Fri, Apr 05, 2013 - Page 8 News List

The Liberty Times Editorial: Failed policies are killing business

There have recently been two major topics in the news: Samsung Electronics Co’s plan to “kill Taiwan” and how Changhua County’s Shetou Township (社頭), a place famed for its hosiery industry, is having a hard time surviving and is being “wiped out.”

The first topic is linked to the zero-sum competition between South Korean and Taiwanese companies, as Taiwan’s failed industrial policies have allowed Samsung to single-handedly wipe out several of the nation’s key industries.

This is a very worrying development for the nation’s high-tech industry.

The second topic is linked to the marginalization of Taiwan’s traditional manufacturing industry in the global market, as the nation has seen a sharp drop in competitiveness, loss of overseas orders and factory closures.

The first issue concerns high-tech industries, while the latter is about traditional manufacturing industries.

While these issues may not seem to be linked, they both reflect the inability of the nation’s business sector and government to handle changes in the external environment and enhancing their competitiveness.

Phrases like “Kill Taiwan” and townships being “wiped out” may sound sensational and a bit exaggerated, but these two issues serve as a warning for the local economy.

If the government could implement policies in response to these problems in a timely manner, it might be able to save the economy, which is now on the brink of collapse.

However, if these warnings are ignored, they could very well become true, and Taiwan’s economic decline would reach a point of no return. If that happens, we will not have far to go before someone manages to “kill Taiwan” and townships are “wiped out.”

According to media reports, Samsung launched a four-part plan to “kill Taiwan” when the global financial crisis hit in 2008.

It was to start by annihilating Taiwan’s DRAM industry, followed by its LCD panel industry, then smartphone maker HTC, and finally the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co, and the world’s biggest electronics contract manufacturer, Hon Hai Precision Industry Co.

If this plan is true, it appears to have worked, as Samsung has gained major headway in these industries and is only one step away from achieving its final goal.

Whether or not there is a plan to “kill Taiwan,” the fact is there is a great deal of overlap between the two countries’ industries.

Both economies are also export-oriented and are major competitors in the international market. As such, competition between Taiwanese and South Korean tech industries — especially in the fields of DRAM, LCDs and mobile phones — is inevitable.

Taiwan has major players in these industries, but none have been able to take on Samsung.

After taking out some Taiwanese companies, Samsung has become a major force in the mobile telephone, panel, semiconductors and television industries.

One in four people around the globe uses either a Samsung phone or television. This gives Samsung a market value of approximately NT$6 trillion (US$200 billion).

On the other hand, the industries Taiwan has worked so hard at nurturing, such as those included in the government’s “Two-Trillion and Twin-Star Industries” plan, were unable to deal with the competition.

Not only did they fail to compete with Samsung, they also accumulated massive debt and hundreds of billion of New Taiwan dollars in losses in a span of two to three years. This has led to DRAM plants closing down and LCD panel makers struggling to return to profitability.

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