December 2020 | Vol

CONTENTS

NEWS AND VIEWS 8 Taiwan Briefs DECEMBER 2020 VOLUME 50, NUMBER 12 By Jeremy Olivier 一○九年十二月號 12 An Editor Looks Back Reflections on my over 50 years Publisher 發行人 in Taiwan, including nearly two Leo Seewald 李豪 Editor-in-Chief 總編輯 decades of service at AmCham. Don Shapiro 沙蕩 By Don Shapiro Deputy Editor 副總編輯 6 President’s View Jeremy Olivier 歐嘉仁 Reflecting on a tough year, and look- Art Director/ 美術主任/ Production Coordinator 後製統籌 ing forward to better days ahead Katia Chen 陳國梅 By Leo Seewald Manager, Publications Sales & Marketing 廣告行銷經理 Caroline Lee 李佳紋 7 Editorial Translation 翻譯 Healthy U.S.-Taiwan Ties Need Kevin Chen, Andrew Wang Continuity 陳又銘, 王先棠力守友台立場延續良好關係

American Chamber of Commerce in Taipei COVER SECTION 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Unlocking Taiwan's 5G Potential Tel: 2718-8226 Fax: 2718-8182 e-mail: [email protected] 解鎖台灣5G的潛能 website: http://www.amcham.com.tw 名稱：台北市美國商會工商雜誌發行所：台北市美國商會 25 Taiwan Blazes New Trails 臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182 with Extended Reality

Taiwan Business Topics is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are Taiwan has already begun independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. forging a reputation as a © Copyright 2020 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint producer of VR creative original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei content. Now the introduction Printing Co., Ltd. of 5G is driving the 登記字號：台誌第一零九六九號印刷所：帆美印刷股份有限公司 development of its VR industry 經銷商：台灣英文雜誌社台北市108台北市萬華區長沙街二段66號 to new levels. 發行日期：中華民國一○九年十二月中華郵政北台字第5000號執照登記為雜誌交寄 By Louise Watt ISSN 1818-1961 19 Taiwan’s Telecom Industry Enters the 5G Era Chairperson: C.W. Chin Vice Chairpersons: Fupei Wang, Timothy Shields Following a knockout Secretary: Seraphim Ma spectrum auction that ended Treasurer: Angela Yu earlier this year, Taiwan’s 2019-2020 Governors: Albert Chang, Seraphim Ma, Paulus Mok, Manohar telecom operators have moved Thyagaraj. quickly to develop nationwide 2020-2021 Governors: C.W. Chin, Brian Sung, Timothy Shields, Fupei Wang, Roger Yee, Angela Yu. 5G networks, roll out 5G-specific applications and 2020 Supervisors: Mark Horng, Stephen Tan, Terry Tsao. content for consumers, and

COMMITTEES: begin partnering with other Agro-Chemical/ Melody Wang; Asset Management/ Eric Lin, Angela Yang, Derek Yung; Banking/ Paulus industries on a wide range of 28 Traversing Taiwan’s OTT Mok; Capital Markets/ Mandy Huang, Eric Jai, C.P. vertical applications. Liu; Chemical Manufacturers/ Charles Liang, Michael Environment Wong; Cosmetics/ Abigail Lin; Defense/ Manohar By Jeremy Olivier Thyagaraj, Roger Yee; Digital Economy/ Max Chen, Over-the-top (OTT) platforms Renee Chou, Tai Chi Chuan; Energy/ Richard Freer, Randy Tsai; Human Resources/ Christine Chen, David are experiencing a peak in Tsai; Infrastructure & Engineering/ Wayne Chin, Paul popularity in Taiwan as the Lee; Insurance/ Emily Chen, KT Lim, Linda Tsou; Intellectual Property & Licensing/ Jason Chen, Peter pandemic alters consumer Dernbach, Vincent Shih; Marketing & Distribution/ (tba); Medical Devices/ Louis Ko, Jeffrey Wang; habits and more people turn Pharmaceutical/ Justin Chin, Rie Nakajima, Shuhei Sekiguchi; Private Equity/ Echo Yeh; Public Health/ away from subscription cable Joyce Lee, Pongo Peng, Tim Shields; Retail/ Ceasar Chen, Peggy Liao; Sustainable Development Goals/ services. However, proposed Kenny Jeng, Cosmas Lu, Fupei Wang; Tax/ Heidi Liu, government regulations Cheli Liaw; Technology/ Cynthia Chyn, Stella Lai, Angela Yu; Telecommunications & Media/ Thomas Ee, 24 Moving Toward Open could create some significant David Shin; Transportation & Logistics/ (tba); Travel & Tourism/ Gina Tsai, Jason Yeh, Fiona Yuan. Networks barriers. By Jeremy Olivier By Jeremy Olivier

COVER DESIGN: GRACE YANG

4 TAIWAN BUSINESS TOPICS • DECEMBER 2020

12 contents.indd 4 2020/12/6 下午11:33 DECEMBER • VOLUME 50 NUMBER 12

TAIWAN BUSINESS 34 A New Chapter in Taiwan’s Love Affair with Scooters Local companies are betting that e-scooters and the sharing economy represent the future of mobility. By Jules Quartly 37 Reorganization of a Taiwanese Corporate Icon Tatung is a household name inTaiwan and was a major player in the country’s industrial rise.Yet this century-old enterprise has fallen on hard times, its property the only remaining asset of value. What caused Tatung’s downfall, and will it be able to rise again? By Chohan Yang, CommonWealth Magazine

Special Report FORECAST 2021

43 Opportunities and Challenges Await in 2021 Taiwan has been a major beneficiary of global circumstances in 2020. It must now take steps to maintain economic momentum as a new year approaches. By Jane Rickards 46 What’s in Store for Next Year? By Jane Rickards 47 For Some Tech Products, Social Distancing has been Good News By Jane Rickards

EXECUTIVE SUITE 48 Meet Louis Ko of Johnson & Johnson By Jeremy Olivier

AMCHAM EVENT 31 2020 AmCham Taipei Longevity Forum 42 2020 AmCham Annual General Meeting

SPONSORED CONTENT 16 Favorable Prospects for Taiwan’s Industry and Economy in 2021 32 Powered by 5G, Taiwan Mobile Pushes the Bounds of Cloud Gaming 40 PineBridge Spearheads Sustainable Investing in Taiwan with Innovative ESG Products 50 Seeing Taiwan Getting in Hot Water: Welcome to Taiwan’s Geothermal Springs

TAIWAN BUSINESS TOPICS • DECEMBER 2020 5

12 contents.indd 5 2020/12/6 下午11:33 PRESIDENT'S VIEW

Reflecting on a tough year, and looking forward to better days ahead

s we head to the end of what has been a two decades of service. Fortunately for us, very difficult year, I would like to thank he will continue to support the Chamber and our readers and advertisers for their TOPICS on a part-time basis. His work on the Acontinued support! This year marked the 50th magazine over the past 18 years has been a big anniversary of Taiwan Business TOPICS mag- reason for its success. Don has shared some of azine and we are very proud of the status it has his reﬂections from his many years in Taiwan in achieved. For those who have not read the spe- this edition of TOPICS. Please join me in con- cial 50th edition issue from April of this year, I gratulating Don on his amazing contributions to highly recommend it; the cover story recounts AmCham and to our TOPICS magazine! the history of this powerful publication. Finally, although we are lucky to be in Next year will be an important anniversary Taiwan in terms of the impact of COVID-19, for AmCham as well. We will be celebrating our thoughts this holiday season are with the our 70th anniversary and will at the same time many friends and family members who are launch our new brand as the American Chamber enduring less fortunate circumstances. of Commerce in Taiwan beginning in January On behalf of the AmCham team, I wish you 2021. President Tsai was very supportive of our all a joyful holiday season and a healthy, happy, name change and mentioned it in her address to and prosperous year in 2021! our Annual General Meeting last month. Plan- ning for the 70th anniversary celebration has already begun, and we are looking to hold the main event in September. We have generously been offered the use of the historic Taipei Guest House by the Ministry of Foreign Affairs to hold the anniversary party. More details will follow. As many are aware, AmCham Senior Leo Seewald Director and TOPICS Editor-in-Chief Don Sha- President, piro will retire from the Chamber after nearly American Chamber of Commerce in Taipei

6 TAIWAN BUSINESS TOPICS • DECEMBER 2020

12 presidents view.indd 6 2020/12/7 下午3:13 E D I T O R I A L Healthy U.S.-Taiwan Ties Need Continuity

iven the importance for Taiwan of its relationship with Discussing this trend at a recent virtual panel discussion, Bonnie the U.S., a pending change in administration in Wash- Glaser, a prominent Washington, D.C.-based expert on Chinese G ington always sets off intense speculation on the island foreign and security policy, described the current period as one as to what to expect from the incoming American government. of “significant convergence between Taiwan and U.S. interests.” This year, with Joe Biden about to replace Donald Trump in the A major factor in that convergence is the U.S. determination to White House, there has been even more conjecture than usual. restructure global tech supply chains to make them more secure, Trump, after all, famously took a congratulatory phone call from with recognition that Taiwan and its well-established tech sector Taiwan President Tsai Ing-wen before even being sworn in. And his constitute a natural ally in that effort. administration went on to adopt a series of measures designed to In addition, public opinion in the U.S. has shown increasing bolster Taiwan’s defense and strengthen the overall bilateral rela- dissatisfaction with China over a host of issues: Beijing’s trade and tionship. Among these steps were a record level of weapons sales, IPR abuses, suppression of the Uighur minority, crackdown on including 66 F-16V fighter jets; the dispatch to Taiwan of the dissent in Hong Kong, and lack of transparency in the early days highest-ranking U.S. official to visit since 1979 (Secretary of Health of COVID-19, allowing the virus to spread. Amid deteriorating and Human Services Alex Azar); and the recent inaugural meeting U.S.-China relations, American willingness to engage with Taiwan of a high-level U.S.-Taiwan Economic Prosperity Dialogue. increases. Will this same concern for Taiwan be evident in the Biden Further, the Biden team can be expected to pay more heed than administration? The indications so far are promising. The Pres- its immediate predecessors did to Taiwan’s achievements in demo- ident-elect’s appointment to key foreign policy positions – such cratic practices, human rights, and the rule of law. as Antony Blinken as Secretary of State and Jake Sullivan to be The incoming U.S. administration will have numerous priority National Security Advisor – are experienced, highly regarded issues to tackle, but AmCham encourages it to maintain the professionals, and to Taiwan they are known quantities. President current momentum in deepening U.S.-Taiwan ties. In particular, Tsai met Blinken in Washington in 2015 when she was a Presiden- we hope that next year will see resumption of long-stalled Trade tial candidate, and she met Sullivan in 2018 when he visited Taipei and Investment Framework Agreement consultations (TIFA talks), as part of a think tank delegation. (The group also called at the leading to preparations for negotiating a Bilateral Trade Agree- AmCham office). ment. We also look forward to additional cooperation through the More to the point, the forces drawing the U.S. and Taiwan U.S.-Taiwan Economic Prosperity Dialogue in the areas of supply closer together are ones that any U.S. administration – whether chains, cybersecurity, semiconductor technology, and other oppor- Democratic or Republican – are likely to find compelling. tunities for genuine partnership.

力守友台立場延續良好關係

於台美關係影響甚鉅，長期以來，只要美國面臨新、著稱的華府專家葛來儀（Bonnie Glaser）就表示，目前美台舊政府交接的時刻，對於新政府將如何拿捏對台政之間的互動態勢，是基於「台美雙方利益極為一致」。至於由策，台灣內部總有諸多揣測。今年，隨著拜登預計接台美雙方各自的利益，之所以產生這樣密切的交集，主要是替川普總統入主白宮，各種推測猜想紛紛出現，甚至比以往更美國政府打定主意要重整、強化全球科技供應鍊，而台灣及多。其發展穩固的科技業，顯然是美方推動供應練重整計畫時不畢竟，很多人都知道，川普在尚未宣誓就職之前，就曾與可或缺的盟友。台灣總統蔡英文通過電話，接受她的祝賀。之後，川普政府也不僅如此，在某些議題上，美國一般民眾對中國的不滿情採取了一系列有助提昇台灣國防力量、加強台美雙邊關係的措緒，似有升高趨勢，例如：北京對中美兩國貿易與美方智慧財施。這包括：內含66架F-16V戰機、規模創下紀錄的對台軍產權的侵害、對維吾爾少數族群的壓迫、對香港異議人士的打售，以及派出1979年至今最高階官員訪台（衛生及公共服務部擊，以及在新冠肺炎疫情爆發之初，中國政府對外曾採取迴避部長亞歷克斯·阿薩爾），近期還舉辦了首屆「美台經濟繁榮掩蓋態度，導致病毒加速散佈。美中關係持續惡化，讓美國政夥伴對話」高階會議。府更願意投入對台工作。拜登所主持的新政府，仍然會如此高調地維護對台關係嗎？此外，與前任政府相比，對於台灣在實踐民主、維護人權目前跡象顯示：應可期待。總統當選人拜登所任命的外交政策與追求法治的許多成果，拜登團隊或許會有更深理解、更多重高階官員，例如可望分別擔任國務卿及國家安全顧問的安東視。尼·布林肯、傑克·蘇利文兩人，都是經歷豐富、廣受好評的專儘管美國即將上台的新政府，眼前有各種優先議題需要處業人士，他們對台灣而言也不陌生。2015年，蔡英文即以總統理，台北市美國商會仍然籲請新政府在對台事務上，盡可能維候選人身份和布林肯在華府會面。蘇利文則在2018年參與了一持目前深化雙邊關係的動力。商會尤其盼望明年能見證美台個智庫訪問台北的行程。當時，蔡英文也與他過碰面。（當年「貿易暨投資架構協定」（TIFA）的協商，在延宕多時之後再這些智庫代表也訪問了台北市美國商會辦公室。）次展開，同時為台美雙邊貿易協定相關談判預先鋪路。我們同其實，問題的關鍵，在於無論民主、共和哪一黨執政，樣熱切期待「美台經濟繁榮夥伴對話」的後續交流，能促進美那些使美台關係日趨緊密的背景因素，都同樣不容忽視。最國與台灣在供應鍊、網路安全、半導體科技等等不同領域的更近，在一場線上專題研討會上，以研究中國外交及安全政策多合作，實現更緊密的夥伴關係。

TAIWAN BUSINESS TOPICS • DECEMBER 2020 7

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— BY JEREMY OLIVIER —

MACROECONOMICS

ENDING THE YEAR ON A HIGH NOTE With the winter months approach- ing and much of the world experiencing upticks in COVID-19 cases and deaths, new lockdown measures in Europe and the U.S. could result in a drop in demand for end products and a slowing of economic recovery. That prospect has not done much to deflate growth predictions or consumer confidence in Taiwan, however. In fact, according to Taiwan’s Director-

ate General of Budget, Accounting and From left, AIT Director Brent Christensen, Minister of Foreign Affairs Joseph Wu, Statistics, the island economy could Minister without Portfolio John Deng, Minister of Economic Affairs Wang Mei-hua, and Minister of Science and Technology Wu Tsung-Tsong attend a press confer- wind up boasting GDP growth for ence regarding the U.S.-Taiwan Economic Prosperity Dialogue. PHOTO: MARTTI CHEN 2020 of 2.54%, 0.98 percentage points higher than its previous forecast made in 11.2%, thanks to strong demand for Given the complementarity of the two August. ICT products and components. Imports partners’ ICT industries, as well as the In addition, National Central Univer- decreased by 1%. Taiwan’s October Taiwan Semiconductor Manufactur- sity in November recorded a 1.8-point trade surplus came to US$47.77 billion, ing Co. (TSMC) project to establish a rise in its Consumer Confidence Index up nearly 30% from the same month 12-inch fab in Arizona with an initial (CCI), citing the increased optimism of last year. investment of US$3.5 billion, a particu- investors in the local equity market. The The Taiwan Institute of Economic lar focus of the talks was how to deepen CCI tracks the level of public confidence Research’s manufacturing compos- cooperation on semiconductor design over the next six months in areas such ite index increased in October for the and production. as employment, family finances, and sixth consecutive month, rising 0.81 Leading the small in-person Taiwan consumer prices, among others. points from the previous month. This delegation to the EPP was Deputy Minis- Compared to the same month a year upward revision reflects continued opti- ter of Economic Affairs Chen Chern- ago, exports in October increased by mism regarding business performance in chyi, who was joined in Washington Taiwan’s manufacturing sector. by Taiwan’s representative to the U.S., TAIWAN STOCK EXCHANGE Hsiao Bi-khim. Minister of Economic PERFORMANCE INTERNATIONAL Affairs Wang Mei-hua, Minister with- THE LINE SHOWS CHANGES IN TRADE VALUE AND out Portfolio John Deng, and Minister of THE SHADED AREA CHANGES IN THE TAIEX INDEX. U.S., TAIWAN HOLD Science and Technology Wu Tsung-tsong POINTS NT$ BILLION joined via teleconference, as did Amer- 13000 315 ECONOMIC TALKS 12000 280 The inaugural U.S.-Taiwan Economic ican Institute in Taiwan Director Brent 11000 245 Prosperity Dialogue (EPP) was held in Christensen. The discussion was led by 10000 210 mid-November. The nine-hour talks took Undersecretary of State for Economic 9000 175 place both virtually and through phys- Growth, Energy and the Environment 8000 140 ical meetings in Washington, D.C. and Keith Krach, who in August became the 7000 105 culminated in a five-year memorandum highest-level U.S. State Department offi- 6000 70 of understanding between the two sides. cial to visit Taiwan in four decades. 35 5000 Among the topics discussed during While the EPP and resulting MOU 4000 0 the EPP were bilateral economic coop- are considered positive steps toward O eration in the areas of medicine, strengthening U.S.-Taiwan ties, they are

DATA SOURCE: TWSE technology, supply chains, and energy. unrelated to Taiwan’s goal of concluding

