Building a Competitive Taiwan
Professor Michael E. Porter
Harvard Business School
Global Leaders Forum
Taipei, Taiwan
October 24th, 2014
This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press, 1990), “Building the
Microeconomic Foundations of Competitiveness,” in The Global Competitiveness Report (World Economic Forum), “Clusters and the New Competitive Agenda for
Companies and Governments” in On Competition (Harvard Business School Press, 2008), and ongoing research on clusters and competitiveness. No part of this publication
may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the
permission of Michael E. Porter. Further information on Professor Porter’s work and the Institute for Strategy and Competitiveness is available at www.isc.hbs.edu
The State of the Taiwanese Economy
• High and rising standard of living
• Highly educated workforce and strong technology base
• Progress on infrastructure, corruption, and other areas
BUT
• Slower economic growth
• Concerns about income inequality
• Low birth rate and aging population
• Concerns about future economic direction
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Copyright 2014 © Professor Michael E. Porter
Agenda
•
Taiwan’s Prosperity Performance
•
Taiwan’s Competitiveness Fundamentals
•
Taiwan’s Role in the Regional and Global Economy
•
An Economic Strategy for Taiwan
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Copyright 2014 © Professor Michael E. Porter
Prosperity Performance
Selected Countries
PPP-Adjusted Real GDP
per Capita, 2013 ($USD
at 2005 prices)
$50,000
Singapore
(+3.5%, $68,251)
Norway
$45,000
Hong Kong
United States
Austria
$40,000
Switzerland
Netherlands
Canada
Finland
United Kingdom
Ireland
$35,000
Denmark
$30,000
Italy
Australia
Germany
Sweden
Belgium Iceland
Israel
France Japan
Taiwan
OECD Average Real
GDP per Capita: $29,380
South Korea
New Zealand
Spain
$25,000
Slovenia
Greece
Portugal
$20,000
Estonia
Czech Republic
Poland
Chile
Hungary
$15,000
Slovakia
Malaysia
Mexico
Russia
China
(+9.7%, $10,459)
Turkey
Brazil
$10,000
Thailand
Indonesia
India
Philippines
$5,000
Vietnam
OECD Average Prosperity Growth: +1.3%
$0
-2%
-1%
0%
1%
2%
3%
4%
5%
Laos
6%
Growth in Real GDP per Capita (PPP $US at 2005 prices), CAGR, 2003-2013
Note: Luxembourg omitted from OECD average.
Source: EIU (2014), authors calculations
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Copyright 2014 © Professor Michael E. Porter
What is Competitiveness?
A nation or region is competitive to the extent that firms operating there are able
to compete successfully in the national and global economy while maintaining
or improving wages and living standards for the average citizen
• Competitiveness depends on the long-run productivity and efficiency of a
location as a place to do business
- The productivity of existing firms and workers
- The ability to achieve high participation of citizens in the workforce
• Competitiveness is not:
- Low wages
- A weak currency
- Jobs per se
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Strong Labor Productivity Performance
Selected Countries
Real GDP per Labor
Force Participant
(1990 GK$), 2013
$70,000
United States
Hong Kong
$60,000
Norway
Netherlands
Austria
Denmark
Australia
Sweden
United Kingdom
Finland
Belgium Canada
Italy
Japan
France
Iceland
Germany
Switzerland
Taiwan
Ireland
$50,000
$40,000
Spain
New
Zealand
$30,000
Singapore
South Korea
Israel
OECD Average: $40,232
Chile
Slovenia
Slovakia
Czech
Republic
Portugal
Greece
Malaysia
$20,000
Mexico
Estonia
Hungary
Turkey
Poland
Russia
Thailand
China
(+9.7%, $15,766)
Indonesia
Brazil
$10,000
Philippines
India
(6.3%, $9,471)
Vietnam
OECD Average: +.93%
$0
-2%
-1%
0%
1%
2%
3%
4%
5%
Growth in Real GDP per Labor Force Participant, CAGR, 2003-2013
Note: Luxembourg omitted from OECD average. Growth calculated as compound annual growth rate.
