Taiwan Credit Insight 3: The Definition of SMEs

Understanding the definition of SMEs in Taiwan is important because it helps to plan for the sales & marketing, and credit management tactics in the region. Would it be possible that more than 80% of the companies in Taiwan are SMEs?

According to the Taiwan’s Ministry of Economic Affairs, the definition of SMEs (revised and issued on September 2, 2009) refers to an enterprise that has completed company registration or business registration in accordance which the requirements of the law, and which conforms to the following criteria:

• In the manufacturing, construction, mining & quarrying industries, a paid-in capital of NT$ 80 million (US$ 2.42 million) or less.
• In the agriculture, forestry & fisheries, water, electricity & gas, commercial, transportation, warehousing & communications, finance, insurance & real estate, industrial & commercial services or social & personal services industries, sales revenue of NT$ 100 million (US$ 3.03 million) or less in the previous business operation year.

Depending on the nature of the business for which they are providing guidance, government agencies may base their definition of an SME on the number of regular employees as noted below:

• In the manufacturing, construction, mining & quarrying industries, the number of regular employees must be less than 200.
• For enterprises with less than 100 regular employees in the following industries are classified as SMEs: agriculture, forestry, fisheries & animal husbandry; water, electricity & gas; wholesaling & retailing; hotel & restaurant operation; transportation, warehousing & communications; finance & insurance; real estate & leasing; professional, scientific & technical services; educational services; medical, healthcare & social welfare services; cultural, sporting & leisure services; other service industries.

Micro enterprises refer to SMEs with fewer than 5 persons employed on a regular basis.

In 2015, the number of SMEs reached a record level of 1,383,981, up 2.29% from 2014, and accounted for 97.69% of all enterprises in Taiwan. Also, the number of employed persons in SMEs increased to 8,759,000, up 1.04% from 2014, the highest level in recent years, and represented 78.22% of all employed persons in Taiwan. The annual sales of SMEs in 2015 came to NT$ 11,803 billion (US$ 383 billion), accounting for 30.36% of the total annual sales of all enterprises in Taiwan. During the year, a total of 98,320 new SMEs were set up, increased by 4.43% against 2014. Sole proprietorship SMEs forms 54.32% of the total SMEs, and 50.43% of the SMEs operates longer than 10 years.

Source: Small and Medium Enterprise Administration, the Ministry of Economic Affairs
http://www.moeasmea.gov.tw

This Credit Insight is an extract from the book Happy Customers Faster Cash, Taiwan Edition and it is now on sale at Amazon.

This book is a learning tool for people engaged in the credit process. It contains three extensive chapters about credit management, business culture and communication with the focus in Taiwan. A chapter is dedicated to discussing various aspects of Taiwan company credit reports.