Market Information
Asia Pacific

The Beer Market in Taiwan

March 2000

Prepared by the Market Research Centre and the Canadian Trade Commissioner Service

© Department of Foreign Affairs and International Trade
(FaxLink no. 34038)

The Market Research Centre produces a wide range of market reports by region and sector for Canadian exporters. For further information please contact:

Market Support Division (TCM) Department of Foreign Affairs and International Trade E-mail: mrc@dfait-maeci.gc.ca - FaxLink Domestic service (613-944-4500); - DFAIT Internet site 
(http://www.dfait-maeci.gc.ca)

Trade Evaluation and Analysis 
Division (TEAD) Agriculture and Agri-Food Canada Contact: Jim Lowe Telephone: (613) 759-7652 Fax: (613) 759-7505 E-mail: lowej@agr.gc.ca Agri-Food Trade Service:  
http://ats.agr.ca

The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter.

EXECUTIVE SUMMARY

The alcoholic beverage market in Taiwan was opened to imports in 1994, which saw the Taiwan Tobacco & Wine Monopoly Board (TTWMB) experience competition in its beer, liquor, wine, and tobacco industries for the first time. Simultaneously, a ban on alcohol advertising was implemented, which was subsequently repealed in 1998. From 1994 to 1997, beer sales by volume declined by 7% to 254 million litres. In 1998, beer sales climbed to 262 million litres, valued at $989 million.

Imported beer represented 20% of value sales in 1998, with Japanese beer manufacturers capturing the largest share, at $83.2 million and 8.4% of the total market. Canadian beer exports in that year totalled $718 000, but declined to $110 000 in 1999.

Upon Taiwan's accession to the World Trade Organization (WTO), the island's government will reduce or repeal many of the tariffs currently assessed to imported products. The monopoly benefit tax currently assessed to imported beer will be lifted in favour of a lower alcohol tax to be applied against all beer, foreign and domestic. In addition, the TTWMB will be privatized, completing the liberalization of the alcohol market. The manufacture of beer by private domestic companies will be legalized approximately three years after Taiwan joins the WTO. In the meantime, several Taiwanese food and beverage manufacturers interested in producing beer in the future, have begun to form joint-venture efforts for the distribution, or manufacture under licence, of foreign beers, in an effort to expand their knowledge of the market logistics.

Canadian beer exporters have found the Taiwan beer market very challenging in the past, marked by high costs and the need for significant commercial support. However, with full market liberalization on the horizon, opportunities exist for the formation of joint ventures with local food and beverage companies, or for targeting niche markets, such as flavoured beers, non- or low-alcohol beer, or specific point-of-sale venues.

TABLE OF CONTENTS

EXECUTIVE SUMMARY 

MARKET OVERVIEW 

Asian Crisis 
Key Factors Shaping Market Growth 
Opportunities 
Actual and Planned Projects 

COMPETITIVE ENVIRONMENT

Local Capabilities 
International Competition 
Canadian Position 

PRIVATE-SECTOR CUSTOMERS 

PUBLIC-SECTOR CUSTOMERS 

Government Organizations 
Government Procurement Regulations 

MARKET LOGISTICS 

Channels of Distribution 
Direct Sales 
Distributors and Wholesalers 
Retail distributors 
Agents and Sales Representatives 
Market-entry Considerations 
Advertising 
Suggested Business Practices 
Import Regulations 
Local Standards, Certificates or Registrations 
Export Credit Risks, Restrictions on Letters of Credit or Currency Controls 

PROMOTIONAL EVENTS 

KEY CONTACTS AND SUPPORT SERVICES 

BIBLIOGRAPHY 

OTHER REFERENCE MATERIAL 

Useful Internet Sites

MARKET OVERVIEW

The beer market in Taiwan has experienced dramatic changes since the liberalization of the alcohol market in 1994. Prior to that year, the market was heavily regulated with tight restrictions on beer imports. As the only legal vendors of alcohol in Taiwan since 1946, the Taiwan Tobacco & Wine Monopoly Board (TTWMB) controlled over 95% of the total beer market in volume terms, along with the distribution system, ensuring uniform pricing policies across all retail outlets. All types of beer manufactured on the island of 22 million people were sold under the Taiwan Beer label.

Just one year after liberalization, 182 imported brands of beer from 24 countries were sold in Taiwan, representing approximately 14% of the market. However, overall market growth was moderate due to the mature nature of the market and the reserved habit of alcohol consumption among native Taiwanese. The decline in consumers visiting bars and restaurants following the onset of the Asian crisis that hit the region in 1997-1998 resulted in a decline in volume demand by between 2% and 3% during this period.

In current value terms, the retail beer market grew from $922 million in 1994 to $989 million in 1998. However, consumption during this period actually declined, from 274 million litres to 262 million litres. Due to uncertain bar and restaurant statistics, it is difficult to determine sales of beer in these locations, although Asian Business Intelligence Limited valued the total size of the market at $1.28 billion in 1997. The $334 million difference may be attributed to sales in non-retail locations, such as bars, restaurants and hotels.

Fewer spirits were also consumed annually from 1994 to 1998, declining from 165 million litres to 159 million litres. Wine was the only one of the three sectors to boost its sales from 1994 to 1998, increasing by 4 million litres to 186 million litres. As the above figures indicate, beer represents the greatest volume of alcoholic beverage sales in Taiwan. However, it is the smallest of the three alcohol sectors in terms of value, representing just 15% of total alcohol sales.

