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Taiwan business prospects remain promising, despite some long-term challenges. In adhering to a capitalist economy, Taiwan has privatized most large state-owned banks and industrial firms. Taiwan is also home to a significant number of small and medium-sized business ventures (a larger proportion than in neighboring Japan and South Korea). As labour-intensive industries are being moved offshore, Taiwan’s business landscape is steadily transforming to one with more technology intensive industries. While traditional exports including electronics, machinery, bicycles and petrochemicals are still important, goods in the sphere of biotechnology, nanotechnology, photovoltaics, communications and IT products (computers, semiconductors, smart phones and LCD technology), are the new drivers of the economy. Another catalyst of growth, despite an ongoing political row, is increasing economic relations with the mainland. China is the Taiwan’s number one destination for foreign direct investment, and as cooperation between the two becomes more congenial, their is certain to be greater investment flow in both directions. The biggest threat to long-term growth is one of demographics. The fertility rate in Taiwan is just over one child per woman – one of the lowest in the world. A declining population raises the prospect of future labour shortages, falling domestic demand, and declining tax revenues.

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