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CONTENTS

NEWS AND VIEWS

marCh 2015 vOlumE 45, NumbEr 3 6 Editorial 一○四年三月號 It’s Time to Set Energy Policy 訂定能源政策，此其時也

Publisher 發行人 Andrea Wu 吳王小珍 7 Taiwan Briefs Editor-in-Chief 總編輯 By Timothy Ferry Don Shapiro 沙蕩 Associate Editor 副主編 Tim Ferry 法緹姆 11 Issues Art Director/ 美術主任/ Reviewing Pharmaceutical Policy; Production Coordinator 後製統籌 Clarifying Investment Criteria; Katia Chen 陳國梅 Making the Rounds Manager, Publications Sales & Marketing 廣告行銷經理 Caroline Lee 李佳紋檢討藥品政策；明文規定投資審查 Translation 翻譯標準；拜訪政府部門 Jay Chen, Yichun Chen, Charlize Hung By Don Shapiro 陳正杰, 陳宜君, 洪兆怡

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 15 Startups: Making up for Lost Tel: 2718-8226 Fax: 2718-8182 e-mail: [email protected] Time website: http://www.amcham.com.tw 新創企業：彌補失落的時光名稱：台北市美國商會工商雜誌發行所：台北市美國商會臺北市10596民生東路三段129號七樓706室電話：2718-8226 傳真：2718-8182 For years, the regulatory and funding environment in Taiwan was not Taiwan Business TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not conducive to fostering new startup necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. enterprises. Many would-be Taiwan- © Copyright 2015 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must ese entrepreneurs headed for Silicon be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. Valley or other locations instead. But 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 lately the situation has changed, in 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號發行日期：中華民國一○四年三月 part because of government recogni- 中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961 tion that Taiwan was losing economic opportunities by not doing enough to The rising stars in the Taiwanese startup scene are an eclectic mix of Chairman/ Thomas Fann encourage entrepreneurial initiative. Vice Chairmen/ Scott Meikle / Dan Silver By Matthew Fulco young tech firms, spanning the res- Treasurer: Cosmas Lu Secretary: Fupei Wang taurant, retail, media, and education sectors. The one thing they have in 2014-2015 Governors: William E. Bryson Jr., Sean Chao, 24 Five Taiwanese Startups to Rodney Van Dooren, Cosmas Lu, Scott Meikle, Dan Silver, common is a global distribution plan. Gordon Stewart, Ken Wu. Watch 2015-2016 Governors: Margaret Driscoll, Thomas Fann, Ajit Nayak, Vincent Shih, Stephen Tan, Fupei Wang, Lee Wood. BOOKS

2015 Supervisors: Arthur Cozad, Kai Speth, Neal Stovicek,Wern-Yuen Tan, Neil Waters. 30 The Chinese Leadership COMMITTEES: and How They Reached Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ the Top Miranda Liaw, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ Michael Wong; CSR/ Lume Liao, Fupei Wang; Customs & A review of The New Emperors: International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Power and the Princelings in China, Chou, Cosmas Lu; Human Resources/ Richard Lin, Seraphim Mar, Vickie Chen; Infrastructure/ L.C. Chen, Paul Lee; by Kerry Brown. Insurance/ Arthur Cozad, Joseph Day, Dan Ting; Intellectual By June Teufel Dreyer Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Manufacturing/ Thomas Fan, Hans Huang; Marketing & Distribution/ Wei Hsiang, Gordon BEHIND THE NEWS Stewart; Medical Devices/ Cyndi Chang, Tse-Mau Ng, Dan TAIWAN BUSINESS Silver; Pharmaceutical/ Margaret E. Driscoll, David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ 27 Uber: Transportation or Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ 33 The Ups and Downs of HTC Prudence Jang, Ajit Nayak, Wern-Yuen Tan; Sustainable Information Company? Development/ Kenny Jeng, Kernel Wang; Tax/ Cheli Liaw, Despite controversy and heavy The smartphone maker is diversi- Josephine Peng; Technology/ Revital Golan, Scott Meikle, fying its product lineup in an effort Jeanne Wang; Telecommunications & Media/ Thomas Ee, fines, Uber persists in seeking its Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & to reverse its fortunes. Tourism/ Anita Chen, Pauline Leung, Achim v. Hake. niche in the Taiwan market. By Jens Kastner By Tim Ferry with Philip Liu

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3 Contents.indd 4 2015/3/1 9:00:05 PM March 2015 • VoluMe 45 nuMber 3 COvEr SPONSOr INDuSTrY F CuS

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taiwan business topics • march 2015 5

3 Contents.indd 5 2015/3/1 9:00:09 PM E d i t o r i a l It’s Time to Set Energy Policy

or two days in late January, a total of 173 delegates – the desirability of maintaining a diverse mix of energy sources in government officials, legislators, scholars, business leaders, order to achieve flexibility and assure a stable power supply. F and representatives of civic groups – attended a National Not all those who opposed the Longmen plant – whose Energy Conference called by the Ministry of Economic Affairs. on-again, off-again construction schedule over many years raised The group debated the crucial issue facing Taiwan following Pres- questions about the integrity of the facility – would necessarily ident Ma Ying-jeou’s decision last year to suspend construction object to keeping the existing plants in operation, especially if the of the controversial Longmen nuclear power plant. In the absence alternative is power shortages weakening the Taiwan economy. of power generation from that facility, what should Taiwan do to The 40-year timespan is not an absolute condition. According to ensure sufficient energy supplies in the years ahead? a New York Times report, for example, most of the 100 nuclear To no one’s surprise, the conference ended with no agreement power plants in the United States have either already been on the best way forward. Proponents of making Taiwan a “nucle- granted license extensions or will likely receive them, generally ar-free homeland” argued that conservation and greater reliance for an additional 20 years. on green energy would make it possible to close down the island’s It is also important to note that the recommissioning process existing three nuclear plants (each with two reactors) when their entails rigorous upgrading in components, equipment, and tech- current lifecycles expire between 2018 and 2025. Other partici- nology that should increase public confidence in the relicensed pants countered that alternative sources such as solar and wind plants’ safety and reliability. But that extensive replacement energy, while beneficial for peak usage, are unsuitable to consti- and engineering work takes a considerable amount of time to tute the base load of the national power supply, as they are complete. If left until the end of the original lifecycle, the national unavailable when the sun is not shining or wind blowing. Those power supply could suffer a debilitating shortage while the plants experts see Taiwan’s only realistic option – short of accepting are closed down for retrofitting. zero economic growth, which would be anathema to most of the A more reasonable approach would be to carry out the population – as extending the life of the existing nuclear plants upgrades in stages, starting now for the first units, timed to beyond the original 40 years, as has become common practice in coincide with regularly scheduled outages for refueling and main- many countries around the world. tenance. That cannot be done, however, until the administration With the failure of the conference to deliver any consensus, gives the green light to the Atomic Energy Council to act on the the ball is now squarely back in the government’s court. In their Taiwan Power Company’s application for license extensions. speeches at the conclave, President Ma and Premier Mao Chi-kuo Time is running out to assure Taiwan’s energy sufficiency. As said that all options remain open, which should include the possi- relicensing appears to be the only practical option, the govern- bility of recommissioning the current nuclear units. They stressed ment needs to act soon to start preparations.

訂定能源政策，此其時也

濟部在1月底召開為期兩天的全國能源會議，有173 核四廠興建多年，期間工程數度停擺，有人因此質疑核位代表 -- 政府官員、立法委員、學者、企業界領袖四廠的安全性，但不是每個反對核四廠的人都必然反對讓現經與公民團體代表共同出席。馬英九總統去年決定停有的核電廠延役，特別是如果核電廠如期關閉將導致電力短建引發爭議的核四廠之後，與會人士利用這次會議討論台灣缺，進而削弱台灣的經濟。核電廠40年的壽命並非絕對。面臨的重大議題。在核四廠不能發電的情況下，台灣要如何〈紐約時報〉就曾報導，在美國的100座核電廠當中，多數已確保未來幾年電力供應無虞？經取得延役的許可，或者可能獲准延役，而一般的延役年限不意外的是，這次會議未就未來的方向達成共識。主張將為20年。台灣建設成為「無核家園」的人士說，節約能源加上提高綠此外，必須指出在核電廠延役的過程中，組件、設備及技色能源的發電比例，台灣便可關閉現有的3座核電廠。這3座術都得大幅升級，這應該可讓民眾對於延役核電廠的安全與核電廠各有兩個發電機組，分別將在2018到2025年之間除可靠性更具信心。但這些大規模的汰舊換新與相關的工程會役。其他與會人士則反駁，太陽能和風力發電在發電滿載時需要很長時間來完成，如果等到原定壽期即將結束的時候才有幫助，但不適合承擔全國電力供應的主要責任，因為沒有開始，到時電廠關閉進行更新，全國的電力供應可能出現嚴陽光或風力時，就無法產生電力。這些專家認為，除非接受重缺口。經濟零成長（但台灣多數民眾不會接受），唯一實際的選項比較合理的做法是分階段更新，最早需要更新的機組現在是跟世上許多國家採同樣做法，讓現有核電廠的服役年限延就要開始，配合定期關機添加燃料與維修的時間來進行。但長到原定的40年以上。在那之前，政府必須先讓原子能委員會審核台電公司有關核由於這場會議未能達成任何共識，問題又回到政府手上。電廠延役的申請。馬總統和行政院長毛治國致詞時表示，政府不排除任何選確保台灣電力供應無虞的時機在逐漸流逝。由於核電廠延項，也包括讓現有的核電廠延役。他們強調要維持能源的多役似乎是唯一實際可行的選項，政府需要趕緊採取行動，以樣性，以保持彈性，並確保電力來源穩定。便展開必要的準備工作。

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— by TIMOTHy ferry —

MACROECONOMICS

tHe new Year brinGs sOMe POsitiVe news While no one seems able to agree on whether the new Chinese year is the Year of the Sheep or the Goat, Taiwan’s economy broadly speaking bears more resemblance to a charging Ram. The economy beat most growth forecasts in 2014 to come in at 3.74%, according to the Directorate General of Budget, Accounting and Statis- tics (DGBAS) – considerably higher than the DGBAS’s own late-year fore- cast of 3.41%. 2015 is expected to be even better; DGBAS has raised its fore- cast from 3.51% to 3.78% based on expectations of strong manufacturing PLANE CRASH — Rescue personnel recover the fuselage of TransAsia Airways flight GE235, which crashed into the Keelung River Feb. 5, killing 43 and injuring 15. performance and rising projections for photo: cna the global economy. The inflation picture also looks favor- into January. Taiwan’s technology manufacturing able. Taiwan’s Consumer Price Index fell Although the inflation index sectors continue to be the main driv- by 0.94% year-on-year in January on the dropped in January, consumers might ers of exports, accounting for 43.5% one-two punch of plunging oil prices, well have failed to notice, as core of the total, or US$10.91 billion. With which bottomed out below US$50 that consumer prices advanced some- the inclusion of the machinery sector, month, and declines in heavily weighted what, by 0.64%, while food prices which saw annualized growth of 18% housing prices, which slumped 2.17%. rose 4.45%. Since Taiwan imports in January, the combined machinery and The Ministry of Interior reported that some 98% of its energy needs, falling electronics industries comprised 50.6% total housing transactions decreased by energy prices have a strong impact on of all exports, and gained 10.9% year- 14% in 2014, and the declines continued consumption and have raised consumer on-year to reach US$12.70 billion. New confidence to a record level of 88.23 on export orders, a leading indicator, rose the index tracked by National Central 4.52% in December 2014, the latest Taiwan sTock exchange PeRFoRMance University. The unemployment rate figure available from the Ministry of

THE RED LINE SHOWS CHANGES IN TRADE VALUE AND came to 3.79% in December, the fourth Economic Affairs, while the DGBAS’s THE SHADED AREA CHANGES IN THE TAIEX INDEX. straight month to show a drop. Purchasing Managers Index (PMI), an 9750 135 Exports rose in January on a year-to- indicator of manufacturer’s sentiment, 9500 120 year basis by 3.4%, to US$25.11 billion, rose from 50.1 in December to 53.5 in 9250 105 over imports of US$20.32 billion, for January, also signaling growing opti- 9000 90 a favorable balance of US$4.8 billion. mism. 8750 75 Taiwan’s depreciating currency had an 8500 60 impact on these figures; with the New DOMESTIC 8250 45 Taiwan dollar falling to 32:1 against the 8000 30 U.S. dollar in January, the numbers look transasia airwaYs fLiGHt 7750 15 better in NT$ terms than in U.S. dollars. CrasHes intO KeeLUnG riVer 7500 0 For example, while total trade in Janu- On February 4, TransAsia Airways January ary increased on an annual basis in NT$ flight GE235 crashed into the Keelung terms by 5.5%, it actually declined in River just after takeoff, killing 43 and

data source: twse unit: nt$ billion US$ terms, by 0.4%. injuring 15.

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The Airbus ATR-72-600 plane carrying 53 passengers – 37 of them Chinese tourists – and five cabin crew took off from Songshan Airport in the heart of Taipei at 10:52 a.m. bound for the offshore island of Kinmen. But it quickly ran into trouble, with the pilot calling in a “Mayday” emergency alert less than two minutes into the flight. At less than 500 meters in elevation, the plane began a rapid descent that the pilot managed to direct between buildings and – with the aircraft tilted on its side – just over the Nanhu Bridge, where it clipped a taxi before crashing into the Keelung River. The dramatic scene was captured on a motorist’s dash cam and quickly made international headlines. PRISON BREAK — Police units surround Kaohsiung Prison to prevent the escape The incident was the second major of six armed inmates holding the prison warden and chief guard hostage. crash for TransAsia Airways in less than photo: cna a year. Last summer, 48 people were killed when a TransAsia flight crash- those who fail and putting them through while descended upon the prison. landed in a residential neighborhood retraining. The crash in the heart of Warden Chen Shih-chih and head guard near Penghu’s Magong Airport during a Taipei also renewed calls to move Song- Wang Shih-tsang then offered them- typhoon. shan Airport outside of city limits. selves as hostages in exchange for the Preliminary information gleaned lower-ranked guards, which the convicts from “black box” flight recorders indi- PrisOn breaK atteMPt accepted. Amidst sporadic gunfights and cates that human error may have been enDs in Mass sUiCiDe intense negotiations, the inmates and a significant factor in the crash. The Six prisoners serving lengthy their two hostages remained holed up pilots observed engine failure in the No. sentences at the Kaohsiung Prison in in the prison throughout the night as 2 engine on the left side of the craft, southern Taiwan attempted to escape on police SWAT teams and military units, but apparently mistakenly turned off February 11, starting a 14-hour ordeal along with the press, took up positions engine No. 1 on the right side, in effect that ended in the mass suicide of all six surrounding the prison. completely disabling the plane. The inmates. Led by the alleged leader of The prisoners demanded to meet pilots attempted to restart engine No. 1 the Kaohsiung chapter of the Bamboo with Chang An-lo, the alleged “boss but were unable to gain the necessary lift Union triad, Cheng Li-te, who was serv- of bosses” of the Bamboo Union who and ultimately lost control. A representa- ing a 28.5-year sentence for murder, claims to be out of the crime business and tive of the French Bureau of Enquiry and and accomplice Chin Yi-ming, serv- now heads, the pro-unification Unionist Analysis for Civil Aviation confirmed ing a 46-year term for robbery and Party. The request was denied, but Chang that the Airbus ATR-72-600 is capable other crimes, the six convicts feigned was able to reach the prisoners on his cell of operating with a single engine, even illness to gain access to the prison infir- phone and reportedly warned them of an during takeoff. mary. Once inside the infirmary, the imminent raid by the police. TransAsia Airway’s stock fell sharply six overpowered the guards, taking During the night and early morn- in the aftermath, and the company them hostage, before proceeding to ing, police assented to the hostage- announced compensation of NT$14.9 break into the prison armory and seize takers’ request for food and two bottles million (US$473,000) per passenger to assault rifles, handguns, and over 200 of kaoliang liquor. After drinking the the victims’ families. rounds of ammunition. Shortly after- kaoliang, the prisoners released the two At the recommendation of the Civil wards, they attempted to shoot their hostages unharmed and turned their Aeronautics Administration, TransA- way out of the prison, but were rebuffed weapons on themselves. The event raised sia began retesting its remaining pilots by prison guards as well as local and concerns of overcrowded and substan- who operate the ATR-72-600, grounding national police units that had mean- dard conditions in the nation’s prison

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system, as well gaps in the monitoring of econoMic indicaToRs prisoners and the training of guards and Unit: US$ billion Year Earlier police to handle such incidents. Current Account Balance (Q3 2014)p 15.8 14.9 Foreign Trade Balance (Jan.) 4.8 2.95 MOre tOP OffiCiaLs New Export Orders (Dec.) 43.5 41 resiGn tHeir POsts Foreign Exchange Reserves (end Jan.) 415.9 416.9 Minister of National Defense Yen Ming resigned January 27, citing Unemployment (Dec.) 3.79% 4.08% personal and professional reasons. He Discount Rate (Feb.) 1.875% 1.875% was replaced by Chief of the General Economic Growth Rate Q3 2014p 3.63% 1.45% Staff Kao Kuang-chi, who had previ- Annual Change in Industrial Output (Dec.)p 7.33% 5.55% ously briefly held the position of acting Annual Change in Industrial Output (Jan.-Dec.)p 6.14% 0.75% Defense Minister in August 2013. Annual Change in Consumer Price Index (Dec.) 0.61% 0.34% Two days later, Premier Mao Chi-kuo Annual Change in Consumer Price Index (Jan.-Dec.) 1.20% 0.79%

accepted the resignation of Minister p=preliminary sources: moea, dGbas,cbc, boFt of the National Development Council Kuan Chung-ming. Kuan reportedly had Wang Yu-chi, resigned on February 10 when he resigned to take responsibility expressed determination to leave the post after prosecutors found no evidence to for the abuse-death of Corporal Hung as early as December last year over frus- back up charges he leveled last August Chung-chia. tration with the lack of progress on the against his former deputy, Chang Hsien- Free Economic Pilot Zone legislation in yao. Wang had accused Chang of leaking tinG Hsin OiL bOss the Legislative Yuan and disappointment national secrets to China, including reLeaseD On baiL with the overall political environment. Taiwan’s bottom line in trade negotia- Disgraced Ting Hsin Oil and Fat With Kuan returning to the faculty at tions. After investigators cleared Chang Industrial Co. chairman Wei Ying- National Taiwan University, Minis- of all charges for lack of evidence, chun was released on NT$100 million ter without Portfolio Woody Duh was Wang submitted his resignation “to take in bail on January 28 by the Changhua tapped to take over as NDC minister. responsibility.” District Court. Wei, one of four brothers Another Cabinet member, Main- Personnel changes also occurred making up one of the wealthiest fami- land Affairs Council (MAC) Minister among high-level presidential staff. lies in Taiwan, was indicted on October On February 5, the Presidential Office 21 for his role in the waste oil scandal confirmed resignations by National that rocked Taiwan at the end of 2014. Security Council Secretary-General King In that incident, raw materials regarded Pu-tsung, one of President Ma Ying- as unfit for human consumption were jeou’s closest political advisers, and allegedly used in the production of edible Presidential Office Secretary-General oils. The court decided that since the Timothy Yang, a former foreign minister. three-month holding period had been King, who cited personal health as his reached and prosecutors had concluded reason for resigning, is reported to have their investigation, there was no further recently undergone at least two heart reason to hold Wei. surgeries. Yang tendered his resignation The bail decision was immediately on the grounds that his mission had been appealed to the Taiwan High Court by accomplished and that he needed to care the Changhua District prosecutor’s office, for his elderly mother. As per custom, he which has been investigating the case will continue to serve as a senior advisor since late last year. Rejecting the appeal, to the president. the High Court sent the case back to Yang has been succeeded by Tseng the Changhua District court for recon- RESIGNATIONS — National Security Yung-chuan, former deputy legisla- sideration, which again granted bail but Council Secretary-General King Pu- tsung, one of President Ma's closest tive speaker. King was replaced by raised the amount to NT$300 million. advisers, is one of several top officials Kao Hua-chu, a former Minister of The release of three other defendants in to have stepped down recently. National Defense who served in that the case on NT$5 million in bail was also photo: cna role from 2009 until July 29, 2013, upheld by the Taiwan High Court.

