Think smart, be different, and shine: The future of industry in Taiwan

When one speaks of economy in Taiwan and the industry that drives the engine, the nickname “computer kingdom” may come to mind. This is partially true because apart from the service, the manufacturing industry accounted for nearly one-third of the GDP by sector. Taiwan certainly has its footstep firmly on the global map of electronics. Acer and hTC are two easy household Taiwanese brand names, not to mention many other less renowned yet equally strong world class providers such as Delta Electronics and Chimei. Of course there are also the sporting goods such as Giant, MERIDA bicycles and Formosa petrochemicals. The seemingly dazzling report card stands steadfastly on the solid rock of hard-earned harvest, as as early as two decades ago Taiwan was responsible for pretty much most of the current lower-end made in China products, the toys, calculators, mugs, stationery, and all that. However, the current manufacturing industry in Taiwan is also facing the common enemy shared by other manufacturing-based developed countries: globalization.

Looking at the trend of manufacturing, Taiwan has moved from the lower technical end to now the higher end, as most of the traditional industries have moved to China due to the lower laboring cost and fewer requirements on precision and product quality, which Made in Taiwan is branded for.

The westward migration of Taiwan’s manufacturing industry to China is an extremely important sign to the fate of Taiwan and its future. Because despite the glamorous GDP on the surface (4+ %), it has been gradually steadying over the past two decades and so. This is also reflected on the current so-called high-end manufacturing industry; our competitive edge on the global market is still based on high-precision technology with “minimal cost.” In short, despite the shift in manufacturing products from the lower to higher end over the past 2 decades, we are still mainly implementing “cost-down” strategy based on already-existing technologies.

Taiwan has certainly taken a toll in this westward migration of the manufacturing industry, economically, socially and politically. Apart from the obvious drag on the GDP, job availability and its serious consequences, the impact on social and political aspects are predominantly inseparable and equally rigorous. The movement has linked a substantial portion of Taiwan’s economy into China, and is often accompanied by the shifting of either the Taiwanese managers or their whole family to China. With a communist government as a neighbor that work restlessly to gain the holistic control over Taiwan, these Taiwanese businessmen along with their financial status are now pawns living under the mercy of China as their factories are now under the control of the CCP. Essentially, Taiwan is gradually losing its assets to negotiate with China through the process of the westward migration. This is just one of myriad ramifications. Even for those company that has insisted on keeping the roots in Taiwan, the lack of product differentiation with China has led to the inevitable cost-down battle, resulting in either dampened salary raise, pay cut, or even the infamous unpaid leave.

Tracking through the evolving trend of manufacturing industry in Taiwan, an upgrade or even a complete changeover is crucial in order for it to truly exit from this dark and narrowing tunnel. The competitive edge can no longer be based on costing down; instead, innovative approaches must be implemented to create product differentiation. This appealing strategy had actually been unpopular in Taiwan due to the extended funding and time it requires in R&D, which is rather counter-intuitive to the “let’s make money now”-minded Taiwanese businessmen.

Fortunately there are a few signs showing promising seeds that could resemble Taiwan’s future. Despite not truly innovative in its sense, businessmen are beginning to elevate product value via branding, quality-control, presentation, along with others, which consumers have also come to embrace. Media have also played its role in bringing the social awareness, so has our government. Former Kaohsiung county magistrate assisted the fruit farmers to package their fruits in gift boxes instead of agricultural baskets, and the council of agriculture started an agricultural product certification system to allow the customers to do background check on these certified products. Most recently the ministry of economic affair employs an MIT logo for Taiwanese products that represents the essence of high quality Taiwanese manufacturing.

The true milestone example in the up-and-coming industry in Taiwan should be the R&D-based biotech firm TaiMed Biologics. A HIV targeted team co-founded by world HIV research pioneer David Ho, professor at Harvard University Chen Lan-Po, and EVP and Head of Global Technical Operations of Roche Patrick Yang, it has incorporated biomedical elites in Taiwan and aimed to develop anti-HIV drugs that would genuinely put Taiwan on the global map of biopharmaceutical industry. This pioneer model set by the success of TaiMed could also solve the souring opinions that experts in Taiwan industry are often treated as robotic technicians, as the professionals would truly be R&D processing instead of performing repetitive technical routines. There is a saying among the education circle that over the years Taiwan has produced many world class talents, yet they have all flourished outside of Taiwan.

As one may receive the “booming economy” impression of Taiwan from its buzzing life and passionate people, the Taiwan’s economy and industry is actually decelerating on a crucial crossroad. The wheel is still in the hands of the people, it is about the time to think smart, be different, and shine.

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