The current classification system for beer in Taiwan declares that all imported lagers are premium lagers, to which an additional import duty is applied. All locally produced lagers are classified as standard lagers, which typically sell for 40% less than their imported counterparts. Knowing this, it is not surprising to discover that 81.7% of volume sales in 1998 were for standard lagers, giving the TTWMB dominance in the market. However, premium lagers have made significant inroads since their introduction to the Taiwan market in 1994, growing from just 3.3% of volume sales that year to 10.7% in 1998. In value terms, premium lagers represented 13.8% of market share in 1998, up from 4.3% in 1994. The TTWMB reported that Taiwan Beer's market share fell to about 73% in 1999. Retail values correspond to these volume figures.

Premium lager typically appeals to university students and young professionals aged 20 to 30. This segment of the consumer market has the greatest purchasing power, and is most eager to taste foreign brands. Imported beers relied upon word-of-mouth or in-store promotions for consumer awareness prior to 1998, due to a complete ban placed on beer advertising in 1994. The lifting of that ban in 1998 not only allowed foreign brands to be advertised in Taiwan for the first time, but also allowed the TTWMB to actively promote its own brands to compete with the growing numbers of imported beers.

Taiwan's growing popularity as a place for foreign investment and employment opportunities for young foreign university graduates willing to teach languages, has led to the development of a bar culture similar to Canada's. Bars cater mainly to the large foreigner populations centred in cities, although they are becoming more popular among young Taiwanese consumers, which will help to expand the beer culture in Taiwan. These establishments are more likely to import foreign brands to serve their foreign clientele.

Annual per-capita beer consumption in Taiwan reached 25 litres in 1996, but the 1997 Asian financial crisis and the slight economic downturn that followed dropped per-capita consumption to 22 litres in 1998. This consumption rate is much lower than many other countries in the world due to a significantly different social attitude toward alcohol in Taiwan. Taiwanese generally have a lower tolerance for alcohol than North Americans or Europeans, and tend not to drink to excess because drunkenness is frowned upon in its traditional society. In addition, the hot, humid climate of Taiwan does not make alcohol beverages as popular as some other beverages, as alcohol tends to dehydrate. While the beer market does have room to expand, and per capita consumption may increase, it is highly unlikely that it will reach levels on par with North American or European consumption.

Asian Crisis

Taiwan experienced an economic slowdown as a result of the financial crisis which hit Southeast Asia in 1997 and 1998. However, compared to its Asian neighbours, Taiwan emerged from the crisis relatively unscathed. Taiwan continues to maintain the world's third-largest foreign exchange reserve, which has been actively used to shore up Taiwan's currency. Taiwan's inflation remained relatively constant at 1% throughout the crisis, and unemployment was up only slightly to 2.9%. Growth in Taiwan's gross domestic product (GDP) reached 5% in 1998, the lowest total in 13 years. The earthquakes in late 1999 slowed the economy, delaying the country's expected economic recovery, and holding GDP growth to below 6%. The economy is resilient, however, and the slowdown is not expected to last long. Economic growth for 2000 is projected to be 6.5%.

Taiwan's export market suffered during the economic crisis, but domestic consumption and demand remained high. Experts remain optimistic about Taiwan's future growth because of the country's strong base of small and medium-sized companies, and due to the government's sound, well-implemented economic planning. Heineken NV, the Dutch beer producer, has stated that the Asian financial crisis "has no real effect on beer consumption in the medium and long term."

Key Factors Shaping Market Growth

In 1998, the TTWMB legalized alcohol advertising and launched an unprecedented $2.1-million campaign to increase the popularity of Taiwan Beer, especially among younger consumers, and to stop the four-year decline of both volume and value sales. The TTWMB used television and press campaigns to advertise its products. However, one of the most successful campaigns involved the signing of local pop artists, such as Wu Bai, as spokespersons for the beer. This campaign successfully promoted it to younger consumers, and improved Taiwan Beer's position among that demographic. The 1998 increase in beer consumption in Taiwan can be tied directly to the lifting of the alcohol advertising ban and the subsequent concentrated effort of the TTWMB in advertising its beer. Standard lager sales increased by 9 million litres, while premium lager sales increased by 1 million litres.

The passage of the Alcoholic Drinks & Tobacco Administration Law (ADTA Law) on June 7, 1999 is expected to dramatically alter the composition of market share in Taiwan. The law, for the first time, allows private companies in Taiwan to engage in the production, import, and sale of tobacco and alcoholic products, and allows for a challenge to the market dominance of the TTWMB. It will also legalize the manufacturing of alcohol by farming families and pubs, as long as their output does not exceed a set volume. Above that volume, producers will be required to have minimum capital of $2.3 million (NT$50 million), and will have to apply for licences to manufacture alcohol. Concurrent with the full liberalization of the market will be a change in the tariffs and taxes applied to beer, both imported and domestic varieties. As one of the most common complaints against imported goods is that they are too expensive, a change in tariffs will improve the competitive prospects for imports. Please see the "Import Regulations" section for a further discussion of tariff changes.

This legalization will lead to not only greater competition among foreign companies that establish factories on the island, but will also encourage the emergence of micro-breweries and specialty beers. The law will take effect when Taiwan joins the WTO, although it will be implemented in stages, with the domestic manufacture of beer by private enterprises being legalized three years after WTO membership is attained. Meanwhile, the TTWMB will soon yield to the establishment of a new company to separate its activities from government, and to prepare for its privatization. The new company will consist of five business units: beer, tobacco, liquor, distribution and marketing, and development of new business.

Under the ADTA Law, beer will no longer be assessed the "monopoly benefit" fee that is currently levied against imports. Instead, normal taxes such as import tariffs, business tax, and excise tax will be assessed. In addition, alcoholic beverages will be taxed according to volume instead of value, allowing imported beverages to compete more fairly with domestically produced varieties on the basis of price. This should help to increase the competitiveness of foreign brands against domestic counterparts. Price competition among retailers can also be expected, as imported brands become more affordable and domestic prices are increased according to the new taxation schedule.

