Launching A New Growth Curve for
Taiwanese Industry
Chinese National Federation of Industries
Chairman Preston W. Chen
The Joint 14th Annual PBFEA and 2006 Annual FeAT Conference
2016/7/1
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Agenda
1.
2.
3.
4.
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Development of Taiwanese industries
Global competition - Challenges faced by Taiwan
Strategies of “launching a new growth curve for
Taiwanese industries”
Necessary governmental action to foster growth
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1. Development of Taiwanese Industries
Product innovation and
Innovation
production-marketing process
Design
Material
-izing
Commerical
-ization
Product
-ion
Market
-ing
Stages of development
1950-1970
Processing & Export
1970-1980
OEM
1980-early 1990
1999-2000
Since 2000
ODM
Global Operation
Knowledge-based Economy & Innovation
Industry innovation and development of Taiwanese industries
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The production variation of four major
types of manufacturing industries
1990
2000
2004
1990-2000 2001-2004
Avg.
Avg.
growth
growth
rate (％)
rate (％)
Manufacturing
16,03
8
27,048
94299
5.4
3.07
Metal
Machinery
4,150
6,330
26013
4.3
2.80
InformationElectronics
2,410
9,265
31435
14.4
3.77
Chemical
Industry
4,331
6,672
25600
4.4
6.51
Civic Life
Industry
5,147
4,781
11250
-0.7
-2.98
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2. Global competition –Challenges faced by
Taiwan
1.Uncertainty of external environment:
The wave of regional trade agreement will create trade and
investment opportunities and benefits. Up to May of 2006, a total
of 193 regional trade agreements has been reported to WTO. The
uncertainty of the differences between multi-directional, regional
and bi-directional trade policies forms a major challenge to the
development of Taiwanese industries.
•
2.Industries across the strait have transferred from “mutual
supplement” to “Competition”:
According to the survey conducted by CNFI, 73.8％ of the respondents
indicated that the competitors in the local Chinese market are primarily
“local Chinese enterprises”, 59.7% of them expressed that they are facing
extremely harsh competition in local Chinese market. It shows that the
local Chinese enterprises have the advantage of being local, and
presenting extremely large pressure of competition to Taiwanese
businesses.
•
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Global competition –Challenges faced by
Taiwan
3.Constraints of R&D investment and innovation ability:
•
Taiwanese enterprises mostly maintain at small-scale,in carrying
out the R&D activities they often face the difficulties of “lack of
talents”, “not easy to attain technologies”, “high churn rate of R&D
staffs resulting to discontinuity of work”, and “lack of capital”, the
development of industries is confined.
4.Human resource environment is yet to be improved:
•
The government is aggressively urging Taiwanese businesses to
invest back to Taiwan, actually the success of the policy lies on the
investment environment. Among the investment environment
indicators, “human resources” is the most important one. Although
the unemployment rate in Taiwan is raised, still many
manufacturers indicate that technical personnel is not enough.
Besides, the relaxation and flexibility of working labor conditions
are the basic issues of improving investment environment.
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3. Strategies of “Launching a new growth
curve for Taiwanese industries”




In the face of global competition, the key of
continuous growth of each industry lies on the
building of the unique strength of core business.
Each industry must aggressively explore the growth
potential of technology and market as well as “blue
strategy”
Each industry must review the “key factors of
success”
Each industry must re-define the niche and strategy
of its new core competitiveness
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Strategies of “launching a new growth
curve for Taiwanese industries”
Re-define the new core
competitiveness of each
industry
Decline stage
Mature stage
Growth stage
Introduction
stage
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Cut-in point of the new core competitiveness of an
industry
Cut in from
customers and
markets
First
class service
and relationship
(loyalty)
High transfer cost
Superior behavior
/need information
Operation model
of new
segmentation as
the core
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Cut in from
channels
Control
Cut in from
products or
capability
Low
cost
channels
manufacturing
Work with top
Top/unique
channels
features
Possess
Global first
network control launched new
points
product
Patents
High
profitability
Cut in from
capital
High
price
estimate, create
merging
commodities
Capital allocating
capability, allow
business having
larger investment
than the
competitors
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The measures of“launching a new growth curve
for Taiwanese industries”
Original
market
New Market
Strategy of scalable
value:
Reconsider the core
value of products,
expand the scalable
service value
Strategy of product repositioning:
Apply original
technology in new
market
Original Technology
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Strategy of technology
efficiency advancing:
Use new technology to create
higher value for products
Strategy of diversified
innovation:
Use new technology to create
new market
New Technology
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4. Necessary governmental action to
foster growth
1.Construct a stable integral environment:

To advance the national competitiveness, the government shall
consider and emphasis the issues of creating and maintaining an
environment that is suitable for the operation of industries, to
allow domestic industries continuously create value and to allure
foreign businesses to invest in Taiwan, and jointly create value
with domestic enterprises.
2. Create high quality investment environment to attract
international capital and technologies

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To advance national competitiveness and to launch a new growth
curve for Taiwanese industries, it is necessary not only to
effectively use our own resources, but also to attract
international capital and technology to Taiwan. thus, one of the
keys of advancing the nation and the industries is how to
advance Taiwan’s value of investment for other countries.
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Necessary governmental action to foster
growth
3.Maintain the consistency and continuity of
industrial policies


Presently many significant investment projects, although being
approved by the Executive Yuan at early days, still are returned to
“Sustainable Economic Development Conference” for further
discussion due to recent complaints or biased claims by some
environmental groups. The projects are forced out by environmental
groups at their wishes, the development of industries is being
seriously impacted.
The government must maintain the consistency and continuity of
industrial policies in order to help the operation of businesses.
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Necessary governmental action to foster
growth
4.Innovation and relaxation of government
regulations and systems:

In the past we had a narrow view of believing that “economic
development is the job of Ministry of Economic Affairs (MOEA)”.
In fact, as we decisively declare to develop knowledge-based
economy, the associated regulations are not just related to
MOEA, most of them are closely related with central government
agencies and local governments. Hence, we expect that the
government can actually review current regulations and realize
the impact of regulations and systems to the development of
economy. It should provide a favorable environment for the
operation of industries, only by doing so the “sustainable
economic development” can be reached.
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Necessary governmental action to foster
growth
5. Build industrial innovation system and
strengthen the cultivation of industrial
knowledge-based talents
•
•
The creation and transfer of knowledge can sometimes provide
more added-value than the production and delivery of tangible
goods. We must replace the free flow of “goods” in the traditional
manufacturing industry with the free flow of “innovative ideas” in
the knowledge-based economy.
The government must relax current laws and regulations to allow
foreign professionals to use Taiwan’s research infrastructure and
to freely implement basic research including IT research,
technology tests, and even the clinical medical study, in order to
attract foreign professionals to leave the achievements in Taiwan
for the commercialization, to advance the strength of our
technology.
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Necessary governmental action to foster
growth
6.Adopt aggressive industrial policies, launch new
growth curve for Taiwanese industries
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The government is necessary to focus on each industry to conduct a
complete analysis of industrial competitiveness and future market
development trend.
The government must work with all industrial associations to periodically
evaluate the technology positioning of each Taiwanese industry in the
global competition, as well as future competitive threats, in order to
capture momentarily changing industrial status.
The government must assist all industrial associations to plan mid and
long-term (2010-2015）direction and strategy of industrial development,
to launch new growth curve for Taiwanese industries.
New direction of development lies on the cross-industry joining, thus, the
government must aggressively promote the convergence of technologies
for both traditional and IT industries.
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Necessary governmental action to foster
growth
7.Promote cross-strait economic, trade and financial exchange







Speed up the direct transportation across the strait.
Relax the upper limit of 40% net value for Taiwanese businesses
investing in Mainland China.
Study the amendment of“The statues of relationship between the
people in Taiwan and Mainland China” and establish as early as
possible the cross strait currency exchange mechanism.
Aggressively open the door for tourists from Mainland China to visit
Taiwan and purchase real estate property.
Enter the memorandum of cross strait financial market collaboration,
allow VC to Mainland China.
Effectively promote common standards across strait in order for
businesses to expand the market.
Build the mutual certification system for products, academic degrees
and professional licenses across strait.
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Necessary governmental action to foster
growth
8.Build cross strait peaceful and stable relationship to
benefit industries


We expect both authorities can abandon the ideology of opposition
and adopt better flexibility, under the condition of not to involve the
sovereignty, to practically cut in the low political topics that do not
touch the issue of opening the industrial market, in order to
converge the consensus of jointly pursuing economic and industrial
development for both sides.
Both sides shall cite the model of “2005 cross strait Chinese New
Year Charter Fly”to practically handle the negotiation issues of direct
flight and convenient transit of passenger/cargo, and furthermore, to
create a more efficient environment for businesses, and to build
cross strait systematic negotiation mechanisms and positive
interactions, to allow Taiwanese industries to well-use Mainland
China market in order to advance the global competitive position.
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The end
Thank You!
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