Minister of Science and Technology Simon Chang (張善政) has expressed concerns over the future of the nation’s technology brands, saying they are lagging behind bigger competitors in terms of marketing budgets.
Taiwanese brands like Acer Inc (宏碁), Asustek Computer Inc (華碩電腦) and HTC Corp (宏達電) all make high-quality smartphones, but their market share remains smaller than that of rivals like Samsung Electronics Co of South Korea, Chang said in a recent interview with the Central News Agency.
“Building a brand is a game of burning money,” said Chang, who became the nation’s first science minister after the National Science Council was upgraded to ministry-level in March.
Chang said that HTC, for example, needs to promote its smartphones to a variety of consumers around the world, but its marketing budget for a phone model is one-tenth of Samsung’s. Since bigger firms with deeper pockets find it easier to pour money into maintaining their market leadership, Acer, Asustek and HTC will face increasing pressure because of their smaller size, the minister said.
In comparison, contract manufacturers are able to focus on basic production rather than on costly advertising, Chang said.
Contract manufacturers like Hon Hai Precision Industry Co (鴻海精密) can win contracts worth billions of US dollars because they need only promote their services to fewer than 10 major clients worldwide, he said.
Though contract manufacturers have thinner profit margins, they can try to increase their economies of scale and boost total revenue to earn bigger profits, Chang said.
Meanwhile, Chang said, the ministry plans to encourage the establishment of more local startups to capitalize on the rise of mobile apps and the e-commerce industry, as well as help startups gain the attention of international companies.
Chang cited as an example Taipei-based mobile app startup Gogolook Co (走著瞧), which was acquired in December last year by South Korea’s Naver Corp, owner of the Line instant messaging app, for NT$529 million (US$17.6 million).
Local Web app security firm Armorize Technologies Inc (阿碼科技) was acquired last year by NASDAQ-listed Proofpoint Inc for NT$750 million, he said.
Chang said his ministry would not fund any research that is “far removed from Taiwan,” such as studies on the electoral system in a US state or rare disorders in Africa.
Instead, the ministry is to help improve cooperation between the academic sector and the Industrial Technology Research Institute (工研院) by gradually allocating more of its budget to the state-funded institute for applied research, he said.