Opportunities

The Taiwanese economy is expected to steadily recover from the brief downturn it experienced in 1998, and the added effect of the severe earthquakes in 1999. Consumption of alcoholic beverages, including beer, will continue to increase moderately until 2003, due to increased participation of foreign breweries in the Taiwan market, and through improved distribution and innovative marketing campaigns. Strong potential for growth could lie with quality products in niche markets. Several domestic food and beverage companies may be interested in creating joint venture projects to improve the position of imported beverages in the market, meanwhile allowing them experience in manufacturing overseas or distribution.

Until recently, non-alcoholic and low-alcohol beer were not available in Taiwan, and currently capture only a small part of the beer market. Taiwan Lite, a lighter version of the TTWMB's best-selling brand, was released in 1999 to target beer drinkers attracted by light-tasting beer. The light-tasting market segment, which is relatively undeveloped, is the focus of Mexico's Corona, vying for young beer drinkers who typically are attracted to more mellow beer. Though Corona volume exports were extremely high in 1999, the beer was significantly underpriced in order to penetrate the market. Corona will be forced to raise its prices in the future in order to turn a profit, which may open the door for other lower priced light beer.

Actual and Planned Projects

In preparing for the increase in competition that is bound to arise as the markets open, the TTWMB has taken steps to reduce its fixed costs, and to locate facilities for expanding its scale of operations. In recent years, the TTWMB has trimmed its work force from 14 000 to 9200 by offering incentives for voluntary retirement. However, critics speculate that in order to be competitive, the bureau's work force will have to be further reduced to just 7000.

Meanwhile, the TTWMB has approached foreign breweries, such as Kirin and Heineken, to contract the use of their excess brewing capacities. The TTWMB also plans to establish a specialized joint-venture marketing company with domestic manufacturers that will use the existing TTWMB sales network, as well as that of private companies, to reach all parts of Taiwan.

In addition, the TTWMB is actively promoting the establishment of a space in restaurants or hotels called "Taiwan Beer Alley." Setting aside a designated area (168 square metres in five-star hotels, and the same amount of space in restaurants that seat at least 500 people, with 500 square metres of floor space), the specialty bar areas will provide freshly brewed beer, non-alcoholic beer, low-calorie beer, and flavoured beer, among other kinds of specialty beer.

Sapporo Breweries Ltd., the Japanese beer manufacturer, opened its first beer restaurant in Taipei in January 1999, with the aim of operating eight outlets by 2003 and expanding the market for Sapporo beer. In a $2.3-million joint venture, Sapporo Breweries (10%) and Sapporo Lion Ltd. (15%) teamed with Panvest Enterprise Co. (75%), a local company that is active in automobile sales and the manufacture and sale of food products. Sapporo Lion operates the restaurant, while Sapporo Breweries exports Sapporo-branded barrelled beer to the restaurant.

COMPETITIVE ENVIRONMENT

Local Capabilities

The domestic production market is dominated by the TTWMB, which will remain the only producer on the island legally permitted to manufacture beer until approximately three years after Taiwan gains WTO membership.

Several local companies, though not yet allowed to manufacture alcohol, have started importing alcoholic beverages, or have established joint ventures with foreign manufacturers to brew alcohol under licence for them. In this way, local companies will develop knowledge about the market, and will be prepared to manufacture beer themselves when the market is fully liberalized in the coming years. Uni-President Enterprises Corp., Taiwan's largest food manufacturer, is positioning itself to be a market leader in a fully liberalized Taiwan beer market. It has been distributing Budweiser and Michelob beer, and has had Philippine manufacturers brewing Leo Beer under licence for it. While developing its production knowledge, Uni-President also owns 7-Eleven, allowing it to use well-established distribution channels to sell its beer products. Another major food company in Taiwan, Kuang Chuan, though not yet involved in the beer market, owns the retail chain, Hi-Life, and is considering establishing a brewery in Taiwan when the market is completely liberalized.

International Competition

In 1998, imported brands, including premium lager, dark beer, and stout brands, captured approximately 18% of the retail beer market by volume, and 20% of the market by sales value. According to the TTWMB, first half sales of imported beer in 1999 declined by 30%, since the introduction of freshly brewed beer by the TTWMB. Importers actively countered this by lowering prices, increasing sales channels, offering gifts, and raising bonuses or rewards for successful sales efforts. Sales of Japanese beer are reported to be off by nearly 40%, with Asashi, Kirin, and Sapporo each using over 30 000 retail sales points in competition with one another to sell their products.

Source: Taiwan Customs, World Trade Atlas, Global Trade Information Services, Inc., 6 March 2000.

Imports of beer in 1999 totalled $113.6 million, with nearly 40% by value arriving from Japan. Mexican exports in 1999 demonstrated a dramatically new approach to marketing of the country's main brand of beer, Corona. From 1996 through 1998, Mexican exports of beer were priced at roughly the same rate, $2 per litre. Export quantities to Taiwan in 1999 seem to indicate that Corona is attempting a low-pricing strategy to penetrate the market and gain a strong market share, selling its beer at about 11¢ per litre. The pricing strategy is essentially a gamble to establish brand loyalty amongst consumers before local brewers are permitted to manufacture beer, after which the company will likely slowly raise prices to increase revenue.

