In a speech last Saturday, Academia Sinica President Wong Chi-huey (翁啟惠) said that: “Taiwanese industry is heavily concentrated in electronics-related fields and the business model is based on contract manufacturing. Although the production value for 17 different products are the world’s highest, Taiwan’s economic growth has seen a downward trend in recent years. What we should be considering today is whether or not this is the industrial model for future sustainable development.”
Wong’s concern for the Taiwanese economy and the fact that he uses his position to highlight these concerns is laudable. Readers should also read the editorial in the Liberty Times (the Taipei Times’ sister newspaper) from Monday, which is an astute in-depth analysis of why the economy has been slowing down in recent years. I want to further clarify why the Taiwanese business model is focused on contract manufacturing and why Taiwanese industry is heavily concentrated in electronics-related fields.
Why contract manufacturing? If we discard any ideological ideas of a “greater China,” the answer is quite easy to see: Over the past 20 years, businesses have been moving to China and neglected research and development and industrial upgrading. It is not appropriate to rely on the contract manufacturing business model for too long.
As evidence that people are aware of this, the issue has been discussed for the past 20 years. However, it has been too easy for Taiwanese businesses to move to China, and as a result, they have neglected industrial upgrading and research and development. It’s not that there haven’t been any warnings, but pro-Chinese academics and media outlets singing praise for China have been louder.
Over the past few years, the “incisive analysis” provided by pro-Chinese businesses, officials and academics has been limited to talk about consolidating resources, raising competitiveness and the win-win situation created by taking orders in Taiwan and placing production in China, as they have attempted to justify the “go west” policy.
However, how about the concentration in the electronics-related industries? Once again the answer is very easy to see. Since other industries have been mesmerized by the massive size of the Chinese market, Taiwan has been left with electronics-related industries, such as integrated circuit, semiconductor, panel and computer manufacturers — the fact is that even computer manufacturers have moved to China since 2000, following former president Chen Shui-bian’s (陳水扁) “active opening” policy.
In other words, these are the industries that were left in Taiwan by former president Lee Teng-hui’s (李登輝) “no haste, be patient” policy — every industry that was not prohibited from doing so, moved to China, leaving the false impression that the electronics industry was the largest.
The question is if Taiwan would have had any companies left in the electronics, integrated circuit, panel or petrochemicals industries today if it hadn’t been for Lee’s ban on them moving to China in 1996, or if Taiwan would have enjoyed 3 percent to 4 percent annual growth after 2000 without these industries?
Wong seems to only have seen the symptoms of these flaws without exploring the reasons for them. That is the only way to explain why he thinks the main reason for Taiwan’s economic decline in recent years has been the result of the heavy concentration of Taiwan’s industry in the electronics-related fields.
In other words, Wong shouldn’t be blaming the big electronics-related industries. Rather, he should ask why Taiwanese governments over the past 10 years have allowed industries, without any restrictions, to move to China and cause more than 2 million Taiwanese to pursue their livelihoods there instead of in Taiwan.
This should make it clear that thinking about and responding to this situation should include doing everything possible to prevent the Taiwanese economy from becoming part of a “one China” market. It should also include demanding that businesses take an international view from a base in Taiwan so that the 2 million Taiwanese who now live and work in China return home and once again start working to promote Taiwan’s economic development. It is this model that should be the model for the future sustainable development Wong said we should be considering.
Huang Tien-lin is a former national policy adviser to the president.
Translated by Perry Svensson
Taiwan’s fall would be “a disaster for American interests,” US President Donald Trump’s nominee for undersecretary of defense for policy Elbridge Colby said at his Senate confirmation hearing on Tuesday last week, as he warned of the “dramatic deterioration of military balance” in the western Pacific. The Republic of China (Taiwan) is indeed facing a unique and acute threat from the Chinese Communist Party’s rising military adventurism, which is why Taiwan has been bolstering its defenses. As US Senator Tom Cotton rightly pointed out in the same hearing, “[although] Taiwan’s defense spending is still inadequate ... [it] has been trending upwards
There is nothing the Chinese Nationalist Party (KMT) could do to stop the tsunami-like mass recall campaign. KMT Chairman Eric Chu (朱立倫) reportedly said the party does not exclude the option of conditionally proposing a no-confidence vote against the premier, which the party later denied. Did an “actuary” like Chu finally come around to thinking it should get tough with the ruling party? The KMT says the Democratic Progressive Party (DPP) is leading a minority government with only a 40 percent share of the vote. It has said that the DPP is out of touch with the electorate, has proposed a bloated
In an eloquently written piece published on Sunday, French-Taiwanese education and policy consultant Ninon Godefroy presents an interesting take on the Taiwanese character, as viewed from the eyes of an — at least partial — outsider. She muses that the non-assuming and quiet efficiency of a particularly Taiwanese approach to life and work is behind the global success stories of two very different Taiwanese institutions: Din Tai Fung and Taiwan Semiconductor Manufacturing Co (TSMC). Godefroy said that it is this “humble” approach that endears the nation to visitors, over and above any big ticket attractions that other countries may have
A media report has suggested that Chinese Nationalist Party (KMT) Chairman Eric Chu (朱立倫) was considering initiating a vote of no confidence in Premier Cho Jung-tai (卓榮泰) in a bid to “bring down the Cabinet.” The KMT has denied that this topic was ever discussed. Why might such a move have even be considered? It would have been absurd if it had seen the light of day — potentially leading to a mass loss of legislative seats for the KMT even without the recall petitions already under way. Today the second phase of the recall movement is to begin — which has
RSS