Taiwan market
Republic of China (Taiwan)
Fig. 1 National flag of Republic of China (Taiwan)
Taiwan, officially the Republic of China (ROC), is a state in East Asia. Neighbouring states include the People's Republic of China (PRC) to the west, Japan to the north-east, and the Philippines to the south. The island of Taiwan has an area of 35,808 square kilometres (13,826 sq mi), with mountain ranges dominating the eastern two thirds and plains in the western third, where its highly urbanised population is concentrated. Taipei is the capital and largest metropolitan area. Other major cities include Kaohsiung, Taichung, Tainan and Taoyuan. With 23.7 million inhabitants, Taiwan is among the most densely populated states, and is the most populous state and largest economy that is not a member of the United Nations (UN). Taiwan's export-oriented industrial economy is the 21st-largest in the world, with major contributions from steel, machinery, electronics and chemicals manufacturing. Taiwan is a developed country, ranking 15th in GDP per capita. It is ranked highly in terms of political and civil liberties, education, health care and human development.
Fig. 2 Map of Republic of China (Taiwan)
Taiwan is an island state in East Asia. The main island, known historically as Formosa, makes up 99% of the area controlled by the ROC, measuring 35,808 square kilometres (13,826 sq mi) and lying some 180 kilometres (112 mi) across the Taiwan Strait from the southeastern coast of mainland China. The East China Sea lies to its north, the Philippine Sea to its east, the Luzon Strait directly to its south and the South China Sea to its southwest. Smaller islands include a number in the Taiwan Strait including the Penghu archipelago, the Kinmen and Matsu Islands near the Chinese coast, and some of the South China Sea Islands. Taiwan is a member of the World Trade Organization, Asia-Pacific Economic Cooperation and Asian Development Bank under various names. Nearby countries and countries with large economies maintain unofficial ties with Taiwan through representative offices and institutions that function as de facto embassies and consulates. Today Taiwan has a dynamic, capitalist, export-driven economy with gradually decreasing state involvement in investment and foreign trade. In keeping with this trend, some large government-owned banks and industrial firms are being privatized. Real growth in GDP has averaged about 8% during the past three decades. Exports have provided the primary impetus for industrialization. The trade surplus is substantial, and foreign reserves are the world's fifth largest. The currency of Taiwan is the New Taiwan dollar. Taiwan's total trade in 2010 reached an all-time high of US$526.04 billion, according to Taiwan's Ministry of Finance. Both exports and imports for the year reached record levels, totalling US$274.64 billion and US$251.4 billion, respectively.
1. Introduction to Taiwan
Taiwan's population is about 23.4 million in 2017; its GDP is $24,027 per capital on year 2017. It also is the 7th largest economy in Asia, and is included in the advanced economies group by the International Monetary Fund (IMF) and gauged in the high-income economies group by the World Bank, and ranked 15th in the world by the Global Competitiveness Report of World Economic Forum, has a developed capitalist economy that ranks as the 22nd-largest in the world by purchasing power parity (PPP), ranks as 18th in the world by gross domestic product (GDP) at purchasing power parity per capita (person), and 24th in nominal GDP of investment. The economy of Taiwan ranks the highest in Asia for 2015 Global Entrepreneurship Index (GEI) for specific strengths. Table 1 shows the household appliance market value in Taiwan, the market had total revenues of $1,709.5m in 2013, representing a compound annual growth rate (CAGR) of 3.4% between 2009 and 2013. In comparison, the Chinese and Japanese markets grew with CAGRs of 11.2% and 0.7% respectively, over the same period, to reach respective values of $93,538.6m and $18,469.6m in 2013. Hypermarkets, supermarkets and discounters account for the largest proportion of sales in the Taiwanese household appliances market in 2013, sales through this channel generated $668.3m, equivalent to 39.1% of the market's overall value. Sales through the electricals and electronics retailers’ generated revenues of $469.8m in 2013, equating to 27.5% of the market's aggregate revenues. The performance of the market is forecast to deceleration, with an anticipated CAGR of 2.8% for the five-year period 2013- 2018, which is expected to drive the market to a value of $1,963.7m by the end of 2018. Comparatively, the Chinese and Japanese markets will grow with CAGRs of 14.5% and 0.6% respectively, over the same period, to reach respective values of $183,824.2m and $19,012.0 m in 2018.
Table 1 Taiwan household appliances market value
2. WDIRC selling
The forecast of WDIRC selling can be shown in Table 2 during the first ten years since product launched. Here the assumptions of households, occupancy ratio, initial sale, selling price, and manufacture cost are 8,468,978, 0.0800%, 6,775, 350 and 200, respectively. The first year is set as the baseline for comparison with the following years, the sale volume, year penetration, revenue, cost and profit are 6,755 (sets), 800 (ppm), 2,371,314(USD), 1,355,036 (USD) and 1,016,277 (USD), respectively. As we think, the growth rate with years will be 1, 3.51, 3.80, 7.23, 8.80, 10.13, 12.92, 14.77, 16.77 and 20 times over the first year. The year penetration of WDIRC will be from 800 ppm to 16,000 ppm at the end of tenth year, the totally ownership (penetration) is close to 79,145 ppm (7.91%), it still is a low penetration ratio in Taiwan even WDIRC listed in market for ten years. However the revenue, manufacture cost and profit these three also present an ascending trend, the profit earned from Taiwan is about $ 20.325 million at the tenth year in an exclusive market, it owns a huge market and profit in this market. Totally according to our prediction and assumption, the selling in Taiwan will be up to 670,263 sets, even this; the penetration ratio is still lower than other consumption electric products such as TV, Refrigerator, Air conditioner, and Wash machine.
