This leads us to the question of whether the government had the right strategy in place for these industries.
High-tech industries should be focused on research and development, innovation and technology upgrades, as well as building brands. This is the only way they can stand up to the competition.
However, the government focused instead on scale and quantity. This, coupled with ineffective governance, made it difficult to pursue industry integration or to initiate dramatic changes when businesses ran into trouble. That is why Taiwan lost so seriously to South Korea.
The crux of Shetou’s problems is that Seoul and Washington have a free-trade agreement, giving South Korean textiles tariff-free access to the US market. When compared with the 10 percent to 19 percent tariffs that Taiwanese makers have to pay, South Korean products have a clear advantage. As a result, many Taiwanese textile companies have lost orders, posted losses and were forced to shut down.
Manufacturing employs the largest number of people in any country and this is why US President Barack Obama is trying to lure back companies to rebuild the US’ manufacturing industry and spur economic growth.
Taiwan’s traditional manufacturing industries were a major contributor to the nation’s economic boom, but when they faltered, the government ignored the challenges that they were facing and failed to build an environment to facilitate their recovery. It sat around and watched as entire industries moved overseas or closed down. That is why entire areas like Shetou fade away into obscurity.
The way Taiwan’s high-tech industry has been severely beaten by Samsung and the way Shetou’s fate is repeatedly being played out in other parts of the country are a reflection of the failure of the government’s industrial policy.
They also prove once again how Taiwanese industries can do nothing but rely on themselves because the government lacks a clear policy, does not know how to execute policies and is sometimes even a stumbling block to business.
President Ma Ying-jeou (馬英九) and his government have been in power for nearly five years and plans like the Twelve Major Construction Projects have become mere slogans or stuff that politicians talk about in speeches.
The government seems to think that talk alone can solve problems. Average incomes have fallen to what they were 14 years ago, unemployment remains high and the economy is faltering. Slogans are not enough to run a country and to solve the nation’s economic woes.
Ma must come up with concrete methods and steps to execute pragmatic policies.
Translated by Drew Cameron