Looking Southward 向南看 TAIWAN BUSINESS TOPICS February 2019 | Vol

February 2019 | Vol. 49 | Issue 2 THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

Looking Southward 向南看 TAIWAN BUSINESS TOPICS February 2019 | Vol. 49 | Issue 2

中華郵政北台字第 SPECIAL REPORT 2019 BUSINESS CLIMATE SURVEY INDUSTRY FOCUS 5000

號執照登記為雜誌TECHNOLOGY 交寄 ISSUE SPONSOR

Published by the American Chamber Of NT$150 Commerce In Taipei Read TOPICS Online at topics.amcham.com.tw

2_2019_Cover2.indd 1 2019/2/6 下午10:11 CONTENTS NEWS AND VIEWS 4 Editorial In a Tough Year, Focus on Reform and Innovation FEBRUARY 2019 VOLUME 48, NUMBER 2 6 President’s View Staying Positive in 2019 Publisher By William Foreman William Foreman Editor-in-Chief 7 Taiwan Briefs Don Shapiro By Don Shapiro Art Director/ / Production Coordinator Katia Chen Manager, Publications Sales & Marketing Caroline Lee COVER SECTION Translation Kevin Chen, Yichun Chen, Charlize Hung, Looking Southward Andrew Wang 向南看 By Don Shapiro 撰文／沙蕩 12 The New Southbound Policy American Chamber of Commerce in Taipei 129 MinSheng East Road, Section 3, in a New Context 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan 南向 Tel: 2718-8226 Fax: 2718-8182 e-mail: [email protected] The New Southbound Policy, website: http://www.amcham.com.tw launched in 2016 to enhance Taiwan’s contacts with countries 050 2718-8226 2718-8182 in the surrounding region,

Taiwan Business Topics is a publication of the American has recently taken on added Chamber of Commerce in Taipei, ROC. Contents are 17 Cultivating Talent in the independent of and do not necessarily reflect the views of the significance. The deterioration in Officers, Board of Governors, Supervisors or members. U.S.-China economic relations Region © Copyright 2019 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original has placed the spotlight on material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. Southeast Asia and India as prime 19 A Commitment to Fostering areas for future growth in trade Regional Healthcare 10866 and investment. Taiwan’s efforts 5000 ISSN 1818-1961 to enhance relations with those countries cover a broad spectrum 21 Conducting an Annual Dialogue Chairman: Leo Seewald of activity, including cooperation in Vice Chairmen: C.W. Chin, Petra Jumpers education, healthcare, agricultural 南向 Secretary: Fupei Wang Treasurer: Al Chang development, and industrial 22 Wedding the Southbound

2018-2019 Governors: Anita Chen, C.W. Chin, Petra innovation. and “5+2” Innovation Jumpers, Leo Seewald, Daniel Tseng, Fupei Wang. 15 Going South to do Programs 2019-2020 Governors: Agricultural Training 南向 Al Chang, Albert Chang, Seraphim Ma, Jan-Hendrik Meidinger, Paulus Mok. 南

2019 Supervisors: Vincent Shih, Terry Tsao, Dylan Tyson.

COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Paulus Mok; Capital Markets/ Nadia Chen, Mandy Huang, C.P. Liu; Chemical Manufacturers/ Charles Liang, Michael Wong; Cosmetics/ Shirley Chen, Abigail Lin; CSR/ Lume Liao, Fupei Wang; Energy/ Randy Tsai; Human Resources/ Vickie Chen, Monica Han, Seraphim Ma; Infrastructure/ Wayne Chin, Paul Lee; Insurance/ Linda Tsou, Dylan Tyson; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Vincent Shih; Marketing & Distribution/ Wei Hsiang; Medical Devices/ Raghavendra Shenoy, Joanne Yao; Pharmaceutical/ Petra Jumpers, Wendy Lin; Public Health/ Joyce Lee, Sophia Lee, Tim Shields; Real Estate/ Tony Chao; Retail/ Ceasar Chen, Mark Chen, Peggy Liao; Sustainable Development/ Kenny Jeng, Cosmas Lu, Kernel Wang; Tax/ Stella Lai, Cheli Liaw; Technology/ Cynthia Chyn, Hans Huang; Telecommunications & Media/ Thomas SPECIAL REPORT Ee, Joanne Tsai; Transportation & Logistics/ (tba); Travel & Tourism/ Pauline Leung, Achim v. Hake. 23 AmCham Taipei’s 2019 Business Climate Survey results

2 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

2 contents.indd 2 2019/2/6 下午9:26 FEBRUARY 2019 • VOLUME 49 NUMBER 2 COVER SPONSOR

Technology for Social Impact

A Report on the Technology Sector Blockchain, Supply Chains, and Smartphones

By Matthew Fulco

40 Taiwan Eyes Blockchain Business To become Asia’s blockchain hub, Taiwan will need to overcome bureaucratic inertia and stiff competition from Singapore and Hong Kong. Microsoft is the worldwide leader in software, services, devices, 42 Taiwan’s Trade War Woes and solutions that help people and business enterprises realize With their heavy exposure to their full potential. At our core, Microsoft is the productivity and plat- China, Taiwanese tech firms are form company for the mobile-first and cloud-first world. We reinvent feeling the bite of the U.S. tariffs productivity to empower every person and every organization on on Chinese goods. 44 Chinese Smartphone Brands the planet to achieve more. Find their Footing in Taiwan Adroit marketing and retailing Microsoft Taiwan Corporation was established in 1989, and in the have helped China’s top handset more than two decades since then, we have demonstrated our firm makers boost sales in Taiwan, but commitment to being a responsible local industry partner as well as concerns about data security are mounting. perform our corporate social responsibility.

As a company, and for our employees as individuals, we value integrity, honesty, openness, personal excellence, constructive self- criticism, continual self-improvement, and mutual respect. We are committed to our customers and partners and have a passion for technology. We take on big challenges, and pride ourselves on seeing them through. We hold ourselves accountable to our cus- SPONSORED CONTENT tomers, shareholders, partners, and employees by honoring our 5 Bayer’s G4A Program commitments, providing results, and striving for the highest quality. Aids Healthcare Startups’ Development Technology is a powerful force for improving people's lives. But 48 Seeing Taiwan right now, half the world does not have access to the benefits and Kick Off Your Small-Town opportunities that technology offers. Microsoft Philanthropies are Roaming in Beigang committed to doing more globally to bring the benefits of technol- 50 Novartis: At the Forefront of Innovative Medicine ogy to the people and organizations who need them most. Together with our grantees, partners and employees around the world, we’re working to fulfill Microsoft’s mission to serving the public good

through innovative technologiesTAIWAN and BUSINESS partnerships. TOPICS • FEBRUARY 2019 3

2 contents.indd 3 2019/2/11 下午2:18 E D I T O R I A L In a Tough Year, Focus on Reform and Innovation

aiwan needs to be prepared to face a challenging year in That approach to business also dovetails nicely with the Taiwan 2019. That’s one of several key messages from AmCham government’s economy strategy of promoting the “5+2 Innovative T Taipei’s recently released Business Climate Survey. Industries”: high-tech (including artificial intelligence, the internet Notably fewer of our member executives – about 45% of things, and blockchain), biomedicine, green energy, smart compared to 55% a year ago — expressed confidence in the machinery, and national defense/aerospace. In the AmCham survey, economic outlook for the coming 12 months. nearly 54% of the respondents agreed that the “5+2” plan would Significantly, however, the business leaders surveyed are far benefit Taiwan’s economic development and about 42% said the more optimistic about the prospects this year for revenue growth plan would influence their company’s decision on future business in their own businesses. That figure was a high 80%, the same expansion in Taiwan. as last year, according to the survey, featured in this issue of our A second noteworthy message from the Business Climate magazine. Survey is that progress is being achieved in areas of major concern Why the difference? Essentially, the main reasons for the lower to AmCham companies. The change may be slower than desired, expectations for Taiwan’s economic performance in 2019 appear but the progress being achieved is nevertheless encouraging. to be external factors beyond the companies’ control. These Regarding both the composition of future energy supply and the include the impact of the current U.S.-China trade conflict, the labor-policy treatment of professional employees, for example, “America First” economic policy of the Trump administration, and companies see a welcome trend of greater flexibility. Beijing’s increasing pressure on Taiwan. They are also more satisfied than previously with the process for But when it comes to the outlook for their own business, the establishing new laws and regulations, as well as the consistency of executives tend to have a deep-seated understanding of the specific implementing the regulations after their enactment. Over 70% of problems they are likely to be confronting and strategies for those surveyed credited the government’s National Development how to manage them. A prime example comes in the reply to the Council with providing effective assistance to AmCham committees survey question that asked what the main source of opportunities in facilitating progress in the Chamber’s White Paper issues. for business growth will be for the respondent’s company in the With a resolute emphasis on innovation and continued deter- year to come. A resounding 43.6% answered “Product or Service mined efforts to tackle chronic obstacles to meeting its economic Innovation.” potential, Taiwan should be able to confirm another of the Busi- For all enterprises in this market, whether domestic or foreign- ness Climate Survey’s findings. Looking ahead on a three-year invested, devising new and innovative business solutions is sure timeframe, a majority of respondents are bullish about Taiwan’s to be one of the most effective ways to navigate the uncertain economic prospects. They seem convinced that doing the right economic environment ahead. things now will reap dividends down the road.

019年將是充滿挑戰的一年，台灣必須為此做好準備—這是而這種經營企業的態度，其實也與現今台灣政府著重「五加台北市美國商會最新公佈《商業景氣調查》報告所提出的二」產業創新計畫的經濟發展政策互相呼應。台灣政府目前重一項關鍵訊息。點扶植的產業，包括了高科技（諸如人工智慧、物聯網、區塊去年，有55%的受訪會員企業主管對未來12個月台灣經濟前景鏈）、生物醫學、綠能科技、智慧機械與國防/航太產業。此次調感到有信心，而今年這個比例有減少，變成45%。查中，有將近54%的受訪者認為，「五加二」產業創新計畫有助於另一方面，調查結果也指出：對於自己所屬企業的營收能否台灣的經濟發展，另有42%受訪者表示，「五加二」計畫會影響所成長，受訪企業領袖們樂觀許多。抱持樂觀態度的受訪者高達屬企業在台灣擴大業務的決策。 80%，與去年比例相同。調查結果的內容，都收錄在本期雜誌中。今年《商業景氣調查》呈現出的另一個重要訊息，是會員企業為何會有這樣的差異呢？商會會員們之所以對2019年台灣經所關注的部份領域，已有某些進展。進展的速度，或許比企業真濟表現無法抱持過高期待，主要是因為某些企業本身難以掌控影正需要的慢了一些，但是能夠出現進展，已令人感到欣慰。舉例響的外部因素。這些外部因素包括：美中貿易衝突、以「美國優來說，在能源供應組成、針對專業人才的勞動政策這兩方面，會先」為經濟政策方針的川普政府，以及北京方面對台灣進一步的員企業都看到政府施政展現出比以往更大的彈性，令人期待。施壓。會員企業對於政府制定新法律、規定的流程，以及立法後實際不過，對於自己所屬公司的營運展望，受訪企業主管的看法施行時能否維持一致性，也更感滿意。超過70%的受訪者認為：在就明確許多。他們相當清楚公司可能遭遇的特定問題，以及要採協調解決商會各委員會所提《台灣白皮書》政策議題上，國家發取的因應策略。頗值一提的例子是，問卷調查當中有一題詢問受展委員會提供了不少實質幫助。訪者：未來一年中，可能促進公司業績成長的機會，主要來自哪我們認為，台灣若能持續重視創新，以堅定決心克服長期以來裡？多達43.6%的受訪者回答：「產品或服務的創新」。限制台灣經濟潛力徹底發揮的各項阻礙，必能使今年《商業景氣對於耕耘台灣市場的企業，無論是本土或是外資背景，若要安調查》的另一項發現，得到更清楚的印證。此次調查顯示，大多然渡過當前經濟環境中各種未知變數，最有效的方法之一，就是數受訪企業都能樂觀看待台灣未來三年的經濟前景。他們的看法發展創新的商業解決方案。似乎是：此刻做對的事，將來必有豐碩成果。

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2 Editorial.indd 4 2019/2/6 下午9:30 CONTENT PROVIDED BY BAYER

Bayer’s G4A Program Aids Healthcare Startups’ Development Four teams in Taiwan are already receiving intense mentoring and assistance from a

Claus Zieler introduces Bayer’s G4A program to assist startup accelerator. startups.

s a champion of innovation in ers in those disease areas, Bayer has (VR SDK). Hemophilia patients the healthcare field, Bayer in accumulated an enormous amount of undergo the pain of frequent intra- A recent years has been proud knowledge, both scientific and market- venous injections to replace the to conduct a program called Grant- ing knowledge. That know-how is clotting factors in their blood. The s4Apps (G4A) to assist startups in something we can contribute to the Yajan solution is to distract patients, selected markets around the world innovation process,” he said. “Start- especially children, with games and in developing new digital technolo- ups may have great ideas – they have virtual reality content to assist them gies and solutions for the treatment a lot of energy and they will pursue in overcoming the fear of injec- of disease. Last year Bayer introduced those ideas vigorously – but without tion, as well as to make for a more the program to Taiwan in collabora- the know-how of a partner who under- comfortable and efficient procedure tion with H.Spectrum, Asia's leading stands the potential pitfalls, it will for both patient and physician. accelerator/incubator focusing on be difficult to get that technology to • Cardiovascular – Sigknow Biomed- healthcare. market across the world.” ical’s EZYPRO® ECG Recorder, From among many Taiwanese start- “Putting the creativity, the passion, a hospital diagnosis product that ups that submitted proposals, four and out-of-the-box thinking of a continuously monitors 14-day companies in four different disease startup together with someone who heart rate and rhythm. The patch areas have now been shortlisted for has very extensive know-how in a is waterproof, sweat-resistant, participation in G4A. The program disease area and in marketing across a hypoallergenic, and lightweight to assists them by providing mentors wide set of countries is a very power- make it convenient to wear. The AI and other experts to guide their busi- ful combination,” Zieler said. “What machine-learning-based algorithm ness development, seed funding, media Bayer also brings to the table is our is highly accurate, clinically proven exposure and promotion, and network- longstanding interaction with custom- to increase the arrhythmia diagno- ing opportunities through Bayer’s ers around the globe, which enables sis rate by 3-5 times. The device has extensive connections. It also presents us to understand the challenges that already received European CE certi- the possibility of eventual partnership the customers are struggling with and fication and Taiwan Food and Drug with Bayer. to distill those challenges into clearly Administration approval. “At Bayer we firmly believe that framed questions for the startups to • Women’s Health – Guzip Biomark- innovation is not owned by any indi- pursue. Getting the question right is a ers’ smart screening to identify high- vidual or any company, and that every necessary first step in finding the right risk subjects for endometrial cancer innovation requires the contribution solution.” (cancer of the uterus lining). Unlike of many talented individuals,” said The Taiwanese G4A teams and their most existing tests, this molecular Claus Zieler, the company’s Singapore- areas of focus are: diagnostic testing is non-invasive. based Senior Vice President and Head • Ophthalmology – Medimaging Inte- Guzip’s biomarkers have the further of Commercial Operations for the grated Solution’s digital hand-held advantages of high specificity and Pharmaceuticals Division Asia Pacific. diagnostic scopes. The lightweight sensitivity, enabling early diagnosis “The G4A is designed to tap into apparatus eliminates the inconve- and treatment. that broad base of innovation that nience of patients having to use “We have had fantastic interac- exists around the world by employing pupil-dilating drops before eye tions with the four short-listed teams,” crowd-sourcing.” examinations. It is also easier for said Zieler. “Their ideas are at different During a recent visit to Taipei to physicians to use than the traditional stages of development, but all appear to participate in the mentoring effort, tabletop fundus cameras, and enables be very promising going forward.” Zieler discussed the benefits of the digital photos to be uploaded to the He also praised Bayer’s collaboration program for both Bayer and the start- cloud, facilitating telemedicine to with H.Spectrum as an “excellent way ups. “Through our existing R&D remote areas. of pre-selecting the startups that are programs in certain disease areas and • Hemophilia – Yajan Tech’s Virtual the most interesting in the healthcare through our interactions with custom- Reality software development kit sphere.”

