Taiwan’s competitiveness ranking rebounds

After years of falling global competitiveness, Taiwan is finally showing signs of a rebound, according to two international reports. Taiwan jumped up five places in the recent World Economic Forum (WEF) rankings, the highest the island has achieved in the last four years. In another report released by the Washington-headquartered World Bank Group on September 9th, Taiwan ranks 46th worldwide in terms of the overall business environment for 2009, up 15 places from 61st place in 2008.

Now ranked 12th in the 2009/2010 global competitiveness report released by the Geneva-based WEF on September 8th, the Commercial Times reported that the jump was due to a number of factors, including “encouraging direct foreign investment in Taiwan’s investment law” (jumping to 39th from 64th place) and “easier bank financing” for businesses (advancing 15 positions). Hu Chung-ying, deputy minister of the cabinet-level Council for Economic Planning and Development (CEPD) said the improvement in ranking is related to the government’s removal of China’s investment restrictions, making it easier for business financing and other deregulation measures adopted after the global financial crisis.

However, the Taipei-based China Times pointed out that Taiwan fell to 79th position from its previous 61st in the subcategory of government debt and to 57th position in central government deficit. Taiwan also dropped in the categories of job market and cost of employee layoffs.

The Taipei-based China Post said Taiwan has found itself mired in debt as a cash-strapped government borrowed to finance important infrastructure projects. Added to this, the government recently announced a NT$120 billion (US$3.7 billion) special reconstruction budget to focus on disaster relief in the wake of Typhoon Morakot. All of the money will be borrowed.

In another report by the World Bank Group, Taiwan is ranked 46th this year, an improvement on its ranking of the last three years. The rise can be attributed to the significant progress in the regulatory ease of starting a business, which was up 90 notches to 29th from its previous 119th place.

The “Doing Business 2010” report ranks 183 economies around the world based on an “ease of doing business index” of 10 topics, made up of a variety of indicators, including the time to start a business, the ease of applying for a construction permit, employee hiring, property registration, business financing, protection of investors, paying taxes, trading across borders, contract execution, and closing a business.

Deputy Minister Hu told the United Daily News that international businessmen and investors give great weight to the International Finance Corporation-World Bank report on business environment, and always use it as an important reference in selecting overseas branches.

The report showed that Taiwan achieved great improvement in streamlining its lengthy and complex procedures involved in starting a business, which had been one of the most criticized aspects of Taiwan’s business environment.

In the area of launching a new business in Taiwan, the number of steps companies had to go through was reduced from eight to six, with the average shortened from 43 days to 23 days, making Taiwan one of the countries that need no “minimum capital” to set up a business.

In terms of the ease of paying taxes, Taiwan jumped 10 places to 92nd, by improving on tax collection, including paying taxes via the Internet. Also, the number of payments companies have to make in a given year was lessened from 23 to 18, and the number of hours spent on preparing, filing and paying taxes was reduced from 340 to 281. Other improvements include the ease in hiring employees and cross-border trades.

Among the four Asian Tigers, however, Taiwan still holds the lowest ranking, far behind Singapore (No. 1), Hong Kong (No. 3) and South Korea (No. 17), said the paper. In other Asian economies, Japan ranks 15th and China 89th.

Penghu Islanders reject casinos

Residents of the Penghu Islands have voted to reject opening casinos there. In Taiwan’s first ever local referendum held on September 26th, over 56 percent of voters voiced their opposition to the casino development proposal. With a population of 93,445, over 17,359 cast their votes in opposition to the idea, while 13,397 (over 43 percent) supported it. This was a victory for the anti-gambling alliance that saw casinos as a step towards having a polluted environment rather than an ecologically friendly one.

The central government first posed the question of opening casinos three years ago. Since then, several international companies have jostled to buy stretches of oceanfront property with the hope of building casino resorts on the islands. Those companies with the most at stake are Amazing Holdings Resort (AMZ), Great Penghu International Resort and the Golden Sand Beach International Resort Village.