Japan's Sapporo Breweries Ltd. has secured a strong place in the market with aggressive advertising and promotional campaigns, through which importers can develop brand awareness, and potentially some brand loyalty, among consumers. Sapporo launched an innovative product series in 1998, which involved the release of seasonal beers exclusively for 7-Eleven of Taiwan. Sapporo Summer Seaside Story was available between July and September, while Sapporo Autumn Special Brew appeared between October and December. Targeting consumers aged 18 to 35, the campaigns were accompanied, respectively, by print media advertising and television advertising.

Foster's Brewing Group of Australia began selling its beer in Taiwan for the first time in July 1999. Using unique packaging as one of its marketing tools, Foster's 946mL beer, which is three times the size traditionally sold in Australia, will compete with other jumbo-sized cans on the Taiwan market. Some brewers are producing both 2-litre and 3-litre party-sized cans. Foster's is targeting the growing segment of the Taiwan market that favours imported brands over the locally produced varieties, and is emphasizing the "Australianness" of its beer through a heavy advertising and promotional campaign in Taiwan. Its role as the official beer of the 2000 Olympic Games in Sydney is also being promoted.

Brands from the United States lead imported beer sales, with Miller (Miller Brewing Co.) and Michelob (Anheuser-Busch Inc.) enjoying 3.4% and 3.2% retail market share, respectively. Miller recently increased its promotional activities in an effort to fend off growing competition from other foreign brands, such as Kirin, Sapporo and Heineken. In 1996, Miller also took back distribution rights from the local agent over a disagreement in price positioning. The local distributor created a medium-pricing strategy for the Miller brand, and though successful in launching the products, it created an image among consumers that Miller was a low-priced and low-quality imported brand.

Canadian Position

Currently, Moosehead is the only Canadian beer being distributed in the Taiwan market, holding less than 1% of the market share. After the first distributor experienced some difficulties importing the beverage, Moosehead moved on to its second distributor hired in less than one year. As retail sales through supermarkets or convenience stores involve significant commercial support and large costs, Moosehead targeted consumers in high-end bars and restaurants.

Canadian beer exports reached $4.23 million in 1996, but dropped to just over $638 000 in 1997 and $718 000 in 1998. Exports in 1999 totalled just $110 000.

Competitive Advantage through Canadian Government Policies and Initiatives

The Export Development Corporation (EDC) offers export financing and insurance to Canadian exporters. Additionally, insurance can be provided for larger transactions that are subject to the terms and conditions established by the buyer. EDC prefers to work through letters of credit, bank credits or bank guarantees. Approval for financing is considered on a case-by-case basis. (See Key Contacts for contact information.)

The Canadian Commercial Corporation (CCC) gives Canadian companies access to financing and better payment terms under the Progress Payment Program (PPP). The PPP concept was developed as a partnership between major Canadian financial institutions and the CCC. It enables the exporter's bank to open a project line of credit for the exporter's benefit, based on CCC approval of the project and the exporter's ability to perform. The CCC will also act as a prime contractor on behalf of Canadian small and medium-sized enterprises, giving those businesses increased credibility and competitive advantage. (See Key Contacts for contact information.)

The Program for Export Market Development (PEMD) helps Canadian companies enter new markets by sharing the costs of activities that companies normally could not or would not undertake alone, thereby reducing risks involved in entering a foreign market. Eligible activities include market visits, trade fairs, incoming buyers, product testing for market certification, legal fees for international marketing agreements, transportation costs of offshore company trainees, product demonstration costs, promotional materials, and other costs necessary to execute a market development plan. Activity costs are shared on a pre-approved, 50/50 basis.

The PEMD refundable contribution ranges from $5,000 to a maximum of $50,000. Preference is given to companies with less than 100 employees for a firm in the manufacturing sector and 50 in the service industry, or with annual sales between $250,000 and $10 million. Other components of the program include international bid preparation (Capital Project Bidding) and, for trade associations, developing international marketing activities for their membership. For additional information visit http://www.infoexport.gc.ca/pemd-e.asp or call 1-888-811-1119.

WIN Exports

WIN Exports, a database of Canadian exporters and their capabilities, is used by trade commissioners around the world and by Team Canada Inc partners in Canada to match Canadian suppliers with foreign business leads, and to share information on trade events. To register your company in WIN Exports or for more information, visit http://www.infoexport.gc.ca/winexports/menu-e.asp or call 1-888-811-1119.

PRIVATE-SECTOR CUSTOMERS

Consumers' buying preferences shifted in 1997 with the onset of slowed growth in Taiwan, accompanied by a slight decline in consumer spending confidence. A significant percentage of beer sales prior to 1997 occurred in bars, restaurants, dance clubs, hotels and karioke /television (KTV) pubs. However, a shift in preference to less-expensive purchases through supermarkets and convenience stores occurred in late 1997 and through 1998. The market for home consumption is considered less sensitive to macro economic shifts, as home consumption usually consists of purchasing lower-priced, locally produced brands. The greatest fluctuation in spending occurs among the affluent and brand-conscious 20- to 35-year-old consumers, who opt for imported beers purchased in restaurants or other public venues.

Consumers generally prefer beer sold in cans, as 81% of sales were in this form of packaging in 1998. Cans are more convenient to carry and cost less for manufacturers to produce, thereby lowering the cost to the consumer. However, it is becoming more fashionable for consumers to be seen drinking glass bottled beers, which represented 19% of beer packaging in 1998, up from 5.5% in 1994.

PUBLIC-SECTOR CUSTOMERS

Government Organizations

The government operates 500 retail outlets that offer a product range similar to that of hypermarkets. Access to these public co-ops is limited to government employees, military personnel and teachers. Prices are generally discounted by 25% over supermarket or hypermarket prices. Public co-ops do not import directly or purchase from foreign exporters, but instead purchase both domestic and imported products from local distributors. Therefore, if exporters wish to access this market segment, they will have to use local distributors in Taiwan.