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 5

Bayer.indd 5 2019/2/6 下午9:35 PRESIDENT'S VIEW

Staying Positive in 2019

used to wait until breakfast before reading the news. Now it’s the first thing I do after shutting off my alarm. Before getting out of bed, I reach for my iPhone and start scanning the headlines of The New IYork Times, Wall Street Journal and Financial Times for positive news that might have broken over- night. Is the political feuding in Washington easing? Any signs of progress in ending the U.S.-China trade war? Are the markets up on Wall Street? The global volatility and uncertainties are also worrying AmCham Taipei members. That’s obvious from our 2019 Business Climate Survey, featured in this issue of the magazine. Our member executives told us they were far less confident about Taiwan’s economic outlook for this year. I’m trying not to let the gloom and doom get me down. After my morning news binge, I put down my phone and start focusing on the things that give me a boost of positive energy. Here are the top five things at AmCham Taipei that excite me about the coming year: 1. Innovation: AmCham Taipei’s membership includes many of the world’s most innovative companies. We’re going to find new ways to leverage these members’ experiences so we can play a bigger role driving innovation in Taiwan. Innovation has some best practices, and we’ll be finding more ways to share them, with high-profile events with thought leaders and content in our magazine, website, and social channels. 2. Insights from Washington: The increasingly tense U.S.-China relationship and how it affects Taiwan will be one of the top stories in 2019. AmCham Taipei will strengthen its position as the best forum for business leaders who want to better understand where the U.S.-China-Taiwan relationship is going. Our new “Insights from Washington” speaker series will help our members connect with the officials, politicians, diplomats, think tankers, and other key influencers at the center of the issue. 3. Digital Economy: Our membership now has a critical mass of companies working in the digital and shared economy space. They are among our most innovative and entrepreneurial members. For the first time, they are going to work together to raise their issues for our White Paper. We are looking forward to helping them resolve their regulatory challenges in the Taiwan market. 4. Young Professionals: We will soon start a new series of events that will feature CEOs who gather (for dinner or drinks) with young professionals or next generation business leaders. At the casual events, the CEOs will provide career advice, share their stories, and take questions. This is part of our plan to be a source of career development for our younger members. 5. Must-Attend Business Summit: Every year, the AmChams across Asia organize a two-day business summit. This year it will be held close to home in Hong Kong. It’s a fantastic event that should not be missed. The theme this year is “The Future of U.S. Trade and Investment in Asia.” Speakers will include business leaders, diplomats and government leaders from across the region. They will be talking about the new geopolitics of Asia, economic vision of U.S. investors in the region, and trends in innovation. I encourage all our members to attend. Go here to register: https:// amchamhk.eventbank.com/event/10320/.

William Foreman President, American Chamber of Commerce in Taipei

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presidents view.indd 6 2019/2/6 下午9:33 T A I W A N B R I E F S

— BY DON SHAPIRO —

MACROECONOMIC ECONOMIC INDICATORS

FEELING THE PINCH US$ billion US$ billion With the global trade environment Current Account Balance (Q3 2018)p 14.04 21.71 growing increasingly uncertain, Taiwan Foreign Trade Balance (Jan.-Dec.) 49.4 58 recorded exports worth US$28.6 billion New Export Orders (Dec.) 43.38 48.5 in December, 3% less than in the same Foreign Exchange Reserves (end Dec.) 461.8 451.5 month a year earlier. The Ministry of Finance attributed the dip largely to Unemployment (Dec.) 3.66% 3.66% sluggish demand for semiconductors Discount Rate (Dec.) 1.375% 1.375% used in manufacturing smartphones. Economic Growth Rate Q3 2018p 2.27% 3.36% New export orders received in Decem- Annual Change in Industrial Output (Dec.)p -1.22% 4.17% Annual Change in Industrial Output (Jan.-Dec.)p 3.65% ber told a similar story, totaling US$43.4 Annual Change in Consumer Price Index (Oct.) -0.05% 1.22% billion, compared to US$48.5 billion Annual Change in Consumer Price Index (Jan.-Oct.) 1.35% in December 2017. The decrease came P=PRELIMINARY SOURCES: MOEA, DGBAS, CBC, BOFT mainly in orders from China, especially for machinery, reflecting Chinese ber registered a 1.22% drop from the CROSS-STRAIT retrenchment due to the trade tensions same month in 2017. Another signal with the United States. of a weakening economy was the TWO OPINIONS OVER In view of the declining trade perfor- Purchasing Managers’ Index, a lead- “1 COUNTRY, 2 SYSTEMS” mance, the Taiwan Institute of Economic ing indicator of economic health in In a speech in early January, Chinese Research (TIER) in January adjusted the manufacturing and service sectors. President Xi Jinping reiterated that its economic growth forecast for 2019 The PMI in December fell to 44.8, the Taiwan “must and will be” reunited with downward from 2.2% to 2.12%. In lowest level since the index was intro- China. “We are willing to create a vast comparison, the institute calculates GDP duced in mid-2012. In addition, the space for peaceful unification, but we growth for the fourth quarter of 2018 color-coded monitoring index compiled will never leave any room for any sort at 2.48%. At Taiwan’s other leading by the government’s National Develop- of Taiwan independence separatist activ- economic think tank, the Chung-Hua ment Council dropped to the lower end ities,” he said, retaining the option of Institution for Economic Research, the of the “yellow-blue” band, nearing the use of military force. President Tsai Ing- latest forecast for 2019 GDP growth is “blue” portion of the spectrum repre- wen responded by saying that opposition 2.18% (set in December). senting contraction. to China’s proposed “one country, two After a steady nine-month rise, The unemployment rate for the systems” framework is “the most impor- industrial production in Decem- whole of 2018 came to 3.71%, an tant Taiwan consensus.” 18-year low according to the Director- A poll conducted by the Cross-Strait

TAIWAN STOCK EXCHANGE PERFORMANCE ate General of Budget, Accounting and Policy Association showed that 80.9% Statistics. The number of people work- of respondents rejected the “one coun- THE BLUE LINE SHOWS CHANGES IN TRADE VALUE AND THE SHADED AREA CHANGES IN THE TAIEX INDEX. ing in the service sector rose by 58,000 try, two systems” formula. Other polling POINTS NT$ BILLION last year, while manufacturing jobs showed a sharp rise in Tsai’s approval 13000 225000 increased by 20,000. ratings, as many Taiwanese appeared 12000 200000 Final trade figures for 2018 showed satisfied with her forceful rebuttal to Xi’s 11000 175000 a 5.9% increase in exports to reach hardline stance regarding unification. 10000 150000 9000 125000 US$336 billion, and a 10.6% rise in 8000 100000 imports to US$286.6 billion. The trade POLITICS 7000 75000 surplus of US$49.4 billion was a decline 6000 50000 from the US$58 billion of 2017. Total SU TSENG-CHANG TAKES 5000 25000 trade with the United States came to OFFICE AS NEW PREMIER 4000 0 US$74.4 billion – US$39.7 billion in Following Premier Lai Ching-te’s Taiwanese exports and US$34.7 billion resignation due to the poor showing of

DATA SOURCE: TWSE in imports. the ruling Democratic Progressive Party

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 7

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BACK IN OFFICE — Starting his second stint as Premier, Su Tseng-chang visits the Taoyuan International Airport to thank personnel for their efforts in controlling African swine flu and preparing for the Chinese New Year rush. PHOTO: AP

(DPP) in the November 2018 municipal training who has previously served in the post after the party’s setbacks in the elections, President Tsai tapped a senior government as a legislator, acting mayor November 2018 local elections. DPP leader, Su Tseng-chang, to succeed of Kaohsiung, and deputy secretary- Cho’s election was seen as strength- him. The President told the media that general of the Presidential Office. Most ening Tsai’s position as a potential she selected Su because he possesses cabinet ministers in the Lai adminis- candidate for a second term when the three characteristics needed by the tration continued in their posts, but next presidential election is held in Janu- nation at this time: experience, boldness, Lin Chia-lung, the former mayor of ary 2020. He roundly defeated You and the ability to get things done. Taichung, was appointed Minister of Ying-lung, who had expressed sympa- It is the second time the 71-year-old Transportation and Communications. thy with a recent call by four senior Su has held the position. He was the The opposition Chinese National- party members for Tsai to refrain from premier in 2006-2007 during the Chen ist Party (Kuomintang) lost no time in running again. Shui-bian administration, at which time dubbing the new team a “cabinet of Tsai was his deputy premier. losers.” In the recent elections, Su was DOMESTIC Su first came to national atten- defeated in the mayoral contest in New tion in 1980 as part of the legal defense Taipei City, Chen in Kaohsiung, and Lin CLAMPDOWN ON BRINGING team for the opposition leaders arrested in Taichung. IN PORK PRODUCTS on sedition charges after the Kaohsi- In an effort to prevent Taiwan’s pig ung Incident. He was later elected as the CHO JUNG-TAI ELECTED farms from being affected by the Afri- head of two county governments – Ping- DPP PARTY CHAIRMAN can swine fever that has hit China, steep tung (1989-1993) and Taipei (1997- Members of the ruling DPP chose penalties have been imposed on visitors 2004) – and has also served as a DPP moderate Cho Jung-tai, a former Cabinet violating the prohibition on bringing party chairman (2012-2014). Secretary-General and onetime legislator, pork or other meat products through The deputy premier under Su will as the next party chairman. He succeeds customs. be Chen Chi-mai, 54, a physician by President Tsai, who stepped down from As of press time, three tourists

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from China had been denied entry at tion process. Within days, however, the rates substantially higher than found in the airport after they were found to be Control Yuan disclosed plans to impeach other markets. Industry responded that carrying processed pork products but Kuan for allegedly taking income for comparisons with mature markets are were unable to pay the increased fine of freelance writing without authorization unreasonable, as an offshore wind power NT$200,000 (US$6,490). Three other while serving in previous government sector cannot be built from scratch with- Chinese visitors have been allowed in posts. A final determination is pending out offering sufficient inducements to after paying the fine. Concern about by the Judicial Yuan’s Public Functionary attract investment. the spread of African swine fever has Disciplinary Commission. Economics Minister Shen Jong-chin increased in recent weeks after several Amid heavy public criticism, Yeh urged the industry to engage in more contaminated pig carcasses were found resigned, saying he had completed his public communication to convince to have floated from China to islands in mission. He was succeeded by Pan Wen- citizens that offshore wind energy is the Taiwan-controlled Kinmen archipel- chung, returning to a position he left reliable and economical. Taiwan is seek- ago off the mainland Chinese coast. in April 2018. Pan said the Ministry ing to increase the share of renewable As another control measure, the of Education would prepare new rules energy in the power-generation mix Council of Agriculture tightened disin- governing the election of university pres- from the current low single digits to fection procedures before restaurant or idents and hoped to unveil the plan 20% by 2025. household scraps can be used for pig within the next half year. Earlier in January, one of the lead- feed. The highly contagious African ing offshore wind developers, Denmark’s swine flu virus can survive for months BUSINESS Ørsted A/S, announced that it was in processed foods. Although it poses no suspending operations in Taiwan threat to humans, it is lethal to pigs. TARIFF RATE SET FOR after failing to obtain a key permit OFFSHORE WIND ENERGY before the deadline to obtain a power SCRAMBLE TO FIND MISSING The Ministry of Economic Affairs purchase agreement at last year’s rate. VIETNAMESE TOURISTS in late January announced a new feed- The company said it would “pause and Shortly after arriving in Taiwan on in tariff for offshore wind power – a revisit” its involvement in four projects December 21 and 23 as members of tour 5.71% reduction from the previous level off Taiwan’s western coast. groups, 152 Vietnamese went missing, but a smaller cut than the 12.71% previ- sending law enforcement authorities on ously proposed. The Ministry had been GOOGLE SIGNS AGREEMENT an island-wide manhunt to track them feeling pressure from two sides. Critics TO BUY SOLAR ENERGY down. By late January nearly all of them argued that the government was being As part of its worldwide effort to rely had been found and arrested. Charges too generous to the developers, offering on renewable energy, Google announced were being brought against three people of engaging in human trafficking under the cover of a Vietnamese travel agency that advertised work opportunities in Taiwan over the internet.

