As we enter 2003, we all look back to past successes and failures and make our new goals. I have recently had many opportunities to meet with leading members of the high-tech industries. During these meetings, we have shared some of our views on current social affairs. Looking back at the nation's development over the last few years, these leaders all worry about the same thing I do -- that in order to further localize various issues, Taiwan has, half deliberately, half by accident, slowed down its internationalization drive, and even placed some hard-to-believe restrictions on itself in some specialized areas in particular need of internationalization. A mature and diversified society will always have elements that pull it in the direction of localization as well as those that pull it toward internationalization. For example, in the field of scientific study, scientists may focus on studying issues particular to localization, but their research results must still meet international standards if they are to be considered successful.
Unfortunately, we may be too eager to make up for past years of localization insufficiencies. While rushing to make amends, we neglect the continuous development toward internationalization. Looking at several other emerging economies and their eagerness for and pursuit of internationalization, we see the advantages built by Taiwan over the years slowly shrink away. One can but worry and wonder how Taiwan shall be able to follow her own path in the face of globalized competition.
The achievement causing Taiwan the most pride on international markets over the past 20 years is the vigorous development of our IT industry, which has created many world firsts. Looking at individual products, statistics from the Ministry of Economic Affairs' Department of Industrial Technology tell us that by the end of 2001, Taiwan had 14 IT products ranked first in the world, including wafer foundries, IC packaging, a notebook computer, an LD monitor, a CD-Rom disc, a DVD disk, a PC camera, an Ethernet card, a hub and an analog modem. Today, our notebook computer exporters hold a 60-percent share of the global market. In other words, one of every two notebook owners in the world is using a Taiwan-made computer. This precious achievement is the result of many years of hard work by Taiwan's people, its industry and the government.
Thanks to our efforts over these past several years, Taiwan has accumulated solid manufacturing competence, engineering abilities, planning experience and a complete and closely linked system of up- , mid- and downstream clusters have taken shape in the IT industry, allowing flexible responses to rapidly changing global markets. IT is one of the industries in Taiwan that has been most successful in its internationalization efforts. Annual production makes up 25 percent of the nation's GDP. Despite competition from South Korea, Malaysia, China and other countries, Taiwan still maintains its leading position.
At the same time, many local companies are also quite international in their outlook. They consider global markets when mapping out their strategies, and when it comes to organization and management, they possess the same operational scale as international enterprises. The government and people should applaud their achievements and give them the support they need and deserve.
We believe that Taiwan, as part of its internationalization process, should adopt an open attitude to attract international enterprises, first rate technologies and professional management, while vigorously upgrading local industry. When trying to attract multinational companies to Taiwan, we shouldn't only consider their operational incomes, but should also pay attention to how many more job opportunities they may create, how many advanced, unique technologies they can bring with them, and how much growth they can provide to up-, mid- or downstream industries. The most important question is how we could learn from their marketing strategies and business methods to be able to market our own brands to the rest of the world.
If we look only to operational income, revenues created in Taiwan will hardly be enough to rank the nation among the top earners for these multinational corporations, simply because Taiwan is a small island with limited natural resources, restricted by overall population size and a small local market. Following the same line of reasoning, Taiwanese companies must compete in international markets to be able to grow into sizeable corporations.
Last century, the UN's political bodies were at the center of international interaction. Now, in the 21st century, the WTO will become the central organization for international economic interaction. If we open the doors to Taiwan, outsiders will enter, but conversely, Taiwan also has to create its own opportunities by entering the domestic markets of other countries.
Taiwan must see itself as part of the international market. We must not place restrictions on ourselves, be satisfied with the status quo and avoid progress. One very important point is that we must respect international standards and not place ourselves on the sidelines. The protection of intellectual property rights (IPR) is one case in point.
A recent approach has been to see government protection of IPR as shielding foreign businesses. I am of the opinion that such an attitude displays a lack of international vision. We should understand that the efforts invested in research and innovation by local companies have brought many concrete results that also need the protection of IPR so as to avoid the threat of being copied or plagiarized by international competitors. Using the number of patents approved by the US Department of Commerce's Patent and Trademark Office in 2001 as an example, Taiwan ranks fourth in the world, surpassed only by the US, Japan and Germany. If we look at the number of patents per 10,000 people, the figure for Taiwan is 2.95, second in the world only to the US with 3.5 patents per 10,000 people. The figure for Japan is 2.75 and for Germany 1.45. If the IPR of Taiwanese companies are to be protected around the world, we have to protect the same rights of companies from other countries.
Even on the Taiwanese market, local companies will benefit from the protection of IPR. If Taiwan wants to create a digital economy, we have to invest aggressively in the research and development of IT and industrial expertise, and companies (and even individuals) must spend huge amounts on research and innovation. In the absence of intellectual property rights, it is fundamentally impossible to protect the results of R&D. Who would then be willing to innovate without these rights? Saying that we want to develop a digital economy when there's a lack of fundamental research and innovation is nothing if not empty words.
We have recently heard accusations by lawmakers that Microsoft Corp is monopolizing the market, and these accusers demand that the Fair Trade Commission investigate the matter. These accusations are derivative of the drive to protect intellectual property. I hope that the government will display a visionary international outlook in dealing with this issue and avoid exploiting the emotions of the populace. If not, and if the government keeps behaving as a savage in the wilderness instead of respecting and protecting IPR -- a standard of civilization -- at the very moment when Taiwanese industry (including the cultural industry) is moving towards internationalization, it would be tantamount to backtracking on the issue of international development.
When it comes to consumer interest, users hope to be able to purchase useful software at reasonable prices. This is understandable, but we also have to consider the fact that "there's no such thing as a free lunch" in this world. If a company cannot generate enough income to support its R&D expenditure, no company will in future be willing to invest in new product development, and both consumers and companies will lose. The same reasoning applies to both domestic and multinational corporations. Government inability to guarantee that multinational companies will be able to make reasonable and legal profits in Taiwan will have a detrimental effect on the will of such companies to invest here, which is after all the result we would want to see.
This year will probably be crucial for the development of Taiwan's economy. The success of industrial upgrading and transformation hinges on whether the government has the vision and determination to persist in its internationalization efforts. If Taiwan is to gain the advantages that come with the knowledge economy, we must establish internationally accepted modes of operation in the areas of R&D, branding and marketing. We have to consider the question of how to elevate Taiwan onto the international stage. The environment and view from up there will be different, and so will behavior and attitudes.
How do we display a highly civilized model of conduct and turn ourselves into an accepted and trusted partner? That will be our challenge here in Taiwan over the next few years.
Ovid J.L. Tzeng is vice president of the Academia Sinica.
Translated by Perry Svensson
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