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competitive contracts that Taiwan has over other countries that are not involved in the international production process.
7 Findings
7.1 Canada and Taiwan’s ICT Industry: Strengths and Opportunities
Canada and Taiwan both have competitive advantages, Taiwan in manufacturing and Canada in software and service development. These competitive advantages in their ICT industries can be exploited to further cooperate with one another, allowing their partner country to benefit from their respective competitive advantage. Both Canada and Taiwan’s economies are export-driven and fluctuate with global trade. The ICT industries of both countries are innovation-oriented. Taiwan’s ICT industry was the highest contributing sector to Taiwan’s manufacturing output composition from 1996 to 2011 when it began to decrease.
Canada’s ICT industry is also important to the Canadian economy as it is a driver of GDP growth and was the fastest growing industry in Canada between 2002-2011 (Industry Canada, 2011). The ICT industry in Taiwan has also experienced declines in ICT contribution to Taiwan’s GDP beginning in 2011 and hardware industry shipment value from 2012. On the other hand, its data communications shipment had risen from 2002 to 2014 and
semiconductor industry from 2011 to 2015.
Taiwan and Canada’s ICT industries are important contributors to the international ICT supply chain. Taiwan has the highest global market share by production value for seven product categories including notebook PCs, desktop PCs, tablet PCs, motherboards, servers, LCD monitors and digital cameras. Canada’s main exports to Taiwan are resource products such as iron ore and nickel which are necessary in the beginning stages of ICT product development.
Universities in Taiwan have the role as generators of fundamental knowledge and are
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heavily supported by the government as they account for 28-30% of public R&D expenditure.
They have become significant contributors of patent holders in Taiwan. Canadian universities also equip talented students with the capabilities of entering the ICT industry after
graduation. However, there are less students interested in studying computer and information sciences so less enter these fields. This has led to fewer highly qualified ICT students and professionals relative to other OECD countries.
Canada ranked 12th and Taiwan ranked 15th out of 140 countries on the World Economic Forum’s Global Competitiveness Index 2015-2016. Taiwan had a competitive advantage to other advanced economies in infrastructure, macroeconomic environment, innovation and market size. Canada’s technological readiness and ability to innovate were on par with other advanced economics however its problematic factor for doing business was a lack of ability to innovate which is greatly centered on ICT capabilities.
7.2 Government Level Cooperation between Taiwan and Canada
Taiwan is a well-positioned ICT hub in Asia which has competitive advantage in its established manufacturing sector. Since the government adjusted the Taiwanese economy from standardized to innovative technology to maintain economic competitiveness, the government has been the leading force of advancement in ICT since the 1970s. Through establishing research institutes and innovation parks such as the Industrial Technology and Research Institute and Hsinchu Science and Industrial Park, Taiwan has appropriate
infrastructure to support and promote its talent in science and technology. Taiwan’s science and industrial parks provide the ICT industry with a significant pool of well-trained workers as well as technical and managerial talent. Further, it provides an arena where talented ICT workers and innovators can work together to share new knowledge, ideas and technology.
The ITRI has generated more than 800 patents each year since 2001 and it has generated
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more than 100 new firms.
Canada has been influential in its ICT industry by encouraging private enterprise, FDI in technology ventures, and integration of technology incubation and development, however has taken a less direct involvement that Taiwan has used. The government’s expenditure on R&D is well above the OECD median, but its R&D capabilities are relatively low. The Canadian government needs to improve both productivity and competitiveness through innovation. The National Research Council is a successful organization that the Canadian government has founded through which its Industrial Research Assistance Program has assisted start-up companies, such as TeraXion and Miovision, by providing funding and guidance. Its
Economic Action Plan in 2007 has met some criticism by the Senate of Canada for not being adequate in promoting all industries, including its ICT industry.