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a bilateral trade agreement (BTA) with he does not expect Taiwan-U.S. ties to WHO defended the move in a statement, the U.S., as trade negotiations are the change significantly under the Biden saying that it was a “practical measure” purview of the Office of the U.S. Trade administration. to prevent “cyberattacks by online activ- Representative (USTR). ists,” and that it did “not reflect a value While the Tsai administration’s recent TAIWAN EXCLUDED judgment or any policy of the World decision to lift the longstanding import FROM WHO MEETING Health Organization.” It added that it ban on U.S. pork containing the feed Despite having gone over seven has since removed the filters. additive ractopamine will remove one months without a local COVID-19 infec- of the last major obstacles to restart- tion, Taiwan is still being excluded from TSMC FOUNDER ing trade talks between Taiwan and the meetings of the World Health Organiza- ATTENDS APEC U.S., the USTR has yet to issue a public tion’s decision-making body, the World Morris Chang, retired founder of statement acknowledging the move. Health Assembly. Due to pressure from TSMC, was chosen to attend the lead- However, John Deng indicated that such China, which attempts to limit Taiwan’s ers’ meeting of this year’s Asia Pacific issues would be discussed at restarted participation in international organi- Economic Cooperation (APEC) forum Trade and Investment Framework Agree- zations that require statehood, Taiwan on behalf of President Tsai Ing-wen. It ment (TIFA) talks, which have not been was not invited to the assembly’s annual was Chang’s third time to be named as held since 2017. meeting this November. Taiwan’s representative to the summit, Responding to the WHO’s rejection which was hosted in Malaysia but took TAIWAN REP SPEAKS of Taiwan, over 1,700 government offi- place virtually due to the COVID-19 WITH BIDEN ADVISOR cials and organizations, including the pandemic. Taiwan’s representative to the U.S., World Medical Association, the African During the meeting on November 20, Hsiao Bi-khim, spoke with Antony Formosa Club, and the European Parlia- Chang shared with other virtual attend- Blinken, then a senior advisor to U.S. ment, expressed support for Taiwan’s ees how Taiwan successfully managed president-elect Joe Biden, over the phone participation. President Tsai and other the pandemic by embracing the power of in November. Blinken has since been Taiwan officials thanked those lobbying digital technology. He noted that Taiwan nominated by Biden to be the next U.S. for Taiwan at the meeting, saying that has recorded only 611 coronavirus Secretary of State. Hsiao says that during Taiwan will continue its efforts to join in cases and seven deaths since the initial the call, she conveyed a congratulatory the future. outbreak in late December 2019. In addi- message to Biden on his election victory. The WHO’s social media was also tion, its popular stimulus programs have She also expressed hope that the U.S. and bombarded with messages of support helped spur consumer activity and kept Taiwan can continue their close cooper- for Taiwan. Its moderators responded the island’s economy on a growth track. ation, emphasizing that the “close and by temporarily blocking mention of the Chang emphasized the importance enduring” ties between the two are based words “Taiwan” and “China,” prompt- of Taiwan’s capabilities in semiconduc- on shared values and common interests. ing an outcry from internet users. The tor design and manufacturing, and said During the Obama administration, Blinken served as National Security ECONOMIC INDICATORS Advisor to then Vice President Biden and US$ billion Year earlier later Deputy Secretary of State. He is Current Account Balance (Q3 2020) 28.7 12.5 seen by the foreign policy community as Foreign Trade Balance (Oct.) 7.5 4 more predictable than the current Secre- New Export Orders (Oct.) 51.6 47.3 tary, Mike Pompeo, whose tenure has Foreign Exchange Reserves (end Oct.) 501.2 472.5 been marked by an openly confronta-

tional stance toward China. Unemployment (Sep.) 3.83% 3.80% Douglas Paal, a former director of Discount Rate (Oct.) 1.125% 1.375% AIT, said that as Secretary of State, Economic Growth Rate Q2 2020p -0.58% 2.60% Blinken would value “Taiwan’s posi- Annual Change in Industrial Output (Sep.)p 10.73% -0.63% tive role in the global economic, political Annual Change in Industrial Output (Jan.-Sep)p 6.29% and health system.” Taiwan’s Deputy Annual Change in Consumer Price Index (Sep.) -0.58% 0.42% Minister of Foreign Affairs, Harry Annual Change in Consumer Price Index (Jan.-Sep.) -0.30% Ho-jen Tseng, described the call between P=PRELIMINARY Blinken and Hsiao as positive and said SOURCES: MOEA, DGBAS, CBC, BOFT

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Lawmakers battle with one another on the floor of the Legislative Yuan over U.S. pork imports. PHOTO: MARTTI CHEN

that Taiwan’s government and people are CTiTV’s license, NCC Chairperson Chen set up stages on the sidelines of the rally. eager to share their expertise with other Yaw-shyang said the news station was The KMT estimated that more than APEC members. found to have repeatedly violated broad- 20,000 participants joined its contingent After the conference, Taiwan’s Pres- casting regulations and that complaints of the protest. idential Office expressed Taiwan’s regarding CTi News comprised 30% of Then, at a Legislative Yuan meet- commitment to the Kuala Lumpur all those the commission had received ing on November 27, KMT legislators Declaration, which signals APEC lead- since 2017. Reports have also surfaced lobbed pig offal – intestines, lungs, and ers’ dedication to spurring economic that the station and other Want Want- other entrails – at their opponents in the recovery after the pandemic. Taiwan owned media outlets receive direct and Democratic Progressive Party. The inci- is also committed to helping carry indirect editorial interference from dent became an international news story out the APEC Putrajaya Vision 2040, Chinese government agencies, as well and the question of who will pay the the summit’s goal of achieving an as Want Want Chairperson and major bill to clean or replace the carpet in the open, dynamic, resilient, and peace- shareholder Tsai Eng-meng. Legislative Yuan is still being debated by ful Asia-Pacific community by 2040, the the two parties. Presidential Office said. KMT PROTESTS In response to the KMT’s recent U.S. PORK efforts, Minister of Health and Welfare DOMESTIC The Chinese Nationalist Party (KMT) Chen Shih-chung noted that pork has begun ramping up its efforts to block containing ractopamine residue consti- NCC REVOKES U.S. pork containing the feed addi- tutes only about 22% of the U.S.’ total CTITV LICENSE tive ractopamine from entering Taiwan pork production. He said that in order The National Communications after the Tsai administration’s announce- to uphold food safety, the government Commission has denied the application ment in August that it would lift the would require country of origin labeling of Chung T’ien Television (CTiTV), a ban on such imports in 2021. In addi- on foreign meat imports. cable news network owned by the pro- tion to its efforts to hold a referendum China Want Want China Times Media on the issue, the KMT encouraged thou- F-16 GOES MISSING Group, to renew its broadcasting license, sands of its supporters to join an annual OFF EAST COAST effectively forcing it off the air. It was the labor protest march in November called Taiwan grounded its entire fleet of first time the NCC had rejected such an the Autumn Struggle. The KMT and the F-16 fighter planes after one went miss- application since its formation in 2006. Taiwan People’s Party (TPP), the party ing off its east coast during a nighttime Explaining the decision to revoke established by Taipei Mayor Ko Wen-je, training exercise in mid-November.

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The plane, flown by air force pilot Col. TAIWAN'S JAN. - OCT. 2020 TRADE FIGURES Chiang Cheng-chih, disappeared from (YEAR-ON-YEAR COMPARISON) radar screens just minutes after taking off

from Hualien Air Base. China/ apan ASEA TOTA Following the disappearance, Black

Hawk helicopters and Coast Guard 122.3 107.6 48 51.7 45.1 43.2 37.5 35.8 234.4 232.5 29.5 Administration vessels were dispatched 28.7 19.4 19.3 280.3 to locate the missing F-16. Search and 271.1 2020 2019 2020 2019 2020 2019 rescue efforts are still ongoing, though the approximate location of the flight .S.A Europe 41.3 data recorder was confirmed 9 nautical 38 29.1 28.5

29.2 26.7 24.8 22.9 miles of Hualien’s coast. The F-16 disappearance follows 2020 2019 2020 2019 2020 2019 T: S Billion another fatal incident experienced by Exports mports SO RCE: BOFT/MOEA Taiwan’s air force less than a month earlier. In October, a Taiwanese F-5 crashed off the island’s east coast, killing transportation system that includes along a route to the Tamsui Fisherman’s its pilot. The incidents have raised ques- another three lines to be built in the Wharf, and includes three new stations. tions about the reliability of Taiwan’s coming years. It stretches 16.71 kilome- older military aircraft. ters and runs from Beitun Main Station in BUSINESS the city’s northeast to the Taichung High TAICHUNG MRT Speed Railway Station in its southwest. STIMULUS VOUCHER HALTS TRIAL RUNS However, a malfunction in the train’s PROGRAM EXPANDED The first line of the Taichung mass coupling mechanism only a week after the The popular triple stimulus voucher rapid transit system opened for a trial run line opened forced the state-owned Taic- program introduced by the Taiwan in mid-November, offering free rides for hung Mass Rapid Transit Corp. (TMRTC) government in July has been expanded the first month of operations to commut- to temporarily halt operations. to include Alien Permanent Residency ers with electronic transportation passes. Meanwhile, a new section of New Certificate (APRC) holders and foreign The new system, called the Green Taipei City’s Danhai Light Rail Transit diplomats. Starting from November 16, Line, is part of a broader initiative by the System began operations last month. The Taiwan’s approximately 13,000 permanent TMRTC to improve Taichung’s public additional set of track extends the service residents and 1,400 diplomatic person- nel can purchase the vouchers, which cost NT$1,000 and are valued at NT$3,000, at post offices across the island. Justifying the expansion, Premier Su Tseng-chang said that many of Taiwan’s APRC holders have deep connections to Taiwan, identify as Taiwanese, or have made significant contributions to the nation. Including these foreign residents in the program is the government’s way of showing its appreciation, he said. When introduced, the stimulus program was initially restricted to Taiwanese citizens and those foreign- ers who had residency through marriage to a citizen. That decision was criticized by many in the foreign community, who argued that foreign residents should be The first line of the Taichung MRT was forced to halt operations indefinitely after an entitled to the same rights and benefits as issue with the connecting device on its trains was discovered. PHOTO: MARTTI CHEN other taxpayers, whether citizens or not.

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An Editor Looks Back

Reflections on my over 50 years in Taiwan, including nearly two decades of service at AmCham.

BY DON SHAPIRO

t was 1969, the year of the Apollo a tightly run one-party state. Chiang 11 Moon Landing and the Wood- Kai-shek had been elected to repeated stock Music Festival. Richard six-year terms as President, chosen INixon was in his ﬁrst year as President indirectly by a now-extinct body, the of the United States, and “Watergate” National Assembly. Like the then Leg- referred merely to the office/apartment islative Yuan, it was dominated by complex in downtown Washington DC. elderly representatives who had held The author as editor of his college news- As part of a Columbia University office since being elected by constit- paper, above, and at Trade Winds in the graduate program in journalism and uencies in mainland China in 1947. 1970s, top left. East Asian studies, I headed that fall for The only suspense at election time was Taiwan, with stops first in Japan and how close to 100% of the National Hong Kong. The plan was to spend a Assembly vote the “Generalissimo” myself, the political environment was year serving as part-time correspondent would receive. frustratingly stagnant. But the dyna- for The New York Times while con- Martial law was still in effect, pro- mism in the economy – then entering tinuing the Chinese-language studies I hibiting the establishment of opposition the “take-off stage” of rapid (often had started on campus. political parties, imposing strict con- double-digit) GDP growth – helped Quickly coming under Taiwan’s trols on the media, and suspending compensate for that shortcoming. In spell, however, I kept extending my such constitutional rights as freedom 1969, the year of my arrival, Taiwan’s stay. Now, more than half a century of assembly. It was the tail end of what export value reached US$1 billion for later, I’m still in Taiwan, wrapping up was termed the “White Terror” period, the ﬁrst time. Today that level can usu- an 18-year tour of duty as AmCham and many of the stories I covered for ally be exceeded in a single day. Senior Director and editor-in-chief of the New York Times, Time Magazine, In that environment, I started to this magazine. and other publications, were trials con- report more frequently about business Some people have asked how I ducted by military tribunals of civilians and the economy. As editor-in-chief of could stay in one country for so long. accused of either pro-Communist or the Columbia Daily Spectator during One reason is that the main things pro-Taiwanese independence activity. my senior year in college, I was nomi- that made Taiwan so attractive – the The proceedings rarely took more than nally president of Spectator Publishing warm-hearted people, endless variety a few hours before guilty verdicts were Co. Inc., but in fact my knowledge of of luscious foods, and breathtaking pronounced. business was extremely limited. scenery – have remained unchanged. At Censorship was rigorous, and inter- I got a crash course when AmCham the same time, in other respects – polit- national publications often arrived with commissioned me in the early 1970s to ically, economically, socially – Taiwan pages missing, passages blacked out, or do a month-long research project on has been transformed so much over the photos of Chinese Communist leaders how U.S.-invested companies contrib- decades that it’s like having lived in sev- stamped with the character fei, for uted to Taiwan’s economic development eral different places. Professionally, I “bandit.” The predominant theme in through employment, cultivation of have felt honored to be able to witness government speeches was the prospect talent, technology transfers, and other and help chronicle those developments, for “glorious recovery of the main- means. I interviewed a score of exec- which were almost all for the better. land.” utives and came away with a new Politically, the Taiwan of 1969 was For a political science major like appreciation of the importance of busi-

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ness enterprises. visas to those countries – Trade Winds office, becoming the first Taiwan-born Some of those companies, including took advantage of my U.S. passport to President. long-gone brands like Philco and send me there on a fact-finding mission. That moment was one of a series Admiral, were assemblers of black-and- As the changed attitude toward of milestones along Taiwan’s path to white TVs for export. The managers Eastern Europe indicated, political becoming a full-fledged democracy. and engineers they trained enabled winds in Taiwan had gradually begun Among many others were the termina- Taiwan to later move steadily up the shifting. A pro-democracy movement tion of martial law in 1987, the total technology ladder to become the world- that led to the eventual creation of the reelection of the Legislative Yuan in class IT production center it is today. Democratic Progressive Party had begun 1991, Lee Teng-hui’s election in 1996 to coalesce, and partial Legislative Yuan as the first President chosen in a direct Trade publications elections took place in the 1970s. popular election, and the first transfer In 1985, at a time when rumors of political power following the DPP’s The business connections deep- were circulating that President Chiang Chen Shui-bian victory in 2000. ened when I became editor-in-chief of a Ching-kuo’s middle son was being When the Ministry of Foreign new weekly called Business & Industry groomed to succeed him, thus con- Affairs last year presented me with a Taiwan in 1973, and then jumped in tinuing the “Chiang Dynasty,” Time Friendship Medal of Diplomacy, Min- 1975 to the competing Trade Winds Magazine was applying for an interview ister Joseph Wu especially cited my Inc., where my title was president (as with the President. The government reporting in those decades on Taiwan’s with many local companies, the real wanted us to submit our questions in political development, noting that it boss was the chairman). In those years, advance, and I agonized over whether was among the resources he relied on Taiwanese manufacturers were demon- asking one about the potential succes- in doing his doctoral research at Ohio strating remarkable skill in turning out sion would be considered too sensitive State University. quality products at attractive prices for and scuttle our chances for the inter- Rather than deserving a medal, I the export market, but they were much view. Supported by Southeast Asia consider it a privilege to have been less adept at marketing. Trade Winds Bureau Chief Sandra Burton, I not only present with my notebook as Taiwan was the best (in my purely objective included the question but put it at the made history through its peaceful opinion) of a spate of publications that top of the list. evolution from authoritarian rule sought to close that gap by introducing As it turned out, Chiang seemed to to democracy, and from devel- Taiwanese industry, companies, and welcome the opportunity to clear the oping-economy status to tech-driven products to a readership of importers air. He told us flatly that no member of prosperity. worldwide. the Chiang family would be considered In the absence of a well-devel- to succeed him and that the process AmCham beckons oped outsourcing infrastructure, Trade would follow Constitutional provi- Winds was forced to perform many sions. The statement made headline When Trade Winds was bought needed functions inhouse, including news in Taiwan. When Chiang passed out by Singaporean interests in 2001, advertising copywriting, design, and the away in 1988, Vice President Lee Teng- I served for a while as Senior Editor of photography of product samples. At hui indeed acceded to the highest the government publication now titled one stage, the company even operated its own printing plant. At its peak it had nearly 200 employees and published two tabloid- sized weeklies, a monthly magazine, and around 10 annual directories, including a Taiwan Bicycles & Parts Buyers’ Guide of more than a thousand pages. The government presented the Trade Winds Weekly with a Golden Tripod award for a series of reports on Taiwan’s “Ten Big Construction Proj- ects” of the 1970s, which included the Taoyuan airport, North-South Freeway, and China Steel complex. And when the Taiwan government announced in 1980 that it was open to starting trade relations with five Eastern European countries that it had previously spurned as too Communist – but Taiwanese Accompanying Time Magazine's Southeast Asia Bureau Chief, Sandra Burton, for an nationals were not yet able to obtain interview with President Chiang Ching-kuo in 1985.

