Tiger king

When it comes to Taiwan, what springs to mind? The birthplace of bubble tea, the leading global semiconductor producer, or bustling night markets?

Taiwan is a dynamic island nation with a population of 23.57 million, boasting a thriving economy and is a critical market for the Asia Pacific region and international trade. Taiwan's rapid industrialisation and export-oriented policies in the 1960s propelled it to become one of the `Four Asian Tigers', renowned for their exceptional economic growth along with Singapore, Hong Kong and South Korea.

Nowadays, Taiwan is transforming its economy from traditional manufacturing towards high-tech R&D industries - particularly semiconductors, 5G, and AI. Its strong manufacturing base differentiates its position from Singapore's service-oriented economy focused on finance and logistics, and Hong Kong's financial and professional services hub.

So what are the opportunities for foreign developers, investors and brands in Taiwan?

Regional development
Taiwan's development strategy has shifted from focusing solely on Taipei, the capital, to promoting balanced growth across urban and rural areas. It has leveraged industry expansion to create new economic clusters and revitalise its regions. For example, Zuoying capitalises on TSMC's expansion, attracting high-tech businesses across its supply chain. Its strategic location has fuelled a 23% rental market boom and rising land values, attracting further investment and revitalising the region through job creation and GDP growth.

The Transit-Oriented Development (TOD) strategy in Taiwan is exemplified by the Taoyuan Aerotropolis. Centred around the main international airport. It aims to become a global logistics and transportation hub and has extended its catchment to Taipei metropolis. This ambitious project involves airport expansion, new business districts, and enhanced transport links to attract international investment and revitalise the local economy. 

Taichung's high-speed rail development underscores TOD's potential, offering residents seamless transportation and mixed-use living through Di Yi Da's ambitious NTD 20 billion project. Set for completion in 2026, this TOD centre is designed with our sister company Benoy's involvement and promises a vibrant live-work-play retail hub seamlessly integrated with Xinwuri Station.

While large-scale foreign developers may not be heavily involved, significant opportunities exist for specific foreign companies. Attractive incentives, including relaxed regulations, tax breaks, subsidies, and land-use concessions, are offered to foster collaboration and regional growth in targeted sectors like technology, retail, and logistics. This presents a compelling environment for foreign companies seeking to expand their reach and tap into Taiwan's growing regional development initiatives.

Consumer behaviour and retail trends
Urbanisation and a growing middle class are changing Taiwan's consumer base. Despite high internet and mobile phone use, e-commerce market share remains moderate at only 5%, fostering a thriving physical retail landscape dominated by high streets stores, malls, and outlet malls.

Since 2016, outlet malls have boomed. This growth is fuelled by the expanding middle class, returning overseas professionals, and a post-pandemic increase in spending willingness. Leading Japanese developer Mitsui Fudosan, has invested over NT$14 billion (US$467 million) to open two new outlets and a mall by 2025.

Taiwanese consumers love to explore both local, international and new brands. Japanese brands are popular among Taiwanese consumers for quality, while Western brands dominate the luxury sector. Notably, the K-pop wave has driven the popularity of Korean fashion and beauty brands among younger generations. Additionally, rising environmental awareness and cultural identity are influencing purchasing decisions. Eslite department store, featuring cultural and creative brands, is a good example of this.

The booming retail sector, coupled with government support for foreign investment, presents significant potential, particularly in developing or investing in second-tier cities. Additionally, Taiwanese consumers' openness to exploring new brands, fuelled by rising spending willingness and a growing appreciation for unique offerings, creates a fertile ground for innovative concepts.

Risks
Despite its strengths, Taiwan's future economic outlook faces unique challenges. Its complex relationship with mainland China (which still considers Taiwan part of its territory) can trigger political tensions and trade disruptions, impacting foreign investment and market access. Additionally, Taiwan's reliance on semiconductor exports makes it vulnerable to global economic fluctuations and technological advancements. Addressing these concerns and diversifying its economy will be crucial for Taiwan's sustained growth.

Taiwan presents a dynamic market for foreign players, offering opportunities in regional development, a thriving retail sector, and open-minded consumers. However, navigating the complex political landscape and economic reliance on specific sectors requires careful consideration. By understanding these nuances, new foreign investors, developers, or brands could capitalise on Taiwan's potential for sustainable growth and success.

Emily Lin