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tsai tHrOws Hat had been deemed unsafe by the produc- in tHe rinG fOr 2016 tion crew. The accident killed Chen Democratic Progressive Party (DPP) Yun-long, while his two co-workers were Chairwoman and 2012 presidential hospitalized with leg fractures and head candidate Tsai Ing-wen declared on a injuries, according to news sites. Scors- February 14 Facebook post that she ese was not at the scene of the accident, would seek to run for the presidency which is being prepared for filming in under the DPP banner in the 2016 elec- the coming year. tion. Tsai had long been considered the likely candidate to represent the oppo- INTERNATIONAL sition DPP as it attempts to maintain momentum following last Novem- beef OVersHaDOws ber’s elections in which its candidates Minister’s Visit tO DC and allies took six out of the nine major Minister of Economic Affairs John mayoral positions at stake. As popular Deng’s visit to Washington D.C. in mid- Tainan mayor William Lai and former February, the first by an MOEA head in DPP party chair Su Tseng-chang have many years, was overshadowed by his MINISTERIAL TRIP — Minister of Eco- nomic Affairs John Deng's visit to both declared that they will not run, Tsai announcement that bans on the import Washington D.C. was eclipsed by is so far the only candidate in the party’s into Taiwan of six different types of announcements that Taiwan would ease import bans on certain U.S. beef forthcoming primary election. The ruling beef products from the United States products. Kuomintang (KMT) is not expected to would be lifted. The Council of Agri- photo: cna nominate a candidate until mid-year. culture made the decision after experts ruled that products such as marrow Denying any such link, the MOEA said aCCiDent Mars start and tallow were not internal organs it was coincidental that the timing of Of sCOrsese fiLM sHOOt – and thus were not covered by amend- the announcement corresponded with A scaffolding collapse on the site ments passed by the Legislative Yuan Deng’s travel schedule. of acclaimed director Martin Scors- in late 2009 to prohibit the import of ese’s new film, Silence, claimed the life such organs. Legislators from both BUSINESS of one worker and sent two more to the sides of the aisle expressed outrage over hospital with serious injuries. The acci- the announcement. Local media inter- GerManY’s basf dent happened at the Chinese Culture preted the policy change as intended to eXPanDs PrODUCtiOn and Movie Center on January 29 when a gain U.S. support for Taiwan’s eventual The world’s largest chemical ceiling collapsed onto contractors hired inclusion in negotiations for member- company by sales, Germany’s BASF, to reinforce an existing structure that ship in the Trans-Pacific Partnership. expanded its investment in Taiwan with the opening of its new facilities in the Taiwan's JanUaRY 2015 TRade FigURes Kuanyin Industrial Park in Taoyuan (YeaR-on-YeaR coMPaRison) on February 5. The new facilities will HK/china Japan asean ToTaL provide advanced processing chemi- cals and materials such as ultra-pure

10.34 electronic grade sulfuric acid (H2SO4) 9.25 4.56 4.21 4.28

3.89 and ammonia water (NH4OH), as 2.97 3.05 2.83 2.36 1.66 1.7 well as high-quality metal feedstock, to 25.12 24.29 the semiconductor, display, and metal 21.34

2015 2014 2015 2014 2015 2014 20.32 systems industries. Lothar Laupichler,

U.s. europe senior vice president of electronic materials business unit at BASF, said in a

2.88 statement that the investment reflects 2.66 2.47 2.43 2.28 2.37 2.24 2.12 the company’s commitment to be closer 2015 2014 2015 2014 2015 2014 to its customers and provide “faster and more efficient solutions that satisfy UNIT: US$ Billion exports imports SOURCE: BOFT/MOEA specific needs.”

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Reviewing Pharmaceutical Policy

A National Drug Policy Forum brought wide discussion but few conclusions.

he Ministry of Health and Welfare (MOHW) in early February convened a one-day National Drug Policy Forum T (originally scheduled to be held in December 2014), bringing 檢討藥品政策 together representatives from the various stakeholders: government, hospitals and other healthcare providers, the pharmaceutical industry (both originals and generics), consumer and patient groups, and 全國藥品政策會議引起廣泛討論，但實 academic experts in healthcare policy. 質結論不多。 It was only the second such Forum ever held – and the first since 2008 – and the items on the agenda included a number of thorny issues on which different stakeholders have very different views. Behind those issues are some basic questions about how drug policy 生福利部2月初召開了為期一天的全國藥 should be framed. How, for example, can Taiwan’s National Health 品政策會議（原定2014年12月舉行）， Insurance system best control costs to keep the program solvent while 衛聚集了包括政府、醫院與其他醫療機構、 still providing patients and physicians with access to the latest inno- 製藥業者（含原廠藥、學名藥）、消費者和病友 vative medications? What, in addition, is the proper balance between 團體，以及衛生政策領域之專家學者等各界利益 protecting patented drugs and promoting a domestic pharmaceutical 相關代表前來參加。 industry based primarily on producing generics? 繼2008年首次舉辦後，這是多年來唯一舉辦 The meeting – which lasted into the early evening – ended with 的類似會議。其議程所討論的主題，包含諸多讓 few concrete conclusions, but at least with a productive airing of 各界代表意見分歧的棘手議題。而這些議題基本 some important topics. Among them: 上都與如何制訂藥品政策有關。舉例來說，臺灣 Drug Expenditure Target (DET). For the past two years, the 全民健保制度的成本能否做最有效的控管，讓持 National Health Insurance Administration (NHIA) has implemented 續穩健經營外，仍有餘力提供病友和醫師取得新 a pilot DET program under which a target is set for NHI spending on 藥？還有如何在保護專利藥品，與促進國內藥商 pharmaceuticals for the coming year, with agreement from industry 製造學名藥之間取得適當平衡？ to make up any difference if the target is exceeded. Industry has 會議持續到傍晚結束，雖然只獲得少數具體結 regarded the system as more transparent and predictable than the 論，但至少某些重要議題上似乎有比較正面的發 previous mechanism of periodic Price Volume Surveys followed by 展。其中包括了： heavy cuts in reimbursement prices. Now the two-year pilot period 藥品支出目標制（DET）：過去兩年，中央健 has ended, and a decision needs to be made on whether to continue 康保險署試辦了藥品支出目標制，其目的是為下 the program. The consensus at the Forum was that the government 一年度全民健康保險的藥費支出預設目標，並與 should make that determination after consulting further with all 藥商達成協議，若藥費超過預設目標則啟動藥價 stakeholders. 調整機制。藥商認為此制度比先前定期藥價調查 Balance Billing. NHIA is interested in adopting the concept of 容易伴隨大幅削價的機制更透明、更易預測。如 Balance Billing for certain categories of pharmaceuticals. Under this 今，兩年試辦期已結束，要針對是否繼續該項計 system, the health insurance system would cover part of the cost of 劃做出決定。會議中各方達成共識，認為政府應 the drug, while the patient agrees to make up the remainder. A poten- 在定案前廣泛徵詢所有利益關係人的意見。 tial benefit of this method is to encourage manufacturers to keep 差額負擔：健保署有意針對某些類別的藥品， medications on the market even when the reimbursement price has 採取藥價差額負擔的概念。在這個系統下，醫療 been decreased. 保險制度將在患者同意負擔部分藥價的前提下， But the research-based pharmaceutical industry is wary of 負擔藥價其餘部分。這種方法的潛在好處在於鼓 balance billing unless some policy changes are first introduced. These 勵藥商就算健保核價偏低，仍保持市場上藥品的 include liberalizing current restrictions on patient education so that 正常供應。 patients can be better informed about the advantages of a given 但除非事先有相關政策的調整，否則開發性製 brand, requiring hospitals to limit their demands for endless rounds 藥業者對差額負擔制度仍有疑慮。政策的調整應 of discounting and to abandon their practice of removing one drug 包括放寬目前對病友進行教育的限制，讓病友更

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from their formulary for every new drug added, and eliminating price 加清楚某一藥品的優勢，限制醫院永無止盡地要 comparisons by groupings. The argument is that these changes are 求砍價，放棄每新增一種新藥，便從處方集刪掉 needed to ensure the continued availability of original drugs in all 一種藥品的做法，並藉分組來排除價格的比較。 categories, which is the avowed purpose of balance billing. 這些改變的必要性，在於確保病友能持續使用各 Automatic generic substitution. Local manufacturers have been 種類別的原廠藥，符合差額負擔的推動宗旨。 seeking a change in regulations to permit pharmacists to substi- 學名藥替代：一直以來，本土藥商無不期盼修 tute generic drugs for original medicines on a prescription unless the 法，希望除非有醫師明確禁止該藥品，否則應允 physician has explicitly disallowed that option. Such a system is in 許藥師以學名藥替代處方原廠藥。美國等某些市 place in major markets, including the United States. But some Forum 場已然出現這種做法。但有部分與會者反駁，說 participants countered that the rationale for generic substitution in 以學名藥替代的理由顯然是為了省錢，然而與世 those markets is significant cost savings, whereas generic prices in 界一般藥價相比，台灣的學名藥價格異常的貴， Taiwan are unusually high by world standards – often 80-100% that 通常是原廠藥價格的八成或者同等價格。另外， of the original. At the same time, as a generic’s chemical composition 學名藥化學成分與原廠藥品並不全然一致，萬一 is not precisely the same as the original, it is uncertain who would 替代藥品效果不佳或出現不良副作用，誰能承擔 bear the responsibility in case the substitution is ineffective or has an 責任？ adverse impact. 罕病孤兒藥：此類藥物被開發用於治療相對 “Orphan drugs.” Pharmaceuticals in this category have been devel- 罕見的疾病，但因為使用量少而價格昂貴。雖然 oped to treat relatively rare medical conditions, but because of the 孤兒藥增加了健保預算的負擔，但從社會福利角 low volume they tend to be quite expensive. Although they add to the 度來看，讓病友有充分機會使用這類藥物仍相當 burden on the NHI budget, their availability is regarded as impor- 重要。官員表示，將研究建立孤兒藥獨立撥款管 tant from a social welfare perspective. Government officials said 道，以減輕正常預算的壓力。 they would study the idea of creating a separate funding channel for — 撰文／沙蕩 orphan drugs to relieve the pressure on the regular budget.

— By Don Shapiro

Clarifying Investment Criteria

What is needed now is a full, transparent listing of all the FSC Vice Chairman Huang Tien-mu has given criteria upon which investments will be judged. assurances that the investment approval process in future will follow international practice. photo: cna

ince its establishment in 2012, AmCham Taipei’s Private Equity Committee has held numerous constructive meetings with S officials from relevant government agencies, particularly the 明文規定投資審查標準 Investment Commission under the Ministry of Economic Affairs and the Financial Supervisory Commission. The FSC is instrumental in considering investment approvals for cases involving either financial 投資申請審查需要完整透明的審查標準。 institutions or companies publicly listed in Taiwan. The reason for the Committee’s creation was concern in the investment community that Taiwan’s investment approval process was 2012年成立以來，台北市美國商會私募股 frequently opaque and inconsistent. Private equity (PE) firms cited 權委員會曾與政府相關單位，特別是經濟 instances in which they believed they had fully adhered to the publicly 自部投資審議委員會，以及金融監督管理委 stated legal requirements, only to find that their investment applica- 員會，進行過多次建設性會談。金融監督管理委 tions were rejected or held up seemingly indefinitely. That outcome 員會對於投資金融機構，或投資在台公開上市公 was troubling, since the PE companies had already expended substan- 司的申請審查扮演關鍵性的角色。 tial time and money in negotiations and due diligence with input from 私募股權委員會之所以成立，是因為投資界認 lawyers, accountants, and consultants. As a consequence, Taiwan has 為，臺灣投資審查過程不透明和前後不一致的狀

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received no foreign PE funding in recent years, even though billions of 況層出不窮。從私募股權公司所引用的例子可 dollars have been flowing into many other markets in the region. 知，儘管自認己遵守公開聲明的法律規定，投資 Over the past three years, however, the discussions with Taiwan 申請案最後不是被否決，就是被無限期延宕。這 government officials have brought a number of positive developments: 結果令人相當困擾，因為私募股權公司往往已花 • The Executive Yuan drafted amendments to the Statute for 了大把時間與成本，聘雇律師、會計師及顧問完 Investment by Foreign Nationals and the Mergers & Acqui- 成談判和盡職調查。也因為如此，近幾年私募股 sitions Law to define what constitutes adequate protection to 權資金大量流向亞太地區其他市場，來臺投資者 minority shareholders in cases of corporate takeovers. Although 少之又少。 the bill has not yet been taken up by the Legislative Yuan, even- 不過，過去三年與台灣政府的反覆討論，帶來 tually its passage will provide a clear definition of what is 下列若干正面發展： required for approval by the government in these cases. •行政院已草擬修正外國人投資條例和企業併 • The Investment Commission eliminated a previous guideline 購法，來介定企業收購時，小股東的權益如何充 that Taiwan’s “national champions” (defined as the Top 100 分獲得保障。雖然立法院尚未通過該法案，但最 corporations) are ineligible for takeover by foreign investors. 終通過後應能清楚提供政府核准申請案所需的明 • The FSC dropped some of the more subjective criteria it previ- 確規定。 ously used in reviewing investment applications, such as the •經濟部投資審議委員會刪除了過去台灣「全 impact the deal might have on capital markets or in weakening 國領導企業」（定義為百大企業）不得被外資接 the capital structure of the target company. 管的規定。 • The Investment Commission pledged to present its review •金融監督管理委員會已取消一些較為主觀的 criteria in future as formal regulations rather than merely 審查標準，例如可能衝擊資本市場或削弱目標公 FAQs posted online. The Commission has already removed 司資本結構等。 the English-language version of the FAQs from its website, •經濟部投資審議委員會已承諾未來會將審 although the Chinese-language version remains (presumably 查標準以正式法規的方式呈現出來，而非只是將 until passage of the above-mentioned legislative amendments). 《常見問題Q&A》公布在網站上。儘管英文版的 • High-level officials made public statements welcoming 《常見問題Q&A》已從投審會的網站移除，但仍 the inflow of PE investment. At a conference in Taipei last 會保留中文版的《常見問題Q&A》至上述法案修 November organized by the Asian Venture Capital Journal, 訂通過為止。 for example, FSC Vice Chairman Huang Tien-mu stressed •政府高層已公開發表聲明，表示歡迎私募股 that the investment approval process in future would “respect 權資金的注入。例如：去年11月，由亞洲創業 the market mechanism and follow international practice.” He 投資期刊在台北舉辦的會議中，金融監督管理委 advised the participants to disregard the “legacy cases” that had 員會副主任委員黃天牧就強調，未來的投資審查 been sources of concern. 過程將「尊重市場機制，並採取與國際一致的作 “Clearly we’ve made some substantial progress over the past 法」。並建議與會人士未來申請時，忽略「過去 few years in clarifying the investment criteria,” says William E. 個案」所帶來的困擾。 Bryson Jr., Senior Advisor of Global Market Advisors and chairman 領先顧問公司資深顧問同時也是美國商會的 of AmCham’s PE Committee. He notes that what is needed now 私募股權委員會主席柏威廉說，「過去幾年在釐 is a full, transparent listing of all the criteria upon which invest- 清投資審查標準方面確實已有進展」。他同時指 ments will be judged, such as what would occur with passage of the 出，現在需要的是完整透明的審查標準，包括通 legislative amendments and replacement of the FAQs with explicit 過修法、以正式明文規定代替《常見問題Q&A》 regulations. “PE investors will accept whatever rules the government 等等。他進而解釋：「私募股權投資人願意遵守 sets,” he explains. “But they need to have clear and objective regu- 政府所有規定，但是該規定必須明確客觀，足以 lations so they can judge which projects are going to be feasible and 讓他們判斷哪些投資計畫可行或不可行」。 which are not.” — By Don Shapiro — 撰文／沙蕩

ach year the various AmCham Taipei committees follow up their White Paper entries with calls Making the Rounds E on the relevant government offices to discuss the current advocacy issues. Over the past several months these meetings have included: White Paper follow-up meetings with various • Environmental Protection Administration, December 22. On behalf of the minister, Chief Secretary Hsieh government agencies. Yein-Rui met with delegates from the Chemical Manu- facturers and Sustainable Development committees.

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拜訪政府部門

白皮書發表後與各政府部門的後續會談 IP&L Committee members at meeting with Director-General Wang Mei-hua of the Taiwan Intellectual Property Office.

