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5. Conclusion
Taiwan has been well-known for IT industry and economic miracles for the past few decades.
This was a great chance and advantage for Taiwan to develop and become the finance and technology center of Asia Pacific at that time. However, due to the political issue, Taiwan government shut the door for 8 years, from 2000 to 2008. Besides, mass media only reports news inside the island without too much exposure of international news. At the special circumstance, it is difficult for Taiwanese and Taiwanese companies to absorb oversea information as well as international trend of politics and economy, not to mention to understand foreign market and clients. Therefore, the very first suggestion to Taiwanese exporters is to fully understand international politics and market trend so that they could get prepared when the situation goes wrong and adjust their strategy to fit in with the market and react at the first moment.
The second suggestion for Taiwanese exporters is to be familiar with all kinds of trading formats, payment terms, and financial tools. For example, Taiwanese exporters can apply different payment terms, such as Usance L/C 90days after acceptance, D/A 60 days, or O/A 45 days, pricing by the level of risk exposure. In the case, foreign buyers can depend on their need and take the payment term they want by this diversified pricing offer.
In Chinese world, relationship is very important for successful business. With the mutual trust built up on relationship, Taiwanese companies will sometimes simply have oral agreement without any legal contracts. However, contract not only is the rules to regulate the right and obligation of both seller and buyer, but also the major legal certificate while involving in commercial disputes. Therefore, the third suggestion for Taiwanese exporters is
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to emphasize the contents of business contract so that they have clear rules to follow when facing disputes.
Last but not least, Taiwanese exporters better leverage financial tools to increase competitiveness in the world market without a doubt. However, it is difficult for some inexperienced companies to choose the appropriate tool if they have never got involved in the procedure or truly understood the professional knowledge and practice in the trade field.
Therefore, the arrangement of recommendations as the below table gives the information to Taiwanese exporters when considering the usage of financial tools.
Table 5.1: Recommendations under Different Conditions
Conditions Recommendation
1 SME for Emerging Markets Commercial LC / Export Insurance
2 SME for Mature Markets Export Insurance / Factoring
3 Multi-national or Big Companies Commercial Insurance / Factoring
4 Political Issues with Small Amount Export Insurance
5 Political Issues with Huge Amount Stand-by LC
6 Companies with Funding Demand Export Credit / Factoring
7 New Clients or New Order Commercial LC / Export Insurance
8 Urgent Need for Credit Commercial Insurance/ Factoring
9 Financial Crisis or Market Failure Export Insurance
10 Cost Concern Commercial Insurance / Factoring
The above criteria are general recommendations under certain conditions. Each company has its own concern with different considerations. Taiwanese Exporters shall leverage as many as possible as possible depending on different buyers, markets, products, and timing. Most important of all, Taiwanese companies are recommended to cooperate with Export-Import Bank of R.O.C. Because Exim bank is a state-owned bank with stable policy and support, companies will still get the steady assistance in terms of credit and financial support when suffering systematic risk or financial crisis.
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The final recommendation for Taiwanese exporters is to build up relationship with Exim bank, factors, banks, and other insurance companies at the same time so that they could apply the product or services they need as well as spread different types of risks to different institutions.
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