IntroductionEast Asia has been developed rapidly and created remarkable economic growth since 1970's. Multinational enterprises (MNEs) believe that investment in Asia can reduce costs and enlarge their markets worldwide because of cheaper labors and bigger opportunities. Taiwan is a country located in South Pacific region. It is one of the most developed countries of this region and is characterized by advanced technology and heavily relying on international trade. It is placed in the central of sea roads between North Asia and South Asia as well as near China. Its vital location offers MNEs great opportunities to wild expand businesses to other markets. Moreover, local government has ea ...view middle of the document...
In the end, the report will give the company some suggestions so Hong Leong Group can be very successful in the future development in Taiwan.The Macro-Environment of TaiwanThe macro environment of the host country is a crucial factor for MNEs to consider while they extending worldwide. MNEs are more interesting in a host country that has superior advantages of minimizing risks while operation (Jobber, 2001). Political, economic, social and technological situation of host country are profound affect MNEs' decisions. Those factors will be described respectively in follow.EconomyAs the global economy has slumped for many years and it affects the economic situation of Taiwan as well. Table 1 shows that economy of Taiwan was in the bottom in 2001. The consequence was not only influenced by global economic recession, but also affected by political instability. A new party got power to rule Taiwan after won the election on 2000. It was the first time of this new party to control Taiwan's development. However, many foreign firms stopped to invest Taiwan and many Taiwanese capitals were outflow because of lacking confidence of new government. The economic growth rate is increasing steadily from 2002. Therefore, recovered and better economic situation of Taiwan can be expected for next couple of years.Table 1Economic growth rate(%)1998 1999 2000 2001 2002 2003 2004Global 2.4 3.1 4 1.3 1.8 2.6 3.8Taiwan 4.6 5.4 5.9 -2.2 3.6 3.2 4.7Source: Ministry of economic affairs, R.O.CPoliticsLocal government aware of the declining of FDI as table 2 has shown, therefore, it enhances new regulations and laws in order to attract more foreign capitals and improve the situation and it also gives assistance for overseas Taiwanese investing Taiwan. Taiwanese government mainly focus on tax incentives such as five-year tax free, tax on investment reduction, accelerated depreciation, encouragement of investment by overseas Chinese or foreign nationals and encouragement of enterprises towards investment. The government's website offers English and translates regulations, laws and investment information into English in order to give MNEs better services. Also, government improves infrastructure and increase the communication with MNEs so as to create a more desirable environment for them.Unfortunately, Taiwan has conflict with China for independence issue. This unstable situation is a big concern of many MNEs to consider before investing Taiwan. They are not willing to take risks if political situation is not clear yet.Table 2Overseas Chinese and Foreign Direct Investment Inflows of TaiwanYear Total Overseas Chinese Foreign Nations(US$ 1,000) Annual Rate of Change (%) (US$ 1,000) Annual Rate of Change (%) (US$ 1,000) Annual Rate of Change (%)1998 3 738 758 -12.37 184 721 -52.33 3 554 037 -8.381999 4 231 404 13.18 132 380 -28.34 4 099 024 15.332000 7 607 739 79.79 50 384 -61.94 7 557 355 84.372001 5 128 529 -32.59 47 223 -6.27 5 081 306 -32.762002 3 271 747 -36.20 44 960 -4.7...
