By the early 16th century, increasing numbers of Chinese fishermen, traders and pirates were visiting the southwestern part of the island. Some merchants from Fujian were familiar enough with the indigenous peoples of Taiwan to speak Formosan languages. The people of Fujian sailed closer to Taiwan and the Ryukyus in the mid-16th century to trade with Japan while evading Ming authorities. Chinese who traded in Southeast Asia also began taking an East Sea Compass Course (dongyang zhenlu) that passed southwestern and southern Taiwan. Some of them traded with the Taiwanese aborigines. During this period, Taiwan was referred to as Xiaodong dao ("little eastern island") and Dahui guo ("the country of Dahui"), a corruption of Tayouan, a tribe that lived on an islet near modern Tainan from which the name "Taiwan" is derived. By the late 16th century, Chinese from Fujian were settling in southwestern Taiwan. The Chinese pirates Lin Daoqian and Lin Feng visited Taiwan in 1563 and 1574 respectively. Lin Daoqian was a pirate from Chaozhou who fled to Beigang in southwestern Taiwan and left shortly after. Lin Feng moved his pirate forces to Wankan (in modern Chiayi County) in Taiwan on 3 November 1574 and used it as a base to launch raids. They left for Penghu after being attacked by natives and the Ming navy dislodged them from their bases. He later returned to Wankan on 27 December 1575 but left for Southeast Asia after losing a naval encounter with Ming forces on 15 January 1576. The pirate Yan Siqi also used Taiwan as a base. In 1593, Ming officials started issuing ten licenses each year for Chinese junks to trade in northern Taiwan. Chinese records show that after 1593, each year five licenses were granted for trade in Keelung and five licenses for Tamsui. However these licenses merely acknowledged already existing illegal trade at these locations.