北市美國商會每年的白皮書發表之後，商會的各個委員會會拜訪相關政府部 The chemical industry representatives expressed thanks to the EPA 台門，針對他們在白皮書中提出的問題進 for taking the lead in coordinating its new registration system for 行討論。過去幾個月，這些會談包括： chemical entities with one being introduced by the Ministry of •環境保護署（12月22日）。環保署主任祕書謝 Labor, thus saving companies from much duplicated effort. The 燕儒代表署長出面會見化學製造商委員會與永 EPA agreed to study the Sustainable Development committee’s 續發展委員會的代表。化學製造商代表感謝環 suggestion to include additional virgin-fiber paper/tissue prod- 保署主動與勞動部協調新的化學品登錄管理制 ucts (not just those utilizing recycled paper) under its Green Mark 度，讓業者不必重複跟兩個政府部門交涉。永 program, provided they come from certified sustainable forests. 續發展委員會建議環保署的環保標章規範，擴 • Council of Agriculture, December 26. Deputy Minister Chen 及更多來自認證為永續森林的原生木漿家庭用 Wen-de offered the COA’s assistance if members of the Agro-chem- 紙產品（不限再生紙產品），環保署表示會進 ical Committee encounter difficulties launching new products due 一步研究。 to problems, as raised in the White Paper, with the crop grouping •農業委員會（12月26日）。農委會副主任委員 requirements of the pesticide registration system. Retail Committee 陳文德表示，如果農化委員會的會員公司在推 representatives also discussed difficulties with the certification 出新產品時，因為類似白皮書所提到的新農藥 process for imported organic foods. 登記系統及採用作物分群制度的問題而遭遇困 • National Communications Commission, December 30. Chairman 難，農委會願意提供協助。零售委員會的代表 Howard Shyr had positive responses for several of the White Paper 也對進口有機食品認證程序所遇到的問題尋求 issues of the Telecom & Media and Technology committees. These 建議。 included plans to increase spectrum utilization and efficiency, •國家通訊委員會（12月30日）。對於電信及媒 promote the use of Small Cell base stations, and to bring NCC 體委員會和科技委員會在白皮書中列舉的好幾 regulations in line with international copyright-licensing practices 個問題，國家通訊委員會（NCC）主任委員石 by distinguishing between cable TV and IPTV technology licenses. 世豪給予正面回應，包括計劃提高頻譜使用與 He also promised to take steps to ensure that channel providers are 效率、推廣小型基地台以及在給發執照時區分 not asked to submit confidential business documents. 有線電視與IPTV，使NCC的規定與國際著作權 • Taiwan Intellectual Property Office, January 28. The delegation 授權實務相符。他並且承諾採取因應措施，以 from the Intellectual Property & Licensing (IP&L) Committee 確保頻道業者不會被要求提供商業機密文件。 praised TIPO for the training it has provided to prosecutors and •智慧財產局（1月28日）。智慧財產權與授權 judges for handling trade-secrets cases since passage of a strength- 委員會的代表讚揚智慧財產局在營業秘密法在 ened Trade Secrets Act in 2013. Director-General Wang Mei-hua 2013年增訂通過之後，為檢察官和法官提供處 pledged to continue those efforts. She was less certain that satis- 理營業秘密相關案件的訓練。局長王美花承諾 factory approaches could be found to crack down on online piracy 繼續推動這方面的努力。對於是否能找到理想 from offshore websites. 的辦法打擊海外網站侵權行為，王局長則表示 • Taiwan Food & Drug Administration, February 6. Retail 需再研議。 committee representatives met with Director-General Chiang •食品藥物管理署（2月6日）。食品安全衛生管 Yu-mei and her staff to discuss a number of highly technical points 理法最近修正後，對於食品添加物有些標示的 about labeling requirements for food additives mandated by recent 規定，零售委員會的代表與署長姜郁美和其他 amendments to the Food Safety and Sanitation Act. 官員討論數則相關的技術性問題。 “In quite a few cases, the government officials had some posi- 台北市美國商會執行長吳王小珍說：「在好 tive news for our committees,” says AmCham President Andrea Wu. 幾個議題上，政府官員給我們的委員會若干好消 “But in all cases, it was extremely useful to have face-to-face commu- 息，但不論是什麼問題，能夠面對面溝通以增進 nication to enhance mutual understanding. The Chamber very much 彼此的瞭解是非常有益的。美國商會對這些政府 appreciates the open attitude these agencies have shown. It is one of 部門所展現的開放態度十分感激。這是台灣投資 the strengths of Taiwan’s investment climate.” 環境的優勢之一。」 — By Don Shapiro — 撰文／沙蕩

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StartupS: Making up for LoSt tiMe 新創企業: 彌補失落的時光

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aiwan has one of the world’s largest technology industries, but has struggled to develop a vibrant startup culture. As T the Internet software boom has minted new billionaires in neighbors China and South Korea, Taiwan has watched from the sidelines. Some observers contend that Taiwan is too small to nurture many startups. An island with a population of just 23 million people, they say, lacks the massive domestic market that helps power startups in China or the United States. But South Korea – with a population of 50 million, still considered relatively small by global standards – has emerged in the past few years as one of Asia’s most dynamic startup hubs. South Korean software startups have attracted billions of dollars in investment and support from Google, Jamie Lin, founder of AppWorks, which has graduated 190 for example. startups and become Asia’s largest accelerator. A more compelling explanation for Taiwan’s photo: cna startup difficulties lies in the reluctance of its tech sector, investors, and policymakers to fully embrace the Internet age. Its large hi-tech companies remain focused chiefly on contract electronics manufacturing, Taiwanese venture capitalists favor later-stage investments in hardware, and the overall regulatory approach is unfavorable for For years, the regulatory and funding environ- cultivating startups. In this static environment, ment in Taiwan was not conducive to fostering entrepreneurship has dwindled. new startup enterprises. Many would-be Taiwan- Nevertheless, there are reasons for optimism. Several foreign-funded incubators have sprung ese entrepreneurs headed for Silicon Valley or up in the past few years, as have an increasing other locations instead. But lately the situation number of entrepreneurship workshops and clubs. has changed, in part because of government Foreign investors say that they see good potential in Taiwan for fostering startups, even if the island recognition that Taiwan was losing economic opportunities by not doing enough to encourage entrepreneurial initiative.

灣科技業的規模在全球名列前茅，卻一直很難培育活躍的創台業文化。鄰近的中國和南韓因多年來，台灣的法規和資金環境不利於扶植新的網路軟體蓬勃發展，造就不少新億萬創業公司，許多有抱負的台灣創業家因而轉往美富豪，台灣只能望而興嘆。國矽谷（Silicon Valley）或其它地方實現夢想。但部分觀察家認為，台灣實在太小，如今情況已逐漸改變：投資人對台灣的初創企業無法讓新創公司百花齊放。他們指越來越感興趣；政府也體認，未能扶植創業計畫出，台灣人口僅2300萬，不像大陸或美國擁有龐大的國內市場，可幫助需付出經濟代價。新創公司獲得成長動能。不過南韓人口也只有5000萬，就全球標準而言算是相對小的市場，近年來卻蛻變為亞洲最蓬勃的創業中心之一。南韓的撰文 / 傅長壽 BY MATTHEW FULCO 新創軟體公司獲得搜尋引擎龍頭谷歌（Google）的數十億美元投資與奧援，即為一例。台灣難以發展新創公司，較中肯的解釋是科技業、投資人和政策制定者

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is unlikely to produce another Facebook startups – in particular the decision in longer necessary to encourage such or Alibaba. 2000 to cancel a long-running 20% tax investments through tax credits, analysts In addition, the Taiwan government credit on investments in venture-capi- say. As a result, it eliminated the tax is moving to become more supportive of tal funds. When the tax credit was in credit. Also in the year 2000, the govern- startups. effect, the number of funds grew from 47 ment passed the Statute for Upgrading In a speech in early February to the in 1996 to 170 in 2000, while accumu- Industries, which provided tax credits to Chinese National Association of Indus- lated capital rose from US$820 million to investors in property development and try and Commerce, Premier Mao Chi-kuo US$4 billion over that period, according “strategic industries.” stressed the importance of creating a more to the Taiwan Venture Capital Associa- “The big institutional investors favorable environment for entrepreneurs, tion (TVCA). [mainly banks and construction compa- noting that the Ministry of Economic But by the late 1990s, when returns on nies] had greater incentives for returns Affairs has been drafting amendments to venture capital could be several hundred when the tax credit was in effect, so they current laws to make it easier to launch percent, the government felt it was no were willing to take risks on the VCs, a new business. In addition, the Execu- tive Yuan’s National Development Coun- cil (NDC) is aiming to turn Taiwan into a regional innovation hub through a three- pronged strategy of deregulating, attracting funds, and building clusters. Of those three areas, funding may be the most urgent. Difficulty secur- ing funding has vexed Taiwanese entrepreneurs since the end of the dot-com boom. While foreign investors are taking an increasing interest in Taiwanese startups, their local counterparts have largely shrugged. Instead of seeking opportunities to back new entrepreneurs at home, experts say, many Taiwanese venture capitalists have followed the island’s hardware manufacturers to China after raising funds offshore. Government policy has also played a Vice President Wu Dun-yih (second from left) presides at a ceremony presenting cash role in dampening the environment for prizes to promising young entrepreneurs. photo: cna

不願充分擁抱網路時代。台灣的科濟部正在草擬修法，簡化創辦新公創業投資商業同業公會指出，稅負技大廠仍把主要重心放在電子代司的程序。此外，行政院國發會希抵減政策實施期間，台灣的創投基工，創投業者偏好參與後期的硬體望透過法規鬆綁、吸引資金和打造金從1996年47支成長至2000年的投資，加上整體法規氛圍不利培育創新園區的三頭並進策略，讓台灣 170支，同期間的累積資金從8.2億新創公司，在這樣的靜態環境下，成為區域創新中心。美元增至40億美元。創業風氣逐漸衰退。在前述三大策略中，資金可能不過分析家表示，到了1990年不過對台灣的創業環境還是有理是最迫切的一項。自網路經濟榮景末期，創投基金的報酬率可高達百由樂觀以對。近年已有數家外資創結束後，台灣創業家一直為籌資困分之數百，政府認為不須再透過稅業育成中心進軍台灣，同時也出現難所苦。儘管外資對台灣新創公司賦抵減鼓勵這類投資，因此在2000 越來越多的創業工作室和社團。外越來越有興趣，內資卻大多不屑一年取消優惠。同年，政府通過《促資表示，雖然台灣不太可能孕育出顧。專家表示，許多台灣創投業者進產業升級條例》，讓不動產開發另一個臉書（Facebook）或阿里巴追隨硬體製造業者轉往海外籌募資和「策略性產業」的投資人享有租巴，但培育新創公司的潛能其實還金，然後進軍中國，放棄在台灣尋稅優惠。是不錯的。找支持新創業家的機會。台灣創意工場是台北的創業育台灣政府也計畫更積極支持新創台灣創業環境低迷，政府政策也成加速中心之一，其執行長王仁中公司。行政院長毛治國二月初向工是原因之一，尤其是在2000年決表示，「租稅優惠實施期間，大型商協進會發表演說，強調為創業家定取消投資創投基金長久以來享有機構投資人（以銀行和營建業者為打造更有利環境的重要性，指出經 20%稅賦抵減的優惠。據中華民國主）追求報酬率的意願較高，因

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who would then invest in startups,” says sive growth of Internet companies that MBA and worked for the Internet startup Lucas Wang, chief executive officer of the began in the mid-2000s, Lin says, while Social Sauce. Since its establishment, Taipei-based accelerator TMI Holdings. “VCs got excited again in the U.S. in AppWorks has graduated 190 startups “When the government offered perks to 2005-2006.” and become Asia’s largest accelerator, institutional investors to put their money Taiwanese investors tend not to see managing US$61 million in VC funds. It in real estate instead, funding got harder value in non-capital-intensive start- typically leads seed and Series-A (early- for VCs – and for startups.” ups, says Jeffrey Ling, Taiwan coun- stage) rounds for its startups, investing Following cancelation of the 20% try manager of the South Korean startup US$100,000 to $5 million per case. tax credit to VC firms, only seven new Toss Lab, an enterprise messaging service. Lin says he founded AppWorks to funds with a combined capital of US$270 “Something in the medical or biotech help Taiwan strengthen its software capa- million were created in 2001, compared fields is acceptable to them, but an Inter- bilities, which have lagged behind its with 32 funds and about US$1 billion the net company is not,” he says. “A large hardware-manufacturing prowess. But previous year, according to the TVCA. user base means nothing to them. They that goal has evolved into one of build- At about the same time, the dot- ask right away: ‘have you made money?’ ing up Taiwan’s capacity to be part of com bubble burst and Taiwanese inves- The answer for an Internet startup is an integrated Internet ecosystem. “Five tors suffered heavy losses. Yet as Inter- almost certainly ‘no.’” to ten years down the road, everything net startups across the world in e-com- is going to be connected. Will Taiwan be merce, search functions, and social media Foreign aid part of it?” he asks. “We think the Inter- evolved into legitimate billion-dollar net is the key distribution channel for enterprises over the next decade, Taiwan- Investors from overseas, both foreign now and the future.” ese investors remained wary of them. and Taiwanese returnees, are showing AppWorks’ biggest success story “During the first dot-com boom, considerably more interest in Taiwan- so far is the online restaurant reser- Taiwanese investors put NT$200-300 ese startups. Deeply familiar with Inter- vation system EZTABLE. The Taipei- billion into Internet companies and net companies, this still small but grow- based firm’s booking system has 150,000 99.9% of them failed,” says Jamie Lin, ing group sees opportunity in the early- monthly users, partners with 1,000 founder of the Taipei-based accelerator stage investments their domestic counter- restaurants, earned US$16 million in AppWorks. “Investors have bad memo- parts eschew. revenue last year, and has expanded to ries of getting burned, and since the Jamie Lin is one of these investors. Hong Kong, Indonesia and Thailand. VC bosses haven’t changed, they don’t Lin founded the AppWorks accelera- Like Lin, CEO Alex Chen studied and want to take the risk again.” As a result, tor in 2010 when he returned to Taiwan worked in the United States for several Taiwanese investors ignored the explo- from New York City, where he earned an years. He co-founded EZTABLE upon his

此願意冒險投資創投基金，接著後對虧損心存餘悸，而且由於創投公群對網路公司非常熟悉，儘管規模者再投資新創公司」，「當政府改司的老闆都沒改變，他們不願再冒仍小，卻不斷成長。他們在台灣投為鼓勵機構投資人將錢投入不動產險」。林之晨表示，這導致台灣投資人避之唯恐不及的初期投資中看時，創投基金的募資難度提高，新資人錯失自2000年代中期開始的網到機會。創公司也一樣」。路公司爆炸性成長熱潮，儘管「美林之晨就是其中之一。他在紐創投公會指出，創投業者的20% 國的創投業在2005到2006年間恢復約市取得工商管理碩士（MBA）學租稅優惠取消後，2001年只有7支朝氣」。位，並曾服務於網路新創公司Social 新創投基金成立，共募得資本2.7億南韓的企業訊息服務新創公司 Sauce，2010年返回台灣，創立之初美元；相較下，2000年出現32支新 Toss Lab台灣區負責人林德理表示，創投，至今已協助培育190家新創基金，募資總額10億美元。台灣投資人對非資本密集型新創公公司，成為亞洲的最大創業加速中大約在此同時，網路泡沫破裂，司的價值往往視若無睹。他說，「心，管理6100萬美元的創投基金。台灣投資人損失慘重。接下來的十他們可以接受醫藥或生物科技，但之初創投通常會為其輔導的新創公年內，世界各地許多電子商務、搜網路公司就不行」，「龐大的用戶司領投種子輪和A輪（初期）投資，尋引擎和社群媒體等網路新創公司群對他們來說根本毫無意義，他們每次金額從10萬到500萬美元不發展成為億萬企業，但台灣投資人會直接問：『公司賺錢嗎？』但網等。對這類公司依然存有戒心。路新創公司的答案幾乎肯定都是『林之晨表示，台灣的軟體實力落之初創投（AppWorks）是台北沒有』」。後於硬體製造，他創辦之初創投原另一個創業加速中心，創辦人林之是希望協助台灣加強這方面能力，晨指出，「在第一波網路榮景期外資援助不過後來發展成促進台灣溶入網路間，台灣投資人投資網路公司的金整合生態系統。他說：「今後五到額達兩、三千億新台幣，其中百分外資和從海外回國的台灣投資人十年，所有東西都會互連互通，台之九十九點九都賠錢」，「投資人對台灣新創公司甚感興趣。這個族灣是否會參與其中？」「我們認為

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return to Taiwan in 2008. “People were ny’s head of Greater China investment. 130 Internet startups. One of those, not talking about startups in Taiwan “We saw the companies had the ability the Didi Dache taxi-hailing app, has then,” he says. “We just wanted to start to scale up fast because they were deter- raised more than US$700 million from a company and nobody was doing online mined to expand outside of the small investors. The social shopping plat- booking for restaurants.” Taiwan market from the beginning.” form Mogujie, also founded by Alib- Chen notes that EZTABLE’s time As an example, Ma cites Cubie, which aba alumni, received US$200 million in AppWorks was crucial for its later launched in March 2012 and joined 500 in Series D funding in June 2014. The success. The company was strug- Startups in October of that year. It was company is worth more than US$1 gling when it entered AppWorks, but an early entrant in the Southeast Asia billion, analysts say. since graduating from the accelerator market, a strategy that helped it achieve Interestingly, Jack Ma himself weighed in mid-2010, revenue has grown three- rapid fast. Cubie now has more than 11 in on the issue of Taiwanese startups last fold every year. “AppWorks helped us million users. December during the Cross-Strait CEO develop a better business model,” Chen BountyHunter, after developing a Summit in Taipei. In his speech, in which says. “We added vouchers to the exist- large user base in Taiwan and becom- he noted that few new companies had ing reservation service after we left ing profitable, is now using funding from been founded in Taiwan since 2000, he AppWorks, and vouchers gave us more 500 Startups to expand in the United said he hoped to establish foundations revenue growth.” States and Thailand, Ma says. Compa- that would help young Taiwanese entre- Silicon Valley-based 500 Startups is nies using BountyHunter include Google, preneurs start new businesses in China another early-stage seed fund and incuba- Microsoft, and Lexus. and sell their products there. tor program with an interest in Taiwan- For the Taiwan start-up scene to grow Jack Ma’s offer has generated mixed ese startups. Among its Taiwan-based sustainably, Ma says that “local heroes” sentiments among Taiwanese, says Wang investments are the mobile multime- need to emerge. “Taiwan needs people Yi-chih, a senior industry analyst and dia messaging app Cubie, the children’s who can be mentors for the next genera- e-commerce expert at the Taipei-based entertainment studio Roam & Wander, tion, like Jack Ma [CEO of e-commerce Market Intelligence & Consulting Insti- and BountyHunter, a crowdsourcing plat- giant Alibaba] or Lei Jun [Xiaomi CEO]” tute (MIC). Although Alibaba’s e-com- form for ideas and product designs. in China. merce platform would enable Taiwan- Those companies attracted invest- As the first generation of success- ese entrepreneurs to better access China’s ment from 500 Startups because they ful entrepreneurs reinvests in and founds 600 million Internet users, with Jack had strong user bases and a global distri- new companies, a virtuous cycle takes Ma’s support increasing their chances of bution strategy, says Rui Ma, a venture hold, Ma says, noting that former Alib- success, China’s market conditions are partner at 500 Startups and the compa- aba employees have created more than highly challenging, Wang says. “Almost

網際網路是現在與未來的關鍵分銷助我們開發更好的商業模式」，「速，如今用戶超過1100萬。Cubie是渠道。」從之初創投畢業後，我們在既有的在2012年3月推出，同年10月成為之初創投目前最成功的輔導個訂位服務中加入餐券銷售，帶來更 500 Startups的輔導對象。案就是餐廳線上訂位系統易訂網多營收成長」。馬睿表示，獎金獵人在台灣累積（EZTABLE）。這家台北公司的訂總部位於矽谷的500 Startups是廣大的用戶群後，開始出現獲利，位系統和1000家餐廳合作，每月有另一個對台灣新創公司有興趣的初如今利用500 Startups提供的資金， 15萬人次使用，去年營收1600萬美期種子基金和創業育成中心，在台將版圖擴及美國和泰國。谷歌、微元，且版圖已擴及香港、印尼和泰投資對象包括行動多媒體通訊應用軟和凌志等企業都是獎金獵人的服國。程式Cubie、開發兒童娛樂的森遊務客戶。和林之晨一樣，易訂網執行長陳（Roam & Wander）公司，以及創意馬睿表示，若要讓台灣的創業翰林也曾在美國深造與工作多年，和產品設計群眾外包平台獎金獵人風潮永續成長，就須有「本土英 2008年返回台灣，和友人一起創辦（BountyHunter）。雄」，「台灣需要能輔導下一代的易訂網。他說，「那時台灣還不流 500 Startups創業合夥人兼大中人，就像馬雲（中國電子商務巨擘行新創公司」，「我們只想創辦一華區投資負責人馬睿表示，前述台阿里巴巴集團董事長兼執行長）或家公司，當時還沒有人做餐廳線上灣公司擁有鞏固的用戶群和全球配雷軍（小米科技創辦人兼執行長）訂位」。銷策略，因此吸引500 Startups投那樣」。陳翰林指出，接受之初創投輔導資，「我們認為這些公司有能力迅馬睿說，這是因為第一代成功創的那段期間是易訂網後來能成功的速擴展，因為他們一開始就下定決業家會尋找和投資新的公司，形成關鍵。易訂網剛參加輔導時，仍處心，要把觸角擴大到台灣狹小市場良性循環。她指出，離開阿里巴巴於掙扎求生階段，但2010年中旬從以外的地區」。的前員工已創辦130家以上的網路新創業育成加速中心畢業後，營收每馬睿舉例，Cubie拜早期就進軍東創公司，其中叫車應用程式嘀嘀打年增加兩倍。他說，「之初創投幫南亞市場的策略之賜，發展非常迅車已向投資人募得超過7億美元的資

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choose to stay in Taiwan,” he adds. With that trend in mind, the NDC is aiming to jumpstart what it sees as Taiwan’s latent entrepreneurialism by making the business environment friend- lier for startups. Under its new Head- Start program, the Council is working with both foreign and local VCs to establish four US$100 million funds to finance local startup companies. The NDC will invest up to 40% of the capital in each fund. VC investors will receive as much as 80% of the profits that the funds post in the future.

