Tue, Aug 09, 2005 page8

• If S Korea can , why can't Taiwan?

  • By Chen Ching-chih 陳清池
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  Based on a survey by Interbrand Corp, Businessweek produced a list of the world's top 100 brands in its Aug. 1 issue (pp 90-94). US firms dominate the top 10 and make up slightly more than half of those listed. In addition, only 10 of the 100 best brands come from outside of the US and Europe; seven out of the 10 are Japanese (including Toyota, Honda and Sony), while the remaining three are South Korean (Samsung, Hyundai and LG). Why can Japan and South Korea make the grade, but not Taiwan?

  The size of a country does not matter, given that five of the top companies ranked were from Switzerland. The Netherlands had three, while Finland and Sweden each had one. All these European nations are smaller than Taiwan. So why did Taiwan not make the list?

  To answer the question, we have to take a look at the development of companies in Taiwan as well as those in South Korea.

  Like Taiwan, Korea was a Japanese colony until 1945. Economists, such as Samuel Ho and Frank Hsiao, have proven that Japanese rule made significant contributions toward laying a sound foundation for economic development in Taiwan and Korea.

  In terms of infrastructure, such as education and public transportation, Taiwan and Korea were far ahead of China (excluding Manchuria, where the Japanese had also laid an industrial foundation) by the early 1930s.

  By the late 1980s, South Korea, like Taiwan, was known as one of East Asia's four Little Dragons (or newly industrialized economies). To eventually achieve the status of a newly industrialized country, South Korea, again not unlike Taiwan, has learned, borrowed and imitated from the success of Japan's post-World War II economic development.

  Among many things the South Koreans have emulated, the institution of the Japanese zaibatsu conglomerates is probably one of the most important. Consequently, South Korea has developed a number of chaebol, or conglomerates of businesses that are usually owned by a single family. The three chaebol that have been ranked among the world's top 100 are: Samsung, Hyundai and LG.

  Not unlike the pre-war Japanese zaibatsu, virtually all chaebol are family-owned and controlled. Many of them got their start by obtaining assets from Japanese firms after Japan's surrender in 1945. The South Korean government then gave them special treatment. Government-chaebol cooperation evidently has been essential to the economic growth of South Korea.

  The rise of Samsung is particularly impressive. In the late 1990s, Samsung was still seen as a low-quality brand in a tough industry. Its rise has been spectacular.

  Taiwan's largest electronics company, Acer, claimed it was Europe's largest and the Asia-Pacific's third-biggest vendor of notebook computers in the first quarter of this year. Acer's products are of high quality. However, Acer is not among the world's top 100 brand names. Neither is Wang Yung-ching's (王永慶) Formosa Plastics Group. Why can't Taiwan have one firm ranked in the top 100?

  After Japan's surrender, Japanese assets in Taiwan were taken over by the Chinese Nationalist Party (KMT) government. No Taiwanese families benefited in the way a small number of South Korean families did. In addition, no Taiwanese businesspeople or families were favored by the KMT government the way chaebol have been favored by the South Korean government.

  As a matter of fact, in its early years of exile on Taiwan the KMT government worked to prevent the expansion of Taiwanese-owned firms. Take a look at the way the KMT government treated Tangjung and Tatung, Taiwan's two largest ironworks in the 1950s. In 1954, the KMT navy brought a lawsuit against Tatung charging it with "theft of naval property."

  No Taiwanese expected Tatung to escape unscathed, and indeed it was nearly crippled by the inevitable guilty verdict. Tangjung fared even worse when it was eventually taken over in 1962 by the KMT government on the pretext it had heavy debts.

  The KMT authorities clearly did not want to allow defense-related heavy industry to be in the hands of the Taiwanese.

  From the early 1960s on, Taiwan's economic growth has depended greatly on thousands of small and medium-sized businesses and a much smaller number of large companies. Under less favorable conditions than companies in South Korea, Taiwanese businesses weren't able to grow to the size and worldwide fame of their South Korean counterparts.

  What's worse, the KMT government seized Japanese assets not for the good of Taiwan and its people, but rather for its own benefit and survival. It is no wonder that the KMT is the richest political party in the world.

  Shouldn't the DPP-led government now develop a policy to help some quality Taiwanese brands become world famous? After all, if and when there is a Taiwanese company ranked among the world's top brands, Taiwan's international visibility will be considerably enhanced.

  In the final analysis, it is up to the people of Taiwan to strive to build on and improve the nation's brands to the highest level possible.

  National pride is the key. South Koreans have demonstrated to the world that they are as good as the Japanese. If and when the Taiwanese are proud of being Taiwanese the way South Koreans are proud of being South Korean, then Taiwan's brands should soon be among the top-ranked in the world.

  Chen Ching-chih is a researcher with the Los Angeles-based Institute for Taiwanese Studies.
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