Taiwan needs to work out how to make better use of the huge Chinese market, especially in an era of rapid information-technology innovation, a Japanese economist said yesterday.
"China ... whose GDP last year reached US$1.4 trillion, four or five times that of Taiwan ... will surpass Germany as the third-largest economy in 2008 and may even be larger than Japan, which would make its GDP 10 to 15 times bigger than Taiwan's," Japanese management guru Kenichi Ohmae said at an event organized by the Chinese National Association of Commerce and Industry (
Addressing the topic of "The Sudden Death of the Industry," Ohmae said China is the engine of the world's economy and Taiwan should use the edge it has over Hong Kong and Singapore in industrial capitalism and management to take advantage of China's growth.
"The next four years will be the crucial period for Taiwan to join the market to maximize its prosperity," he said.
The association last invited Ohmae to speak in Taiwan in April, when he discussed the prospects for China's economy with former China-based lawyer Gordon Chang (
Ohmae views Beijing's hands-off policy and the devolution of power to city mayors and provincial governors as the key moves that have made China one of the major destinations for global capital.
Allowing companies to develop naturally was crucial in an age of information-technology revolution, as was letting slow-thinking companies die, he said.
The move by Taiwan's traditional industries to China means they were aggressively struggling to survive and had helped the nation lower its unemployment rate, Ohmae said.
If the companies had stayed in Taiwan, he said, they would have failed and more jobs would have been lost, and "the unemployment rate may have reached as high as 12 percent."
Taiwan Semiconductor Man-ufacturing Co (台積電) chairman Morris Chang (張忠謀) disagreed with Ohmae's unemployment predictions. But he said that entering China's massive market would be helpful in creating value for Taiwanese companies, which was the key to future prosperity.
Value creation consists of brand recognition, customer service, capital intensity, advantages in intellectual property and design capabilities, Chang said.
"Design capability is a significant factor in value creation," Chang said. "Designers should not only be creative but also be able to anticipate market trends."
Anticipating the future, he added, requires in-depth understanding of customers and markets, which Taiwan, with its edge in language and cultural background, has in China.
Commenting on both speakers in a panel discussion, Chen Tien-jy (
"Taiwan's exports to China made up 25 percent of total exports last year," Chen said. "Over 70 percent of Taiwan's exports to China were raw materials, 25 percent of them were machinery, while less than 3 percent were consumer products."
Disagreeing with Ohmae's description of China as the engine of the world's economy, Chen worried that China's raw-material-based production would accelerate consumption of the world's already scarce resources.
"If China does not change to a more energy-saving production method, it may use up resources, such as oil reserves, by 2020," Chen warned.
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