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Taiwan economic relationship. One of the subjects we have focused on most intently in recent years has been Tai- wan’s transition away from nuclear energy and whether renewable sources such as wind and solar power would be able to ﬁll the gap in time. Other important topics have included the demographic challenge posed by Taiwan’s aging society, the strengths and weaknesses of Taiwan’s universal healthcare system, and the government’s initiative to promote the development of innovative industries. A frequent editorial theme has been the potential benefit for both the U.S. and Taiwan of entering into a Bilateral Trade Agreement. One of my proudest moments was at the 2018 Hsieh Nien Fan banquet when I heard President Tsai include the fol- In presenting Shapiro with a Friendship Medal of Diplomacy in November 2019, Foreign lowing in her keynote address: “Don Minister Joseph Wu praised his “remarkable contributions over the years in strengthen- Shapiro and his team at Taiwan Busi- ing relations between Taiwan and the United States.” ness TOPICS have been fantastic. The in-depth articles on a range of Taiwan the Taiwan Review. But on May Day, U.S. governments, and participating in economic issues – whether it’s health- 2002, I was invited to lunch by then a total of 17 “Doorknock” missions care, labor, or finance – have been AmCham president Richard Vuylsteke, to Washington, D.C. TOPICS was influential and insightful. They have a longtime friend and fellow member of already an excellent publication when been a valuable source of feedback for an eating-out group indelicately called I took the helm, and I hope that I was our policymakers.” the Wednesday Night Old Farts. Before able to make it even better. Among the Another was when former U.S. the first dishes arrived, he had offered changes: addition of the annual Wine Under Secretary of Commerce Frank me a job as editor-in-chief of TOPICS & Dine and Travel & Culture spe- Lavin, speaking at an AmCham lun- and by halfway through the meal he cial issues, a change in name from the cheon, recalled that whenever he was had my commitment. overly generic TOPICS to the more asked for advice by AmChams around One reason I was quick to accept descriptive Taiwan Business TOPICS, the world on how to promote their is I had previously been an AmCham and the launching of TOPICS Online policy agenda, he would hand them member through Trade Winds, which to help spread the magazine’s reach a copy of the AmCham Taipei White besides publishing its own periodi- more widely. Paper and say “This is what you should cals was also the Taiwan agent for The annual Taiwan White Paper be doing.” various U.S. trade magazines and exhi- issue, presenting the Chamber’s rec- I am also gratified that in a market bitions. Beyond that, I had greatly ommendations to the Taiwan and U.S. that has never received sufficient inter- respected AmCham’s role at the time governments on how to improve the national media attention, TOPICS has of U.S. “derecognition” in 1979-1980, business environment, grew thicker and been instrumental in providing infor- when the Chamber helped frame what thicker over the years – not because mation to the world about this vibrant became the Taiwan Relations Act and of increased regulatory problems but economy and society. In the process, ensured the smooth survival of U.S. reflecting the increased number of we have helped sustain a community of community institutions. AmCham committees. In fact, we were freelance writers who are also available I will always be indebted to Richard able to make significant headway on to write for other publications. for bringing me onboard at AmCham. a number of issues of concern to our Although December 31 marks my This will be the 222nd issue with my industry members. formal retirement, I will continue to be name on the masthead, and it has been In terms of content, the monthly involved with AmCham and TOPICS a magnificent experience – working TOPICS has sought to provide readers in the capacity of Senior Adviser. I look with a team of talented colleagues on – Chamber members and non-members forward to a new chapter in assisting the AmCham staff, getting to know alike – with well-researched, read- the Chamber in its mission of making the dedicated business executives in able information that helps them better Taiwan an ever-better location for the Chamber membership, interacting understand the workings of the Taiwan investment by U.S. and other multina- with key officials in the Taiwan and economy and the status of the U.S.- tional companies.

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Don.indd 14 2020/12/6 下午11:35 VALEDICTORY Some Input from Well-wishers

Under Don Shapiro’s leadership, Taiwan Business TOPICS from Don and stuck them to every wall in my home. I imme- has long been the go-to place for detailed, objective informa- diately started to feel better. tion on the Taiwan economy. — Mark Caltonhill, TOPICS contributor — Richard Bush, The Brookings Institution and AIT Chairman (1997-2002) Don has been so valuable to AmCham for so long, and made such outstanding contributions to Taiwan, that it is grati- One of my best decisions when president of AmCham Taipei fying to know his retirement is only partial for now. Even was to hire Don as editor-in-chief of TOPICS. For decades, before Don joined AmCham, as a journalist he helped spread Don has been an accurate, insightful, and reliable journalistic AmCham’s message to the world. I ﬁrst met Don in January resource for information about Taiwan’s social, political, eco- 1979 when he arranged for me, as AmCham’s newly elected nomic, business, military, and cultural developments. In an chairman, to be interviewed by the American TV network era where “fake news” is in the ascendency, Don is a pole star ABC, giving us an important early opportunity to advocate to guide other journalists who take the highest standards and policies that ultimately were included in the Taiwan Rela- traditions of journalism seriously. tions Act. — Richard Vuylsteke, East-West Center president, AmCham Taipei president (2000-2008) Don Shapiro has made TOPICS the gold standard for bilin- gual publications of international business organizations. More than that, Don is the chronicler and true historian of We’ve all heard that Don knows everyone in Taiwan, and the American experience in Taiwan. Those of us who have everyone in Taiwan knows Don, but years ago, while we were known and worked with Don will always be grateful to him. in Washington, D.C. on Doorknock, I learned just how wide — Robert Parker, AmCham Chairman (1979-1980) Don’s circle of inﬂuence really is. If you walk around Wash- ington long enough, you’ll pass a famous person from time to time. As our Doorknock group was walking down the street, Don, I am grateful for the advice, encouragement and insight we passed a world-famous Pulitzer-Prize-winning journalist. that you shared so generously for so many years. Your life I kept walking (not wanting to stare) until I heard, just over and work are an inspiration. You’ve shown how a passion my shoulder, “Don, how are you doing? What are you doing for Taiwan can translate into a lifetime of contributions, as in Washington?” you've boosted the bilateral relationship for decades in so — Paul Cassingham, AmCham Chairman (1999-2000) many ways.

Your willingness to step up to any challenging task made In the early 00’s when I was scrounging to make a living AmCham’s work shine year after year, one initiative after the writing mostly forgettable reviews and travel articles for Eng- other. You’ve done this quietly, behind the scenes, but for lish-language papers in Taiwan, Don Shapiro was publishing those of us who’ve seen what you do and how dedicated you my longer, more personal (and by-and-large funnier) articles are, our appreciation is limitless. in TOPICS. Some of those early stories would eventually find — Dan Silver, AmCham Chairman (2016) their way into my first book, Vignettes of Taiwan, which led to my being hired to write two Lonely Planet: Taiwan guides (and a slew of others). Don always encouraged my sense of Don is a true storyteller who always articulates with insight humor, so if you like my work for TOPICS, he’s the one to and has helped capture key events related to the development thank. (But if you don’t, blame me – I can take it.) To call of U.S.-Taiwan relations and Taiwan’s miraculous economic Don Shapiro the most formative editor in my career as jour- growth. He is regarded by many government officials in the U.S. nalist and writer is no exaggeration. and Taiwan as a reliable source for gaining an insider’s view. — Joshua Samuel Brown, TOPICS contributor — Andrea Wu, AmCham Chairman (2004) and President (2008-2017)

It is difficult to find words strong enough to express my gratitude to Don for his encouragement and friendship over Don, thank you for your tremendous contribution to U.S.- almost two decades. Perhaps one short anecdote will suf- Taiwan ties over so many years! Personally, I've looked fice. Like many writers, I suffer from bouts of doubt about forward to every issue of TOPICS since I left Taiwan over a my craft, and during a worse-than-usual episode, I woke one decade ago because it has kept me connected to my favorite morning to find that the previous evening I’d printed 20 A4 Foreign Service post and reminds me of friends like you. sheets with a single sentence of encouragement from an email — Robert Wang, Deputy Director of AIT (2006-2009)

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Favorable Prospects for Taiwan’s Industry and Economy in 2021 2021

he global economy will be faced Oxford University’s Internet Institute, semiconductor industry supply chains, with a number of potential risk who said: “The world is in the midst of a and a digital application ecosystem. As a T factors in 2021, including a transformation from from 20th century result, since most members of the public renewed coronavirus spike in Europe financial capitalism to the data capitalism were already extremely familiar with and the U.S., a breakdown in financial of the 21st century. Future markets will no digital technology, the government was stimulation policy negotiations in the longer be determined by money, but rather able to use digital technology to play a U.S., and continued further deterioration by data.” powerful role in controlling the epidemic, in U.S.-China relations. Nevertheless, This year’s COVID-19 outbreak spread building on the experience Taiwan had the latest World Economic Outlook infection throughout the world, causing gained in 2003 in combating the SARS report from the International Monetary a sharp decline in economic growth as epidemic. Fund (IMF), released on October 13 and countries turned their attention to fighting First, the medical and health authorities entitled “A Long and Difficult Ascent,” the pandemic. The resulting business utilized global positioning system (GPS) estimates global economic growth in 2020 model of encouraging social distancing information on each person’s mobile phone of -4.4%, a slight improvement from the contributed to ushering in the age of the to track the recent contacts of people -4.9% projected in June, and a growth commercial digital economy and data confirmed to have contracted COVID-19, rate of 5.2% next year. capitalism. so that they could be immediately placed in When asked for his professional Taiwan is a key part of the global quarantine. Next, digital technology was opinion regarding the IMF’s forecast technology supply chain, occupying a employed to establish a rationing system regarding Taiwan’s economic growth, crucial portion of the manufacturing link. for face masks. Leich Capital CEO Mark Lin refers to It has a worldwide reputation Whether because of the success in the remarks two years ago by his good friend, as a science and technology island, prevention and control of the COVID-19 Professor Viktor Mayer-Schönberger of supported by mature high-tech industries, pandemic or the high degree of stability

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of the data technology applications that negative economic growth rates! and beverage, medical equipment, undergird the Taiwanese economy and As to which industries in Taiwan biotechnology and pharmaceuticals, its trade connections with the rest of the will have the best investment potential renewable energy, semiconductors, world, the IMF in October substantially in 2021, Mark Lin believes that the digital software, and communications readjusted its estimate for Taiwan’s 2020 COVID-19 phenomenon will continue to have benefited from the expansion of economic growth from the -4.0% forecast affect the world and Taiwan’s economy demand from Taiwan’s domestic market in June to 0%. That is an outstanding until the fourth quarter of next year. and the growth of global supply chains, performance in a year when countries However, industries such as energy, making them the most attractive potential around the world are generally showing transportation, hotels, logistics, food industries for investment.

「看好2021年台灣產業經濟發展」

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TELECOM

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TAIWAN’S TELECOM INDUSTRY ENTERS THE 5G ERA

Following a knockout spectrum auction that ended earlier this year, Taiwan’s telecom operators have moved quickly to develop nationwide 5G networks, roll out 5G-specific applications and content for consumers, and begin partnering with other industries on a wide range of vertical applications.

BY JEREMY OLIVIER

020 is the Year of 5G in Taiwan. and other entertainment services. They dent of research at the market research While it may seem like old news to are also exploring 5G-enabled solutions firm TrendForce, construction of these some, 5G’s potential is still gradu- for enterprise and government clients in base stations can cost around NT$2.5-3 2ally being unlocked across the island and areas such as self-driving vehicle technol- million (US$87,000-100,000) each, among its various industries. The tran- ogy, smart healthcare, and smart manu- three times as much as building a 4G sition to this new generation of mobile facturing. base station. technology is being led for the most part Taiwan’s “big three” telecom oper- And while some in the industry by Taiwan’s three biggest telecom opera- ators, as well as two other major firms, initially felt some pressure from the tors – Chunghwa Telecom, Far EasTone, took part this year in one of the world’s Taiwan government’s zealous push to and Taiwan Mobile. most expensive spectrum auctions, develop an island-wide 5G ecosystem fast Yet today’s telecommunications are no bidding a combined US$4.7 billion on and early, the major players were off to longer just about mobile technology or spectrum in the 3.5 GHz, 28GHz, and the races as soon as the spectrum auction merely connecting people to one another. 1,800MHz frequency bands. Adding to was complete. Chunghwa Telecom has Telecom companies and their part- those enormous costs, these companies announced plans to construct 3,000 5G ners are now focusing a greater amount must now source and deploy thousands base stations by the end of 2020, while of attention to consumer applications, of 5G base stations around the island. Far EasTone and Taiwan Mobile are each such as a wide range of video, audio, According to Kelly Hsieh, vice presi- aiming for 2,000 – with thousands more

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TELECOM

says Lin. “But by August, more than 10 handsets had been introduced, and our 5G signup grew more than 20% from the first month.” Lin says that because Taiwan was not part of the initial batch of countries that adopted 5G technology, equipment costs were about half that incurred by, for example, South Korean telecom operators. “We could have waited a while longer to get an even lower rate, but then you risk being too late to the market,” Lin says. While the timing has worked out in some respects for Taiwan’s telcos, they have also been forced to cope with complicating factors arising from another earthshaking event. The early stages of Taiwan’s roadmap for auctioning off spectrum and building out 5G networks happened to coincide with the outbreak and rapid spread of COVID-19 this year. In a written statement to TOPICS last Chunghwa Telecom President Kuo Shui-yi (center) poses with popular Taiwanese month, the National Communications band Mayday, the official spokesperson for the company’s 5G-enabled entertainment package. Commission (NCC), the government PHOTO: CHUNGHWA TELECOM agency responsible for regulating the island’s telecom industry, said that tele- planned for the next two to three years. even though there was still some concern com companies around the world have Speaking to Taiwan Business TOPICS right after the auction concluded, the suffered from the delayed launch of new last September, Taiwan Mobile Presi- process had turned out to be relatively mobile phone products due to disrup- dent Jamie Lin said that the government’s well-timed. tions in the supply chain. expedited timeline for 5G seemed rushed “In the first month after we launched In addition, the introduction of new and might raise issues for service provid- our 5G service, there were only two 5G standards and regulations has been ers scrambling to lock down resources or three 5G-compatible phones on the delayed as technical exchanges have and begin laying plans to deploy their market, so I’m sure many in the indus- been canceled and meetings of interna- networks. But he noted this October that try were feeling it was a bit too early,” tional standards-setting organizations

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forced to go online. And the substantial moving ahead with its goals of building is one of the few countries that is still able drop in international travel has resulted a comprehensive 5G ecosystem. Su Wei- to carry out large-scale trials and verify in a loss of revenue from international gan, an industry analyst at the Market the effectiveness of 5G.” roaming services and short-term prepaid Intelligence & Consulting Institute, a SIM cards. government-supported Taiwan think Reaching consumers Nevertheless, the NCC points out, tank and IT research organization, notes changes to the nature of work and life- that due to Taiwan’s insulation from the As 5G becomes more universally style brought on by the pandemic – such pandemic’s most disruptive effects, its available in Taiwan, numerous consumer as remote working, education, and tele- ICT industry has been able to continue trends are starting to develop. Of most conferencing – have slightly increased operating normally. immediate relevance to Taiwan’s mobile demand for broadband network services. “5G infrastructure construction in users are the 4K quality streaming video, Taiwan’s effective handling of the Taiwan has managed to proceed smoothly XR content, super high-quality music COVID-19 pandemic and the grad- without much disruption,” Su says. Also, and audio, and cloud-based gaming now ual decoupling of ICT supply chains while testing of 5G applications in many available on their 5G mobile devices via from China have also presented some parts of the world has been hindered or their chosen service provider. advantages for the island economy in stalled due to the virus’ spread, “Taiwan All these applications were unthink- able until now, says T.Y. Yin, executive vice president of Far EasTone’s Consumer Business Unit. 4G’s limited bandwidth would not allow it. But the light- ning speed and low latency (the time lag before data is transferred) afforded by a 5G connection provides for a seamless user experience with no frustrating delays or pauses. To demonstrate this point, Yin demonstrates the company’s multi-view video streaming service offered through its popular friDay Video platform. Much of the content featured on this app is from South Korea, part of a memorandum of understanding signed between FET and Korean telecom service provider KT Corp. With the multi-view func- Far EasTone’s new 5G entertainment services for consumers include the multi-view tion, users can watch a full-frame video function, accessible through its friDay streaming video platform. PHOTO: FAR EASTONE of their favorite K-Pop group and choose

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focused views of their favorite member of to explore the VR world, or they can “Lossless music offers a much differ- that group. slip it into a separately sold headset to ent experience for the listener; the To allow for this kind of viewing, get a more immersive effect. (More on sound is exactly the same as what you Yin says, production of the video needs Taiwan’s XR industry in the accompany- would hear if you were listening to it in to incorporate several different cameras ing article in this section). person,” says Chunghwa’s President Kuo that follow each performer. More impor- 5G entertainment options aren’t just Shui-yi. “This kind of listening expe- tantly, though, it requires 5G connectiv- limited to video. For music lovers who rience will become increasingly more ity to transition between different points have dealt for years with the reduced universal as more 5G phones become of view because “the magnitude of data quality of digitalized music, which must available.” traffic is five times or six times larger undergo compression to minimize file The other major consumer trend than that needed for just one viewpoint,” size and thus data traffic, 5G connectivity made possible with 5G is cloud-based he explains. can now allow mobile users to enjoy loss- gaming. Until recently, playing high- XR, or extended reality, is another less streaming music on their phones. quality, state-of-the-art games required area that is being driven in part by the To explore this emerging area, Chun- a console and game cartridges – or, later, introduction of 5G in Taiwan. FET’s ghwa Telecom has teamed up with local digital files downloaded to a computer or friDay platform now includes a virtual music streaming company KKBOX to gaming device. However, cloud gaming reality service that also relies heavily on offer KKBOX Hi-Fi, a lossless stream- allows mobile users to play such games content from its Korean partner. Users ing service featuring over 10 million orig- immediately on their phones without can watch the content directly on their inal-quality songs in 16bit/44.1Khz or needing to purchase extra hardware or mobile device, moving the phone around 16bit/48Khz FLAC formats. having to wait for long download times. Working with the American graphics processing unit (GPU) designer NVIDIA, Taiwan Mobile has brought the company’s GeForce Now cloud gaming service to the Taiwan market, offering its subscribers plans starting from NT$299 (US$10) per month. According to NVID- IA’s website, GeForce Now boasts over 70 titles, works across a wide range of mobile devices, laptops, and desktop computers, and can be paired with a collection of controllers, gamepads, keypads, mice, and routers provided by the company’s partners. Using this system without interrup-

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tion “definitely requires a 5G connection,” says Lin of Taiwan Mobile. “Whereas before, if you wanted to play cutting-edge games, you needed to have a high GPU in your end device – either your mobile phone or PC – but now with GeForce the GPU is a service on the cloud.” He adds that “Since this service is offloading all the computing to the cloud, it doesn’t drain your battery or make your phone hot, and you get to play all these great games for around US$10 a month.”