ANOTHER CHAPTER IN NTU PRESIDENCY SAGA It appeared in December that the prolonged standoff between National Taiwan University and the Ministry of Education over the NTU faculty’s election of economist Kuan Chung-ming as university president had finally been resolved. Education Minister Yeh Jiunn-rong, who was moved over from the Interior Ministry specifically to bring the controversy to a conclusion, announced that Kuan would be allowed STILL UNRESOLVED — Kuan Chung-ming has now been installed as National Taiwan University president but faces new accusations by the Control Yuan. to take office, despite flaws in the elec- PHOTO: CNA

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the signing of a long-term agreement TAIWAN'S JAN. - DEC. 2018 TRADE FIGURES to purchase the output of a 10-mega- (YEAR-ON-YEAR COMPARISON) watt array at a solar farm in Tainan in HK/China Japan ASEAN TOTAL southern Taiwan. The deal is the first

to take advantage of a recent amend- 130.2 336.1 138.4

ment in Taiwan’s Electricity Act to allow 317.2 55.2 58.2 58.6 51.6 286.7 44.2 41.9 34.5

non-utility companies to buy renewable 31 259.3 20.8 energy directly. The power will be used 12.1 by Google’s large data center in Chang- 2018 2017 2018 2017 2018 2017

hua County. .S.A Europe The project – being carried out 39.7 34.7 36.9 31.4 34.6 31.6 30.2 together with Google’s development 29.2 partners Diode Ventures, Taiyen Green 2018 2017 2018 2017 2018 2017 Energy, J&V Energy, and New Green NIT: S Billion Power – will maximize land-use effi- Exports Imports SO RCE: BOFT/MOEA ciency by elevating the solar panels on poles mounted into commercial fishing ponds. The arrangement will also bring led by local law enforcement officials,” manufacturing sector, but was highly economic benefits to the local fishing BASF said in a statement.” It said it was controversial because of the huge tax community. also taking measures to strengthen its breaks the state government promised. information protection procedures. Now Reuters is quoting a senior Hon KKR COMPLETES DEAL Hai executive as saying that due to high WITH LCY CHEMICAL CAR SALES DECREASED production costs, the project will be A private equity consortium led by BY 2 PERCENT IN 2018 converted into an R&D center that will KKR has completed its acquisition of a Automobile sales last year totaled mainly employ engineers and researchers majority stockholding in Taiwan’s LCY 435,135 units, a drop of 2.1% from rather than blue-collar workers. Chemical Corp. The share swap and 2017. Toyota continued to be the top- purchase agreement was first announced selling brand, with market share of CONGRESS BACKS TAIWAN in July last year. LCY, a leading producer 27.8%, with China Motor (which PARTICIPATION IN WHA of polypropylene, performance plastics, markets under the Mitsubishi brand) The U.S. House of Representa- and other products, will now be priva- second with 11.3% and Honda Taiwan tives on January 22 passed a resolution tized and delisted from the Taiwan Stock third with 8.9%. Mercedes-Benz led the supporting Taiwan’s participation in the Exchange. The deal has been closely market for imported models. It report- World Health Organization. The reso- watched by the investment community edly registered a 4.1% increase in sales lution, which passed unanimously in a as the first major transaction by private from 2017 to take an overall market voice vote, directs the Secretary of State equity firms in a number of years. share of 6.7%. to “develop a strategy to regain observer status for Taiwan” in the WHO and BASF EMPLOYEES IN INTERNATIONAL other international forums. The motion, TRADE SECRETS CASE sponsored by Rep. Ted Yoho, the rank- Six current and former employees FOXCONN BACKPEDALS ing Republican on the Asia and Pacific of BASF Taiwan, the local subsidiary ON WISCONSIN PLANS Subcommittee of the House commit- of the German chemical company, were Hon Hai Precision Industry Co. tee on Foreign Affairs, had bipartisan arrested in January for allegedly pass- (better known internationally as co-sponsorship. ing the company’s proprietary technology Foxconn) appears to be downsizing its A similar resolution was passed to a Chinese competitor. The Criminal plans for investment in the U.S. state last year but was not taken up by the Investigation Bureau said the technol- of Wisconsin. Originally the company Senate before the end of the Congressio- ogy, used to make high-purity ammonia pledged to invest US$10 billion to build nal session. Taiwan attended the annual for the semiconductor industry, has an a plant that would employ 13,000 work- World Health Assembly (WHA) as an estimated market value of more than ers to build LCD screens for TV sets. observer from 2009 to 2016, but was US$100 million. “We have taken imme- The project was hailed by President not invited for the past two years due to diate steps to support the investigation Trump as a sign of resurgance in the U.S. the chilly cross-Strait relationship.

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Looking Southward 向南看

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rom the time President Tsai Ing-wen announced in her Inaugural Address in The New Southbound F May 2016 that she planned to promote a “New Southbound Policy,” assessments of the program’s potential have been mixed. Policy in a New Context Supporters have hailed the vision of diversi- fying markets and strengthening relations with 南向 neighboring countries in the Asia Pacific by sharing know-how and experience in areas where Taiwan excels. Skeptics scoffed at the idea as impractical, noting that former President Lee The New Southbound Policy, launched in 2016 to Teng-hui had initiated a “Go South” policy in the enhance Taiwan’s contacts with countries in the sur- 1990s with minimal success, while China today rounding region, has recently taken on added sig- is in an even stronger position to try to block nificance. The deterioration in U.S.-China economic Taiwan’s initiatives. relations has placed the spotlight on Southeast Asia Government officials have cautioned that the New Southbound Policy must be viewed as and India as prime areas for future growth in trade and a long-term effort that will reap benefits only investment. Taiwan’s efforts to enhance relations with gradually. So far, to be sure, the program hasn’t those countries cover a broad spectrum of activity, brought about any dramatic, breakthrough including cooperation in education, healthcare, agricul- achievements in improving relations with the 18 tural development, and industrial innovation. target countries, which include the 10 member states of the Association of Southeast Asian Nations (ASEAN), six countries in South Asia, 南向 plus Australia and New Zealand. The most 南 concrete accomplishment to date is undoubtedly the bilateral investment agreement signed with the Philippines in December 2017, a pact that hope- fully will serve as a model for similar agreements 向 with other ASEAN countries and perhaps India. At the same time, recent changes taking place in the global and regional political and economic BY DON SHAPIRO environment may warrant taking a fresh look at

MAJOR NEW SOUTHBOUND TRADING PARTNERS, 2018 05 UNIT: US$ BILLION Taiwan Exports Imports Total Trade ASEAN 58.2 34.5 92.7 Singapore 17.4 8.4 25.8 Malaysia 10.6 9.3 19.9 0 Vietnam 10.8 3.7 14.5 Philippines 8.9 2.5 11.4 Thailand 6.2 4.6 10.8 0 Indonesia 3.3 5.5 8.8 India 3.8 3.3 7.1 0 Australia 3.6 9.6 13.2 SOURCE: BUREAU OF FOREIGN TRADE

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the role that the New Southbound Policy can play. The tariff war that the Trump administration launched last year against China and the U.S. government’s exas- peration with the way that China deals with foreign investors are giving new prominence to Southeast Asian countries and India as the prime growth areas of the future. “The U.S.-China trade war may have a silver lining for Taiwan,” Bonnie Glaser, an Asian specialist at Washing- ton’s Center for Strategic and Interna- tional Studies (CSIS), told Taiwan Busi- ness TOPICS. “Some Taiwanese companies on the mainland are shuttering facto- The annual Yushan Forum provides an opportunity for thought leaders from around ries and moving to South or Southeast the region to discuss salient issues of concern. Asia. This is a boon to Tsai’s New South- bound Policy which aims to strengthen ity over the course of the next few years. the Trans-Pacific Partnership shortly ties with countries in those regions.” “People around the world are now after taking office, that effort – which Since trade follows investment, that paying more attention to Southeast began with the Obama administration’s migration is also likely to have an effect Asia,” says Alan Hao Yang, director of proclaimed “pivot to Asia” – has now in reducing Taiwan’s current heavy the Center for Southeast Asian Studies reappeared in the U.S. government’s dependence on cross-Strait commerce at National Chengchi University. “It’s a repackaged Indo-Pacific Strategy. (in 2018, mainland China plus Hong rapidly growing market of around 650 The change in the international envi- Kong continued to account for 41% of million people, and the U.S.-China trade ronment is only one of the reasons why Taiwan’s export trade and nearly 20% of friction is only increasing its importance.” the New Southbound Policy should not its imports). As a result, it is possible that The current fluid geopolitical context be looked at through the prism of the Go the hope President Tsai expressed in her includes the increased attention the South initiative of the Lee Teng-hui era. Inaugural Address – that the New South- U.S. government has been paying to The earlier program was mainly devised bound Policy will enable Taiwan to “bid the Asia Pacific region in an effort to to try to divert Taiwanese industrial farewell to our past overreliance on a check China’s influence. After a setback investment to Southeast Asia, spurred single market” – may indeed become real- when President Trump rushed to leave by national security and economic secu-

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rity concerns over the huge number of Changes in approach administration recognizes the difficulties Taiwanese manufacturers that were involved and places greater emphasis on setting up in China. Another factor is that the Lee Teng- people-to-people contacts. Taiwanese enterprises were not swayed hui initiative was largely keyed toward This approach has been made easier by the Lee government’s admonitions, working with the governments of South- by the emergence during the past few given the lure of the welcoming invest- east Asia. Considering the absence of decades of a more developed civil society ment conditions in China at the time. formal diplomatic relations with all of in many of the New Southbound Policy Today, however, labor costs, environmen- the countries involved, that was clearly a target countries. Many of the cooper- tal regulations, and the overall investment huge obstacle. Although the New South- ative programs are now carried out in climate in China are less attractive, not to bound Policy has not totally abandoned collaboration with domestic institutions mention the threat of being caught in the the idea of developing closer government- – NGOs, think tanks, universities, hospi- middle of a U.S.-China trade war. to-government cooperation, the Tsai tals, etc. – in the various societies. Yet another change that has occurred is within Taiwan’s social fabric. “We probably now have more than a million Southeast Asian people living in Taiwan, counting both migrant workers and the large number of spouses from trans- national marriages,” says Alan Yang. Consequently, Taiwan no longer views its position within the region almost exclu- sively in terms of its relations with China and Japan. Its increased cultural diversity has brought it closer to its other regional neighbors. Taiwan has also come to greater appreciate the elements of “soft power” that it can mobilize to make up for its Minister Without Portfolio John Deng says that substantive progress is being made formal diplomatic isolation and miti- despite the lack of diplomatic relations with the New Southbound countries.

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gate the pressures that Beijing may bring that we aren’t so familiar with,” he says. it were administered by an independent to bear. “Obviously with high-level “Each country is different in terms of institution outside of government. “Even exchanges, we cannot make a public government structure, laws and regu- TAITRA [the semi-official Taiwan Exter- announcement or we have to tailor it so lations. There are different languages, nal Trade Development Council] is too as not to make trouble for our partner,” customs, and religions. We have to work political,” he maintains. says Minister without Portfolio John harder to get to know more about each A further challenge is the sheer scope Deng, whose Office of Trade Negotia- government’s operations and each soci- of the effort, which encompasses scores tions takes overall responsibility for coor- ety’s culture and special characteristics in of different projects involving 23 minis- dinating the New Southbound Policy. order to work effectively.” tries and departments in the Taiwan “But these countries want their econo- Due to that gap in understanding in government. The budget devoted to the mies developed, they want their students Taiwan as well as political sensitivities in programs came to US$241 million in to be better educated, they want their some of the target countries, some crit- 2018. To provide more focus for the medical care to be improved, and they ics urge the Taiwan government to rely deployment of resources, the NSP is want their farmers to increase their more heavily on the private sector in concentrating primarily on the major income. For those goals, with or with- building connections with Southeast Asia. ASEAN economies as well as India. out diplomatic relations, we have a lot “ASEAN countries love business and love And in August 2016 the administra- to offer. Yes, you need to tailor your investment, but they’re scared to deal with tion pinpointed five flagship programs program to face the political reality, but the Taiwan government directly because under the NSP: regional agricultural in substance you can still move forward.” the benefit from China is much bigger – development, medical and public health Politics may not even be the number- there’s no comparison,” says Jackie Lo, cooperation and the development of one challenge faced by the New South- chairman of the Taiwan-ASEAN Busi- industrial chains, industrial talent devel- bound Policy. Deng stresses the compli- ness Council. The three-year-old council opment, industrial innovation and coop- cation of becoming knowledgeable represents over 40 corporate and banking eration, and the holding of an annual about conditions in 18 different coun- members in Taiwan and Southeast Asia. conference known as the Yushan Forum. tries. “Although we do have experience in Lo says that operating the New South- The other articles in this section look at those places, there are still many aspects bound Policy would be much easier if these flagship programs in more depth.

Going South to do Agricultural Training 南

ack in the 1950s and 1960s, when Taiwan needed support in the B international community to hold onto its seat in the United Nations, one of its most effective means of winning friends abroad was through agriculture. Numerous teams of agricultural tech- nicians were dispatched to developing countries, especially in Africa, to teach farmers techniques for increasing yields of rice and other crops. In much the same spirit, the New Southbound Policy has adopted the sharing of advanced agricultural technology as one of its flagship programs. Taiwan regards itself as uniquely qualified to A Vietnamese delegation led by a provincial deputy governor visits an aquaculture play this role. Given the island’s tropical/ center in Taiwan. subtropical location, its farmers are accus- tomed to the hot and humid conditions counterparts. It is not so long ago that ing, storage, transportation, and market- found in most of the target countries. It is farming in Taiwan was transformed into a ing techniques. also easy for Taiwan’s agricultural experts modern business, assisted by computeriza- “Over the past 50 or 60 years we to relate to the needs of their regional tion, biotechnology, and advanced grow- have gained a lot of experience that the

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government would like to use to help of Agriculture and the local Karawang per hectare, but using our techniques our Southeast Asian neighbors just as government, focuses on five areas: irriga- the amount could be raised to 7,000 to we help our farmers in Taiwan,” says tion, rice cultivation, horticulture, duck 8,000,” says Director General Hung. Hung chung-hsiu, Director General of the farming, and the organization of farmers’ “That will make a very practical contri- Department of International Affairs at associations. bution to people’s lives.” the Council of Agriculture. He says that To get the project started, 30 Indo- Taiwan’s relative diplomatic isolation many Taiwanese remember with grat- nesian farmers and agricultural exten- has not proven to be a severe obstacle itude the economic aid that the United sion workers were brought to Taiwan in carrying out the agricultural projects States provided to Taiwan after the last fall for 15 days of intensive training. under the New Southbound Policy, says Second World War. “Now we have a They have now returned to Karawang, Hung. “The Taiwan sovereignty issue good livelihood and can share out expe- accompanied by Taiwanese specialists, to often prevents us from joining world rience to help other countries – to ‘pay train others in the use of improved farm- organizations, so we need some channels forward’ the assistance we received.” ing techniques. The Demo Farm will be of cooperation as a bridge,” he notes. The first stage of the project has expanded to 2,000 hectares in the second An example is the Asia Pacific Associ- involved establishing a Modern Agricul- stage and eventually to 10,000 hectares. ation of Agricultural Research Institu- ture Demonstration Farm on about 400 In addition, planning has begun for simi- tions (APAARI) based in Bangkok. Since hectares of land in Karawang Regency in lar demo farms in Vietnam and the Phil- membership is open to both government the West Java province of Indonesia. The ippines. and non-government organizations, the program, which is being undertaken in “Normally rice production in Indone- Council of Agriculture has been able to cooperation with the Indonesian Ministry sia yields about 3,000 to 4,000 kilograms join – and through its membership gain

00 0 5 0000000 000000 000000 Visitors from the Philippines at a mushroom-growing demonstration area in Taiwan.

