Taiwan has a comparatively small eCommerce market but attracts many foreign exporters who wish to penetrate the Asian market.
Companies often see a specific demand for their products in the Taiwanese market or sell here in addition to other countries.
For example, Shopee is one marketplace that operates in multiple countries and regions, including Taiwan ROC, as well as Vietnam, Singapore, Malaysia, Philippines, Thailand, Indonesia, and Korea.
In this article, we go into greater detail and cover the most important topics for exporters that want to enter the Taiwanese eCommerce market.
If there’s anything else you wonder about, feel free to write a comment at the end of the article.
Topics covered:
- Market Entry Strategy
- Taiwan Market Entry Obstacles
- Market Entry Research
- Incorporation
Market Entry Strategy
Market entries can differ depending on the sales goals and level of commitment among companies. While some brands just want to test a market and increase local awareness, other companies have vast goals to increase sales rapidly.
Below you can find three different segmentations of what market entries mean.
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- Selling on Tmall & Lazada
- Logistics & fulfillment options
- Payment gateways
- Incorporation & trademarks
Initial Marketing Campaigns
Initial marketing campaigns and work are used to increase local brand awareness, warm-up, or test the market. Companies that have little brand awareness often have to dedicate more time and finances for this phase.
Examples of events that can be part of initial marketing campaigns include the setups of pop-up stores, offline activities, tastings, or by working with key-opinion-leaders (KOLs), for example.
Initial marketing campaigns can be crucial as operating costs can be high at the start.
Cross-Border E-Commerce
Taiwan is located within proximity to places like Hong Kong SAR and Singapore, making cross-border sales a viable option. You can also store the products in a bonded warehouse in mainland China, even if this can be comparatively complex.
Shopee is one marketplace that is available in Taiwan, as mentioned, allowing you to sell cross-border here. Having said that, many Taiwanese buy products from mainland Chinese websites such as Taobao.
Thus, many companies find it easier to import products to Taiwan, coming closer to the market and reducing shipping lead times and costs.
At the moment, you won’t find as many cross-border marketplaces here compared to Southeast Asia and mainland China.
Domestic E-Commerce Operation
Taiwan has a few eCommerce marketplaces and buyers primarily visit the likes of Shopee and Taobao, for example, when shopping for products.
Due to the limited amount of cross-border sales solutions, it can be beneficial to sell on domestic eCommerce websites instead.
In short, this requires that you set up a local company and/or work with an importer and register the products with the local authorities.
This will also give you the option to sell the products offline such as in restaurants, hotels, or general stores, for example.
Incorporating and selling locally comes with additional challenges and costs, something that you must study well in advance before entering the market.
Taiwan Market Entry Obstacles
Below you can find some of the main entry obstacles that companies face when entering the Taiwanese market.
Tariffs
Exporters must pay the related import duties and VAT before the products can reach the final consumers. Duties can determine whether companies enter or leave markets or not.
Mainland China, for example, imposed duties towards Australian imports of wine, resulting in heavy losses and increased competition.
At the same time, Vietnam recently signed an FTA with the European Union, offering new opportunities for companies.
The VAT is generally 5%, which is comparatively low to many other countries. Examples of commodity taxes charged for different products include:
- Rubber tyres: 10% – 15%
- Beverages: 8% – 15%
- Electrical appliances: 10% – 20%
- Vehicles: 15% – 30%
Setup Costs
If you plan to import your products to Taiwan and sell on domestic eCommerce platforms, you have to set up a local entity that comes with setup fees and running costs.
I have mentioned this briefly above and we will cover this topic more later in this article.
Product Standards & Labeling Requirements
Even if labeling and certification standards are similar in Taiwan compared to Western countries, there are unique guidelines that have to be followed.
Example A: Food Packaging
According to the website of the Laws & Regulations Database of the People’s Republic of China, the following content must be included on food labels:
- Product name (food category)
- Quality specifications (combination and composition of the quality of contents)
- Origin (the sources of raw materials for food production)
- Net weight
- Grinding date (the date of production)
- Expiration date
- Name, telephone number, and address of the manufacturer
- Name, telephone number, and address of the domestic responsible manufacturer
The regulations are managed by the Council of Agriculture（行政院農業委員會).