The state lends a hand

“With these matching funds, we can At a “matchmaking conference,” successful business executives share their experience offer VCs a high return on their invest- with local university students. ments and lower the risk they face invest- photo: cna ing in early-stage companies,” says Chen Shu-chen, a senior specialist in the NDC all Taiwanese Internet startups in China ronment is deteriorating as economic Department of Industrial Development. over the past 10 years have collapsed due growth slows,” he says. “Wages are “We believe this policy will also help to unwritten rules and legal constraints,” higher, the cost of living is rising, and air increase the interest of domestic investors he observes. pollution is growing.” in local startups.” The China market is less attractive to Meanwhile, Taiwan’s government In January, the NDC announced Taiwanese – especially the nation’s youth and some companies are allocating fund- it would invest US$83 million in four – than it was a decade ago, says John ing of their own for startups, Chen notes. different venture capital firms as part Chen, research director at MIC and a “Instead of going to China, the majority of the HeadStart program. The NDC China specialist. “The investment envi- of Taiwanese entrepreneurs may rather will provide US$15 million to 500 Start-

金。同樣由阿里巴巴前員工創辦的全軍覆沒。」創企業提供資本。國發會將在每個社群購物平台蘑菇街在2014年6月產業情報研究所資深研究總監兼基金最多投入資本額的40%。未來進行D輪募資時，籌得2億美元。分中國問題專家陳子昂表示，大陸市在基金獲利時，創投機構最多可以析師表示，蘑菇街市值超過10億美場對台灣人，尤其是年輕一輩的吸獲得其中的80%。元。引力已不如十年前。他說，「（中國發會產業發展處專門委員陳有趣的是，馬雲本人去年12月出國）投資環境因經濟成長趨緩而惡淑貞說：「有了這些相對基金，我席兩岸企業家台北峰會時，發表對化」，「薪資高漲，生活成本攀們可以提高創投機構的投資報酬台灣新創公司的看法。他在演說中升，空氣污染也日益嚴重」。率，並且降低他們對新創企業投資指出，台灣自2000年後就幾乎沒陳子昂指出，在同期間，台灣政的風險。我們相信這個政策也能提有新創公司創立，他希望成立基金府和部分企業提撥資金投資新創公高國內投資人對本地新創企業的興會，幫助台灣創業家到中國創業、司。他說：「多數台灣創業家可能趣。」販售產品。就會選擇留在台灣發展，而非前往在「創業拔萃方案」下，國發會台灣資策會產業情報研究所資深中國。」在1月間宣布將對4家創投公司投產業分析師兼電子商務專家王義智資8,300萬美元。國發會將對500 表示，台灣對馬雲的前述談話反應政府助一臂之力 Startups提供1,500萬美元，並提供不一。王義智說，阿里巴巴的電子 3,000萬美元給由台灣的創新工業商務平台能讓台灣創業家接觸到大有鑑於這個趨勢，國發會希望使技術移轉股份有限公司與美國科陸6億網友，再加上馬雲的支持，成經營環境對新創企業更為友善，藉技類非政府組織Battelle Memorial 功機率更大，但大陸市場狀況的挑此助長台灣潛在的創業精神。國發 Institute共同主持的合資基金。此戰相當高。他觀察發現：「由於不會在「創業拔萃方案」下，與國外外，國發會將對之初創投的新基金成文規定和法律限制，過去十年內及本地的創業投資機構合作，成立4 投資1,200萬美元，或30%的有限合進軍中國的台灣網路新創公司幾乎個各為1億美元的基金，為本地的新夥相對資金，對Translink Capital III

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ups and US$30 million to a joint-venture since a fixed par value reduces the poten- communities in Singapore and the United fund run by Taiwan’s Industrial Technol- tial range of return on the investment. States. ogy Investment Corp. and the Battelle Although Taiwanese companies no longer As Taiwan fortifies its startup ecosys- Memorial Institute, a US-based science need to set the par values of their shares tem, it can also learn from the experi- and technology NGO. In addition, at NT$10 – the regulation was revised ence of South Korea. Like Taiwan, South the NDC will provide US$12 million in December 2013 – they are still not Korea has a relatively small domestic or match 30% of limited partner (LP) permitted to change the par value once it market and became a global economic contributions to AppWorks’ new fund, has been declared. power in part because of its strength as and US$20 million or match 30% of a technology hardware manufacturer. Translink Capital III’s upcoming fund. Startup cluster Hardware remains the bread and butter “We are happy to see support for of its electronics giants LG and Samsung. startups in terms of real money deployed Under HeadStart, the government also But in the past few years, South Korean from the government into companies,” plans to spend more than NT$100 million startups have moved into mobile gaming says Rui Ma of 500 Startups. to transform the Taipei Expo Park (site and social media with great success. Further, the NDC is pressing to of the Flora Expo in 2010-2011) into a Kakao is the best-known example. Its amend laws seen as impeding startups startup cluster, which it hopes will attract KakaoTalk instant messaging service is from operating in Taiwan. As a result of 100 companies a year. Clusters are impor- on 93% of smartphones in South Korea, those obstacles, many Taiwanese startups tant because they bring together a criti- according to research firm AC Nielsen. have registered in the Cayman Islands or cal mass of interconnected firms, entre- After Kakao merged with Daum Commu- moved to Singapore. preneurs, and expertise, analysts say. As a nications in October 2014, the combined “These laws, which were estab- cluster grows, new companies, talent, and group’s market value came to US$9.45 lished in the early years of the Republic investment pour in. billion, according to South Korea’s of China, are interpreted very strictly,” The Taipei Expo Park project was Yonhap News Agency. says Wu Ja-lin, a section chief at the inspired in part by Block 71 in Singapore, The Daum Kakao IPO turned its NDC’s Regulatory Reform Center. “The a former factory the city-state’s govern- majority owner and co-founder Kim government now wants to loosen them to ment refitted in 2011 as a hub for its Beom-soo into a billionaire overnight. provide a better environment for startups startup community. Block 71 has been a Now Kim is reinvesting that wealth into in Taiwan.” major success, doubling from 250 start- new South Korean startups through his Meanwhile, the NDC is also seeking ups at its debut to 500 today. Earlier this VC firm K Cube Ventures. K Cube’s port- to make it easier for Taiwanese startups year, Block 71 expanded to San Francisco folio includes Frograms, maker of an to change the par values of their shares, to foster closer ties between tech startup online movie recommending engine, and

即將成立的基金投資2,000萬美元，價值公布，還是不能更改。他山之石或30%的相對資金。在「創業拔萃方案」下，政府也 500 Startups的馬睿說：「我們很計劃投入新台幣1億元，把台北花博台灣在強化新創企業生態環境高興看到政府以實際提供資金的方公園（2010-2011年台北國際花卉的過程中，也可以跟南韓借鏡。南式支持新創企業。」博覽會場地）打造成新創企業的群韓跟台灣一樣，國內市場規模並不國發會並且進一步敦促修法，聚中心，希望一年能夠吸引100家大，之所以能在全球經濟扮演重要以排除被認為阻礙新創企業在台灣公司。分析師說，群聚中心相當重角色，部分得力於它做為科技硬體發展的問題。因為有這些障礙，許要，因為它把彼此相關的公司、企生產國的實力。電子大廠樂金與三多台灣的新創企業是登記在開曼群業家與專業技術人才聚在一起，形星仍以硬體生產為主，但過去幾島，或是遷到新加坡。成一個臨界質量。隨著群聚中心的年，南韓的新創企業在行動裝置遊國發會法制協調中心科長吳家林成長，新的公司、人才與投資也會戲與社群媒體方面大放異彩。說：「這些中華民國早年訂定的法相繼投入。其中Kakao成功的實例最為人所熟律，在解釋上十分嚴格，政府現在台北花博公園的這個計畫，部份知。根據AC尼爾森的調查，南韓有希望放寬，讓新創企業在台灣能有是仿效新加坡的Block 71。後者原本 93%的智慧型手機，都使用該公司較好的環境。」是座工廠，2011年由新加坡政府改的KakaoTalk即時通訊服務。據南韓同時，國發會也在設法讓台灣的建為新創企業的中心。Block 71的營的聯合新聞社報導，Kakao於2014年新創企業較容易調整股票的票面價運十分成功，剛開始的新創企業家 10月與Daum Communication合併之值，因為如果票面價值固定，會縮數為250，目前已倍增為500家。今後，新公司的市值達到94億5,000萬小投資可能獲利的幅度。台灣上市年稍早，Block 71拓展到舊金山，在美元。公司股票的票面價值原本一律訂為新加坡與美國的新創業界之間培養 Daum Kakao首次公開募股行動，每股新台幣10元，後來這項規定在更密切的關係。讓大股東及共同創辦人金凡秀一夕 2013年10月已經修改，但一旦票面之間成為億萬富豪。如今他透過自

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Greenmonster, which produces the virtual gaming companies, laying the foundation reported US$17.29 million. Gogolook scrapbook app Take Flava. for the South Korean startup ecosystem. is the maker of the Whoscall app used Changseong Ho, co-founder of the South Korea, Lin notes, has the to identify unknown callers on mobile Viki online video subtitling service, sold world’s fastest Internet connection speed devices. Whoscall can detect spam calls that company to the Japanese e-com- and has been a leader in developing 3G based on calling time, frequency, and merce giant Rakuten in 2013 for US$200 and 4G technology. By contrast, Taiwan’s other factors. When Naver bought million. Now he too is using a VC firm Internet connectivity is the 19th fastest in Gogolook, Whoscall already had 1.2 of his own – TheVentures – to fund early- the world. million monthly users in Taiwan, Japan, stage software startups, including Bridge “South Korea, like the U.S. and and South Korea and a database of 600 Mobile, maker of an Internet-based China, foresaw the Internet would rede- million numbers. mobile phone call service, and Parking fine global commerce,” Lin says. “It also Gogolook’s strength in data analyt- Square, which offers a parking-space app. understood that the Internet could make ics made it an attractive acquisition The surging South Korean startup a small country a bigger economic player. target for Naver, analysts say. Naver is scene is attracting international atten- But Taiwan did not. Taiwan remained on in the midst of an aggressive campaign tion as well. Google will open a 20,000- the manufacturing path, and its compe- to strengthen Line internationally as it square-foot center in Seoul this year to tiveness has suffered.” competes against Tencent’s WeChat and provide mentorship and increased global South Koreans have exported software WhatsApp, two other messaging apps exposure for South Korean startups. – primarily gaming at first – for a long with large user bases. South Korea’s success with startups time and so many products are designed can be traced back to its decision after with a global view, says Rui Ma of 500 Strength in hardware the 1997-1998 Asian Financial Crisis Startups, who formerly covered that to make the Internet a strategic indus- country for the company. “South Kore- At the same time, some Taiwan- try, says Lin of AppWorks. The South ans are also very aggressive in terms of ese startups are building on the island’s Korean government invested in fiber regional expansion compared to Taiwan- strength as an electronics hardware optics, built a comprehensive nation- ese,” she adds. maker. Taipei-based startup Joyray Tech- wide broadband network, and launched Indeed, South Korean Internet nology will release an open-platform programs to strengthen the digital literacy giant Naver, owner of messaging app smartwatch for children this spring, of the population. Lin believes those poli- Line, purchased the Taiwanese startup which will be able to run Google’s cies spurred the development of Internet Gogolook in December 2013 for a Android or Apple’s iOS. Founder and

己的創投公司K Cube Ventures，把產業。南韓政府投資鋪設光纖，建確實，開發即時通訊應用程式財產重新投入南韓的新創企業。K 立全國性的寬頻網路，並且推動計 LINE的南韓大型網路公司Naver在 Cube投資的對象包括線上電影推荐畫，提升民眾的數位能力。林之晨 2013年12月買下台灣新創公司走著引擎Frograms，以及推出虛擬剪貼相信，這些政策促成網路遊戲公司瞧（Gogolook），據說代價為1,729 簿Take Flava的Greenmonster。的發展，為南韓新創企業生態奠定萬美元。走著瞧的應用程式Whoscall 南韓線上影音字幕公司Viki的共了基礎。裝在行動裝置上，可以用來顯示不同創辦人許長生（Changseong Ho, 林之晨指出，南韓的上網速度全明來電者的身分。Whoscall可以根據譯音）在2013年以2億美元代價，球第一，並且在3G和4G行動通訊的來電時間、頻率和其他因素判定是把公司賣給日本電子商務巨擘樂天開發方面居領先地位。台灣的上網否為廣告電話。Naver買下Gogolook 株式會社。現在他也透過自己的創速度則在全球位居第19名。時，在台灣、日本和南韓已有120 投公司 The Ventures資助剛起步的林之晨說：「南韓跟美國和中國萬人每月使用Whoscall這個服務，它軟體新創企業，包括網路行動電一樣，都預見網際網路將重新界定的資料庫更有6億個號碼。話服務提供者Bridge Mobile，以及全球商務。而且南韓瞭解到，網路分析師說，Gogolook在資料分析提供找停車位應用程式的Parking 可以讓小國成為經濟要角，但台灣方面的優勢，讓Naver想要將它併 Square。沒有體認到這一點。台灣還是走製購。Naver正在積極推動一項計畫，南韓蓬勃發展的新創企業，也受造業的路子，它的競爭力因此受到要在面對騰訊的WeChat與WhatsApp 到國際矚目。Google今年將在首爾影響。」競爭的態勢下，強化它在國際間的成立一個占地20,000平方呎的中 500 Startups的馬睿曾為她的公司地位。WeChat和WhatsApp這兩個即心，以輔導南韓的新創企業，並幫掌管過南韓市場。她說，南韓出口時通訊應用程式，目前的使用人數助它們與國際接軌。軟體已經有很長時間（起初主要是超過LINE。之初創投的林之晨說，南韓新創遊戲軟體），有許多產品在設計時同時，有些台灣的新創企業在企業的良好發展，可以回溯到1997 就放眼全球。她說：「跟台灣相比利用台灣身為電子硬體製造國的優到1998年發生亞洲金融危機時，較，南韓在區域擴張方面也顯得非勢。總部設在台北的新創公司悅睿南韓當局決定將網際網路訂為戰略常積極。」科技今年春天將推出為兒童設計的

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chief executive officer Jerry Chang is a shipments will reach 27 million this year ate New Kinpo Group, which earns veteran of Foxconn’s smartphone busi- and 116 million by 2017. billions in revenue annually – it nonethe- ness group and has enlisted the hard- 3-D printing is another new prod- less launched the world’s first all-in-one ware manufacturing giant to produce the uct category that offers opportunities 3D printer and scanner in October 2014. smartwatches. for Taiwanese firms. And while Taiwan’s The printer takes from a few minutes to a Chang sought US$100,000 in fund- XYZprinting is not a startup in the several hours to scan an object, depending from the crowdfunding platform traditional sense – its parent company ing on the size. It also comes with free Kickstarter and received about 85% of is the massive electronics conglomer- software, both to scan the object and to his target sum. He says he may seek the remainder on Indiegogo, a large global fundraising site. But Chang has also persuaded local venture capitalists to provide early-stage funding for product development. While not disclosing the amount they invested, he did say: “These two investors share our vision and believe we can execute toward that direction. They think the smartwatch is an important new emerging product and they should be involved in it.” Analysts expect the global wearable devices market to surge over the next few years. The U.S.-based research firm IDC reports a threefold increase last year in shipments of wearables to reach 19 million, and predicts that the figure will hit 112 million by 2018. U.K.-based Juni- GETTING THEM YOUNG — XYZprinting’s mobile 3D printing lab pays a call at an elemen- per Research sees the wearables market tary school.

as growing even faster, forecasting that photo: cna

開放平台智慧型手錶，它可以使用 Juniper Research對成長率做出更高說：「整合硬體和軟體，是台灣應 Google的Android作業系統或蘋果的的預測，認為今年的出貨量將達到走的道路。台灣在硬體生產方面有 iOS系統。悅睿創辦人與執行長張 2,700萬個，到2017年將達到1億些部分領先全球，新創公司應該利愛群是富士康智慧型手機部門的老 1,600萬個。用台灣在這方面的能力，就像倫敦將，在準備生產智慧錶時，找上以 3D列印是可以給台灣企業帶來機利用它做為全球金融中心的優勢，生產硬體著稱的老東家。會的新產品類別。台灣的三緯國際成為金融科技的樞紐。」金融科技張愛群透過群眾募資平台並非一般的新創企業（它的母公司是把科技運用到金融服務，以發展 Kickstarter，想要籌募10萬美元資是電子大廠新金寶集團，每年營收新的商業模式，例如行動支付系金，結果籌到大約85%。他說，不以數十億美元計），但它在2014年統。足的15%可能會透過大規模的全球 10月推出全球第一台全功能3D列還有一項正面的發展，是線上訂募款平台Indiegogo繼續募集。印掃瞄機。視物體的大小，這部機位服務提供者EZTABLE在1月宣布，但張愛群也說服了本地的創投器掃瞄的時間從幾分鐘到好幾個小已經向本地創投基金CMC Capital與公司，提供產品研發所需的早期經時，它並且附有免費軟體，可用來 Hsun Chieh Capital募得500萬美元。費。他沒有透露金額，但說：「這掃瞄物體並且調整大小及顏色和輸這兩家創投公司背後分別是由電子兩家投資者跟我們理念相同，相信出成品。大廠聯發科技和聯華電子支持。我們可以朝該方向推動。他們認為三緯國際在2013年成立，目前台灣的投資者對網路公司一般較不智慧錶是個重要的新興產品，他們是全球第二大3D列印機生產商，僅感興趣，EZTABLE執行長陳翰林被應該要參與其中。」次於美國的Makerbot。三緯國際在問到為何能夠向他們募到資金時分析師預期，全球穿戴型裝置的 2015年預料將銷售超過10萬台3D列表示：「投資人喜歡有個標竿。我市場在未來幾年將快速成長。美國印機到世界各地，去年的數字則是3 們跟他們說，我們想要成為亞洲的研究公司IDC的報告說，去年穿戴萬台。 OpenTable。他們瞭解到，既然有人型裝置出貨量是前一年的3倍，達 James Hill是台北版Startup Digest 搞線上餐廳訂位的商業模式已經做到1,900萬個，預測到2018年將成電子報的主編，也曾是即時通訊應得有聲有色，對我們投資的風險就長到1億1,200萬個。英國研究機構用程式Cubie的業務發展經理。他沒那麼大了。」

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adjust the size and color and print it. ups should take advantage of Taiwan’s backed by semiconductor giants Medi- XYZprinting was founded in 2013 hardware manufacturing capabilities, aTek and United Microelectronics Corp. and is currently the world’s second-larg- which are some of the best in the world, (UMC), respectively. When asked how est maker of 3D printers after the U.S.’s just as London is using its strength as a EZTABLE was able to attract fund- Makerbot. XYZprinting is expected to global financial center to become a hub ing from Taiwanese investors typically ship more than 100,000 3D printers for fintech” – applying technology to averse to Internet companies, EZTABLE globally in 2015, up from about 30,000 financial services to create new business chief executive Alex Chen replied: “Inves- units last year. models, such as mobile payment systems. tors like a benchmark. We told them we “Integrating hardware and software is In another positive development, wanted to be the OpenTable of Asia. the way forward for Taiwan,” says James online booking provider EZTABLE They realized that someone else had Hill, curator of the newsletter Startup announced in January it had raised US$5 already had great success with the online Digest in Taipei and former business million from local venture capital funds restaurant reservation model, so we development manager of Cubie. “Start- CMC Capital and Hsun Chieh Capital, seemed less risky to them.”