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communication links to national and nities for Taiwanese enterprises. Accord- of tropical fruits and vegetables from international agricultural research insti- ing to the government, the program has Southeast Asia. India is also a potential tutes throughout the region, including helped the Taiwan Fertilizer Co. to start source of supply. “It’s such a big coun- the International Rice Institute located in exports to Malaysia and Cambodia, try it includes temperate, subtropical, the Philippines and even indirectly to the while Taiwan Fertilizer, Taiwan Sugar, and tropical areas,” says the Council of United Nations’ Food and Agriculture and the Taiwan International Agricultural Agriculture’s Hung. “They would like to Organization. Development Co. have made investments export more to Taiwan, especially organic Besides burnishing friendly rela- in Southeast Asian markets. products, and we hope to complete the tions with other countries in the region, A further objective is to provide certification process in the near future.” another aim of the New Southbound Taiwanese consumers with a greater vari- Policy is to open new business opportu- ety of produce through increased imports — By Don Shapiro

Cultivating Talent in the Region

n the first two-plus years of the New eration in Higher Education of Taiwan, ning university instructors from the New Southbound Policy, the number of the department is the agency in charge of Southbound region. The program enables I students from the target countries the flagship Talent Development Program them to complete doctoral programs in enrolled in Taiwan’s colleges and univer- under the New Southbound Policy. Taiwan tuition-free, notes Andy Cheu-An sities increased by over one-third to reach “The market is there,” says Yang. On Bi, Director General of the Ministry of 41,000. At the same time, more than the inbound side, “the New Southbound Education’s Department of International 7,000 young Taiwanese per year head for countries are growing fast and need the and Cross-Strait Education. the New Southbound countries either to human resources – well-equipped, well- On the outbound side, Taiwan- take formal courses of study or to partic- trained, well-educated people.” Taiwan, ese studying or doing internships in the ipate in internship programs, often with which has a surplus of space in its insti- region are another source of future talent scholarships or stipends from the Taiwan tutions of higher education, has the facil- for this country’s enterprises as they seek government. ities and the programs to accommodate to promote their business dealings with These “inbound” and “outbound” those students. And when the students South and Southeast Asia. components are equally important to graduate and return to their home coun- “Since we have the market and a pipe- Taiwan’s goal of promoting the develop- tries, their bicultural experience may line of students, the objective is to build ment of talent in the region, says Andrea make them prime candidates for employ- up a platform to foster bilateral educa- Shu-ya Yang, a section chief in the Depart- ment by Taiwanese companies investing tional cooperation with the countries ment of International and Cross-Strait in those markets. of the region,” says Yang. The pillar of Education at the Ministry of Education. Among the students coming to Taiwan that platform is the network of Taiwan With assistance from the inter-univer- are the more than 100 recipients each Education Centers and Taiwan Connec- sity Foundation for International Coop- year of “elite scholarships” to begin- tion Centers set up in the target countries,

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often housed within leading universities. tions to visit,” says Yang. Last year bilat- for nearly 43% of the total in the 2017- The functions of the centers encompass eral forums were organized with four 2018 academic year. Second was Vietnam recruiting students to study in Taiwan countries – India, Malaysia, Vietnam, with over 19% and third was Indonesia (including the holding of higher education and the Philippines – bringing univer- at 17%. fairs), arranging academic exchanges, and sity presidents together to discuss the role In preparation for the greater interna- offering Chinese-language classes. of higher education and how to meet the tionalization of the campuses, Taiwan has “We invite foreign scholars, univer- challenges to future employment oppor- trained a corps of foreign student advi- sity presidents, and government officials tunities posed by Industry 4.0. sors. To accommodate Muslim students, responsible for education policy to come The country sending the most students universities have made prayer rooms and to Taiwan, and we also send our delega- to Taiwan by far is Malaysia, accounting Halal food available. “Their culture, their religion, and their lifestyle may be quite different, so we have to get to know them better and make sure there are good channels of communication,” says Yang. For the future, Director General Bi says that one aim is to increase the private sector’s engagement in the program through internships and work- study arrangements. Another, despite the lack of diplomatic relations with the cooperating countries, is to increase government-to-government contacts, for example by signing Memorandums of Understanding on cooperative efforts.

An Asian Young Leaders delegation attending a briefing. — By Don Shapiro PHOTO: TAEF

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2_CoverStory.indd 18 2019/2/6 下午9:43 NEW SOUTHBOUND A Commitment to Fostering Regional Healthcare ONE COUNTRY, ONE CENTER In each of seven priority markets, a Taiwanese medical center has been designated to coordinate cooperation activities in that country. The areas of cooperation include providing medical training and estern medicine was introduced to exchanges, building a regional disease-prevention net- Taiwan a century and a half ago by work, bolstering healthcare-related supply chains, and W foreign missionaries such as George Leslie working toward regulatory harmonization. Mackay, and American doctors in the 1970s and 1980s helped Taiwan develop a vaccine to overcome National Taiwan University Hospital the scourge of hepatitis B. Now that Taiwan has built Indonesia its own strong foundation in healthcare and public health, it is only right for Taiwan to select medical National Cheng Kung University Hospital India cooperation as one of the flagship programs under the New Southbound Policy, says Marc Min-huei Hsu, director of the Office of International Cooperation Changhua Christian Hospital Thailand at the Ministry of Health and Welfare (MOHW). He cites Taiwan’s well-trained doctors and nurses, well- run hospitals, and widely admired universal health Chang Gung Memorial Hospital Malaysia insurance program as key assets in this field. The core of the flagship program is what is being Hualien Tzu Chi Hospital called the One Country, One Center (1C,1C ) project, The Philippines which is being carried out by MOHW with adminis- trative support from the Chung-Hua Institution for Taipei Veterans General Hospital/ Economic Research (CIER) think tank. One lead- National Yang-Ming University Vietnam ing Taiwanese medical center was chosen to “spear- head bilateral cooperation” in healthcare in each of Shin Kong Memorial Hospital six priority countries: India, Indonesia, Malaysia, the Myanmar Philippines, Thailand, and Vietnam. Following a first

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year of operation in 2018, Myanmar was which is why we are having the hospitals mance,” notes Roy Chun Lee, project added to the list for 2019. take the lead,” says MOHW section chief coordinator at CIER, explaining why “The Taiwan experience will be more Coco Yu-yu Lee. “Much of the coopera- the introductions and networking are so affordable for these countries,” says Hsu. tion is at the hospital level, such as help- important. “If they try to adopt the experience of ing the hospitals in the other country “Our top five export markets for Western countries, it would be too expen- to operate more efficiently. But in most medical devices are the EU, U.S., China, sive for them. But the Taiwan model can cases we also have ministry-level cooper- Japan, and maybe Hong Kong,” says Roy provide an acceptable quality of care at ation. For example, we want to share our Lee. “ASEAN wasn’t in the picture. One an affordable cost.” experience regarding infectious disease big difference since the New Southbound While responsible for overall coordina- control, and some countries hope to Policy was launched is that we have tion of collaborative healthcare activities learn from us about building a universal started to see more companies show- in their country of assignment, each of the healthcare coverage system.” ing interest in developing new markets in Taiwan medical centers is placing partic- In addition, the 1C,1C program was ASEAN.” ular emphasis on its areas of specializa- designed to offer healthcare support for In India, the country’s ancient practice tion. The Hualien Tzu Chi Hospital, for Taiwanese businesspeople and their fami- of traditional medicines has opened addi- example, is famous for its bone marrow lies living in the target countries. The tional opportunity for dialogue between bank, the Changhua Christian Hospi- responsible Taiwan medical center helps MOHW’s Department of Chinese Medi- tal for liver transplants, and the Taipei to arrange for physical checkups or medicine and Pharmacy and India’s Minis- Veterans General Hospital for an inten- cal treatment as needed. try of Ayurveda, Yoga and Naturopathy, sive-care procedure called extracorporeal A special feature of the program is Unani, Siddha and Homoeopathy. CIER’s membrane oxygenation (ECMO). to use the contacts that are developed Lee says India is eager to learn more The 1C,1C medical centers are to facilitate entry into new markets for about Taiwan’s success in modernizing assigned specific quotas for the number Taiwanese manufacturers of medical traditional Chinese herbal medicine, for of medical professionals from their desig- devices and pharmaceuticals. The train- example by providing the equivalent in nated countries to be trained per year and ing courses for physicians and nurses pill form as well as imposing quality stan- the content of the training course. The may include a visit to companies in one dards and making available manufactur- bulk of the training takes place at medi- of Taiwan’s biotech industrial parks for ing certification. cal facilities in Taiwan. According to demonstrations of their products. Another The government-to-government MOHW, each year at least 500 foreign channel is provide Taiwanese businesspeo- nature of the contacts has not been an physicians receive training in Taiwan on ple on marketing trips to South or South- obstacle. “After all, we’re talking about new treatments and techniques, and then east Asia with introductions to potential healthcare,” Roy Lee says. “We’re not return home to train their colleagues. customers among local hospitals. talking politics.” “Of course, in most of these coun- “Medical products require trust and — By Don Shapiro tries we don’t have diplomatic relations, confidence, not just price and perfor-

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Conducting an Annual Dialogue 南向

art of President Tsai Ing-wen’s excellence, the event was named the (TAEF), established last year with govern- vision for the New Southbound Yushan Forum after Taiwan’s highest ment funding. The highlights of the 2018 P Policy was for Taiwan to host mountain peak. The first conference, in forum were speeches by two Nobel Peace an annual conference of thought lead- 2017, was attended by some 800 public Prize laureates — former President of ers from the target countries to provide and private sector participants from South Africa F.W. de Klerk and Indian guidance regarding regional concerns and more than 20 countries and featured children’s rights activist Kailash Satyarthi. how the New Southbound Policy could sessions on Economy and Trade, Human Besides the Yushan Forum, TAEF is best address them. Organizing the event Resources, Technological Innovation, tasked with five other missions: – to be held each year on October 11 and NGO Engagement, Think Tank Collabo- • Collaborating with think tanks 12, right after Taiwan’s “Double Ten” ration, and Youth Dialogue. around the region and serving National Day – became one of the flag- Starting from 2018, responsibility as the pilot organization for a ship projects under the program. for organizing the conference rests with Taiwan-based think tank to special- To reflect Taiwan’s aspirations for the Taiwan-Asia Exchange Foundation ize on topics of regional interest.

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NEW SOUTHBOUND

• Developing an Asian Young Leaders program to help the next generation of leaders grapple with vital regional and global issues. • Working with NGOs in neighboring countries to enhance “civil society connectivity.” • Promoting “regional resilience” by sharing Taiwan’s experience in emergency preparedness with other countries vulnerable to natural disasters. • Engaging in cultural exchange programs with the New South- bound countries. “Through these five action programs, we’re seeking to become more involved with the region that we’re a part of,” says Alan Hao Yang, the TAEF executive director and also director of the Center for Southeast Asian Studies at National Chengchi University. “We’re trying to create a comprehensive program, not just focusing on trade, investment, and education.”

Wedding the Southbound and “5+2” Innovation Programs

南向

n addition to the New Southbound Policy, one of the central initiatives of the Tsai Ing-wen administration has been the I “5+2 Innovative Industry” program focusing on cutting edge industrial sectors. The goal of forging links between those two policies was assigned to the Ministry of Economic Affairs as one of the five flagship projects under the New Southbound Policy. MOEA selected India, Indonesia, Malaysia, the Philippines, Vietnam, and Thailand as the main counterparts for industrial cooperation. It has also outlined the following objectives: 5 • Deepening industrial supply chain partnerships, especially for smart machinery. • Cooperating in the promotion of smart city technologies and the development of platforms and systems based on the internet of things. • Promoting turnkey projects (the export of whole plants) from Taiwan. • Providing assistance to small and medium-sized enterprises in the region based on Taiwan’s long experience in that area. • Contributing to an environmentally friendly Asia Pacific by promoting green energy technology. • Engaging in innovative marketing and promotion activities to enhance the image of Taiwanese products and technology throughout the region. • Utilizing markets in the region as a test bed for innovative Taiwanese products.

22 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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2019

A Business Climate Survey

Report on Results

The online 2019 Business Climate Survey was conducted for AmCham Taipei by PwC Taiwan between November 12 and December 21, 2018. Of the 391 eligible respondents among the vot- ing representatives of the hamber’s member companies (usually the country head), 179 took the survey for a response rate of 45.7%.

CONSULTANT Suite 706, Worldwide House 129 MinSheng East Road, Section 3, Taipei 10596, Taiwan Tel: +886-2-2718-8226 Fax: +886-2-2718-8182 www.amcham.com.tw

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Good Opportunities in a Challenging Environment A Message from 2019 AmCham Taipei Chairman Leo Seewald

AmCham Taipei’s Business Climate Survey provides valuable insights into the attitudes and concerns of multinational business executives in Taiwan. The results help the Chamber shape its advocacy agenda for the coming year and serve as useful reference for the U.S. and Taiwan governments, scholars, and others interested in U.S.-Taiwan economic relations.