Source: The Conference Board Total Economy Database, EIU (2014)
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Copyright 2014 © Professor Michael E. Porter
Strong Innovative Output
Selected Countries
Average U.S. patents per
1 million population, 2011-2013
450
Taiwan
400
Japan
350
United States
Israel
300
South Korea
250
Switzerland
Sweden
Finland
200
Canada
Germany
150
Denmark
Singapore
Luxembourg
100
Norway
France
United Kingdom
Iceland
Australia
50
Italy
Argentina
Philippines
South Africa Colombia
0
0%
2%
4%
Netherlands
Austria
Belgium
Hong Kong
Ireland
United Arab Emirates
New Zealand
Hungary Spain Slovenia
Brazil
Turkey
Mexico
Russia
6% Slovakia 8%
10%
Czech Republic
Greece
Malaysia
Chile Portugal
Thailand
Bulgaria
Egypt
Ukraine
12%
14%
CAGR of US-registered patents, 2003-2013
Source: USPTO (2014), EIU (2014)
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China
(+34.3%, 3.4)
16%
India
Poland
18%
20%
3,000 patents =
Copyright 2014 © Professor Michael E. Porter
Low Workforce Participation
Selected Countries
Labor Force
Participation (2013)
100%
OECD Average: +2.8%
95%
Switzerland
90%
Singapore
Iceland
85%
China
Vietnam
Sweden
Norway
Laos
80%
Finland
United States
70%
Philippines
65%
Indonesia
France
Slovakia
New Zealand
Brazil
Australia
Canada
Czech Republic
Estonia
Hong Kong
Russia
Israel
OECD Average: 74.0%
Spain
Netherlands
Belgium
South Korea
Ireland
Poland
Malaysia
Austria
Greece
Mexico
Italy
60%
Thailand
Germany
United
Kingdom
Denmark Portugal
75%
Japan
Slovenia
Taiwan
Chile
Hungary
India
Workforce Participation Rate
Turkey
55%
=
Labor Force Size
Population Age 15-64
50%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
Change in Labor Force Participation Rate, 2003-2013
7%
8%
9%
10%
Note: Luxembourg omitted from OECD average.
Source: EIU (2014), World Bank, authors calculations
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Copyright 2014 © Professor Michael E. Porter
Declining Share of World Exports
Selected Countries
Share of World
Exports of Goods
and Services
12%
China
10%
8%
6%
Japan
4%
Hong Kong
South Korea
2%
Singapore
Taiwan
0%
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Source: UNCTADstat (2014)
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Copyright 2014 © Professor Michael E. Porter
Lagging Wages
Manufacturing Wages, Selected Countries
Manufacturing
Wage Level
($US)
$40
Japan $35.34
$35
$30
Singapore $24.16
$25
South Korea $20.72
$20
$15
Taiwan $9.46
$10
$5
Philippines $2.10
$0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: BLS, EIU (2014)
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Copyright 2014 © Professor Michael E. Porter
What Determines Competitiveness?
Endowments
•
Endowments, including natural resources, geographical location, population, and land area, create a
foundation for prosperity, but true prosperity arises from productivity in the use of endowments
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Copyright 2014 © Professor Michael E. Porter
What Determines Competitiveness?
Macroeconomic Competitiveness
Human Development
and Effective
Political Institutions
Sound Monetary
and Fiscal Policies
Endowments
•
Macroeconomic competitiveness sets the economy-wide context for productivity to emerge, but is not
sufficient to ensure productivity
• Endowments, including natural resources, geographical location, population, and land area, create a
foundation for prosperity, but true prosperity arises from productivity in the use of endowments
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Copyright 2014 © Professor Michael E. Porter
What Determines Competitiveness?
Microeconomic Competitiveness
Quality of the
Business
Environment
State of Cluster
Development
Sophistication
of Company
Operations and
Strategy
Macroeconomic Competitiveness
Human Development
and Effective
Political Institutions
Sound Monetary
and Fiscal Policies
Endowments
•
Productivity ultimately depends on improving the microeconomic capability of the economy and the
sophistication of local competition revealed at the level of firms, clusters, and regions
• Macroeconomic competitiveness sets the economy-wide context for productivity to emerge, but is not
sufficient to ensure productivity
• Endowments, including natural resources, geographical location, population, and land area, create a
foundation for prosperity, but true prosperity arises from productivity in the use of endowments
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Copyright 2014 © Professor Michael E. Porter
Assessing the Quality of the Business Environment
Context for
Firm Strategy
and Rivalry
• Local rules and incentives that
encourage investment and productivity
Factor
(Input)
Conditions
• Improving access to high quality
business inputs
–
–
–
–
Qualified human resources
Capital availability
Physical infrastructure
Scientific and technological
infrastructure
– Administrative and regulatory
infrastructure
– e.g. incentives for capital investments,
IP protection
• Sound corporate governance
• Open and vigorous local competition
− Openness to competition
− Strict competition laws
Demand
Conditions
• Sophisticated and demanding
local needs
Related and
Supporting
Industries
– e.g., Strict quality, safety, and
environmental standards
– Sophisticated demand in the private
sector or government
• Availability and quality of suppliers and
supporting industries
• Many things matter for competitiveness
• Successful economic development is a process of successive upgrading, in which the
business environment improves to enable increasingly sophisticated ways of competing
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Massachusetts Life Sciences Cluster
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Copyright 2014 © Professor Michael E. Porter
ISC Competitiveness Model
Taiwan’s Competitiveness Profile, 2013
Country Competitiveness
18
Macroeconomic
Competitiveness
Microeconomic
Competitiveness
19
14
Political
Institutions
Macroeconomic
Policy
National Business
Environment
Company Operations
and Strategy
27
1
12
17
Rule of Law
Factor
Conditions
Demand
Conditions
29
9
12
Related and
Supporting
Industries
Context for
Strategy and
Rivalry
7
16
Significant
disadvantage
Moderate
disadvantage
Neutral
Moderate
advantage
Taiwan’s GDP per
capita rank is 16th
vs. 144 countries
Significant
advantage
Note: Rank versus 144 countries, *Color coding based on comparison relative to income.
