Taiwan television stations showed footage of some collapsed buildings in Hualien, near the quake's epicentre, and media reported some people were trapped.
A five-storey building in Hualien appeared heavily damaged with the first floor collapsing and leaving the rest leaning at a 45-degree angle.
Wednesday's magnitude 7.2 quake could be felt as far as Shanghai, according to a Reuters witness.
The epicentre was just off the coast of eastern county of Hualien, in waters off eastern coastline of Taiwan Island, the Taiwan central weather administration said.
Japan issued an evacuation advisory for the coastal areas of the southern prefecture of Okinawa.
Japan's Meteorological Agency (JMA) forecast a tsunami of up to three metres for Japan's southwestern coast.Â
A 30cm tsunami reached Yonaguni Island at 1118 AEDT, the JMA said.
Japan's Self Defence Force has sent planes into the area to gather information about the tsunami impact around the Okinawa region. It is also preparing shelters for evacuees if necessary.
The Philippines Seismology Agency also issued a warning for residents in coastal areas of several provinces, urging them to evacuate to higher ground.
The quake was felt in Fuzhou, Xiamen, Quanzhou and Ningde in China's Fujian province, according to Chinese state media.
Taiwan's earthquake monitoring agency measured the quake as magnitude 7.2 while the US Geological Survey put it at 7.4. It struck about 18km south-southwest of Hualien and was about 35km deep.
Multiple aftershocks were felt in Taipei in the hour after the initial quake.
Taiwan's high speed rail operator said no damage or injuries were reported on its trains, but noted trains will be delayed while it carries out inspections.
Taiwan Semiconductor Manufacturing had evacuated factory areas, Bloomberg News reported.
Taiwan's official central news agency said the quake was the biggest to hit the island since 1999 when a 7.6 magnitude tremor killed around 2400 people.
with AP
