Small and medium-sized enterprises account for the major part of Taiwanese industry. When compared with developed countries, even though Taiwan’s small and medium-sized enterprises are still lacking in human resources, experience, funds, technology and knowledge management, they are still engaged in intensive overseas investment activities, which has gradually enabled them to play an important role in the investment world. What are the decision-making processes and influential factors among them? These are well worth probing into and studying.
A large share of Taiwan’s foreign direct investment comes from the manufacturing industry, which accounted for 65.2% of total foreign direct investment at the end of 2005. The proportion attributable to the service industry has also been rising gradually.
79.3% of Taiwan’s foreign direct investment is concentrated in Asia, of which China attracts nearly 50%, with the six countries in Southeast Asia together accounting for a further 27.4%, North American countries for 5.1%, and the Central and South American countries for 11.7%. In addition, enterprises prior to 1986 had generally engaged in small-scale investments abroad, but in recent years, the scale of investment has been increasing. While the scale of investment in China has been rather small, it is obvious that it is mainly small and medium-sized enterprises that have accounted for the foreign direct investment in China, in large part because on an individual basis they have already lacked the ability to invest abroad. In addition, the cultural, geographical and psychological differences between China and Taiwan are minimal. Thus, because of these advantages, it is only natural that China would be regarded as the number one preference when it comes to deciding on a foreign direct investment market for small and medium-sized enterprises. The procedure that small and medium-sized enterprises adopt to engage in foreign direct investment can be divided into three main