Source: Institute for Strategy and Competitiveness, Harvard University (2012), based in part on survey data from the World Economic Forum; analysis prepared based on
research findings by Scott Stern, Mercedes Delgado, and Christian Ketels.
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Copyright 2014 © Professor Michael E. Porter
Taiwan’s Strengths and Weaknesses
Strengths
Weaknesses
• Some strong clusters
• Inefficient legal framework
• Availability of scientists and engineers
• Brain drain
• Math and science education
• Ability to attract and retain talent
• University-industry research collaboration
• Doing business costs
• Intense local competition
• Distortive tax system
• Solid IP protection
• Weak environmental regulations
• Transportation and physical infrastructure
• High tariffs
• Low prevalence of inward FDI
Companies
Companies
• R&D spending
• Professionalism of management
• Extent of staff training
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Copyright 2014 © Professor Michael E. Porter
Doing Business
Selected Countries
Country
Ease of
Doing Starting a Dealing with Getting Registering
Construction
Business Business
Electricity Property
Permits
Rank
Getting
Credit
Protecting
Investors
Paying
Taxes
Trading
Across
Borders
Enforcing Resolving
Contracts Insolvency
Singapore
1
3
3
6
28
3
2
5
1
12
4
Hong Kong
SAR, China
2
5
1
5
89
3
3
4
2
9
19
United States
4
20
34
13
25
3
6
64
22
11
17
Malaysia
6
16
43
21
35
1
4
36
5
30
42
Korea
7
34
18
2
75
13
52
25
3
2
15
Taiwan
16
17
7
7
31
73
34
58
18
84
16
Thailand
18
91
14
12
29
73
12
70
24
22
58
Japan
27
120
91
26
66
28
16
140
23
36
1
China
96
158
185
119
48
73
98
120
74
19
78
Rank out of 189 countries.
Source: World Bank Doing Business (2014)
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Copyright 2014 © Professor Michael E. Porter
Taiwan’s National Cluster Export Portfolio
2002-2012
Share of World
Exports, 2012
7%
Average Change in Taiwan’s Overall
World Export Share: -.47%
Information
Technology
(+3.4%, 14.7%)
6%
Analytical Instruments
(+1.7%, 6.1%)
Sporting, Recreational
and Children's Goods
5%
Communications
Equipment
Plastics
4%
Lighting and
Electrical Equipment
Production
Technology
3%
Textiles
2%
1%
Metal Mining
and Manufacturing
Fishing and
Fishing Products
Motor Driven Products
Power and Power
Generation Equipment
Apparel
0%
-3%
Business
Services
Chemical Products
Medical Devices
Taiwan’s Average
World Export Share: 1.96%
Forest
Products
Building
Fixtures and
Furniture Equipment
Financial
Services
-2%
Entertainment and Reproduction Equipment
Heavy
Machinery
Agricultural 0%
Products
-1%
Transportation
and Logistics
Hospitality and Tourism
Automotive
Jewelry, Precious Metals and Collectibles
Oil and Gas Products
Biopharmaceuticals
Change in Share of World Exports, 2002-2012
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1%
2%
= $6 billion
Copyright 2014 © Professor Michael E. Porter
Opportunities for Economic Diversification
Taiwan’s Share of World Exports by Cluster, 2012
Fishing &
Fishing
Products
Hospitality
& Tourism
Agricultural
Products
Transportation
& Logistics
Processed
Food
Distribution
Services
Jewelry &
Precious
Metals
Business
Services
Financial
Services
Entertainment
& Reproduction
Equipment
Publishing
& Printing
Analytical
Instruments
Medical
Devices
Building
Fixtures,
Equipment &
Services
Footwear
Forest
Products
Power
Generation
Motor Driven
Products
Heavy
Machinery
Coal &
Briquettes
Production
Technology
Tobacco
Automotive
Oil &
Gas
Apparel
Construction
Materials
Heavy
Construction
Services
Lightning &
Electrical
Equipment
Communications
Equipmemt
Biopharmaceuticals
Chemical
Products
Prefabricated
Enclosures
Furniture
Aerospace
Vehicles &
Defense
Information
Technology
Education &
Knowledge
Creation
Textiles
Plastics
World Market Share
Aerospace Mining & Metal
Engines Manufacturing
> 6.0%
Leather &
Related
Products
> 3.0%
> 1.5%
Sporting
& Recreation
Goods
Marine
Equipment
Taiwan overall world market share in 2012: 1.96%
Note: Clusters with overlapping borders have at least 20% overlap (by number of industries) in both directions.
