procurement tenders.  However, the area import 
restrictions will no longer apply after Taiwan joins the World Trade 
Organization (WTO).  Also restricted and/or controlled is the 
importation of certain products on the grounds of national security, 
maintaining the public order, or preserving human, animal or plant 
health.  All require a prior import permit issued by the Board of 
Foreign Trade.  Taiwan authorities have recently lifted the ban on 
importation of several raw food products from mainland China, based on 
the needs of the food processing industry in Taiwan.
                           
Membership in Free Trade Arrangements

Although Taiwan is currently not a member of any free trade 
organizations, it has made some progress in its attempt to join 
international organizations in recent years.  Taiwan has applied to join 
the WTO and its application is being handled by a WTO working party.  
Taiwan is now holding bilateral talks with WTO members on tariff 
reductions and market liberalization issues.  Taiwan became a member of 
the Asia Pacific Economic Cooperation (APEC) in November, 1991.  Taiwan 
is a member of the Asian Development Bank and became a member of the 
Central American Bank for Economic Integration in 1992.


VII. Investment Climate 

Taiwan has taken a number of steps to liberalize its economy and improve 
its investment environment as part of its dual push to enter the World 
Trade Organization (WTO) and develop the island as an Asia-Pacific 
Regional operations center.  Partly as a result of these efforts, 
foreign investment in Taiwan increased significantly in 1994, reversing 
a four-year decline. Foreign invested firms are generally accorded 
national treatment.  Trade-related capital flow is relatively free. 
Investment disputes are rare.  Most export performance, local content 
requirements and foreign ownership limits have been removed.  A number 
of restrictions on foreign institutional investment and banking, 
however, remain in place.  Taiwan has a comprehensive legal system to 
protect foreign investments and property rights and ensure fair 
competition.  Taiwan is a stable multi-party democracy.  Due to labor 
shortages and a new national health insurance plan, wage and benefit 
costs are rising.  Labor disputes are relatively rare. 

A1. Openness to foreign investment

Taiwan has long encouraged and facilitated direct foreign investment.  
Regulations affecting foreign-invested enterprises are thus generally 
transparent and non-discriminatory.  The authorities have taken a number 
of steps in the past two years to improve the investment climate, 
especially for service industries.  Most ownership restrictions in the 
securities trading, insurance and banking industries, for example, have 
been removed.  In its negotiations to enter the World Trade Organization 
(WTO) as a developed economy, Taiwan has committed to bring its trade 
and investment regimes into full compliance with all international 
standards.  Taiwan's plan to develop the island into a regional 
operations center for domestic and foreign businesses should result in 
further liberalization measures over the next few years.  Plans call for 
the gradual easing of quotas on the hiring of foreign workers and 
liberalization of restrictions on telecommunications, banking, and 
shipping.   

The Taiwan authorities permit foreign direct investment through new 
investment, acquisitions, mergers and takeovers as stipulated by the 
Statute For Investment By Foreign Nationals (SIFN) and the Statute For 
Investment By Overseas Chinese (SIOC).  The vast majority of industrial 
categories are open to foreign investment.  A "negative list" adopted in 
1990 clearly specifies industries closed to foreign investment.  Foreign 
investment is prohibited in such industries as agriculture, cigarette 
manufacturing, liquor distilling, petroleum refining, basic 
telecommunications, broadcasting, and electricity distribution.  Foreign 
ownership is restricted in such industries as general construction, 
shipping, mining, legal and accounting services.  Some restrictions on 
foreign participation in construction projects are being lifted.  
Private and foreign participation in power generation projects, for 
example, is now allowed.  New amendments to the SIFN and SIOC now under 
consideration in the Legislative Yuan will, if passed, permit foreign 
investors to invest in NT dollars, relax restrictions on repatriation, 
and waive joint ventures with foreign ownership below 20 percent from 
restriction by the negative list.   

Applications for investment approvals, acquisitions and mergers are 
screened by the Foreign Investment Commission (FIC), Ministry Of 
Economic Affairs (MOEA), to determine whether the investment project is 
subject to the above mentioned restrictions.  FIC approval is generally 
granted within 4-5 working days.  Investments eligible for tax breaks or 
other incentives, and investments in restricted or pollution-prone 
industries are screened by an inter-ministerial commission.  Processing 
generally takes about two-three weeks.  Screening is routine and non-
discriminatory.

Both the SIFN and the SIOC specify that foreign-invested enterprises 
must receive the same regulatory treatment as that accorded their local 
counterparts.  Foreign companies may invest in firms undergoing 
privatization.  They are eligible to participate in public-financed 
research and development programs.

Taiwan offers a number of incentives to encourage investment, including 
accelerated depreciation and tax credits for investment in pollution 
control systems, production automation and energy conservation.  
Equipment for R&D purposes can be brought into Taiwan duty-free.  Other 
incentives include interest-free or low-interest NT dollar and/or 
foreign currency loans for developing new and/or leading products, 
upgrading traditional industries, and importing automation or pollution 
control equipment.  A broad five-year tax holiday for new investments, 
abolished in January 1991, was re-instituted in January, 1995.

A2.  Conversion and transfer policies

There are relatively few restrictions on converting or transferring 
funds associated with a direct investment.  Approved foreign investments 
can readily obtain foreign exchange from a large number of designated 
banks.  The remittance of invested capital into Taiwan is made according 
to a schedule submitted by the company and approved by the FIC.  
Declared earnings, capital gains, dividends, royalties, management fees 
and other returns on investments can be repatriated at any time.  The 
invested principal can be freely repatriated in whole or in part at any 
time one year after the venture goes into operation.  Repatriation of 
invested principal at an earlier date is subject to FIC approval.  As 
noted in section A1 above, proposed amendments to the SIFN and SIOC 
would remove restrictions on repatriation.   Capital movements arising 
from the trade of merchandise and services as well as from debt 
servicing are not restricted.  For purposes other than trade, no prior 
approval is required if the cumulative amount of inward or outward 
remittances is less than $5 million for a resident or $10 million for a 
corporation (including foreign-invested enterprises).  No delay in 
remitting investment returns or principal through legal channels has 
been reported.


A3.  Expropriation and compensation

Taiwan law stipulates that no venture with 45 percent or more foreign 
investment can be nationalized for a period of 20 years after the 
venture is established.  Further, Taiwan law stipulates that 
expropriation can be based only on national defense needs, and that 
"reasonable" compensation shall be given.  No foreign-invested firm has 
ever been nationalized or expropriated.  No examples of "creeping 
expropriation" or official actions tantamount to expropriation have been 
reported.

A4.  Dispute settlement

Investment disputes are not common.  Taiwan is not a member of the 
International Center for the Settlement of Investment Disputes nor the 
New York Convention of 1958 on the recognition and enforcement of 
foreign arbitrage awards.  Normally, Taiwan resolves disputes based on 
domestic laws and regulations.

Taiwan has comprehensive commercial laws, including a Company Law, 
Commercial Registration Law, Business Registration Law, Commercial 
Accounting Law, and laws for specific industries.  Taiwan's Bankruptcy 
Law guarantees that all creditors have the right to share the assets of 
a bankrupted debtor, on a proportional basis.  Secured interests in 
property, both chattel and real, are recognized and enforced through a 
reliable registration system.

Taiwan's court system is independent and free from interference from the 
Executive Branch.  Judgments of foreign courts are enforced by the local 
courts on a reciprocal basis on the condition that the foreign courts 
have jurisdictional authority.