Taiwan Mobile President Jamie Lin and Formosa Plastics Transport Chairman Chen Branching out Sheng-kuang stand in front of 5G-powered autonomous vehicles, a collaboration between the two companies and self-driving transport startup iAuto. As a mobile network technology, 5G PHOTO: TAIWAN MOBILE goes well beyond traditional telecommunications services and consumer uses. teamed up with self-driving transport low latency, its shorter signal poses some The applications are increasingly far startup iAuto to produce 5G and Cellular logistical issues for widespread use. reaching, and more and more industries V2X-powered autonomous vehicle tech- For iAuto’s founder, Kang Li, ensuring are becoming involved. nology for commercial and government that his company’s solutions can be safely “It’s no longer just about phones,” clients. The technology will be deployed implemented means being realistic about says Taiwan Mobile’s Lin. “It’s also about at the Chang Gung Health and Culture the limitations of 5G. designing a network for the IoT industry.” Village, a retirement community operated “5G is still in the early stages, and we He notes that Taiwan’s place as one of the by the Chang Gung Memorial Hospi- haven’t found a complete solution that frontrunners of 5G buildout and penetra- tal, an affiliate of the Formosa Plastics can be adopted at a reasonable cost and tion will open opportunities for a variety Group, iAuto’s other major partner. that can also enable a sustainable busi- of new IoT-powered smart industries. Safety has been one of the major ness model,” says Li, who serves concur- “Hopefully, Taiwan can be one of concerns when it comes to self-driv- rently as a full-time board member of the the leading economies and end up creating vehicle technology. In the U.S., some Taiwan Transportation Safety Board. For ing opportunities to export some of these fatal crashes have resulted from latency one thing, to make safe nationwide self- industries that we end up building on top issues that tech firms experienced with driving transportation a reality, Taiwan of the 5G network,” he says. the communication systems in auto- will need to wait for the debut of a tech- For example, Taiwan Mobile recently mated vehicles. Although 5G boasts very nology known as multi-access edge

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computing (MEC) to reduce latency and well as with fintech companies to apply more competitive,” he says. “For exam- thereby bolster C-V2X's practicality. 5G toward strengthening Taiwan’s finan- ple, they can more quickly launch their “This is why, for now, we are focus- cial services industry. goods and services on the market, reduce ing our business model on closed or semi- Kelly Hsieh of TrendForce says devel- their costs, and become more effective closed environments,” says Li. In addi- opment of the 5G ecosystem should and more efficient.” tion to its project in the Health and make this kind of cooperation more Both Chunghwa and Far EasTone are Culture Village, iAuto has also been common. “Incidentally, one of the more seeking to switch half of their current contracted to install its self-driving vehi- important added-value aspects of 5G subscribers to 5G within the next three cle modules on trucks that transport communications is that it allows indus- years, enticing them with both their new hazardous substances inside Formosa tries to streamline their vertical integra- services and competitive rate plans. Plastics’ Mailiao petrochemical complex. tion efforts, in turn facilitating a closer Kuo expresses optimism about this It is also currently participating with partnership between related industries,” ambitious goal. “With 4G, it took us Taiwan Mobile in a bid to develop the she says. around four to five years to reach 100% island’s first “smart harbor,” part of a Still, Chunghwa’s Kuo says that one adoption and coverage,” he says. “But land reclamation project in Kaohsiung of the major challenges his company has with 5G, I think it will be even shorter initiated by Evergreen Marine Corp., the faced is persuading companies in each because 5G applications are more attrac- giant Taiwanese shipping line. industry of the benefits that 5G can bring tive and far-reaching than 4G.” Chunghwa Telecom is also explor- them and explaining how the new mobile Getting more people on board is ing the potential of 5G to enhance its technology can align with their business mainly a matter of word-of-mouth, says corporate partnerships. The company is and growth models. Kuo. As more mobile users adopt 5G, currently cooperating with local univer- “The trick is convincing these compa- they’ll persuade others to join as well. sities and international companies to nies that adopting 5G and the various “The same goes for governments and develop smart healthcare solutions, as applications it enables will make them enterprises.”

MOVING TOWARD OPEN NETWORKS

his August, the Ministry of processes, creates economies of scale, and companies, Cisco provided hardware and Economic Affairs (MOEA), in reduces the total cost of ownership of software for the network’s data center partnership with U.S. tech multi- mobile networks. architecture, as well as packet core soft- nationalT Cisco Systems, announced the “Under the old model, Taiwanese ware and cloud technology. launch of a 5G “open lab.” The initia- companies had no clear opportunities to Another major telecom operator tive creates a platform where Taiwan- get involved in network buildouts,” says that has recently undertaken efforts to ese suppliers can apply to develop a Cisco Systems Taiwan Regional Manager develop an O-RAN network is AT&T, a range of 5G-related hardware and soft- Jeffrey Wang. “But through this project decision that has set it apart from other ware, including small-cell base stations, with the MOEA, we can begin erecting U.S. service providers. The U.S. Federal IoT devices, and network switches, via our 5G packet core software and link- Communications Commission has Cisco’s cloud-based mobile network. ing it with small-cell base stations being expressed hope that this model may also The purpose of the open lab is produced by Taiwan manufacturers.” fill the gap left by the Trump administra- to forge a local supply chain for 5G He notes that several local firms have tion’s decision to ban Huawei network network equipment and ultimately applied to participate in the lab, some of equipment. present a more competitive, cost-effi- which have already been accepted. Observers say that Taiwan’s exist- cient alternative to the current stan- Cisco already has experience with ing strengths in the OEM/ODM manu- dard of expensive, proprietary systems developing open infrastructure for 5G facturing of ICT products make it a good supplied by a few major telecom equip- networks. In 2018, it partnered with environment to begin cultivating a local ment providers. Proponents of the open Japanese conglomerate Rakuten’s mobile O-RAN industry. infrastructure – also known as O-RAN, carrier subsidiary to develop the compa- “Taiwan has the ability to supply 5G or open radio access network – say that ny’s greenfield mobile network in Japan. user terminals, 5G base stations, transit simplifies operations and procurement Cooperating with over a dozen other mission networks, 5G nuclear networks,

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and other hardware devices built for the more for our services – people wouldn’t Still, in Wang’s view the time to get 5G open network architecture,” says Su pay for that.” started is now. “We cannot wait,” he Wei-gan, an analyst at the semi-official Nevertheless, Lin and others say they says. “If we don’t do it at this moment, Market Intelligence & Consulting Insti- can see a change taking place within the we won’t be ready when the time comes. tute. “For example, Taiwan has compet- next five to ten years, if not less. Chun- What we need to do now is begin attract- itive production capacity in complete ghwa Telecom President Kuo Shui-yi says ing software talent, accumulating expe- machines or components for use in serv- that companies will likely start recon- rience, and developing necessary tech- ers and networking equipment.” sidering the overall composition of their niques and skills.” Yet none of Taiwan’s telecom oper- networks over the next few years as To generate more enthusiasm for the ators is considering an open architec- standalone 5G networks – those not built project, Wang suggests providing incen- ture for their own 5G networks, at on top of the existing 4G/LTE infrastruc- tives to companies willing to try the least not yet. ture – become the norm. O-RAN model. “I think that O-RAN is definitely the Wang of Cisco says that for the time “For example, incentivize them to future of communications systems tech- being, telecom operators may opt to use a certain number of locally produced nology, but it hasn’t gotten to the point use O-RAN for their enterprise clients’ base stations within a three-year period,” where its price-performance ratio is private networks, which are smaller in he says. “The government has collected comparable with the existing systems to scale and can allow for a wider margin of so much money from these service justify mass deployment,” says Taiwan error. “It’s kind of like training troops,” providers. Giving some of it back in the Mobile President Jamie Lin. “If we he says. “Once they’re done with the form of subsidies to jumpstart this trans- adopted it now, our costs would be so training and see that there’s no prob- formation could be a very good move.” much higher than our competitors. We’d lem with this new system, they’ll be will- be putting ourselves in an awkward ing to start trying it with their public — By Jeremy Olivier position because we couldn’t charge networks.”

TAIWAN BLAZES NEW TRAILS WITH EXTENDED REALITY

Taiwan has already begun forging a reputation as a producer of VR creative content. Now the introduction of 5G is driving the development of its VR industry to new levels.

BY LOUISE WATT

aiwan-produced works made The early results have been promis- the faster download and image display with virtual reality (VR) have ing. In three of the four years since the speeds – showcased through VR film become a regular feature at inter- prestigious Venice Film Festival started a works, virtual concerts, and sports events nationalT film festivals. Industry promot- competition for VR films, Taiwan-made – will entice more people to sign up for ers see this development as confirming works have been nominated in that cate- 5G services. that Taiwan has become one of the top gory. In 2019, Taiwan had the third most “5G brings users a brand-new expe- players in extended reality (XR) content, nominations in the VR category – seven rience via its features of high bandwidth which includes VR and other forms of out of a total of 39 works – behind only and low latency,” says Chen Ming-shih, computer-altered reality. the U.S. and UK. president of Chunghwa Telecom’s Mobile Part of Taiwan’s success in this area is Now the introduction of 5G services Business Unit. “In the past, people often due to its technological ecosystem, which in Taiwan is driving interest in the indus- experienced dizziness or discomfort when has helped it attract international film- try to new levels and pushing the island’s viewing VR content. The reason was makers and production companies for telecom operators to develop their own blurred images or unstable video stream- cooperation on creating XR content. XR content. These companies hope that ing – not because the resolution of the

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September. Curious movie-goers could don headsets and watch films – both those that require viewers to stand up and move their bodies to interact with the story, and those where they sit down and swivel around a 360-degree environment. One Taiwanese offering was the short VR film Jiou Jia (Home), directed by Hsu Chih-yen, co-director of the 2018 hit film Dear Ex, and produced by Kaohsiung Film Archive. It was featured in the “Best of VR – Out of Competition” section and is a snapshot of life in a Kaohsiung family home. The viewer is given the role of the disabled and mute grandmother, whose family visit and talk to her, before leaving her alone again with her maid. Liz Rosen- thal, Venice Film Festival programmer, called Home “a very moving portrait of old age and isolation.” Three Taiwanese directors talk about their VR works during an online panel discussion held in Taipei as part of this year's Venice Film Festival. From left to right: Tang The works were screened in the Chi-Chung, director of The Sick Rose; Hsu Chih-yen, director of Jiou Jia (Home); Ambassador Theater on Changchun and John Hsu, director of Great Hoax: The Moon Landing. Road, which has started Taiwan’s first PHOTO: LOUISE WATT commercially operated VR cinema in partnership with HTC. video wasn’t good enough, but because renowned directors, such as the multi- Taiwan has garnered a strong repu- the internet speed wasn’t fast enough.” award-winning Tsai Ming-liang. His tation for VR films over the past two However, with new VR devices becom- 55-minute The Deserted is a 360-degree years thanks to government support, the ing lighter and more powerful and 5G film centered on a man who lives in a island’s advanced tech ecosystem, and a connection allowing for smoother video dilapidated house and is visited by the free creative and artistic environment. quality, it will now be possible to watch ghosts of his mother and partner. Viewers Not least, Taiwanese filmmakers and 8K VR content comfortably, Chen says. are placed right in the middle of the vari- companies have been able to benefit from Extended reality (XR) is an umbrella ous scenes to observe the characters and experience and expertise via international term covering all forms of computer- their environments. collaborations – particularly with France, altered reality, such as virtual reality Liu Szu-ming, president of HTC Vive which was previously seen as a pioneer (VR), augmented reality (AR), and mixed Originals, says hardware such as the VR in developing VR cultural works. There or merged reality (MR). VR is a complete headsets primarily used by gamers has have also been collaborations with the immersive experience, usually involv- been driving the XR content industry. He U.S., Japan, and Argentina. ing a special headset that allows viewers cites the American VR company Oculus The Kaohsiung Film Archive, with to enter a 360-degree cinema experience. as an example and says that Vive plays a funding from the Ministry of Economic AR, accessible on smartphones, overlays similar role in Taiwan. Affairs and Ministry of Culture, set up virtual objects onto a real-world environ- “However, the U.S. is very big Asia’s first immersive VR theater in 2017. ment. MR combines elements of both VR compared to Taiwan, so it would help if The Kaohsiung VR Film Lab also funds and AR, enabling real-world and virtual the creators here were more concentrated” VR projects. objects to interact. and could share resources, says Liu. The Ministry of Culture established In recent years, Taiwan has been “At the beginning, the market isn’t Taiwan Content Creative Agency, or developing hardware and software for big because there aren’t as many people TAICCA, last year to promote the devel- XR, such as HTC’s VR headsets that using these devices, so we have no opment of Taiwan’s cultural content were first used for gaming. Filmmak- way to really build an ecosystem,” Liu industry. The government aims to raise ers and companies including HTC are says. “Our strategy is to achieve success the global profile of Taiwanese works, as aiming to use technology to deepen the at international film festivals, and then part of its attempts to play catch-up with film-going experience. more filmmakers will be willing to invest. South Korea’s cultural industries. HTC Vive Originals, the compa- They want to invest in VR because they XR content is one of the areas that ny’s content production brand, has been hope that Taiwan and their creative TAICCA is promoting so that it can around since 2017. Several of its works energy can be seen.” become a “prominent art form in the have been shortlisted in the Venice Film Taipei was one of 15 cities around market,” says Hu Ching-fang, president Festival’s VR section. They include the world chosen to screen VR films as of TAICCA. productions by both emerging and part of this year’s Venice Film Festival in She says that Taiwan’s success with

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VR filmmaking “came as a surprise to At a press conference, Deputy Foreign VR headset and VR world. In May, it us,” and that the fledgling VR industry Minister Tseng Ho-jen donned a head- launched what it billed as the world’s first had fed off the pre-existing technology set and watched a virtual version of the 5G mobile VR headset to support 5G ecosystem in Taiwan. former vice president, Chen Chien-jen, technology, plus the world’s first social “It just happened because we have and medical and quarantine inspection VR platform designed for mass market all the right technology companies here, staff, explain the steps they took. “We users. In this new environment, people and we have creators, as well as a tradi- trusted the people, and the people trusted can create their own avatars and interact tion of nourishing and encouraging us,” Chen said in the film, extolling the with friends, colleagues, or strangers. high art forms,” Hu says. She adds that government’s transparency. Attracting consumers to watch and the Venice Film Festival’s selection of pay for XR content is one way Taiwan’s seven Taiwanese VR films for last year’s Entering a new phase telecom companies hope to get back competition was especially eye-opening some of their hefty 5G investment. While for her. The introduction of 5G in Taiwan in specific 5G applications may change Among those films was Gloomy Eyes, June has accelerated the development of the way many industries work in years a VR animation about a little girl and a XR content. to come, companies like Chunghwa are zombie-child in search of the sun. It was Local telecom companies are now also expecting ordinary consumers to adopt produced by HTC Vive Originals and getting in on the act. Chunghwa Telecom 5G services and drive initial growth. French production company Atlas V. plans to work with Verizon Media, part “At the initial promotion stage, we Aurélien Dirler, a consultant at of New York-based Verizon Communica- will still prioritize content that is likely to TAICCA, says that Taiwan’s strength tions Inc., to develop AR and VR sports- resonate in the consumer market,” says could also be seen in its presence at large related content. It is also using 8K live Chen. “Entertainment content is currently film markets, such as the one held each broadcast technologies to stream virtual our main focus of development.” year alongside the Cannes Film Festival. concerts. VR content is a smart way for telecom “In the Cannes market last year, “Through 5G, remote concertgoers companies to demonstrate 5G services Taiwan was the third country by the can see their favorite performers from a to a skeptical public, says Jimmy Cheng, number of attendees after France and the short distance away from various view- director of content at Digital Domains, a U.S. and that was something very new,” points, just like being in a real perfor- visual effects company. he says. “Four years ago, Taiwan was mance,” says Chunghwa Telecom’s “I think over 80% of the people in only about VR hardware, but in just a Chen. “XR content is absolutely the easi- the world still don’t understand why we few years it has become a major player est way for users to feel the power of need 5G,” he told a Taipei panel that for content.” 5G.” was part of the Venice Film Festival in This year, TAICCA has launched Both Chunghwa and Taiwan Mobile September. Our current home Wi-Fi is immersive content grants to encour- are collaborating with XRSpace, a quite sufficient for us to do our work, age co-productions between Taiwan- company founded by former HTC CEO upload and download, and stream most based and foreign companies. In June, Peter Chou that has created its own of the content we want to watch, he said. it awarded a total of NT$3.5 million to five projects “to explore the international market potential for XR technology.” Dirler says that Taiwan’s experience in hardware manufacturing was a major attraction for foreign studios. “One of the advantages of Taiwan is that they have experience in collaborations and co-productions,” he says. “They have this ecosystem which is very complete because they are the only country in the world along with the U.S. to actually have hardware manufacturers like HTC, MSI, and Acer. That’s why there was interest from studios from Europe to find partners in Taiwan.” While not likely to win any awards, even the foreign ministry is using VR to get out its messaging. Underlining the government’s support for VR, in Octo- ber the ministry released a short VR film, Three Crucial Steps, explaining how Deputy Minister of Foreign Affairs Tseng Ho-jen watches the Foreign Ministry's latest VR short film, Three Crucial Steps, about Taiwan's response to COVID-19. Taiwan responded to COVID-19. PHOTO: LOUISE WATT

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“So, to promote 5G, telecoms need to The work is a VR musical video find a good way to showcase its capabil- produced for Taiwanese singer Anpu, ities, and VR is actually a very good way who appears in 3-D animated form in the to do that,” Cheng says, noting that the virtual landscape. HTC Vive Originals bandwidth of the Wi-Fi we are used to say this creates a “brand-new business “is really a problem” when downloading model” for the music industry. VR content. Cheng, who licenses and distrib- Can Taiwan continue to be a leader in utes XR content, said that to succeed, XR content? For HTC Vive Originals, VR Taiwanese cultural content has to be able film is just the beginning. The company is to cross over into other markets. developing a blockchain trading platform “When I try to display cultural for XR content, and recently produced content from Africa to Taiwanese, what was billed as the world’s first normally it’s going to fail because we immersive musical experience combining don’t understand the culture,” he says. VR and a somatosensory device – a chair “I think the best way to make Taiwanese that moves automatically and is meant to cultural content is to work with people Liu Szu-ming, president of HTC Vive make the watching and listening experi- Originals, in front of the HTC Vive Origi- around the world and make the content ence feel that much more immersive. nals logo. PHOTO: LOUISE WATT very diversified.”

TRAVERSING TAIWAN’S OTT ENVIRONMENT

Over-the-top (OTT) platforms are experiencing a peak in popularity in Taiwan as the pandemic alters consumer habits and more people turn away from subscription cable services. However, proposed government regulations could create some significant barriers.