The government supported the Gambling Ordinance and saw it as a way to develop Penghu’s economy, but they also gave the final decision to the residents in a local referendum. With the recent veto, another referendum cannot be submitted for another three years. In the meantime, there are other offshore islands that have expressed an interest in developing casinos, if the circumstances are right, including matching support from the central government.

Although Penghu might not become a gambling mecca in the near future, it still has abundant natural beauty. The Penghu islands, also know as the Pescadores, consist of 90 small islands off the west coast of Taiwan. The area’s natural beauty makes it an ideal place to develop it into a maritime tourist attraction.

Singles’ spending-power soars

With the explosion in the size of the single population, their consumer spending power has also soared, expecting to reach NT$888 billion (US$27.3 billion) per year. Several magazines and newspapers have focused on the economic windfall for businesses that cater to singles, which is a growing trend not only in Taiwan, but also elsewhere in Asia.

Dating in the age of the Internet

Japanese sociologist Masahiro Yamada coined the phrase Konkatsu with co-author Tohko Shirakawa in a book entitled Konkatsu Jidai (The Era of Marriage Hunting) to describe the situation in Japan. In China, singles are also a dominant consumer power. The top five dating websites are marry5.com, jayuan.com, Love Apartment, zhenai.com and baihe.com. On average, they help a single person find a date every 12 seconds, generating annual gross earnings of NT$5 billion in 2008, according to Commonwealth magazine.

The ratio of singles in Taiwan aged 20 and above was 37 percent in 2000. In 2008, it had jumped to 42 percent or approximately 7.4 million people. Based on a conservative estimate of the average monthly expenses of singles (NT$10,000 = US$308), the total business opportunities would be over NT$888 billion (US$27.5 billion) a year. Still, industries have been slow to tap into this potential goldmine.

Business Today magazine also reported on this topic. Wang Xiao-wen, is a 34-year-old single woman working for a financial services company. There are many singles around 35 years old in her company. Wang does not adopt a celibate life, yet she knows if she does not get married in a couple of years, she may well be a single all her life. She surfs the net daily in the hope of finding a suitable date. With an ample income and no pressure to support a family, she has the time and money to shop, workout in the gym, and think of studying painting.

Singles, the ideal super-consumers

Lan Ya-ning, director of the advertising and marketing research center at Ogilvy & Mather’s Taipei office, points out the marriage age in Taiwan has increased as more single people put off getting married. There are more and more people between the age of 29 and 40 who are still not married. For singles, the focus is on themselves. They share common characters of “3 nos and 3 yeses” - no expense limit, no knowledge of financial management, and no family to support. And yes, they have money, time and are self-centered. The combination of all six elements makes them super consumers.

Still, most of Taiwan’s businesses focus their attention only on young singles, not on older singles or the divorced. The market focus is on physical items like mini-refrigerators or small-sized appliances, but not on services. In fact, Matsushita Electric Industrial Co. of Taiwan, Teco, Sampo and others have launched a range of electric appliances tailored for the needs of singles, developing small capacity refrigerators, washing machines, and rice cookers.

However, the fastest growth sector is the Internet, especially online dating services, which could be worth NT$5 billion (US$153.8 million) a year according to the United Daily News. The most popular fee-based online dating site is Yahoo! Taiwan with over 1.6 million registered members. The most popular free dating site is Love Apartment with 1.77 million members in Taiwan, the majority of them being female. (Love Apartment is also successful in China with over 20 million members). In addition to other local dating sites like PC-Home, international online social networking services also rush in to share the big pie including Facebook (US), Cyworld (South Korea) and 91yuan.com (China). Lan said 70 percent of the internet surfers are singles, over 50 percent being female. They enjoy online dating, online shopping, and playing games.

Other ways singles spend money

Singles also expend more time on physical fitness activities than married couples. At fitness centers, they not only exercise, but also expand their social networking. Those centers offer restaurants, spas, hydrotherapy, swimming pools, lectures and exercise training classes.