Here are the major findings of the 2019 Business Climate Survey:

• Business leaders are significantly less confident than last year about Taiwan’s economic outlook over the next 12 months. Only 45.8% of those surveyed said they were very or somewhat confident about the economic prospects for 2019 – a 10 percentage point drop from the year before. • Factors causing concern for global companies included the ongoing U.S.-China trade dispute, the U.S. administration’s “American First” trade policy, pressure on Taiwan from China, and cybersecurity threats. • Many business leaders were more positive about Taiwan’s three-year economic outlook, with 53.6% expressing a degree of confidence – mostly unchanged from last year. • Companies were also more bullish about their own profitability, with about 80% saying they were very or somewhat confident about revenue growth over the next 12 months and three years. • Other key findings of the poll: – 89% expect their headcount to increase or remain unchanged over the next year. – 87% worry about the future sufficiency of the electric power supply. – 59% expressed dissatisfaction with the level of attention top policymakers in Taiwan give to business. – Respondents were highly enthusiastic about the overall quality of the workforce and living conditions in Taiwan.

AmCham Taipei thanks PwC Taiwan for its excellent cooperation in conducting the survey.

24 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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The coming year will be a challenge for the economy The level of confidence is about 10 percentage points less than a year ago.

How confident are you about Taiwan’s economic growth over the next 12 months?

45.81% of respondents said they were either somewhat or very confident – a drop from 55.5% last year.

2019 2018

Ve r y c o n f i d e n t 4.47% Ve r y c o n f i d e n t 6.5% 45.81% 55.5% So m e w h a t c o n f i d e n t 41.34% So m e w h a t c o n f i d e n t 49%

No t v e r y c o n f i d e n t 45.81% No t v e r y c o n f i d e n t 37%

No t c o n f i d e n t a t a l l 7.26% No t c o n f i d e n t a t a l l 6.5%

Do n ’ t k n o w / Ca n ’ t s a y 1.12% Do n ’ t k n o w / Ca n ’ t s a y 1%

0 20 40 60 80 0 20 40 60 80

But economic prospects are seen as better for a three-year timespan The expressed level of confidence is slightly higher than a year ago.

How confident are you about Taiwan’s economic growth over the next 3 years?

53.63% of respondents said they were either somewhat or very confident – an increase from 50.25% last year.

2019 2018

Ve r y c o n f i d e n t 4.47% Ve r y c o n f i d e n t 3.52% 53.63% 50.25% So m e w h a t c o n f i d e n t 49.16% So m e w h a t c o n f i d e n t 46.73%

No t v e r y c o n f i d e n t 40.22% No t v e r y c o n f i d e n t 38.19%

No t c o n f i d e n t a t a l l 5.59% No t c o n f i d e n t a t a l l 10.05%

Do n ’ t k n o w / Ca n ’ t s a y 0.56% Do n ’ t k n o w / Ca n ’ t s a y 1.51%

0 20 40 60 80 0 20 40 60 80

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 25

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Factors that might affect economic performance in the year ahead A number of external elements are seen as creating potential uncertainties.

To what extent do you regard the following as potentially impacting your company’s business operations and competitive positioning in Taiwan in the coming year?

Geopolitical aspects

Current U.S.-China trade dispute

A l a r g e e x t e n t 26.828% So m e e x t e n t 54.19% No t a t a l l 16.76% Do n ’ t k n o w 2.23%

0 20 40 60 80

U.S. "American First" trade policy

A l a r g e e x t e n t 19.55% So m e e x t e n t 53.07% No t a t a l l 22.91% Do n ’ t k n o w 4.47%

0 20 40 60 80

Pressure from China over Taiwan

A l a r g e e x t e n t 35.75% So m e e x t e n t 43.58% No t a t a l l 16.76% Do n ’ t k n o w 3.91%

0 20 40 60 80

Information security

Cybersecurity threats

A l a r g e e x t e n t 22.91% So m e e x t e n t 53.63% No t a t a l l 18.99% Do n ’ t k n o w 4.47%

0 20 40 60 80

Intellectual property rights infringements

A l a r g e e x t e n t 21.23% So m e e x t e n t 46.93% No t a t a l l 29.61% Do n ’ t k n o w 2.23%

0 20 40 60 80

26 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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Taiwan continues to provide a positive environment for multinationals Confidence holds steady in prospects for their own companies.

How confident are you about your company’s prospects for revenue growth over the next 12 months?

More than 80% are either somewhat or very confident.

2019 2018

Ve r y c o n f i d e n t 21.79% Ve r y c o n f i d e n t 32.16% 80.45% 81.4% So m e w h a t c o n f i d e n t 58.66% So m e w h a t c o n f i d e n t 49.25%

No t v e r y c o n f i d e n t 16.76% No t v e r y c o n f i d e n t 13.07%

No t c o n f i d e n t a t a l l 1.68% No t c o n f i d e n t a t a l l 3.52%

Do n ’ t k n o w / Ca n ’ t s a y 1.12% Do n ’ t k n o w / Ca n ’ t s a y 2.01%

0 20 40 60 80 0 20 40 60 80

How confident are you about your company’s prospects for revenue growth over the next 3 years?

The degree of confidence over 12 months and 3 years is about the same – a high 80% or so

2019 2018

Ve r y c o n f i d e n t 24.58% Ve r y c o n f i d e n t 24.12% 80.45% 79.4% So m e w h a t c o n f i d e n t 55.87% So m e w h a t c o n f i d e n t 55.28%

No t v e r y c o n f i d e n t 16.20% No t v e r y c o n f i d e n t 14.57%

No t c o n f i d e n t a t a l l 1.68% No t c o n f i d e n t a t a l l 3.52%

Do n ’ t k n o w / Ca n ’ t s a y 1.68% Do n ’ t k n o w / Ca n ’ t s a y 2.51%

0 20 40 60 80 0 20 40 60 80

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 27

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Innovation and market expansion: the main sources of growth

Which of the following areas do you see as the main business growth opportunity for your company in Taiwan over the next 12 months?

Pr o d u c t o r s e r v i c e i n n o v a t i o n 43.58%

Ex i s t i n g m a r k e t e x p a n s i o n 35.75%

En t r y i n t o n e w m a r k e t s e c t o r s 7.82%

M e r g e r s a n d a c q u i s i t i o n s ( M & A) 3.91%

Ne w j o i n t v e n t u r e s a n d / o r s t r a t e g i c a l l i a n c e s 6.15%

Ot h e r s ( p l e a s e s p e c i f y ) 2.79%

0 20 40 60 80

More than a third of companies plan to increase employment this year

Do you expect the number of your fulltime equivalent employees in Taiwan to increase, remain around the same level, or decrease over the next 12 months?

In c r e a s e 34.64%

La r g e l y u n c h a n g e d 54.19%

De c r e a s e 9.50%

Do n ’ t k n o w 1.68%

0 20 40 60 80

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Progress on Taiwan White Paper issues Coordination efforts by the National Development Council have been productive.

Since 2017, the government’s National Development Council has been holding quarterly meetings with AmCham committees to track and facilitate progress on White Paper issues. To what extent do you regard this as effective?

Ve r y e f f e c t i v e 17.88% 70.39% So m e w h a t e f f e c t i v e 52.51%

No t a t a l l e f f e c t i v e 12.29% Do n ’ t k n o w 17.32%

0 20 40 60 80 100

A resounding 70% of the respondents rate the NDC efforts as either very or somewhat effective. Last year the level was about 60%.

In response to AmCham White Paper suggestions, the government in 2016 extended the notice and comment period for new regulations from 14 to 60 days. To what extent do you agree with the following statements?

6.15% St r o n g l y a g r e e 3.35% 2.79% 2.79% 38.55% Ag r e e 45.81% 35.20% 24.02% 26.82% La w s a n d r e g u l a t i o n s c a n b e r e s e a r c h e d i n a u s e r - f r i e n d l y w a y . Ne u t r a l / Do n ’ t k n o w 30.17% 35.20% 31.84% In p r i n c i p l e , d r a f t r e g u l a t i o n s a r e g i v e n a s u f f i c i e n t p u b l i c n o t i c e a n d c o m m e n t p e r i o d b e f o r e a d o p t i o n 25.70% In p r a c t i c e , d r a f t r e g u l a t i o n s a r e g i v e n a s u f f i c i e n t p u b l i c n o t i c e Di s a g r e e 17.32% a n d c o m m e n t p e r i o d b e f o r e a d o p t i o n . 22.35% 35.75% Go v e r n m e n t b o d i e s g i v e s e r i o u s a t t e n t i o n t o c o m m e n t s f r o m t h e p u b l i c a n d t y p i c a l l y p r o v i d e c a r e f u l l y c o n s i d e r e d r e l e v a n t 2.79% r e s p o n s e s t o p u b l i c i n p u t St r o n g l y d i s a g r e e 3.35% 4.47% 5.59%

0 20 40 60 80 100

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 29

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Many companies see value in the government’s signature programs Survey-takers were asked about the 5+2 Innovative Industries program, Forward-looking Infrastructure program, and New Southbound policy.

To what extent do you consider that the following government policies will benefit Taiwan’s economic development?

10.06% A l a r g e e x t e n t 13.41% 5.59% 53.63% So m e e x t e n t 45.38% 39.11% 18.44% ( A) 5+2 In n o v a t i v e In d u s t r i e s Pl a n No t a t a l l 28.49% ( B) F o r w a r d - l o o k i n g In f r a s t r u c t u r e 46.37% De v e l o p m e n t Pl a n 17.88% ( C) Ne w So u t h b o u n d Po l i c y Do n ’ t k n o w 14.53% 8.94% 0 20 40 60 80 100

To what extent will these policies influence your company’s decisions on future business expansion in Taiwan?

5.59% ( A) 5+2 In n o v a t i v e In d u s t r i e s Pl a n A l a r g e e x t e n t 4.47% ( B) F o r w a r d - l o o k i n g In f r a s t r u c t u r e 4.47% De v e l o p m e n t Pl a n 36.31% ( C) Ne w So u t h b o u n d Po l i c y So m e e x t e n t 35.75% 26.26% 44.69% No t a t a l l 49.72% 59.78% 13.41% Do n ’ t k n o w 10.06% 9.50% 0 20 40 60 80 100

Are you satisfied with the government’s progress so far in implementing these specific initiatives?

0.56% ( A) 5+2 In n o v a t i v e In d u s t r i e s Pl a n Ve r y s a t i s f i e d 0.56% 0.56% ( B) F o r w a r d - l o o k i n g In f r a s t r u c t u r e De v e l o p m e n t Pl a n 30.73% ( C) Ne w So u t h b o u n d Po l i c y So m e w h a t s a t i s f i e d 21.79% 28.49% 40.78% No t s a t i s f i e d 46.93% 46.37% 27.93% Do n ’ t k n o w 30.73% 24.58% 0 20 40 60 80 100

30 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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Taiwan’s human capital is one of its biggest assets Personnel are regarded as hardworking and easy to train.

To what extent are you satisfied with your company’s ability to recruit enough – and sufficiently capable – personnel to meet your business needs in Taiwan?

2019 2018

Ve r y s a t i s f i e d 8.94% Ve r y s a t i s f i e d 14%

So m e w h a t s a t i s f i e d 50.28% So m e w h a t s a t i s f i e d 48%

Ne u t r a l 17.88% No t s a t i s f i e d 28%

No t s a t i s f i e d 21.79% St r o n g l y d i s s a t i s f i e d 7%

St r o n g l y d i s s a t i s f i e d 1.12% Do n ’ t k n o w / Ca n ’ t s a y 2%

0 20 40 60 0 20 40 60

Fewer companies are “very satisfied,” but most still report overall satisfaction.

The survey showed continued enthusiasm about the quality of Taiwan’s human capital.

Out of 18 characteristics, the top 5 cited were:

u Execution of assigned tasks v Trustworthiness w Openness to training x Industriousness y Business ethics

The bottom 5 were:

14 Creativity/ability to innovate 15 Ability/willingness to take initiative 16 Communication skills 17 English ability 18 International mindset

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 31

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Taiwan is seen as an excellent place to live and work Safety, social stability, and friendliness are among the chief attributes.

Asked about the quality of life in Taiwan, the respondents were generally enthusiastic. The top five positive factors cited were:

u Personal safety

v Social stability

w Healthcare system

x Mass transportation

y Friendliness toward foreigners

The least favorable aspects cited were:

u Air quality

v Education system

w Diversity & inclusiveness

x Environmental sanitation

y Infrastructure

32 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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Key Areas of Concern – Regulatory Framework Further reforms are needed for Taiwan’s regulatory regime to meet the needs of a competitive, knowledge-based economy.

Are you satisfied with the general level of attention given by Taiwan’s top policymakers to the needs of business, as well as their level of engagement with the private sector, in setting relevant policies?

Ve r y s a t i s f i e d 3.91% So m e w h a t s a t i s f i e d 36.87% No t s a t i s f i e d 49.16% St r o n g l y d i s s a t i s f i e d 10.06%

0 20 40 60 80

Modest improvement in satisfaction was seen regarding the following aspects of Taiwan’s regulatory environment:

2019 2018

New regulations meet economic needs and demonstrate a thorough understanding of industry and/or business dynamics.

St r o n g l y a g r e e 2.23% St r o n g l y a g r e e 1.04% Ag r e e 29.05% So m e w h a t a g r e e 16.06% Ne u t r a l / Do n ’ t k n o w 27.93% Ne u t r a l / Do n ’ t k n o w 30.05% Di s a g r e e Di s a g r e e 35.20% 43.52% 52.85% St r o n g l y d i s a g r e e 5.59% 40.79% St r o n g l y d i s a g r e e 9.33% 0 20 40 60 0 20 40 60

Formal rulemaking is conducted according to international best practice.

St r o n g l y a g r e e 0% St r o n g l y a g r e e 1.04% Ag r e e 26.26% So m e w h a t a g r e e 16.58% Ne u t r a l / Do n ’ t k n o w 29.61% Ne u t r a l / Do n ’ t k n o w 28.5% Di s a g r e e 37.99% Di s a g r e e 43.01% 53.89% St r o n g l y d i s a g r e e 6.15% 44.14% St r o n g l y d i s a g r e e 10.88% 0 20 40 60 0 20 40 60

Government bodies give serious attention to comments from the public and typically provide carefully considered relevant responses to public input.

St r o n g l y a g r e e 2.79% St r o n g l y a g r e e 1.04% Ag r e e 24.02% So m e w h a t a g r e e 20.73% Ne u t r a l / Do n ’ t k n o w 31.84% Ne u t r a l / Do n ’ t k n o w 26.94% Di s a g r e e 35.75% Di s a g r e e 41.45% 51.29% St r o n g l y d i s a g r e e 5.59% 41.34% St r o n g l y d i s a g r e e 9.84% 0 20 40 60 0 20 40 60

Laws and regulations are interpreted in a consistent manner and are not subject to different interpretations by different government bodies or government personnel.

