President Ma Ying-jeou (馬英九) said in his New Year’s Day address that the nation’s new industrial policy is to develop “hidden champions” in Taiwan’s small and medium-sized enterprises (SMEs) which have a leading status in their respective businesses in terms of key technologies and global competitiveness.
In his speech, Ma said he had recently visited several SMEs in different parts of the country and was impressed by these smaller-scale companies that have quietly secured unique but solid positions in the world market.
The president named a few companies, such as ball-bearing maker Tungpei Industrial Co in Taoyuan County, high-pressure gas cylinder producer Mosa Industrial Corp in Yunlin County and Gloria Material Technology Corp in Greater Tainan, which supplies steel for the global aviation, aerospace and energy industries. He said these companies might not be household names, but represented the true hidden champions of Taiwan’s economy.
Ma’s remarks echoed what Premier Sean Chen (陳冲) told Cabinet officials in August, that Taiwan should transform domestic SMEs into the kind of mittelstand companies which have become the engines driving Germany’s export sector. At that time, Chen set a goal of turning 100 Taiwanese SMEs which possess key technologies and market products under their own brand names into hidden champions in three years.
Clearly, the government is trying to reinvigorate smaller export-orientated companies in a manner similar to the German economic model to reverse the declining market share of Taiwan-made products, while revamping local contract manufacturing industrial clusters to own-brand industries.
Borrowing the term “hidden champions” from German business consultant Hermann Simon in a study of the role of mittelstand companies in Germany’s exports success, the Taiwanese government aims to upgrade local SMEs, which account for more than 90 percent of the nation’s businesses, to help build a sustainable economy. In Germany, the mittelstand companies account for about 70 percent of exports, with “hidden champions” contributing about 25 percent of the total.
It would be nice if the government’s hidden champions plan could be handled smoothly: Just provide a blueprint of industrial development, the necessary assistance in recruitment, financing and intellectual property rights protection, and wait for the efforts to bear fruit. Unfortunately, that is no easy task.
Take the four German companies that Chen mentioned in August, for example — lens maker Carl Zeiss, drinking water filtration system provider Brita, dishwasher maker Winterhalter and Dorma Group, which supplies door technology products and systems. They have remained market leaders for decades because of the inherent attributes of the companies, regardless of government assistance. Though not big in size, many are family-run businesses. They have secured market niches by focusing on specific products and are able to stay at the top of their sectors with heavy investment in research and innovation.
Furthermore, these companies have strong leadership; they are aggressive and focused in their business; they recruit highly competitive employees with a low turnover rate; they maintain close relationships with customers; and, most importantly, they pay as much attention to globalization as giant corporations do.
For Taiwan, the plan to nurture hidden champions represents an important step in the restructuring of the country’s industrial development.
The government needs to help companies deal with a talent shortage, improve domestic investment and facilitate the integration of domestic industries. Companies must develop competitive business models and sustainable corporate management, and expand the scope and depth required in their long-term technology roadmaps.
South China Sea exercises in July by two United States Navy nuclear-powered aircraft carriers reminds that Taiwan’s history since mid-1950, and as a free nation, is intertwined with that of the aircraft carrier. Eventually Taiwan will host aircraft carriers, either those built under its democratic government or those imposed on its territory by the Chinese Communist Party (CCP) and its People’s Liberation Army Navy (PLAN). By September 1944, a lack of sufficient carrier airpower and land-based airpower persuaded US Army and Navy leaders to forgo an invasion to wrest Taiwan from Japanese control, thereby sparing Taiwanese considerable wartime destruction. But two
This year, India and Taiwan can look back on 25 years of so-called unofficial ties. This provides an occasion to ponder over how they can deepen collaboration and strengthen their relations. This reflection must be free from excitement and agitation caused by the ongoing China-US great power jostling as well as China’s aggressive actions against many of its neighbors, including India. It must be based on long-term trends in bilateral engagement. To begin with, India and Taiwan, thus far, have had relations constituted by various activities, but what needs to be thought about now is whether they can transform their ties
The US Navy’s aircraft carrier battle groups are the most dramatic symbol of Washington’s military and geopolitical power. They were critical to winning World War II in the Pacific and have since been deployed in the Indo-Pacific region to communicate resolve against potential adversaries of the US. The presence or absence of the US Seventh Fleet — the configuration of US Navy ships and aircraft in the Indo-Pacific region built around the carriers — generally determines whether war or peace prevails in the region. In the immediate post-war period, Washington’s strategic planners in the administration of then-US president Harry Truman shockingly
On Thursday last week, US Secretary of State Mike Pompeo delivered a barnstorming speech at the Richard Nixon Presidential Library and Museum in Yorba Linda, California, titled “Communist China and the Free World’s Future.” The speech set out in no uncertain terms the insoluble ideological divide between a totalitarian, communist China and the democratic, free-market values of the US. It was also a full-throated call to arms for all nations of the free world to rally behind the US and defeat China. Pompeo elaborated on a clear distinction between China and the Chinese Communist Party (CCP), in an attempt to recalibrate the