Another booming business for singles is the market for pets and pet products and services. Chang Kuo-ping, chairman of the Taipei Veterinary Association, said in the last three to five years, the ratio of singles keeping pets as companions jumped 30 percent. In his veterinary clinic, over 50 percent of his clients are singles. The pet market’s estimated value is NT$10 billion (US$30.7 million) a year and is projected only to increase. Many people are generous, spending over NT$10,000 (US$307) at pet boutiques on such items as dog collars, dog beds, and albums for pet photos.

Catering to the single diner

The food industry is also taking notice by introducing smaller-portion packaged foods. According to Lin Chin-hsing, associate manager of Wei-Chuan Foods Corp., the business of eating out in Taiwan accounts for NT$200 billion plus (US$6.15 billion) annually, of which a large percentage is derived from single patrons. Wei-Chuan has introduced smaller-packaged soy sauce and monosodium glutamate (MSG) for singles to purchase, and is planning to develop instant food products for their convenience.

Most restaurants seem not to understand the requirements of singles yet. It is hard to find tables designed for single customers, who must awkwardly share a table with strangers. However, Pizza Hut Taiwan has seen the potential business opportunities of singles and introduced single pizzas with 32 different combinations. They even deliver single pizzas to customers for an extra fee of NT$35 (US$1.10).

Wang Wen-kuan, manager of marketing and public relations of Mazda Autos, said singles have strong buying power in automobiles, cellphones and cosmetics, with more time and disposable income available.

According to the Eastern Online Market Research Consultant, 44.8 percent of those surveyed said that the favorite thing single people would like to do is to travel overseas and domestically. Given their spending habits, it is understandable that singles are somewhat relaxed about personal financial planning. Although, as they age they are forced to undertake financial planning, often seeking simple short-term savings or investments.

Baseball: Taiwan’s national passion

On August 30th, US Vice President Joseph Biden, Jr., shook hands with each member of Taiwan’s Kuei Shan little league baseball team before their championship game at this year’s Little League World Series in Williamsport, PA. Taiwan went on to take second place, losing to California 3-6.

Earlier that month, another Taiwanese little league baseball team lost 6-7 to Brooklyn, NY, in the semi-final of the 2009 Bronco World Series in Monterey, CA. Also, on August 10th, Taiwan’s senior league team lost 1-14 to Houston, TX, in the 2009 Palomino World Series in San Jose, CA. Coming second and just to make it to the semi-finals for these little league teams are massive achievements worthy of celebration. Still, it is a far cry from 1974, when Taiwan’s little league, senior league and big league all took home championship honors.

Baseball is Taiwan’s national sporting passion. The game was introduced during the Japanese colonial rule from 1895 to the end of World War II. The first official baseball game ever recorded in Taiwan’s history was played in 1906 between two local high schools. In 1931, a school team representing Taiwan won second place in Japan’s national baseball tournament and earned the respect of its Japanese counterparts. By the mid-1940s, baseball easily qualified as Taiwan’s national sport.

After the Kuomintang (KMT) government took over the governing of Taiwan, the first major baseball craze came in the 1970s when Taiwan suffered a series of diplomatic and political setbacks. In 1971, Taiwan was expelled from the United Nations and the government tried to compensate by supporting international sports competition as a substitute of international political participation. The people of Taiwan sought to find heroes and a new identity.

Taiwan’s little league baseball teams (11-13 years old) competed in championships on the other side of the globe and people stayed up well past midnight to watch the live broadcasts of the games. These young baseball players regained a part of Taiwan’s national pride. They won an incredible nine Little League World Series Championships in the 13 years from 1969 to 1982.

Taiwan’s senior leagues (14-16 years old) and big leagues (16-18 years old), also under the sponsorship of the Little League World Series, have also been successful. In total, Taiwan won 17 Little League World Series Championships from 1969 to 1996.

When those young players grew up, they formed the core of Taiwan’s adult baseball teams. Taiwan’s adult teams have not achieved the success of its young players, but they are still considered world-class, winning two Olympic medals – a bronze in the 1984 Los Angeles Olympics and silver in the 1992 Barcelona Olympics. They have also grabbed four top-three honors in the biennial Baseball World Cup.

