Several cases of government agencies purchasing Chinese-made surveillance cameras have caused controversy in Taiwan, as such cameras and systems might pose a risk to information security.
China’s Hikvision Digital Technology Co has even become a supplier to the government due to its low bids, allowing it to take over the local market bit by bit.
As an information technology power in its own right, Taiwan has no shortage of major surveillance camera makers, but when competing with Chinese brands, why are the prices of Taiwanese brands so uncompetitive, even on their home turf?
In the past, I frequently visited government agencies, asking them to give local businesses their utmost support, especially at a time when local operators were caught in a price war where the prices of Chinese products were lower than the material costs for Taiwanese products.
It is more than just a case of massive production volume bringing down material costs for Chinese brands. The root of the problem is government subsidies that allow Chinese companies to entice consumers with low prices and monopolize markets.
Regardless of how many times I offered evidence to government officials, the reaction was the same: The Government Procurement Act (政府採購法) does not exclude any brand from public bidding, so the public sector will continue to follow the law, until the law is amended.
In other words, the government cannot exclude Chinese brands from public bidding.
Taiwan is a signatory to the Agreement on Government Procurement under the WTO, requiring it to conduct trade in a fair, open and transparent way. The agreement also contains bidding rules — the process, methods and requirements — that the government cannot ignore.
The US-China trade dispute has lifted the veil on Beijing subsidies, as media outlets have reported to the world how China set a record last year by publicly or privately offering US$22 billion in subsidies to Chinese businesses.
The government should stay alert, as China’s subsidy policy is hurting Taiwan’s economy.
The US, as the world’s largest economy, has been using tariffs to combat the unfair situation created by Chinese subsidies.
What should Taiwanese businesses do if they do not want to lose out to Chinese brands at home?
In mid-April, the Cabinet released “Principles for the Use by Government Agencies to Restrict Products Edangering National Cyber Security,” and it is set to approve a list of products thought to endanger national cybersecurity, which agencies would be banned from buying.
Local businesses should seize the opportunity to report suspected items and brands to the government and perhaps succeed in including subsidized products on the prohibited product list.
The government’s procurement information system is well established after nearly 20 years of research, development and practice. If “country of brand” and “place of production” could be added to the procurement bidding system, it would make the procurement information complete.
Taiwan has played a key role in the global information and communications industry, and “country of brand” and “place of production” are of particular importance for such products.
By disclosing this information, the government could determine what kinds of local businesses are lagging behind. In this way, the procurement information would allow businesses to gain a better understanding of themselves and other businesses.
Despite Taiwan’s relatively small market — accounting for only 3 to 5 percent of the global business volume of brand-name companies — it is the perfect test market, with affordable costs, outstanding talent, a mature IT environment and, most importantly, a fairly high level of internationalization.
After developing best practices at home, businesses could market their goods to the rest of the world.
If the US is the world’s largest market and the market where every brand must do all they can to get a foothold, then Taiwan is the perfect “backyard” test market for selling and testing products.
Anny Wei is a former D-Link Corp chief executive officer.
Translated by Eddy Chang
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