I recently visited Taiwan with an eye towards learning how the country was fostering innovation and was impressed by the vision and methodical approach. Much like a top company’s strategic plan, it took stock of:
• Core competencies and competitive advantages
• Global high tech industry trends and population needs
• Historical country-wide bottlenecks and cultural issues that could hinder innovation
Because Taiwan is small compared to the U.S. (23 million people), and the range of industries more narrow, it seemed manageable to plan an economic road map, in a corporate, strategic planning kind of way.
My image of Taiwan, was formed decades ago, as a kid growing up seeing toys and other inexpensive goods bearing the label “made in Taiwan.” This was also true of goods I remember at the time made in Hong Kong. Both countries left low cost manufacturing behind, as labor rates in other Asian countries undercut their abilities to compete in those sectors, and both went in different directions. Hong Kong became a world financial, real estate, luxury fashion and shipping center, while Taiwan used its engineering expertise to enter hardware technology (Foxconn, a Taiwanese company assembles Apple iPhones, ASUS and Acer manufacture Computers, and HTC makes cell phones). Recognizing that low cost hardware manufacturing is not a way to sustain an economy when lower labor countries can undercut them in price, and recognizing the tremendous, broad spectrum engineering talent it has as a country, Taiwan is once again reinventing itself, focusing on intellectual property and innovation that are less capital intensive. The chart below from the World Economic Forum, illustrates the evolution.
Taiwan has a 98.5% literacy rate, the fourth highest standardized math test scores in the world (according to the Organization for Economic Development) and over 25% of all university degrees are in engineering. Seventy percent of the world’s integrated circuits are manufactured in Taiwan, and Taiwanese companies have for years excelled at mobile phone, computer hardware, and electronics engineering. In a 2014 Bloomberg article, a Global Tech report cited that Taiwan had the highest number of patents per population, and per R&D expenditure in the world. More recently, the country smartly decided to use its formidable technology and engineering talent to focus, in the words of Wayne Gretsky, on “where the puck is going,” including areas such as virtual reality, robotics, artificial intelligence, internet of things, smart healthcare, smart logistics, smart machinery, green energy, and smart cities.
Four aspects impressed me unexpectedly about Taiwan, that global companies and even other countries can learn from.
• A clear long-term vision & methodical/multi-pronged approach to achieving it
• A tremendous sense of humor that is infused in so many areas
• A sophisticated sense of design, love of color and graphics
• A motivated workforce with the technical skillsets to both invent and execute
Vision And A Methodical/Multi-pronged Approach To Communicating And Implementing It
One of Taiwan’s goals is to be come the Silicon Valley of Asia, a liaison and facilitator between the U.S. and other Asian markets. Taiwan feels it can succeed because of its historical capabilities, geographic position in Southeast Asia, relatively equidistant from Hong Kong, Korea, Japan, India, Indonesia, Thailand and Vietnam, and because of the global business partnerships it has forged and continues to explore.
Government Policy And Long-Term Planning
The key government initiatives lead by the Taiwan National Development Council (the body coordinating the country’s move toward an innovation economy) include creating:
• A startup and entrepreneurship ecosystem and support system
• Relationships with other global R&D innovation clusters around the world
• Software applications that build on its historical tech hardware expertise
• Assistance for innovations coming out of universities and research institutions in getting funded and commercialized
• Assistance to help innovations move along more quickly into prototypes and testing
• A culture of innovation and inspiration among children at the youngest levels in fun and interesting ways
Three institutions that foster innovation stand out:
Logo credit: Taiwan Startup Stadium
Taiwan Startup Stadium
A mentoring and support startup hub for early stage tech companies that have demonstrated proofs of concept and products or services with international potential, Taiwan Startup Stadium connects them with top global accelerators, early stage investors, conferences, business partners and tech companies to help their businesses expand. It provides boot camps, workshops and educational programs with international experts and corporate partners like Amazon Web Services and Facebook’s FbStart, and promotes these start-ups at tech conferences worldwide, including through international media that cover the conferences.
Start-ups run from apps like FRNCI, a kind of couch surfing for meeting people to take you around Taipei and soon other cities, to Bitmark, a blockchain-based system for establishing and transferring ownership of digital assets, to Lyra VR, an award-winning immersive music creation experience. FRNCI’s co-founders & team members took me around Taipei and the experience was amazing…. An incredibly fun and time-efficient way to literally get the flavor of the city and insights into the culture.
Logo credit: Taipei Economic & Cultural New York Office
Hsinchu Science Park
A science and tech park inspired by Silicon Valley, that is home to small start ups and more than 400 high-tech companies, primarily involved in semiconductors, computers, telecommunications, and optoelectronics. It was intentionally located next to two of Taiwan’s most prestigious, technically oriented universities: National Tsing Hua University and National Chiao Tung University. The goal of the science park is twofold: to foster cutting edge, state of the art scientific and tech innovations that can be commercialized to grow the economy, and to provide synergistic learning and inspiration through close proximity to others involved in related pursuits. The two largest semiconductor factories in the world are located there: TSMC (Taiwan Semiconductor Microelectronics Corporation) and UMC (United Microelectronic Corporation).
Logo credit: Taipei Economic & Cultural New York Office
ITRI (Industrial Technology Research Institute Of Taiwan)
The goal of ITRI is to help commercialize inventions stemming from Taiwanese research institutions to increase their odds of success. ITRI helps them assess market opportunities, prepare and test prototypes among lead users, run pilot trials, develop business plans, fundraise, and transfer technology. In essence, it’s in the business of taking brilliant inventions and turning them into viable companies with global sales potential.
ITRI has a special group TUSA (Taiwan US Alliance) that facilitates relationships with U.S. Silicon Valley companies for mutually beneficial synergies in information and communications technology products like smartphones, tablets, touch screens, and audio visual driver chips. Having recently visited small countries who are innovators in their regions, like Israel, Singapore, New Zealand, and Chile, all know they have to sell their products and services in other countries if they are to create new, large, and profitable long-term businesses.