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Mastering Adaptability for Growth

Nov 14, 2014

When Tim Cook launched a new line of iPhones in September, business reporters, tech geeks, and Apple fanatics listened intently as the Chief Executive Officer of the world’s most valuable company outlined an extensive list of innovations made to the highly coveted smart phone.

In Taiwan, the iPhone launch — available via live stream for the first time — was watched just as closely because a number of Taiwanese companies make components for many of Apple’s gadgets.

In fact, record-setting pre-sale orders for the iPhone 6 and 6 Plus are expected to boost Taiwan’s technology-related export as the phones are rolled out around the globe.

Taiwan’s Ministry of Finance reported that, as of the second quarter of 2014, technology-related exports had already exceeded 9 billion dollars, driven mostly by semiconductor sales.

Taiwan Semiconductor Manufacturing Corporation Limited already reported sales of over 6 billion dollars to Apple.

Meanwhile, Taiwan’s ASE Group, the world’s largest provider of independent semiconductor manufacturing services, has been highly successful in servicing this important sector.

Taiwan’s credibility in the global technology market is grounded in the government’s efforts to empower its universities and businesses to act as centers of research and development. The Industrial Technology Research Institute was at the heart of this program.

“From the beginning, our purpose was clear. Through science, research and technology, we would lead Taiwan’s industry by transformation and upgrading. We helped Taiwan transform from a labor-intensive to a technology-intensive economy. If you look at the developments over the past forty years, that has been the contribution of ITRI,” ITRI Chairman Dr. Ching-Yen Tsay noted.

Next in line?

Though Taiwan’s semiconductor industry is one of its most celebrated, the country has nurtured other sectors, particularly biotechnology, pharmaceuticals, and green energy solutions, all of which have benefitted from significant investment in research and development.

“For biotech, there are only a few countries worldwide where you can list a company. One is the United States and the other one is Taiwan. Right now, we feel that Taiwan is the best place for us,” ASLAN Pharmaceuticals President and Chief Executive Officer Carl Firth explained.

“For small- and medium-sized biotech companies less familiar with Asia, Taiwan is a good place to start.  You have a country that has a rich history of drug manufacturing and drug development doing high quality work. From here, companies can reach out to other parts of Asia using Taiwan as a platform,” Firth added.

For many years, Taiwan has been a springboard for many of the world’s largest pharmaceutical companies to mainland China and the rest of Asia.

“Taiwan can provide very good quality clinical trials. The expertise in clinical trial protocols is very good. That is why the top five worldwide pharmaceutical companies choose Taiwan as their clinical trial center,” said Development Center for Biotechnology Chairman Dr. Johnsee Lee, who also serves as honorary Chairman of the Taiwan Bio Industry Association.

The growth of Taiwan’s biotech sectors has prompted companies on both sides of the Pacific to aggressively pursue partnerships.

“Unlike in the past, Taiwan is now more well-known in the United States, especially for health care. International companies recognize the level of opportunities that exist within Taiwan, particularly in its healthcare system. There is a tremendous opportunity not only for American businesses to expand into Taiwan, but also for Taiwanese companies to invest and thrive in the United States,” said General Biologicals Corporation Chairman T.C. Lin.

“We are actively looking to expand operations in the United States via acquisitions. This can greatly benefit, in particular, our molecular diagnostics division,” added Lin, whose company is marking its thirtieth anniversary this year.

Taiwanese medical device manufacturers are also poised to benefit from growing health care ties.

“The United States consumes most of the world’s resources in medical products. 55 percent of our business is generated there,” said Apex Biotechnology Corporation Chairman and Chief Executive Officer Dr. Thomas Shen. Apex Biotech is Taiwan’s leading exporter of blood glucose systems strips.

Taiwan also has a laudable level of awareness of environmental issues. According to a recent study by the Taiwan Institute for Sustainable Energy, nearly 91 percent of Taiwanese are aware of the effects of climate change.

That consciousness has sparked the development of a fast-growing clean energy industry. One such company, Topper Sun, developed rooftop, stand-alone solar tracking systems as part of its total solutions package, considered among the most efficient in the field.

“We are very proud that our product has one the highest efficiency ratings of Mono (monocrystalline silicon cells) with its current efficiency reaching 19.7 percent through the traditional process,” said Topper Sun Chairman Summer Luo.

“Our Solar Tracker was launched in the market last year and received very positive feedback. We are currently looking for distribution channels in the US that we can partner with,” Luo added.

Taiwan also contributes to the global supply chain for wind turbines. According to the Metal Industries Research Development Center, Taiwan is among the top ten suppliers of key sub-systems and materials to large wind turbines manufacturers around the world.

In 2013, the industry’s output reached around $270.68 million, 90 percent of which represented exports.

“MIRDC is currently working closely with U.S. research institutions in metal material, vehicle chassis, medical devices, and the testing and certification field,” said MIRDC President Dr. Ho-Chung Fu.

As Taiwan develops its international role, its economic reach is expanding to new up— and—coming sectors, such as aerospace.

“In Taiwan, the scope of aviation industry continues to expand and production values have grown from 2.4 billion dollars in 2011 to 2.8 billion dollars in 2013”, said Aerospace Industrial Development Corporation President Butch Hsu.

Backbone of development

Taiwan’s path to global prominence in science and technology is a by-product of decades of investment in higher education. The Taiwanese government invests more than 400 million dollars annually in higher education.

According to the World Economic Forum 2012 Global Competitiveness Report, Taiwan ranked ninth in Higher Education and Training, and fourteenth out of one-hundred and thirty-three countries in Innovation.

As of 2012, Taiwan had more than 160 universities and colleges and its student population had exceed 1.3 million.

As the country aims to make its educational system more international, the country’s top universities attracted, nearly 50,000 foreign students, according to the Ministry of Education.

“In terms of the growth rate for international students, we are number one among the top-tier universities. In terms of the percentage of degree-seeking international students, we are number one as well,” said National Cheng Kung University Executive Vice-President Dr. Huey-Jen Su.

Beyond student and faculty exchanges, Taiwan has also bolstered its efforts to enhance institutional links with other universities and corporations.

Taipei Tech - one of Taiwan's most prestigious academic institutions

“This university is eager to partner with foreign and local companies. We are already doing a lot of research with foreign companies. I would like to set up more research laboratories with local and international companies to enhance our core competitiveness,” Taipei Tech President Dr. Leehter Yao said.

Kaohsiung Medical University, the country’s’ first private university, has also developed its international relationships.

“KMU values the significance of international exchange and cooperation in developing students’ global perspectives,” KMU President Dr. Ching-Kuan Liu noted.

Looking forward, Taiwan’s universities are adjusting their plans to adapt to the changing needs of business and industry.

National Chiao Tung University, already considered a leader in science and engineering, is consolidating its reputation in health care.

“We have a special program called BioICT, which combines biology, biomedicine, information, communication, and technology. Basically it combines our strengths in engineering to contribute to healthcare. Traditionally, Taiwan is very good at high quality manufacturing but we are also in need of change. This year, we are making a change to make our university more comprehensive,” explained NCTU Vice-President Dr. Han-Ping Shieh.

“There are many start-ups and venture capitalists in Silicon Valley, and we’d like to be recognized by them. We hope that they notice our research and hope that our students have the opportunity to go there and have internships and come back with their what they have learned. Joint cooperation is what we are looking forward to,” Shieh added.


- This article originally appeared in the November/December 2014 edition of Foreign Affairs (Credit: Elizabeth Arcega)

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Taiwan 2014 was prepared for and originally printed in GMI Post Newspaper.

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