A5.  Performance requirements and incentives

The Taiwan authorities impose few performance requirements on foreign-
invested firms. There are, for example, no requirements that firms 
transfer technology, locate in a specified location, or hire a certain 
number of local employees in exchange for permission to invest.  Like 
domestic firms, however, foreign-invested companies are subject to 
restrictions on the number of foreign laborers that can be hired and 
must locate in areas zoned for appropriate industrial or commercial use.  
Tax credits are offered to encourage locating in less-developed areas of 
Taiwan.  Tax credits and tax breaks are offered to encourage the 
introduction of new technology into Taiwan.  Subsidies of up to one-half 
of total expenditures are offered for R&D that results in the 
development of new products. 

Manufacturing firms located in export processing zones and the Hsinchu 
Science-Based Industrial Park are, in principle, required to export all 
of their production in exchange for tariff-free treatment of production 
inputs.  These firms may, however, sell up to 50 percent of their 
production on the domestic market upon payment of relevant import 
duties.   

Local content requirements, abolished for most industries in 1986, 
remain in place for motor vehicles.  Thirty-one percent local content is 
required for heavy-duty vehicles over 10 tons, 37 percent for heavy-duty 
vehicles 3.5-10 tons, 50 percent for passenger cars, small trucks and 
vans, and 90 percent for motorcycles.  

A6.  Right to private ownership and establishment

Private investors have the general right to establish and own business 
enterprises except in industries involving national security and state-
owned monopolies.  Private entities have the right to freely acquire and 
dispose of interests in business enterprises.  Except in sectors 
controlled by state monopolies, firms have the same access as state-
owned companies to markets, credit, licenses and supplies.

A7.  Protection of property rights

Taiwan has a comprehensive legal system that protects and facilitates 
acquisition and disposition of property rights. A full range of criminal 
and administrative relief is available to rights holders.  Criminal 
sentences, including jail terms for egregious cases, are routinely meted 
out by Taiwan courts in intellectual property rights (IPR) related 
cases.  Civil damages are also available. Newly instituted export 
monitoring procedures for computer software products and for trademarked 
goods appear to have helped deter the export of pirated and counterfeit 
goods.  Taiwan is not a member of the Bern or Paris Conventions, 
although it generally adheres to the principles embodied in those 
agreements. 

Taiwan's copyright, patent and trademark laws already provide a level of 
protection for rights holders that meets most international standards.  
Those laws are now being further amended to bring them into conformity 
with all TRIPS standards.  The scope of amendments required are the 
subject of WTO accession negotiations with the United States and other 
trading partners.  Draft trade secret and integrated circuits laws are 
expected to pass the legislature as part of Taiwan's WTO accession 
package. 

A8.  Regulatory system:  laws and procedures

Taiwan's laws and policies generally foster competition. Taiwan has a 
set of relatively comprehensive laws and regulations to govern taxes, 
labor, health and safety.

Bureaucratic procedures associated with investment applications are 
relatively streamlined and transparent.  The Industrial Development and 
Investment Center (IDIC) functions as the coordinator between investors 
and all agencies involved in the investment approval process.  

The work permit issuance procedure for foreign white-collar employees 
has been improved.  For most foreign-invested manufacturing firms, the 
permits, issued by the Foreign Investment Commission, can be obtained in 
one to two weeks.  Investors in non-manufacturing enterprises are 
required to obtain work permits through the agency in charge of that 
particular sector (e.g., the Ministry of Justice is responsible for 
issuing work permits for foreign legal consultants).  The different 
standards and procedures used by the various authorities responsible for 
issuing work permits can cause confusion and processing delays. 

A9.  Capital markets and portfolio investment

A wide variety of credit instruments, all allocated on market terms, are 
available to both domestic and foreign invested firms.  Legal and 
accounting systems are transparent and consistent with international 
norms.  The regulatory system is generally fair.  Foreign investors 
remain subject to some restrictions:  individual foreign investors may 
not trade in Taiwan's securities markets, and institutional investors 
are subject to ownership and investment fund limits as well as 
repatriation restrictions.  The Taiwan authorities have taken a number 
of steps over the past two years, however, to encourage the more 
efficient flow of financial resources and allocation of credit.  
International banks are now allowed to accept NT dollar deposits.  
Limits on branch banking have been partially lifted.  The insurance and 
securities industries have been liberalized and opened to foreign 
investment.  Access to Taiwan's securities markets by foreign 
institutional investors has increased. 

Taiwan has a complicated regulatory system governing portfolio 
investment.  Only officially-approved "Qualified Foreign Institutional 
Investors (QFII's)," including large banks, insurance companies, 
securities firms, and mutual funds can engage in portfolio investment.  
The QFII's must obtain this permission from the Securities and Exchange 
Commission and the Central Bank of China.  Each QFII is limited to a 
ceiling of $200 million.  Foreign institutional investors may not freely 
repatriate invested principal until three months after the investment is 
made.  QFII's may, however, move funds out of Taiwan temporarily, as 
long as the money is brought back into Taiwan within the three-month 
period.  Earnings may not be repatriated until 12 months after the 
principal arrives in Taiwan.  

Legal restrictions on foreign ownership in a company listed on the 
Taiwan Stock Exchange (TAIEX) prevent foreign acquisition.  Foreign 
ownership in a TAIEX listed company is limited to 5 percent for a single 
foreign investor and 10 percent overall.  The limits will be raised to 6 
and 12 percent, respectively, when amended regulations are promulgated.  
On a case-by-case basis, foreign investors may request approval from the 
Foreign Investment Commission to exceed these limits.  There have been 
no reports of private or official efforts to restrict the participation 
of foreign-invested firms in industry standards-setting consortia or 
organizations.

Taiwan has a tightly regulated banking system.  The financial sector as 
a whole has, however, been steadily opening to private investment since 
the middle of the 1980's, although the foreign presence remains small.  
The establishment of many new securities firms, banks, and insurance 
companies has underscored this liberalization trend and enhanced 
competition.  The five largest banks, however, are still owned by the 
public authorities.  As of March 31, 1995, these five had combined 
assets of $318 billion, accounting for 44 percent of the total assets of 
all domestic and foreign banks.

A10.  Political violence

Taiwan is a multi-party democracy, with a stable, though still evolving, 
democratic political institutions.  Major civil disturbances, 
insurrections or other serious threats to the political system are 
unlikely.  There have been no reports of politically-motivated damage to 
foreign investment.  Both local and foreign-invested companies have, 
however, been subject to protests and demonstrations related to 
environmental issues.

B.  Bilateral investment agreements

Taiwan has concluded bilateral investment protection agreements with the 
following countries: Argentina, Indonesia, Latvia, Malaysia, Malawi, 
Nicaragua, Nigeria, Panama, Paraguay, the Philippines, Singapore, and 
Vietnam. 

Under the terms of the 1948 Friendship, Commerce and Navigation Treaty 
with the United States, U.S. investors are generally accorded national 
treatment and are provided a number of protections, including protection 
against expropriation.  Taiwan and the United States also have an 
agreement pertaining to investment guarantees, which serves as the basis 
for the U.S. Overseas Private Investment Corporation (OPIC) program in 
Taiwan.  In September 1994, representatives of the United States and 
Taiwan signed a bilateral Trade and Investment Framework Agreement 
(TIFA) to serve as the basis for consultations on trade and investment 
issues. 

C.  OPIC and other investment insurance programs

OPIC programs are available to U.S. investors.  U.S. investors have 
never filed an OPIC insurance claim for an investment in Taiwan.  Taiwan 
is not a member of the Multilateral Investment Guarantee Agency.