Government Procurement Regulations

The Central Trust of China (CTC) is the government procurement and distribution organization in Taiwan. However, most government purchases are administered by local purchasing entities without the aid or direction of the CTC. The CTC is simply informed of any procurement purchase.

Under Taiwanese law, most public enterprises and agencies must procure locally when products are available. While most tenders are open to international companies, local firms are heavily favoured. However, as an element of its accession to the WTO, Taiwan agreed to join the Agreement on Government Procurement (GPA). This should aid in improving the transparency of the bid process on major government-procurement contracts in the future.

MARKET LOGISTICS

Taiwan is one of the largest cargo handlers in the world, and the distribution infrastructure is among the best in the world. Because the island is relatively small, most of the main markets are easily accessible. Nevertheless, although the market is concentrated, some rural regions remain under-supplied.

Channels of Distribution

Taiwan has a very modern retail market, with over 1000 supermarkets and 4000 convenience stores. Convenience stores are slowly gaining market share from supermarkets by offering more product choice, longer hours and more retail services, in an effort to encourage repeat business. The 24-hour convenience of stores such as 7-Eleven, Circle-K, Family Mart, AM PM, Nikomart, and Hi-Life benefit from many late hour sales. Although the country's distribution system is well-developed, it is undergoing changes that will ease market access for imported products.

A good partner, agent, distributor, or joint-venture partner is as essential in Taiwan as it is in any other export destination. To simplify the process, some importing firms will also act as distributors. This system is not always preferred by exporters, but in Taiwan, fears exist that companies searching for distributors are not serious about entering and committing to the Taiwanese market. When distributors are enlisted to take ownership of product, companies can maintain involvement in the market at arms-length, as extra costs of distribution, marketing, and product servicing, among others, are not incurred. Should a company insist on working with a distributor, the company should also spend extra time and money to demonstrate its commitment to the market.

Direct Sales

It is now possible to make direct sales in Taiwan, since many retailers are looking for ways to reduce costs and to be more competitive. One strategy adopted by retailers is to deal with manufacturers directly, in order to decrease the number of wholesalers used in getting the product to the customer. This strategy is most common among large retailers, who are more likely than smaller retailers to have the means and resources to provide their own distribution network. Company-owned convenience chain stores frequently purchase directly from manufacturers, and often operate affiliated distribution companies.

Distributors and Wholesalers

Both distributors and wholesalers are employed in Taiwan, but small and medium-sized exporters generally rely exclusively on distributors. Distributors in Taiwan act as sales agents, and, in the case of small transactions, may also act as product promoters. Wholesalers purchase imported goods for sale to numerous outlets, generally in rural regions.

According to the World Economic Society, Taiwan has approximately 6000 wholesalers that handle processed food and beverages. These wholesalers are expected to consolidate, which will have the effect of decreasing the number of operators and their scope of operations. Meanwhile, distribution firms are expanding their operations.

Retail distributors

The advent of supermarkets, hypermarkets and convenience stores in Taiwan has made beer and other alcoholic beverages more accessible to local consumers. Some large food retailers successfully developed independent distribution networks, while smaller retailers find it more cost-effective to contract with large distribution companies.

Exporters should note that many Taiwanese retailers charge standard listing or shelving fees, and expect manufacturers to cover the costs of in-store promotions and product demonstrations.

Agents and Sales Representatives

Agents have the advantage of superior market intelligence and improved communication for customer servicing. Sales representatives play an important role in the direct sale of products. Generally speaking, foreign firms are better served by agents with whom they have close ties.

Canadian suppliers are encouraged to establish relations with those individuals and companies that have a solid understanding of Taiwan's retail sector. It is also important that potential sales partners have well-established industry contacts.

Market-entry Considerations

Distinct and unique packaging is a key to establishing brand recognition in Taiwan, as consumers rely on brand logos and colours to identify their favourite products. However, as mentioned earlier, while adhering to Taiwanese labelling laws, an English brand name will enhance the consumer's perception of the product as being of higher quality. As always, price and quality of the product are significant considerations for the consumer.

Exporters considering Taiwan as a market should keep in mind the changes in tariff and non-tariff barriers that are ongoing as a result of the country's WTO application. Both processed and non-processed agricultural products have seen major -- and often confusing -- changes in tariff rates and product classification. Some exporters have seen decades-old product classifications changed without notice when their goods arrived at port, only to have them reversed upon arrival of the next shipment.

Taiwan maintains a number of strict standards for the importation of agricultural goods, and many products require the approval of several government agencies before they may be imported. Once Taiwan gains membership in the WTO, many of the strict standards and non-tariff barriers will be removed, and some tariffs will be lowered. However, several barriers will continue to stand, restricting market access for a some agricultural goods.

Advertising

The ban on media advertising for alcoholic drinks from 1994 through 1997 meant that any marketing by importers and agents was directed toward bars, restaurants, and similar points of sale. The relaxation of advertising regulations on alcohol in Taiwan halted the trend of declining alcohol sales, and opened the market significantly to promotion of alcoholic beverages, including beer. However, regulations still exist for advertising through some forms of media. There are no restrictions on newspaper and magazine advertising, although beer may only be advertised on cable television from 9 p.m. to 6 a.m., and from 9:30 p.m. to 6 a.m. for radio and regular television. Advertising through sponsorships of cultural or sporting events is to be permitted under the new advertising legislation, as well.

Suggested Business Practices

Conducting business in a country with cultural and economic differences can be both challenging and rewarding. Taiwan's status as a developing country presents unique obstacles and opportunities in this region.