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Copyright 2014 © Professor Michael E. Porter
Opportunities for Economic Diversification
Taiwan Export Share Growth Successes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Industry
Cluster
Drawn, float, cast glass, worked
Parts of primary cells, batteries
Vessels and other floating structures
Electronic microcircuits
Cast, rolled glass in sheets
Synthetic or reconstituted precious stones
Calendaring or other rolling machines
Phenols, phenol-alcohols, and derivatives
Optical fibers, lenses and other elements, unmounted
Crystals and parts of electronic components
Transfers, decalcomanias
Chemical elements for electronics
Other acyclic alcohols and derivatives
Radar apparatus, radio navigational aid and remote control apparatus
Miscellaneous ash, residues containing metals
Float, ground, polished glass
Video recording or reproducing apparatus
Lenses, prisms, and other optical elements, mounted
Miscellaneous parts for machine-tools with metal
Miscellaneous glass articles
Aldehyde-, ketone-, and quinone- function compounds
Snow vehicles, golf cars and similar vehicles
Acyclic hydrocarbons
Copper foil, powder and flakes
Drawn, blown glass in sheets
Toughened safety glass
Silver, platinum and other metals of the platinum group
TV, radio transmitters
Polycarboxylic acids, and their derivatives
Work-holders, tool holders
Lathes, metal-working
Miscellaneous mixed alkylbenzenes and alkylnaphthalenes
Parts for telecommunication equipment
Cyclic hydrocarbons
Machining-centers, unit construction machines, not lathes
Carboxylic acids and their derivatives
Polyacetals, polycarbonates in primary forms
Esters, inorganic acid and their derivatives
Other pulp, paper, making machinery
Miscellaneous machinery parts, non-electrical
Lighting and Electrical Equipment
Motor Driven Products
Marine Equipment
Information Technology
Building Fixtures and Equipment
Jewelry, Precious Metals and Collectibles
Production Technology
Chemical Products
Medical Devices
Information Technology
Publishing and Printing
Information Technology
Chemical Products
Analytical Instruments
Metal Mining and Manufacturing
Building Fixtures and Equipment
Entertainment and Reproduction Equipment
Analytical Instruments
Production Technology
Medical Devices
Chemical Products
Automotive
Chemical Products
Metal Mining and Manufacturing
Building Fixtures and Equipment
Automotive
Jewelry, Precious Metals and Collectibles
Communications Equipment
Chemical Products
Production Technology
Production Technology
Chemical Products
Communications Equipment
Oil and Gas Products
Production Technology
Chemical Products
Plastics
Chemical Products
Forest Products
Production Technology
World
Export
Share
30.26%
22.19%
20.33%
26.51%
11.02%
11.66%
13.64%
11.65%
8.38%
22.10%
9.21%
17.79%
8.24%
13.52%
5.17%
5.10%
5.25%
7.20%
6.22%
7.34%
6.74%
4.31%
3.76%
22.71%
5.12%
3.71%
3.05%
5.56%
13.15%
5.71%
11.93%
6.37%
5.35%
3.39%
11.49%
3.12%
8.19%
3.19%
7.16%
3.20%
Change in
Share
(2002-2012)
26.02%
16.34%
15.01%
13.79%
10.47%
8.23%
7.76%
7.69%
6.31%
5.90%
5.72%
5.02%
4.96%
4.30%
4.14%
4.14%
4.08%
4.06%
4.03%
3.96%
3.46%
3.41%
3.36%
3.32%
3.08%
2.99%
2.92%
2.92%
2.90%
2.88%
2.74%
2.63%
2.57%
2.42%
2.14%
2.11%
2.04%
2.03%
2.01%
1.96%
Export Value
$1,133,371,687
$126,892,748
$73,828,746
$108,458,422,289
$89,768,214
$125,568,869
$85,643,159
$906,954,360
$2,415,172,064
$7,020,359,651
$110,018,229
$2,081,104,729
$1,450,496,652
$2,335,437,479
$186,625,087
$291,996,085
$2,700,629,565
$915,601,865
$690,507,938
$545,633,440
$549,187,760
$92,675,289
$1,076,449,905
$1,750,702,646
$157,068,923
$154,662,960
$1,762,468,962
$9,143,353,757
$2,532,433,702
$305,819,796
$966,873,447
$150,184,605
$7,257,442,452
$1,918,306,852
$1,525,270,652
$196,960,541
$4,237,721,802
$73,926,950
$304,210,052
$302,271,569
Note: Includes Taiwan’s 405 largest export industries, with export values of greater than $50 million in 2012.
