Taiwan: export-focused businesses express caution

Payment Practices Barometer

  • Taiwan
  • Chemicals/Pharma,
  • Electronics/ICT,
  • Textiles

16th June 2021

The negative impact on global trade caused by the pandemic has undoubtedly had an effect on Taiwan’s export-driven economy. This may explain why businesses express caution about the coming months.

Introduction

The negative impact on global trade caused by the pandemic has undoubtedly had an  effect on Taiwan’s economy. This was particularly due to the problems associated with interrupted supply chains for its heavily export-focused economy.

The Atradius Payment Practices Barometer provides us with the valuable opportunity to  hear directly from businesses how they are coping with changed trading and economic  circumstances caused by the pandemic. The survey questionnaire was completed by   businesses in Taiwan during Q2 2021, a full year after the World Health Organisation declared Covid-19 a global pandemic.

Key takeaways from the report

Taiwan’s economic model is largely reliant on exports. During periods of healthy trade flows, this has been an economic strength. However, the pandemic has resulted in a
difficult export environment. It is perhaps for these reasons why the majority of businesses we spoke to during the survey expressed caution about the coming months and few were prepared to predict business growth with any confidence.

However, in the year after the outbreak of the pandemic, a significant number of businesses in Taiwan continued to use trade credit very frequently with B2B customers as an effective tool to drive  sales and secure established relationships within a market. Moreover, businesses in Taiwan offer customers the longest payment terms in Asia, almost 20 days more than the regional average.

Liberal trade credit policies may help drive sales and boost confidence, however businesses would be well-advised to protect their accounts receivable through credit risk mitigation measures. .

Key survey findings for Taiwan

  • Trade credit involves 55% of all B2B sales of Taiwanese businesses polled
  • Payment terms offered by Taiwan businesses are the longest across Asia
  • Late payments affect a significantly lower proportion of Taiwan's credit-based sales than across Asia.
  • 65% of the respondents to our survey in Taiwan told us they employ trade credit insurance to mitigate the impact of customer credit risk on the business (average for Asia: 59%)
  • Looking ahead, potential bank lending restrictions as well as the possibility of renewed geopolitical trade tensions are also reasons for concern for more businesses in Taiwan than in Asia.

Interested in getting to know more?

For a complete overview of the payment practices in Taiwan and in the local ICT/electronics, chemicals/pharma and textiles/clothing industries, please download the complete report.

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.