AmCham Taipei 2012 Business Climate Survey January

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  • 1. AmCham Taipei2012 Business Climate Survey Independent Marketing

2. Chairmans Message2Independent Marketing 3. Basic Message from 2012 AmCham Chairman Billimprovements. optimism, but spotlighting areas needing Wiseman Message from 2012 AmCham Chairman Bill WisemanOur 2012 Business Climate Survey asked 387 votingrepresentatives from AmCham member companies mainly CEOs to answer about 20 questions in anonline questionnaire. 232 members took part - a 60%response rate.In general, the results of the 2012 survey were closelyaligned with those of 2011. Members expressedoptimism about the economy and business prospects inTaiwan, with nearly half citing plans to increaseinvestment in the coming year.Independent Marketing 4. Message from 2012 AmCham Chairman Bill WisemanIf views of the business outlook are slightly less rosythan a year ago, the driving factor seems to be globalmacroeconomic uncertainty and its expected impact onTaiwans economy.Once again, the survey results show that the Taiwangovernment deserves commendation for a number ofachievements, including progress in cross-Straiteconomic relations, adjustment of the corporate taxrate to make Taiwan more competitive within the Asianregion, and further strengthening of IPR protection. Independent Marketing 5. Message from 2012 AmCham Chairman Bill WisemanBut the survey also pinpoints areas where furtherefforts are needed to remove what are currentlyperceived as serious obstacles to economic growth: Human Resources. Shortages of talent are developing incertain sectors, while constraints remain on hiringprofessionals from abroad. More also needs to be done tocultivate creativity and initiative-taking in the Taiwanworkforce. Independent Marketing 6. Message from 2012 AmCham Chairman Bill Wiseman Bureaucratic inefficiencies. Among the problems cited areinconsistent regulatory interpretations, inadequate oroutdated laws, and lack of transparency. Tax structure. Although the corporate tax rate has beenreduced, the high personal income tax rate discouragesforeign experts from accepting assignments in Taiwan. Theincentive system for encouraging R&D also needs review.High-level government officials have indicated toAmCham that they recognize these problems and areworking on finding solutions.Independent Marketing 7. Message from 2012 AmCham Chairman Bill WisemanWe offer the findings of the survey as reference for thegovernment as President Ma Ying-jeou prepares for hissecond term.In closing, I would like to extend the Chambers heartythanks to Gordon Stewart of Independent MarketingPty Limited for his invaluable guidance in the planningand execution of this project.Bill Wiseman2012 AmCham Taipei ChairmanIndependent Marketing 8. Executive Summary8 Independent Marketing 9. Executive Summary Key Indicators2012 Forecast Increased5 Year 2011for Revenue Investment in BusinessProfitability& Profit 2012Outlook Growth20102011 2011 2012201120122011201273.5% 71.9%81.2%58.4% 54.3% 42.9% 81.0% 70.3% Alert!Alert! *Alert! Statistically significant change from 2011Independent Marketing 10. Executive Summary - Key Takeaways AmChams Business leaders had a reasonably good2011 and are focused on (almost 74% of companieshave a primary focus on the domestic market), andgenerally optimistic, about the future of theirbusinesses in Taiwan. Many will increase their investment in Taiwanduring 2012. But there is some softening orleveling-off in their forecasts for longer-terminvestment levels and in their prospects forgrowing revenues and profits in the short-term.However, the good news is that these softerforecasts are counter-balanced by either Neutral,or Remain the same forecasts, rather than bynegative ones.Independent Marketing 11. Executive Summary - Key Takeaways Bureaucracy! Bureaucracy! Bureaucracy! Is acommon and persistent negative issue for ourbusiness leaders. It is cited throughout this (andlast years) survey as having negative impacts,being a barrier to success and the one majorthing companies want the Taiwanesegovernment to aggressively tackle. Whilerecognizing the progress made by theTaiwanese government in other certain areas,their belief is that more can be done to reduce,simplify and clarify government bureaucracy. Independent Marketing 12. Executive Summary - Key Takeaways Inter-governmental relations: Our leaderswould like to see, and believe it would beadvantageous if there was: a broadening andspeeding-up of ECFA; a re-engagement on TIFAtalks; a bilateral investment and a taxationagreement between Taiwan and the U.S.A Outside of macro-economic risks, issuessurrounding Human resources are of the mostconcern to our business leaders. Specifically, thequantity, quality and costs associated with theiremployment. Independent Marketing 13. Detailed Findings13Independent Marketing 14. 