FiVe taiwanese startups to watch

The rising stars in the Taiwanese startup scene are an eclectic mix of young tech firms, spanning the restaurant, retail, media, and education sectors. The one thing they have in common is a global distribution plan.

BY MATTHEW FULCO

Roam & WandeR coming startup that is backed by WI Harper, TMI Ventures, and 500 Startups. Warren is a Silicon Valley veteran who formerly worked for Microsoft and Motorola before arriving in Taiwan in 2010 to take an executive position at HTC. In 2012, he joined the TMI incubator as an entrepreneur-in-residence and founded Roam & Wander. Warren says he chose to base Roam & Wander in Taiwan because “people do great work at a reasonable cost” and “the quality of life is outstanding.” He also believes Taiwan- ese software capability is stronger than ever, complementing the island’s longstanding hardware prowess. Roam & Wander’s flagship products are the stuffed pink rabbit TuTu and stuffed brown bear DiDi. Kids can bring the animals to life by downloading their respective apps from the iOS store and then inserting their iPhones or iPads into the crea- tures’ heads. That brings the stuffed animals to life: they will not only talk but also eat and drink if given toy foods and beverages. Tea party with TuTu and DiDi. “Play is very important to a child’s intellectual and social photo: roam & wander development,” says Warren, who has a young daughter. “We think kids should spend time engaged in physical, creative play Imagine a kid’s tea party – and then make that experience with toys rather than just sitting and tapping away at a screen.” more real with smart toys. That’s how Jason Warren, the Amer- Warren believes Roam & Wander’s “freemium” business ican founder of the Taipei-based children’s entertainment studio model distinguishes it in the increasingly crowded smart toy Roam & Wander, describes the concept behind this up-and- sector. There is no charge for playing the iPad app “Sticker

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Games” featuring TuTu and DiDi. And the physical stickers colony uses the same system of traditional Chinese characters as that Roam & Wander rewards players with – mailed to them Taiwan. In the future, Chung envisions expansion to Singapore from the company headquarters in Taipei – are also free. But and Malaysia. once kids get the stickers, they start thinking about owning a physical TuTu or DiDi doll, each of which retails for about US$40 online or in stores. WRiTePaTh Children’s ownership of the stickers shows retailers that the dolls have a customer base, Warren says. The strategy has borne fruit thus far. Roam & Wander has established retail partnerships with France-based FNAC, Amazon, Toys “R” Us, Studio A, and retailers in China. TuTu also won the award for Best New Toy at the Hong Kong Game and Toy fair in September 2014.

The neWs Lens

Taipei-based media startup The News Lens thinks big. Less than two years old, it aims to become the top new media company in Taiwan by offering a compelling alternative to the tabloid fodder that dominates the mainstream. “Everybody hates the media industry in Taiwan,” says Joey Chung, The News Lens’s chief executive and co-founder. “It’s sensationalist, full of junk, and very biased.” With The News Lens, Chung and his partner, editor-in- chief Mario Yang, a former senior editor of Taiwan’s Business Charles Chin, founder and CEO of WritePath. Weekly, say they identify important news and then offer objec- photo: writepath tive analysis that lets readers view it from a larger perspective. The site’s content is derived from other news sources as well as generated by a team of freelance writers. WritePath is a Singapore-registered startup headquartered “I’m not a media person, per se,” says Chung, who has not in Taipei that operates TopAdmit.com, TopScIedit.com, and previously run a media company but has written six Chinese- BizEditors.com – three online editing services focused on college language books and reported for the Taipei Times for a year. admissions, academic research, and enterprises, respectively. “But my partner and I saw an opportunity to bring a more While the company has no full-time editors, it says it uses a team contemporary news platform to Taiwan that makes heavy use of of experienced freelancers “highly trained across management, video content and social media.” academia, engineering, and other specialized disciplines.” Chung and Yang launched The News Lens as an aggrega- WritePath’s first site, TopAdmit.com, was founded in 2009 tor on Facebook in June 2013 and then as a website two months to help students with their college admissions essays. Since that later. Since that launch, The News Lens’s website has grown to time, the site has grown fast. In the 2013-2014 admissions cycle, 4.5 million unique visitors a month and 9 million page views, a TopAdmit.com served clients from 22 countries and revenue growth rate that Chung says is three to five times faster than the grew 50%. company predicted. “It began as a passion for educational services,” says founder In addition to appearing on its main site, video content from and chief executive officer Charles Chin. “We help students to The News Lens is broadcast onto screens in taxis, convenience highlight their qualifications and talents in a way that is compel- stores, and the Kaohsiung MRT. That content, which does not ling to an admissions committee.” exceed two minutes, is tailored to young Taiwanese profes- Compared to Peterson’s EssayEdge, a major competitor, sionals on the move, “people who don’t have time to read the TopAdmit.com is more globally oriented, Chin says. He believes news,” Chung says. EssayEdge is focused on the U.S. education market and is less In December 2013, The News Lens received angel fund- convenient and effective for students who are not native English ing from Marcus Brauchli, a former executive editor at the speakers. “We are very interested in Asian markets, where we see Washington Post and Wall Street Journal, and Sasa Vucinic, a high growth potential,” Chin says. “Mainland China is obviously Serbian journalist who helped found the Media Development important, but so are South Korea, Japan, and Southeast Asia.” Loan Fund NGO. Meanwhile, TopSCIedit.com, founded in 2012, helps profes- That funding helped The News Lens gain a stronger foothold sors and researchers get published in “renowned research jour- in Taiwan. Now it has its sights set on international expansion. nals,” says Chen. TopSCIedit.com has currently set a target of Hong Kong will be the first new market, as the former British placing one million research papers per year in Asia.

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StartupS

WritePath’s newest service is BizEditors.com, a crowd-sourc- JoyRay TechnoLogy ing translation platform that translates to/from Chinese and almost any other language. In June 2014, WritePath announced it had raised US$525,000 in seed funding led by Japan’s B. Dash Ventures, which it plans to use to establish offices in Japan, Korea, and the United States. Other investors included Pinehurst Advisors, Jamie Lin of AppWorks, Gogolook founder Jackie Cheng, and Bernard Chan, former entrepreneur-in-residence at TMI Ventures.

eZTaBLe

EZTABLE operates the foremost online restaurant booking system in Taiwan. Founded in 2008, it is one of the oldest and most successful tech startups in the young Taiwan scene. When Alex Chen returned to Taiwan from the United States, where he had studied applied mathematics and later worked in finance, he founded EZTABLE with his partners because “we just wanted to start a company.” He adds that “nobody was Joyray Technology founder Jerry Chang holding Jumpy smart- talking about startups in Taiwan at the time.” watch.

Chen and his partners concluded that a market exists for photo: joyray online restaurant booking in Taiwan, based on the model of the U.S. company OpenTable, which earns its revenue by charging Former Foxconn executive Jerry Chang heads the children’s restaurants. The restaurants pay up front in order to get into wearables startup JoyRay Technology, which is set to launch its the system. Jumpy smartwatch this spring. Chang is betting that his hard- But the EZTABLE team soon discovered that Taiwanese ware acumen and an open-platform system, which can run restaurateurs were unwilling to pay in advance for an unfamiliar Android or iOs, will make Jumpy stand out in the fast-growing service. “At that point, we shifted gears,” Chen says. “We told and competitive wearables sector. them we would give them six free months first, and that if they His Foxconn ties are paying dividends already, helping him to were satisfied with the results, then they could pay to continue source components for Jumpy, as well as recruit talent. Foxconn using our service.” will also manufacture the watches. But Chang is adamant that That move, along with the chance to be in Jamie Lin’s Joyray is no typical hardware startup. “We want to build a full AppWorks accelerator, has been responsible for EZTABLE’s ecosystem for which developers can design their own apps,” he explosive growth since 2010, Chen says. Revenue has grown says. “It’s important for user retention.” 300% a year for the past three years, and the company is Chang was inspired to found Joyray when he observed his expanding into Hong Kong, Thailand, and Indonesia. young song intrigued with a Foxconn smartwatch prototype his EZTABLE’s success has attracted the interest of both inter- father had brought home from work. “That watch was designed national and local venture capitalists. In 2012, Rose Park Advi- for adults, but it made me realize that smartwatches should exist sors, an investment firm founded by Clayton M. Christensen, for kids too,” he says. “There is vast potential in the children’s a Harvard Business School professor and his son Matthew market for these devices.” Christensen, invested US$1.5 million. In January, EZ TABLE While Jumpy faces many competitors, Chang believes the announced it had raised an additional US$5 million. The fund- device’s large screen, detachable watch head, and varied apps ing came from local VCs: CMC Capital and Hsun Chieh Capi- will help to distinguish it. He envisions the device as a provid- tal, backed by the chip-making giants MediaTek and United ing a balance of education, exercise, and entertainment apps. Microelectronics Corp. (UMC), respectively. “Bringing the family together is what we want to do with EZTABLE is now moving away from its original web-based Jumpy,” he says. reservation system to focus on a booking app, which is avail- Jumpy will retail for US$129-$149 and be sold in the United able for iOS, Android, and Windows. “It’s about convenience States, Europe, Taiwan, and Japan. for consumers,” Chen says. “In the future, almost everyone is As part of the funding drive for Jumpy, which requires going to be making restaurant bookings on their smartphones US$1-2 million, Chang joined the AppWorks accelerator. Since or tablets.” then, he has raised US$85,000 of his $100,000 crowdfund- Consumers also benefit from using EZTABLE because they ing target on the Kickstarter platform, and may seek to raise accrue points for every reservation they make with the system. the remainder on the global fundraising site Indiegogo. Previ- The points can later be exchanged for vouchers at participating ously, Taiwanese venture capitalists had provided an undisclosed restaurants. amount of early-stage funding for product development.

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Uber: Transportation or Information Company?

Despite controversy and heavy fines, Uber persists in seeking its niche in the Taiwan market.

BY JENS KASTNER

photo: alexander torrenegra f/ wikipedia

ince the market launch in Taiwan often a luxury model at that. tions for operating as an “information of ride-sharing service/mobile As has happened in many markets company” rather than a “transporta- S app company Uber in mid- that the company has entered, however, tion business.” Moreover, Uber’s drivers 2013, the company has seen impressive Uber’s stellar rise has taken regula- – mostly luxury-car owners with some growth on the island. Both ridership tors off-guard, and its ambiguous legal time to spare and a need for additional and the driver pool have increased by status has resulted in a number of con- income – have been slapped with fines an average of 30% a month, according flicts with the authorities. As of January totaling NT$6.6 million (US$209,000) to the company, and more than 1,000 17, Uber has been fined in Taiwan 133 for not holding the required commercial drivers are now providing over 100,000 times, for a total sum of NT$16.5 mil- drivers’ licenses. rides a month. Many consumers seem lion (US$522,000), for violating the Founded in San Francisco in 2009, to appreciate the chance to use a Highway Act and the Automobile Uber has since begun operating in some mobile app to arrange for transport – Transportation Management Regula- 200 cities in over 50 countries, and has amassed a valuation of a whopping US$40 billion. However, Uber’s stellar growth has come at a cost, with the company experiencing controversy and opposition in nearly every market it has entered. It has been banned in Spain after complaints by taxi drivers, as well as in New Delhi, India after an alleged rape committed by one its drivers. Uber drivers have been accused of rape in the United States, too, and during the Sydney hostage crisis last December, Uber received negative publicity for abruptly raising prices, seemingly to exploit commuters’ fear of public transportation. Uber’s troubles worldwide stem in large part from its insistence that it is a hugely innovative software company

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rather than a transportation business – recent conversations, Taiwan’s regula- cial treatment. the same issue that plagues it in Taiwan. tors were unaware of Uber’s measures Unsurprisingly, the main force Repeating the combative stance the requiring sufficient insurance coverage pressing for a tough stand toward Uber company has taken in other countries, of Uber cars and the thoroughness of by the government – both the MOTC Uber initially responded to Taiwan’s the background checks conducted on and the Ministry of Economic Affairs regulators with defiance, blasting the its drivers, which the company says (MOEA), which is responsible for over- Ministry of Transportation and Com- actually exceeds those for Taiwan’s seeing the information business sector munications (MOTC), the regulator taxi drivers. For example, while Uber Uber says it properly belongs to – are for transportation businesses, for “out- does not accept drivers having any sort the local taxi companies and alliances. dated thinking” and for “opposing the of criminal record, those with crim- Their primary complaint is that while tech revolution.” inal convictions older than “five to taxi drivers must pay licensing fees But more recently, the Taiwan seven years,” depending on the offense, to the government, neither Uber nor branch has been striking a more may be licensed as taxi drivers. (Cer- Uber’s drivers do the same. They fur- conciliatory note, just as Uber’s head- tain offenses such as tax evasion are ther protest that while their drivers quarters has begun doing elsewhere. excluded from consideration). “We feel must prepare for and pass a test to For example, the Wall Street Journal that we already have the strictest pro- become licensed, drivers connected with in late January reported on a speech in cedures in the transportation industry Uber can operate without having to go Munich by Uber CEO Travis Kalanick here, but if there are some new sugges- through that process. that was filled with talk about compro- tions on what to add, we are obviously So strong is opposition to Uber that mising with regulators he once sparred open to them,” Gu says. local media report that certain taxi with. “We had some constructive con- As to the authorities’ core demand companies are even offering boun- versations with different government that Uber register as a transportation ties on Uber drivers. Reportedly, these organizations over the past several business rather than an informa- companies are willing to pay NT$500 weeks,” says Uber Taiwan general man- tion business, however, the company’s to people who provide firm evi- ager Gu Li-kai. “Before we went into actions continue to suggest that its posi- dence that Uber is still operating in those meetings, there might have been tion is unchanged. In an email reply to Taiwan, including a picture or video several misconceptions and miscommu- a query from Taiwan Business TOPICS, of a Uber car’s license plate, a screen- nication, but now we feel that we are the MOTC said Uber continues to “ille- shot of a confirmed dispatch order on the right track.” gally recruit drivers on the Internet” on the Uber app, a bill for the trans- Gu says that several initial sources and to evade registration fees. The action, and a confirmation slip from of friction are now being overcome, MOTC stressed that during a meeting the motor vehicle office after filing the such as the question of whether Uber’s between Uber and the Executive Yuan report. The association has reportedly drivers are sufficiently insured and in late December, the vice premier made raised NT$500,000 to fund the bounty vetted. According to Gu, before the clear that Uber cannot expect any spe- scheme, and the offer stands until the end of March.