BY JEREMY OLIVIER

ore and more households forms offer a seemingly endless variety Taiwan something of a Wild West envi- worldwide are switching away of original content. As a result, OTT has ronment for streaming-service providers. from traditional cable tele- become a highly competitive and satu- Although the National Communications visionM to view an increasing amount of rated market, and local platforms have Commission (NCC) introduced a draft audiovisual content through their mobile found it difficult to compete with more OTT law this August, the initiative has phones, computers, or smart TVs. The established competitors from China and met with strong criticism from industry rise over the past decade of stream- the U.S. They must now develop strat- representatives who say it could penal- ing content platforms like YouTube and egies to make themselves stand out ize lawful businesses and that it offers no Netflix have presented internet users among their peers. help in tackling online piracy. with an attractive alternative to watching To further complicate matters, online A March 2020 study conducted by television the old-fashioned way, giving piracy has been a consistent thorn in the the consumer research organization them more freedom of choice and limit- side of legitimate OTT operators. An Kantar Worldpanel Taiwan found that ing interruptions from advertising. issue particular to Taiwan is the prolif- 96% of Taiwanese aged 15-49 use an In Taiwan, streaming music and eration of pirated content hosted on OTT video service, and that 78% watch video – also known as over-the-top servers located outside the country, espe- online content at least five or six days per (OTT) media – is a more recent indus- cially in China. week. Because there are so many plat- try trend, but it is one that has caught In addition, the current absence of forms to choose from, with some or all on quickly as a growing number of plat- any OTT-related regulations has made content offered free of charge, Taiwan-

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Popular messaging app LINE’s OTT platform LINE TV boasts a wide range of locally produced content for the Taiwan market, including drama series, feature films, educational programming, and theatrical productions. PHOTO: LINE

ese use an average of 3.2 services to view which also includes mobile payment content and viewing experiences driven content. And given the very high rate of services and other social media functions. by the introduction of 5G this year. mobile penetration in Taiwan, the most LINE Taiwan General Manager Roger Another popular video-streaming common channel for consuming OTT Chen says this ecosystem has been instru- option among Taiwanese is friDay Video, content is via smart phones. mental in building up a strong LINE TV the OTT service offered by Far EasTone, The higher consumption of OTT user base in Taiwan, as features such as Taiwan’s third-largest telco. T.Y. Yin, content is yet another change brought on the LINE timeline can be used to make executive vice president of Far EasTone’s by the COVID-19 pandemic. More time certain content go viral. Consumer Business Unit, says that with a spent at home means more opportuni- The company has adopted a success- 5G connection, subscribers to the friDay ties to binge-watch TV shows and movies ful business model for its OTT service in service can enjoy 4K-quality stream- online. And while the Taiwan govern- Taiwan. It initially offered a completely ing video, featuring films from six major ment’s excellent early action in contain- free advertising-based video on demand movie studios, as well as a plethora of ing the coronavirus has made it possible (AVOD) service to attract viewers. Later, South Korean movies and dramas. to avoid the lockdowns and other restric- it introduced an additional subscrip- tive measures taken in more heavily tion video on demand (SVOD) option for New rules adopted affected locations, OTT has still managed those who wish to skip the ads and enjoy to thrive in Taiwan this year. The Kantar certain exclusive content by paying a Christine Chen, a partner at the report on Taiwan’s OTT market notes monthly service fee. Taipei-based law firm Winkler Partners, that between January and March, the Chen says that the variety of content says that one of the major challenges percentage of Taiwanese willing to on LINE TV is also an attractive feature related to OTT in Taiwan is “whether pay for subscription streaming services of the platform, particularly its local Taiwan-produced content and related increased from 26% to 35%. content options. industries will survive under global According to the report, one of “Many users refer to us as the OTT competition, including competition from the top five providers of OTT content provider with the most Taiwanese China in particular, which shares a simi- in Taiwan is LINE TV, an affiliate of productions,” he says. “We cover a lot lar language and culture for movies and Korean-owned, Japan-headquartered of Taiwanese dramas, movies, educa- television series.” LINE Corp., which also operates a tional content, and now even theatrical The main Chinese contender in the messaging app that is immensely popular productions.” OTT field is iQIYI, a subsidiary of tech in Taiwan. The streaming content service Telecom operators are also getting multinational Baidu. The March 2020 is just one part of the LINE ecosystem, in on the OTT game, providing unique Kantar report found that at that time,

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iQIYI was the second most content providers that do not popular subscription-based include a special column for OTT platform in Taiwan, Taiwanese programs or fail behind Netflix. to publicly disclose informa- While Chinese compa- tion related to its produc- nies have long been prevented tion or co-production of from investing in Taiwan’s Taiwanese programs from the broadcasting and telecommu- current year could be fined nications industries, iQIYI between NT$100,000 and and WeTV, the video stream- NT$500,000. ing service offered by Tencent, To some international were until recently able to providers, such a mandate provide Taiwanese with a local seems excessively punitive. version of their platforms by An executive of a multina- partnering with local agents. tional company who declined However, the Ministry of to be named in this report Economic Affairs (MOEA) this Septem- later problems. “This kind of regulation says that of the roughly 3,000 hours ber moved to ban such arrangements, would increase uncertainty and possibly of video content her company has on arguing that they violate the provisions encourage unfair play,” he says. the shelf, only a fraction is produced in of the Act Governing Relations Between “If I see my platform as a large Taiwan. the People of the Taiwan Area and the provider, I should register myself, then “International media companies are Mainland Area. Under the MOEA’s new comply with all the requirements,” he like the central kitchen,” she says. “We regulation, agents who continue to part- explains. “And if I fail to comply with collect most of our programs from over- ner with banned Chinese OTT service any one of them, I will be penalized. But seas and over time, we release different providers can be fined up to NT$5 if I say I’m a small provider, then there’s programs in each country.” million (US$170,000). no burden at all. So, why bother with It is unrealistic to expect that all of Some public figures, including poli- saying that I’m a large one?” the international players will be able ticians from the Democratic Progres- Furthermore, he says, the law only to produce enough local content to fill sive Party, have voiced concerns that the targets platforms that, like LINE TV, up an entire column on their platforms, proliferation of Chinese-produced OTT feature professionally produced content, she says. Even if they do, it’s uncer- content in Taiwan could foster more while deliberately not covering those that tain whether that programming would friendly attitudes toward unification with rely on user-generated content (UGC), be well-received in other locations. And China and thus endanger national secu- such as YouTube. However, a growing while the law does also provide for incen- rity. For its part, the NCC says that these number of television stations and profes- tives for Taiwan-produced content, she kinds of regulations are based on the sional studios have started channels says that this area should be the purview principle of reciprocity; since Taiwanese on YouTube, leading some to question of the Ministry of Culture, not the NCC. OTT companies are banned from operat- whether it should be considered a purely Observers note that the law in its ing in China, Chinese content providers UGC-driven platform. current form does nothing to address should face the same treatment in Taiwan. Another area of the draft law that online piracy, the single most harmful The NCC has issued its own draft has come in for criticism from the indus- issue to the legitimate OTT industry. A OTT law, the Internet Audiovisual try is the requirement that OTT provid- large portion of the pirated content is Service Management Act, which also ers make periodic reports to the NCC not hosted in Taiwan, and even when targets Chinese streaming content. The regarding their revenue, user numbers, the authorities take action to remove law allows for OTT operators to regis- internet traffic, and the status of users, a pirated website, several mirror sites ter with the NCC on a voluntary basis. among other data. Companies have pop up immediately afterward. Chen However, says Winkler Partners’ Chen, argued that this information is highly of LINE refers to this process as an it also gives the commission “the right to sensitive and should not be requested “endless game.” set up a standard based on user figures, by the NCC. However, Chen of Winkler Winkler Partners’ Chen notes that click rates, revenue, and influence in the Partners says that if the NCC can ensure during public hearings for the draft law, market and publish a list of OTT plat- the security of this information, the some stakeholders argued for collec- forms which will be obliged to register.” requirement should not have a severe tive punishment mechanisms for Inter- The NCC explains that the draft law impact on the industry. net service providers (ISPs) that host plat- applies the concept of “catching the big A further major industry concern forms with infringing content. “However, fish, while letting the small ones go.” related to the draft OTT law is the representatives of ISPs strongly stated Roger Chen of LINE Taiwan says that requirement that OTT businesses offer that it is impossible for intermediaries to while this approach may seem reasonable a certain amount of locally produced bear the cost of examining whether the on paper, it isn’t sufficiently clear where content on their platforms. An arti- internet content they’re transmitting is the line is drawn, which could lead to cle in the law states that registered OTT legal or not,” she says.

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12 CoverStory.indd 30 2020/12/6 下午11:36 AMCHAM EVENT Preparing for Taiwan’s Future Super-aged Society

Shih-der also delivered a speech on public-private partnerships for reducing the rate of osteoporosis in Taiwan. This year’s Longevity Forum featured two panel discussions moderated by Deputy Minister of Health and Welfare Hsueh Jui-yuan and Acer Group founder Stan Shih, respectively. Panelists included the NDC’s Kao Shien-quay, HPA’s Wang Ying- he 2020 AmCham Taipei Lon- related to the workforce and the urban wei, Academia Sinica researcher Yang gevity Forum 2.0 was held environment. Pan-chyr, Yang-ming University’s Wu T on November 11 at the Sher- Next, Wang Ying-wei, director Shao-chi, National Health Insurance wood Hotel, drawing an audience of 90 general of the Health Promotion Administration Medical Review and members and their guests. The forum Administration (HPA) under the Min- Pharmaceutical Benefits Division Head featured speakers and panelists from istry of Health and Welfare, discussed Tai Hseuh-yung, Amgen Taiwan Gen- government, academia, and industry, the high rate at which Taiwan’s pop- eral Manager Joyce Lee, and Cigna allowing for a diverse range of view- ulation is aging and the consequences Taiwan Life Insurance General Man- points and an eye-opening discussion of of this phenomenon for the whole of ager and CEO Tim Shields. The topics the projected impact of Taiwan's aging society. Both Wu and Wang pointed to discussed were how to achieve a healthy solutions and the potential solutions. the World Health Organization’s Active aging society through preventative AmCham was honored to gather key Aging framework as a possible way of screening and cross-industry cooper- policy and opinion leaders in the same counteracting the negative effects of ation, and how to use public-private room to explore one of Taiwan’s most an increased elderly population. WHO partnerships and big data to create a pressing issues. defines active aging as "the process of more effective strategy in preparation The event’s keynote speech was optimizing opportunities for health, for a super-aged society. delivered by Kao Shien-Quay, deputy participation and security in order to In closing remarks, AmCham minister of the National Development enhance quality of life as people age.” Taipei President Leo Seewald said Council, who noted the urgency of While travel restrictions due to that given Taiwan’s success in han- addressing Taiwan’s rapidly aging pop- COVID-19 prevented Aaron Jones, Cig- dling the COVID-19 pandemic and ulation, the rate of which is on par with na’s Head of Analytics for APAC, from its world-class healthcare system, the Singapore and South Korea. Moving attending in person, he addressed the development of an effective, compre- forward, Kao said, the government has audience virtually in a pre-recorded hensive approach to Taiwan’s longevity the responsibility to work together with video. Jones highlighted the importance issues is an area where the island private industry in applying digital solu- of data and analytics in responding to economy can really shine. tions to the economic and social issues the needs of an aging society. He also The forum’s platinum sponsor was associated with an aging society. noted Cigna’s role in utilizing aug- Amgen. Cigna was the silver sponsor.

A presentation by Distinguished Pro- mented intelligence – the process of SPONSORED BY fessor Wu Shiao-chi of National Yang- combining human experience with Ming University's Institute of Health machine intelligence – to deliver afford- Platinum and Welfare Policy, suggested poten- able, predictable, and simple healthcare

tial policy directions for coping with to its customers. Taiwanese Osteopo- Silver Taiwan’s aging society, including those rosis Association board director Tu

TAIWAN BUSINESS TOPICS • DECEMBER 2020 31

Longevity forum.indd 31 2020/12/7 下午3:40 ADVERTORIAL Powered by 5G, Taiwan Mobile Pushes the Bounds of Cloud Gaming

earing up for the “5G+ applications” era, Taiwan Mobile G has looked to two strategies to propel the company’s foray into gaming. First, a partnership with Riot Games since 2019 has put together a strong game lineup that includes Legends of Runeterra, VALORANT, and League of Legends: Wild Rift. Both parties are committed to breaking new ground for game distribution in the telecom services landscape. Shortly after its local launch, Legends of Runeterra topped both the iOS and Android download charts. Subsequently, the Legends of Runeterra Academy was established in response to players’ feedback, encouraging many in the gamer community to share handy tips and card game walkthroughs. Meanwhile, first- person shooter game VALORANT also coordination, and exclusive “agent” capabilities, players can enjoy high- received glowing reviews and has even moves that eliminate opponents at the speed cloud gaming at any time. Their been touted as a “must-play” shooter title perfect time. As the competition heated experience is greatly enhanced by generous of 2020. Taiwan Mobile kicked off its up, the number of online spectators grew bandwidth and reduced latency. first VALORANT Summer Cup Esports to over 30,000. GeForce NOW allows players to stream competition in September, attracting more Secondly, Taiwan Mobile has also games from the cloud, even with less-than- than 70 professional and amateur teams. teamed up with NVIDIA, the powerhouse optimal hardware settings. The GeForce The championship series was staged at in the Graphics Processing Unit industry. graphics card can be virtually plugged into the New Taipei City Esports training Their cloud gaming platform GeForce a laptop or any other device. Be it a PC, center. The winning team, Looking for NOW Alliance Taiwan Mobile has opened Mac, or Android handset, the device is Sponsors, impressed onlookers with a new chapter in gaming history. Thanks immediately transformed into a powerful top-notch teamwork, precise game-play to superb 5G and home broadband Esports gaming station. Your favorite PC games are at your fingertips – anytime, anywhere. More importantly, the GeForce NOW platform is connected in real-time to different digital game stores (STEAM, EPIC, Ubisoft Connect, Wargaming, etc.). Players can access previously purchased PC games online and try out popular free titles. They can easily send invitations to other players, taking part in a PC game community that allows thousands of players to stay connected simultaneously. Taiwan Mobile has taken cloud gaming further with a “telecom + cloud gaming” bundled subscription discount offer. Its 5G GFN high-speed “double goodies” plan charges a monthly fee of NT$1,549 or $1,749. Through this new all-purpose solution, users can enjoy multiple perks facilitated by high-quality mobile and

32 TAIWAN BUSINESS TOPICS • DECEMBER 2020

TW mobile advertorial.indd 32 2020/12/6 下午11:38 ADVERTORIAL

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TW mobile advertorial.indd 33 2020/12/6 下午11:38 TAIWAN BUSINESS

A New Chapter in Taiwan’s Love Affair with Scooters

Local companies are betting that e-scooters and the sharing economy represent the future of mobility.

BY JULES QUARTLY

magine pedestrians walking down rest of the world to become global spacious sidewalks in Taipei, free of leaders in micromobility – defined as motorbikes. The only sounds heard transportation over short distances, Iare from their conversations, the whir usually on light, single-person vehicles of electric vehicles, and the chirping such as bikes and scooters. Specialized of birds. Cars and public transport market research firm Mobility Fore- are self-driving, but for the “last mile” sights describes micromobility as filling you can either rent an e-scooter with the gap between “public transport, a swipe of a card or – if it’s a nice day short haul trips and the most important and you have the time – take a healthy – ride hailing taxis,” which themselves walk in the fresh air. fill the space between car ownership This vision is the future of smart and public transport. It estimates the urban transport that a handful of Tai- global micromobility market will be wanese companies are promoting by worth up to US$50 billion in 2025. capitalizing on two major trends: elec- There are dozens of potential solu- tric scooters and the sharing economy. tions to provide transportation for the By leveraging new technology, con- last mile of a journey. Taipei was one nected products, and smart services, of the first to get on board with the they hope to convince consumers of the shared bike concept when YouBike was benefits of giving up ownership of gaso- PHOTO: WEMO launched in 2009. It took a while to line-powered cars and motorbikes. catch on, but it is now a highly pop- Gogoro, which started business – whose plentiful cash reserves mean ular service for locals and visitors alike, in 2011 and has led the way with its it can scale up fast. Finally, there is the connecting with the MRT and buses for bestselling Smartscooters, is the best new kid on the block, the nimble and travel to work, home, tourist hotspots, known of the four major players in disruptive SKRT, which incentivizes and hotels. YouBike is currently the market. WeMo has been operating motorbike and scooter owners to share working with Taiwan’s TPIsoftware since October 2016 and was Asia’s first their unused rides. enterprise solutions to introduce an AI- scooter-sharing brand, but its success Differentiated by their distinct powered customer service system. has created rivals such as iRent, backed business models, the four companies Bike sharing took off in a big way by the giant Hotai Motor Co. – the dis- all have ambitious plans to expand in China in 2016, while electric kick- tributor for Toyota, Lexus, and Hino throughout Asia before taking on the scooters started flooding the streets of