Personal relations and trust are very important in Taiwan, making the initial stages of a business relationship vital. Exporters should be wary of "opportunities" that promise to expedite the export process through facilitation money or alternative avenues of market entry. Companies are advised to establish relations with reputable and trustworthy local business partners or representatives.

Since it is difficult to make appointments in Taiwan on short notice, it is wise to plan commercial itineraries before arriving. Having business cards printed in both English and Mandarin (the official language of Taiwan) is greatly appreciated. Presenting small gifts during business functions is a common and highly regarded practice.

Import Regulations

The future beer tax of $1.20 per litre (NT$26) will make imports more competitive with domestic brands, since it will be applied against all varieties of beer, regardless of origin, thereby raising the prices of domestic brands. The current monopoly benefit tax of $1.38 per litre (NT$30) levied on importers will be phased out over the alcoholic beverages market (ie. wine, beer, spirits, etc.) by 2005, with the expected date for complete beer market liberalization to be 2003.

Currently, all imports entering Taiwan through one of its five ports are required to pay a 0.4% harbour construction tax and a 5% value-added tax. Goods entering Taiwan by air freight or parcel post are exempt from harbour tariffs. Highly processed foods are generally subject to high import tariffs, which can hinder their competitiveness against locally produced goods. Please contact the Canadian Trade Office in Taipei for current import duty rates.

All processed foods must adhere to similar import regulations. Packaging may be written in English, or any other language of origin, but must include an additional comprehensive label written in Mandarin. Labels must be affixed before Customs clearance, and must bear the following information:

• brand names;
• quantitative analysis of contents: weight, volume or number;
• food additive names;
• net weight in metric units;
• manufacturer's and importer's name, address and phone number;
• date of manufacture; and
• expiration date.

All food shipments must be accompanied by the proper import licences and permits, food registration certificates, and shipping documents. All documentation must be in English or be accompanied by an English translation.

Import licence: Where licences are required, the importer may first be required to obtain the authorization of numerous agencies. Import licences are valid for six months, but an extension may be granted for justifiable reasons. Goods must be shipped within the validity period of the licence. Licences are not transferable. Most agricultural products require licensing, and some also require approval from the Council of Agriculture before importation.

Import permit: A foreign supplier's pro-forma invoice is required for an application of an import permit from Taiwan's Board of Foreign Trade. Most import permits are valid for six months from the date of issue.

Shipping documents: Documents required for shipments to or from Taiwan include a commercial invoice signed by the exporter (in triplicate) that includes the following:

• import licence number;
• F.O.B., C&F or c.i.f. value;
• insurance charges;
• freight charges; and
• notice of any discounts or commissions that have been applied.

The commodity description and value shown on the commercial invoices must agree with those on the import licence.

Bill of lading or waybill: This must include all marks and case numbers that appear on the packages. Customs does not permit the grouping of marks or numbers on shipments of mixed commodities. The bill of lading must show both the number of packages and the number of pieces inside the packages.

Pro-forma invoice: This invoice (quotation) is required by the importer to obtain an import licence and to establish a letter of credit. It must include a full description of goods, including:

• brand name;
• method of packing;
• quantity;
• unit price, total cost, freight, insurance and other charges;
• method of shipment;
• date and port of shipment;
• port of destination;
• terms of payment;
• validity of offer;
• name and address of letter of credit beneficiary; and
• other details required by the importer.

Packing list: At least two copies are required.

Certificate of Origin: This may be requested by an importer or bank or through a letter of clause. It must be issued by the government of the country of origin or by the authorized issuing offices.

Local Standards, Certificates or Registrations

Taiwan has very strict standards for imported agricultural goods. These standards are outlined in the publication Chinese National Standards (CNS), produced by the National Bureau of Standards of the Ministry of Economic Affairs. Many of Taiwan's standards for processed foods far exceed internationally accepted standards, and in some cases, standards and food quality are established through unorthodox means. Imported agricultural goods are regularly tested for compliance with national standards, while domestic products are seldom tested.

To export food items, exporters must obtain approval and registration from:

National Laboratories of Food and Drug
Department of Health
161-2 Kun Yang Street
Nanking District
Taipei, Taiwan
Tel.: (886) (2) 785-6283
Fax: (886) (2) 785-6793

The Taiwan Health Department often requires that the first shipment of a product be tested for content and possible health risks. This test is at the exporter's expense, with the cost based on the value of the shipment. After the initial test, the Health Department tests products at random. Experience has shown that roughly every 20th shipment is tested.

Any companies wishing to manufacture beer within Taiwan will be required to comply with the government's hygienic and environmental protection regulations, and will be subject to taxation.

Export Credit Risks, Restrictions on Letters of Credit or Currency Controls

Taiwan has a highly developed banking sector that will provide letters of credit for most import transactions. Most sales to Taiwan are conducted on bank-to-bank letters of credit. Credit terms last 60 to 90 days.

There are few barriers to full and immediate repatriation of capital and remittances of profit for registered foreign investment, or trade transactions. There are reports of foreign exchange delays of up to two months, although delays are rare on smaller transactions.

PROMOTIONAL EVENTS

2000 Taipei International Food Show 15-18 June 2000 (Annual) Taipei World Trade Centre Exhibition Hall Taipei, Taiwan Assorted foods & beverages, condiments & additives, bakery products, foreign exhibits, Image area, trade media. http://taipeitradeshows.cetra.org.tw/food/index.shtml

Organizer:
China External Trade Development Council (CETRA) CETRA Exhibition Department 5 Hsin-yi Rd., Section 5 Taipei, Taiwan 10548 Contact: Ms. Christie Huang Tel.: (886-2) 2725-1111 ext. 363 Fax:(886-2) 2725-1314

Taipei International Food Machinery Show 22-26 June 2000 (Annual) Taipei World Trade Centre Exhibition Hall Taipei, Taiwan Food & beverage, hotel/restaurant equipment. http://taipeitradeshows.cetra.org.tw/foodtech/index.htm

Organizer:
Please see above.