Consumer protection

Arguably Uber’s second most for- midable non-government critic is the Consumer Foundation (CF), which says it looked into Uber’s services in January and found several problem areas. “If the driver has cheated the rider, for example by taking an extra-long route, Uber will say that it’s only a mobile-app matchmaking platform, with no responsibility whatsoever” for the driver’s actions, says CF Vice Chairman Yu Kai-hsiung. “And they don’t even have a telephone number here in Taiwan, meaning there is no real channel for complaints from Taiwanese consumers.” Yu adds that Uber’s privacy policy is Taxi drivers in Portland, Oregon protest that Uber is operating under a different set of rules. available in English language only, and photo: aaron parecki / wikipedia that Uber takes the liberty of changing

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The Uber headquarters in San Francisco and examples of screens from the Uber app.

fares without prior notification, a Local scholars who have been autonomy to its Taipei branch. “If they practice in breach of the Automobile observing the case expect that Uber and manage to localize like Toyota in the Transportation Management Regu- the authorities will soon come to an U.S. or like McDonald’s here in Taiwan, lations. Uber's fares are continually understanding. Tu Meng-ru, a professor then we will see a good end to the adjusted according to level of demand, of transportation science at National story,” Tu says. He sees such localiza- while Taiwan's taxi drivers are pro- Taiwan Ocean University with a partic- tion as taking the form of cooperation hibited from adjusting fares under any ular research focus on e-commerce and with the local taxi associations to offer circumstances. logistics management, predicts that Vice services that are safely and conveniently Gu counters, however, by noting Premier Simon Chang – who formerly arranged electronically, while being that every move by a Uber car is GPS- served as the Minister of Science and cheaper than the regular, high-class tracked, and that no cash ever changes Technology and before that as Google’s Uber cars. Tu regards such an outcome hands between rider and driver in Asia-Pacific Infrastructure Chief Oper- as a win-win-win situation for the taxis, Uber’s credit-card-only transactions. ating Officer – will be the major force in Uber, and consumers. In the event of a dispute between rider working out an accommodation. Judging from a February 4 and driver, “Uber is able to look at “Taiwan has record-high pene- announcement by the MOTC, the gov- concrete facts and data,” something tration rates for Facebook, Google, ernment is also looking at ways of a traditional taxi company could not smartphones, and so forth, and the adapting in response to the Uber chal- do, he says. “The most common issue government wants to learn from such lenge. The ministry said it is mulling that might arise is that the rider feels innovative software companies,” says a classification system for taxi fares unfairly charged because the driver took Tu. As a result, he expects the govern- that would divide the vehicles into gen- a wrong route. But since all payments ment to adopt a policy of accepting eral and premium tiers. Obviously are done electronically, we, unlike a Uber as long as the company more inspired by what Uber has been doing, taxi association, will be able to directly strictly obeys Taiwan’s laws and pays the system would regard only rela- refund the rider’s credit card.” regulatory fees. tively new vehicles with larger engine As to the lack of a telephone com- Daniil Matzkuhn, a Taipei-based displacements as qualified for pre- plaint hotline, Gu stresses that emails tech-blogger, says the authorities are mium status. MOTC envisions a fleet are replied to “within 24 hours.” He particularly curious to learn how Uber of around 800 to 1,000 Mercedes Benz, adds that Uber detects the language set- has been able to perfect the online2off- BMW, and Lexus taxis, with fares ting on a user’s smartphone, so that “a line (O2O) business model of finding allowed to exceed those of the general rider will always see everything [on the consumers online and connecting them models, comprised mostly of Toyota app] in the language he is most com- to real world goods and services. “If it Camrys. The new service would be fortable with.” could combine O2O and Taiwan’s high available only in Taipei and New Taipei Indeed, the CF’s Yu acknowledges smartphone penetration rate as craftily City, “due to their citizens’ relatively that in the one-and-a-half years Uber as Uber has been doing, Taiwan’s offline higher standards of living,” the min- has been operating in Taiwan, the service sector could be a lot more suc- istry said. foundation has not received a single cessful,” he says. Uber’s Gu says that such a premium consumer complaint related to the ser- Tu recommends that Uber include taxi fleet would pose no threat to Uber’s vice. “I don’t deny that Uber is an taxi drivers in its driver pool to appease popularity. He welcomes the MOTC outstanding app platform,” he says. “I the taxi unions, “which do have some initiative, he says, since “the more just hope they will comply with Tai- influence in elections” He also suggests attractive options the Taiwanese con- wan’s consumer rights protection laws.” that Uber’s headquarters give more sumer has, the better.”

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The Chinese Leadership and How They Reached the Top

The interplay of numerous factors influences who becomes a member of the Political Bureau Standing Committee.

BY JUNE TEUFEL DREYER

t noon on November 15, 2012, boring. All were Han Chinese, male, seven men filed onto the dais late middle-aged, and had black hair, A in Beijing’s Great Hall of the rumored to be chemically enhanced to People, thus ending months of specula- preserve the appearance of youth. They tion. A journalist for one major Western wore tailored navy suits, crisp white news outlet had even conducted an shirts, and conservative ties. Not even informal contest, asking entrants how the most hyperbole-prone pundit would many members of the Political Bureau have been tempted to call them the Standing Committee (PBSC) there “Seven Samurai.” would be, their names, and the policy Kerry Brown, a former First Secre- portfolios they would hold. While some tary of the British embassy in Beijing guesses were more accurate than others, and now director of the China Studies such was the aura of mystery around Centre at the University of Sydney, the selection process that no one got the brings his impressive qualifications to outcome completely right. bear in examining the background of Among the oddities preceding their these men, the super-elite of the Chi- entrance onto the stage, the meeting at nese Communist Party (CCP) and which the chosen ones were anointed, ultimately of the People’s Republic the Eighteenth Party Congress, had of China (PRC) itself. Party General The New Emperors: Power and the been postponed twice; the heir apparent Secretary/PRC President/Central Mil- Princelings in China, had mysteriously disappeared for two itary Commission head Xi Jinping by Kerry Brown. weeks; and one of the early front-run- gets his own chapter, as does Premier I.B. Tauris, London and New York, 2014. ners, Bo Xilai, was in prison, convicted Li Keqiang; the others are considered 244 pp. of trying to cover up his wife’s murder sequentially in a single chapter. But ISBN 978 1 78076 910 3 eISBN 078 0 85773 383 2 of a business partner reputed to have behind their consistent and unremark- been her lover. able surface appearance, the author Against this stranger-than-fiction finds a surprising amount of diversity. backdrop, the end result seemed anti- Xi, as is well-known, was a prince- climactic. The appearance of the new ling – positioned by both birth and leadership was collectively bland, even marriage connections among the chil-

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dren of parents who had fought the and poverty; and third, it does not mess communist revolution and reaped the around with you. So what else is there benefits of victory for themselves and to say?” Unreported by China’s offi- their families. He had first been intro- cial media, but widely known through duced to the nation at the Seventeenth social media, the remarks raised private Party Congress in 2007 as the putative doubts about Xi’s capacity as a leader. successor to Hu Jintao. Even so, Xi’s A second setback occurred only path to power had not been entirely few months later, at the CC’s Fourth smooth. His father, Xi Zhongsun, Plenum in 2009. Since, as head of the had been accused of complicity in Party Secretariat and vice-president of an alleged plot against Mao Zedong the PRC, Xi was heir-apparent to Hu and hence was sidelined in the years Jintao, he was expected to be named just prior to the Cultural Revolution. a vice-chair of the CMC. He was not, Though undoubtedly difficult for both leading to much speculation about the the elder Xi and his family, the purge succession. meant that the son was never able to Though Brown does not dwell on Xi Jinping, accompanied by U.S. Vice Pres- join a Red Guard rebel group, which it, Xi’s disappearance from public view ident Joe Biden, during a 2012 visit to the United States. might well have caused him problems just before the Eighteenth Party Con- photo: wikipedia later in life. gress has never been satisfactorily Xi Jinping was one of the millions of explained, with most Chinese skeptical youth sent to the countryside to expe- of the official explanation that he was rience the hardships of peasant life, recovering from a soccer injury. Yet he explosion killed 214 workers, exposing which also proved a blessing in dis- did succeed to the top post. One must major defects in mine safety. More guise. Unable to attend school to obtain wonder whether Xi’s determination to explosions followed, this time in a a formal education, Xi somehow man- be a strong leader and his attacks, thus karaoke hall and bath house. aged to acquire both bachelor and far successful, on his putatively corrupt Apparently Li’s efforts at crisis Ph.D. degrees from Beijing’s prestigious rivals are connected to efforts to settle management favorably impressed his Tsinghua University. The latter degree, scores for the past setbacks. superiors, as did Liaoning’s economic Brown notes, is suspected of being In contrast with Xi, Premier Li Ke- growth rate during his time there. “outsourced.” Xi somehow skipped the qiang has been quite unlucky. He comes Though clearly Hu Jintao’s favorite to normal intermediate step of a master’s from a more –– though not entirely – succeed him in the highest party and degree as well. humble background, trained initially governmental posts, Li had to settle for After serving as private secre- in law, and received a “real” Ph.D. in second best, however. tary to Central Military Commission economics from the equally prestigious The other five members of the PBSC (CMC) member Geng Biao, Xi was Beijing University. Li impresses those also show a range of different back- posted first to Hebei and then Fujian who have met him with his sharp mind grounds and characteristics. Wang provinces, with attacks on corruption and smooth operating style, in contrast Xishan, whose degree was in history, becoming a hallmark of his speeches. to his famously awkward mentor, Hu had not even joined the CCP until he There were setbacks in his path to the Jintao, who oversaw Li’s rise through was in his 30s; Zhang Dejiang studied top: for example, at the Fifteenth Party the ranks of the Communist Youth in North Korea in the late 1970s; Liu Congress in 2007, Xi came in last in League that Hu once headed. Brown Yunshan had worked as a journalist in balloting for full membership in the sees Li as a more personable version Inner Mongolia, and Zhang Gaoli was Central Committee (CC), receiving only of Hu – a problem solver rather than a an executive in a state oil company for alternate, non-voting, status. policy initiator. nearly 20 years before entering gov- Shortly after being placed in charge ernment service. Most surprising of all Additional setbacks of Henan, a succession of disastrous must be Yu Zhengsheng, whose brother, fires occurred in the province, earning a bureau chief in the Ministry of State Unmentioned by the author were Li the nickname of “the governor with Security, defected to the United States two other stumbles, the first in Mexico three fires.” Next, Li was confronted in 1985, creating a scandal that would City in February 2009 when he with a tainted-blood scandal that made normally have tainted his family mem- lectured Western powers most undiplo- international headlines and caused bers beyond redemption. matically, saying that “some foreigners, him to clamp down hard in the name Some, like Zhang Gaoli, have con- with full bellies and nothing better to of stability, compensating some of the nections with business networks, while do, engage in finger-pointing at us. noisiest complainants and enforcing a others, such as Zhang Dejiang, seem First, China does not export revolu- news blackout. Only two months after almost antagonistic to them. Some, tion; second, it does not export famine his transfer to Liaoning, a coal mine including Xi Jinping, amassed sub-

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stantial local support for their careers of differing from official government leadership re-establish the “emotional in central government; others, though policy, there has been no military repre- connection with the population” that serving in various provinces, did not. sentative in the PBSC. Within the past existed in the early years of the CCP. And whereas Xi’s rise was aided by several years, there have been hints that, This task will not be easy. As Brown a strong family network, Yu Zheng- contrary to Mao Zedong’s dictum, the points out, Chinese society has become sheng’s was marred by his, with several party may not always control the gun. more diverse, and also more outspoken. relatives even having committed suicide. Yet ominously, the first part of Mao’s People are increasingly more likely to sentence on the topic, “political power protest worsening pollution, the con- Drawing conclusions grows out of the barrel of a gun,” fiscation of land, and official abuses remains relevant. of power. Income disparities have not What then should one make of the As Brown weighs these factors, he only become greater, but more visibly data? Brown’s aim goes far beyond the suggests that it would be advisable for so, thereby exacerbating tensions, while presentation of biographical informa- a would-be future leader of the PRC to social media have made it easier for tion, seeking to tease out the factors first seek the support of the elite, pre- people to share their grievances despite that made the difference between also- sumably meaning the party elite, and efforts to block and censor the news. rans and those who emerged at the business. Least influential are the sup- To maintain stability and keep them- pinnacle of party leadership. He is skep- port of intellectual and military elites. selves in power, the leadership must tical of the importance of factional Xi Jinping’s success rests on the fact create a steady stream of deliverables. loyalty, terming it “a somewhat ossified that he alone combined the full range Maintaining economic growth in an and static notion.” of these networks. There is a bit of the era of apparent global decline, and a On the question of ideology – what post hoc ergo propter hoc juxtaposition domestic ecosystem at a dangerous these people actually believe – Brown of cause and effect in this analysis. Did inflection point, is a daunting challenge. opines that they believe in themselves, Xi’s success really depend on these bases The essence of Xi’s “China dream” is a in power, and in the importance of more than did countless other wan- society in which the PRC’s citizens have maintaining that power. They act with nabe leaders? Or did the analysis start a living standard comparable to that real ruthlessness to achieve it. Family with the conclusion of Xi’s success, note of much of the developed world, and and what the author calls tribal alli- the networks he tapped into, and work a nation that is innovative and able to ances based on family connections backward? produce its own intellectual property. continue to matter, as they did in pre- Additionally, some of the critical Undoubtedly, he also wishes to see a sit- 1949 China. Brown reports that in the factors affecting why these men suc- uation in which the Chinese president run-up to the Eighteenth Party Congress ceeded while others did not may simply is as visible and respected as that of the there were frequent reports of family not be publicly available. Particularly United States. meetings, with evidence of contestation in the PRC’s opaque system, nefarious At the same time, Brown believes, within them. deeds often remain hidden. Bo Xilai’s the leadership is aware that the country Also critically important, according actions came to light almost acciden- has in the last 150 years all too often to the author, are provincial links, tally when his chief of police, becoming collapsed in disarray and failure when with the path to Beijing often running concerned that Bo meant to blame him it tried to take on the West. The leaders through the provinces. In addition, for complicity in the murder, fled to the must guide the country in such a way business and money are “key and American consulate-general in Chengdu that it does not splinter into disunity or becoming more important.” The CCP in an apparent attempt to claim asylum. become overwhelmed by internal insta- has uniquely melded a Marxist ideology Until former PBSC member and secu- bility. This means they will have to find to cutthroat capitalistic entrepreneur- rity chief Zhou Yongkang fell afoul of a way to mobilize the already frag- ship, even bringing its avatars into Xi’s anti-corruption campaign, his mis- mented, sometimes fractious worlds a party that supposedly represents deeds were also unknown. These cases within China of different networks workers and peasants. may well be the visible tip of an iceberg and power groups so that they work However, Brown notes, patronage is of unknown, but presumably large, size. together to deliver the dream. also important, as are military and insti- Further, the important networks tutional ties. Here, a bit more attention Brown has documented interact with to how the People’s Liberation Army individuals in different ways at dif- (PLA) acts on and influences the mem- ferent times – ways that are scarcely — June Teufel Dreyer is a pro- bers of the PBSC, either as individuals predictable. In the end, what may fessor of political science at the or as an institution, would have been matter most is luck. University of Miami in Coral Gables, helpful. For the past two decades, even Still, however the lucky seven rose Florida. She is the author of such as the PLA has become increasingly to their lofty positions, they face a books as China’s Political system: powerful and its members increasingly common dilemma. In Brown’s ele- Modernization and Tradition, now in publicly outspoken, even to the point gant phrase, it is imperative that the its ninth edition.

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The Ups and Downs of htc

The smartphone maker is diversifying its product lineup in an effort to reverse its fortunes.

BY TIM FERRY WITH PHILIP LIU HTC Desire Eye. photo: htc

aiwan’s leading smartphone sion to be released later this year. Vicky Yeh, smartphone market ana- brand HTC last November The Re is not the only new venture lyst with the Industrial Economics and T launched its first own-brand, for HTC. Its Re launch coincides with Knowledge Center (IEK) at Taiwan’s non-smartphone or tablet product: a tie-up between HTC and U.S. sports Industrial Technology Research Insti- the Re, a mini still and video camera. clothing and accessories maker Under tute (ITRI), says that HTC is trying to Resembling a periscope, the L-shaped Armor to create fitness-related wear- “transform from a smartphone brand camera with one-button activation is able devices, as well as a collaboration name to a personal computer and elec- aimed at the booming market for “life- with Google to manufacture its Nexus tronics brand name.” style cameras” pioneered by GoPro – 9 line of tablets. All three moves signal HTC hasn’t given up on its core and with sales booming, the company HTC’s push to diversify away from a smartphone business, but here too the has already announced an updated ver- singular focus on the already saturated company has also diversified its product smartphone market and towards more lines away from top-tier models aimed burgeoning tech sectors such as wear- at rich markets towards lower-priced able devices. models offered in emerging markets. “In a mature market like smart- Will these new ventures be enough phones, it’s reasonable for branded to restore HTC to its once lofty perch phone makers to deliver products which at the top of the global smartphone can clearly present diversification and industry? creativity,” says Avril Wu, sector analyst Diversification into wearables and and vice president for Taiwan tech- IoT-related tech should offer attrac- nology analytics firm Trendforce, citing tive potential opportunities. Market the Re camera as one such example. forecasts predict annual sales in IoT-re- She views such diversification as bene- lated devices and components ranging fiting the company by allowing HTC to from 30-50 billion units valued at some “expand the application of mobile tech- US$300 billion by 2020. HTC has nology” into new product lines such earned a reputation for offering bold as wearables, and equally important to new products to the market, including help the maker build up its ecosystem in some of the world’s first Android and the rising Internet of Things (IoT) sector Android 4G LTE phones, and has been The HTC Re camera of connected devices and appliances. recognized as an innovation leader photo: htc

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by Boston Consulting Group, iPhone. Although many suspected Fast Company magazine, and that the real target of Apple was Bloomberg, all signs that the com- Google, instead of going head to pany is well-positioned to take head in battle against the search advantage of these new sectors. giant, Apple instead waged war But HTC is also known for getting on Android developers. Further, too far ahead of the market, only while Samsung was also in Apple’s to have consumers shift direction crosshairs, smaller and less expe- behind them, as previously seen rienced HTC represented an easier in HTC’s costly investments in 3D target. cameras and sophisticated audio The litigation in U.S. and for- that contributed little to revenue eign courts distracted HTC and and profits. cost the firm billions of US dol- A push into emerging mar- lars. Even more importantly, it kets also offers great potential, as stopped nearly half of HTC’s ship- global smartphone sales are sky- HTC Chair Cher Wang shows the motherboard of the ments into the United States at the new Desire Eye smartphone model during a presenta- rocketing, propelled by strong tion at this year's World Economic Forum in Davos, border in 2012, including flag- demand in developing countries Switzerland. ship models One X and Evo 4G photo: wikipedia such as China and India. But in LTE. The impact on HTC’s market these markets, Chinese smart- share and income was devastating. phone vendors such as Huawei and turer of touchscreens, smartphones, The patent wars “ruined HTC’s consti- ZTE already dominate, offering sur- and notebook PCs, including one of tution,” says IEK’s Yeh. prisingly good phones for less money, the earliest mobile devices, Compaq’s Moreover, while HTC was tied up in and these vendors now collectively Pocket PC. HTC’s collaboration with litigation that was eventually settled in own some 38% of the world market, Compaq led to ventures with Micro- November 2012, China’s smartphone according to Trendforce. soft, Google, and even with telecoms industry was just ramping up. ZTE Perhaps the most significant obstacle such as T-Mobile, O2, and Vodafone, and Huawei began by offering cheaper standing in HTC’s way back towards all of which also wanted to produce smartphones for emerging markets that its previous heights, though, is that the their own-spec phones. were quickly supplanting the developed chasm separating its current status from According to presentation mate- world as areas of growth for the smart- its 2011 glory days may be simply too rials provided by IEK, HTC began to phone industry. wide to bridge. develop its own-brand smartphones in According to TrendForce, Chi- HTC’s rise and subsequent decline 2006, and from 2008 to 2011 the com- na’s smartphone industry has been are the stuff of legend in Taiwan. The pany enjoyed great success in developed expanding at an annual clip of 50% company rose from ODM obscurity to world markets. It produced the world’s since its inception in 2011, with its heights of consumer branding and sales first Android-based smartphone, the global market share reaching 38.6% in rarely attained by Taiwanese firms, but HTC Dream, launched in October 2014. In 2014, the three leading Chi- then plummeted from lists of top 10 2008, followed by its well-received nese brands – Lenovo, Huawei, and smartphone vendors following years User Interface (UI) software, Sense, in Xiaomi – each delivered over 60 million of patent litigation, shifting market 2009, and the first Android 4G LTE- units, joining Samsung, Apple, and LG trends, and ever-stiffening competition. enabled phone offered in the United on Trendforce’s list of top smartphone HTC’s market cap shrank from 2011’s States, the HTC Evo, in 2010. By 2011, brands. Their shipments are expected to US$33.8 billion to the current US$4.06 HTC’s market valuation exceeded rise to over 530 million in 2015. billion, relegating the erstwhile market former leader Nokia and the company By 2012, heightened competition leader to the “Other” column in market held over 10% of the global market for in the top-tier segment from Apple share charts of smartphone vendors. smartphones. However, this early suc- and Samsung led HTC to shift focus cess also led the company directly into towards emerging markets. But here What went wrong? the middle of the smartphone patent they faced another challenge; as late- wars that would eventually engulf all of comers in entering China, India, and HTC was founded in the late 1990s the top players. other markets, they had to play catch by a partnership consisting of chair- In March 2010, Apple filed suit up. And China’s rising sophistication person Cher Wang – a scion of the against HTC in both the U.S. District in branded electronics eroded HTC’s Wang family of international conglom- Court of Delaware and the Interna- quality advantage, while production erate Formosa Plastics Group – and tional Trade Commission (ITC) for located in higher cost Taiwan put the CEO Peter Chou. The firm started out patent infringement, citing at least 20 company at a price disadvantage. as a contract ODM/OEM manufac- patents that allegedly copied Apple’s The old strategy of offering better