Table 2 To estimate the selling of WDIRC in Taiwan
How about the annual growth rate for selling WDIRC in Taiwan market? Fig. 3 shows the result. Here the calculation of revenue can use this equation as “WDIRC’s Revenue = Annual growth rate * Year + Baseline”, the formula can be written in a mathematic equation in Figure. The first year revenue is 2,371,314, according to this regression by data simulation, the annual growth rate it take about 5M per year (r2 =0.9902), in other words, by averaged the annual revenue is 5M in Taiwan market for selling WDIRC products during the first decade. .
Fig. 3 To estimation the revenue of WDIRC selling in Taiwan market
3. Rice selling
A ten-years forecast to WFR sale, after WDIRC launched in Taiwan market, is presented in Table 3. The first year since the marketing of WDIRC, online/offline deals for WFR sale are 31,934 kg, here the assumptions of population, rice consumption, sharing of WFR, online buying rate and market sharing are 23,395,600, 45.50, 0.10%, 10.00%, and 30%, respectively. How to calculate the WFR volume by online/offline sale, Eq. 1 is the equation for calculating the WFR sale volume.
Eq. 1 SaleVolume=Population x RiceConsumption x WFRratio x On/OffBuyingRatio x MSharingRatio
(eg. 31,934= 23,395,600 x 45.50 x 0.001 x 0.1 x 0.3)
The use rate of WFR is set as 0.0014 kg/person-year. Based on this, we can get the annual revenue is $ 31,934 (WFR priced as $1), and the profitability is set to 10%, so the profit that will earn $ 3,193. Changing with the time, the ratio of WDIRC in kitchens will increase and cause the use of WFR increasing. We assumed the series of growth rate (G.R.) by years is 1, 5.81, 18.20, 26.84, 33.89, 40.77, 45.50, 54.35, 64.93 and 71.40. G.R. it is based on the prediction of WDIRC’s growth. By this series of G.R., both revenue and profit, they will also be presented like this serial when the dealing cost of WFR through online/offline transaction is keeping constant. Whatever the cost of online/offline transactions depends on the volume of WFR’s selling, so if the volume with time is scaling up, the dealing cost will be significantly lowered, in other words, the profitability with time will increase more than our prediction. If all hypotheses are true, the profit in tenth year will approach to $ 228,014. Eq. 2 calculates the penetration of WFR which to be used in this country by people. From this indicator (URate of WFR), we can see the level of penetration of WFR, even at the tenth year, the level of WFR use rate in Taiwan is still underestimation, that’s meaningful for us to optimistically think, the use rate of WFR can be easy completed and it will be grew up more than our prediction.
Eq. 2 URate of WFR = SaleVolume of WFR / Population
(eg. 0.0014 = 31,934 / 23,395,600)
Table 3 To estimate the selling of WFR in Taiwan
Regarding the revenue of WFR selling in Taiwan, Fig. 4 shows the result. This is a prediction by data simulation according to our assumption, the regression could be calculated as “WFR’s revenue = Annual growth rate * Year + Baseline”. The result shows the annual growth rate is $249.873k per year (r2=0.9941), in other words, the increasing of revenue of WFR selling in Taiwan is $249.873k dollar per year. This growth can help the company to maintain its team in the local market for servicing customers.
Fig. 4 To estimation the revenue of WFR selling in Taiwan market
4. To summarize the revenue and profit
Here according to the estimations above, we summarize the incomes from sales of WDIRC and WFR in Taiwan. Both revenues and profits are presented in Table 4. In the first year, the products of WDIRC and WFR are unfamiliar with Taiwanese people; namely the recognition and acceptance aren’t well to local consumers, so on the beginning (1st year) sales would be not good and the totally revenues and profits will be $ 2,403,248 and $ 1,019,471, respectively. Both of them will increase with years when selling with good experiences and promotions. Through our forecast, at the end of tenth year, the profits of WDIRC and WFR will be up to $ 20,325,450 and $ 228,014, and the totally profit will be $ 20,553,464, this is a huge profit which be created in Taiwan market by our novel products and services.
Table 4 To estimate both revenues included WDIRC and WFR selling in Taiwan
Totally the revenue of WDIRC and WFR (2W) selling in Taiwan market can be shown in Figure 5. The 2W revenue in first year is 2.403M dollars, after that the growth rate of revenue is 5M per year, this is a simple regression by mathematic model to predict the revenue on product selling. In practice, there are other factors that need to be considered much more, it could be higher than this or lower. Whatever by this calculation let us to trust that the market it always be there.
Fig. 5 To estimation the revenue of WDIRC and WFR selling in Taiwan market