Launching A New Growth Curve for Taiwanese Industry

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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
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Agenda

1. Development of Taiwanese industries
2. Global competition - Challenges faced by Taiwan
3. Strategies of launching a new growth curve for
   Taiwanese industries
4. Necessary governmental action to foster growth

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1. Development of Taiwanese Industries
Product innovation and production-marketing
process Stages of development 1950-1970
1970-1980 1980-early 1990 1999-2000 Since 2000
Innovation
Design
Material -izing
Commerical -ization
Product -ion
Market -ing
Processing Export
OEM
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 Avg. growth rate () 2001-2004 Avg. growth rate ()
Manufacturing 16,038 27,048 94299 5.4 3.07
Metal Machinery 4,150 6,330 26013 4.3 2.80
Information-Electronics 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 RD investment and innovation
  ability
• Taiwanese enterprises mostly maintain at
  small-scale,in carrying out the RD activities
  they often face the difficulties of lack of
  talents, not easy to attain technologies,
  high churn rate of RD 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
Introduction stage
Growth stage
Mature stage
Decline stage
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Cut-in point of the new core competitiveness of
an industry
Cut in from customers and markets Cut in from channels Cut in from products or capability Cut in from capital
First class service and relationship (loyalty) High transfer cost Superior behavior /need information Operation model of new segmentation as the core Control channels Work with top channels Possess network control points Low cost manufacturing Top/unique features Global first launched new product Patents High profitability High price estimate, create merging commodities Capital allocating capability, allow business having larger investment than the competitors
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The measures oflaunching a new growth curve for
Taiwanese industries
Original market
Strategy of scalable value Reconsider the core
value of products, expand the scalable service
value Strategy of product re-positioning Apply
original technology in new market
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 Market
Original Technology 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
• 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 Taiwans 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
  Taiwans 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
• 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 ofThe 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 Flyto
  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!