Posted: November 1, 2012 |  AUTHOR: KEN FOX | CONTACT ME

 

Taiwan, known as the Republic of China, and one of Asia’s Four Tigers (along with South Korea, Hong Kong and Singapore) is a world class technology leader. Along with a stable democracy, favorable view of the U.S. and only a 4.4% unemployment rate, Taiwan is an envy of many other nations. It’s relatively small population of 23 million people and small area, one third the size of Virginia, claims a number of global businesses.

Taiwan is a world leader in producing computers of all types. It’s Hon Hai Precision Industries, better known as Foxconn, is the world’s largest contract manufacturer of electronic products. According the Wall Street Journal, Foxconn currently employs more than one million workers in mainland China to manufacture and assemble Apple iphones and ipads, as well manufacturing and assembling other company’s products such as: the Kindle, Playstation and Xbox 360.

The following chart shows Taiwan’s global leadership in select electronic component and device categories:

Taiwan’s GDP growth (5.2% in 2011) and trade surplus has been positive. The country has transformed itself from a recipient of U.S. aid in the 1950s’and early 1960’s to an aid donor and major foreign investor. Taiwan businesses have become major investors in mainland China, Vietnam, Thailand, Indonesia, the Philippines and Malaysia. Many of its companies started out small. A number of these companies, especially those focusing on electronics, technology and telecom have grown into world leaders as shown below.

Recent news for some Taiwan companies has not been positive:
Foxconn, Apple’s main manufacturer, has had employee protests over working conditions at one of its major plants in Wuhan, China.
The U.S. government, in September 2012, fined AU Optronics $500 million for price fixing related to liquid-crystal display panels. Two senior company executives were fined $200,000 each, and sentenced to three years in prison. Other Asian companies, including LG Display (South Korea), Sharp Corp, (Japan) and three other Taiwan based companies, including: Chungwa Picture Tubes Ltd., Chimei Innolux Corp and Hann Star Display Corp. also pleaded guilty to related charges and agreed to pay fines. Toshiba (Japan) is also being investigated for LCD price fixing.

On a more positive note, Taiwan has increased ties to mainland China. There are now daily flights between the two countries, where there used to be only such flights during the Chinese New Year or Spring Festival, once a year. Taiwan is investing more in mainland China. The key sectors for mainland China investment include electronics, machine tools, LED and solar battery manufacturing. Mainland China is also investing in Taiwan. In the first half of 2012, Chinese investors pumped U.S. 122,2 million in Taiwan, an annual increase of 464%. Since Taiwan’s opening to Chinese investment, the main investment sectors include: banking (31%), retail (19%) and IT related (19%).

Taiwan is also home to one of my favorite companies, The Evergreen Group. This conglomerate owns shipping, trucking, aviation and storage companies. Its shipping subsidiary, Evergreen Marine, operates the world’s fourth largest container freight shipping company. Evergreen Marine’s 150+ ships call on 240 ports in approximately 80 countries worldwide. Evergreen also owns Eva Airlines, based n Taiwan, which I have flown and liked, non-stop from Taipei to San Francisco.

Final Comments
Except for the occasional sword rattling from mainland China to take over Taiwan, prospects for the country look promising. The growth of Foxconn, due to Apple’s phenomenal growth exemplifies Taiwan’s technology and savvy business strategies. The country represents a strong ally of the U.S., and world center for electronic technology innovation. Taiwan’s government, headed by President, Ma Ying-jeou and business leaders (except for current price fixing charges against some companies) provide role models for the rest of the world.

References:
1. Wider Opening to Chinese investment Helpful, Taiwan Official, WantChinaTimes.com, September 12, 2012.
2. Firm Fined $500 million for LCD Price Fixing, Wall Street Journal, Sept. 21. 2012
3. Worker Protest at Foxconn Plant in China, Business & Financial News, Reuters.com, April 27, 2012

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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