Taiwan was named the “beautiful island” (Ilha Formosa) by Portuguese sailors passing by in 1544 – and the country still lives up to this title today.
The lofty mountains that make up much of the backbone of the island – and which appealed to Portuguese sailors five centuries ago – are also the island’s main challenge in satisfying its food and drink needs.
There is relatively little flat agricultural land in Taiwan, and what remains after industrial and urban expansion makes for comparatively high-cost agriculture.
As a result Taiwan has a self-sufficiency ratio for food and agricultural production of only around 33 per cent, meaning approximately two thirds of the food it needs to feed its population of 23 million is imported.
Australia is the third largest source after the US and Brazil, and in 2013 we supplied $550 million of agricultural products to Taiwan, mostly in the form of beef, cereals, and dairy products.
The range of products Australia supplies to Taiwan is as interesting as it is extensive – and the list includes sugar, flour, tallow, fruit – particularly Tasmanian cherries, oil, seeds and wine. Stock feed is also in demand for Taiwan’s domestic dairy and beef cattle operations.
Successful sectors
To take one example, the dairy products Australia exports to Taiwan include a range of extended shelf-life (ESL) milks supplied in retail packs and in bulk to the food service sector. If you have a latte or cappuccino at Starbucks or 7-Eleven in Taiwan, the chances are that you will be most likely be drinking Australian milk.
A stand-out success in 2014 was a contract won by a Victorian food maker to supply ice cream cones to the very popular soft-serve ice cream makers of Taiwan. More than 30 six-metre containers of cones have been supplied so far.
Australian chia seeds are another success story. A small local distributor, MRJ International, has invested creatively in the marketing of this fashionable health supplement, with sales growing impressively since market entry in 2012.
Why has Australia been so successful in Taiwan? Australia’s clean and safe image has served us well over many years. Our reputation as a country with a clean environment and a well-regulated agricultural and food production system is highly valued in Taiwan, which has faced several large-scale food safety scares in recent years.
Australia’s well regulated supply chains and clear product certification has been valuable in building our reputation.
Forging partnerships
Distribution channels for Australian products vary depending on whether the product is for retail sale, or for use in the food service industry or food manufacturing sector.
Australian companies have been most successful when it comes to supplying the food service and manufacturing sectors, but it's worth noting there are a number of major manufacturers including I-Mei Foods, Uni President, Nam Chow Food and Wei Chuan Food, that are also vertically integrated with retail food stores and restaurant chains.
Uni President, a major food manufacturer, uses Australian dairy products and wheat to manufacture its dairy-based food and beverage products. Uni President also holds the franchise for a number of international chains in China and Taiwan, including 7-Eleven – which has over 4,800 stores in Taiwan, Starbucks coffee – which has 300 stores, Cold Stone Ice Cream, Mister Donut, Afternoon Tea, and others.
Selection of an appropriate distributor is therefore crucial to successful market entry, and Austrade can provide advice in this area.
The China connection
An important feature of the Taiwan food and beverage market is that it's not structured to the population of Taiwan alone. Many Taiwanese food companies and traders, including Uni-President Enterprises Corporation, Nam Chow Group, and Wei Chuan Foods have set up manufacturing and retail businesses in China and several operate large factories there.
These companies make a range of products such as instant noodles, bakery products, edible oils and milling flour, predominantly for Chinese consumers. Some also operate restaurants and other food outlets.
This means that success in Taiwan may result in additional demand for products from subsidiaries in the China market.
Sizing up the competition
Despite Australia’s successes, the Taiwan market remains a tough market to break into. The United States has a strong foothold in the market, and it has a dominant market share in many sectors as well as heavy investment in marketing and promotion there.
Also, in the dairy sector New Zealand enjoys a free-trade agreement with Taiwan (ANZTEC), which provides specific tariff and quota-free advantages. With many Taiwanese importers focused mainly on price, Australian firms must work to shift attention to the quality and reliability of Australian produce.
When it comes to tackling the Taiwan market, Austrade recommends new players undertake initial research to establish what competing product is available and, where possible, how it's being distributed and priced.
Visiting the market to meet potential buyers face-to-face is also essential after an initial market assessment.
About the author: Martin Walsh is Austrade’s Senior Trade Commissioner based in Taipei, Taiwan.
Chia charts new territory
The Chia Co is a major Australian producer of the emerging super-seed chia, and Taiwan has become the company's third largest export market after the US and UK.
The company is represented by importer MRJ International in Taiwan, which introduced chia to that market in 2012.
Even though MRJ is a small business, it put significant effort into marketing the product through press conferences, in-store tastings, and other promotions and advertising.
At the time, MRJ was the first to import Australian chia seeds to Taiwan, and these days it distributes the seeds to over 500 outlets including major high-end supermarkets, organic specialty stores and Hands Tailung lifestyle stores.
Following its success, MRJ says more companies are starting to import chia seeds from other sources, and manufacturers are starting to use them as ingredients in beverage products.
The Chia Co, however, continues to hold 60 per cent of the chia seed market share in Taiwan, and has also now appointed MRJ as its agent in Japan.
A blossoming market
Taiwan has been a major destination for Tasmanian cherries for 20 years, and demand has grown significantly in recent years according to Tim Reid, managing director of exporter Reid Fruits.
Reid Fruits, Tasmania's largest cherry exporter, now sells its produce in around 20 countries – but Taiwan still accounts for around a quarter of the company's export sales, says Reid.
“Taiwan has remained the major export market for Tasmanian cherries until the last couple of years, with Hong Kong and mainland China now also becoming major markets for the industry,” he says.
According to Reid, demographic shifts in Taiwan mean the company's cherries are increasingly sold in supermarkets, specialty fruit shops, and even online – instead of traditional 'wet markets'.
He also notes that Taiwan is a highly competitive market and Tasmanian producers have to compete with countries with a lower cost of production, such as Chile.
“Because of this, the Tasmanian cherry industry strives to provide high-quality large cherries for the top end of the market,” Reid says.