In 1989, professional baseball finally arrived in Taiwan with the formation of the Chinese Professional Baseball League (CPBL). The first game was played in 1990. CPBL was the fourth professional baseball league in the world at the time, after Major League Baseball (MLB) in the United States, Nippon Professional Baseball (NPB) in Japan, and Korea Baseball Organization (KBO) in South Korea.

In 1997, a competitor, Taiwan Major League (TML) was founded to challenge the monopoly of CPBL. But due to financial pressures TML agreed to merge with CPBL in 2003. At present, CPBL has four teams with an average game attendance of about 3000 spectators.

Whereas steroids have tarnished the image of the game in the United States, gambling and game-fixing scandals have tarnished the game’s image in Taiwan. This has seriously eroded the game’s fan base in Taiwan.

While Taiwan has produced some great talents over the last few decades, the best players are usually courted to play for professional teams in Japan and the US. In the 1980s, Taiwanese pitchers such as Kuo Tai-yuan, Soh Katsuo (aka Chuang Shen-hsiung) posted impressive numbers with the Seibu Lions and Chiba Lotte Marines, both of Japan's NPB. More recently, young stars such as outfielder Chen Chin-feng and pitchers Wang Chien-ming, Tsao Chin-hui, and Kuo Hong-chih became the first group of Taiwanese players to play for North American Major League Baseball (MLB) teams.

Especially popular is Wang, who, playing for the New York Yankees, reached 50 MLB wins more quickly than any other player for two decades. He has become Taiwan’s first true star in American baseball and a national hero. Now there are over 20 Taiwanese baseball players competing in the US minor leagues, all with the dream of becoming the next Wang.

The Taipei-based China Times said that even though Taiwan did not win the game this time, the baseball team has inherited the traditional spirit of Taiwanese little league –great sportsmanship and a fierce fighting spirit which won them their first championship in Williamsport 40 years ago.

The United Evening News commented that Taiwan should be proud of the kids who came from the aborigine tribes, training with old equipment and facilities. However, it is not right when all the best players depart for the American major leagues or that Taiwanese baseball fans know more about Wang and the New York Yankees than any domestic team. The paper urged the government to map a long-term plan to develop the island’s baseball to establish it as truly the national sport.

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Typhoon Morakat photo story

Photographer: Chien-chung Chen

Born in 1968, Mr. Chien-chung Chen is studying at the Graduate School for Social Transformation Studies, Shih-Hsin University, Taipei, Taiwan. His interests include: reading, writing, painting, traveling, taking photos, and enjoying music. Nicknamed “pipe smoker,” he keeps a blog: http://www.wretch.cc/blog/apophoto/. Here are some translated excerpts from his blog.

"In the aborigine tribe in Chialan village, eastern Taitung County, the people evacuated in time, but their homes washed away. The villagers had learned its lesson after the 2005 typhoon destroyed a dozen homes. A senior tribesman said that the river was 150 meters wide in the early 1900s under the Japanese rule. That width was decided by Mother Nature. But in recent decades, the river shrank to 50 meters wide because overdevelopments changed the land usage of the riverbed and higher embankments were built to change the river's path. The flooding by Morakat moved everything back to its original width, the path designed by Mother Nature.”

“Another astonishing view I found during this trip was the floating wood covering all the ocean surfaces in Fukang fishery harbor. Local residents told me that this was the 'masterpiece of mountain rats,' who had been illegally logging in the mountains for years. They cut the trees in haste and sometimes forget or are pressed for time to move the trees down. Typhoon Morakat swept all the remaining trees to the river and it flowed down to the harbor.”


A graveyard of floating wood swept down from illegal logging on the mountains, gathering near the ocean in Fukang Harbor.

Human beings should respect and co-exist with Mother Nature to avoid its eventual backlashes.

A broad view on life is needed to comfort the souls of the survivors.