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Geographic Influences on Competitiveness
Neighboring Countries
“The
Neighborhood”
Nation
Regions and Cities
• Economic coordination and integration with neighboring countries is a major force of
productivity and competitiveness
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Copyright 2014 © Professor Michael E. Porter
Taiwan’s Major Impact on China’s Economy
Top 10 Exporters in China, 2012
•
Among top 10 biggest exporters in China, 7 exporters are Taiwanese enterprises
Rank
Company
Subsidiary Company
Country
Amount of Exports
(Unit: US$ million)
1
Hon Hai Precision Industry Co., Ltd.
Foxconn (Shenzhen) Technology Group
Taiwan
35,543
2
Quanta Computers
Tech-Front (Shanghai) Computer Co., Ltd.
Taiwan
26,974
3
Hon Hai Precision Industry Co., Ltd.
Hongfujin (Zhengzhou) Precision Industry Co.,Ltd.
Taiwan
15,735
4
Pegatron Corp.
GNDC (Shanghai) Co., Ltd.
Taiwan
15,143
5
Huawei Technologies Co., Ltd.
Huawei (Shenzhen) Technologies Co., Ltd.
China
12,259
6
Hon Hai Precision Industry Co., Ltd.
Hongfujin (Chengdu) Precision Industry Co.,Ltd.
Taiwan
11,994
7
Samsung Group
Samsung (Huizhou) Group
Korea
9,422
8
China Petrochemical Development Corp. China Petrochemical Development Corp.
China
7,681
9
Hon Hai Precision Industry Co., Ltd.
Hongfujin (Yantai) Precision Industry Co.,Ltd.
Taiwan
6,999
10
Pegatron Corp.
Pegatron (Suzhou) Corp.
Taiwan
6,664
Source: Ministry of Commerce People’s Republic of China
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Copyright 2014 © Professor Michael E. Porter
Taiwan in the Region
Exports
Exports (US$M)
350,000
300,000
All Other
Canada
Australia
United Kingdom
Germany
250,000
South Korea
Japan
200,000
ASEAN:
19%
ASEAN
150,000
United States
Hong Kong
100,000
ASEAN:
12%
China:
40%
50,000
China
China:
24%
0
2000
2013
Source: Taiwan Directorate-General of Budget, Accounting and Statistics and Ministry of Economic Affairs
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Copyright 2014 © Professor Michael E. Porter
Taiwan, China, and the Region
• Taiwan’s traditional model has been delivering high-tech inputs for final assembly
in China to be sold on the U.S. market, often under other firms’ brands
Challenges
• China is getting more expensive as a production site versus other locations in Asia
• Much of the value is captured by those in control of the brand and the overall value
chain
• Taiwanese firms are under pressure from rivals like Korean firms, that often have
stronger brands
• China’s growth is increasingly domestic demand, with local Chinese firms putting
pressure on Taiwanese firms ‘from below’
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Copyright 2014 © Professor Michael E. Porter
Taiwan and the Region
Fortune Global 500 Companies
Number of
Companies in
Top 500
100
+79
90
80
70
60
50
40
30
+2
20
+5
10
0
Taiwan
2000
2013
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South Korea
2000
2013
26
China
2000
2013
Copyright 2014 © Professor Michael E. Porter
Taiwan’s Outbound FDI
2008-2012
$US (Billions)
16
14
China
12
10
8
6
ASEAN
4
South Korea
2
European Union
Japan
United States
0
2008
2009
2010
2011
2012
Source: MOEA
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Copyright 2014 © Professor Michael E. Porter
Current Economic Policies in Taiwan
• The current economic development strategy emphasizes knowledge-intensive
innovation
– Promote and encourage the development of diverse industries and export markets
– Promote innovation, high-tech industries and investment in R&D centers
– Support the growth of entrepreneurship through incubators and accelerators
– Create an environment conducive to the introduction of high quality human resources
(in particular R&D and global management talents and skills)
– Encourage private investments and public infrastructure investments
– Improve government service functions
– Level the playing field for Taiwan’s businesses by concluding FTAs with key trading
partners (e.g. China)
• Taiwan has recently identified 10 key industries for investment
Emerging Industries
Intelligent Industries
•