D.  Labor

Taiwan has an ample supply of well-educated and skilled workers though 
shortages exist in specific fields like computer software design, 
securities brokerage, and foreign exchange dealing.  The supply of 
unskilled workers for such labor-intensive industries as garments and 
apparel, footwear, dyeing and finishing, consumer electronics, pottery, 
metal pressing, and construction is very tight.  Turnover of unskilled 
labor is high.  Because of labor shortages, 73 manufacturing industries 
and major public construction projects are allowed to import alien 
workers.  As of March 31, 1995, approximately 170,000 alien workers were 
in Taiwan, representing about two percent of the labor force.

There are no special hiring practices, but wages include at least a one 
month bonus at the end of the year;  fringe benefits often include 
meals, transportation and sometimes dormitory housing.  A standard Labor 
Insurance program is mandatory.  The program provides maternity, 
retirement and other benefits.  A new National (universal) Health 
Insurance System that went into effect in March 1995 replaces the health 
insurance aspects of the Labor Insurance program.   The new system 
expands coverage to include the entire families of employees.  The 
combined premium costs of the two programs to an employer is, on 
average, two to three times greater than the former cost of the Labor 
Insurance program alone (costs vary according to workers' monthly 
salaries.)

Taiwan does not have unemployment insurance, although a limited 
unemployment relief program is run by the Council of Labor Affairs 
(CLA).  The Labor Standards Law sets a standard eight-hour work day and 
48-hour work week.  The law restricts child labor, and requires the 
employer to provide overtime pay, severance pay and retirement payments.  
Taiwan's minimum wage is set at NT $14,010 (about $530) per month which 
the CLA plans to raise to NT $14,880 (about $562) in August of 1995.  
Current manufacturing wages average about NT $31,000 (approximately 
$1,170).  The minimum wage is adjusted in August every year, based on 
the inflation rate (measured by the Consumer Price Index) plus half of 
the increase in labor productivity.  The law mandates criminal penalties 
(fines) for labor law violations.

Independent labor unions have been permitted since martial law was 
lifted in 1987.  Their membership is limited and declining, down by more 
than half to 4,000 or 0.04 percent of the work force in 1994.  According 
to official statistics, workers involved in labor disputes in 1994 
numbered 30,500, down 20 percent from 37,900 in 1993.  Taiwan is not a 
member of the International Labor Organization (ILO), but it generally 
adheres to the ILO convention protecting worker rights.

E.  Foreign trade zones and free ports

Taiwan has no duty-free foreign trade zones or free ports.  It has three 
export processing zones and a science-based industrial park where 
imports to be used in the manufacture of exports are duty free.  Up to 
50 percent of the output of firms in these zones may be sold locally, 
after import duties and other taxes are paid.  Foreign-invested firms in 
the zones operate under the same regulations as local firms located 
there.  

F.  Capital outflow policy

Capital movements arising from the trade of merchandise and services are 
not restricted.  For purposes other than trade, no approval is required 
for capital inflows or outflows below $1 million per transaction, with 
an annual cumulative limit of $5 million per resident or $10 million per 
registered business firm.  An outward investment may not exceed 40 
percent of the investing company's paid-in capital unless such an 
investment project is approved by its shareholders.  A local company is 
not required to obtain prior approval for overseas investments of less 
than $10 million.  Taiwan has put in place, however, a number of 
specific registration/approval requirements for investments in mainland 
China.

The Taiwan authorities actively encourage investment into Southeast 
Asian nations (as part of Taiwan's strategy to diversify outward 
investment away from mainland China), and into a number of countries 
with which Taiwan has diplomatic relations.  Incentives include loans 
and/or overseas investment insurance with the Export-Import Bank of 
China.  

G.  Foreign direct investment statistics 

Statistics on foreign direct investment in Taiwan are available from two 
sources.  The Foreign Investment Commission (FIC) publishes monthly and 
yearly foreign investment approval statistics by industry and by 
country.  The Central Bank of China (CBC) publishes foreign direct 
investment arrivals on a quarterly and yearly basis.  CBC data, 
contained in balance of payments statistics, are not further classified 
by industry or country.

According to FIC statistics, foreign investment approvals rose 34 
percent in 1994 to $1.6 billion, reversing a decline over four 
consecutive years. In the first five months of 1995, foreign investment 
approvals surged 82 percent from the corresponding period of 1994, 
reaching $800 million.

Cumulative foreign investment approvals from 1952-1994 totaled $19.3 
billion.  Of this amount, one-quarter was directed toward the 
electronics and information industries.  Other industries with 
relatively heavy foreign investment include chemicals, machinery and 
basic metals, and more recently trade, banking and insurance.

The United States and Japan are the two main sources of Taiwan's foreign 
investment, jointly accounting for over half of cumulative foreign 
investment approvals.  Approvals for Japanese investments amounted to 
$5.5 billion or 28 percent of total foreign investment.  Of total 
Japanese investment, 25 percent was placed in electronic and information 
industries with another 25 percent in financial and trade industries.  
Approvals for U.S. investments totaled $5.0 billion, or 26 percent of 
total foreign investment.  Forty percent of U.S. investment was directed 
toward electronic and information industries, with another  20 percent 
in chemicals.

From 1952 to 1994, Taiwan firms entered into 4,100 technical cooperation 
agreements with foreign companies.  Of these agreements, 60 percent were 
signed with Japanese firms.  About 24 percent of such agreements were 
with U.S. firms.  Taiwan is aggressively pursuing cooperation agreements 
with foreign companies to encourage those firms to make Taiwan their 
"regional operations centers" for East Asia. Of the 25 "strategic 
alliance agreements" reached with multinational firms (many of which 
have a technology cooperation component), 14 have been signed with U.S. 
companies.

The appreciation of the NT dollar and rising land and labor costs have 
spurred a surge in outward investment.  As of 1994, cumulative approvals 
for outward investments totaled $13.4 billion, according to Taiwan 
statistics.  Most observers believe this figure far underestimates the 
actual amount of outward investment.  According to PRC figures, Taiwan's 
cumulative contracted investment in mainland China was almost $24.3 
billion by the end of 1994.  According to recipient country statistics, 
cumulative Taiwan contracted investment in Southeast Asian countries 
exceeded $21.6 billion by the end of 1994.

Tables under Apppendix D.


VIII.  Trade and Project Financing


The Banking System

Taiwan has a Central Bank, 34 domestic banks (with 1,259 branch 
offices), eight "medium" business banks (with 419 branch offices), and 
37 foreign banks (with 57 local branches).  There are also 74 credit 
cooperatives, 285 farmers' credit units, and 27 fishermen's credit units 
on the island.  These banks, cooperatives, and credit unions have 
traditionally played a dominant role in finance in Taiwan.

The Central Bank performs all of the functions normally associated with 
central banks.  It is entrusted with responsibility for issuing 
currency, managing foreign exchange reserves, handling treasury receipts 
and disbursements, setting interest-rate policy, overseeing the 
operations of other financial institutions, and serving as a lender of 
last resort.

Taiwan's 34 commercial banks offer a wide range of services including 
receiving deposits, making loans, handling trade financing and providing 
guarantees, and discounting bills and notes.  Most are also involved in 
the securities business, underwriting and trading securities and 
managing bond and debenture issues, as well as in providing savings-
account facilities.  The Chiao Tung Bank assists with long-term 
financing for industries and projects, while the Export-Import Bank and 
the Farmers' Bank focus respectively on trade financing and agricultural 
development.

Foreign banking institutions are playing an increasingly important role 
on the financial scene.  Foreign banks are essentially treated as 
domestic commercial banks -- are permitted to engage in trade financing, 
foreign exchange dealings, lending to individuals and corporations, and 
various kinds of trust business.  Currently, many foreign institutions 
are concentrating on the development of consumer-loan and credit-card 
business in order to build greater overall market presence.