2011: A Relatively Good Year for Business.Almost three out of four (71.9%)of our businessleaders assert that their business in Taiwan waseither relatively or very profitable in 2011. Avery similar response to the one we received in2010. Independent Marketing 15. How would you characterize your Taiwan business financial performance?14.3% Very Profitable20.5% 57.6%Relatively Profitable53.0%23.8%Break even or small profit/loss23.9% 3.0%Relatively Large Loss 2.6% 1.3% Very Large Loss0.0%2012 Column1 2011 Independent Marketing 16. 2012: More of the sameThe majority of our business leaders areforecasting and expect 2012 to also be arelatively good year. However, growth inrevenues & profits are forecast to occur at alesser rate than was forecast last year (from 81%to 58%). The balance to this is that many moreexpect to Remain the same for 2012 ratherthan indicating a decline in either revenues orprofits.Independent Marketing 17. What is your Taiwan business Revenue & Profits forecast for 2012 compared to 2011?Substantial growth in both Revenues & Profits 11.0% 17.1% Substantial growth in Revenues & modest growth in Profits 1.8%7.7% *Alert!...Modest growth in Revenues & substantial growth in Profits 0.4%2.6%Modest growth in both Revenues & Profits45.2% 53.8% Remain the same22.4% *Alert!...7.7% Modest growth in Revenues & no change in Profits3.1% 2.6%Modest growth in Revenues & modest decline in Profits1.8%2.6%No change in Revenue & modest decline in Profits 0.9%0.0%Modest decline in Revenues & modest growth in Profits 0.4%0.0% Modest decline in both Revenues & Profits 9.6%6.0% Modest decline in Revenues & substantial decline in Profits0.4%0.0% 2012 Substantial decline in Revenues & modest decline in Profits0.4%0.0% 2011Substantial decline in both Revenues & Profits 1.3%0% 0%20% 40%60%*Alert! Statistically significant change from 2011IndependentMarketing 18. Short-term investment : Softening?There does appear to be some softening/flattening in planned investment levels - withonly 43% saying they will increase their entityslevel of investment in 2012 either slightly orsubstantially. This compared to 54% last year.Statistically, this is bordering on a significantdrop.Independent Marketing 19. What is likely to happen to your entitys level of investment in Taiwan over the next 12 months? Substantial Increase10.0% 16.4%Slight Increase 32.9% 37.9%No Change40.7% 36.2% Slight Decrease12.6%5.2%Substantial Decrease 2.2% 3.4%Dont know/cant say 1.7%0.9% 20122011 IndependentMarketing 20. Unfortunately, or realisticallyTaiwan is generally viewed as Not a high priorityback at the global head office. Perhaps this alsoinhibits greater investment. We said last year thatTaiwan needs to better position and market itself totry and gain some more global attention. Changesto: taxation rates; improvements to direct foreigninvestment rules and incentives; research &development incentives; and lowering some of thebureaucratic barriers, may go a long way here.Independent Marketing 21. How does Taiwan fit into your global entitys investment plans? 2012#1 Priority 10.3%5.2% 2011In the top 39.9% 6.9%In the top 5 6.9% 9.5% In the top 10 14.7%11.2%Not a high priority45.7% 54.3%Looking to reduce investment/disinvest 2.6% 2.6% Dont know/cant say 9.9%10.3%0% 10% 20% 30%40%50% 60% Independent Marketing 22. Looking forward five yearsWhilst the vast majority (70%) are optimistic orslightly optimistic about their five-year businessoutlook in Taiwan, there has been a statisticallysignificant drop in this score compared to a yearago, with many taking a more Neutral position.Further suggesting that there is a growingcautiousness in regards to their future businessprospects. Independent Marketing 23. How would you describe your five-year business outlook for Taiwan? Optimistic27.6%29.3%Slightly Optimistic 42.7%51.7% Neutral 21.6%*Alert! Statistically significant change from 201120126.9%2011Slightly Pessimistic7.3%9.5%Pessimistic 0.9% 2.6% 0% 10%20%30%40%50%60%IndependentMarketing 24. What impacts their business?Not surprisingly, given their Taiwan market focus,changes in local demand have the single greatestimpact on their businesses.However, there are several areas where theTaiwanese government can have a direct andsubstantial influence. These include governmentbureaucracy, inconsistent regulatoryinterpretation, inadequate or outdated laws, andcompany and personal taxation levels. Indeed,reducing taxation levels may well release moremoney into the economy and help stimulate thearea of largest impact domestic demand. Independent Marketing 25. Which of the following impacts your operation in Taiwan, and how much of an impact do they have? Top Ten Responses overall2012 Ranking2011 Ranking Issues 11Changes in local demand 23Inconsistent regulatory interpretation 34Ability to recruit appropriate new personnel 42Governmental Bureaucracy 57Currency Exchange rate fluctuations 65Inadequate/Out-dated laws 78China-Taiwan government relations 89Changes in employment expenses 96Corporate Taxation l