St r o n g l y a g r e e 2.23% St r o n g l y a g r e e 1.55% Ag r e e 26.26% So m e w h a t a g r e e 18.65% Ne u t r a l / Do n ’ t k n o w 25.14% Ne u t r a l / Do n ’ t k n o w 27.46% Di s a g r e e 39.66% 46.36% Di s a g r e e 39.9% St r o n g l y d i s a g r e e 6.70% St r o n g l y d i s a g r e e 12.44% 52.34%

0 20 40 60 0 20 40 60

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 33

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Key Areas of Concern — Energy Companies need greater assurance of the adequacy of future power supplies.

Regarding the future of Taiwan’s electrical power supply, how concerned are you about the following aspects?

Power supply sufficiency

Ex t r e m e l y Co n c e r n e d 40.22% 86.59% So m e w h a t Co n c e r n e d 46.37% No t Co n c e r n e d 10.06% No Op i n i o n / Do n ’ t k n o w 3.35%

0 20 40 60 80 100

Voltage stability

Ex t r e m e l y Co n c e r n e d 26.82% 73.19% So m e w h a t Co n c e r n e d 46.37% No t Co n c e r n e d 20.11% No Op i n i o n / Do n ’ t k n o w 6.70%

0 20 40 60 80 100

Electricity cost

Ex t r e m e l y Co n c e r n e d 25.14% 69.83% So m e w h a t Co n c e r n e d 44.69% No t Co n c e r n e d 25.14% No Op i n i o n / Do n ’ t k n o w 5.03%

0 20 40 60 80 100

The government aims to phase out nuclear power from Taiwan’s energy mix by 2025, and to replace it with increased use of renewable energy resources and natural gas. To what extent will concerns about the practical achievability of this nuclear-free goal affect your company’s decisions on future business expansion in Taiwan?

A l a r g e e x t e n t 20.11% 63.13% So m e e x t e n t 43.02% No t a t a l l 29.05% No Op i n i o n / Do n ’ t k n o w 7.82%

0 20 40 60 80 100

34 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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Key Areas of Concern — Labor Policies Respondents believe more flexibility in labor regulations is needed to meet the needs of a knowledge-based economy.

The latest amendments to Taiwan’s Labor Standards Act, which took effect in March 2018, provide for more flexible arrangements regarding the structure of the workweek, overtime pay, and employee annual leave. Regarding the current provisions of the Labor Standards Act, to what extent do you agree with the following statements?

They provide sufficient flexibility to meet my company’s needs.

Over 45% of respondents think that current regulations are too inflexible.

St r o n g l y a g r e e 4.47% So m e w h a t a g r e e 25.70% Ne u t r a l 22.35% Di s a g r e e 25.70% 45.25% St r o n g l y d i s a g r e e 19.55% Do n ’ t k n o w 2.23%

0 20 40 60

Labor issues will be a key factor in my company’s decisions on future business expansion in Taiwan.

For more than half the companies, labor issues will be a major factor in whether they expand operations in Taiwan.

St r o n g l y a g r e e 13.41% 55.31% So m e w h a t a g r e e 41.90% Ne u t r a l 32.96% Di s a g r e e 8.94% St r o n g l y d i s a g r e e 2.23% Do n ’ t k n o w 0.56%

0 20 40 60

How satisfied are you with the provisions of the new Act for the Recruitment and Employment of Foreign Professional Talent, which took effect in February 2018, and its subsequent imple- mentation? The law seems to have had only a limited impact.

Ve r y s a t i s f i e d 3.35% So m e w h a t s a t i s f i e d 23.46% Ne u t r a l 43.58% No t s a t i s f i e d 12.29% St r o n g l y d i s s a t i s f i e d 4.47% No t f a m i l i a r w i t h t h e d e t a i l s 12.85%

0 20 40 60

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 35

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Economic relations with the United States Respondents overwhelmingly support bilateral agreements and regular trade negotiations with the U.S.

How important is it for your business in Taiwan that the following agreements be signed between the U.S. and Taiwan?

Bilateral trade agreement

Ve r y i m p o r t a n t 36.26% 85.38% So m e w h a t i m p o r t a n t 49.12% No t i m p o r t a n t 14.62%

0 20 40 60 80 100

Bilateral investment agreement

Ve r y i m p o r t a n t 29.59% 80.48% So m e w h a t i m p o r t a n t 50.89% No t i m p o r t a n t 19.53%

0 20 40 60 80 100

Double taxation agreement

Ve r y i m p o r t a n t 26.99% 76.68% So m e w h a t i m p o r t a n t 49.69% No t i m p o r t a n t 23.31%

0 20 40 60 80 100

A bilateral trade agreement is considered the most important, followed by an investment agreement and a double taxation agreement.

Formal negotiations between the U.S. and Taiwan under the Trade and Investment Framework Agreement (TIFA) have been suspended since 2016. How important is it for your business that the talks resume soon to address outstanding trade and investment issues between the two sides?

Ve r y i m p o r t a n t 29.61% 74.86% So m e w h a t i m p o r t a n t 45.25%

No t i m p o r t a n t 20.11%

Do n ’ t k n o w 5.03%

0 20 40 60

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Taxation The high individual tax rate is seen as making it more difficult to attract high-caliber foreign talent to Taiwan.

To what extent do you agree that the following aspects of Taiwan’s tax system are favorable?

1.68% 3.35% St r o n g l y a g r e e 1.68% 2.79%

32.40% 29.61% Ag r e e 34.08% 31.84%

33.52% 27.93% Ne u t r a l / Do n ’ t k n o w 43.58% 41.90% 26.82% 27.37% Di s a g r e e 17.32% 19.55% Co r p o r a t e i n c o m e t a x r a t e 5.59% In d i v i d u a l t a x St r o n g l y d i s a g r e e 11.73% 3.35% Ea s e o f c o r p o r a t e t a x c o m p l i a n c e p r o c e s s 3.91% Cl a r i t y o f t a x l a w s a n d r e g u l a t i o n s

0 20 40 60 80 100

Investment incentives MNCs would welcome various forms of inducements.

To what extent do you agree that the following incentives would help stimuate foreign companies’ willingness to invest in Taiwan?

16.76% A l a r g e e x t e n t 25.70% 33.52% 33.52% 53.07% 56.42% So m e e x t e n t 52.51% 46.93%

22.91% No t a t a l l 10.06% 8.38% ( A) Go v e r n m e n t s u b s i d i e s 10.06% ( B) Ta x c r e d i t s 7.26% ( C) Ta x e x e m p t i o n s 7.82% Do n ’ t k n o w ( D) Re d u c e d t a x r a t e s f o r 5.59% s p e c i f i c i n d u s t r i e s 9.50%

0 20 40 60 80 100

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 37

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WHO TOOK PART IN THE SURVEY

Respondents by Industry A broad cross-section of industry sectors:

Professional Services ICT 18.44% Healthcare-related 3.91% 26.26% Financial services 2.23% Chemicals/Energy 5.03% 11.73% Consumer Goods & Food/Beverage 10.06% Media & Entertainment 10.61% 11.73% Retail & Trade Other services

Respondents by Business Type A variety of business activities:

Service provider 18.44% Sales & distribution 1.12% 33.52% 4.47% Research & development 4.47% Manufacturing for domestic market Manufacturing for export 6.15% Local/regional procurement 31.84% Others

Respondents by Number of Employees The companies come in all sizes:

4.47% 1-5 7.82% 11.73% 6-20 21-50 10.61% 8.94% 51-100 101-250 16.2% 12.85% 251-500 501-1000 13.41% 13.97% 1001-2000 2000+

Number of Years Operating in Taiwan The majority of companies are deeply rooted in Taiwan:

10.61% Less than 5 years 10.61% 5-10 years 35.75% 11-20 years 15.08% 21-30 years More than 30 years 27.93%

38 TAIWAN BUSINESS TOPICS • FEBRUARY 2019

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A Report on the Technology Sector

Blockchain, Supply Chains, and Smartphones

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 39

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TAIWAN EYES BLOCKCHAIN BUSINESS

o become sia’s blockchain hub, aiwan will need to overcome bureaucratic inertia and stiff competition from ingapore and ong ong

BY MATTHEW FULCO

IN THIS REPORT Cryptocurrency is dead. Long live At the same time, the government blockchain. has expressed the ambition to turn That’s the growing consensus Taiwan into a regional blockchain among all but the most ardent crypto hub. Blockchain is basically digital bulls as governments move to crimp pieces of information (the “blocks”) virtual currency but explore uses stored in a public database (the for its underlying distributed ledger “chain”). The blocks contain infor- technology. Bitcoin, the preeminent mation about transactions and who’s • Taiwan Eyes Blockchain Business p40 digital currency, lost more than 70% involved in them, along with unique of its value last year, falling from an code (a “hash”) that helps distinguish astronomical US$19,870 per bit- one block from another. The data is coin in December 2017 to less than considered ultra-secure because it is US$3,500 over 12 months. encrypted and any later modification • Taiwan’s Trade War Woes p42 There are several reasons for cryp- would show up in the ledger. to’s decline: its prevalence in financial Blockchain has potential appli- skulduggery, decentralized nature cations across a wide swath of (central banks want the final say on industries, including finance, logistics, • Chinese Smartphone Brands Find their currency development), and the fact agriculture, medicine, and hospitality. Footing in Taiwan p44 that no underlying assets back its The technology is valuable value. because it allows businesses to share For its part, Taiwan has taken the data securely, helping them work middle road on virtual currency, sim- more efficiently and reduce database ilar to what South Korea has done. costs, says Carl Wegner, head of Asia There have been no crypto crack- business development for R3, a New downs here as in China, nor has York-based enterprise blockchain Taiwan embraced digital currency like software firm. Japan has. Instead, the island has cre- “Blockchain is a core technology. ated a fintech regulatory sandbox – a It will be as fundamental to business testing environment for formulating in the future as the internet is today,” regulations and security checks. It has Wegner says. also allowed some limited trading on Taiwan is wise to focus on block- local exchanges, but stopped short chain technology first rather than of bringing digital currency into the digital currency, he says. “It will be mainstream financial system. hard for crypto to be accepted by reg-

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ulators until their concerns about money are blockchain related. More than half Cheng-hwa, an industry analyst with the laundering and other illegal activities are of the blockchain group is international, semi-governmental Market Intelligence & resolved.” with founders coming from the United Consulting Institute. Darren Wang, founder and CEO of the States, Sweden, Austria, Poland, Vietnam, Lee notes that ABA has promised to Taipei-based blockchain startup OwlTing, South Africa, Malaysia, and Hong Kong. develop at least 10 Taiwanese blockchain agrees with Wegner. “Crypto shouldn’t be In October, the government launched accelerators as well as provide support to anything you sell for a profit,” saysWang, the Asia Blockchain Accelerator, the first local blockchain firms seeking to expand whose company works with the hospi- entity in Taiwan dedicated to distrib- overseas and global ones that want to tality and agriculture industries. “It could uted ledger technology. The organization enter the Taiwan market. be a token used to carry out a transaction intends to create more than NT$1 billion but without any resale value.” in blockchain business value in just two Stiff competition OwlTing has two primary block- years, with the aim of helping Taiwan chain-based businesses. One of them uses become Asia’s blockchain center. Despite the recent policy moves by the blockchain technology to maintain the “ABA will provide a wide range of Taiwanese government, some observers integrity of pork supply chains. By scan- assistance to Taiwanese and foreign com- still have concerns about the level of gov- ning a QR code on a pork product, it is panies deploying blockchain,” David ernment support for blockchain. Jason possible to trace its journey from farm to Pan, ABA’s chief executive officer, said Hsu, a legislator with the opposition table, the company says. in a news release. “Our goal is to build a Nationalist Party, notes that the gov- OwlTing’s other blockchain busi- comprehensive ecosystem that maximizes ernment has earmarked NT$1 billion ness streamlines bookings for hotels the real business potential of blockchain (US$32.5 million) for artificial intel- from third-party online platforms. By technology,” he said. ligence research centers, but nothing recording inventory in real time, Owl- “The launch of the Asia Blockchain comparable for blockchain. Ting’s blockchain technology prevents Accelerator has indeed supported Tai- “Blockchain is a great opportunity for double booking, Wang says. He adds that wan’s blockchain ambitions,” says Lee Taiwan, especially as there are no clear the service also automates special rates and advance booking discounts for regular guests. Last year at the Asian Blockchain Summit in Taipei, Minister Chen Mei-ling of the National Development Council said that blockchain would play a key role in the development of Taiwan’s digital economy. Chen pledged government support for local blockchain firms, including an increase in funding. Industry insiders say that Taiwan’s blockchain fundamentals are strong because of its large pool of talented engineers and complete tech hardware supply chain. Amid the crypto winter and nascent blockchain spring, Taiwan is well posi- tioned to benefit, analysts say. “We will see a lot of international and domestic blockchain startups across the value chain begin to take a newfound interest in Taiwan,” says Jun Waka- bayashi, an analyst at the Taipei-based accelerator AppWorks. Taiwan’s advanced technology and competitive operating costs will help optimize companies’ bottom lines, especially those working at the infrastructure level like protocol development and mining – the digital creation of blocks on the blockchain. Seventeen of the 33 companies that joined AppWorks’ latest batch of startups

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 41

2 IF.indd 41 2019/2/6 下午10:06 INDUSTRY F CUS leaders in the space yet,” he says. “We adopt blockchain.” firms, is using distributed ledger tech- need to be dedicating more resources Taiwan faces stiff competition from nology developed by local blockchain firm to blockchain, rather than focusing on Singapore and Hong Kong to become a AMIS. JPMorgan will deploy the tech- AI – where the U.S. and China have regional blockchain hub. Singapore in nology in a private blockchain to process established themselves as the dominant particular has the advantage of being able interbank and cross-border transactions. players.” to centralize government decision-making. Meanwhile, AppWorks’ Wakabayashi Hsu urges the NDC to set up a Blockchain also needs long-term has some advice for Taiwan’s policy- national blockchain research center that planning, which is often challenging in makers: “This idea of blockchain has yet can identify areas where Taiwan can Taiwan’s tumultuous political environ- to find its true form in the real world, implement blockchain technology, such ment. specifically in terms of widespread com- as healthcare, supply chain management, Still, OwlTing’s Wang believes Taiwan mercial use cases. It’s important at this logistics, and smart cities. can become a blockchain leader in Asia. fledgling stage that over-regulation and “Awareness building is essential,” He points out that JPMorgan Chase, one red tape not stifle the pace of innova- he says. “Companies aren’t sure how to of the world’s largest asset management tion.”

