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What to Look for in a Taiwan Warehouse for Distribution Across Asia

by | Mar 7, 2024 | Blog Post

A Taiwan warehouse can be an excellent hub for distribution of products across Asia. Most companies that want to distribute from Taiwan will use the services of a third-party logistics company (3PL) with an existing facility and local market expertise. But how do you find the Taiwan 3PL partner that’s the best fit for your specific needs? Read on to get detailed guidance on this question. Or, watch this short video from Pippen Hsu, Manager of Dimerco Express Group responsible for Taiwan contract logistics.


Product distribution from Taiwan

Let’s start with what makes Taiwan a solid choice as an Asia distribution hub.

  • Strategic geographic location: Taiwan is located in East Asia, making it an economical transportation hub for destinations like China, Japan, South Korea, and Southeast Asia. Taoyuan International Airport boasts an average flight time of 4-hours to major cities in Northeast and Southeast Asia.
  • Strong air freight gateway to North America and Europe. As a mecca for high-tech manufacturing, many Taiwan-based operations need rapid global delivery of high-value, high-demand tech products. Taoyuan Intl. boasts frequent direct service to global gateways, with service from China Airlines, Eva Airways, and other key carriers.
  • Proximity to suppliers. Taiwan is the global epicenter of semiconductor manufacturing and plays a critical logistics role in the semiconductor supply chain. Having your warehouse close to Taiwan-based suppliers can reduce logistics costs and distribution cycle time.
  • Skilled workforce. Taiwan’s educated and skilled labor can enhance productivity and reduce errors in the warehouse.
  • Transparent, well-defined regulatory environment. There is no excess bureaucracy and, with the right trade compliance guidance, it’s relatively easy to understand and comply with regulations and customs procedures.

Taiwan Warehouse: Key Questions to Ask Potential Providers

If you are searching for a Taiwan logistics company to help set up distribution from Taiwan, chances are you’ll research several potential providers. Here are questions you can ask to distinguish best-fit partners from those less qualified. Some of these vetting questions apply across the board, while others will relate to companies with specific requirements.

Questions for Companies that Lack a Current Business Presence in Taiwan

  • Can the 3PL provide business agent services? Some foreign-based companies want to establish distribution operations in Taiwan without having to establish a legal entity there. The right 3PL can facilitate this process by serving as the Importer or Exporter of Record. Dimerco is one of the few 3PLs in Taiwan with the deep regulatory knowledge to guide foreign companies and simplify the process of entering the Taiwan market. Dimerco can act as a business agent for them by applying for a “Business Agent Application” to the Taiwan National Taxation Bureau.
  • Can the 3PL assist in obtaining an income tax exemption? For businesses legally registered overseas but not in Taiwan, the Taiwan government allows for corporate tax exemptions for business that are undertaking only “preparatory or auxiliary business activities.” If operating in a Free Trade Zone, it’s possible for such companies to seek an exemption from corporate income tax if approved by Taiwan’s Civil Aviation Administration (CAA). Dimerco is one of only a few 3PLs in Taiwan with the capability and experience to offer Corporate Income Tax Exemption Certificate Application services.