The Canadian Trade Office in Taipei (CTOT) and the Taipei Economic and Trade Office (TECO) in Canada are well positioned to connect the facilities and talent that each country has to offer to bolster their relationships. Annual meetings connect governments on pertinent economic matters which give opportunity for both countries to cooperate and promote trade and investment. Findings from the interview with the CTOT officials and questionnaire with the Canadian Wearable Technologies document suggest that the CTOT’s major functioning in promoting cooperation will need to be to create events and opportunity for close
communication between Canadian and Taiwanese ICT companies to create environments in which companies are informed of the benefits of cooperating between industries. This will allow companies to create trust in each other’s business practices and create organic and strong business ventures. Linkages between Taiwanese and Canadian research institutes and universities have also bolstered communication and cooperation through knowledge and technology sharing which is demonstrated in the number of Taiwanese students studying in Canada and the number of ICT related patents granted.
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7.3 Industry Level Cooperation between Taiwan and Canada
Canada has many start-up and long-running companies in its ICT industry that are strong in creating new ideas and technologies. Taiwan’s government has focused on developing a highly skilled ICT workforce. Its ICT manufacturing industry contributes to almost 30% of its total manufacturing industry and employs almost 900,000 people. The ICT services-producing industry employs almost 250,000 people. Canada’s ICT industry consists of 40,000 firms clustered in technology centered cities such as Toronto, Vancouver and Ottawa (City of Toronto, 2010). Canada and Taiwan’s ICT industries are both leaders in ICT patent holdings, with Taiwan holding 17,474 patents and Canada holding 14,436 patents.
The share of Taiwan’s ICT exports to total trade in 2015 was a significant 34%. Trade and investment integration has improved Taiwan’s competitiveness by increasing the size of the market available to its domestic firms and exposing them to international competition.
Taiwan has a low number of free trade agreements with other countries but is a member of the WTO and a signatory of the Information Technology Agreement which provides it with a favourable trading environment. Canada’s ICT goods trade is much less competitive than Taiwan’s with a 40% decrease between 2007 and 2013. However, exports in software and computer services grew by 30% while exports in communications services grew nearly the same amount (Focus Economics, 2016). Taiwan’s main exports to Canada are ICT products which account for nearly two thirds of total exports to Canada, including electronic circuits, TV receptors and cellular devices. Canada’s main export to Taiwan in 2013 were metals and a small portion were electronic integrated circuits. Their level of dissimilar products and
services in the ICT industry give plenty of opportunity to increase trade.
Canada and Taiwan are not significant investment partners to each other. In 2014, the stock of Taiwanese FDI into Canada was only CAD 32 million, ranking as its 27th largest source of FDI in Canada among 30 countries which data was available. Taiwan’s FDI in Canada had maintained a higher level between 1994 to 2010 of over CAD 100 million.
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Canadian FDI into Taiwan had fluctuated more between 1994 and 2014, having high peaks of over CAD 450 million in 2009 and CAD 340 million in 2000. Between 2002 and 2004, Canadian FDI into Taiwan was lower than Taiwan’s FDI to Canada at CAD 60 million.
Canada ranked as the 49th largest source of FDI in Taiwan in 2014 among 61 countries for which data was available with a steady rate since 2012 of just under CAD 200 million. To enhance Canada and Taiwan’s industry and government cooperation, Canada will need to become a steady source of FDI in appropriate ICT ventures and Taiwan will need to become a more significant investor in Canadian ICT companies.
7.4 Taiwanese and Canadian Company Level Cooperation
Some of the most competitive electronics manufacturing services (EMSs) and original design manufacturers (ODMs) including Foxconn, Advanced Semiconductor Engineering and Pegatron, among others, are founded and based in Taiwan. The number of ODMs in Taiwan indicate that its ICT industry has been successful at transitioning from original equipment manufacturing (OEM) and has the capability to transition to original brand manufacturing (OBM) in the future.
Investors such as the Alibaba Group have begun to fund Taiwanese start-up companies.
500 Startups received USD 83 million in 2015 from the Taiwanese government to invest in Taiwanese start-up companies. The investment in 500 Startups has not demonstrated any significant returns demonstrating that this funding could have been invested elsewhere. The Alibaba Group investment, although in its early stages, seems like a more appropriate partner for investment as it also opens China’s market to Taiwanese producers.