moving back to Taiwan, but whether such a shift is feasible is a big question. Taiwanese contract electronics manufacturers produce components for and assemble many of the world’s tech gad- gets in China, everything from mobile devices and computers to data-center and networking equipment. Much of it is considered “Made in China” and subject to the tariffs, which could rise to 25% if Beijing and Washington fail to hammer out a trade deal by March 1. An area of particular concern for Taiwan is the Apple supply chain, dom- inated by Taiwanese tech hardware makers with production facilities in TAIWAN’S TRADE WAR WOES China. The U.S. government has yet to hit imports of Apple’s iPhones or MacBook computers with tariffs, but President Donald Trump has left that ith their heavy eposure to hina, aiwanese option on the table. “I mean, I can make tech firms are feeling the bite of the tariffs on it 10% [tariffs on iPhones and Mac- Books], and people could stand that hinese goods very easily,” he was quoted as saying by Bloomberg in November. That possibility is rattling Apple’s BY MATTHEW FULCO Taiwanese suppliers, who already are feeling the effects of a saturated handset market and shaky global economy. The California-based tech giant is the top cus- or years, China bears warned Tai- As it turns out, the bears were half tomer of some of the largest Taiwanese wanese tech firms about their right. High exposure to China is coming tech companies, such as Hon Hai Pre- F dependence on the Chinese back to bite Taiwanese manufacturers, cision Industry Co. (also known as market. A deep recession in China or a but largely because of an unforeseen Foxconn), Taiwan Semiconductor Man- cross-Strait relations crisis could spell development: a full-fledged trade war ufacturing Co. , and Quanta Computer. trouble for companies overly reliant on between China and the United States – Globally, Hon Hai is the largest contract Chinese manufacturing facilities or cus- Taiwan’s two largest trading partners. electronics maker, TSMC the top contract tomers, they said. Mainland China, The trade fiction has many of Taiwan’s chipmaker, and Quanta the biggest con- together with Hong Kong, accounts for leading manufactures looking to set up tract notebook computer maker. 40% of Taiwan’s exports. shop in other places. Some are considering In January, Nikkei Asian Review

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reported that Hon Hai had laid off shipping 9.9 million units in the quarter iPhones – by Apple’s standards, anyway – 50,000 workers at its largest iPhone fac- that ended September 2018. in India. Taiwanese contract manufacturer tory in Zhengzhou, a city in central Wistron began assembling the SE model China. The iPhone assembler plans to Moving house in India in 2017 and later added the 6S. slash a total of 100,000 jobs from its pay- Eddie Han, a smartphone analyst at roll, the report said. While the tariff war itself may cool the semi-governmental Market Research In December, analysts forecast that in 2019, the underlying rivalry between & Consulting Institute (MIC), says that TSMC’s revenue could fall 15% sequen- the United States and China to domi- Foxconn might shift iPhone produc- tially in the first quarter of 2019 as nate advanced technology seems certain tion out of China but that the transition orders flag from Apple and other smart- to continue. To better safeguard trade would take time. Neither India nor phone vendors. The cryptocurrency bear secrets and proprietary technology from Vietnam currently possesses the complete market has also hit the chipmaker hard China’s predatory trade practices, the supply chain and modern logistics net- as demand ebbs for chips used in bitcoin Trump administration is pressuring the work that China does, he says. mining machines. major U.S. tech companies to reduce their In November, Charles Lin, CFO of “The trade war indirectly impacts the China exposure. iPhone assembler Pegatron (No. 2 after entire [Apple] supply chain; it creates Thus far, Trump has been unable to Foxconn) told investors that his com- uncertainty” that depresses business, says persuade Apple to bring iPhone produc- pany would shift production out of China Boyce Fan, an analyst at Taipei-based tion back to the United States, but the “with or without [the] tariffs.” He was market intelligence firm TrendForce. assembly operations could well move to quoted by Nikkei Asian Review as saying “Some people may think smartphone Southeast Asia and India. Apple’s Tai- that “the intensifying trade tension accel- OEMs are the most seriously affected wanese suppliers will inevitably follow erates our decision to do it.” because their assembly businesses closely their key customer wherever it goes. Also planning a move is Taiwan’s correlate to the production volume of end In December, the Vietnam Investment Inventec, which makes Apple’s Air devices and their revenues reflect the fluc- Review reported that Foxconn sought Pods wireless earbuds. The company tuations in demand directly,” Fan added. to open an iPhone plant in Vietnam to that it would set up assembly plants in “In fact, all the companies in the supply offset the impact of the trade war. In Feb- Malaysia, Mexico, or Taiwan to avoid chain are experiencing a setback.” ruary, The Wall Street Journal reported U.S. tariffs on Chinese goods. If Apple In November, Quanta forecast a 5% that Foxconn is weighing whether to shift products had not been exempted from the quarterly decline in notebook computer more iPhone production to India. tariffs, up to 90% of Inventec’s revenue shipments in the fourth quarter after To date, Apple has only built budget could have been affected instead of the

Foxconn is one of the companies potentially most affected by the U.S.-China trade skirmish.

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 43

2 IF.indd 43 2019/2/6 下午10:06 INDUSTRY F CUS 10% as now, The Taipei Times reported. chased a 29,000-square-meter factory for duction to Taiwan, but questions the Meanwhile, the Taiwanese government NT$4.28 billion (US$139 million). The viability of that strategy. “It would be a is seeking to lure manufacturers back site will also house an artificial intelli- challenge for them to move back due to home. A three-year program launched in gence research lab, the company says. the shortage of land, potentially insuf- 2018 offers such perks to “reshore” as In response to a question about ficient electricity, and increasingly rigid tax credits, discounts on utility fees, and whether the trade war might prompt environmental protection laws,” he says. assistance in finding land and recruiting chipmakers to beef up production Without brands of their own, Tai- personnel. Further, firms can enjoy two- capacity in Taiwan, Liu Mei-chun, a wanese manufacturers can be expected year waivers on rent in industrial parks. researcher at the semi-governmental to remain reliant on component produc- Eligibility for the program is Industrial Technology Research Insti- tion and assembly for Apple. “Taiwanese restricted to manufacturers affected by tute said: “According to current trends, firms are aware they depend too much the Sino-U.S. trade tiff who have been Taiwan and global chip manufacturers on Apple – it’s a reflection of their operating in China for more than two will continue to expand their produc- over-reliance on contract electronics man- years and plan to produce high-value tion capabilities in Taiwan.” While China ufacturing and assembly,” Han says. and/or connected devices in Taiwan. remains a vital market for Taiwanese Since South Korean electronics giant Following the program’s launch, chipmakers, they aim to reduce risks by Samsung produces all of its devices in- Quanta announced it would relocate strengthening their presence outside of house and Chinese brands are fast production of high-end products from China, Liu notes. developing supply chains of their own, China to Taoyuan in northern Taiwan, MIC’s Han acknowledges that some “Taiwanese manufacturers are left with where the notebook assembler has pur- Taiwanese tech firms are relocating pro- very few choices,” Han says.

CHINESE SMARTPHONE RANDS FIND THEIR FOOTIN IN TAIWAN

droit marketing and retailing have helped hina’s top handset makers boost sales in aiwan, but concerns about data security are mounting

BY MATTHEW FULCO

mong smartphone brands, Tai- Yet there’s another big chunk of in Taipei, Taichung, and Kaohsiung. wanese consumers have long the market in which lower-priced Chi- Other Chinese brands opening stores A favored Apple, which holds a nese-made smartphones have found an include Beijing-based Xiaomi and Shen- little over one-quarter of the market. opening, overcoming any qualms about zhen-based Huawei. Samsung follows with almost 19%, data security or political sensitivities. Those efforts have borne fruit. As of according to data from German research In the past few years, China’s top November, Oppo was the No. 4 smart- firm GFK Global. three mobile phone makers have aggres- phone brand in Taiwan with a 10.3% Subsidies from the mobile carriers sively targeted the mid- and budget- market share, according to GFK. Xiaomi make pricey phones somewhat more range of the market with high-profile and Huawei were virtually tied for the affordable here, but brand cachet is par- marketing campaigns and the rollout No. 7 spot with shares of 3.9% and amount. When Apple asks NT$41,500 of brick-and-mortar stores. Leading 3.8% respectively. (about US$1,350) for the iPhone XS the retail effort is Oppo, based in the Taiwan has been integral to the global – close to a month’s salary for many Tai- southern city of Dongguan. The com- expansion strategies of Oppo, Huawei, wanese office workers – Apple loyalists pany has opened more than 50 branded and Xiaomi, analysts say. “Taiwan is a don’t blink. After all, it’s Apple. stores throughout Taiwan and has offices mature smartphone market where brand

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2018 MARKET SHARE

Apple Samsung ASUS Oppo HTC Sony

25.4% 18.8% 11.6% 10.3% 6.5% 6.3% Xiaomi Huawei Others may soon follow suit in exiting the smartphone sector. The Taoyuan-based firm posted a loss of NT$2.6 billion (US$84.2 million) in the third quarter of 2018. Meanwhile, Oppo is closing in on Tai- wan’s Asus, which still holds 11.6% of the domestic market, according to GFK. 3.9% 3.8% 13.3% Chinese brands benefit from deeper SOURCE: GFK GLOBAL pockets than their local counterparts, which allows them to spend heavily on awareness is high,” says Eddie Han, a Fan, an analyst at Taipei-based market marketing and physical store expansion. smartphone analyst at the semi-govern- intelligence firm TrendForce. “Chinese For example, Xiaomi has US$50 billion mental Market Intelligence & Consulting brands tend to offer cost-effective models in market capitalization, compared to Institute (MIC). “If Chinese smartphone instead of focusing on premium segments, Asus’s US$7 billion. HTC has just $2.7 brands can be successful here, it shows which is a key advantage for them.” billion. Huawei has annual revenue of that they are globally competitive.” Interestingly, in the less than five over US$100 billion, compared to Asus’s Geographic proximity and cultural years that they have been in the Taiwan US$12.7 billion. It would be impos- similarities – especially language – also market, Chinese brands have put local sible for Asus or HTC to match Oppo, make Taiwan a natural market for Chi- smartphone makers on the defensive. Xiaomi, or Huawei on marketing spend. nese handset makers, Han says. PC giant Acer has largely suspended In addition, “like in China, consumers smartphone production, citing difficulty Marketing mavens in Taiwan pay great attention to the cost competing with Chinese rivals. Many in effectiveness of products,” says Boyce the industry are speculating that HTC The Chinese firms also seem sav- vier about marketing because they all started out as brands, not contract electronics manufacturers like the Taiwanese. Having always sold to end users, Chinese smartphone makers seem to have a better understanding than their Taiwanese counterparts of what consumers want and how to communicate with them. It was thanks in part to astute marketing that Xiaomi became one of the world’s biggest startups. In the company’s fledgling years, it courted controversy by borrowing ideas from Apple, whether in the design of its phones or the black tur- tleneck and jeans that founder Lei Jun wore when he introduced new products, similar to the outfit favored by late Apple founder Steve Jobs. Despite being labeled a copycat by some analysts, Xiaomi generated a tre- A busy Mi store in Taipei’s Xinyi District. mendous buzz by inviting comparisons to PHOTO: MATTHEW FULCO Apple. Meanwhile, it gradually has devel-

TAIWAN BUSINESS TOPICS • FEBRUARY 2019 45

2 IF.indd 45 2019/2/6 下午10:06 INDUSTRY F CUS oped a youthful, tech-savvy image of its “Huawei phones offer really good that local women liked bright colors and own, even if its flagship handsets still value for the money,” says Siam Hus- rose-gold phone bodies, so it introduced channel the iPhone. sain, a Taipei-based engineer who has those color schemes specifically for the Xiaomi rose to fame in China selling been using a Huawei Y6II for two years. Taiwan market. phones online. Yet it has adapted to the He says the handset has performed well In Taiwan, “Oppo seems to focus tastes of local consumers, who often buy and has given him no major troubles. more on female consumers who like to their handsets in physical stores, by set- Compared to a Samsung phone in the take selfies,” hence the importance of the ting up sleek dedicated “Mi” stores that same class, the Huawei offers the same phone’s camera, says MIC’s Han. are destinations unto themselves. On a hardware specifications for a lower From 2016, Oppo ramped up its mar- recent Friday evening, the Mi store in the price, he adds. keting in Taiwan, serving as a sponsor Shinkong Mitsukoshi department store Rick Cheng, the owner of a breakfast of the Taipei Spring Wave Music and in Taipei’s trendy Xinyi district was just store in New Taipei City, has been using Art Festival and signing on local singers as busy as the nearby Apple store in the a Huawei Mate 20 Pro since November. Hebe Tien and Jam Hsiao to promote its nearby Taipei 101 shopping mall. The phone’s strong battery life – impor- smartphones. Many consumers browsing in the tant for power-consuming mobile games Lisa Hsu, an English teacher based in store were iPhone users, prompting a Cheng likes to play – was a key selling the central city of Taichung, was attracted sales representative to note that Xiaomi point. A former iPhone user, Cheng was to Oppo by the company’s advertise- packs more features into its handsets disappointed with the battery life of ments featuring Hebe Tien. “After I saw than Apple does – at a more attractive Apple phones. He also likes the Mate the ads, I went to a retail store and asked price point. A 128-gigabyte Xiaomi Mix 20 Pro’s camera. “It's about NT$15,000 to see an Oppo phone,” she says. “I’m 3 phone with an AMOLED display, for cheaper than the equivalent iPhone but its happy with the phone’s camera but not instance, costs NT$14,999. An iPhone camera takes better photos,” he says. the video capability.” XR with the same amount of memory is Oppo, founded in 2004, began as Hsu believes that Oppo offers excel- priced closer to NT$28,000 and uses a a maker of hi-fi CD and DVD players. lent value for the money. She formerly less advanced LCD screen. Although Oppo shut down its hi-fi busi- owned an HTC Sensation, but the phone The Mi store sells a suite of connected ness in April 2018 – as streaming services did not impress her. “If I have the budget, devices in Xiaomi’s ecosystem, like Blue- hurt the sale of physical disc players – the I will consider an iPhone in the future, tooth headphones, fitness bands, and the company can leverage its vast experience but if not, I will be happy with another Mi Sphere Panoramic Action Camera. selling branded consumer electronics as it Oppo for half the price,” she says. For its part, Huawei built its brand concentrates resources on mobile devices. name on telecommunications equipment, In its first two years in Taiwan, Oppo Tightrope act which is used in more than 170 countries, focused on understanding the local before moving into mobile devices. In market rather than pushing for imme- Given the political tensions between the second quarter of 2018, Huawei sur- diate high sales, he said. One of the China and Taiwan, Chinese smartphone passed Apple to become the world’s No. 2 company’s challenges in Taiwan was to brands have to tread carefully here. That smartphone maker by shipments. To boost optimize its handsets to work with the they have steadily built market share its brand name, the company has part- messaging app Line that’s popular in amidst a nadir in cross-Strait relations is nered with German optics maker Leica, Taiwan rather than WeChat, the prefer- a testament to their adroit salesmanship best known for high-end photographic ence of Chinese users. As it researched as well as Taiwan consumers’ ability to equipment, on its smartphone cameras. Taiwanese consumer tastes, Oppo found decouple politics from business. Subscriptions A Chunghwa Telecom ad promotes one of the Oppo models. PHOTO: MATTHEW FULCO

