8. Taiwan’s Economic Dynamics

8.3. Can Taiwan Brand?

Of course, Taiwan has some very high quality products as well, and they are mostly selling in the local specialty shops with. Those are mostly displayed in the shopping districts with high rent storefronts, and the price tag is only affordable by the wealthier people or for tourists. Of course Taiwan is not short of the riches, about 20% of the people are in the highest earning ranks departs from the rest of 80% earning ranks (see Figure 24) The storefront merchandizes are still considered to be inexpensive compare to the western brands. The cheap product mentality runs just the opposite of “Branding”.

Cultural difference is another factor. One of electronic buyers who came to Taiwan to attend Taipei Computer Show and asked “Why are Taiwan’s electronic products colorless?” I asked him why he asked the question. He replied “In Indonesia, color sells.”39F39F40 He has to make his products colorful in his shop in Indonesia and many selections for customers’ buying appetite. “People will buy more with more color selections.” according to him. “The local market is very active”, and he is only focusing on the Jakarta market. Jakarta has a population of 10 million, and the local market is very vibrant.

By looking at the Local Cluster correlation, local ratios do not correlate well either in employment, revenue, nor wages. From the growth rates, there are four consistent specialties in the Local clusters: Local Food and Beverage Processing and Distribution;

Local Health Services; Local Hospitality Establishments; Local Real Estate, Construction, and Development. From the definition, Local clusters serve the local

39 Taiwan uses receipts system to keep track of bill of sales. A small business under the monthly income of US$60k does not need to use the Bill of Sales.

40 Commented by Hsu, Longhua, a CEO of Power Supply Company, from Indonesia in October 30th 2013.

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demands such as mom-and-pop shops or local hospitals. The French wine industry is both local and international. The Italian car business is local and international. The German, Japanese, and Korean car industry serves local and international.

Taiwan’s local infrastructure is outdated including safety and law re-enforcement.

Taiwanese has local car manufacture serves a small percentage of domestic market, and it has not developed international market. The bicycle industry has earned international reputation, but the locals rarely ride bike to work or school. Public transportation is very convenient in the big cities, students either walk or take public transportations to schools, and most people rides scooters to work because it is easier to park and inexpensive for the fuels. Business people drive if they have parking spaces, and large cities have parking issues. The road conditions are too dangerous for those who bikes. Furthermore,

Taiwanese often claims to be a food heaven, but the recent food processing safety issues have prevented from people buying local cooking oils. People are willing to pay for expensive foreign made packaged food for the food safety standards. Additionally, Taiwan has a very good healthcare service that everyone is covered with inexpensive healthcare insurance. This local service has been a favorable local service and done well.

These local industries without a supportive local market are difficult to sustain in the international markets and are branded internationally.

Of course, there are some exceptions, DingTaiFeng has made its branding internationally.

Foreign visitors in Taiwan often commented how good Taiwan’s fruits and vegetables are, and the varieties and its quality are out of the world. Taiwan has one famous food restaurant that is spreading in the world recently, and that is DingTaiFeng. It is making the class of its own and spreading like wildfires in many major cities in the world. The price is not low, but they always have long waiting lines. This is a local Taiwanese supply made to the world market branding. Evaluating some of the shops in different parts of the world, in Seattle, Los Angles, and Taipei, one thing people sees is they serve good food with consistency and clean restaurants with excellent services. The waiters and waitresses are well trained with good manners. They take a good care of the

customers including waiters speaking different languages to serve the needed customers.

They even protect your purse with a purse rack while eating the delicious food. The food

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has the McDonald consistency but much higher quality, and the price is definitely higher than normal. The brand is demanded by customers domestically and internationally with excellent services. People eat there can trust that the consistency is always there. Often, people from Japan fly to Taipei for a meal of DengTaiFeng waiting in a long line. I asked one of Japanese girls who ate at Taipei DingTaiFeng, what does she like about the restaurant. She relied “The food tastes good, and it is very clean.” The cleanliness has been commented several times when I surveyed people who went to DingTaiFeng. It is the management who wins the reputation, and the business is built on consistency. That is also what McDonalds builds on, the consistency. People often jokes about McDonald serves consistently unhealthy food, greasy hamburger and fried potatoes, but kids like them, so parents buy them; at least the food is safe. Branding is selling public trust.

Taiwan needs to improve on public trust, and policies can help in this area.

Local market is important. There is much room to improve the local market by designing some good services and products to serve the local demands. When the demands are big enough, it will become collective exportable products and services, and Porter points out that one location must have a healthy local demand to support the traded products. This is one of Taiwan’s OEM’s weaknesses. It only gets the order when someone else has surveyed the market and learned the demands. After the design is made, it is sent for OEM production. The OEM companies might not ever know why it is designed in a certain way. OEM is only responsible for making it work the way customers want it, but the buyers are not the users. OEM does not need to support the storefronts. It will support the exchange or returns by the buyers’ demand that is a distribution company.

OEMs receive the second-hand information from the distributors, and their job is to be sure buyers’ demand is perfectly set with the cost negotiated. OEM is not at the market front; they do not have market knowledge; they have production knowledge. OEM is designing the production process, not the products, for mass markets. OEM rarely

surveys the market front but the design trail version is always targeted for a mass market.

Without that pre-condition of a mass production, OEM cannot be profitable. Most OEM production costs are surprisingly low. This puts Taiwan’s majority workforce in a non-market front. This is not because Taiwan can only do OEM businesses. Taiwan has very

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limited specialties market besides being a blue-collar worker for 40 years now. Taiwan needs to break out of the nutshell and develop their own specialization instead competing on cost. How can Taiwan improve that?

在文檔中 台灣經濟形貌: 增進公共政策效益之動態群聚模式 - 政大學術集成 (頁 118-121)