Foreign Exchange Controls

There are no foreign exchange (FX) amount limitations for transactions 
for trade, insurance and authorized investment.  Similarly, there are no 
FX limitations on repatriating capital and profits related to direct 
investments or trade, providing that the investment is approved by the 
Taiwan authorities.  There are, however, FX controls on portfolio 
investments.  All other transactions involving inward or outward 
remittances for domestic firms have a $10 million annual ceiling per 
account.  Individuals are allowed to remit a maximum of $5 million 
yearly to or from overseas.

Financing Availability

Importers are usually responsible for arranging their own financing.  
The Taiwan Authorities' assistance is, however, available in certain 
cases.  The Export-Import Bank, for instance, provides loans of up to 85 
percent of the total contract value on sophisticated machinery and other 
high-technology items.  Loans are also available for imports of natural 
resources, raw materials, and spare parts.  Such loans can be granted 
for equipment and materials employed in the manufacture of goods for 
export, as well as for those used in the production of sophisticated 
equipment and the development of advanced technologies.

Methods of Payment

Bank-to-bank Letters of Credit (L/C) constitute Taiwan's most important 
import payment process.  In 1994, Taiwan imported $85.3 billion, of 
which $54.1 billion were financed through L/C's.  On a lesser scale, 
company to company payments are made via Open Account (O/A), documents 
against Payment (D/P) and Documents Against Acceptance (D/A).  The AIT 
Commercial Section recommends that U.S. exporters minimize financial 
risk by requiring their Taiwan trading partners to finance their imports 
through L/C's.  A large majority of Taiwan's importers utilize usance 
L/C's with validity of up to 180 days.  On the whole, U.S. companies 
find Taiwan's financing system to be efficient, and report no widespread 
pattern of deferred payment.

Any banks authorized to handle foreign exchange may issue L/C's.  This 
includes local banks (and their branch offices), 11 U.S. banks and their 
branches, and 26 third-country banks.  All banks on Taiwan that are 
authorized to handle foreign exchange have extensive ties with one or 
more U.S. banks.  This relationship includes test key exchanges.

Types of Available Export Financing and Insurance

In 1987 Taiwan's EXIMBANK (EXIMBANK/T) established a $200 million fund 
to assist U.S. firms exporting goods and services to Taiwan.  EXIMBANK/T 
provides funds to commercial banks in the U.S. on a fixed interest rate 
basis.  The U.S. banks then use this "loan" to finance U.S. exporters 
via such instruments as D/A, Usance L/C, Deferred Payment L/C, Standby 
L/C, or Letter of Guarantee.  American exporters seeking competitive 
financing terms to export goods to Taiwan may contact U.S. commercial 
banks or their associates which are members of the Taiwan EXIMBANK Fixed 
Rate Relending Facility Program (FRRP).  The program provides financial 
assistance for American exporters by extending trade credit to Taiwan 
importers.  Because U.S interest rates tend to be lower than those 
offered through Taiwan's EXIMBANK, however, this resource is not heavily 
used by U.S. exporters. 

Project Financing

Taiwan does not rely on money from multilateral institutions to 
facilitate investment projects.  In the public sector, Taiwan 
authorities rely heavily on bond issuance to cover the huge outlays 
connected with the Six-Year Development Plan.  In addition, the 
authorities also initiated an energy tax and a pollution tax to help 
protect the environmental problems.  Private investment projects can be 
easily financed through banks on the island.  Moreover, many Taiwan 
investors, especially large-sized companies, employ financial 
instruments to raise funds in capital markets both at home and abroad.

List of Banks with Correspondent U.S. Banking Arrangement

-  Bank of Taiwan
-  Chang Hwa Commercial Bank, Ltd.
-  Chiao Tung Bank
-  Chinatrust Commercial Bank
-  Export-Import Bank
-  Farmers Bank of China
-  First Commercial Bank
-  Hua Nan Commercial Bank, Ltd.
-  International Commercial Bank of China
-  Land Bank of Taiwan
-  Shanghai Commercial & Saving Bank, Ltd.
-  Taipei Bank



  Chapter IX.  Business Travel


Business Customs

Formal business introductions in Taiwan are not complete without an 
exchange of business cards.  It is advisable for foreign visitors to 
have their cards printed in both English and Chinese.  There are 
numerous printers in Taiwan that specialize in printing these 
indispensable business aids.  They offer accurate, low-cost service, 
with card orders normally being filled within only a few days.  Since 
cards are required on nearly every business occasion, it is a good idea 
to carry sizable numbers of them at all times.

The New Taiwan dollar (NTD) is the official currency.  It is circulated 
in one-, five-, ten-, and fifty-dollar coins, and fifty, one-hundred, 
five-hundred, and one-thousand dollar notes.  Since the relaxation of 
foreign currency controls in 1987, exchange between foreign currency and 
the NTD has become relatively free although exchange is still limited to 
authorized banks and dealers.

Up to NTD 40,000 and USD 5,000 can be brought into Taiwan by a foreign 
visitor.  It should, however, be declared on the customs slip that must 
be filled out upon entering the island.  Foreign currency can be 
exchanged at the airport, as well as at authorities-designated banks, 
hotels, and shops.  In addition, internationally-recognized credit cards 
are accepted in many hotels, restaurants, and shops.  It should be noted 
that a surcharge is sometimes added when payment is made by credit card.

In most instances, tipping is not necessary.  A 10 percent service 
charge is usually added to restaurant and hotel bills, eliminating the 
need for gratuities in such situations.  It is, however, relatively 
common to leave the change when a bill is paid.

Porters at hotels and airports customarily receive tips for their 
services.  Approximately NTD 50-NTD 100 per item of luggage is 
acceptable.  It is not necessary to tip in taxis unless assistance with 
luggage is rendered, but most drivers do appreciate being allowed to 
keep small change.

Travel Advisory and Visas

Taiwan has an extremely low-level of violent crime.  Although normal 
precautions should be taken by visitors, the streets of Taipei and other 
cities are safe at any hour.  While violent crime is rare, Taiwan's 
pickpockets and thieves are extremely clever, so valuables should be 
properly secured.  Taxi drivers, restaurateurs, store clerks and other 
service people are normally quite honest and often solicitous of the 
needs of the non-Chinese speaking foreign guest.  The people of Taiwan 
are generally outgoing toward foreigners and often will go out of their 
way to assist visitors.

U.S. citizens and citizens of fourteen other nations may visit Taiwan 
for up to fourteen days without a pre-arranged visa, providing they have 
a return plane ticket off the island with reservations and more than 6 
months of validity left on their passport.  Other visitors to Taiwan are 
required to have valid Taiwan visas.  These can be obtained from 
authorized representative offices in the United States.  Two basic types 
of non-official visas are available to foreign visitors, depending upon 
the nature and duration of intended visits.

Extensions of visitor visas may be granted up to a maximum of two 
extensions of sixty days each, provided applicants have valid grounds 
for making such requests.  Applications for extensions are administered 
by the city/county police headquarters.  No extensions are granted to 
those who enter Taiwan without a pre-arranged visa except in the event 
of force majeure or matters of vital importance.

Foreign visitors from nations with which Taiwan has reciprocal visa 
agreements receive visitor visas free-of-charge.  The visa fee for those 
from other countries is NTD 500 for a single-entry visa and NTD 1,000 
for a multiple-entry visa.