General Questions

  • Is the warehouse close to ports? All else being equal, you’ll save time and money choosing a Taiwan warehouse partner that’s close to where your goods are arriving or leaving. Dimerco’s distribution center in Taiwan is just a 5-minute drive from the country’s main air freight terminal and is also close to the ocean ports of Taipei (30-minute drive) and Keelung (55-minute drive).
  • Is the warehouse close to suppliers? Much of Taiwan’s manufacturing, including chip making, is concentrated in the Northeast part of the island near the capital of Taipei – with Hsinchu Science Park being a key production hub. A warehouse near your suppliers will shorten distribution time and allow you to maintain lower inventory levels but still meet customer delivery requirements. One computer company moved most of its manufacturing from China to Taiwan to be closer to its suppliers. Now that company distributes from Dimerco’s bonded warehouse within the Taoyuan Airport’s Free Trade Zone. The location allows the company to hold less inventory, reduce the number of touch points between factory and consumer, and ship products as early as two days after they are made.
  • Can the 3PL bundle international shipping and customs clearance services with its warehousing service? If so, this could be a significant advantage in terms of reducing overall supply chain time and touch points. Also, it frees you from the time-consuming and difficult task of coordinating the efforts of different partners – a particular advantage to new companies that simply don’t have the resources.
  • Is there a full-featured warehouse management system in place? Don’t wait to ask the systems questions until late in the evaluation process. Much rides on the provider’s ability to process orders efficiently and accurately. 3PLs that rely on manual methods for receiving, putaway, picking, and inventory management will cost you more in the end – both in terms of real dollars and a loss of customer confidence linked to accuracy problems.
  • What value-added services are available? Few companies are looking for simple “pallet-in, pallet-out” service from a warehouse partner. Make sure your Taiwan logistics provider can handle value-added services like sorting, relabeling, repackaging, and final assembly – and perform these activities in full compliance with local regulations.
  • Does the 3PL have experience handling semiconductor products? Many companies looking for a Taiwan warehouse will be tech companies that need to store and ship valuable and highly sensitive semiconductor products. It helps to work with a 3PL partner with deep experience in semiconductor logistics services.
  • Is the 3PL TAPA-certified? TAPA stands for Transported Asset Protection Association. It’s the world’s first platform to unite manufacturers, 3PLs, carriers, and law enforcement agencies with the common aim of reducing supply chain inventory losses. TAPA’s rigorous security standards define how certified companies must securely store, handle and ship goods. If you store high-value technology products in Taiwan, a Taiwan warehouse operation that is TAPA-certified, like Dimerco’s, can help you avoid major product losses and reduce risk.
  • Can the Taiwan logistics partner scale to meet future needs. It’s costly and disruptive to change warehousing partners. That’s why you want a 3PL that can meet your defined needs today AND your potential needs tomorrow.
    • Can they expand space, if needed?
    • Can they serve you in other locations, including outside of Taiwan?
    • Can they service all your sales channels, including both B2B and eCommerce?
    • Can they provide a full range of freight forwarding and contract logistics services, if required?

Bonded Warehousing and Free Trade Zone Services in Taiwan

Depending on your business model, you may be able to defer payments on taxes and duties, creating a huge cash flow benefit. But to take full advantage, your 3PL provider may need to operate within one of Taiwan’s Free Trade Zones (FTZs). Like many countries, Taiwan has established bonded warehousing and FTZ programs to facilitate global trade.

A bonded warehouse lets companies store imported goods near customers while deferring payment of duties until the goods are sold. For instance, if your duty rate is 15% and you have $100 million worth of high-value inventory, that equates to USD 15 million in cash available for spending or investment until the products are sold.

FTZs offer the same cash flow advantages as bonded warehouses. Additionally, within an FTZ no duties are payable on imported components that are subsequently re-exported, such as when these components are utilized in the production of finished goods. Furthermore, manufacturing activities are permitted within an FTZ without immediate duties or taxes being payable.

All space within an FTZ is bonded, although bonded warehouses can be situated either inside or outside an FTZ. Tax and duty payments are based largely on the value of the goods. For high-value tech products, it’s hugely beneficial to hold on to your cash as long as possible, while still complying with government requirements. It helps to work with a Taiwan 3PL that can advise you on how to improve your cash flow and can also provide bonded and FTZ warehouse services.

In 2023, Dimerco opened its second bonded warehouse within the Taiwan Taoyuan International Airport Free Trade Zone (FTZ). The facility is primarily for high-tech companies operating in Taiwan – the epicenter of global semiconductor manufacturing. Supplier inventory entering Taiwan can be stored duty and tax free at the facility until the inventory ships out. For finished goods being manufactured in Taiwan, these can be stored in the bonded warehouse duty and tax free until they are sold and shipped.

Fast-growing laptop maker, Framework, utilizes the services of Dimerco’s Taiwan FTZ warehouse. At any given time, the company might have 20 weeks of supply on certain parts. Dimerco’s FTZ location allows Framework to purchase this inventory and store it duty and tax free until it is sold and shipped out. “For a new company, that cash flow advantage is huge,” says Lauren Mitchell, Framework’s Head of Logistics. Read the case study.



Difference Between Bonded & FTZ Warehouse In Taiwan

Taiwan Warehouse - Bonded Warehouse vs Free Trade Zone



Choose Wisely When Selecting a Taiwan Warehouse Partner

Millions of dollars can be gained or lost based on your choice of a 3PL warehouse partner in Taiwan. Choose wisely. Take your time and ask the right questions.

If you’re looking for guidance on setting up distribution operations in Taiwan, contact Dimerco to arrange a discussion with one of our Taiwan warehouse specialists. We were founded in Taiwan in 1971 and few providers can match our level of experience and knowledge operating warehouses and transportation operations in this market.