Latvian businessman Normunds Medens recently published an article titled "Taiwan’s experience in e-business: an opportunity also for Latvia" in Latvian newspaper "dienas bizness" after visiting Taiwan. For the Latvian version please visit: http://www.db.lv/viedokli/eksperti/viedoklis-taivanas-pieredze-e-biznesa-iespeja-mums-apvienot-spekus-eksporta-468506

Taiwan’s experience in e-business: an opportunity also for Latvia

Speed and solutions adapted for it – this is the impression Taiwan gives you as soon as you get off the plane at the airport in capital Taipei and become part of the city traffic. Circumstances in which pace sets the tone for everyday life of many people and time is worth its weight in gold have encouraged the people of this Asian country to develop various e-business models worth considering also in Latvia.

Numbers are clear indicators of Taiwan’s dynamic growth and economic potential: 23 million people and a GDP of USD 523 billion put Taiwan in a stable place among the so-called heavyweights of Asia. The best way to describe Taiwan’s Internet business, which I recently got to know during an e-commerce seminar in the country, is to use numbers: there are 17.6 million Internet users, the total value of the Internet market reaches USD 34 billion, with 40% of the online shopping deals coming from abroad. In Taiwan, people up to 30 years of age mostly shop online. 45% of the consumers use the direct selling platform, while 25% use Facebook for shopping. Taiwan takes the third place worldwide in terms of the use and development of the online business after the US and UK.

Quick and convenient

Given Taiwan’s location, a large share of the online deals there take place with its closest neighbour, China. However, if we speak about e-commerce in this part of Asia, it covers the trading area that also includes South Korea, Japan, Malaysia, Singapore, the Philippines and Taiwan. In Taiwan, the business of Internet commerce has its own specific features with some advantages. For example, if you choose to buy a product online while in Taipei, you get a six-hour delivery guarantee. However, if you are in the southern Taiwanese city of Kaohsiung, you are guaranteed to receive the product within 24 hours. I need to stress that these deadlines apply not only on paper, but also in real life. The delivery speed is there owing to the excellent logistics system and high level of responsibility of the employees involved in this business. Taiwanese logistics companies have adapted to the Internet age perfectly and the largest online shops use their own logistics base.

One of Taiwan’s distinctive e-commerce trends is consumers choosing to have their purchases delivered to the shops nearest to their homes. This saves time and the recipient of the product does not have to be home at the time of delivery. In addition, being able to receive the goods ordered online in such a shop also lets people use that shop to buy other products they are interested in. It is important that, at the shop, you can use cash to pay for things bought online. It is worth considering this model also in Latvia, especially Riga, where it would open up new business opportunities for small shops whose clients mostly include the people of local residential communities.

Bypassing an excess link in the chain

Another considerable aspect of Taiwan’s experience with e-commerce is cutting the cross-border trade chain short in favour of consumers. The traditional pattern of exports presupposes that a container is filled with one kind of product and shipped to its final destination. Afterwards, it finds its way to several consumer shops or business centres. However, the new key principle of online shops is to exclude the third party (retailer) from the commercial chain. As a result, the consumers essentially put together their own containers with a wide variety of products. This reduces the costs usually resulting from the need to rent large premises and the further sale of unsold goods. The manufacturers benefit as well, as they no longer need to produce goods for an unknown range of consumers, but for a specific, known customer. The producer to logistics company to consumer model is good for small countries to boost their exports, as it provides small businesses with additional opportunities to sell their goods in foreign markets. For example, Latvian food manufacturers could fill one export container with several food products to be transported under specific storage temperatures. Another solution would be to put together a single shipment of goods made by several smaller outworkers by using a single online platform, of course. For Latvia, this opens up new opportunities that could be described by the motto ‘Small and Proud’. Taiwan is an excellent example of this business model, as well as a good export market for berries, mushrooms and honey from Latvia because of the high demand and price of these products there.

The advancement of Asia’s e-commerce also brings about several challenges for lawmakers, as they constantly need to update or create new regulations in tax policies, the e-payment environment, consumer protection and commercial insurance. Despite the extremely rapid development of e-commerce, the Taiwanese government is coping with it very well.

Worth cooperating

As you know, Taiwan is one of the fastest growing economies in South Asia, which would be impossible without close cooperation with China. Both republics have a lot in common, including families, traditions, businesses and political commitment. However, you cannot deny strongly democratic Taiwan’s efforts and achievements in promoting China’s development. Taiwan is like China’s younger brother who makes the slower Asian giant keep pushing itself forward, which, in my view, has contributed to the rapid development of both countries. China has thus far been the main focus of Latvia’s economic policy; however, cooperation with Taiwan – one of Asia’s great economic heavyweights – is a great opportunity for us to boost our economic potential, which includes the field of e-commerce.