The government has been saying that industrial upgrades and innovation are key to reviving the dire state of the nation’s manufacturing sector and the economy as a whole, as manufacturers face increasing competition from China and South Korea.
However, more than empty slogans will be needed to make a successful industrial transformation. To compete with foreign firms, Taiwan first needs to increase its own capabilities, rather than relying on bilateral trade agreements.
The easiest, most effective way to help local industry to offer higher-value products and services is for the government to listen to what corporate executives advise. However, apparently government officials do not take local corporate executives’ words seriously.
“Not a single government official has approached me to discuss how to build an electric vehicle supply chain in Taiwan,” Simplo Technology Co chairman and chief executive officer Raymond Sung (宋福祥) said last week.
Three years ago, Sung suggested that the government concentrate state resources on developing a supply chain for electric vehicle production, given that the electric car industry looks set to be the next big industry and that it could provide a chance for the manufacturing sector to reclaim its glory.
This was not the first time Sung has complained of the government’s bureaucratic inertia.
Sung said he feared that the nation could quickly lose its edge if the government remains inactive.
To facilitate development in a small market like Taiwan, Sung advised the government to create a single platform for automakers, component manufacturers, research houses and colleges to jointly produce energy-efficient cars.
Simplo, which supplies battery packs to Apple Inc, has started supplying batteries to electric bike and bus manufacturers in China, Europe and Japan. The company hopes the business will ignite growth.
Sung has said that the nation is good at manufacturing and all it needs is to form a task force to bring together national and industrial resources and to avoid wasted investment through multiple parties developing the same technologies.
Many local colleges and universities poured resources into developing electric cars, but the vehicles they showcased were all very similar.
Hon Hai Precision Industry Co, which assembles iPhones and iPads for Apple Inc, has also showed strong interest in investing in the electric car business.
Taiwan has already built an electric vehicle supply chain, but it is not strong enough to fend off global competition, as most of the producers are small and medium-sized businesses.
Taiwanese companies supply key components to US electric car maker Tesla Motors Inc. The firms face losing orders from Tesla once Tesla moves a local factory back to the US and builds a new one in China. Chroma ATE Inc, which provides precision test and measuring instrumentation, automated test systems and automation solutions and was one of Tesla’s major local partners, lost orders for its services for Tesla’s new car, the Model S.
It is clear that the risk of losing competitiveness is imminent. Totally ignoring the time constraint, the Cabinet said it has tapped 20 economic experts and industry representatives to attend a series of national economic conferences next month at the earliest. The meetings aim to map out strategies for dealing with cross-strait trade ties with China and the growing trend of inking bilateral trade pacts.
However, the meetings are time-consuming and could be fruitless because local firms face more complex issues, which increased trade deals cannot solve.
The government is working on efforts not relevant to industry needs. What the industry does need is an environment favorable to industrial development.