6. Profile and tendency of international education in Taiwan
6.1. Porter’s Diamond Analysis: Taiwan competitive advantage and impact on international
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6. Profile and tendency of international education in Taiwan
6.1. Porter’s Diamond Analysis: Taiwan competitive advantage and impact on international education
We will use the Porter Diamond Model to see how the national advantage of Taiwan can be translated as international advantage and attract foreign or local investor in education.
The advantages we will list are link to the general economic factors that can benefit to the development of private or international school in Taiwan.
Chance: Taiwan business condition makes it a favourable place for risk taking investment.
The stable economy, politic and workforce lower the risk of losing the investment.
Firm structure and rivalry: Taiwan industrial benefit for cluster, as the science parks in the biggest city .The private sector benefits from a well-developed commercial code and open-market policies facilitating the free flow of goods and capital.
Factor condition: Taiwan have favourable factor in the global economy and its future will depend of how it will solve current issues as de-internationalization and its relation with china, the low-paid salary to employees, brain drain of talent to better career opportunities in Asia, and the size of businesses in Taiwan that are small and medium enterprise, with lack of bigger corporations.
Taiwan has no natural resources, and most of the economic factors conditions are listed below.
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➢ Taiwan is part today of the global industrialized system, and an important link in the global supply chain
➢ Taiwan main industry developed around the semiconductor industry, however today involves more than just traditional manufacturing industry. Taiwan has a transition to the innovation economy and also the environmental protection-related demand.
➢ The infrastructure, international airport and major harbour in South and North Taiwan, in addition to the High Speed Rail (HSR). It benefits stable electricity connections and access to energy.
➢ Taipei City has been ranked 85th in the world in terms of quality of living, according to a survey made on 231 cities worldwide by consulting giant Mercer in 2014, which it made it attractive for expatriate and their families to be relocate
➢ Taiwan have majors cities (Kaohsiung, Taipei, Hsinchu, Taichung) that have sufficient population for implementation of private school
➢ Taiwan was ranked as the world’s 22nd wealthiest country in 2016 by U.S. monthly magazine Global Finance.
➢ Highly educated human resources can contribute to Value added Innovation management for expanding Taiwan's international trade.
Due to its good and reliable infrastructure, and geographical position in Asian, Taiwan can be a good location for investor. The freedom of doing business combine with the environment quality, are attractive to new white collars immigrants, and combine with growing wealth, importance of education, it can advantage investment in private education.
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Demand condition: Taiwan population is only 23 million people, making it a small market compare with other Asian countries, with exception to Australia. Taiwan is therefore dependent from the global market and export oriented.
In term of demand for education, parents spending are high, for the preschool, the cram schools but also for the higher education. Families, who have the mean to offer it, will make the choice of the best opportunities for their children even at high schooling fees. This can be view as an advantage for the domestic market.
The demand can be increased by the new immigration policies and a wave of new immigrants with the choice of English-Medium education for their children.
Related and support industry: Taiwan have a very strong supply chain industry, with numerous SME for semiconductor and high tech hubs as in Hsinchu Science Park. Alliance and partnership are also common. We can mention the case of the A-Team, in the bicycle industry, that was then formed by the industry leaders to promote Taiwan’s product image and to build Taiwan’s global competitive edge in the bicycle industry and enable Taiwan to compete with the Chinese Low labour cost and massive productions. The alliance with the spirit of “Power in Partnership” emphasizes the integration of parts suppliers, assembly and channels and the “Future of Cycling”. The A-team also obtained support and auxiliary help from government agencies, the Corporate Synergy Development Center (CSD).
In the education sector, private and international school are present in every big city, in the Hsinchu science park, and it is easy for parents to switch from one school to another. It gives possibility for the investor to choose the best location in term of demand based on the current
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competitor.
Government: Taiwan government major challenge is to adapt to the new economic landscape, rethink its industrial policy and face the competition for its main industry the semiconductor with USA. Local Corporations in this sector are also looking for investment in the USA market. In end of April 2017, the world’s largest contract electronics maker, Hon Hai Precision Industry Co (Foxconn) was in negotiation with the US government over possible investments in the U.S. The Apple’s sole A-series chip supplier, TSMC discuss about possible U.S. plant next year with a definitive decision in 2018.
Following the national statistics, Taiwan recorded trade surplus of $3.9 billion in March of 2017, which is lower compared to $4.5 billion in a year earlier. Export concern mainly by sales of information, communications and audio-video products, electronic products, and articles of base metal.
Taiwan government however is encouraging the development of industries and companies both at home and abroad by numerous policies in favour of business:
➢ The government promote innovation-oriented industrial policy, with the aim to lead SMEs towards a high value-added industrial era featured by innovation, invention, and R&D
➢ The signature of multilateral and bilateral free trade agreements, and regional economic integration
➢ New regional economic integration with the New South Bound Policy and less dependency to China
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➢ Face the decline of the population, the brain drain, and the consequent economic problem by the implementation of the New Southbound Policy Promotion Plan and the National Development Council’s Plan for Retention of Talent
➢ Law is enforcing contracts and protecting minority investors registering property
We can note that Taiwan ranks 11th in global Doing Business World Bank report in 2015, among 189 economies worldwide, and rank 11th in the listing of 180 countries for the 2017 Index of Economic Freedom ( Washington-based think tank The Heritage Foundation) that strengthen its robust economy.
Regarding education sector, Taiwan have an open market approach, the Ministry of education welcome every private school and expect more growth in this sector.
In April 2017, legislators and educators also called on the government to make English the nation’s second language, under the government’s “new southbound policy,”
Recommendations were made to allocate money from the Cabinet’s Forward-looking Infrastructure Development Plan to achieve the objective. The proposal mainly concerns the public school, but can have a positive impact on private school and its investor.
Conclusion:
Taiwan is a good destination for foreign direct investment (FDI) as its economy benefits from regional economic dynamism and integration, a supportive government and policies toward business, a population with high purchasing power and also a high-tech industry. The New Southbound policy is promising for immigration and new FDI from ASEAN countries. In this context, and with an increase of the demand for English-Medium and international education,
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there is favourable possibility for implementation of private school.
In the next part we will see however if the market can sustain development of new private school, knowing the decline of the population, the numerous public school that had to close, and the saturation of the market.