To embrace the global e-trend and confront all the challenges that cloud the future of Taiwan’s IT
industry – the impact of the global knowledge-based economy, outward-moving business and
decreasing total revenues, etc. – the Convenor of NICI of the Executive Yuan, working with many
chief officers from other government agencies, leading academies, research institutions, top
enterprises and civil organizations, has formulated the “e-Taiwan program” to counter all these
issues.
The “e-Taiwan program” was formally approved by the Executive Yuan in June 2002 and
combined with nine other plans to form the so-called “Challenge 2008: the 6-Year National
Development Plan”. Not to overstate its importance, the “e-Taiwan Program” holds the key to the
complete success of “Challenge 2008”. There are five integral parts in this plan, i.e. “6 million
broadband users”, “e-Society”, “e-Industry”, “e-Government” and “e-Opportunity”. “6 million
broadband users” is expected to deliver the following results by 2007: (1) broadband network is
fully installed with implementation of IPv6 and wireless LAN environment, (2) small & medium
enterprises are mostly brought online, (3) safety standards, regulation, strategy and legislation are
properly installed and in full operation, (4) IC security enforcement is strictly observed and capable
of fostering the related industries, (5) CA cards have been successfully issued and commonly
accepted as a primary means of identification.
2. M-Taiwan (FIND, 2005)
The third IT revolution aims to forge the personal computers, internet and mobile communications
into a "Ubiquitous Network". By utilizing this network, the government, entrepreneurs and
end-users are able to get the information they need by any device, at any time and anywhere – more
efficiently, more conveniently, and giving better quality of life.
With the advantages of the world’s No.1 production value of WLAN products and mobile phone
penetration rates, the Taiwan government has actively promoted Mobile-competitiveness. The NICI
committee of Executive Yuan (Cabinet), Ministry of the Interior (MOI) and MoEA coordinated to
propose the “M-Taiwan Program” with a budget of NT$37 billion in five years. The “M-Taiwan
Program” is expected to build up the wireless networks, integrate mobile phone networks, set up
optical-fibre backbones, and execute the Integrated Beyond 3rd Generation (iB3G) Double Network
Integration Plan. It is also expected to shift Taiwan from an ‘e-nation’ to an ‘m-nation’, and to reach
the vision of “Mobile Taiwan, infinite application, and a brave new mobile world”.
4.3 Mode of Governance
4.3.1 Governance for Business – moving to ODM
Since the 1970s when foreign-owned firms started to invest in Taiwan, many Taiwanese
manufacturers became their original equipment manufacturer (OEM). Since the 1980s when
production of the first personal computers began, under the open system policy of IBM, some
Taiwanese manufacturers produced IBM-compatible computers with their own brands, such as
Multitech by Acer (renamed in 1987). Since then, the percentage of Taiwanese manufacturers
producing products with their own brands has increased only slightly.
As observed by Huang (1995), since 1989 when the US economy was in recession, the growth rate
of sales for Taiwanese computers with their own brand in the US market decreased almost to zero.
Especially in June 1992, when Compaq announced reduced prices of its all series products by up to
30-40 per cent, branded computer manufacturers in Taiwan were forced to give up their own brands.
However, at the same time, many European and American computer enterprises started to look for
the OEM that was able to control production costs efficiently. Thus, Taiwanese computer
manufacturers returned to the mainstream computer market by the way of the foundry. At the same
time, Acer also announced it was giving up its own brand and becoming the OEM again. This
indicated that, before the 1990s, the competitiveness of Taiwanese manufacturers was already
recognized in terms of vertical specialization and internal management.
Since then, Taiwanese manufacturers have started to globalize and conduct direct investment in
Southeast Asia and China. By exporting intermediate goods, equipment, technology and
management knowledge to the Asia-Pacific area, Taiwanese enterprises started to export final goods
to the global market. On the other hand, Taiwanese enterprises also put their resources into product
design and became ODMs. In addition, since the middle 1990s, some big manufacturers with
famous computer brand names such as Dell and Compaq, started to utilize a strategy of
“built-to-order” which meant that, under their logistic information systems, customers could place
an order and receive products directly from various global locations (Wu et al., 2002).
In summary, the early days of manufacturing IT equipment in Taiwan on an OEM basis, the
percentage of Taiwanese manufacturers with their own brands has increased only slightly, contrary
to the notion of an evolution from OEM to OBM (own-brand manufacture). On the other hand,
Taiwanese enterprises put their resources into product design and became ODMs (own-design
manufacturers) and CDMs (collaborative-design manufacturers), while working to strengthen
collaborative design R&D management capability.
4.3.2 Governance for Government
In the early stage, the flow of knowledge or competence building came through the way
international companies invested in Taiwan. Afterwards, the Taiwanese government actively
promoted the establishment of research institutions, not only introducing advanced technology and
knowledge but also researching and developing by themselves, and then transferring technology
from abroad, setting up spin-off companies, or floating talents; in these ways spreading knowledge
and technology to the whole of industry little by little. The industries begin to establish good
connections with Hsinchu Science Park and Silicon Valley at the same time.
In relevant governmental policies, the establishment of the Science Park and the ABCDE plan have
both been quite successful, with an important influence on the industries. However these
comparatively successful plans are mostly an extension of past achievements in manufacturing and
design. In addition, the liberalization of the telecommunication market has been quite successful,
especially for wireless communication; nevertheless, relevant results still need to be observed.
After the industries gradually set up their R&D competences, the great progress in industrial
technology means the whole innovative system has to be adjusted; for example, the research
institution must transform its roles, the function of universities must be improved and so forth.
Actually, the Taiwanese government has put more effort in this direction in recent years.
4.4 Knowledge flow and interactions with outside
The knowledge base and the learning processes have greatly affected organizational innovation
activities. In fact, the introduction and upgrading of these ICT products and technologies mainly
depend on the supply from other countries, not from domestic industrialists or research institutions.
In the early stages (1970s), Taiwan’s technologies used in production were mainly transferred from
industrialized countries. Therefore, technology transfer was adopted as an initial strategy for the
quick development of the industry base at the very beginning. Research institutes are employing
technology acquisition, joint research, foreign direct investments and strategic alliances to interact
with foreign companies. Research institutes act as mechanisms to accelerate the industry’s
technological development. Thus, leverage and diffusion promotion were being exercised through
acquisition of equipment, through the movement and transfer of skilled staff. Then, technological
R&D capacity gradually accumulated through imitating, copying, or limitedly improving the
existing foreign products, and later, around 1990s, the IT industry gradually developed in-house
R&D capacity through self-directed effort, direct alliances, and joint ventures with foreign
companies. Meanwhile, domestic industrialists lean towards continuous innovation that raises
values, successively strengthening the efficiency of the production lines. Besides, some major
Taiwanese IT companies have tried to find ways to differentiate their products, with branding and
product design the two major strategies.