Headline January 24, 2017/ ''' *TAIWAN - TOWERS* '''

''' *TAIWAN - TOWERS* '''

TODAY, TODAY,  TAIWAN CHURNS OUT NEARLY 50,000 or plus, brand new engineers a year, more than a quarter of all graduates.

Today, Taiwan's high tech industry is a model for the country's economic future, and a management guru's dream. By instinct more than by reading the  Harvard Business Review, the average-

Taiwanese electronics company has managed to embody practically every globalization trend going, from  horizontal integration to virtual organizations.

TAIWAN HAD  ALWAYS GONE through the usual development phase of making things locally to save hard currency, attracting export-oriented firms and, and developing its own export industries.

But its labour was no longer cheap compared with its neighbours, and it needed to develop the  technology ladder to industries that rewarded brains more than brawn.

Mr Li did four things which Taiwan's thousands of electronics companies now thank him for.

He started a national laboratory, called the  *Industrial Research Technology Institute*  from which many of Taiwan's most successful high-tech firms have been spun off.

Around the lab he secured scarce land and built on it the beginning of Hsinchu, helping companies settle it by offering tax incentives and shared factory space.

He beefed up the  engineering side of Taiwan's already numerous universities. 

And he encouraged the creation of  venture-capital  industry, convincing a Taiwanese executive  from  Hambrecht & Quist, one of Silicon Valley's  top investment banks, to set up a venture fund in Taiwan which spurred a host of imitators.

Fortunately, Mr  Li stopped there. He saw his role as accommodating the natural growth of the industry by providing the infrastructure it needed, rather than steering it:

''We knew we were not smart enough to do more than that.'' 

The result is that,  unlike Japan and South Korea, where the government encouraged concentration on a few technologies chosen by the rocket scientists in the economic ministries-

Taiwanese firms have largely made their own way, helped by a large pool of talent, fairly easy access to capital, and a critical mass of like-minded companies around them.

Much of the above comes from making virtues of Taiwan's main liabilities: a small domestic market, expensive labor, little available land and a few natural resources.

These limitations told Taiwanese entrepreneurs that they should dispense with any ambition to become the nest Sony or IBM. Instead, they would have to make a living in the shadow of foreign giants,  -as the pilot fish, not the shark.

This proved liberating. Once a company gets over corporate  vanity, it can get on with the real business.

For Taiwanese high-tech firms, that turned out to be the  so-called Original Equipment Manufacturer  [OEM]  market. 

This is the well guarded secret of all sorts of industries, from bicycles to consumer electronics : the company whose name is on the box may have never touched the product inside.

OEM manufacturers make goods to other firms specifications, sometimes even helping to design the product. They labour in obscurity while their customers get all the credit and most of the profit. 

UNFAIR? MAYBE! 

But Taiwanese firms were not too  proud  to  grab  a good business opportunity. Three-quarters of Taiwan's electronic production today is eventually sold under someone else's brand name.

For all the hard work and low wages of the OEM business, there are two particularly good things about it. 

The first is that its practitioners learn a lot from their customers, which help them come up with their own technology and products.

The second is that they can ignore the tricky marketing side of the business, from demand forecasting to advertising and distribution, and just concentrate on making the stuff as efficiently as possible.

At the time, it soon became clear that this often meant leaving Taiwan. Wages in mainland China and parts of South-East Asia, such as Vietnam, are  one-twentieth of those in Taiwan, and land is affordable and available.

So, companies moved their older, more labor-intensive factories to somewhere cheaper.

Over that past many years, over  80,000 businesses have moved offshore, about half to China and half to South-East Asia, and-

Today more than half of Taiwan's electronic production is off the island.

''We don't compete with neighbouring countries, we use them.'' says Stan Shih, boss, boss of Acer, Taiwan's biggest PC manufacturer.

The result is that  Taiwanese firms are insulated from competitive devaluation, having already moved most of their labor-intensive plans to the countries that are now becoming cheaper by the day.       

This not only made  Taiwanese companies  into some of the most cost-efficient in Asia. it also allowed them to grow far larger than they could on an island itself.

For example, Taiwan's small pool of labot and limited land can support a show industry in of only about  10,000 workers. But by moving most of its factories to China, just one company- Paochen was able to expand to 120,000 workers.  

It is now the biggest shoe maker in the world, producing million of Nike, Reebok and other brand name sports shoes.

The same is true for industries from umbrella to handtools, none of which make sense on Taiwan itself for these days.

*Taiwan Inc is becoming a virtual company*.

The Honour and Serving of the  *Base Line Operational Research*  on Taiwan continues. Thank Ya all for reading and sharing forward and see you on the following one:

With respectful dedication to the Students, Professors and Teachers of the world. See Ya all on !WOW!  -the World Students Society and......... Twitter-!E-WOW!  -the Ecosystem 2011:

''' !WOW! in Short '''

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless