Tue, Apr 14, 2009 page4

• COMMUNITY COMPASS: Foreigners face special business challenges

  Opening a business in Taiwan is relatively easy if one is aided by a local specialist, but understanding body language is an entirely different matter

  • By Richard Hazeldine / STAFF REPORTER
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  From the old lady selling home-grown vegetables at the local market to the teenage girl hawking the latest fashions out of a suitcase on Zhongxiao E Road, sometimes it seems like everyone in Taiwan is involved in business of some kind.

  Taiwan is truly a country of entrepreneurs.

  But what about foreigners looking to join the fold? How easy is it for expats to start a business, and what, if any, problems are they likely to encounter along the way?

  Not too many, said accountant Ann Hu (胡安嘉), because registering a new company is relatively easy — as long as you’re prepared to employ an expert to help.

  Hu, a certified public accountant (CPA), has been practicing in Taiwan for 15 years. During that time she has helped about 50 foreigners register their business. She also periodically teams up with the European Chamber of Commerce to give seminars for budding foreign businesspeople.

  The process involves several stages and requires dealing with the likes of the Ministry of Economic Affairs, the Investment Commission and your local city or county government, Hu said, adding that it usually takes between six weeks and two months to complete.

  Go it alone, however, and that time can easily double, as even with outstanding language skills it can prove difficult. All the paperwork is in Chinese and if your application hits a snag, a lack of readily available information means novices may not know where to turn next. This is why most Taiwanese also employ a professional, Hu said.

  Employing a CPA will set you back about NT$60,000, including consultancy fees, while the minimum investment amount for a small company is NT$250,000.

  That figure, however, is set to drop to NT$10,000 or NT$20,000 in the next couple of months, Hu said.

  But even with help, the process can still be problematic, as New Zealander Chris Jordan found out to his cost when deciding what kind of business license to apply for.

  When Jordan and his partner started a business English consultancy almost three years ago, a consulting license seemed the obvious choice.

  “We were led to believe that it would be possible for us to get ARCs for foreign employees,” he said.

  But after obtaining the license, they found out that they could only employ foreigners if their business capitalization was in excess of NT$5 million (US$147,000).

  It wasn’t.

  “It caused us a lot of headaches,” he said.

  After managing to successfully work around the restrictions for a while, business expansion plans meant a new license application was needed.

  “What’s not easy here is finding any clear information,” he said. “There’s information on the Internet, but when you call people, most of the time you get a stock answer.”

  Anyone who has been in Taiwan for a while knows that locals have no qualms about flouting the law, and businesspeople are no different.

  Swiss national Michel Blanc has been here for 20 years and has three businesses — a freight forwarding company and two restaurants. During his time in the restaurant business he has seen it all. Despite strict rules and regulations for the industry, many still ignore them.

  “Two weeks ago I saw the guy from a nearby restaurant dump the oil from his deep fat fryer into the drain in the alley,” Blanc said.

  The main problem, he said, is that laws and regulations are selectively enforced.

  Large Western and Chinese establishments on main roads have to comply with all these laws, but small places simply don’t, he said.

  “They [small places] don’t issue unified receipts (統一發票) so the government can’t do anything as officially they don’t exist. The police occasionally fine them, but they don’t shut them down,” he said. “But if I don’t like the law in Taiwan, I have to move on.”

  Sticking to the letter of the law, however, can be expensive.

  As Jordan discovered when his company expanded, having people coming to their premises for language training meant they needed a cram-school, or bushiban (補習班), license.

  This resulted in an enormous list of very particular requirements regarding fire safety; the width of hallways, fireproofed and fire-rated materials, all of which needed to be certified and checked.

  “It’s very expensive and the regulations make your space impracticable, difficult to use,” he said.

  The planning process also led to a strange discovery.

  When buildings are designed in Taiwan, blueprints always have a balcony inside. While the balcony is never actually made, it helps construction companies get around certain regulations. For schools, the floor plan has to be exactly the same as the blueprint. So we had to build a “balcony” right in the middle of the office, which is bizarre as it makes the building less safe, Jordan said.