Volunteers from Tzu Chi Foundation are always the first ones to reach the disaster areas to offer help and relief materials.

Collapsed houses seen from the riverbed in Chialan, Taitung.

Flooding river water washed away 2 rows of houses already, leaving the collapsed one on the 3rd row on the riverbed. A total of 51 houses were demolished in Chialan, one of the worst hit villages.
Two lifelines of Taitung County were cut off by Typhoon Morakat. The highway was destroyed by a rush of water, and the railroad was broken into sections.

Silicon Valley still leads, as Taiwan keeps pace

Earlier this year, the Taipe-based Commonwealth monthly had a cover story that implied that Taiwan would emerge as the new Silicon Valley of the world. It caused a great deal of buzz. However, a much different story emerged – one which indicated that the Valley is a hard act to copy.

Dr. Joseph Yang’s background resembles much of the people he works with - a mix of academia, private business, government and think tanks. As the director of the Science Division of the Taipei Economic and Cultural Office in San Francisco for the last six years, he has taken inventory of the South Bay and stressed that it is hard for any country to overshadow Silicon Valley (SV).

“In the six years that I have been here, I’ve found it is impossible for anyone to copy Silicon Valley. It has everything to do with the genes of Silicon Valley.” Yang thinks it cannot be rivaled in 20, 30, even 50 years. “You can never find a place that can attract the top science and hi-tech people, converging to work in such harmony and for it to blend in so smoothly.”

What Yang finds amazing is that people are attracted to SV not just because of jobs, but because of the mix of the Chinese, Indians, Iranians and so forth who are invested here as well. “Once you live in Silicon Valley, it becomes home.” There are a lot of places that go out of their way to attract top talent, but it is not home. SV has been successful in creating innovation, partly because it “comes from all the innovative elements of different cultures… If you go to any large company, you will see a United Nations, a pick of the top minds in any country.”

Silicon Valley hard to duplicate

Robert Parker, founder of Parker Price Venture Capital in San Francisco concurs. “Innovation is Silicon Valley’s forte,” Parker said. Although he does not discount that Taiwan and China are becoming more innovative all the time, neither are a match for the Valley as yet. “Silicon Valley’s great universities, Stanford and UC-Berkeley, draw top young minds from all over the world, and many of them stay to add their ideas to new companies in Silicon Valley.” As an international lawyer and businessman, he has been on hand to witness the extensive changes in Taiwan, working on the formulation and implementation of the Taiwan Relations Act along with starting two law firms in Taiwan. He understands Taiwan’s business world, but also its social and political landscapes.

C.K. Cheng likened the Valley’s biggest assets to “bio-diversity.” “The more diversity you have - the better chance you have of cross-pollinating and success.” Cheng, a general partner of Harbinger Venture Capital in the United States, arrived here more than 25 years ago to work in the MiTAC-Synnex Group, now one of the world's leading conglomerates.

While at Harbinger, Cheng invested in many tech companies and successfully saw many go public. In his opinion, what makes the Valley unique is “not necessarily the semi-conductor. The building strength is not the industry, but the mentality….The Valley attracts people who are not afraid to fail. Not afraid to give up. They dare to try different things.” Parker also mentioned failure as a component of success and a big part of the Valley culture. “We celebrate successes in high tech, but failures are valuable, too. Silicon Valley’s culture recognizes that innovation is risky, and failing with a bold idea doesn’t hold back a good entrepreneur for long,” he noted.

On occasion, people might write the Valley off thinking that its heyday has passed. The Commonwealth article did so with headers such as “Can Silicon Valley win back its magic?” implying SV might have lost its magic. And just this year, SV became “siliconless” when Intel’s Santa Clara factory closed. Might SV be like Detroit, which saw its rise and fall tethered to the automobile industry? Cheng thinks otherwise. “Silicon Valley has the ability to reinvent itself - into a Soft-Valley, Bio-Valley, Solar-Valley. That’s what makes it unique. The mentality. The Spirit.”