A one-year multiple-entry visitor visa is available to a representative 
of a foreign company that has recorded total import and export 
transactions with Taiwan amounting to USD 600,000.  Up to four such 
visas can be granted to foreign employees of any one company, with an 
additional USD 600,000 in total transactions being necessary to qualify 
for each of these visas.  Six-month and three-month multiple-entry 
visitor visas are available for respective transaction amounts of USD 
300,000 and USD 100,000.  Applications for multiple-entry visitor visas 
must be referred to the Ministry of Foreign Affairs.  Normally, foreign 
nationals make application through their domestic Taiwan agents, 
representatives, or affiliates of their firms. 

Holidays

There are 10 holidays and three festivals in Taiwan.  Dates for the 
three festivals -- which include Chinese Lunar New Year day, Dragon Boat 
Festival, and Mid-Autumn (Moon) Festival -- change with the lunar 
calendar.  The following is a list of the 10 holidays and three 
festivals in Taiwan:

Holidays                                          Date
--------------------------------------  --------------
Founding Day                                 January 1
Spring Festival (Chinese New Year)  Late Jan. - Mid Feb.
Youth day                                     March 29
Women and Children's Day                       April 4
Tomb Sweeping Day and President Chiang         April 5
   Kai-Shek day
Dragon Boat Festival               Late May - Mid June
Mid-Autumn Festival                          September
Confucius' Birthday                       September 28
Double Ten National Day                     October 10
Taiwan Retrocession Day                     October 25
President Chiang Kai-Shek's Birthday        October 31
Dr. Sun Yat-Sen's Birthday                 November 12
Constitution Day                           December 25


Business Infrastructure

A.  Transportation

Taiwan has two international airports, Chiang Kai-shek International and 
Kaohsiung International.  Both offer regular flights to major 
destinations around the world.  There are also several domestic airports 
and domestic airlines that provide fast and convenient connecting 
flights between Taiwan's larger cities, as well as outlying islands.

For travel within Taipei and various other major cities, taxi drivers 
are obliged to use the meter to calculate the fare.  The basic charge is 
NTD 50 for the first 1.65 kilometers, with an additional NTD 5 for every 
additional 350 meters.  There is also an additional NTD 5 charge for 
every three minutes the vehicle travels below a speed of five kilometers 
per hour.  All taxis have a surcharge of NTD 10 for luggage service.  
Since most taxi drivers cannot speak English, the visitor should always 
carry Chinese-language versions of both his hotel namecard and desired 
destination.
   
Bus services in major cities are quite extensive, but can be 
incomprehensible to the foreign visitor.  A comprehensive long distance 
bus system run by the Taiwan Auto-Transport Company and Tong-Lieng Bus 
Company enables people to travel virtually anywhere on the island 
quickly, comfortably, and at reasonable cost.  The Taiwan Railway 
Administration operates an extensive rail network that is more than 
1,000 kilometers in length.

B.  Language

Mandarin is the official language.  Taiwanese, a variant of the Fukien 
dialect, is also commonly spoken, especially in the southern and rural 
areas.  English is by far the most popular foreign language, and large 
numbers of people speak it with fluency.  In particular, those working 
in hotels, business, or public organizations are likely to have a good 
command of the language.  Moreover, many people, especially those 
educated before the Second World War, can also speak Japanese.

C.  Communications

In general, Taiwan's telecommunications systems are efficient and 
convenient.  Cities in Taiwan are plentifully supplied with blue public 
phones that can be used for both local calls and domestic long-distance 
calls.  Facsimile is widely used everywhere in Taiwan.  Direct 
transmission is available to many countries in the world as well.  Most 
major companies, hotels, and business service centers have facsimile and 
telex services.  In addition, the International Telecommunications 
Administration (ITA) also has extensive videoconference facilities in 
its Taipei Communications Building.

D.  Accommodations and Housing

Taiwan has a large number of international- and domestic-standard 
hotels, hostels, and inns.  For those who plan to stay in Taiwan on a 
long-term basis, a wide selection of apartments and houses is available.  
Rental costs vary considerably, depending on location and size.  
Typically, rents in Taipei and environs are far higher than those in 
other parts of the island.  Landlords frequently require deposits of up 
to two months' rent, and tenants are usually responsible for utilities.

E.  Health information

As in many other tropical and sub-tropical areas, tap water in Taiwan 
should be boiled before drinking.  Hotels and restaurants do provide 
drinking water, and bottled mineral water is widely available.  Visitors 
should also take special care to wash all fruits and vegetables before 
eating and avoid eating in any of the island's countless street stalls, 
at least during the first few weeks of their stay.

There are numerous international-standard private and public hospitals 
and clinics.  Taiwan also offers high quality dental care, with most 
clinics being privately operated.  The majority of doctors and dentists 
in Taiwan speak English well.
  
Many western brand-name pharmaceuticals are sold in Taiwan, often 
without prescription.  In addition, a wide range of foreign and domestic 
over-the-counter non-prescription drugs is available.  Visitors should, 
however, bring sufficient supplies of any specific medications they 
might require.  Emergency medical treatment can be obtained by dialing 
119.

G.  Food

Chinese cuisine ranks among the best in the world, and there is no 
better place to sample it in all its infinite variety than in Taiwan.  
In the countless large and small restaurants, specialties from almost 
every region can be found.  Major regional styles include the Peking, 
Cantonese, Shanghai, Szechwan, and Hunnan cuisines.  The local Taiwan 
cuisine and traditional Buddhist vegetarian restaurants are also well 
represented.

Western food is gaining in popularity, as can be seen from the many 
western-style restaurants and foreign fast food chains that have set up 
branches in Taiwan's large cities in recent years.  Visitors will find 
everything from hamburgers, pizza, and steaks to the finest European 
cuisine.

Establishments serving other Asian cuisines can also be found in growing 
numbers in Taipei.  Vietnamese, Thai, Indian, Malaysian, Korean and 
Japanese food are all big favorites with the city's residents, with the 
latter two being particularly popular.

Foreign visitors should not overlook the fragrant teas for which Taiwan 
is justly famous.  These teas can either be purchased in attractive 
packages for use at home or sampled in one of the island's many 
traditional Chinese-style tea houses.



  CHAPTER X: APPENDICES


  Appendix A:  Country Data


Population:  21.13 million (on 12/31/94)
Population Growth Rate:  0.87 percent 
Religions:  Buddhism, Confucianism, Taoism,   Christianity
Government System:  Democracy   
Languages:  Mandarin (official), Taiwanese, Hakka.    Frequent use of 
English and Japanese in   business settings.
Work Week:  Monday - Saturday morning.