Biotechnology
•
Cloud computing
•
Medicine and healthcare
•
Smart electric vehicles
•
Culture and creativity
•
Green architecture
•
Tourism
•
Patent commercialization
•
Green energy
•
High end agriculture
Source: Office of Information Services, Executive Yuan
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Copyright 2014 © Professor Michael E. Porter
The Need for an Economic Strategy
Policy
Improvement
Economic
Strategy
• Implementing best practices in
each policy area
• An overall agenda for creating a
more competitive and
distinctive position for a
country or region, based on its
particular circumstances
• There are a huge number of
policy areas that matter
• No region or country can (or
should try to) make progress in
all areas simultaneously
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Copyright 2014 © Professor Michael E. Porter
Creating an Economic Strategy
National Value Proposition
• What is the distinctive competitive position of the nation given its
location, legacy, existing strengths, and potential strengths?
– What unique advantages as a business location?
– For what types of activities and clusters?
– What roles with the surrounding countries and the broader global economy?
Achieving and Maintaining
Parity with Peers
Developing Unique Strengths
• What elements of the business
environment can be unique strengths
relative to peers/neighbors?
• What existing and emerging clusters
can be built upon?
• What weaknesses must be addressed to
remove key constraints and achieve parity
with peer locations?
• Priorities and sequencing are a necessity in economic development
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Copyright 2014 © Professor Michael E. Porter
Toward a Taiwanese Economic Strategy
What is Unique about Taiwan?
•
Gateway to China: Strongest democracy, freedom of speech of any
Chinese-speaking country
•
Strategic location in the Asia-Pacific region
•
Entrepreneurial, flexible business culture
•
SME economy
•
World class technology
•
Strong intellectual property protection
•
Large pool of researchers
•
Strong science and technology education, as well as research institutions
•
Some deep technology clusters in related industries
•
Logistics strengthened in past 10 years
•
Strong outbound FDI, so far mostly to China
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Copyright 2014 © Professor Michael E. Porter
Renewing Taiwan’s Competitiveness
Address Urgent Competitive Weaknesses
• Reduce the cost of doing business in Taiwan
• Improve the supply of VC and increase incentives for investment in SMEs
• Realign training and higher education around Taiwan’s business needs
• Create a world class strategy to attract inward FDI
• Pragmatically pursue FTAs or similar agreements with as many countries
as possible
• Shift immigration policy towards skilled immigration
• Create institutions to raise the participation of women in the workforce
• Improve the efficiency and sophistication of local industries
Build on Strengths
• Continue to improve Taiwan’s innovation system
• Raise the sophistication of management training
• Mount a plan to raise the quality of life, including cultural life, environmental
quality, housing, and health care
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Copyright 2014 © Professor Michael E. Porter
Renewing Taiwan’s Competitiveness – continued
Evolve and Widen Taiwan’s Cluster Portfolio
• Mount an aggressive cluster development program
• Build on existing and emerging strengths, especially in areas where China is not a
leader and there are needs in ASEAN
− e.g., Chemicals
− Plastics
− Advanced production machinery
− Specialty agriculture
• Focus on high value-added segments and niches
• Pursue advanced services connected to Taiwan’s strengths (e.g., software, IoT)
Reposition Taiwan in the Region and the World
• Gateway to China and Asia
− Greater China regional headquarters
− R & D and advanced manufacturing hub
• Technology provider and advanced manufacturer for ASEAN markets
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Copyright 2014 © Professor Michael E. Porter