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quality at a lower price – the strategy Another example of the company’s two models supplement Butterfly 2, the employed by Taiwan’s electronics diversification strategy is its contract company’s high-end flagship model, industry across many segments – was production of Google’s latest tablet-PC and the mid-level model HTC One M8. no longer working. “In the mid-to- model Nexus 9, marking the resump- HTC is vigorously pushing the models high-end markets, HTC was squeezed tion of tablet production following the worldwide, especially in the emerging by Apple and Samsung, and in the disappointing performance of its two markets of China, India, and South- middle to low-end, it was squeezed own-brand models two years ago. As east Asia. Media reports say that HTC by the Chinese vendors and manufac- HTC’s shipments are down across its will launch new models at the Mobile turers,” observes IEK’s Yeh. product lines, the return to contract World Congress in Barcelona Spain this The impact on HTC’s finances has manufacturing is apparently meant to month, as well as a smartwatch. The been dramatic. In 2013, the company bolster its output volume for the sake number of new models underscores the suffered a net loss of NT$1.329 bil- of economies of scale. HTC has more company’s resolve to revitalize its pres- lion (US$44.3 million), on sales of involvement in Nexus 9 than a pure ence on the global smartphone market. NT$203.4 billion (US$7.7 billion), contract producer, though, since the Among HTC’s biggest shortcomings and its share price began its inexorable device is furnished with HTC’s propri- has been what experts see as mediocre slide from 2011 high of NT$1,238 to etary BoomSound stereo speaker. In marketing. HTC has strived to project its closing price of NT$147 on Feb- addition, HTC can sell the tablet under a distinct brand image and retain loyal ruary 11. By 2013, HTC had dropped its own brand in markets approved by followers by employing international to 11th place in terms of market share, Google. Market reception to Nexus celebrities as spokespeople, such as trailing far behind market leaders Sam- 9, notably in Japan and the U.K., has actor Robert Downey Jr., in the second sung and Apple, at 31.6% and 15.5% been satisfactory, as shown by initial half of 2013, at a cost of NT$360 mil- respectively. supply shortages. lion (US$12 million), and baseball star The numbers improved in 2014, The earlier-mentioned partnership Robinson Cano, at an undisclosed cost. with fourth-quarter results showing rev- with Under Armor is aimed at pro- But the results were roundly criticized enues up 12% year-on-year to reach moting the U.S. company’s UA Record as being confusing and did little to NT$47.9 billion (US$1.5 billion), brand of fitness apps, including popular stimulate sales. with slim profits of NT$500 million fitness tracking app MapMyRide. While Aware of the weakness in marketing, (US$15.9 million). It marked HTC’s neither Under Armor nor HTC has dis- Cher Wang took over the task her- third consecutive quarter of profit- closed exactly what devices HTC will self during a top-management reshuffle ability. The company is estimated to produce, tech blogs predict it will likely in the fourth quarter of 2013, leaving have earned after-tax net profits of be a line of wristwatch-type devices. Peter Chou to concentrate on product NT$1.81 per share in 2014, much According to the HTC website, Robin design and development. The effort so better than the NT$1.6 per share in the Thurston, Under Armour’s senior vice far has produced only limited success at red in 2013. president in charge of its Connected best, according to market observers. Fitness brand, cited HTC’s “fear- Most securities analysts are still har- Diversification less commitment to innovation” and boring a conservative outlook for HTC, its “attention to detail and premium predicting a low share price range of As HTC’s business stabilizes, diver- design” as reasons the company chose NT$90-100 in the coming 12 months. sifying its product lines will hopefully HTC as its partner. Kao Hsin-shan, tech-industry ana- expand its range and increase sales. At To back up its innovation, HTC last lyst at Barclays Securities Taiwan, for the product release of the Re in New April set up a Creative Lab in its R&D instance, notes that despite changes in York City last November, Peter Chou center in Seattle, boasting a workforce the product lineup, HTC’s gross margin noted that the camera is an outcome of 250, dedicated to software develop- will remain low, as acute competition, of an R&D effort that has focused on ment. In addition, Cher Wang signed notably in China and India, will con- audio and image in recent years. Cher an agreement with China’s Guizhou tinue to dampen the profit level. Wang said in media interviews that Re provincial government in October for Market observers hesitate to pre- is a natural extension of HTC’s inno- establishing a big-data online precision dict that HTC’s new moves can propel vation from mobile phones into the marketing and interactive center in a hi- the company back to the top of the budding sector of mobile devices, tech industrial park. consumer tech game. But noting that adding that the company will offer even While HTC is trying to bolster its Cher Wang still has the “brand name more such devices in the future. bottom line with new product lines, it is dream,” and based on the firm’s On other occasions, Chou has also strengthening its smartphone offer- improved performance over the past stressed HTC’s intention to create ings. The company launched two new half year and renewed emphasis on new value by rolling out cloud-based smartphone models at the end of 2014, product diversification and emerging products and other non-smartphone the Desire Eye and Desire 820, both markets, neither are they are dismissing products. targeting the medium-price sector. The the possibility out of hand.

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3 HTC.indd 35 2015/3/1 9:41:03 PM Are You Reading a Borrowed Copy?

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Fullpage_Subscription_09.indd 36 2015/3/1 9:12:53 PM INDUSTRY F CUS A Report on the Luxury Goods Sector

Elevating the Shopping Experience

BY JULES QUARTLY

photo: jules quartly taiwan business topics • march 2015 37

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AImING To BE ASIA’S ShoppING DESTINATIoN

Taiwan needs to reinvent itself, and one potential solution is to develop a luxury goods market that is the envy of the region.

IN THIS SURVEY nly the select few will ever tainly far removed from the cheap enter Taipei 101’s Pres- and cheerful night-market clothes, O tige Club lounge, tread food, and trinkets that make up the on its thick, golden-tan pile carpet, usual image of Taiwan. • Aiming to be Asia’s Shopping Destination and admire the bronze-beige décor. But that contrast is entirely the p38 Reserved for that elite group is the point. Taiwan once more needs to pleasure of sitting in the luxuri- reinvent itself and move up the value ously upholstered chairs and looking chain if it is to continue to thrive. It • From Bags to Riches p41 out through expansive plate-glass is therefore striving to position itself windows on the marbled 101 mall as “Asia’s shopping destination,” an atrium below. emporium for luxury goods and supe- • The Jewelry in Taiwan’s Crown p41 A special electronic card is rior service. required to access level six, where To effect such an image makeover • More Than Just Telling the Time p42 the lounge is located. Refreshments is not an easy sell, concedes Taipei are gratis, and the attentive service is 101 Mall Manager Thomas Tai, who butler-like. Guests feel like they have is well aware of the stiff competi- • Upgrading to First-Class p44 arrived in a different world – cer- tion posed by Hong Kong, Singapore, Seoul, and even special economic zones in Malaysia. But he regards the • Chinese Aesthetic with a Contemporary goal as achievable. “We set the luxury Asian Style p46 benchmark,” he says of Taipei 101. To become a Prestige Club member, it is necessary to spend NT$1.1 million – not in a year, but in one day. And to retain membership, the feat must be repeated every year. This exclusive club has some 1,300 to 1,500 members, which indicates the extent of the wealth residing in Taiwan. Even though Chinese tourists

Taipei 101 Mall Manager Thomas Tai.

photo: jules quartly

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Only those who spend NT$1.1 million in a single day get to be members of the Taipei 101 Mall's Prestige Club. are a significant part of Taiwan’s luxury photos: taipei 101 goods market, as are other Asian and international visitors, the business must rely on a solid domestic customer base. One of the advantages of the luxury 5.5% to reach NT$9.9 billion, compared At Taipei 101, 70% of customers goods market is its relative immunity to with the previous year’s NT$8.7 billion are, in fact, local. “We think this is the plague of financial malaise. While and NT$7.4 billion in 2011. Although constructive and positive,” Tai con- portions of the national economy have final 2014 figures are not yet avail- fides, noting that it largely insulates the been slowing down or even dying off, able, they are expected to continue the market from the vagaries of external this sector has boomed. Those who can upward trajectory. political and economic conditions. He afford luxury goods don’t need to curb Taipei 101 has also been receiving expresses confidence that this solid their purchasing, a fact that is unlikely to more visitors – 9 million in 2014, a big foundation will assure further expan- change in the near future. jump over the 6 million in 2013 – partly sion in Taiwan’s luxury market for at Share prices worldwide of exclusive because the Xinyi MRT line began oper- least the next two years. merchandise companies have risen by ations, bringing riders practically to In its Luxury Goods Report in 6% annually on average over the past 20 its door. This year a record 10 million Taiwan, published in July last year, the years, according to a study by Bain & people are expected to make the pil- London-based market intelligence firm Company, which describes itself as “the grimage to 101’s hallowed halls. Euromonitor was equally bullish about world’s leading advisor to the global prospects here. The report noted that luxury goods industry,” in collaboration The cross-Strait factor “affluent consumers in Taiwan remained with Fondazione Altagamma, the Italian unaffected by the sluggish economy and luxury-goods manufacturers’ industry Chinese visitors account for up to a continued with steady demand for luxury foundation. Taipei 101 Mall’s retail sales third of the spending at 101. They are goods.” Taiwan’s people, the report con- figures share this positive trend. While immediately recognizable, as most travel tinued, place “increasing importance on the country’s department stores regis- in groups led by guides waving pen- status, image and wealth, resulting in tered a relatively anemic growth rate of nants. In 2014, Taiwan received 2.8 younger consumers pursuing lavish life- 3.1% in 2013 compared with the pre- million China visitors, and the number style choices, such as indulging in luxury vious year, retail sales figures at 101 rose is expected to rise to 3 million this year, goods rather than saving money or investing.” This sea-change in traditional atti- tudes is driven by the enhanced exposure of luxury brands in the media, particularly through linking them with the power of celebrity. Later marriage and lower birth rates are also factors. Tai- wan’s youth would prefer to enjoy life, it would appear, rather than settle down and start families.

At the Taipei 101 Mall, 70% of the customers are Taiwanese.

photo: jules quartly

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A wide-angle view of the Taipei 101 Mall atrium. photo: taipei 101

according to the Tourism Bureau. For Stand in the spacious lobby and watch and Asia’s biggest downtown duty-free all “overseas Chinese,” the number of as coaches disgorge excited Chinese tour plaza, on the offshore island if Kinmen, arrivals in Taiwan in 2014 was 5.2 mil- groups. The group members stampede opened this past December. Just a 10-ki- lion. As Euromonitor notes: “Rising toward the impressively long escalator up lometer ferry trip from the Chinese city numbers of (mainland) Chinese tourists to the sixth floor, where they get a couple of Xiamen, the complex provides signifi- with high spending powers and a strong of hours to select from more than 500 cant incentives for China’s brand-hungry desire for luxury brands also attributed major brands on offer before eventually hordes – at least those in Fujian Province to growth of luxury goods in Taiwan.” descending to the first floor to pick up – to choose Taiwan’s outlying island over While the Taipei 101 management Taiwan snacks and tea to carry back as Hong Kong. is focusing primarily on the domestic gifts for relatives and friends. The Taiwan government has done its market, it is fully aware of the power of Most of the goods are on a “pre- part to facilitate matters by easing regu- the yuan. It is therefore welcome news order” basis, meaning the merchandise is lations on landing visas for Chinese. The that well-to-do Chinese tourists seem to actually picked up at the airport depar- new rules came into effect on January 1 be gravitating to Taiwan for their shop- ture gate so as to qualify for the duty- and apply to residents of the country’s ping and leisure rather than to Hong free tax allowance. While customers major cities, who are allowed to travel to Kong or elsewhere. also include outbound Taiwanese trav- Taiwan independently. Entry and customs Hong Kong, in fact, is becoming elers, some local nationals buying locally formalities can be completed in about two more of a low-cost destination for its sourced goods, and significant numbers minutes, and visitors can stay for 15 days. mainland compatriots, with budget- of Japanese tourists, the emphasis is def- While Ever Rich is certainly doing conscious day-trippers trailing around initely on the Chinese. They are the most its part to try to turn Taiwan into Asia’s suitcases full of infant milk powder numerous (90% of the total) and also the shopping destination (for its efforts, it and elbowing out wealthier tourists. biggest spenders. was given the 2013 DFNI Asia/Pacific Luxury retailers in the Special Admin- Recently, however, there has been Award for Travel-Retail Excellence in istrative Region are reporting weaker some fallout from Beijing’s anti-cor- 2013), another company leading the way sales, even though the total number of ruption drive. “Our luxury market did is the Gloria Hotel Group. “There is no mainland visitors is climbing, reaching not grow quite as much as expected in denying that Chinese tourists contribute a staggering 47.2 million last year. The 2014,” says an Ever Rich spokesperson. tremendously to the Taiwan market, but wealthy are instead heading in this direc- “There were more Chinese travelers but the full-price market still heavily relies tion, or to Japan and South Korea. actually not as much boutique or luxury on local customers in Taiwan,” says John One company seeking to cash in on shopping.” Perfumes continue to sell Chen, the company’s chairman and chief the flow of Chinese visitors is Ever Rich. well, but ostentatious gifts not so much, executive. (See the accompanying story in It runs the duty-free stores at Taiwan’s though some manufacturers have been this section for details about Gloria’s new principal airports, harbors, and offshore reducing the size of the logos on branded outlet mall project in Taoyuan). islands, such as Kinmen and Penghu, goods to make them less conspicuous. “Taiwan customers have become plus a flagship, six-story outlet in Taipei’s Ever Rich’s latest initiative to rake in more brand-conscious and aware,” Chen Neihu district. the yuan is the luxury Golden Lake Hotel says, noting a corresponding shift in emphasis to the experience of luxury, rather than just the goods themselves. “As expressed in our slogan, `Luxury, Authenticity, Value,’ these core values are exactly what the majority of customers look for. We aim to provide a luxurious shopping experience in which consumers will find authentic branded products at value prices.”

The influx of Chinese tourists has been a boon for Taiwan's luxury-goods market.

photo: jules quartly

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FRom BAGS To RIChES

foreign retailers. Located at Kaohsiung airport, it was the first of many duty- free stores, and now the company is busy building hotels and malls in various parts of the country. The latest venture, on the offshore island group of Kinmen, is a luxury hotel and Asia’s biggest downtown duty-free plaza. It caters largely to Chinese tourists, who are responsible for much of the steady growth of the luxury goods market over the past decade or so. For Chiang, as for Taiwan more broadly, the challenge is to leverage market knowledge to provide authentic The Ever Rich duty-free empire got its start with handbag manufacturing. products at an attractive price. “Our photo: ever rich chairman’s principle target is not just to sell good products anywhere in the world, but a good experience, too,” says he story of Ever Rich Duty Free quickly, and just two years later opened an Ever Rich spokesperson. “We want Shop Corp. Chairman Simon his own leather goods store. Before long, our public facilities to show Taiwan’s T Chiang neatly encapsulates the he was selling European-made bags to identity and the very best that Taiwan has changing fortunes of Taiwan’s luxury the local market and beyond. In fact, he to offer, not only by buying in the best goods market, particularly when it comes became the national distributor for top products, but by creating `an interna- to bags and leather goods. brands like Gucci, Celine, and A. Testoni, tional enterprise with localized service.’” Born to a poor, farming family in the which is how he came to learn of the Ever Rich’s Chiang has moved up the South, the young Chiang was sent off power of marketing and good service. value chain, from making bags to being a to Taipei by his mother to learn a craft, He founded Ever Rich in 1995, and distributor for prestigious foreign brands namely making luxury handbags. Starting two years later established the country’s and finding a competitive and profitable as a factory apprentice at 14, he learned first duty-free shop that wasn’t run by market niche.

ThE JEwELRY IN TAIwAN’S CRowN

Precious metals and gems are even more valuable if presented in an elegant design that has artistic and emotional appeal.

photo: jules quartly

surefire hedge against low mium for a great or novel design and for going down. It’s as simple as that,” sum- interest rates, inflation, or eco- purchasing at a luxury maison, the advan- marizes Michael Chia-Hao Liu, the Taipei Anomic meltdowns, precious tage of good jewelry is the assurance of 101 corporate spokesperson. metals and stones have never gone out of authenticity in case the owner should High-end jewelry has of late been one fashion as a form of investment. choose to cash in one day. “High-end jew- of the best sellers among all luxury seg- While the customer may pay a pre- elry retains its value when the economy is ments at Taipei 101 and accounted for

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explore the local market. Meanwhile, Ever Rich has positioned itself to take a slice of the expanding pie and develop its own brand-name jewelry. Its selling point is authentic materials, but also jewelry that is connected to Taiwan’s imagery, such as a sunrise on Alishan. In addition to the value of the raw materials, this type of jewelry has a story behind it, making it a gift that has practical, artistic, and emotional appeal. In an article for the Ever Rich duty- free magazine, the curator and director of Hu’s Art Company, Hu Chao-sheng, describes how his collaboration with Ever Rich Jewelry developed. “When we held internal discussions or talks with

photo: ever rich Ever Rich, we always focused on an idea we shared: since this is a Taiwan brand, 30% of revenues in 2014, an increase growth overall,” according to Euromon- it must reflect the culture. Our creativity of 51% on the previous year. Part of the itor. “Imported jewelry dominated the was derived not only from modern reason for the good business is that most market in Taiwan, particularly in terms Taiwan art but also from lifestyles and first-tier brands not only maintain outlets of real jewelry. U.S branded jewelry fashions, and even floral art and photog- in the mall but use the space to present enjoys wide recognition among local raphy.” The brand image was promoted their whole collections, including the consumers. Brands from European coun- through presentations, sales, and also latest designs. As a result, shoppers can tries are considered high-end jewelry, exhibitions. easily find what they want, or have seen well known for excellent designs and As an Ever Rich spokesperson put in the online catalogue. quality.” it while strolling through the compa- Unlike watches (limited editions Increasingly, Euromonitor notes, ny’s sparkling jewelry exhibition space in aside), designer clothes, and bags, domestic companies are trying to get the flagship duty-free store in Neihu: “If high-end jewelry’s basic materials have a a foothold on the jewelry bandwagon you have a famous brand from your own residual value that can always be traded and attempting to compete with inter- country, then the country’s international for their full worth. In addition, jewelry national brands. The annual Taiwan image naturally goes up.” is always welcome as a gift. Jewelry & Gem Fair at the Taipei World It is precisely through these kinds of The global slowdown demonstrated Trade Center acts as a platform for young initiatives that Taiwan may be able to the continued value of investing in jew- designers and manufacturers, as well move up the value chain in the luxury elry, which maintained “solid value as introducing overseas companies to goods market.

moRE ThAN JUST TELLING ThE TImE

If you thought luxury timepieces have had their day, think again. The watch you wear says a lot about you.