Appendix B:  Domestic Economy
(USD millions, except where noted)

                                1994    1995(e)   1996(f)
                              -------- --------- ---------
GDP (current)                  241,209  271,471   299,000
GDP Growth Rate (percent)          6.5      6.9       6.4
GDP Per Capita (USD)            11,604   12,944   141,000
Government Spending as      
  Percent of GDP                  23.7     23.0      23.2
Inflation (percent)                4.1      3.9       3.5
Unemployment (percent)             1.6      1.6       1.6
Foreign Exchange Reserves       92,454  100,000   110,000
Average Exchange Rate for
  USD 1.00                       26.45    25.61     25.35
Debt Service Ratio (as percent
  of exports of goods &
  services)                       1.83     1.80      1.78
U.S. Economic/Military
  Assistance                         0        0         0

Sources:
1. Directorate General of Budget, Accounting and Statistics
2. Central Bank of China
3. AIT/T



Appendix C:  Trade
(USD millions, except where noted)

                                1994    1995(e)   1996(f)
                              -------- --------- ---------
Total Country Exports (fob)    93,049  110,600   124,000 
Total Country Imports (cif)    85,349  104,600   120,000
Trade Balance                   7,700    6,000     4,000

U.S. Exports to Taiwan (cif)   18,043   19,900    27,600
U.S. Imports from Taiwan (fob) 24,337   26,600    22,800
Trade Balance with U.S.         6,294    6,700     4,800

Sources:
1. Ministry of Finance
2. Directorate General of Budget, Accounting and Statistics
3. AIT/T




Appendix D:  Investment Statistics

-------------------------------------------------------
-                       Table 1
-   Foreign Investment Approvals By Year and By Area
-           (1952-1994) (unit: U.S. dollar million)
-------------------------------------------------------
Year   Japan   U.S.A.  Hong Kong  Europe  others  total
----  -------  ------  ---------  ------  ------ ------
52-79    415     763      301       265     508   2,252
1980      89     190       40        15     132     466
1981      66     206       35        13      76     396
1982     152      92       41        47      48     380
1983     198      99       24        21      63     405
1984     115     241       65        91      47     559
1985     146     341       29       100      87     703
1986     256     147       76       135     156     770
1987     432     447      181       214     145   1,419
1988     445     161      157        98     322   1,183
1989     668     381      248       315     806   2,418
1990     839     581      236       283     363   2,302
1991     535     612      129       165     337   1,778
1992     421     220      213       165     442   1,461
1993     278     235      169       215     316   1,213
1994     396     327      251       245     412   1,631
------  ----   -----   ------    ------   -----  ------
52-94  5,452   5,043    2,195     2,385   4,261  19,336
---------------------------------------------------------
Source: Foreign Investment Commission


---------------------------------------------------------
Table 2
Foreign Investment Approvals by Industry and by Area
(1952-1994) (unit: U.S. dollar million)
---------------------------------------------------------
Industry                   Hong                  Total
             Japan  U.S.A. Kong   Europe  Other  
Total        5,452  5,043  2,195  2,385   4,261  19,336
Electronic   1,344  1,986    295    549     378   4,551
and electric
appliances
Chemicals      540    999    230    699     353   2,820
Other Services 649    414    253    131     766   2,213
Banking and    124    180    222    289     618   1,433
Insurance
Trade          601    235    237    124     216   1,413
Machinery      670    261     96    100     286   1,413
Basic metals   492    258    118    121     247   1,237
and metal
products
Food and       173    189     91     90     309     852
beverage
processing
non-metallic   129    163     76     71     180     620
minerals
rubber         216     53     65     54     170     494
products
Transportation  31     41    116      1     277     466
Textiles       114     70     59     23     104     370
Wholesale and   60     11     18     29     200     319
retail
Construction    43     15     82      9      45     194
Transport       53      5     77     23      22     181
equipment
Others         212    163    161     72     152     760




-------------------------------------------------------
-                       Table 3
-   Outward Investment Approvals by Year and by Area
-           (1952-1994) (unit: U.S. dollar million)
-------------------------------------------------------
-     mainland                  other n/s
Year  China    U.S.A.   ASEAN    America  others  total
----  -------- ------  --------   ------  ------ ------
52-79   n.a.       9       31         5      15      59
1980    n.a.      35        3         0       4      42
1981    n.a.       2        3         0       6      11
1982    n.a.       3        9         0       0      12
1983    n.a.       3        6         0       2      11
1984    n.a.      31        7         2       1      39
1985    n.a.      36        4         0       2      41
1986    n.a.      46        8         1       2      57
1987    n.a.      70       16        10       6     103
1988    n.a.     123       59         7      29     219 
1989    n.a.     509      282       116      25     931
1990    n.a.     429      567       410     146   1,552
1991     174     298      703       361     295   1,830
1992     247     193      289       256     149   1,134
1993   3,168     529      275       211     646   4,829
1994     962     144      289       844     340   2,579
------  ----   -----   ------    ------   -----  ------
52-94  4,552   2,458    2,551     3,223   1,667  13,449
---------------------------------------------------------
Source: Foreign Investment Commission
Note: A new registration requirement for PRC investments went into 
effect in 1993. 1993 statistics thus include investments made prior to 
1993 but not previously registered.





---------------------------------------------------------
Table 4
Outward Investment Approvals by Industry and by Area
(1952-1994) (Unit: U.S. dollar million)
---------------------------------------------------------
Industry    Mainl.   USA    ASEAN   Other  Other   Total
            China                   N/S
                                    Amer.
Total       4,552  2,458   2,551   2,223  1,666   13,449
Banking and     2    560      91   1,392    259    2,304
Insurance
Electronic    668    476     712     146    117    2,120
and electric
appliances
Chemicals     291    672     316      42     17    1,338
Basic metals  367     18     477       -     26      888
and metal
products
Food and      536    160      56       -     61      814
beverage
processing
Other services 88    215      20     174    272      770
Trade          37    126      33     184    333      714
Textiles      257      -     251       5    110      623
Non-metallic  278      5     197       1     59      540
minerals
Plastic       517      -       9       -      2      528
products
precision     353      3       2       1      9      367
instrument
Transport     177      2       1       -    176      356
Equipment   
Paper         116      4     108       -    115      343
products
and printing
Rubber        187     49      88       9      8      342
products
Other         676    165     190     268    102    1,402
 





--------------------------------------------------------
Table 5
-  Technical Cooperation Projects by Year and by Area
-        (1952-1994) (unit: number of projects)
-------------------------------------------------------
Year           Japan    U.S.A..    Europe  others  total
----           ------  --------   ------  ------ ------
52-79            926      253       116      22   1,317
1980              84       43        13       3     143
1981              55       36        26       7     124
1982              78       39        24       3     144
1983              83       29        28       1     141
1984              99       42        26       1     168
1985             118       49        26       4     197
1986             105       41        37       9     192
1987             185       53        45      12     295
1988             154       71        40      13     278 
1989             109       72        31      28     222
1990             106       54        30      10     200
1991              80       65        33       8     186
1992             193       50        19      10     175
1993              85       50        34      12     181
1994              70       39        24       6     139
------         -----   ------    ------   -----  ------
52-94          2,433      986       552     131   4,102
---------------------------------------------------------
Source: Foreign Investment Commission


---------------------------------------------------------
Table 6
Technical Cooperation Projects
by Industry and by Area
(1952-1994)
(Unit: number of projects)
---------------------------------------------------------
Industry          Japan  U.S.A.  Europe  Others  Total
Total             2,433    986     552      131  4,102
Electronics and     693    400     103       14  1,210
electric appliances
Chemicals           407    196     157       27    787
Machinery           363     66      97        9    535
Basic metals and    323     53      53        6    435
metal products
Other services      111    105      26       41    283
Rubber products     131     32      21        4    188
Non-metallic         96     22      23        2    143
minerals
Food and beverage    80     38      12        9    139
processing
Others               63     13      20        -     96
Textiles             47     21       8        2     78
Construction         35      5      10        4     54
Garment and footwear 18     14       4        3     39
Paper products       19     13       4        -     36
and printing
Transport            17      1       7        1     26
equipment
Others               30      7       7        9     53
 


--------------------------------------------------------           
Table 7      
Selected Major U.S. Investments in Taiwan
-------------------------------------------------------
-                                   U.S..     
-                       Registered  Investor 
U.S. Investor/          Capital     Share     Major
Local investment        (U.S. dollar mil.)  (percent) Products
----------------------  ----------  --------- ---------
Ensite limited (ford motor)/   21       70   Autos
Ford lio ho motor co.

