Some people say that succeeding at a new business in your own country is hard, but trying to do so in another one without priori knowledge of the language, customs or regulations can be far more difficult.
There are the obvious formalities such as registration, taxes, licenses, permits and insurance which are difficult to negotiate but possible. Then, there are the less formal problems of funding, trademarks, finding and keeping a reliable staff, who to pay off and how much.
If you are a clueless foreigner, you could be squeezed in every way imaginable, unless you first read Elias Ek’s “How to Start a Business in Taiwan” (Enspyre, NT$ 1,200).
Ahead of the release of his new book, the Swedish expat talked to The China Post. Herewith is an edited transcript of our conversation.
You should set sufficient capital to start your own business. You should not only consider the legal minimum amount to start a limited liability company or company limited by shares, but also think about setting up enough starting capital to run your daily business. Taiwanese law allows you to virtually start without capital. Depending on the nature of your business, however, a Certified Public Accountant (CPA) might not accept capital of NT$0 unless you demonstrate that you’ll have enough money to do what you’ve planned to.
I think one of the biggest mistakes people do is to start a company with too little money. That’s just a general business mistake. You too quickly run out of money and start making bad choices.
I usually refer to the three Fs: friends, family and … fools – people who are ready to take the risk. There is also a growing start-up community in Taiwan, as well as incubators and accelerators that are willing to put in a little money to help you get to the next step.
In my experience, banks are quite out of the question. If you want to borrow money to buy a house, maybe, but if you want to borrow money to start a business, it is very hard. On the other hand, the government now allocates grants and subsidies for hiring, employee training and innovation investment. Getting those grants is definitely not easy and they do not include start-ups.
You need a good idea of where the business is going to go in a couple years in order to find the right business entity. You can always change it but it’s a bit of a hassle to do so.
You also need to think about where your money is going to come from, taxes and so on. For instance, your income is probably going to come from another country; in this eventuality, it might be suitable for you to set up a business in another country and set up a branch office in Taiwan, rather than having just a Taiwanese company.
The only legal name registered in Taiwan is Chinese. If you want to do import and export, you have to register your English name too, but that’s a secondary registration. Coming up with a name is actually quite hard to come up with a good one.
When you register, you also need to think about what license you’re going to apply for. You actually have to pick a field – retail, e-commerce, etc. There are few industries that are either not allowed or restricted to enter by foreigners – media, education.
Any other challenges for business-starting foreigners
Every foreigner needs foreign investment approval by the government. You have to submit a document stating your intentions before you register. It’s pretty much like a formality. I never heard of anyone not being approved, but it is a small thing that should be done
In fact, the challenge for business investors is not the rules. The rules are not hostile to foreigners at all. It’s more about one’s understanding of those rules. There are some rules and regulations in Taiwan and then, there is common practice. You need to be aware that those are different. What lots of people do when they start a company is that they kind of surrender some of the understanding of the mechanics to others.
My number one ambition is that when you hire an accountant to do the paperwork, you know the questions to ask. You would be able to point to a Chinese term and say: ’Is that what you are talking about?’ So you can get on the same page easier. My second ambition is that you could also do the whole process on your own.
I don’t have a big problem with the regulations. But, I do think the government should act more like a cheerleader that connects people and investors. The government should also make sure that ‘it’s cool enough to be a start-up in Taiwan,’ because, right now, it’s not cool to work for a start-up here. It’s really hard to hire the best people because they want to go and work for the big corporations that offer job safety. Last but not least, we need to upgrade the education system, which is book-based and should emphasize internships more.