Taiwanese and Canadian ICT companies have formed partnerships to increase the competitiveness of their products, services and companies. Joint ventures between Canadian and Taiwanese companies have enabled companies across countries to combine their
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developed technologies to produce new and innovative products and services, enhancing the profitability of their companies. In the year following, two ICT company partnerships in co-developing products between Compal Communications, Inc. and Wavesat, as well as Quanta Computer, Inc. and Intrinsyc Software International, companies experienced an increase in their market share value compared to the recent years prior.
A partnership between Tatung Infocomm and Bridgewater Systems is an example in which a Taiwanese and Canadian company combined their service technology capabilities.
Tatung Infocomm and Bridgewater Systems built a successful partnership in which Tatung Infocomm could deploy Bridgewater’s market leading WiMAX solutions, making their services more competitive in the Taiwanese market and accessible to regions across Taiwan.
This partnership allowed the Taiwanese company to apply a new technology without having to develop it itself.
World-renowned and highly competitive Taiwanese electronics manufacturer, Foxconn Technology Group, entered into an arrangement agreement with the Canadian company SMART Technologies Inc. with the goal of acquiring the company in 2016. Foxconn Technology Group has successfully acquired other established ICT companies with great success such as its acquisition of Japan’s Sharp Corporation. Their interest in acquiring the Canadian company demonstrates their trust in the quality of products, business opportunities and growth. This also demonstrates an example of how a Taiwanese ICT company can boost a Canadian company when it is in need of financial aid. This is a mutually beneficial
opportunity to financially stabilize SMART Technologies Inc. while providing it and Foxconn with new product and service launch opportunities and continued research and development.
Canadian companies also outsource their manufacturing to Taiwan’s well established manufacturing companies due to Taiwan’s high level of quality, trustworthiness and
competitive contracts. Laipac Technology Inc. is an example of a Canadian company moving its production to Taiwan after setting up an office in Taichung in 2004. Laipac moved its
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manufacturing to Taiwan after the rise in labour costs in China. The founder chose Taiwan because he believes in the high level of quality and communication. He is also a Taiwanese Canadian who grew up in Taiwan so has a high level of knowledge and understanding of Taiwanese culture and language which enhances communication. Laipac Taiwan’s office has been open since 2004 and its manufacturing in Taiwan since 2013. Laipac has stated only contentment and success from doing business in Taiwan including using the country as a hub in which its products can be sold to other countries in the region as well.
Through partnerships, joint ventures, outsourcing manufacturing processes to Taiwan and a future acquisition, Taiwanese and Canadian companies have expanded their business activities and capabilities which has made them more competitive in their ICT industries. By working together to create new products and services using different technologies created in both countries, companies can continue to innovate using each country’s research and development. Sharing knowledge and technology across countries allows each to create new innovations without having to create similar ones within their own industries. Instead,
companies can build on the shared knowledge and technologies, making their ICT companies and industries more competitive in the global ICT market. Canadian and Taiwanese
companies have excellent technological and innovative technologies which they can combine to enhance their products and services and ensure their competitiveness worldwide.
7.5 Limitations
Throughout the research process of this thesis, limitations were identified which have had an impact on the quality of analysis of the Canadian and Taiwanese ICT industries and cooperation between them. Nonetheless, this thesis was successful in drawing accurate findings and conclusions from the information gathered in the analysis of ICT industries and cooperation sections. Many business plans and models are kept confidential in order to
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protect their competitiveness with other companies. When searching for information on Taiwanese business success after cooperating with a Canadian company, it was difficult to find internal information demonstrating trends of success based on the launchings of new products or services.
Much of the information on bilateral cooperation is based on aims and goals rather than results. The lack of transparency from Canada’s previous government led to a lack of public information on results from government initiatives. Also, literature and reports in Chinese were not able to be used in this thesis, especially pertaining to Taiwanese bilateral reports and cooperation articles. The information provided by the bilateral offices and companies are the reflection of the individuals contacted rather than the organizations as a whole. Many
statistics that were searched for were unable to be found such as the number of Taiwanese students studying in ICT related programs across Canada over time and the percentages of OEMs, ODMs and OBMs over time in Taiwan.