Taiwan doesn't have many companies with strong brands mainly because Taiwan's business model is based on flexible contract manufacturing. Chen Ching-Chih strongly associates brand-building with economic development. Chen also asserts that the Japanese had a positive impact on economic development in Korea and Taiwan, and suggests the government can help companies build bigger brands. Do companies with top brands contribute to economic development? The British economy has outperformed the German and Japanese economies over the last 10 years, but the UK has fewer top brands.
Many auto and electronic companies have strong brands but weak profits, such as Sony and Ford. We cannot assume brand-building by Taiwanese companies will automatically improve economic performance or create profits. Further, the Asian financial crisis in 1997 exposed many problems with Korean conglomerates modeled on the Japanese zaibutsu. Overlending and poor government oversight led to the bankruptcy of many prominent Korean companies such as Daewoo and Kia. Samsung, LG and Hyundai have managed to survive and prosper but government intervention in business is a double-edged sword.
Taiwan has a globally competitive electronics industry with its own fair share of top companies. The economic model for the industry is based on Silicon Valley -- not Japan -- because these companies were founded by Taiwanese engineers educated and trained in America.
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