  “It’s about following the letter of the law and not being reasonable,” he said.

  Another problem when trying to find a suitable building or premises are Taiwan’s zoning laws, which are notoriously inflexible and can cause many problems. Small, local businesses can usually get away with zoning infractions but, again, foreigners tend to have to follow the law.

  Blanc told how one of his restaurants had been open for several years, but the location still had an office license, then “all of a sudden somebody [at the local government] wakes up and says ‘now you’ve got to do this.’” It was a decision that cost him upwards of NT$200,000.

  South African Anje Handley, who recently opened a coffee shop, also had trouble in the hunt for a good location.

  Even if there were shops in an area, or the building had been demolished, the original zoning designation still applied. You may find a 7-Eleven next to a nice location, and think it would be OK to open a shop, but that was not necessarily the case, she said.

  But there are ways around the law. If you can’t get a small restaurant license, then it is possible to set up as a limited company (有限公司), but one that sells food, drinks and coffee, she said.

  Once you’re up and running, however, a whole new set of problems can arise, especially if you are trying to sell a product, Jordan said.

  “An enormous amount of communication is culture related,” he said. “You may be able to exchange niceties and communicate [in the local language] about things of relative inconsequence, but once it gets down to brass tacks, then culture becomes very important.”

  Things like your customer’s body language and certain phrases they use are understood by locals, but not by foreigners, he said.

  “To negotiate on an equal footing or to really feel that you understand where this person is coming from is almost impossible,” he said. “We would sometimes go to a sales presentation and walk out and say ‘that didn’t go so well. I’m pretty sure they’re not going to go with us.’”

  But my Taiwanese assistant would say, “They’re going to go for it,” Jordan said.

  “I’ve got a lot of local friends and I get on well with people. But even after all this time, there’s still so much that I can’t pick up on and you really notice it in business,” he said.

  Language and culture aside, are there any other things foreign entrepreneurs need to worry about? What about if you’re in the bar or coffee shop business? Are gangsters likely to come knocking for a share of your profits?

  Highly unlikely, Blanc said.

  “It’s crap,” he said.

  Gangsters do exist, but they do not go after businesses with low margins like restaurants; they go after drugs, prostitution and smuggling. That’s where they make the money, he said.

  “If someone comes and threatens me, how much can I give them? That’s a fairytale,” he said. “People watch too many movies.”

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  For your information

  USEFUL ADVICE:

  ANJE HANDLEY, COFFEE SHOP OWNER: “Shop around for the best deals from banks as some local banks are more flexible and will even give foreigners a credit card without the need for a guarantor. Small banks also charge less than bigger banks for business-related expenses such as credit card machines.” ANN HU, ACCOUNTANT: “Plan well. Setting up a business is easy, but running one is not.” MICHEL BLANC, RESTAURATEUR:“Stick to the law 100 percent and don’t cut corners. Check things out before you make big investments, something that is still not easy. You need to avoid surprises because if you build something, particularly a restaurant, corrections are very expensive.” CHRIS JORDAN, LANGUAGE CONSULTANT: “Get an accountant that has experience in the field that you’re looking to enter as they will be familiar with all the pitfalls that could potentially trip up your business application. Also, don’t get frustrated with the system when things are done differently than you are used to as this will only make things worse.”

  For your information

  SEVEN STEPS TO STARTING YOUR OWN BUSINESS

  1. Do a company name check (Ministry Of Economic Affairs, MOEA). 2. Get approval from the Investment Commission (part of MOEA). 3. Wire investment (money) into bank account 4. Get second approval from Investment Commission. 5. Incorporate the company (MOEA or local government, depending on size). 6. Apply for a business license (local city or county government). 7. Apply for uniform invoice book (統一發票) (local city or county government). For staff-related matters, you need to contact the Council of Labor Affairs (CLA).
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