Taipei Wine & Drink 2001 23-26 February 2001 (Biennial) Taipei World Trade Centre Exhibition Hall Taipei, Taiwan Assorted beverages, including spirits, beer, liqueurs, wine, cider, and a variety of non-alcoholic beverages.

Organizer:
China External Trade Development Council (CETRA) CETRA Exhibition Department 5 Hsin-yi Rd., Section 5 Taipei, Taiwan 10548 Contact: Ms. Maria Chen Tel.: (886-2) 2725-1111 ext. 282 Fax:(886-2) 2725-1314

KEY CONTACTS AND SUPPORT SERVICES

Canadian Government Contacts

Agriculture and Agri-Food Canada 
Sir John Carling Building 
930 Carling Ave. Ottawa, ON K1A 0C5 
Contact: John Smiley 
Tel.: (613) 759-7632 
Fax: (613) 759-7506 
Internet: www.agr.ca 

Business Development Bank of Canada 
5 Place Ville Marie, Suite 400 Montreal, QC H3B 2G2 
Tel.: 1-888-463-6232 
Fax: (514) 283-0617 
Internet: http://www.bdc.ca 

Canadian Commercial Corporation (CCC) 
50 O'Connor St., 11th Floor Ottawa, ON K1A 0S6 
Tel.: 1-800-748-8191 or (613) 996-0034 
Fax: (613) 995-2121 
Internet: http://www.ccc.ca 
E-mail: info@ccc.ca 

Canadian Food Inspection Agency 
59 Camelot Drive Nepean, ON K1A 0Y9 
Tel.: (613) 225-2342 
Fax: (613) 228-6653 
Internet: http://www.cfia-acia.agr.ca 
E-mail: cfiamaster@agr.gc.ca

Canadian Trade Office 
365 Fu Hsing North Rd, 13th Floor 
Taipei 10483, Taiwan 
Tel.: (886-2) 2547-9500 
Fax: (886-2) 2712-7244 
Internet: http://www.ctot.org.tw 

Department of Foreign Affairs and International Trade (DFAIT) 
125 Sussex Dr. Ottawa, ON K1A 0G2 
Korea and Oceania Division (PKE) 
Tel.: (613) 995-1183 
Fax: (613) 996-1248 

Market Support Division (TCM) 
Tel.: 1-800-267-8376 or (613) 995-1773 
Fax: (613) 944-0050 

Export Development Corporation (EDC) 
151 O'Connor St. Ottawa, ON K1A 1K3 
Tel.: (613) 598-2500 
Fax: (613) 237-2690 
E-mail: export@edc4.edc.ca 
Internet: http://www.edc.ca

Agriculture and Agri-Food Canada

The Agri-Food Trade Service regional contacts are as follows:

Al McIsaac St. John's, NF 
Tel.: (709) 772-0330 
E-mail: mcisaaca@agr.gc.ca 

Chris Pharo Charlottetown, PEI 
Tel.: (902) 566-7310 
E-mail: pharoc@agr.gc.ca 

Fay Abizadeh Winnipeg, MB 
Tel.: (204) 983-8622 
E-mail: abizadehf@agr.gc.ca 

Max Xiao New Westminster, BC 
Tel.: (604) 666-9353 
E-mail: xiaom@agr.gc.ca

Shelley Manning Halifax, NS 
Tel.: (902) 426-2137 
E-mail: mannings@agr.gc.ca 

Bernard Gravel Montreal, QC 
Tel.: (514) 283-3815 (ext.506) 
E-mail: gravelb@agr.gc.ca 

Roy Gordon Regina, SK 
Tel.: (306) 780-7134 
E-mail: gordonr@agr.gc.ca

Bernard Mallet Fredericton, NB 
Tel.: (506) 452-3732 
E-mail: malletb@agr.gc.ca 

Carol Kerley Guelph, ON 
Tel.: (519) 837-5866 
E-mail: kerleyc@agr.gc.ca 

Colin J. Campbell Edmonton, AB 
Tel.: (780) 495-4186 
E-mail: campbellc@agr.gc.ca

Taiwan Government Offices

Board of Foreign Trade 
1 Hu Kou St. Taipei, Taiwan 
Tel.: (886-2) 351-0271 
Fax: (886-2) 331-5387

Bureau of Animal and Plant Health Inspection and Quarantine 
4 Chi Nan Rd, Section 1 Taipei, Taiwan 
Tel.: (886-2) 351-2141 
Fax: (886-2) 393-2324

National Laboratories of Foods and Drugs, Department of Health 
161-2 Kun Yang St. Nanking District Taipei, Taiwan 
Tel.: (886-2) 785-6283 
Fax: (886-2) 389-9860

Taiwan Tobacco & Wine Monopoly Bureau 
4 Nanchang Rd., Section. 1 Taipei, Taiwan 
Tel.: (886-2) 2321-4567 
Fax: (886-2) 2341-0452

Customs Authority Director General, Directorate General of Customs 
85 Hsin-Sheng South Rd, Section 1 Taipei, Taiwan 
Tel.: (886-2) 351-2875 
Fax: (886-2) 711-4166

Commercial Banks in Taiwan

Asia Pacific Bank 
66 Min Chuan Rd Taichung, Taiwan 
Tel.: (886-4) 227-1799 
Fax: (886-4) 220-4297

Bankers Association of the R.O.C. 
46 Kuanchien Rd., 8F Taipei, Taiwan 
Tel.: (886-2) 361-6019 
Fax: (886-2) 383-1783

