Taiwan has for decades been proud of both its advanced technology and economic development, and its government and businesses have for many years recognized both the value of innovation and the spirit of entrepreneurship.
However, a speech by Lee Kai-fu (李開復), a former head of Google’s China operations, last week in Taipei appeared to be sounding the alarm about the local business environment and leading discussions about how to create a new driving force in the economy.
Lee, a renowned venture capitalist now running a company in Beijing that incubates technology start-ups, also lamented the lack of ambition and vision among Taiwanese start-ups, making one wonder how our parents and our grandparents managed to create Taiwan’s economic miracle decades ago.
In his first public speech since he announced in early September that he had been diagnosed with cancer, Lee said that for Taiwan to become more competitive, the government needs to improve the domestic investment environment through deregulation and stimulation, while business start-ups should be more aggressive and must look beyond Taiwan to global markets.
That speech on Tuesday last week could be Lee’s last public appearance before he starts a course of chemotherapy, according to the 52-year-old Taiwanese-born American. In it, he also warned that a vicious cycle is developing in Taiwan’s venture capital industry, largely because poor returns on investment have led to a lack of interest in investing in local start-ups and channeled the money into the real-estate sector instead. Entrepreneurs trying to raise money in Taiwan are having a tougher time, he said.
There are certainly some arguments for whether the nation’s information and communications technology (ICT) start-ups have lagged far behind their Asian peers in terms of innovation, entrepreneurship and value-added products, as Lee suggested. However, his warning was made the same way former Acer chairman Stan Shih (施振榮) and many others have made their points in recent years, fretting about the ICT industry’s woes and stagnant development.
Perhaps more important, according to Lee, the biggest challenge for Taiwan is that the government is unable to solve difficulties facing both start-ups and venture capitalists. One might ask: Can the government spend time soliciting advice and make more of an effort to draft more detailed plans aimed at improving the investment environment? Yes, it can, but such plans are more often aimed at demonstrating the government’s bureaucratic performance than serving any practical purpose.
Therefore, the key to whether Taiwan can create a positive investment momentum and develop a transformed business model is if the government is able to face up to its problems and take a serious, honest look at the country’s economic situation. Taiwan’s economy is not doing well, with annual economic growth in the third quarter coming in at a weaker-than-expected 1.58 percent, and people’s wages are not growing, after the latest data show their average real income having fallen to the level of 16 years ago.
If the government cannot stop fooling itself and continues in its self-indulgent mindset, it is just avoiding its problems. Over time, this will decrease investors’ confidence in Taiwan, not only because of the lack of good returns, but because it is hindering the nation’s long tradition of entrepreneurship.
As Lee said, Taiwan’s investment environment is as sick as he is and it needs strong medicine if the nation is not only to stay on its feet, but to regain its past glory.