When entrepreneurs are looking for a good place to start their business, especially in Asia, the first word coming to their mind is: China. Everybody speaks about China, in the press, on the television, with a cup of coffee, and so on. The entire world says China will soon become the world’s largest economy.
So should I open my own business there? Well, don’t forget the story about David and Goliath. Being biggest don’t necessary mean being the best. Is China really the best place to do business? In order to answer this question we took a look on the net and found out this interesting article, written by the economic blog The Commentator
They argue that Taiwan is a much bigger success story than China.
“So why is there a big difference between China and Taiwan? Well, if you look at Economic Freedom of the World, you’ll see that Taiwan ranks among the top-20 nations while China ranks only 123 out of 152 countries.”
How could it be? Taiwan is so small! The Commentator gives the examples of Belarus and Luxembourg where we can see that what makes the difference is the relation between the GDP of a country and the size of its population. With a GDP per capita in 2013 of US$20,930 for Taiwan against US$6,747 for Mainland China, Taiwan has a stronger economic activity than China. In 2013 China was still considered a developing country whereas Taiwan won the status of developed country in 1990 and was one of the Four Asian Dragons. Taiwan early on built up a lot of manufacturing know-how and has relatively light regulations for setting up new businesses.
Over the last three decades, Taiwan has averaged 6% annual GDP growth. Taiwan economy is growing. Every Taiwanese have access to health care, housing, education and a good purchasing power. When you’re walking on the streets or sitting in the metro, it is not unusual to see people carry Louis Vuiton bags. Taiwanese are extremely keen on luxury products and many can afford them.
High tech is one of the more fruitful sectors in Taiwan. For example, Hon Hai is the biggest ODM (Original Design Manufacturer) in the world, providing electronic components to Apple and other well-known companies as Microsoft, Samsung and so on. But Taiwan is no longer only a great manufacturer for foreign companies, Taiwan is also developing its own strong brands such as the HTC, Acer, Giant and Asus.
For foreign companies, one big difference between Taiwan and China is that in China you need local partner but in Taiwan any foreigner or foreign entity can own 100% of a local company. We have all heard horror stories of companies investing in China just to see their technology being ripped off by their local partner. This can’t happen in the same way in Taiwan.
So China has seen quick growth, but this growth is related to the Chinese population size. There are as many differences of the richness between rich and poor people in China as between Western and African people. A large part of the Chinese population are living in an extremely poverty. In Taiwan you will never see someone living in a slum. Of course, as in every country in the world there are poor people, but very few. Overall the life quality is very high. And in the end, is that not what we all want?
Read more of The Commentator’s article here: http://www.thecommentator.com/article/4925/taiwan_is_the_success_story_not_china