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Europe and the U.S. from 2018. India has experimented with e-scooters, bikes, and motorbikes, and battery- operated skateboards, Segways, and other innovative transport solutions have been tried elsewhere. Ride-hailing behemoths like Didi, Lyft, Grab, and Uber – with a combined valuation of US$166 billion according to research and consultancy firm Lux Research – are also trying to get in on the action. Their problem is that in places like Asia, the future of last-mile transportation likely involves two wheels rather than four because of serious road congestion, technological progress, pollution problems, and con- venience. As Premier Su Tseng-chang report- iRent offers a range of vehicles from vans to cars to lightweight vehicles such as e-bikes edly put it in August last year at a and e-scooters. meeting to discuss the transition from PHOTO: JULES QUARTLY internal combustion engine to electric scooters, Taiwan is the world’s away “about 3 to 5 million” randomly through a deal with Taipower to use “motorcycle kingdom” and “ranks parked motorcycles in Taipei, reduce electricity only from renewable sources, near the top globally in terms of motor- pollution, and usher in a smarter trans- while working on a trace, recase, cycle ownership, parts and component port ecosystem. repackage, and solar storage system. manufacturing, and industry chain Asked in a Zoom call whether What this means, basically, is ensuring completeness.” sharing electric scooters is the future of each battery is accounted for in terms “More than an essential means of mobility, Wu says: “Change is deter- of use and disposal, so as to eliminate transportation, the scooter holds great mined by consumers and at the moment any environmental problems. In addi- sentimental value to Taiwanese,” Su in Taiwan it’s common for each person tion, some old batteries can be reused added. “Many young people use it to to have up to two motorcycles. There if renovated properly, and can tap into get to work, small families transport have been 50 years of motorcycle his- solar storage systems for charging and kids to school on it, and others ride it tory and change is very difficult without discharging purposes. on adventurous outings.” They’re also a huge paradigm shift like a black swan This progress led to the venture cap- relatively cheap and easy to park. event or government intervention.” ital group AppWorks putting a big Taiwan has an estimated 14 mil- Even so, his company has made wager on WeMo in June. The multi- lion-plus registered scooters, with at considerable gains toward its goals of million-dollar investment is intended to least 1 million of them in Taipei. Given educating people about the benefits of a see the company further establish itself Taiwan’s unique tech advantages, shared economy. He describes this pro- in Taiwan, before spreading its wings to its leadership in smart city solutions cess as a “democratic dividend” and Southeast Asia and further afield. through the Taipei Smart City Project, notes that winning over young con- plus the strong tradition of scooter use, sumers means they are likely to be Growing competition the city seems well positioned to give customers forever. birth to a micromobility unicorn. The company’s scale has grown Wu sees both the positives and the The prize is an estimated global from just 200 e-scooters in 2015 to negatives to the increased competition scooter-sharing market with annual today’s more than 7,000 available in that WeMo’s success has inspired. “It’s revenues of about US$550 million by Taipei, New Taipei, and Kaohsiung, for a bit like Taiwan’s bubble tea business,” 2025, based on an expected growth a total of more than 1 million trips per he says. “Once one company is suc- rate of 24.4%, says consulting service month. Membership has grown from cessful, everyone wants to do the same. Prescient & Strategic Intelligence. And last year’s 100,000 members to the cur- Last year two large players started up, while Europe was the largest regional rent 450,000. “Basically, we’re doubling iRent and Gogoro, and I guess I have market in 2018, over the next five years every six to eight months,” Wu notes. mixed feelings. the Asia-Pacific will grow fastest. WeMo has launched Internet of “My logical self says competition is Jeffrey Wu, founder and CEO of Things (IoT) smart parking solutions, great for the industry and new entrants WeMo, says he was inspired to create and members can rent scooters through will help create a boom so that electric Asia’s first electric scooter-sharing com- the social media app Line. It is also scooters and the sharing economy are pany because he thought it could clear tackling the problem of battery waste a big part of the average citizen’s daily

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Arroyo adds that SKRT’s price point is competitive and “people can use SKRT to earn money.” The B2C model allows only one party to make money, while SKRT lets anyone with an idle scooter cash in. Asked about the future of mobility, Arroyo says: “Taiwan is at the cutting edge of mobility and public transportation. Coming from the U.S., I feel as if I am living in the future of mobility already.” He is keen on the idea of expanding out of Taiwan and “going wherever there are idle vehicles and people that want access to them. It is my hope that Taiwan can be our champion and launching point for several places in WeMo Scooter has deployed more than 7,000 e-scooters across Taipei City, New Taipei Southeast Asia.” City, and Kaohsiung City, now facilitating roughly 1 million trips per month to both local His attitude sums up the hopes of all commuters and international tourists. PHOTO: WEMO four operators in the Taiwan market, even before it becomes saturated. Jef- life. On the other hand, it’s a bit like P2P (peer-to-peer) sharing economy. frey Wu says WeMo is in discussion giants on the battlefield. Other brands Arroyo and his business partner with three or four prospective partners eat into market share and it’s harder not Lexington Uhlmann were working in in ASEAN countries about working to be just another kind of taxi service.” Taiwan and thinking of business ideas together and doing small-scale testing, When Gogoro’s GoShare launched when they “looked around at the con- while GoShare has also set up shop on in October last year, it boasted of being stant flood of scooters” and came up Ishigaki Island, in Japan’s Okinawa. the world’s first end-to-end mobility- with a scheme to efficiently utilize and As Wu puts it, Taiwan is well placed sharing platform, using its network monetize the idle assets. The two Amer- to make a splash in the field of micro- of e-scooters and swappable batteries. icans started their company in 2018 mobility in Asia because “motorcycles “Reinventing urban transportation and named it after an onomatopoeic are much more popular on this side with an ecosystem of sustainable energy sound – like tires burning rubber – of the world.” He notes that “Made solutions” is how its PR people describe often used by rappers to suggest a fast in Taiwan products are superior, and the operation. getaway, although the name can also we provide all the tech and services to Meanwhile, Hotai Finance Co. (part stand for Sharing Keys Revolutionizes build green vehicles for sharing.” of the Hotai Motor Co. conglomerate) Transportation. In addition, Taiwan companies are bought up just over half of iRent in In an email interview, Arroyo uniquely placed to build out the com- March this year for NT$310 million addressed what he sees as the compa- plicated mixture of software, hardware, (US$10.8 million). The fresh infusion of ny’s competitive edge. “Firstly, WeMo, and smart solutions that make a com- cash and technical support will ensure GoShare, and iRent are all B2C (busi- prehensive transport system possible in that it continues to spread its reach all ness-to-consumer) online rental shops any country. WeMo, for example, has over Taiwan and increase membership that are competing with each other for an internet-connected black box that from the current 330,000 participants. the ‘last mile’ customer who wants to can provide road and trafﬁc data to the iRent’s strength is its ability to offer use a scooter for a few minutes to get government. Its new funding will sup- a total transport solution via a range of home from the MRT. We are not com- port expanded R&D efforts to create vehicles, from vans to cars to lightweight peting with them in this space. a “mobility-as-a-service” platform and vehicles such as e-bikes and e-scooters. “Additionally, the B2C last mile launch scooter-sharing services in new These are all available for short-term model needs dense city populations to markets. Meanwhile, Gogoro is inte- rental using a phone and app. thrive, which is why you see them in grating artificial intelligence, advanced SKRT, the latest entrant to the limited locations. They rely on elec- cloud management, and IoT solutions, market, takes a novel approach to tric scooters that have a limited range, as well as battery swaps. sharing by helping owners to rent out which works fine in a dense city for Conceivably the future of global their motorcycles and scooters when a few minutes but does not give you mobility has already arrived in Taiwan, they’re not being used. It’s an innova- access to the beautiful mountains, and what it has to offer – like many tive idea that SKRT co-founder Elliot beaches, hiking trails, waterfalls, and other Made in Taiwan goods and ser- Arroyo says was born of a background geographical wonders that Taiwan has vices – will soon be exported around in recycling, problem solving, and the to offer.” the world.

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Reorganization of a Taiwanese Corporate Icon

Tatung is a household name in Taiwan and was a major player in the country’s industrial rise. Yet this century-old enterprise has fallen on hard times, its property the only remaining asset of value. What caused Tatung’s downfall, and will it be able to rise again?

BY CHOHAN YANG, COMMONWEALTH MAGAZINE

t only took a couple of the original name “Hsieh Chih hours for the Lin family to Business Enterprise,” Tatung began lose management control of as a construction company whose ITatung, a company it had stew- projects include the Executive arded for over a century. Yuan building in Taipei. On the morning of October After the end of World War II, 21, a group of activist investors the business expanded into elec- known as the “market fac- trical appliance and equipment tion” scored a decisive victory at manufacturing, and Lin’s son, an extraordinary shareholders Lin Ting-sheng (widely known meeting, where their members as T.S. Lin), took over from his were elected to seven of the nine father. Tatung became one of the seats on the company’s board of first 16 publicly listed Taiwanese directors. companies in the late 1950s, the It was the first time in beginning of a golden era. Taiwan that outsiders had Tatung was once a pillar of Taiwan’s industrial land- At the time, Tatung’s electric scape, yet a succession battle led to declining per- gained an absolute majority of formance and brought the company to the brink of rice cooker became a symbol of board directors. The only seat collapse. the company’s excellent Taiwan- remaining in the hands of the PHOTO: COMMONWEALTH MAGAZINE made products. T.S. Lin, regarded “company faction,” which rep- as a key figure in Taiwan’s indus- resented the Lin family, was won by 2, Lin was unanimously elected trial development, also devoted himself Tatung Chairwoman Lin Kuo Wen-yen. chairman. to education, setting up the Tatung At a press conference after the How did the Lin family, who Institute of Technology in 1956. It was meeting, new director Wang Kuang- founded Tatung in 1918 when Taiwan renamed Tatung University in 1999. hsiang, the head of the market faction, was under Japanese colonial rule, even- Many of Taiwan’s foremost indus- said that Eastern Broadcasting Co. tually lose management control of the trial talents attended Tatung University, Chairman Lin Wen-yuan would step in company? including some top executives at as the new Tatung chair. On November Established by Lin Shang-chih under leading manufacturers such as bicycle

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maker Giant Manufacturing and elec- Tatung’s golden goose. of W.S. Lin’s wife, Lin Kuo Wen-yen. tronics companies Pegatron Corp. and The flat panel industry soon fell Lin Kuo, who married into the Lin Hon Hai Precision Industry Co. Tai victim to cutthroat pricing compe- family when she was 28, became known Cheng-wu, current CEO of Hon Hai tition, however, creating operating as the “Iron Lady” for her shrewd- subsidiary Sharp Corp. of Japan, is one problems for Chunghwa Picture Tubes ness and strong personality. After T.S. of the school’s alumni. His ﬁrst job was and eventually leading to Lin Cheng- Lin had a stroke in the early 2000s, at Tatung, and at a press conference yuan’s indictment in the U.S. in 2015 she assumed the role of vice president, this year unveiling Sharp’s 5G phone, on charges of price ﬁxing. In 2003, Lin attending public events and speaking on Tai became emotional when asked Cheng-yuan resigned from the com- behalf of the company while her hus- about Tatung’s management feud. He pany, citing health reasons. He was band sat quietly at her side. expressed his gratitude to Lin Ting- succeeded by his younger brother, In 2018, when Tatung celebrated sheng for his support. Frank Lin, who resigned in early 2007 its 100th anniversary, W.S. Lin ten- Tatung shareholders meetings tra- and was replaced by W.S. Lin. dered his resignation, and a year ditionally were held in the Shang Chih Just as his sons were abandoning the later he was imprisoned for embez- Building at Tatung University. How- family business, T.S. Lin died in 2006. zlement and breach of trust. Lin Kuo ever, the October 21 meeting took That year, the power struggle taking took over as chairperson, and the same place at the Dazhi Denwell Hotel in the place among the patriarch’s successors year the Tatung Group posted a loss northern part of Taipei, portending the would begin bubbling to the surface. of NT$23.3 billion, the biggest in the end of the Lin family’s reign. company’s history. The Lin family valued tradition, and Last line of defense On June 30, 2020, Tatung brazenly T.S. Lin’s successor was to be chosen blocked shareholders from exercising from among his five sons. However, In 2006, a new election for Tatung their right to vote, and the Taiwan his offspring ended up undermining board directors and supervisors was Stock Exchange demanded that the the succession process and harming held. At that time, rumors emerged that company provide a public explanation the company. Since 2000, the Tatung half-brothers W.T. Lin and Lin Cheng- of the situation. At the resulting press Group has turned a profit only six yuan would team up with Robert Tsao, conference, Lin Kuo tried to deflect times and has struggled to retain its honorary chairman United Microelec- questions from reporters by claiming longstanding reputation as a standard tronics Corp., to win control of the she did not understand what was being bearer for “buying Taiwanese.” company. Speculation again surfaced in asked. She also appeared to consult W.S. Lin (Lin Wei-shan), T.S. Lin’s 2008 that Frank Lin would join hands with her lawyer on how best to answer oldest son, took over as Tatung’s pres- with former China Development Finan- when the questions were repeated. ident in 1972, but had to wait until his cial Holdings President Benny Hu in It was also Lin Kuo who recruited father died before formally succeeding what some suggested was a revenge play former China Steel Chairman Lin Wen- him as the company’s chairman. Within emblematic of Shakespeare’s Hamlet. yuan (no relation) to serve as an outside two years, he was implicated in a case The two gambits were successfully director and repel challenges to her rule of embezzling Tatung funds, which he blocked largely because of the presence of the company. Over the years she had used to make a personal investment in a company called Nature Worldwide Technology Corp. Litigation in the case would last 10 years. The second son, W.T. Lin, was orig- inally responsible for Tatung’s overseas business. He later returned to Taiwan to set up his own company, eager to chart his own course. T.S. Lin also had three sons from a second wife. The oldest, Lin Chen-hua, was mired in debt and faced being sued by creditors. He was not involved in Tatung’s core operations. While Tatung’s core business was stable, its subsidiary Chunghwa Pic- ture Tubes, which manufactured display panels, was consistently losing money. It was not until Lin Cheng-yuan, the second son from the second wife, took Lin Kuo Wen-yen, nicknamed the “Iron Lady” of Tatung, served as the company’s chair- over as CEO and made it profitable person until she was ousted in early November. venture that for a period of time it was PHOTO: COMMONWEALTH MAGAZINE

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fought off at least ﬁve bids for management control without ceding a single board seat. That streak ended in October when Lin Wen-yuan, now chairman of Eastern Broadcasting Co., shifted his support to the “market faction,” effectively ending Lin Kuo’s reign of more than a decade. In an interview, Lin Wen-yuan explained why he ultimately agreed to take over as Tatung chairman. “The founding Lin family no longer has the legitimacy to manage Tatung,” he said. Up until the day before the extraordinary shareholders meeting, Lin Kuo had still not abandoned hope. As the market faction had the backing of shareholders who maintained more Tatung shareholders vote for directors at an extraordinary shareholders meeting on than half of Tatung’s total shares, October 21. her only option was to ask the Min- PHOTO: COMMONWEALTH MAGAZINE istry of Economic Affairs (MOEA) to suspend the meeting. To do so, she reit- After the October 21 meeting, how- since 1997. erated a longstanding accusation that ever, Lin Kuo issued a statement that Wang Kuang-hsiang dispelled the market faction was backed by Chi- appeared to conflict with her original rumors that he was seeking the vice nese capital, which would constitute a motive. In it, she said: “No matter what chairmanship. He did not provide any violation of the Business Mergers and happens in the future, I will, as always, clues about how the new board plans to Acquisitions Act. work with Tatung’s management team overhaul Tatung’s core businesses, per- To Lin Kuo’s dismay, the Securi- and do everything I can to safeguard haps reﬂecting the market faction’s lack ties and Futures Bureau responded Taiwan’s national and information of experience with the heavy machinery that there was no evidence to back security and protect Tatung’s century- and electronics products that are a key her claim. The MOEA then rejected old foundation.” source of revenue for the company. Tatung’s appeal. Though the October 28 meeting Nevertheless, he was open about But Lin Kuo had what she hoped was postponed, James Wang resched- how Tatung’s property holdings could would be one final ace up her sleeve. uled it for a few days later. Announcing be developed. He said that the com- The company faction decided to throw the new date, Wang said that from that pany would look into the government’s its support behind former Ernst & day forward there would no longer be incentive program for redeveloping old Young Taiwan chairman James Wang, a “company faction” or “market fac- buildings, and cited Tatung’s property helping him win the most votes of tion,” but that all stakeholders would on RenAi Road in central Taipei as a any independent director. By law, the belong to the “Tatung faction.” possible candidate. Another important director with the highest vote total At the meeting on November 2, asset is the company’s headquarters and becomes the convener of the board and Tatung’s nine-member board of direc- Tatung University campus on Zhong- is responsible for calling board meet- tors voted unanimously to elect Lee shan North Road. ings. In theory, the convener could Wen-yuan as the new chairman and to The academic institution that T.S. repeatedly try to delay the meeting appoint Lin Kuo Wen-yen as Tatung’s Lin established to help industry serve scheduled for October 28 in order honorary chairperson. The appoint- the country could well become just to avoid replacing the incumbent ment would allow her to maintain another number on Tatung’s finan- chairman. In addition, independent an office at the company headquar- cial statements, one more major change directors can call extraordinary board ters, where she would continue to be facing a company that was once among meetings. afforded a high level of courtesy. Lin Taiwan’s industrial vanguard. If Tatung could gather evidence Kuo expressed her approval of the that the market faction had in fact col- board’s decision. luded with Chinese investors, thereby Although Tatung’s power struggle — This article is reprinted, with weakening its voting rights and is now resolved, it will be hard-pressed updating, with permission from the delaying a board vote for chairman, to relive its glory days. The compa- publisher, CommonWealth Magazine. it could call another extraordinary ny’s consolidated sales in 2019 totaled Translation from the original Chinese shareholders meeting to win back NT$35.4 billion, down more than was done for CommonWealth management control. 40% from a year earlier and the lowest by Luke Sabatier.

TAIWAN BUSINESS TOPICS • DECEMBER 2020 39

Tatung.indd 39 2020/12/6 下午11:39 ADVERTORIAL PineBridge Spearheads Sustainable Investing in Taiwan with Innovative ESG Products

he Covid-19 pandemic has had important than carefully selecting stocks, irreversible consequences for bonds, and other investment options with T how people live. When it comes ESG criteria in mind. When integrated to investing, for example, incorporating into investment decisions, ESG factors can Environmental, Social & Governance alert fund managers to problematic firms, (ESG) factors in the decision has become mitigating risks. the new normal. Despite the pandemic’s “In 2020, environmentally conscious disruptions to portfolio formation investors have turned to ESG products this year, a massive increase in socially in a big way,” says Steven Huang, responsible investing has taken place Chief Investment Officer at PineBridge across the board. ESG ranked high Investments Taiwan. “Looking forward, globally among trending search engine we expect multi-asset funds that cover keywords, making ESG-focused equity ESG-focused equities and bonds to and bond assets a favorite for investors. gain traction in the market. Those who As 2020 draws to a close, ESG-related prefer more growth potential but less investments are booming amid reports of stock volatility in their portfolios can outstanding capital growth. take full advantage of this fast-evolving Financial markets worldwide have ESG movement, for instance adopting a recently enjoyed record new highs, and quantitative ESG multi-asset strategy that investors have shown signs of optimism. invests in equities and bonds.” Yet, it is increasingly difficult to ensure Still considered a new financial Steven Huang, Chief Investment Officer at effective trading and risk management, concept in Taiwan, ESG products PineBridge Investments Taiwan which is vital in times of abundant liquidity are increasingly in demand. To better and investment possibilities. This is where serve investors here with a one-stop- ESG factors can play a crucial role. shop approach, PineBridge has once the company has been taking the lead The coronavirus outbreak, intensified again fostered innovation. It launched in environmentally conscious investing, climate change, and a spate of protest the ESG quantitative multi-asset fund, others in the industry soon moved in demonstrations and strikes all cast their Taiwan’s first ESG-themed multi-asset concert with ESG product roll-outs. shadow on 2020. However, around the fund. Through global market allocation, As of October 31, 2020, the fund has world, ESG investing continues to grow investors can now acquire ESG bonds as NT$22.4 billion under management, vigorously. With this development in well as stocks in one fund transaction. according to data compiled by the full swing, the international investment This potential game-changer may bring Securities Investment Trust & Consulting community is taking specific steps to reject about comprehensive upgrades to ESG Association of the R.O.C. (SITCA). or transform companies that ignore ESG standards for many multi-asset products in Categorized by SITCA as an International issues. The objective: make the Earth a the Taiwan market. Investment-grade Bond Fund, it is the better, more sustainable place. PineBridge previously launched largest global investment-grade bond Accounting for ESG factors in the PineBridge ESG quantitative bond fund fund in Taiwan. PineBridge launched portfolio screening process helps fund (The fund invests substantially in high- Taiwan's first ESG quantitative multi-asset managers take preemptive steps to risk, non-investment-grade bonds, and its fund within less than a year, continuing address corporate risks. In our post- sources of dividend payments may include to spearhead the market’s ESG fund COVID-19 world, few things are more the principal) in January 2020. While development.