Science Council nurtures Valley networks

In as much as SV is hard to duplicate, Taiwan does an exceptional job of keeping pace with much of the Valley’s innovation, and a good deal of the credit goes to the Science Division in Santa Clara, California. The division acts as a direct conduit, tapping into SV’s innovation. No organization goes as far in building a bridge between SV and Taiwan’s hi-tech sectors.

As its director, Yang promotes the work of Taiwan’s National Science Council (NSC), which is very similar to the National Science Foundation (NSF) in the United States. The NSC is Taiwan’s cabinet-level agency responsible for national science and technology development. The Council supports academic research and develops Taiwan’s Science Parks.

Locally, the Science Division nurtures new talent by linking US-Taiwan collaborators, and directing them to the appropriate people to help them bring their ideas to the marketplace. Yang’s special skill is his spider-like talent for weaving a network of collaborative webs. First by knowing what projects people are working on and then connecting them to others with similar interests and complimentary needs. Through his wide network, he can simply point someone in the right direction to get funding or, as in a recent case, to assist someone find the appropriate land to build a new manufacturing facility in Taiwan. The office serves as a catalyst.

And with the Science Division keeping a finger on the pulse of SV, Taiwan is able to remain at the forefront of new developments, steering emerging technologies towards the island’s exceptional production and management infra-structure.

Taiwan’s strengths and weaknesses

According to Parker, “Nobody, including Silicon Valley, beats Taiwan’s smaller companies at agility and flexibility. Engineering management is a great strength in Taiwan’s larger companies. Taiwan’s forte is in using technology to make things the world wants.”

Although Taiwan cannot rival China’s domestic market and cheaper workforce, the island’s stability is its strength. As a civil society, it has a certain order which is reassuring. According to Cheng, “You are not afraid of doing something wrong, whereas in some Chinese cities, there are still certain fears.”

Moreover, Yang sees tremendous advantages in Taiwan’s talented management pool hence you have many of China’s top companies hiring CEO, CFO and other top tier management personnel from Taiwan. “The pool is highly trained. They are disciplined.”

China is as yet a young market economy, with little resources dedicated towards building a corporate culture. It is very different from the big American companies. In US corporations, no matter which overseas office you visit, they have built a system that is uniform and the dissemination of the company’s culture also remains so. In China, the mentality is to “get rich quick” and there is still a lack of order. However, both Yang and Cheng believe it is only a matter of time before this changes.

Whereas innovation is heavily connected with SV, it is not something Taiwan excels at given its educational system and society. Taiwan’s culture emphasizes discipline, which makes for great manufacturing managers, but it does not foster Silicon Valley-styled innovation.

Taiwan has become export reliant, focusing on industries in semi-conductors and electronics. As a consequence, the recent global downtown has hit the island especially hard. According to Commonwealth, Taiwan’s semi-conductor business will drop 20 percent as a result of the slowdown in the Valley. Yang cited South Korea as a good example of a country that has diversified and therefore has a better cushion against the worldwide economic slowdown.

What’s next?

China, Taiwan and the United States still form the Silicon Triangle. It would be difficult to replace the innovative minds at work in Silicon Valley. And Taiwan’s strength remains as a contractor, designer and financier, turning an idea into an end product. Meanwhile, no one can top China as a manufacturer and the world’s largest consumer of materials. In the Silicon Triangle, each has a place in the research, development and production chain.

The Commonwealth article seems to indicate that venture capitalists are taking their money out of semiconductor and information technology in favor of bio- and clean-technology. However, this does not mean they are not investing in SV. Take Tesla Motors as an example. The electric car company will be relocating its headquarters and research facilities to Stanford Research Park in Palo Alto, California with US$465 million in low-interest loans from the government. Some might regard a car company outside of Detroit or other manufacturing strongholds as counter-intuitive, but the best engineers are still in SV and innovation follows the talent.

So don't worry; despite the death knell people have been sounding for Silicon Valley, some of the world's best minds are there right now pioneering the next revolutionary technology.