There are capital letters and small letters of the alphabet. Children can handle them.
Just explain to them simplified and traditional characters are two versions. It is not easy. But not totally unachievable.
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I think it depends. My daughter is much better with speaking and listening may be because she is much more talented with learning languages. More, it depends on what you expect. I guess it is the same issue of the listening and speaking of English of local people. PTH is a second language to them, so it is at second language level. My son is now studying in a university in another country. He has classmates from taiwan and china. He said he understands their mandarin and he can speak some. So I guess may be not with perfect accent but good enough for communication.