Back `You name it, we will make it'
Ranabir Ray Choudhury
| The statistical profile of Taiwan's achievements in recent times has been, to say the least, impressive. In macro terms, GDP has risen from $1.6 billion in 1952 to $48 billion in 1982 to $281 billion in 2002. With a population density among the highest in the world (the island's population is 23 million), the per capita income has risen from $196 to $2,819 to $12,572 over the same period. |
Seen differently, the island republic's progression as an economy can be described as a journey from being an original equipment manufacturer to being an original design manufacturer, which measures appropriately the step-up in the sophistication of the Taiwanese industrial and technological capabilities over the past 20 years.
In fact, the director of the Taiwan Industrial Technological Research Institute (ITRI), Dr Johnsee Lee, describes his country's progress since the early 1950s as one of movement from the labour-intensive era to being capital-intensive and subsequent graduation to the stage of technology-intensive development.
The statistical profile of Taiwan's achievements in recent times has been, to say the least, impressive. In macro terms, GDP has risen from $1.6 billion in 1952 to $48 billion in 1982 to $281 billion in 2002.
With a population density among the highest in the world (the island's population is 23 million), the per capita income has risen from $196 to $2,819 to $12,572 over the same period.
The broad sectoral structure of the economy has also undergone a significant change in keeping with the popular perception of a modernising economy. Thus, while the share of agriculture in GDP has slumped from 15 per cent in 1951 to just 1.8 per cent in 2003, that of services has increased from 46 per cent to around 68 per cent.
The share of manufacturing has remained more or less constant, having declined to around 30 per cent from 32 per cent. The focus of Taiwan's progress till now has been concentrated on computer-related products across a wide range of activity.
Thus in the broad sphere of integrated circuits (IC),Taiwan holds the No 1 position in the world in the foundry sub-sector (including overseas production as well) with a 72.9 per cent penetration; in the mask ROM sub-sector (56.7 per cent) and in IC packaging with a 30.4 per cent penetration. It is No 2 in IC design controlling 25.9 per cent of world activity in this sphere.
In the sphere of networking products, Taiwan is No. 1 in the production of ethernet cards with a 66 per cent penetration; in the hub sub-sector (74.8 per cent); in ADSL modem ((59.6 per cent); in wireless LAN (29.5 per cent); and in analogue modem with a 41.7 per cent world penetration.
Taiwan is also the world's largest producer of Notebook PCs accounting for 55 per cent of the international market; of LCD monitors (41.1 per cent); CD-R disks (83.3 per cent); CD-RW disks (70.3 per cent); DVD disks (74.5 per cent); and PC cameras (58 per cent). The country is also No 1 in the world in the production of hand tools, accounting for nearly 17 per cent of total international production in this sub-sector. But what is the real success story behind all this achievement, especially the new urge that is gripping Taiwan to move into the league of pace-setters for change in the world economy?
A visit to the giant bicycle plant (Taiwan is the world's No 3 in bicycle production) shows how assembly line production is still the bedrock of Taiwanese manufacturing, but what is hidden from view is the expenditure that is being incurred by the company on research and development, the ultimate objective of course being to improve the product while cutting costs.
On the other hand, a visit to ITRI indicates in no uncertain terms the emphasis being currently put by the Taiwanese on innovation (at the laboratory level), a great deal of attention being also devoted to the effort to translate the inventions into practical value on the shop floor so to speak.
Not surprisingly, Taiwan holds the ninth place in the international league table of R & D expenditure to GDP ratio with a 2.16 per cent performance, the eight other countries ahead of it being Israel (4.81 per cent), Sweden (4.27), Finland (3.40), Japan (3.09), South Korea (2.96), US (2.82), Germany (2.49) and France (2.20). The latest edition of the World Competitiveness Report also recognises Taiwan's prowess in the "R&D-to-manufacturing" field by placing it fourth in the world, describing the country as a "strong innovator".
The three other economies which have been placed above Taiwan are Finland (described as a "strong planning" economy), US ("technological supremacy") and Sweden ("squeaky clean"). As regards patents, Taiwan stands fourth in the number of patents issued in 2002 with 5,430, the US leading the pack with 87,033, followed by Japan (34,882) and Germany (11,282).
Indeed, a visit to the ITRI set-up in Hsinchu (where 6,000 people work) shows very clearly the nature of the high-voltage activity that is currently on in Taiwan to develop new technology and, what is perhaps more important, translate it into a manufacturing process so that innovation and value addition ("innovalue" as the Taiwanese call it) can go hand in hand.
Among the projects now engaging the attention of the ITRI researchers is tetrabyte data storage technology which will enable a disk to store up to 200 full-length movies; a micro fuel cell which will postpone the recharge hassle to once every 50 days; and second-generation blast-resistant cargo containers, which could contain the explosive force of a device on board an aircraft and thereby save the lives of scores of people. A visit to Taiwan at this point of time shows that biotechnology is a rising star in the Taiwanese economic firmament with the Government going out of its way to invite foreign investors to engage themselves in this sector.
Among the concessions offered is a 35 per cent deduction of the amount of investment in R & D or personnel training from income-tax over a five-year period; exemptions from import tariffs and business taxes on machinery and equipment imported for a company's own use and which is not manufactured locally; and a Government subsidy of up to 40 per cent of the cost of development of a new product.
Some budding biotech firms have already begun exploring for foreign markets for their products: among others, a small biotech company with just 12 full-time employees has developed a quick TB detection process, which it is trying to market to India.
It is said that the Taiwanese have turned the phrase "you name it, we have got it" into "you name it, we will make it". And they will make it and introduce a new brand with a new design in the shortest possible time. This is the Taiwan of the future that the world will have to contend with.
At this stage of its development, India need not be worried by the impending competition because it is not yet a major player in the branding and design field. But certainly, like the South Koreans, Taiwanese companies can invest in India to take advantage of its huge domestic market, something which does not seem to have caught on in the island republic as yet.
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