Chinatrust Commercial Bank Head Office(Banking Department) 
3, Sungshou Road, Taipei, Taiwan 
Tel. (886-2) 2722-2002 
Internet: http://www.chinatrust.com.tw/english/english.html

Export-Import Bank 
3 Nan Hai Rd., 8th Floor Taipei, Taiwan 10728 
Tel.: (886-2) 321-0511 
Fax: (886-2) 394-0630

International Commercial Bank of China 
100 Chi Lin Rd. Taipei, Taiwan 10424 
Tel.: (886-2) 563-3156 
Fax: (886-2) 563-2614

Bank of Taiwan 
1120 Chungking South Rd., Section 1 Taipei, Taiwan 10036 
Tel.: (886-2) 349-3456 
Fax: (886-2) 311-5145

Chang Hwa Commercial Bank Ltd. 
38 Tsuyu Rd., Section 2 Taichung, Taiwan 40010 
Tel.: (886-4) 222-2001 
Fax: (886-4) 223-1170

Taipei Bank 
50 Chungshan North Rd., Section 2 Taipei, Taiwan 104 
Tel.: (886-2) 542-5656 
Fax: (886-2) 542-8870

Industry Associations in Taiwan

R.O.C. National Association of Shipping Agencies 
6F-2, 15, Lane 3 Chienkuo N. Rd., Sec. 1 Taipei, Taiwan 
Tel.: (886-2) 508-0106 
Fax: (886-2) 508-0129

Taiwan Association of Frozen Food Industries 
Rm. 2, 11F, 103 Chungcheng 4^th Rd. Kaohsiung, Taiwan 
Tel.: (886-7) 241-2053 
Fax: (886-7) 241-2055

Taipei Import-Export Association 
350 Sunkiang Rd. Taipei, Taiwan 
Tel.: (886-2) 581-3521 
Fax: (886-2) 542-3704

BIBLIOGRAPHY

Asia Pulse. "Sapporo Breweries to Operate Beer Restaurants in Taiwan," November 6, 1998.

Australian Financial Review. "Foster's Big Can Gives Drinkers a Chance to Taiwan On," July 3, 1999: 4.

China Post. "Taiwan: Taiwan Beer, Long Life Price Hikes to be Limited," May 18, 1999.

Businessworld - Philippines. "Heineken Says Asia Crisis Has No 'Real Effect' on Region's Beer Consumption," July 24, 1998.

Economic Daily News. "Taiwan: Beer Alley Set Up in Restaurants," July 16, 1999: 37.

Economic Daily News. "Taiwan: Imported Beer Sales Down by 30%," July 20, 1999: 38.

Euromonitor. The Market for Alcoholic Drinks in Taiwan, May 1999.

Feliciano, Marie. Euroview, "Imported Beer Struggles Against Local Brew," January-February 2000.

Global Trade Information Services, Inc. World Trade Atlas, December 11, 1999.

Taipei Times. "Food Firms Prepare to Tap Alcohol Market," October 26, 1999.

Taiwan Economic News. "Taiwan Tobacco & Wine Monopoly Bureau Gets Ready to be Privatized," April 20, 1999.

Taiwan Economic News. "Taiwan's Liquor Ad Restrictions to be Eased after WTO Entry," June 1, 1999.

Taiwan Economic News. "New Law Will Abolish Monopoly Bureau System," June 21, 1999.

Taiwan Economic News. "Major Taiwan Foodmakers Poised to Produce Alcoholic Drinks," August 16, 1999.

United States Department of Commerce. National Trade Databank, Taiwan Trade Regulations and Standards, September 3, 1999, downloaded from www.tradeport.org/ts/countries/taiwan/regs.html on November 25, 1999.

OTHER REFERENCE MATERIAL

Curry, Jeffrey. Passport Taiwan. World Trade Press, San Rafael, CA, 1998. WorldPress@aol.com

Harris, Gregory. Taiwan: Food Processing & Packaging Equipment Market. American Consulate in Kaohsiung, September 5, 1997.

Useful Internet Sites

Agriculture and Agri-Food Canada: 
http://www.agr.ca

Agri-Food Trade Service: 
http://ats.agr.ca

Canada Business Service Centres: 
http://www.cbsc.org

Canadian-Taiwan Business Association: 
http://www.ctot.org.tw/e/ctba.html

China External Trade Development Council (CETRA): 
http://www.tptaiwan.org.tw

Department of Foreign Affairs and International Trade: 
http://www.dfait-maeci.gc.ca

Economic Development Corporation: 
www.edc.ca

ExportSource: 
http://exportsource.gc.ca

Governments on the WWW : Taiwan: 
http://www.gksoft.com/govt/en/tw.html

InfoExport: 
http://www.infoexport.gc.ca

Montgomery Network (international trade show organization): 
http://www.montnet.com

Political and Economic Risk Consultancy:
http://www.asiarisk.com

Search engine for Taiwan and Southeast Asia: 
http://www.sinica.edu.tw/index.shtml

Strategis: 
http://strategis.ic.gc.ca

Tradeport: 
http://www.tradeport.org

Trade Show Central: 
http://www.tscentral.com

U.S. Department of Agriculture: 
http://www.fas.usda.gov

World Bank: 
http://www.worldbank.org

Source: IDD Information Services, Tradeline, January-March 2000.

* All currency amounts are expressed in Canadian funds unless otherwise stated. The source for the currency conversion rates for the Canadian dollar, the New Taiwan dollar, and the U.S. dollar are the average annual rates based on IDD Information Services, Tradeline, March 2000. See Table 6 for conversion rates used.