Financial services are among the biggest UK exports to Taiwan and have grown at 14% per year on average for the last decade. Banks are also among the largest UK investors in Taiwan. The Taiwanese banking sector is overbanked and conservatively regulated, but there are some signs that this is now changing. This year Taiwanese politicians have said that they would like to liberalise the financial sector further and, perhaps, consolidate Taiwanese banks.
While the rest of the world slowly emerges from the economic downturn, the Taiwanese economy continues to display encouraging signs of recovery resulting from abundant liquidity in the banking system and huge foreign exchange reserves. A current account surplus, zero foreign debt, and moderate public debt contribute to Taiwan’s outstanding macroeconomic performance as well giving the ability to weather international financial crises.
The steady economic growth, high saving rates, and ongoing financial liberalisation make Taiwan an attractive market for international capital. Increasing opportunities in wealth management, foreign currency securities exchange, pension fund management and training in financial service are worth noting.
The continuing cross-straits rapprochement is likely to lead to further opportunities for companies with capabilities in wealth management, corporate/trade finance, and investment advisory.
With the implementation of the Economic Co-operation Framework Agreement (ECFA, a quasi free trade agreement), Taiwanese banks, insurers and futures and securities firms are now able to operate in China. In addition, on 21 June 2013, a Cross-strait Trade in Service Agreement, signed by Taiwan and China, opens the service market in eleven areas to both sides. Financial services are among the key points of the service agreement and China’s opening to Taiwan in this respect exceeds its WTO commitments, and is even better than the treatment accorded to Hong Kong under Closer Economic Partnership Agreement. It offers Taiwan in a more competitive business position, especially for the financial services sector. The Cross-strait Trade in Service Agreement reduces restrictions on investment by Taiwanese financial companies; Taiwanese banks could reduce the cost of setting up business in China and Taiwanese securities companies could enjoy an easier route to obtaining qualified foreign institutional investor (QFII) status.
RMB business – A cross-strait RMB clearance agreement was signed in August 2012 and in January 2013 Taiwan and China signed an agreement on RMB settlement (the revision of the Regulations Governing Foreign Exchange Business of Banking Enterprise). Bank of Taiwan (Shanghai Branch) and Bank of China (Taipei Branch) are the settlement banks for NT Dollar and RMB currency. Standard Chartered forecast RMB deposits in Taiwan will reach RMB100-150bn by the end of 2013 and RMB 1 trillion by end of 2015 (by comparison deposits in the UK totalled RMB3bn last year). However, Taiwanese financial regulation is relatively conservative and, as a result, Taiwan has not yet developed a sizeable market for RMB products. The agreement enables the banks to provide all operations in RMB and promote Taiwan as an important offshore RMB financial centre, and offers diversified opportunities in introducing RMB denominated financial products. Additionally, it also allows Taiwanese to repatriate earnings back to Taiwan and is expected to provide a fertile market for financial services companies to further tap into such wealth from Greater China.
Opportunities for finance and professional service sector in Taiwan’s free economic pilot zones .It is expected the restrictions for financial products will be relaxed in the pilot zones, especially for off-shore structured products denominated in foreign currencies, also to be the idea business basis to develop a sizeable personal wealth fund management business, targeting Mainland Chinese who want to offshore their money.
Getting into the market
In Taiwan the regulatory standards for financial and professional service sector are generally similar to those of the EU, but there are some differences- so British companies wishing to develop their business in the Taiwanese market are advised to undertake as much market research and planning as possible in the UK.
UKTI’s team in Taiwan, with its wide local knowledge and experience, can provide a range of services to British-based companies wishing to grow their business in global markets.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Vicki Wu, British Trade and Cultural Office , Senior Commercial Officer; Tel: +886 2 (02) 8758 2065 or email: Vicki.Wu@fco.gov.uk.
Johanna Tsao, British Trade and Cultural Office, Commercial Officer; Tel: +886 2 (02) 8758 2030 or email: Johanna.Tsao@fco.gov.uk.
The 18th Taiwan Britain Business Council (TBBC) on 19-20 May 2014 in London
Since its establishment in 1997, Taiwan Britain Business Council (TBBC) has always played an essential role in promoting and strengthening trade and investment relations between Taiwan and the United Kingdom. Thanks to the strong support of the UK Trade & Investment and the Bureau of Foreign Trade in Taiwan as well as the enthusiastic participation of both business communities, the Taiwan British Business Council meets once a year, alternately in the UK and Taiwan, to facilitate bilateral trade exchange and investment collaborations.
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.