Texas Instruments Inc./        28      100   Semi-
Texas Instrument Taiwan, ltd.                Conductors

Texas Instruments Inc./       167       26   drums
Ti-acer inc.

General Instrument Corp./      47      100   Semi-
General Instrument of Taiwan                 Conductors
Ltd.                                         Converters

AMOCO Chemical Corp./         122       50   Petro-
China American Petrochemical                 Chemicals
Co., Ltd.

AETNA Life Insurance Co./     112      100   Insurance
Taiwan branch

Motorola Inc./                 39      100  Integrated
Motorola Electronics Taiwan                 Circuits

E. I. Dupont de Nemours/      92      100  Industrial,
Dupont Taiwan                              Electronic
-                                           & Agricul-
-                                           tural
-                                           Products

IBM Corp./                     14      100  Computers:
IBM Taiwan                                  Sales and 
-                                           Services

Goodyear Int'l Corp./           8       76  Tires/Tubes
Goodyear Taiwan

Uniroyal Inc./                 15       80  Anti-
Premier Chemical Co.                        Oxident
-------------------------------------------------------
Source: AIT/Taipei


-------------------------------------------------------
-                       table 8
-    Selected Major Japanese Investments in Taiwan
-------------------------------------------------------
Japanese Investor/           Major         
Investment                   Products
--------------------------   --------------------------
Aankyo co./                  Pharmaceuticals
Sankyo co. Taipei

Idemitsu co/                 Petrochemicals
Shinkong Idemitsu corp.

Nissan Motors/               Autos
Yue Loong Motors

Sanyo Electric c./           Electrical appliances
Sanyo Electric (Taiwan)

Mitsui co./                  Trading
Mitsui (Taiwan)

Takashimaya co./             Department stores
Ta-ya Takashimaya Dept. Store

Toshiba co./                 Compressors
Toshiba Compressor (Taiwan)

Sumitomo co./                Trading
Sumitomo (Taiwan)

Diamond Housing co.          Consulting
Diamond Investment co.

Japan Asia Airlines/         Hotels
Hwa Ya Development co.
-------------------------------------------------------
Source: Foreign Investment Commission



-------------------------------------------------------
-                      Table 9
-    Selected Major European Investments in Taiwan
-------------------------------------------------------
Japanese Investor/           Major         
Investment                   Products
--------------------------   --------------------------
Volkswagen ag/               Machinery
Ching Chung Motor co.

Dresdner Bank ag/            Securities
Grand Cathay Securities

Imperial Chemical Inc./      Chemicals, Pharmaceuticals

N.v. Philips/                Electronics
Philips Electronics (Taiwan)

Shv International ag/        Food Processing
Macro Taiwan ltd.

Merck ag/                    Chemicals
Merck-Canto Advanced Chemical

Refa ltd./                   Chemicals
Ciba Geigy Taiwan

Internallianz Bank, Zurich/  Securities
Kwang Hwa Securities

Glaxo Group ltd./            Pharmaceuticals
Glaxo Taiwan ltd.

Horwood Investment/          Chemicals
Chi Mei Industry co.

H.S. Development & Finance/  Banking
Chinatrust Commercial Bank
-------------------------------------------------------
Source: Foreign Investment Commission


  
  Appendix E:  U.S. and Country Contacts


1.  U.S. Trade Related Contacts
-------------------------------

American Institute in Taiwan (AIT)
Commercial Section
Chief: William Brekke
Deputy Chief: Alan Turley
Suite 3207, 333 Keelung Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-720-1550
Fax: 886-2-757-7162

Agriculture Section
Chief: Debra Henke
Trade Officer: Daniel Martinez
7, Lane 134, Hsin Yi Rd., Sec. 3, Taipei, Taiwan
Tel: 886-2-709-2000
Fax: 886-2-709-2054

Economic Section
Chief: Lauren Moriarty
Eco. Officer: Simon Schuchat
7, Lane 134, Hsin Yi Rd., Sec. 3, Taipei, Taiwan
Tel: 886-2-709-2000
Fax: 886-2-702-7675

Washington-Based Country Contacts
---------------------------------

AIT/Washington
Trade and Commercial Programs
Director: Ray Sander
Suite 1700, 1700 N. Moore Stret
Arlington, VA 22209 
Tel: 703-525-8474
Fax: 703-841-1385

U.S. Department of Commerce
Taiwan Desk Officers
Scott Goddin
Laurette Newsom
Room 2327, 14th and Constitution Ave. NW
Washington, D.C. 20230
Tel: 202-482-4681
Fax: 202-482-4098

U.S. Department of Commerce
US&FCS East Asia Pacific
Director: Herbert Cochran
Room 1229, 14th and Constitution Ave. NW
Washington, D.C. 20230
Tel: 202-482-2429
Fax: 202-482-5179

U.S. Department of Commerce
Trade Information Center
Room 7424, 14th and Constitution Ave. NW
Washington, D.C. 20230
Tel: 1-800-USA-TRADE

U.S. Department of Agriculture
Foreign Agricultural Service
Trade Assistance and Promotion Office
South Building, 14th and Independent Ave. SW
Washington, D.C. 20250
Tel: 202-720-7420

2.  AmCham and/or Bilateral Business Councils
---------------------------------------------

American Chamber of Commerce
President: Christian Murck
Rm. 1012, 96 Chungshan N. Rd., Sec. 2, Taipei, Taiwan
Tel: 886-2-581-7089
Fax: 886-2-542-3376

China External Trade Development Council
Secretary-General: Ronie H.K. Huang
4-8F, 333 Keelung Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-725-5200
Fax: 886-2-757-6653

3.  Trade or Industry Associations
----------------------------------

Chinese National Asociation of Industry & Commerce
Chairman: Jeffrey Koo
13F, 390 Fuhsing S. Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-707-0111
Fax: 886-2-701-7601

Chinese National Federation of Industries
Chairman: Kao Chin-yen
12F, 390 Fuhsing S. Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-703-3500
Fax: 886-2-703-3982

4. Public Agencies
------------------

Ministry of Economic Affairs (MOEA)
Minister: P.K. Chiang
15 Foochow St., Taipei, Taiwan
Tel: 886-2-321-9273
Fax: 886-2-391-9398

Ministry of Finance (MOF)
Minister: Lin Chen-Kuo
2 Aikuo W. Rd., Taipei, Taiwan
Tel: 886-2-322-8006
Fax: 886-2-321-1205

Board of Foreign Trade (BOFT), MOEA
Director General: Lin Yi-fu
1 Hukou St., Taipei, Taiwan
Tel: 886-2-321-0717
Fax: 886-2-351-3603

Ministry of Transportation and Communications (MOTC)
Minister: Liu Chao-shiuan
2 Changsha St., Sec. 1, Taipei, Taiwan
Tel: 886-2-349-2900
Fax: 886-2-389-6009

Directorate General of Telecommunications, MOTC
Director General: Steven Y. Chen
31 Aikuo E. Rd., Taipei, Taiwan
Tel: 886-2-341-5123
Fax: 886-2-395-2763

Council of Agriculture (COA), Executive Yuan
Chairman: Sun Ming-hsien
37 Nanhai Rd., Taipei, Taiwan
Tel: 886-2-311-9175
Fax: 886-2-361-4397

Council for Economic Planning and Development (CEPD)
Chairman: Hsu Li-teh
9F, 87 Nanking E. Rd., Sec. 2, Taipei, Taiwan
Tel: 886-2-562-7694
Fax: 886-2-551-9011

Department of Health (DOH), Executive Yuan 
Director-General: Pao-ya Chang, M.D.,M.P.H., Ph.D.
100 Aikuo E. Rd., Taipei, Taiwan
Tel: 886-2-396-7166
Fax: 886-2-341-8994