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here was a time when Taiwan was famed for producing fake T Rolex watches. They were so good it was hard to tell them apart from the real thing – though being sold in a night market might have been a bit of a giveaway. The story goes that the Swiss watchmaker was so impressed by the replica versions made here that it sent representatives to find out how Taiwan manufacturers managed to build such quality timepieces at such a low cost. While the story may be apocryphal, it does illustrate the fact that Taiwan has moved up the value chain and has become more of a guarantor of quality ment, it has everything. Even with its 450 timepieces, for the store. than a producer of fakes. That dubious US$1.27 million price tag, it can only Limited editions nearly always repre- honor now resides in China. appreciate in value.” sent a safe bet against inflation because At the Taipei 101 Mall, watches make The most popular luxury watch in they have scarcity value. But there are up about 13% of total sales. Not bad for Taiwan has been and still is Rolex, which other forces in play if you’re collecting as an item that has little practical function local collectors take a shine to because an investment, says Schooling: “The right in an age when the correct time is ever of its history, stretching back to London kind of watch will go up in value, or at present, updated by cellphone towers in 1905, its reliability, and sell-on value. the very least, retain its value. People do and synced with data networks. Not bad It had a market value share of 11% buy them for investment and have done when the most interesting watches are in 2012, according to the most recent well, but it does not apply to all of them. arguably mini-computers gauging your Euromonitor report, the only brand to be “Diamonds and precious metals body fat and determining how many in double digits. all help but they do need to be com- steps you have walked in a day. While Taiwanese previously tended bined with a ‘limited’ release. Essentially, But there’s more to watches than to buy their watches abroad for reasons market forces operate here – so the more telling the time. There’s the look, the of price and authenticity, nowadays they demand there is and the fewer editions investment angle, and – even more impor- need travel no further than Taipei 101 there are, the higher the likelihood the tantly – their value as status symbols. Mall, or a plethora of other retail outlets watch will go up in value.” “What better way to declare your suc- in the country’s major cities. International “I think there is a strand of watches cess than with a classy timepiece on your standard after-sales services are also now that will always do well, and those are wrist?” says watch expert and auctioneer available locally. ones with the highest quality movements George Schooling. “High-end watches, Still, Chinese tourists account for the within the watch,” Schooling continues. by their very nature, are all about pre- bulk of the business. Prices in Taiwan “The tourbillon watches have always cision and quality. There is a timeless for timepieces are reportedly 20-30% been popular and continue to be associ- appeal about knowing that this watch will less than on the mainland, plus visitors ated with exclusivity and luxury.” not let you down – and on the rare occa- qualify for a refund on the 5% Value Aficionados are a demanding lot and sion it does, any respectable watchmaker Added Tax. Wealthy visitors may buy don’t want just a pretty face to sell them or brand will stop at nothing to repair it products costing in the tens or even hun- a watch. Rather, they want someone for you. It is worth remembering the kind dreds of thousands of U.S. dollars. who is knowledgeable about the tech- of people who buy these luxury watches “Serious collectors have to come nical details and mechanical movements tend to be high achieving, precise people here,” says David Tao, Taipei 101’s to explain the potential purchase’s selling themselves,” Schooling opines. director of mall operation, since Taiwan points. Hence, good service is crucial. “Brand is also important. A Burberry is one of the world’s top five mar- “For a serious watch lover, specialist or a Calvin Klein watch is much more kets for watch collectors. As for 101, stores are always the best places. They likely to depreciate. Stick to the known it boasts impressive outlets from most will tend to have people who can advise watchmakers such as Cartier, Omega, of the world’s best watchmakers. Patek you – albeit a little biased – but part of and Rolex – unless the watch is so out- Philippe, for instance, has set up its big- the appeal of the luxury watch brands rageous that the price can only go up, gest flagship store worldwide in the mall is client service, so they will serve your as with the Chanel J12 Tourbillon High and – most significantly – will earmark at interest as well as theirs. Duty-free is great Jewelry. Encrusted with white gold and least 1% of its production of limited edi- for a lower-end luxury watch, if you don’t diamonds and containing a fine move- tion watches, which works out to about really care about investment value.”

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UpGRADING To FIRST-CLASS

Why settle for less when you can have more, appears to be the Gloria Hotel Group’s business model as it expands its footprint.

photo: Gloria hotel

ne of the reasons why Taiwan is more a business-class to offer a perfect combination of service, goods, and value.” rather than first-class destination for luxury goods is “Unfortunately, as in many industries here, available prod- O that apart from buying things, there is little else for ucts [in the hospitality field] are somewhat one-dimensional. As international men or women of means to do in their accustomed one of the major hotel operators in Taiwan, we believe a richer manner. portfolio of hotels will definitely have a positive impact on To become Asia’s number-one shopping destination, Taiwan attracting luxury tourists from all over the world,” Chen con- will have to compete with the premium-class delights on offer in fides. “We have also noticed that seasoned tourists prefer to Hong Kong, Seoul, and Singapore, including their deluxe hotels, stay at hotels that are not luxurious in the traditional sense, but spas, butler service, and Michelin-starred dining options. unique in style, which reflects their lifestyles more closely.” This first-class market is not just about luxury goods (the Gloria Hotel is leading the way in this respect. In May, it hardware) but also the experience (software), a fact that has plans to open its latest boutique-style Hotel Proverbs Taipei. been recognized by Gloria Hotel Group Chairman and Chief Once again it has collaborated with designer Ray Chen, who Executive John Chen. “We believe luxury has always been an worked on two other hotels in the company’s expanding hotel experience and will continue to be,” he says. “To be luxurious is chain, the Hotel Quote Taipei and Gloria Residence.

Construction under way on the Gloria Outlets mall near the Taoyuan High Speed Rail station. photos: Gloria hotel

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Armani is one of the brands that will be present in phase one of Gloria Outlets.

photo: Gloria hotel

In August, the group is set to open up phase one of Gloria “We aim to provide a platform that satisfies both the needs Outlets, which will eventually accommodate 260 major luxury- of brands and shoppers,” he notes. “By creating the right shop- brand tenants offering located discounts of 35-70%. The super ping experience, we are ensuring the satisfaction of the shoppers mall will be located in Taoyuan near the High Speed Rail station and maximizing the sales of the brands.” and just 10 minutes away from the international airport, making Teaming up with The Outlet! Company, a developer and it easily accessible to both domestic consumers and international operator of outlet centers from the United States, the Western- visitors. The complex will also contain a deluxe hotel, office style operation will include luxury brands such as Italy’s Giorgio space, and cinemas. Armani, Salvatore Ferragamo, and Versace, Spanish luxury In addition, the mall will include an onsite airport check-in house Loewe, and the New York-based Coach. center to enable international travelers to shop till they flop, Importantly, Gloria Outlets will not be carrying retail offer- VIP Lounge, information center with bilingual service staff, ings already existing in Taoyuan and Taipei, but rather add to free WIFI, large-scale food court, cafes, and restaurants with a the mix to develop new markets, Chen insists. “As an outlet variety of Western and Asian cuisines, plus other amenities. All shopping mall, Gloria Outlets will not be competing with the of which is designed to create a first-class experience. existing department stores. In fact, it will trigger another growth “The model of an outlet requires it to be a distance away of the retail industry by completing the inventory cycle.” from the full-price market to avoid cannibalization,” Chen says, The second phase of Gloria Outlets is scheduled to start in adding that the convenient transportation link will allow it to the spring next year, while the final two phases will commence “be the first or last stop of everyone’s visit to Taiwan.” He says in winter 2016 and the first half of 2017. the mall will “not only quench people’s desire for shopping, but The company sees itself as contributing to a virtuous circle for also drive the growth of the retail industry in Taiwan.” Taiwan’s economic development. Its new facilities will create new “Full-price department stores usually cater to customers that jobs, many of them well-paid. In turn, such jobs help expand reside within a five to 10-kilometer radius of the sites, whereas the market for luxury products. “The expansion of a high-in- Gloria Outlets can cover shoppers within a much greater area – come population creates more opportunities for luxury shopping, up to 60 kilometers,” says Chen. He predicts sales of between which naturally leads to more internationally well-known luxury NT$3 billion and $4 billion annually. brands setting up in the Taiwan market,” says Chen.

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ChINESE AESThETIC wITh A CoNTEmpoRARY ASIAN STYLE

Liuligongfang is one of the very few Taiwan companies with the necessary cultural heft to become a luxury brand.

t is little wonder that Taiwan, as a relatively recent arrival to the inter- I national high-end consumption market, does not really have a major luxury brand to call its own. Few countries do, in fact. According to an Economist report in December, Europe is still the primary home of luxury-goods makers and accounts for 70% of the world’s consumption. Whether it is cars and yachts from Germany, fashion and fine wines from France, spirits from the United Kingdom, or leather from Italy, Europe tends to rule the roost in this sphere. The economic powerhouse of the United States has produced fewer luxury goods of note, though its high-end electronics (especially Apple products) are among the market leaders. Where the United States has found a niche is in leather bags, says an Ever Rich spokesperson. Instead of buying Gucci and Prada, the new rich are favoring Coach, Tory Burch, and Michael Kors. “The American brands are producing bags with more flair – exciting designs in vibrant colors that younger people seem to prefer,” notes the spokesperson. But consumer tastes are constantly changing, providing opportunities for “new-world” countries to make their mark, as Australia, South Africa, and the Americas have done in wines. China is just starting to become an exporter of upmarket goods, while Japan has been doing so for some time, seeking the advantage that comes from greater revenue from less production. Many of the luxury Liuli products are not only decorative but functional as well.

It is not enough to be able to pro- photo: liuli duce an object that is better than the

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competition’s. The product also needs to be marketed brilliantly and then attain a reputation, which like a fine wine matures with time. For top-of-the-line brands, the goal is to be regarded as a classic, always in fashion. One Taiwan brand that is striving to reach the pinnacle of international acceptance as a luxury goods maker is Liuligongfang & Co. Founded by actor- director Chang Yi and actress Loretta H. Yang in Tamsui in 1987, it produces artistic glassware. It works have been exhibited in more than 30 countries and collected not just Liuligongfang has sought to be a lifestyle brand based on traditional Chinese aesthetics. by the wealthy but also by prestigious

galleries and museums, including Lon- photos: liuli don’s Victoria and Albert Museum. While Liuligongfang has expanded opening “lifestyle outlets” in Taiwan “To guide the international develop- its operation and now has hundreds that merge culture, dining, art, and life- ment of your brand, you must help your of employees around the world, it has style, the brand’s TMSK Restaurant in culture to be understood and appreci- also sought to become a lifestyle brand Shanghai was singled out by The Times ated by other cultures,” says Nana Chen, based on traditional Chinese aesthetics of London as one of Asia’s finest dining head of public relations at Liuligongfang. combined with a “tactile style of con- establishments. “Liuli has a unique technique enabling temporary Asian living.” In addition to A recent Liuli event at Songshan Cul- the company to make unique products, tural Park called Living Well, hosted by which is very rare in this business. Liuli is the company’s mini-museum and Liuli very well known in China for its products Café, showcased the “fresh incarnation” – but the design might look too Chinese of this emerging style and highlighted the for Occidental people. The challenge for need to sell more than just goods, but Liuli is to find new designs that stay Chi- also an experience or lifestyle. nese but appeal more to world culture.” It is a stiff challenge to become a leading brand, but Liuli has a head start, as was recognized by Vincent Bas- tien, former CEO of Louis Vuitton and now professor of marketing at the HEC School of Management in Paris when he called Liuli “one of Asia’s most promising brands.”

The company has extended its lifestyle experience to include cafes and restaurants.

photos: liuli

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which this year kicks off March 28. This multi-day martial arts spec- tacular celebrates the traditions of the local militias that kept remote villages safe in the days of yore. It also has a religious function, and climaxes on the birthday of Guanyin, the Buddhist bodhisattva of compas- sion known in other parts of the world as Avalokiteśvara. Guanyin’s birthday is the 19th day of the second lunar month, which in 2015 falls on April 7. The event features both traditional temple-affiliated groups and modern troupes. The former evolved out of local defense units, and their displays feature ritualized dueling with swords, pikes, and even farm tools. Until well into the 19th century, Neimen – now part of Kaohsiung City – was a dangerous fron- tier district where battle-array members had to be ready to fight using whatever was at hand. City-based troupes, Taiwan: by contrast, often add tap dancing, hip- hop, or cheerleading moves to their drills. Background information about Where Celebrations the festival can be found on the official website (www.who-ha.com.tw). Another special event during this Never Let Up season is the Purple Butterfly Valley Two-Year Butterfly Viewing Event, which began on October 4 last year and fter the excitement of Thanks- The old town of Pingxi is just 11 continues until March 31. It showcases giving, Christmas, and New kilometers east of Taipei 101, but set the annual 250-kilometer migration of A Year, many residents of West- amid rugged mountains. Before the hundreds of thousands of butterflies ern countries find the first month or two discovery of coal transformed this from Taiwan’s south to the northwest. of each year a little sluggish. In Taiwan, region, isolated homesteads released During the cooler months, four however, this is an extremely buoyant lanterns at dusk to let their neighbors purple-crow butterfly species – all have period. The Lunar New Year kicks off know all was well. In recent years the wingspans of 60 to 75 millimeters and sometime between late January and mid- custom has been embraced by tourists, eye-catching patches of blue and purple February (in 2015, it began on February who write wishes for health, happiness, – gather in exceptional numbers in a 18), and is soon followed by the Lantern prosperity, or true love on their lanterns Festival and Yanshui’s Beehive Rockets before launching them into the sky. Festival [for more details, see the Seeing Pingxi is best reached by a scenic Taiwan column in the January issue of branch railway, and ready-to-fly Taiwan Business TOPICS]. lanterns are available year-round. What Overlapping with both is the Pingxi makes the annual Sky Lantern Festival Sky Lantern Festival, running from special are the scheduled mass lift-offs February 22 to March 5. If you have of lanterns several times each evening. looked at web pages or leaflets on Have your camera ready! Taiwan’s tourist attractions, there is a More than 300 kilometers down-is- good chance you came across an image land from Taipei is the town of Neimen, of a night sky filled with glowing paper and like Pingxi it is set among the hills lanterns. The photo was likely taken that dominate Taiwan’s interior. The during the festival, which is held in district is known island-wide thanks New Taipei City’s Pingxi District. to the Neimen Songjiang Battle Array,

交通部觀光局廣告 TTB AD

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handful of locations in Taiwan’s south and southeast. The best known and most accessible are in Kaohsiung City’s Maolin District, a mountainous area inhabited by members of the aboriginal Rukai tribe. This migration is one of Taiwan’s most remarkable natural phenom- ena. At times, a single tree in Maolin may host well over 1,000 butterflies. Taiwan offers excellent butterfly-watch- ing throughout the year. Of the island’s 400-plus butterfly species, 56 are found nowhere else on Earth. Maolin is an exceptionally attractive place to visit in any season. Details of the Butterfly Viewing Event, local aboriginal culture, and hiking options can be found on Maolin National Scenic Area’s trilingual website (www. maolin-nsa.gov.tw). Like Neimen’s Battle Array, the in 1732, it has long been the starting to 16. One in every six orchids sold in Taichung City Mazu International and ending point of Taiwan’s larg- the world is cultivated in Tainan City. Festival is an extravaganza inspired est annual pilgrimage. Each spring, the Last year, TIOS attracted 330,000 visi- by Taiwan’s exuberant temple culture. temple’s principal Mazu icon embarks tors from 36 countries, many of whom Mazu is Taiwan’s most prominent folk on a nine-day tour to scores of affil- signed up for package tours so they deity. The faithful believe she was once iated temples in Taichung and three could enjoy the nearby hot springs at nearby counties. Guanziling or locally grown coffee in Hundreds of thousands of devo- Dongshan. tees accompany the icon, eager to show Culture vultures will find checking their loyalty and hoping to receive the the websites of Taiwan’s many museums deity’s blessings. Diehards walk the highly rewarding. From February 7 to entire distance, more than 300 kilome- May 3 this year, for instance, the Taipei ters, sleeping in temple dormitories and Fine Arts Museum (www.tfam.museum) courtyards along the way. is hosting an exhibition titled The Testi- The festival includes entertainments mony of Food: Ideas and Food. Given ostensibly laid on for the gods and food’s importance to the local way of goddesses, but enjoyed by everyone. life, this should be a fascinating and In addition to Taiwanese opera and wide-ranging examination of how food traditional puppetry, zhentou troupes is seen and depicted by artists. perform lion dances, dragon dances, If you prefer gritty reality to pretty and stilt-walking stunts. pictures, consider visiting When the Details of these three spectaculars, South Wind Blows - the Documentary a human being, born into a family plus several others scheduled for 2015, Photography of Taixi Village, an exhibi- surnamed Lin in Meizhou, a fish- can be found on the Taiwan Tourism tion running at Taichung City’s National ing community in Fujian (the coastal Bureau’s official “Time for Celebration” Museum of Natural Science (www.nmns. Chinese province nearest Taiwan) on website (www.eventaiwan.tw). Those edu.tw) until June 14. Like many places the 23rd day of the third lunar month planning to visit Taiwan should bear in rural Taiwan, Taixi faces a range of in 960 A.D. Credited with miracles in mind that the country has so many challenges including population outflow during her lifetime, she developed a festivals that the website can highlight and the younger generation’s unwilling- reputation after her death as a protector only a fraction of them. ness to engage in farming and fishing. of fishermen and sailors. Green-thumbed visitors may enjoy For general travel information, go Over 800 shrines around Taiwan the Taiwan International Orchid Show to the Tourism Bureau’s website (www. and its outlying islands are dedicated to (TIOS, www.tios.com.tw), held at the taiwan.net.tw) or call the 24-hour tour- Mazu, among them Zhenlan Temple in Taiwan Orchid Plantation in Tainan ist information hotline (0800-011-765, Taichung City’s Dajia District. Founded City’s Houbi District from March 7 toll free within Taiwan).

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