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There are a few keys to Taiwan's success in the high-tech sector.@Martian Can you explain why Taiwan such big industrial giant ?Does the government support the industry or they follow a different business model ?
Thanks ,I read about the Japaneses ,Korean and Ford model of business and the pro and cons .Are the working habits (max no of working hr per day, lower rank leadership etc) more healthy in Taiwan as they lack in Japan and South Korea.Also is there a debt problem or not in Taiwan .There are a few keys to Taiwan's success in the high-tech sector.
Firstly, Taiwan's ITRI was founded in 1973. ITRI is a quasi-government organization to support research and development. This is logical. As a small country, Taiwan needs to collect and focus its combined energies to develop high technology.
It is more important to have one large organization with the resources to pursue R&D than to have numerous small organizations/corporations that dilute their resources on duplicative efforts.
ITRI is famous for spinning-off TSMC and UMC. UMC is famous for spinning-off MediaTek.
Secondly, Taiwan is very different from Japan and South Korea. Taiwan has a bottoms-up system. Many small Taiwanese start-ups pursue a diverse field of technologies. The market decides which new product survives.
The Taiwanese business ecosystem is pretty straightforward. You start with a pool of little tadpoles. The ones that survive grow into medium-sized technology companies. Over time, some of the medium-sized companies grow into profitable billion-dollar tech companies.
Japan and South Korea use a top-down system. With the Japanese keiretsu or the South Korean chaebol, management decides on the technological fields and products that will receive investment. This means the keiretsu or chaebol is usually late in entering a business sector.
For example, TSMC created the foundry business in 1987. Samsung didn't enter the foundry business until 2006, because it took 20 years for the foundry segment to grow into a massive business. Thus, in the majority of cases, Samsung will always be years behind Taiwanese pioneers.
Today, Taiwan's Andes Technology Corporation is probably the new TSMC. For the last ten years, Taiwan's Andes Technology has been designing CPUs. Their latest version has over 2 billion transistors. I don't think Samsung will ever catch up to Taiwan's Andes Technology in the future. It is difficult to match another company's product when it's been refined over ten years (in Andes Technology's case) or twenty years (which happened with TSMC's library of design tools and manufacturing expertise for high wafer yields).
Thirdly, Taiwan's small tech start-ups are constantly experimenting with new technology. Taiwan was the first in the world to develop a headset that allowed for virtual pressing of telephone buttons suspended in the air.
Taiwan's business model has proven superior to Japan's keiretsu and South Korea's chaebol. The Taiwanese government supports basic research up to a point with ITRI. After the technology looks viable, it is spun off into corporations that further develop the technology into commercial applications.
I should mention that the South Koreans are no dummies. Three years after the establishment of Taiwan's ITRI, the South Koreans quickly established their own ETRI in 1976.
Taiwan's model of a government-supported technological seed and further development by the commercial sector has proven very successful. The rigid Japanese keiretsu has proven to be a failure over the long term. The jury is still out on the South Koreans. Can the South Koreans move away from the rigid chaebol model? If they can't, they will share Japan's fate. TSMC proves that South Korea's Samsung is being outclassed.
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Samsung Buys Its Way Into Foundry Business | EDN
You bring up a good point. South Korea is highly leveraged. The problem with a chaebol or keiretsu is that it enters many large existing business sectors in the hope of gaining market share. This requires a huge amount of capital. Thus, during the Asian financial crisis of 1997, South Korea had to borrow $57 billion from the IMF.Thanks ,I read about the Japaneses ,Korean and Ford model of business and the pro and cons .Are the working habits (max no of working hr per day, lower rank leadership etc) more healthy in Taiwan as they lack in Japan and South Korea.Also is there a debt problem or not in Taiwan .
Thanks ,it looks like Putin Russia has a similar model.Hope India also follow this model for high tech industryYou bring up a good point. South Korea is highly leveraged. The problem with a chaebol or keiretsu is that it enters many large existing business sectors in the hope of gaining market share. This requires a huge amount of capital. Thus, during the Asian financial crisis of 1997, South Korea had to borrow $57 billion from the IMF.
Taiwan had no need to contact the IMF. Taiwan is a cash-rich country with ample financial resources. Small Taiwanese companies do not require a large amount of capital. Only profitable Taiwanese companies survive. Unlike South Korea, the Taiwanese government does not offer a financial lifeline to Taiwanese companies.
The Taiwanese government was thinking about offering financial help to Powerchip. However, the American government objected on antitrust grounds. For the moment, we'll just ignore the fact that the US government bailed out AIG and GM. In the end, the Taiwanese government never offered any financial help to Powerchip. In Taiwan, a company either sinks or swims on its own.
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http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/cron.html
About top-down system, I have read in a Business Mag, for many years Lucky Goldstar (LG) was a small trading house engaged in import and export of consumer goods, before identifying sectors and products where they would expand. In the 80s and 90s they imported Toshiba, Sanyo, Philips products and exported (incredibility) to India and other 3rd world countries of South America & South Asia. Stories of Samsung, Daewoo, Hyundai also same. Indian Pvt sector also followed the same route with Nelco, Bush, Murphy but failed.Japan and South Korea use a top-down system. With the Japanese keiretsu or the South Korean chaebol, management decides on the technological fields and products that will receive investment.
IT hardware is all about electronic chips, it boils down to semiconductor. Chip Foundries are unavailable unless local expertise is available in Silicone doping.They have decent IT industry and growing from Medicine industry and cycle making industry
@Martian can tell you more about it?
The most important factor of Taiwanese companies is their profitability. Unlike Japanese multinationals (e.g. Toshiba, Hitachi, and Mitsubishi), large Taiwanese companies do not cook their accounting books, lose lots of money, or falsify data such as mileage for cars.They have decent IT industry and growing from Medicine industry and cycle making industry
@Martian can tell you more about it?
Medicine and biotech in Taiwan is mainly domestic company or PSU not MNC .Extreme mountain bikes are require a decent mechanical and high precision industry similar to watches .IT hardware is all about electronic chips, it boils down to semiconductor. Chip Foundries are unavailable unless local expertise is available in Silicone doping.
About medicine, I am sorry even we Indians are far ahead. And what is cycle industry? Is it any hi-tech area?