Environmental Protection Administration (EPA), Executive Yuan
Administrator: Chang Lung-sheng
41 Chunghwa Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-321-7888
Fax: 886-2-321-2491

5.  Market Research Firms
-------------------------
(Partial listing)
 
InterMatrix Taiwan
General Manager: Alan Beebe
5/F, 156-1, Sung Chiang Rd., Taipei, Taiwan
Tel: 886-2-567-0159
Fax: 886-2-567-1267

A.C. Nielsen Co
CEO: Everett C. Holmes
8/F-2, 87 Sung Chiang Rd., Taipei, Taiwan
Tel: 886-2-506-6823
Fax: 886-2-507-9440

Investec-Coopers Lybrand Consulting Ltd.
Managing Director: Michael McNabb
3/F, 367 Fu Hsing N. Rd., Taipei, Taiwan
Tel: 886-2-715-2822
Fax: 886-2-545-1185

6.  Commercial Banks
--------------------

(Partial listing)

American Express Bank, Ltd.
Senior Director & Gen. Mgr: Howard Law
3rd & 4th F, 214 Tunhwa N. Rd., Taipei, Taiwan
Tel: 886-2-715-1581
Fax: 886-2-713-0263

Citibank, N.A.  
Corporate Officer: Thomas M. McKeon
52 Minsheng E. Rd., Sec. 4, Taipei, Taiwan
Tel: 886-2-715-5931
Fax: 886-2-712-7388

The First National Bank of Boston
VP Corporate Banking: Patrick Jean
5/F, 137 Nanking E. Rd., Sec. 2, Taipei, Taiwan
Tel: 886-2-506-3443
Fax: 886-2-508-4462

Bank of Taiwan
Chairman: Y.D. Shen
120, Chungking S. Rd., Sec. 1, Taipei, Taiwan
Tel: 886-2-314-3399
Fax: 886-2-381-4139

International Commercial Bank of China
Chairman: P.Y. Pai
100 Chilin Rd., Taipei, Taiwan
Tel: 886-2-563-3156
Fax: 886-2-561-1216

The Multilateral Development Bank 
Office Director: Brenda Ebeling
14th and Constitution, NW
Washington, D.C. 20007
Tel: 202-482-3399
Fax: 202-482-5179


  Appendix F:  Market Research


A.  List of FY'95 Industry Subsector Analysis (ISA)

             Subject
------------------------------------------
 1.  Broadcast equipment
 2.  Industrial air pollution control equipment
 3.  Biotech applications/human health care
 4.  Semiconductors
 5.  Commercial printing
 6.  Non-residential building supplies
 7.  Hair care products
 8.  Educational toys
 9.  Game software
10.  Local area networks
11.  Semiconductor manufacturing equipment
12.  Specialty vehicles
13.  Chromatographic and spectroscopical equipment
14.  Implantable medical devices
15.  Oscilloscopes
16.  Textiles furnishings
17.  Medical waste control equipment
18.  Customer premise equipment: cordless
19.  Dietary supplements
20.  Programmable controllers
21.  Golf equipment
22.  Networking software
23.  Sightseeing-tour services
24.  Securities
25.  CAD/CAM
26.  Business training
27.  Spirits
28.  Household kitchenwares

B.  Agriculture Section - Market Briefs

Lobster
Fish
Mullet Roe
Sea Cucumber
Pet Food
Snack Food
Cookies and Crackers
Candy
Juice, 100% Pure
Juice, Concentrate
Juice, Drinks
Water
Wine
Beer
Distilled Spirits
Milk
Ice Cream
Cheese
Nuts
Fresh Fruits and Vegetables
Frozen Foods
Frozen Vegetables
Health Food
Dried Fruit
Breakfast Cereal
Cut Flowers
Vegetable and Flower Seeds
Taiwan Food Market (AMP Report)
Taiwan's Food Retailing in Transition 
  


B.  ISA Plan for FY 1996


No.  ISA List
---  ------------------------------
 1.  Integrated circuits
 2.  Commercial passenger aircraft
 3.  Health insurance
 4.  Business application software
 5.  Electronic testing equipment
 6.  Electric generating equipment
 7.  Education services
 8.  Electronic laboratory instruments
 9.  Domestic electrical appliances
10.  Engineering plastics
11.  Process control/pulp & paper industry
12.  Industrial waste treatment equipment
13.  Orthopaedic appliances
14.  Petrochemical production machinery
15.  Security systems
16.  Futures
17.  Insulation materials
18.  Radio/TV broadcasting/studio equipment






Note:  A complete list of ISA reports is available on NTDB.
  
  Appendix G: Trade Event Schedule


Event name: Michigan Environmental Trade Mission
Event date: October 19 - 20, 1995
Industry theme: POL, MCS
Type of event: Certified TM (Trade Mission)
Location: Taipei World Trade Center
Background of participants: Manufacturers, sales agents, engineering and 
consulting firms

Event name: Taipei Int'l Medical Equipment & Pharmaceuticals Show
Event date: November 10 - 12, 1995
Industry theme: MED, HCS, BTC, DRG, and computer products for medical 
purposes
Type of event: TFO (Trade Fair Overseas Procured)
Location: Taipei World Trade Center
Background of participants: Manufacturers and sales agents

Event name: Textile Home Furnishing Trade Mission
Event date: November - December, 1995
Industry theme: TXP 
Type of event: TM (Trade Mission)
Location: Taipei World Trade Center
Background of participants: Manufacturers and sales agents

Event name: Environmental Trade Mission
Event date: December 7 - 8, 1995 Taipei
            December 11 - 12, 1995 Kaohsiung
Industry theme: POL, MCS
Type of event: TM (Trade Mission)
Location: Taipei World Trade Center
Background of participants: Manufacturers, sales agents, engineering and 
consulting firms

Event name: The 5th Taipei Int'l Book Exhibition
Event date: January 19 - 24, 1996
Industry theme: BOK, CD-ROM titles
Type of event: PVF (Privatized Fair)
Location: Taipei World Trade Center
Background of participants: Publishers and sales agents

Event name: Taipei Int'l Sporting Goods Show
Event date: April, 1996
Industry theme: SPT
Type of event: TFW (Trade Fair Washington Procured)
Location: Taipei World Trade Center
Background of participants: Manufacturers and agents 

Event name: Computer Software Trade Mission
Event date: April, 1996
Industry theme: CSF, CPT
Type of event: TM (Trade Mission)
Location: Taipei World Trade Center
Background of participants: Manufacturers, sales agents, and software 
house 

Event name: Taipei International Food Industry Show
Event date: June, 1996
Industry theme: FPP, FOD, MFI
Type of event: TFO (Trade Fair Overseas Procured)
Location: Taipei World Trade Center
Background of participants: Manufacturers, sales agents
 
Event name: Computex '96
Event date: June 6 - 10, 1996
Industry theme: CPT
Type of event: SFO (Solo Fair Overseas Procured)
Location: Taipei World Trade Center
Background of participants: Manufacturers and agents of computers and 
peripherals in related fields 

Event name: Royal College of Surgeons 
Event date: June 1, 1996
Industry theme: MED
Type of event: TFW (Trade Fair Washington Procured)
Location: Taipei World Trade Center 
Background of participants: Manufacturers and sales agents of medical 
supplies 

Event name: Growth Industries USA Multi-state/Catalog show
Event date: July 1, 1996
Industry theme: GIE
Type of event: RC (Regular Catalogue Show)
Location: Taipei World Trade Center
Background of participants: Manufacturers and agents
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