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Among the three prominent Chinese wasn’t selling smartphones in the Taiwan Taiwan Strait for the sake of politics,” smartphone brands in Taiwan, Huawei market. Now that it is the island’s No. 5 Ma Xiaoguang, a spokesperson with Chi- is most at risk because of its growing handset seller, the government is scruti- na’s State Council Taiwan Affairs Office, role in the Sino-U.S. trade war. The U.S. nizing potential security risks its phones was quoted as saying by the Xinhua News has accused the company of stealing may pose. Agency in January. ITRI’s decision indi- industrial secrets, obstructing a crim- MIC’s Han points out that Huawei in cated the organization was “pandering to inal investigation and misleading the U.S. 2018 sent its P20 smartphone to be tested certain foreign forces,” Ma added. government about its business in Iran. by the government’s Electronics & Secu- Reportedly, other Chinese-made Huawei says it’s innocent of the charges. rity Services system. The P20 was one of devices are also restricted from accessing The United States is urging its allies to five phones that passed the examination, Taiwan’s internal government websites. A exclude Huawei from their 5G telecom- in addition to Samsung’s Galaxy S6 edge, January 16 report in the English-language munication networks to prevent possible Nokia’s N7 Plus, Oppo’s R15 Pro, and Taipei Times suggested that the restriction spying by China. Intelligence analysts the Infocus M7, he says. includes mobile devices made by Oppo have long alleged that Huawei has links Still, security concerns about Huawei and Xiaomi, although the government has to China’s state security agencies, despite handsets remain. In January, the semi- not explicitly named those companies. the company’s denial of such ties. Thus governmental Industrial Technology Russman Jaimes, founder of the far, Australia, New Zealand and Japan Research Institute announced that it Taipei-based Vine Education Co., which have banned Huawei from their 5G roll- would ban Huawei smartphones and offers language and corporate training outs. Germany is reportedly mulling computers from its internal network. In services, says he is not concerned about banning the Chinese telecoms giant from a statement, the research institute said it data security on his Oppo R11s. its 5G network as well. made that decision because “its research “I think a lot of spying by govern- Taiwan is way ahead of them. Taiwan involves secret information” that had to ments goes on, whether China or someone banned Huawei from its telecommuni- be protected. else, so I wouldn’t base my decision to cations network following publication Beijing denounced the move in state- buy a smartphone on that,” he says. of a Congressional report in 2012 that run media. “We are strongly against such “My Oppo does everything I need it found unacceptable security risks in an action that undermines regular eco- to for 1/8 the cost of an iPhone,” he says. Huawei equipment. At the time, Huawei nomic and trade activities across the “I’m never turning back.”

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2 IF.indd 47 2019/2/6 下午10:06 SEEING TAIWAN

CHAOTIAN TEMPLE

Kick Off Your Small-Town Roaming in Beigang MAZU FESTIVAL

he majority of Taiwan’s 23.7 international visitors. But long before ally a transliteration of an indigenous million people live in busy cities Taiwan’s Tourism Bureau announced toponym – the worshipers walked miles Tlike Greater Taipei and Kaohsi- that 2019 will be “Small Town Roam- from outlying villages, rode in oxcarts, ung. Of the many more rural areas that ing Year,” outsiders were already going or arrived by boat. make up the rest of the island, one of there in droves. Like every other Mazu shrine, Chao- the most bucolic is Yunlin County in The town’s most famous place of tian Temple is especially lively in the the central-western lowlands. worship and cultural focal point is weeks ahead of the deity’s birthday, The Yunlin County government is Chaotian Temple. Founded in 1694, the 23rd day of the third month on the located in Douliu City, and the coun- this ornate shrine is one of the five traditional lunisolar calendar. In 2019, ty’s High-Speed Railway station is most important in Taiwan devoted to her birthday falls on April 27. in neighboring Huwei. For tourists, the worship of Mazu, the goddess of Mazu is not the only divine person- however, perhaps the most fascinating the sea, who has long been the island’s ality in Chaotian Temple. The goddess part of the county is a town nearer the most popular deity. For generations, the is accompanied by two fearsome-look- coast along the Taiwan Strait. Beigang, faithful have converged on the town to ing entities she brought to heel and which has just over 40,000 inhabit- pray and make offerings. enlisted as her deputies. One is called ants, is on the north bank of a river Now they come by bus, car, and Shunfeng Er (his name means “ears with the same name. motorcycle. Long ago, when the that hear the wind”), while the other is Beigang has been named one of town was known as Bengang – writ- known as Qianli Yan (“eyes that see a Taiwan’s “classic small towns,” and its ten with Chinese characters that meant thousand miles”). attractions are now being presented to “stupid harbor,” but which was actu- Inside the temple, you can also

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find representations of Guanyin (the the Militia Shrine dates from just after Buddhist bodhisattva of compassion the most violent uprising in Taiwan’s known in other cultures as Avalokites- history, a late 18th-century rebellion vara); the Old Man Under the Moon, that pitted home-defense volunteers a matchmaking god; and Wenchang against an insurgent army. Dijun, a deity whose help is sought by The militiamen defending Beigang those about to take important exami- were brave, but in one battle 108 of nations. them perished, along with a dog whose The temple is a sacred place, but vigilance had previously foiled several hardly an environment that lends itself sneak attacks. The men and the canine to quiet contemplation. Pilgrims burn were given heroes’ funerals at this spot, so much incense, and let off so many and the temple was built in their honor. firecrackers, that you may feel like Inside, a small statue of the dog receives cutting your visit short. However, do regular offerings of food and incense. stay long enough to see one of Taiwan’s An obelisk nearby commemo- BEIGANG BIG CAKES oddest religious relics – a nail that was rates the nearest Taiwan has to a driven into a stone step more than 200 “Mayflower moment” in its history. ies. The most characterful of Beigang’s years ago. In 1622, it is believed, Yan Si-qi – a confectionery businesses, located at 42 The story behind this nail, which Chinese tailor and trader who had been Zhongshan Road, used to be a movie is circled with red paint and cordoned living in Japan – led 13 ships of settlers theatre. Tourists are free to wander off by metal railings, is uncompli- and supplies to the Beigang area. around the small auditorium at the cated. An immigrant from Fujian (most Besides its history and culture, back and the rooms upstairs where Beigang residents trace their ances- Beigang can also appeal to your stom- antique furniture is now displayed. try to that part of China) feared that ach. The town’s hinterland is one of To escape from the tumult around his parents had not survived the peril- Taiwan’s most productive agricultural Chaotian Temple – and perhaps have a ous voyage across the Taiwan Strait. areas, and the town’s delicacies include picnic with some of those mouth-water- Holding the nail in one hand and a the meat of locally raised ducks served ing pastries – head 600 meters south mallet in the other hand, the young man on white rice. Another specialty is what to the Beigang Water Cultural Park. begged Mazu to send him a sign that his are known simply as “Beigang big The unusual structures preserved here mother and father were still alive. When cakes” – pies often given to friends and were built in the 1930s to collect, filter, the soft nail penetrated the granite, he relatives by families whose daughters disinfect, and distribute river water to took it as an omen that they were well. are about to marry. nearby households. You will notice that According to the legend, parents and The “big cakes” come in a range of the lower part of the 18.2m-tall water son were eventually reunited. sweet and savory flavors, among them tower is ten-sided, while the upper A less famous but equally engaging adzuki bean, mushroom, and braised section is cylindrical. religious site can be found less than 200 pork. Several shops sell smaller pastries Reaching Beigang by public trans- meters from Chaotian Temple. What filled with mung-bean paste or a mild portation is easy. More than a dozen is variously called Yimin Temple or curry, as well as light almond cook- buses per day connect the town with Chiayi on the main north-south rail- road. There is also regular bus service to Taichung, Douliu, and the Chiayi High-Speed Railway Station. The Yunlin County government’s tourism website (https://tour.yunlin.gov. tw) has suggested tours and dining tips in English, Chinese, and Japanese. For all kinds of useful information about Taiwan, visit the Tourism Bureau’s website (www.taiwan.net.tw). The 24-hour tourist information hotline (0800-011-765) is toll-free within Taiwan. Free maps and leaflets can also be obtained at the Beigang Visi- tor Center, next to the Beigang Water Cultural Park. The center is open every BEIGANG WATER CULTURAL PARK day from 9am to 5pm.

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Novartis: At the Forefront of Innovative Medicine

he Novartis motto – “Reimag- ining Medicine” – goes to the heart of the company’s deep T Novartis Taiwan signed an MoU with Taichung Veterans General Hospital on long-term partnership commitment to developing innova- to create a Center of Excellence to advance the standard of care for diabetes, heart failure, organ tive drugs to help fill the unmet needs transplants, and ophthalmology. of patients worldwide. The Swiss-based pharmaceutical multinational consis- the standard of care,” says Vicky Tse, tently ranks among the top companies General Manager & Country President investing in R&D, ensuring a constant of Novartis (Taiwan). She cites several pipeline of new and groundbreaking dramatic examples of how Novartis treatments. products launched in recent years that In 2017 the investment in R&D led marked improvements in patients’ came to US$9 billion, accounting for conditions around the world, including 18.3% of total revenue. Also in 2017, Taiwan: Novartis spent nearly US$15 billion • Heart failure. Besides facing the risk on acquisitions to expand its presence of hospitalization and death, heart- in the cutting-edge fields of gene ther- failure patients had to severely curtail apy and radiopharmaceuticals, adding their daily activities and often had Novartis received the Top Employer in Taiwan to its existing strengths in such areas as trouble sleeping without propping award in 2019 for the second consecutive year. Carlo Perone, Head of HR for Novartis' APMA cardiovascular medicine, immunology, themselves up with several pillows. A Region, celebrated together with associates in respiratory, neurology, oncology, and Novartis drug introduced two years Taiwan. ophthalmology. ago now enables them to improve “At Novartis, we’re dedicated to their quality of life and resume the past four years, Novartis has been a developing innovative medicines to activities they loved to do before recipient of CommonWealth maga- address unmet medical needs and getting ill. zine’s CSR Award, and in 2018 was making them available to patients and • Psoriasis. The unsightly red patches recognized as the number one pharma- caregivers to transform patients’ lives. and white scales on the skin caused ceutical company in Taiwan for CSR We work hand-in-hand with physi- patients to cover up and stay away activity. Among the ways in which cians and key stakeholders to advance from the beach or swimming pool. Novartis Taiwan actively supports the “A new Novartis drug improves their local communities where we live and symptoms and restores their confi- work are: dence,” says Vicky. • Employee Charity Fundraising: • Ophthalmology. A Novartis break- Through this program, established through has helped over 30,000 in 2009, Novartis Taiwan employ- patients in Taiwan with neovascular ees have donated more than NT$30 Age-related Macular Degeneration million to 18 local charities. “We (nAMD) to avoid loss of sight. particularly identify and support Novartis has also been a leader in groups that do good work but tend the cutting-edge fields of gene therapy to get less attention,” says Vicky and CAR-T therapy. • Community Partnership Day: The “Besides giving back to society more than 700 associates together through innovation, Novartis also volunteer over 1600 hours each does so through our Corporate Social year to support and serve local Responsibility programs,” says Vicky. communities “A commitment to CSR is deeply We feel the energy in teams as Novartis Taiwan employees donated to the Institute for the Blind and Andao Foundation to ingrained in the company and is central Novartis are unleashing the power of help improve their facilities in 2018. to how we run our business.” For the employees in three ways. “The first is

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to stimulate curiosity by encouraging this market and views it as having high Taiwan for the past two years by a people to ask questions and constantly potential for development. “Taiwan regional association. look for better ways to do things,” says has lots of talents – people who are Aside from the quality of person- Vicky. very experienced and have the passion nel, Vicky also cites other factors that The second is to inspire our asso- to perform,” says Vicky, a native of contribute to a favorable overall envi- ciates with personal and company Hong Kong. “Developing and growing ronment. “Because Novartis is bringing purpose. That sense of purpose is often people are always in my heart.” in innovative medicine, we need to be fostered when physicians, patients Novartis has begun a program to sure there is a high level of care,” she or care-givers shared their treatment cultivate more diversity through rota- says. “Taiwan has highly professional outcome. The third is to to “un-boss,” tion. Employees are not only rotated doctors and a high-quality healthcare providing a platform to let employees through different positions, but may system through the National Health perform at their best and to help support also have the opportunity to work Insurance program. The government their growth by removing barriers. in the Basel headquarters or other wants to get the most advanced medi- “I love this approach because it markets for a few months, while Novar- cines for the people of Taiwan, and it energizes the employees,” says Vicky. tis colleagues from other markets are has also put a very good patent law into “People become more engaged and will- similarly given the chance to come to place, which is important for innovative ing to speak up as they see themselves Taiwan. “It helps to spark different medicine.” as part of the company and grow with ideas,” says Vicky. “What’s more, the government has the company.” That concern with career develop- accorded top priority for biomedi- With its more than 30-year history ment has enabled Novartis Taiwan cine. It’s investing for the future, so the in Taiwan, Novartis is deeply rooted in to be named as a Top Employer in outlook is quite positive.”

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