2023.09 The Taiwan Banker NO.165 / By Hank Huang (黃崇哲)
The world awaits: Taiwan's financial sector goes globalEditor's Note
Taiwan is an economic miracle not only in terms of its industrial achievements, but also in terms of the wealth it has accumulated. According to the Allianz Global Wealth Report 2022, its net worth per capita is nearly 140,000 euros, behind only the United States, Switzerland, Denmark and Sweden. This is not just a number, but also a strong driving force behind the development of Taiwan’s financial industry. This fortune did not just fall from the sky, but was the result of decades of hard work. From the early agricultural and manufacturing industries to the subsequent technology and service sectors, Taiwan has been continuously innovating, restructuring and upgrading itself, creating many internationally competitive brands and products which have brought economic growth and job opportunities, along with tremendous added value and foreign exchange earnings. Taiwan has a tradition of frugal financial management, and has accumulated large savings as a result of the wealth generated by industrial development, not only providing the basis for domestic investment and consumption, but also giving Taiwan’s financial industry more resources and space for internationalization. Not content with operating domestically, it is also exploring overseas markets, especially in Asia. One of the most important examples is investment by Taiwanese banks in China. Due to its huge market and close industry chains, language and cultural relationships with Taiwan, many banks have entered China to set up branches or sub-branches, recognizing the opportunity to not only serve Taiwanese customers investing or trading in China, but also to attract local Chinese customers. They have achieved good profitability in China and increased their brand awareness and influence. Of course, they have also faced environmental changes and risks, such as political factors, regulatory pressure, and exchange rate fluctuations. Fortunately, these banks have demonstrated flexibility in adjusting their deployment strategies in a timely manner to avoid the risk of over-reliance on the China market. In addition to China, Taiwanese banks have also been moving into Southeast and South Asia, especially under the New Southbound Policy, which has strengthened financial cooperation with the region. In fact, this is the third time that Taiwan’s financial sector has gone southward. The first was during the period of Japanese rule, when Taiwan’s financial institutions followed the footsteps of imperial Japanese and entered Southeast Asian; the second was from the 1970s to the 1990s, when banks followed the footsteps of Taiwanese businesses. Neither of these two attempts achieved good results, mainly because of the lack of industrial support and market recognition. This time is different: Taiwan’s financial industry has not only industry support and market awareness, but also rich internationalization experience and capabilities. As a result, Taiwanese banks have finally found profit sources in New Southbound markets, creating new room for development. Taiwan’s financial industry should not only play in the Asian Cup, but also the World Cup. In addition to China and the New Southbound markets, it should also pay attention to higher-end, mature markets such as the US, Japan, and Europe – markets with not only more opportunities and challenges, but also higher added value and competitiveness. In order to gain a foothold in these markets, however, they must enhance their service quality, innovation and risk management. Only in this way can Taiwan’s financial industry become truly world-class, allowing Taiwan’s wealth to be better utilized. Great treasures await Taiwan’s next generation of financial globetrotters.