40 TAIWAN BUSINESS TOPICS • DECEMBER 2020

Pinebridge.indd 40 2020/12/6 下午11:40 ADVERTORIAL 台灣

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TAIWAN BUSINESS TOPICS • DECEMBER 2020 41

Pinebridge.indd 41 2020/12/6 下午11:40 AMCHAM EVENT

Big Changes and New Directions Mark AmCham’s 2020 AGM

xcitement was in the air at the Yu of Microsoft. COVID-19 and its ability to maintain 2020 AmCham Taipei Annual Newly elected for one-year terms as positive economic growth throughout E General Meeting, held at the Supervisors were Max Chen of Face- the pandemic without needing to resort Shangri-La’s Far Eastern Plaza Hotel book Taiwan, Shelley Chia of Deloitte to lockdowns. on November 17. As the Chamber’s and Touche, and Seraphim Ma of Baker Lastly, President Tsai acknowl- signature year-end event, it would McKenzie. edged the great recent strides made in serve as the platform for announcing In brief opening remarks as the the U.S.-Taiwan relationship, noting that AmCham Taipei would begin luncheon meeting began, American Taiwan’s importance as the U.S.’ the formal process of becoming the Institute in Taiwan Director W. Brent ninth largest trading partner and 11th more appropriately named American Christensen emphasized that regardless largest export market. She also cited Chamber of Commerce in Taiwan in of the results of the recent U.S. elec- the visit to Taiwan in September by January 2021. To commemorate this tions, Taiwan continues to enjoy broad, Keith Krach, the U.S. Under Secretary momentous occasion, President Tsai bipartisan support in Washington. He of State for Economic Growth, Energy, Ing-wen delivered the keynote speech. also commended President Tsai for pri- and the Environment, and the resulting This year’s AGM drew around 230 oritizing transparency and safety in U.S.-Taiwan Economic Partnership members and their guests, and voting Taiwan, and for creating a “safe, stable Dialogue held between Taiwan ofﬁcials for the 2021 Board of Governors and environment, which has allowed Tai- and the State Department in Wash- Supervisors took place as members wan’s businesses to flourish in the face ington this month. arrived. The six Governors voted in of strong global headwinds that are Also of significance at this year’s for two-year terms were Justin Chin of constraining growth in so many other event was Chairperson CW Chin’s AstraZeneca Taiwan, Cynthia Chyn of economies.” announcement that Don Shapiro, Amazon Web Services, Paulus Mok of In her keynote speech, President Tsai AmCham Taipei Senior Director and Citibank Taiwan, Terry Tsao of SEMI congratulated the Chamber for suc- Editor-in-Chief of its Taiwan Business Taiwan, and Daniel Tseng of Corning cessfully moving to change its name TOPICS magazine, would be retiring Display Technologies Taiwan. They to AmCham Taiwan, which she said is from his full-time position at the end of join 2020-2021 Governors CW Chin “a true reflection of its membership.” the year, while continuing in an advi- of Applied Materials Taiwan, Timothy She said that she believes the organiza- sory capacity. Chin and AmCham Shields of Cigna Taiwan, Brian Sung of tion will “play a crucial and signiﬁcant President Leo Seewald thanked Sha- Cadence Design Systems Taiwan, Fupei role in the development of Taiwan’s piro for his invaluable contributions to Wang of Ogilvy Public Relations, Roger partnerships in the future.” She also the Chamber and presented him with a Yee of Raytheon Taiwan, and Angela spoke of Taiwan’s success in containing commemorative plaque.

42 TAIWAN BUSINESS TOPICS • DECEMBER 2020

AGM.indd 42 2020/12/6 下午11:40 2021SPECIAL REPORT OPPORTUNITIES AND CHALLENGES AWAIT IN 2021

Taiwan has been a major beneficiary of global circumstances in 2020. It must now take steps to maintain economic momentum as a new year approaches.

BY JANE RICKARDS

espite a devastating pandemic such as the Purchasing Managers’ Index disruption in production lines in China in that the International Mone- (PMI), which in November had its largest the first few months of this year. tary Fund predicts will shrink month-on-month expansion since Feb- China’s supply chain problems “woke theD world economy by 4.4% this year, ruary 2017, “are all moving in a positive up the world to the hardship of having Taiwan proved itself to be a global eco- direction.” a shortage of key parts, components, nomic star. It was one of just around So, what created this stellar perfor- and products that are deemed essen- a dozen countries that has managed to mance? Economists point to three main tial for most economies,” says Tony achieve positive growth. factors. Phoo, an economist with Standard Char- Among the forecasts for Taiwan’s GDP First, Taiwan’s successful manage- tered Bank. The experience provoked an growth for 2020, the most optimistic ment of the pandemic meant that the interest across the world in diversifying – 2.54% – has come from Taiwan’s Direc- nation did not need to impose any large- supply chains, he says. torate General of Budget, Accounting and scale lockdowns. Manufacturing plants Phoo notes that Taiwan’s tech- Statistics (DGBAS). Of the six economists and offices were able to continue run- nology scene is very similar to that of the interviewed for this report, Ma Tieying ning smoothly, and Taiwan was still able mainland, although some of its indus- of Singapore-based DBS bank made the to steadily supply the world with needed tries, such as semiconductors, are more lowest prediction of 1.8%. merchandise. advanced. Amid these early fears about Particularly impressive was Taiwan’s “The production lines in Taiwan since Chinese production shutdowns, Taiwan third-quarter GDP growth of 3.92% the middle of the year have been running was a natural choice for diversifying year-on-year, according to a prelimi- at a normal level, whereas production trade flows, both for Taiwanese and for- nary estimate from the DGBAS in late lines in heavily affected countries have eign companies. November, which would constitute the not been able to run normally,” Liang The second factor underpinning Tai- fastest pace in over two years. Liang Kuo- says. He calculates that last year Taiwan’s wan’s good economic performance was yuan, president of the Yuanta-Polaris share of exports in the world economy the gargantuan demand in advanced Research Institute, says it could be one stood at 1.75%. By May 2020, the figure countries for electronics products of the highest third-quarter results in the had leapt to 2.41%. involved in long distance learning and world for this year. Darson Chiu, an economist with the telework. These ranged from laptops, The fourth quarter is also looking Taiwan Institute of Economic Research personal computers, and tablets for indi- positive, says Liang. He notes that var- (TIER), says that technology companies viduals to work or study from home ious newly released manufacturing data, and other firms were alarmed by a big to advanced servers for companies that

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needed to accommodate the large number of employees working remotely. There was also increased demand for electronic leisure devices, for components connected to the recently launched iPhone 12, and for more digital connectivity due to the need for video streaming and conferencing, e-commerce, and online entertainment. The upcoming holiday shopping season and the transition to 5G technologies further intensified this demand. All of this involved products or components that Taiwan excels in producing. Quanta Computer has been expanding its facilities in Taiwan to take over the production of servers formerly made in China for the U.S. market. In particular, semiconductors, where PHOTO:QUANTA Taiwan has a leading edge, are used in all these categories across the board. One of In some instances, the migration of cross-Strait trade compared with previous the biggest beneficiaries of the increased technology companies back to Taiwan years. Taiwanese chip firms, for example, demand has been the Taiwan Semicon- relates not only to tariffs, but also to benefited from aggressive stockpiling ductor Manufacturing Co. (TSMC), American security sensitivities about Chi- by Chinese telecommunications giant Taiwan’s top chipmaker. nese-made hardware products that could Huawei in preparation for a U.S. edict The third reason for Taiwan’s out- be used for spying. Products made purely restricting shipments of products using standing showing this year is its in Taiwan are deemed more trustworthy, U.S. technology to the company in mid- advantageous position amid U.S.-China and recent trends have given Taiwan September. trade tensions and American concerns more independent and controllable supply TSMC’s world leadership in the semi- over the security of Chinese-made products. chains. Liang cites data processing equip- conductor foundry business has resulted Taiwanese companies who flocked to ment, particularly servers, as a case where in heavy Chinese reliance on the com- China during the previous two decades to Taiwan has benefited from such concerns. pany, says the CIER’s Liu. China is still enjoy cheap manufacturing and assembly Other reported returnees include buying large volumes of chips from the of electronics goods have shifted some Compal, a computer manufacturer, and company, as well as from other Tai- of their operations back to Taiwan in printed circuit board supplier Unimi- wanese chipmakers. order to avoid American tariffs on Chi- cron Technology, which is expanding its Angela Hsieh, an economist with nese goods. Taiwan plant. TIER’s Chiu reports that Barclays Bank Singapore, notes that In 2019, the Taiwanese government Acer and ASUSTEK Computer have also TSMC – the only company besides Sam- implemented the “Action Plan for Wel- moved production of laptops back to sung to produce 7-nanometer chips – coming Overseas Businesses to Return Taiwan. held a 51.1% global market share in the to Invest in Taiwan,” which offered ben- Liu Meng-chun, a division head at second quarter of 2020. Huawei’s pur- efits such as attractive loans and rent the Chung-hua Institution for Economic chases amounted to a substantial 14% of concessions to Taiwanese manufacturers Research (CIER), notes that the repa- TSMC’s revenues, she says. willing to relocate some or all of their triation of production has resulted in Nevertheless, Hsieh says that TSMC operations back to the island. increased land prices, especially in indus- could potentially shift to other customers According to the InvesTaiwan Ser- trial or technology parks in Taoyuan. to compensate for its loss of business vice Center operated by the Ministry of Given Taiwan’s frequently cited “five with Huawei. For example, TSMC still Economic Affairs, 733 returning compa- shortages” – land, water, electric power, sells chips to smart phone makers Xiaomi nies have received approval to move or talent, and labor – analysts are unsure and Vivo. expand their operations in Taiwan and whether the migration of companies back Hsieh cites trade figures released by to date have pledged NT$1.15 trillion in to Taiwan will prove to be sustainable in Taiwan’s Ministry of Finance (MOF) for investment. the long run (see the accompanying story October 2020. While new Taiwanese Quanta Computer began moving pro- in this section). investment in China has been declining duction of servers for sale to the U.S. “I think at this moment, Taiwan can since 2016, Taiwan’s share of exports back to Taiwan starting last year. The still cope with the first wave of movement to China and Hong Kong actually rose servers are now produced in a building coming back,” says Liang. “But eventu- sharply in 2020 from around 40.1% in opposite Quanta’s headquarters in ally, resources will be exhausted.” 2019 to 43.6% for the first 10 months of Taoyuan. The company reportedly is also this year. Over the same period, exports to investing about NT$15 billion to build a Winners and losers the U.S. accounted for 14.7% of the total. massive new factory in the same area to According to the MOF data, exports boost production of goods that the com- Ironically, U.S.-China trade tensions of electronic components – amounting to pany used to make in China. have actually resulted in an increase in 39.3% of all overseas sales – grew by a

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remarkable 20.4% between January and ment appeared higher in May at 4.2%, the steep 16.41% decline of the second October this year. The semiconductor a decline in the labor participation rate quarter. sub-category grew by 22.3%, and that of occurred from May to September, sug- However, the vouchers have not been information, communication, and audio- gesting that many unemployed people enough to preserve previous consump- visual products by 14.8%. had given up searching and exited the job tion levels. According to DGBAS, overall Export orders, a leading indicator, market. consumption is expected to contract by increased by 9.1% year-on-year to reach Average September wages including 2.52% this year. But the agency is more a record high US$51.6 billion in October. bonuses and overtime stood at bullish about next year, predicting 4.04% DBS’ Ma attributes this surge in part to NT$53,047, the DGBAS said, an growth in consumption, “supported the Chinese rush-order effect, as well as increase of 2.01% over the same month by the steady growth of the domestic to new product launches and the com- last year. Ma predicts that wage growth economy, as well as the effects of a low mercialization of 5G telecommunication for the year as a whole will slow from base.” Barclays’ Hsieh puts the average applications. 2019’s 2% to 1%, and will remain at growth in consumption for 2021 at a Meanwhile, the DGBAS says, real that level until the delayed effects of GDP more conservative 3.2%. private fixed capital formation is fore- growth are felt. DGBAS estimates that the consumer cast to grow 1.47% this year, supported The Legislative Yuan has passed var- price index (CPI) will show a 0.26% by continuing investment from the semi- ious relief measures throughout the year decrease for 2020 before rising 1.16% conductor industry and 5G network with a total value of over NT$400 bil- next year. The economists interviewed for construction. Next year, the statistics lion. The most recent special budget of this report said this year’s negative figure agency predicts, it will grow by 3.68%, NT$210 billion was passed in October is partially based on low fuel prices. They assisted in part by the reshoring of Tai- and is to be financed through the issuance all agree that under current conditions, wanese companies from overseas, as well of debt. The funds will reportedly be used the Central Bank is likely to keep the cur- as by offshore wind development and to provide loans and other assistance to rent discount rate, refinancing rate on urban renewal projects. enterprises hard-hit by the pandemic and secured loans, and temporary accommo- However, not all Taiwanese are to cover gaps in funding for the govern- dation rate unchanged. gaining financially from Taiwan’s stellar ment’s consumer voucher program. Another factor in the economic pic- economic performance. Liang of Yuanta- That stimulus program helped boost ture has been the steady appreciation in Polaris describes Taiwan’s recovery as domestic spending, alleviating some of the New Taiwan Dollar, which traded “K” shaped, with the ICT sector coming the severe hits to consumption experi- at 29.91 to the U.S. dollar at the end out strong and traditional industries at enced when Taiwan shut its borders to of 2019 and has recently strengthened the lower end. According to the MOF, tourism in March. DGBAS reports that to around 28.5 to the dollar. Barclays’ October exports of base metals and the accommodation and food sector Hsieh describes the trend as a headache related products, plastic and rubber arti- decreased by a slight 0.35% year-on- for the Central Bank, which will try to cles, and machinery fell by 10.7%, 9.6%, year in the third quarter, a reprieve from rein in the appreciation to protect export and 9.3%, respectively. Standard Chartered’s Phoo notes that APPRECIATION OF THE NT DOLLAR non-tech sectors such as petrochemicals, The recent strengthening of the currency reflects Taiwan's good economic performance, but textiles, steel and iron, machinery equip- places more pressure on export competitiveness. ment, and rubber and plastics are seeing weak performance. Unfortunately, more 2017 2018 2019 2020 Taiwanese work in these poorly per- Exchange rate vs US$ 29.67 30.58 29.91 28.5 forming industries than in the tech sector. DATA SOURCE: CENTRAL BANK Ma of DBS notes that the service sector has also been struggling, largely RISING EXPORT ORDERS IN 2020 because of the pandemic, particularly the Taiwan set a new monthly record for export orders in October, the most recent data available. hospitality and food and beverage seg- ments. 50 51.6 The seasonally adjusted unemploy- 45.6 45.5 38.5 41 ment rate in October was a mere 3.77%, 38.9 but that number doesn’t tell the whole story. Many workers, especially in traditional manufacturing sectors and the service sector, have been put on unpaid leave. According to Barclays’ Hsieh, the number of furloughed employees spiked at 31,186 in June before dropping to April May June July August September October 11,317 in November. Ma notes that even though unemploy- UNIT: US$ BILLION DATA SOURCE: MOEA

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competitiveness. Taiwan to join the pact only if it accepts attract new immigrants, Singapore and “We expect the Central Bank to keep that it is part of China, a position that the Hong Kong, which has its own aging signaling its preference for Taiwan dollar current Democratic Progressive Party gov- problems, offer more attractive incentives appreciation to lag behind its peer cur- ernment would never agree to. On the than does Taiwan. rencies,” she says. At the same time, other hand, RCEP may not have much And while Taiwan’s position as a con- Yuanta-Polaris’ Liang notes that the of an effect on Taiwan as many of the tract manufacturing powerhouse seems NT appreciation is another sign that member countries have already signed free secure, it needs to find ways to develop the Taiwan economy is performing well trade deals with each other and Taiwanese new champion industries. Noting that globally. companies have absorbed the impact. Taiwan’s main industries are still related The rival Comprehensive and Pro- to semiconductors and other elec- Looking ahead gressive Agreement for Trans-Pacific tronics, Ma of DBS suggests that the Partnership (CPTPP) presents a China- government’s successful management of Among the future challenges that free alternative to the RCEP. Yet a COVID-19 may reduce pressure from Taiwan will be facing are its exclusion number of obstacles, such as Tai- business and the public restructure and from the world’s network of free trade wan’s nearly decade-long ban on food reform the economy. agreements. Although Taiwan enjoys imports from Japanese areas near the She adds that Taiwan needs to tariff-free treatment for ICT products 2011 Fukushima nuclear disaster, remain strengthen its software capabilities, and under the World Trade Organization's in the way of it joining the CPTPP. that the government could do more to Information Technology Agreement, it President Tsai Ing-wen has made clear help foster companies specializing in has signed free trade agreements with Taiwan’s hopes of signing a free trade areas such as artificial intelligence. only a handful of countries. deal with the U.S., but it is not yet clear Liang proposes that advanced med- The Regional Comprehensive Partner- whether the incoming Biden administra- ical devices are a promising sector, as they ship or RCEP – a 15-nation pact backed tion will be interested. combine medical knowledge and elec- by China – was signed in November. It Also confronting Taiwan is the demo- tronics technology, both areas in which could become the world’s largest free graphic challenge that it will reach the Taiwan shines. While Taiwan so far has trade agreement, covering nearly a third status of being a super-aged society by come through the pandemic and U.S.- of the global population and about 30% 2025, meaning that one in five citizens China trade tensions in good shape, he of its global GDP, according to Reuters. will be aged over 65, with the working expresses worries that once those issues Once in force, it could also allow China population having to bear heavy tax bur- are no longer present, Taiwan’s industry to dominate trade in the region. It is dens for their care. Hsieh of Barclays could revert back to its old attitudes and widely believed that China would allow notes that in the regional scramble to practices.