Example B: Safety Mark
The Bureau of Standards, Metrology and Inspection (BSMI) is responsible for the management of the safety mark in Taiwan, called the TS Mark.
Be sure to apply for the mark if your products are subject to this safety mark, which is the equivalent of the CE mark in the EU, for example.
Market Entry Research
Before you enter a new market, you must have a robust strategy and prepare for entry. Below you can find necessary research needed prior to entering a market.
Marketplace Research
Doing thorough research about which marketplaces that best suit your products and sales goals is of utter importance. Most of the eCommerce marketplaces used in Taiwan are either foreign or headquartered in mainland China.
Some of the marketplaces accept cross-border sales while some don’t. Besides, the payment options, as well as operating costs, should be studied well in advance. Some of the biggest and most popular marketplaces are listed below.
Shopee.tw
Shopee is one of the biggest eCommerce marketplaces in Southeast Asia and is partly owned by the large Chinese company, Tencent. Since 2015, Shopee has expanded at an incredible pace, and shoppers are attracted by its low shipping costs and wide product assortment.
In 2021, it was also announced that the marketplace plans to enter the South American market, starting with Brazil.
Selling on Shopee is significantly cheaper compared to the likes of Tmall Global and JD on the mainland. Not only can you sell cross-border with Shopee, but they also offer Payoneer as a payment solution, making transactions easy.
It can be worthwhile to sell cross-border on Shopee if you just want to test the Taiwanese market. You also have access to 7 other markets at the same time then.
Yahoo! Taiwan Shopping
Yahoo! Taiwan Shopping is popular in Korea, Japan, and Taiwan but rarely heard of in other places.
Yahoo offers both auctions and regular sales services in Taiwan. The auction site is called Yahoo! Auctions and has a market share of 18.4%.
Yahoo! Shopping Taiwan, on the other hand, accounts for 17.9% of the market, thus being slightly smaller than the auction site.
Auctions are more popular in the Asian region compared to Western markets.
Setup Costs
Setup costs can be significantly high in places like mainland China, as the eCommerce market landscape is completely different from that of other countries.
Working with a Tmall operator can cost thousands of US dollars per month, while the setup costs can be in the tens of thousands of dollars.
If you plan to do a full market entry in Taiwan, keep in mind that you have to set up a local entity and pay for shipping, import tariffs, initial campaigns, and more.
Additional costs for product registrations, certifications, as well as potential pop-events will apply.
Competitor Cost Analysis Research
We generally recommend companies conduct a market study before entering a new market. The report will help you understand the local competition, future sales potentials, get a pricing overview, and more.
With that said, companies can also perform a simpler market analysis at the start by visiting local websites, for instance.
In mainland China, some third-party service providers even visit offline stores and take pictures of products on shelves.
Shipping & Logistics
Selling cross-border or on domestic eCommerce websites will also determine your shipping options. If you sell your products, you cannot import and store the products in Taiwan.
As a result, sellers often store products in fulfillment in Hong Kong, for example.
This generally results in higher and longer shipping costs as domestic sellers can store their products in Taiwan.
Yet this also comes with additional challenges as you often have to deal with more product registrations and certifications, as mentioned.
If you sell bulkier or perishable products, then importing the products is the most suitable option.
Incorporation
Companies that plan to import and sell products domestically in Taiwan must set up legal entities first. This is the case unless you work with an importer or distributor that can manage the imports on your behalf.
Having said that, many companies prefer to manage the imports on their own to keep control of sales and the supply chain.
General Requirements
Below you can find the general requirements when incorporating in Taiwan.
- Name of the company
- Purpose of the business
- Location of the company’s offices
- Names of all directors
- Shareholder’s contributions
- Profit-allocation ratio
- Manner of issuing public announcements
- The date that the articles of incorporation were adopted
Documentation
The documents needed will be as below:
- Company registration letter
- Company registration form
- Representative’s copy of passport
- Representative’s copy of Alien Resident Certificate (some banks accept the Taiwan ID)
- Company and representative chops
If a shareholder is a company then additional will be needed as follows:
- Organization structure until the ultimate beneficial owner (individuals)
- Shareholder list of each layer of the company
- Director list of each layer of the company
- Copy of passport for any ultimate beneficial owner who directly or indirectly holds the Taiwan business entity 25% or more of ownership
