For another take, read this excellent letter taking issue with my POV.
 

There is one exception: many well-known individuals in the entertainment industry are an American (or other foreign)-born Chinese and bilingual ABCs with talents in that direction are much in demand.

I used to provide a section on getting along, but I stopped.  If you already knew Taiwan, you didn't need it.  If you didn't, it couldn't help you. If you've read this far, you already know a lot about how to get along in Taiwanese culture. 

I will say this: your best bet is always to act like a foreigner.  You cannot "be Taiwanese" nor will fluency in language make you more comfortable or help you navigate better.  In difficult situations stick to English.  Smile a lot.  Say nothing.

Remember, in every social situation, it is always acceptable to grovel and flatter. A constant stream of compliments should issue from your lips. They cost nothing, and will grease your way through society.

If you are seriously interested, check out Hartzell's Harmony in Conflict and Bo Yang's The Ugly Chinamen. Both paint accurate pictures of the Chinese, though Bo Yang often exaggerates for satiric effect.  Hartzell is well-known to all long-term foreigners in Taiwan (he has been a dogged battler on behalf of foreigners), knows Taiwan better than anyone and affects an entertaining innocence.  Because Harmony in Conflict was written during the martial law period, it is deliberately light on the deeper meaning of Chinese cultural forms.  When you finally understand "harmony" and "face" as cultural postures for reinforcing authoritarian domination of society, you will have arrived.  Most anthropological works are good for understanding the deeper roots of Taiwanese social behavior, but worthless as guides to behavior. 

Keep in mind some simple rules. First, just because they speak English well doesn't mean that they are your friend, or intelligent, or sympathetic, or they understand you, or they want romance, or they are nice people. It just means that they have mastered English, and nothing more. Second, people who don't speak any English are just as smart as people who do. Don't worry; even though they can't speak English, they still see right through you. Most importantly, the people in Taiwan are human beings, just like you, with their own feelings, needs, and agendas. They were not put here on earth to ensure that you have an exotic cultural experience in Taiwan. So don't treat them like they are.

Finally, don't be fooled by politeness.  Politeness is to Chinese culture what a pearl is to an oyster: a beautiful secretion around a major irrititant.  It is the opposite of being accepted.  Its purpose is to keep you at arms length and under control.  You know you are accepted when they start treating you like crap just like everyone else.

Politics is a dangerous topic. You can get yourself in a ton of trouble without even knowing it. Until you really understand what is going on, or are absolutely sure of the political allegiances of those you are talking to, do not reveal your own stance, or raise the issue. The Taiwanese don't with each other, and neither should you.

"Although China has never owned Taiwan (it was part of the Manchu Empire, as was China, in the 19th century) China is frothing to annex it.  Consequently, there is the threat of war between the two sides, and between China and the US.  Unless there is a war, the biggest political threat may be China's destabilization campaigns.  Prior to reoccupying Macao and Hong Kong, Beijing conducted political warfare against the two, notably involving the use of organized crime gangs and the introduction of criminals into those territories to create social problems, allowing China to pose as the white knight coming to the rescue.  A similar campaign is almost certainly in the works for Taiwan as well, augmented by such delights as disease, cyberwarfare and sabotage. China hates and envies Taiwan's prosperity, freedom and US patronage, and will do anything to blot it out.  Regardless of what happens, however, foreigners are unlikely to be targeted.  In March of 2000, however, Beijing "leaked" its plan to drop neutron weapons on the island to burn off the population (the Chinese have also threatened to dump A-bombs on LA should the US intervene in any conflict, but Western "experts" say it is Taiwan's Chen Shui-bian who is the hothead).  Make no mistake, you are living in a potential war zone, however much Western academics may be in denial.  There is a good chance of war in the next five years. And read this.  See my Background page for more information.