What’s in Store for Next Year?

BS economist Ma Tieying takes the most bullish view of until the second half of the year,” says Angela Hsieh of Bar- Taiwan’s economic prospects for 2021, forecasting GDP clays Bank. She notes that if Taiwan can lift border controls, the growth of 4.2%. The most cautious position among return of foreign visitors would provide a sorely needed boost thoseD interviewed for this report was from Yuanta-Polaris for ailing hotels, restaurants, and retailers. If the world economy Research Institute President Liang Kuo-yuan, whose forecast returns to near-normal, Taiwan’s traditional manufacturing sec- is “at least 3%.” In between is the government’s own statistics tors could expect a rise in exports. agency, which expects growth of 3.83%. Liang of Yuanta-Polaris points out that rapid distribution The actual outcome is likely to depend on two uncertain- of the vaccine won’t be easy because of logistical chal- ties. First is the efficacy of the COVID-19 vaccines developed lenges. Pfizer’s vaccine needs to be stored at about minus 75 by American companies Pfizer and Moderna, and how quickly degrees Celcius, which is well below the level of normal medical their use becomes widespread in severely infected countries. The freezers, according to U.S. media reports. second is the attitude that the incoming Biden administration In most countries, the vaccine is expected to be made avail- takes toward China. able first to healthcare workers, people with already weakened Even if the vaccines are as successful as the two companies health conditions, and the elderly, including residents of nursing claim, the Taiwan economy “probably wouldn’t feel the effects homes and other long-term care facilities. Before infected econ-

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omies could return to normal, a sizeable proportion of the and remote communications. In addition, “if COVID-19 is not population would need to be inoculated, notes Standard Char- fully under control and foreign governments like the U.S. and tered economist Tony Phoo. “At Standard Chartered Global Japan inject stimulus packages into their economies,” that could Research, our timeline is in the second half of 2021.” also help fuel demand for Taiwan products. But he adds that the vaccines’ mere existence could have a The nature of the China policy adopted by the Biden admin- positive influence in contributing to a global rebound. as “the istration is seen as another factor affecting the 2021 outlook. “If impact on sentiment cannot be ignored.” In the meantime, he the new U.S. administration becomes more friendly to China or says, “we see a bumpy recovery in the first half of next year – not as hostile, the movement of Taiwanese businesses based in one of fits and starts.” China will not be as fast as in 2020,” says Liang. For his part, Liang speculates that slower world recovery could actually benefit Taiwan’s overall economy through sus- — By Jane Rickards tained high demand for ICT products used for working at home

For Some Tech Products, Social Distancing has been Good News

OVID-19 has brought a spike in global demand for various types of information and communication technology – both in terms of goods and services. As a result, Taiwan Chas been among the few countries to have maintained a positive economic growth rate despite the pandemic. However, some of this demand is likely to be a one-off event for 2020, notes Ma Tieying of DBS. The likely one-off pur- chases this year include desktop computers, laptops, and tablets, as well as consumer electronics products like gaming devices. In the unprecedented situation presented by the pandemic, people across the world spent much more time at home – both at work and at play. Taiwanese companies that benefiting from this trend include makers of personal computers and various components and peripherals. Economist Tony Phoo of Standard Chartered notes, for example, that heightened sales of home entertainment sys- Taiwan's effective handling of the COVID-19 pandemic has enabled tems have led to increased orders for lenses and image-projecting it to perform better this year than most of the world's economies. technology made by Taiwan companies. This kind of demand may not continue once the pandemic is cation of automation technology has also risen, such as using under control, says Ma. robots and drones for food and medical supplies, delivery, and “Growth in the segment of computers and consumer elec- disinfection.” tronics may see a pullback in 2021 after a strong surge this Ma predicts that even after the economy reopens post- year.” COVID-19, many large-scale events may remain virtual for She sees more staying power in the other area of demand for some time. Consumers’ preference for contactless solutions will Taiwanese technology that surged during the pandemic: digita- also continue. lization and automation. “This would continue to grow after Over the long-term, Ma says, new waves of technological COVID-19, creating sustained opportunities for this segment of innovations are increasingly being driven by semiconductors, a electronic components,” she says. sector where domestic companies like Taiwan Semiconductor Digitalization involves 5G, cloud computing, and data Manufacturing Co. (TSMC) are among the world leaders. centers, while automation requires robots, drones, artificial Owing to its strength semiconductors, “Taiwan should be intelligence, and the internet of things. Growth in this area well-placed to benefit from post-pandemic opportunities in the “would stimulate demand for servers, network devices, chips, global tech sector,” Ma says. She cites Taiwan’s “well-estab- sensors, and various other electronic components,” Ma says. lished semiconductor supply chain ranging from upstream Global demand for digital connectivity has clearly increased design to downstream fabrication and packaging and testing.” during the pandemic due to the need for video conferencing, e-commerce, and online entertainment, Ma notes. “The appli- — By Jane Rickards

TAIWAN BUSINESS TOPICS • DECEMBER 2020 47

20 Forecast.indd 47 2020/12/7 下午3:18 EXECUTIVE SUITE

Meet Louis Ko of Johnson & Johnson

For Louis Ko, general manager of Johnson & Johnson Medical Tai- wan, change is unavoidable. The Kellogg School of Management graduate has led the Taiwan affiliates of two multinational companies through big structural transitions, a major feat for anyone at any stage of their career. Ko says that being adaptable and adopting the right mindset were key to facing the challenges that those transitions entailed.

Ko met with TOPICS Deputy Editor Jeremy Olivier in November to discuss his educational and professional background, his experiences with change management, and his thoughts on how to make the market for medical devices in Taiwan more competitive.

What did you major in in college? courses there, but it was the people skills every few years. And compared to phar- Did your studies prepare you for your that proved really valuable in my career. maceuticals, where it may take some eventual career? time for patients to try various treat- For my undergraduate studies, What attracted you to the healthcare ment options before achieving their I majored in business administra- industry and medical devices in partic- goals, medical devices can allow them tion at National Cheng Chi University ular? Would you make the same choice to immediately start returning to their in Taipei. I think that this gave me a if you were starting over? normal lives. That impact gave me a lot very useful, generalized background. I When I was searching for my first of motivation to continue working in learned a little bit of everything related role 18 years ago, I really wanted to this area, and I would certainly make to business and took courses in other work for a multinational company. the same decision if given the opportu- core subjects as well. At that time, I was interested in a few nity to start over. Something that was also very useful different areas, such as fast-moving for my future career was my involve- consumer goods, banking, and tech What are your views on the competi- ment in AIESEC, an international companies. tiveness of U.S.-made medical devices in student organization that aims to bridge In the end, I did get some good the Taiwan market? What are the most students from diverse countries and offers, but the best was for a sales posi- significant barriers to better market help them understand social and cul- tion in J&J’s medical devices division. penetration? tural differences. Participating in this This role really attracted me because I think Taiwan’s medical device group required that I improve my social it allowed me to have some autonomy market is adequately competitive. At networking skills, which are essential over my sales plan and to serve different J&J, we specialize in products that are for surviving in the business world. territories. It was a good environment technologically advanced and evidence- In 2008, with the support of J&J, for professional and personal growth, based but bringing those products to I obtained my MBA from the Kellogg which was just what I was looking for. market is another story. Taiwan has School of Management at North- I also found medical devices to be a a world-class healthcare system with western University. While there, I began dynamic and fast-paced sector. Within excellent nationalized health insurance receiving more specialized knowledge the healthcare field, the life cycle of that is very beneficial to most patients. about business and management. I did medical device products is quite short It covers over 99% of the population learn some valuable hard skills from my – the technology and materials advance and has one of the best pricing struc-

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tures in the world. because of that, conflicts sometimes However, this also creates bar- arise. But with more empathy, they start riers to introducing better and more to understand each other and can solve advanced products. In the NHI’s reim- problems together. bursement category, which makes up I also champion the values of diver- around 70% of the market, prices are sity and inclusion, which are part of also very low. So, from the supplier’s J&J’s company culture. You need a perspective, figuring out how to launch team of people with diverse back- premium products in Taiwan can be grounds to learn from each other and quite challenging. Most multinationals grow. Inclusion is giving all team mem- are now trying to leverage patient self- bers the same priority to speak their pay and balance billing to overcome minds and contribute. You can’t always this challenge. This is also why we as an rely on the most outspoken people to industry are continually in conversation lead the team; you need to consider with the government on creating a more those who are humbler or more intro- flexible approach. verted as well. By doing so, you give Another issue is that Taiwan is a ceed, sometimes we need someone to the organization room to come up with fairly small market compared to some give us that extra push. He also taught more innovative ideas. of its regional neighbors. Whenever a me about juggling all the different parts Lastly, although I think empowering company wants to launch a new, state- of my life – family, social life, career people is key, I believe a truly good of-the-art product, they almost always – and finding the right balance to be leader can inspire and move people to choose China or Japan or Australia happy and successful. make an impact. instead. Moreover, smaller markets like Singapore and Hong Kong have What’s been the biggest challenge If you had one piece of advice for less regulatory barriers, and thus the you faced in your career and how did someone interested in healthcare as a time to market is much shorter. Taiwan you deal with it? career, what would that be? thus needs an accelerated review and Partway through my time at J&J, I In my view, the most important approval process for medical devices made a big career change. At that time, thing is to develop learning agility. to ensure that new products can hit the an opportunity arose for me to serve Like I mentioned earlier, medical local market in a timely manner. as the country head of a Danish com- devices evolve quickly. There are a lot pany whose Taiwan operation was of disruptive new technologies being Did you have a mentor as a student changing from a distributor to a direct introduced in the market. In addition, or young professional who had a big sales model. I had to help establish a multinationals frequently go through influence on you? new subsidiary and recruit a new team structural changes, and you need to I actually had two. One was the – basically, to start over from scratch. be prepared for that. So, the ability to managing director of J&J Taiwan back To do this successfully, I needed to be adaptive, to be willing to learn new when I first started. He encouraged me transform my mindset to one in which I things quickly, is critical. to pursue my studies abroad, to aim had nothing to lose. That pushed me to high and really put myself in an interna- take risks and be more creative. How do you like to spend your lei- tional environment. I also learned that if you can look at sure time? What gets you “recharged?” He also taught me about how the opportunities and share your vision I think for me, the interesting thing important it is to create a culture of effectively with your team, you can is that I can find ways to recharge while trust with my team. Managers who easily get everyone working toward the I’m still at work. If I’m doing something do not maintain a high level of trust same goal. I’ve taken this lesson with meaningful, something that I’m pas- in the workplace may have subordi- me and applied it to the multiple times sionate about, and I achieve success in nates who are unwilling to share their I’ve led a team through big changes at a that pursuit, that kind of work gets me true thoughts and feelings. Without company. recharged. that transparency, it’s hard to make the I do enjoy my leisure time as well, right decisions at a firm. So, it is incred- Do you have a particular philosophy though. I love all kinds of music – I used ibly important to create trust and be as as a manager? How has your experi- to play piano and guitar, and I still like authentic a leader as you can. ence over the years informed the way going to KTV to sing. That relaxes me. The other person who had a big you manage your team? A lot of my energy and happiness influence on me was a fellow alumnus Being at Kellogg really taught me the comes from spending time with my from Kellogg, who is now the founder importance of teamwork, something kids. I have two young boys and when and managing partner of a hedge that I think requires a lot of empathy I have time on the weekends, I just love fund. He showed me that, although it’s – an essential trait for a manager. Dif- hanging out with them, studying with common knowledge that we need to ferent teams in an organization have them, playing music and sports with step out of our comfort zones to suc- different demands and objectives and them. That also gets me recharged.

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Getting in Hot Water: Welcome to Taiwan’s Geothermal Springs

f you have never been to a hot ities were proliferating in Xinbeitou What comes out of the ground is spring, the time is surely right for (“New Beitou”), Guanziling in Tainan, cloudier in some places than in others. you to take a stress-busting hot- and Sichongxi in Pingtung. In Guanziling, the presence of silt parti- Ispring vacation in “the Heart of Asia.” At all three locations, you can find cles turns the water a rich shade of Thanks to encouraging news from buildings that preserve the traditions of brown. At Jiaoxi in Yilan County, the scientists working on coronavirus the Japanese era, as well as thoroughly sodium bicarbonate springs are rich in vaccines, people are once again daring modern, luxurious facilities. minerals and carbonic acid ions, but the to hope that international leisure travel Scalding mineral-enriched spa water is odorless and clear. can resume within months. When the waters bubble to the surface in the In Jiaoxi, travelers who lack the time door is finally unlocked, all who found island’s north, east, interior, and far or inclination for a full-body soak can 2020 to be an unusually trying year, south. In some of these locations, dip their feet for free in the hot-spring and who wish to refresh themselves in upmarket hotels have been built, creek that flows through Tangweigou one of Taiwan’s marvelous geothermal allowing hot-spring devotees to stay Hot Spring Park. Nearby, there are resorts, are guaranteed a welcome of overnight and bathe in the comfort places where, for a small amount of exceptional warmth. of private suites. Other springs, by money, you can enjoy the sensation of Taiwan’s hot springs, long known to contrast, remain just as Mother Nature fish nibbling the dead skin off your feet. and enjoyed by the island’s Austrone- made them. To access many of them, At the foot of Taiwan’s breathtaking sian indigenous inhabitants, have been you will need a four-wheel-drive vehicle mountain ranges, there are over 100 hot a tourist lure since the last decade of or good legs and a guide. springs in which tourists can soak away the 19th century. Taiwan’s hot springs are amazingly their aches. The country owes this abun- Soon after a German sulfur varied in terms of setting, tempera- dance to its position on the “Pacific merchant established a hot-spring club ture, and mineral content. Springs Ring of Fire.” This location also means in what is now Taipei City’s Beitou near Taipei tend to be acidic and sulfu- that earthquakes occasionally dislodge District, the Japanese took control ric, while those in other regions are boulders. Drawing up a comprehensive of Taiwan. The island’s new rulers usually carbonatic and rich in dissolved list of Taiwan’s geothermal spas is there- imported their love of hot springs, and calcium, sodium, magnesium, and fore impossible, because a spring may very soon hotels and other tourist facil- potassium. sometimes disappear under rocks in the

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wake of a tremor. The same phenomenon can result in a new spring appearing overnight, or an established one drying out. Each time a typhoon dumps huge amounts of rain on fragile hillsides, the sudden reshap- ing of the landscape may create or extinguish a hot spring. From the visiting tourist’s perspective, Taiwan’s hot springs have certain advantages over Japan’s onsen. While nudity and segregation by gender is the norm at Japanese hot springs, swim- suits are worn at most public springs in Taiwan, meaning families can splash

and relax together. JINSHAN HOT SPRING Whereas many hot-springs establishments in Japan deny entry to minerals in the water. individuals with tattoos, inked skin As its name proclaims, the Taiwan is no obstacle to enjoying a soak in Hot Spring & Fine-Cuisine Carnival – Taiwan. As in Japan, however, hot- which kicked off in October and runs spring guests are expected to wash their until June 2021 – combines the joy of bodies thoroughly before entering the hot-spring bathing with another of the spring water, and to rinse off any chairs country’s great passions. It is often said or buckets they may use in the process. that a dip in a spring followed by a Letting your towel touch the water is fine meal is an ideal pairing. Since you considered unhygienic. For that reason, should not eat much before the soak, some bathers balance their towels you are likely to emerge with a healthy yogi-like on their heads each time they appetite. immerse themselves. As in previous years, Taiwan’s

In springs where the temperature Tourism Bureau is joining forces with JIAOXI TANGWEIGOU HOT SPRING PARK exceeds 45 degrees Celsius, it is impor- local governments and operators of tant to gradually acclimate your body. hot-springs establishments to offer outpost guarding the shore for much Use a scoop to pour some water over attractive accommodation-and-dining of the postwar period. Fully restored yourself, then enter the pool one limb packages, tour discounts, and special at the beginning of the 21st century, it at a time. You may not realize you are offers on signature merchandise. There now offers a range of private rooms and perspiring, so bring a bottle of water to are also chances to win luxury bathing- outdoor pools. enable you to stay hydrated. accommodation vouchers. Four of the 19 resorts are in the east- It may seem counterintuitive, but The Bureau invites travelers to “take ern counties of Yilan, Hualien, and rather than showering after luxuriat- a hot-springs trip and savor warm Taitung – a region very often named by ing in a hot spring, you should let your memories for a lifetime” at 19 differ- both domestic and international tourists skin benefit from the trace quantities ent resort areas, five of which are in the as their favorite part of Taiwan. Other of sulfur, sodium carbonate, and other Greater Taipei area. Xinbeitou is one featured hot springs are conveniently of them. Another is Wulai, where visi- close to the population centers of Tai- tors can experience the culture of the chung and Kaohsiung. Austronesian indigenous Atayal people For details of special events and as well as spectacular mountain scenery. profiles of major hot-springs establish- For those who prefer a coastal milieu, ments, visit the multilingual website the springs around Jinshan and Wanli https://taiwanhotspring.net. Alterna- near the northern shore are a delightful tively, drop by any visitor information destination. center in Taiwan for leaflets and maps. One of Jinshan’s highlights is the For additional information about Governor-General’s Hot Spring. Built visiting Taiwan, please contact the tour- in 1939 by the Japanese colonial ism hotline at 0800-011-765 (toll free authorities as a venue for entertain- within Taiwan) or go to the Tourism ing dignitaries, it served as an army Bureau website (www.taiwan.net.tw).

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