December 2014 Taiwan Business TOPICS

CONTENTS NEWS AND VIEWS

4 Editorial Online Piracy – a Growing IPR Challenge

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5 Taiwan Briefs

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Publisher

By Timothy Ferry

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Andrea Wu

10 Issues

總硨蟯

Editor-in-Chief

Taiwan Down Slightly in Doing Business Survey; Taking Stock on White Paper Issues

沙蕊

Don Shapiro

副丝硨

Associate Editor

法硚姆

Tim Ferry

瞎襓丝䝝 /

Art Director/

ĺžŒčŁ˝çľąçąŒ

Production Coordinator

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Katia Chen

Manager, Publications Sales & Marketing ĺťŁĺ‘ŠčĄŒéŠˇçś“ç?†

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By Don Shapiro

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Caroline Lee

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Jay Chen, Yichun Chen, Charlize Hung 陳正ć?°, é™łĺŽœĺ?›, 洪兆急

American Chamber of Commerce in Taipei 129 MinSheng East Road, Section 3, 7F, Suite 706, Taipei 10596, Taiwan P.O. Box 17-277, Taipei, 10419 Taiwan Tel: 2718-8226 Fax: 2718-8182 e-mail: amcham@amcham.com.tw website: http://www.amcham.com.tw ĺ??稹ĺ?°ĺŒ—ĺ¸‚çžŽĺœ‹ĺ•†ćœƒĺˇĽĺ•†é›œčŞŒ ç™źčĄŒć‰€ďźšĺ?°ĺŒ—ĺ¸‚çžŽĺœ‹ĺ•†ćœƒ č‡şĺŒ—ĺ¸‚10596ć°‘ç”&#x;ć?ąčˇŻä¸‰ćŽľ129č™&#x;ä¸ƒć¨“706厤 雝芹2718-8226 ĺ‚łçœ&#x;ďźš2718-8182 Taiwan Business TOPICS is a publication of the American Chamber of Commerce in Taipei, ROC. Contents are independent of and do not necessarily reflect the views of the Officers, Board of Governors, Supervisors or members. Š Copyright 2014 by the American Chamber of Commerce in Taipei, ROC. All rights reserved. Permission to reprint original material must be requested in writing from AmCham. Production done in-house, Printing by Farn Mei Printing Co., Ltd. ç™ťč¨˜ĺ­—č™&#x;ďźšĺ?°čŞŒçŹŹä¸€é›śäš?ĺ…­äš?č™&#x; ĺ?°ĺˆˇć‰€ďźšĺ¸†çžŽĺ?°ĺˆˇč‚Ąäť˝ćœ‰é™?ĺ…Źĺ?¸ 眓銡商ĺ?°ç Łč‹ąć–‡é›œčŞŒç¤ž ĺ?°ĺŒ—市108ĺ?°ĺŒ—市č?Źč?Żĺ?€é•ˇć˛™čĄ—äşŒćŽľ66č™&#x; ç™źčĄŒć—Ľćœ&#x;中č?Żć°‘ĺœ‹ä¸€â—‹ä¸‰ĺš´ĺ? äşŒćœˆ 中č?Żéƒľć”żĺŒ—ĺ?°ĺ­—珏5000č™&#x;ĺ&#x;ˇç…§ç™ťč¨˜ç‚şé›œčŞŒäş¤ĺŻ„ ISSN 1818-1961

Chairman/ Thomas Fann Vice Chairmen/ Scott Meikle / William J. Farrell Treasurer: Cosmas Lu Secretary: Fupei Wang 2013-2014 Governors: Thomas Fann, William Farrell, Ajit Nayak, Neal Stovicek, Stephen Tan, Fupei Wang, Bill Wiseman.

COVER SECTION

15 Better Late than Never, Taiwan Enters the 4G Era 2015ĺš´çś“ćż&#x;ĺą•ćœ› Taiwan’s 4G operators made up for lost time by rolling out their service in just about half a year after licensing. But competition is fierce, especially with some new players joining the fray, leading to intense pricing pressure. While consumers will be happy with both the rates and the fast transmission speeds, the high cost of the spectrum and infrastructure construction will make for tight profit margins for the operators.

24 Spillover from the Cooking Oil Scandal 25 Encouraging Smart City

By Jens Kastner with Timothy Ferry Applications 25 Positioning the Electronics 22 OTT: A Monster or a Friend?

Sector for Post-4G

2014-2015 Governors: William E. Bryson Jr., Sean Chao, Rodney Van Dooren, Cosmas Lu, Scott Meikle, Dan Silver, Gordon Stewart, Ken Wu.

BEHIND THE NEWS

2014 Supervisors: Anita Chen, Midee Chen, Joseph Lin, Louis Ruggiere, Vincent Shih.

27 Weighing Road Safety and the Environment

COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ Miranda Liaw, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ Michael Wong; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Cosmas Lu; Human Resources/ Richard Lin, Seraphim Mar, Vickie Chen; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Arthur Cozad, Joseph Day, Dan Ting; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Manufacturing/ Thomas Fan, Hans Huang; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Susan Chang, Tse-Mau Ng, Dan Silver; Pharmaceutical/ Margaret E. Driscoll, David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ Prudence Jang, Ajit Nayak, Wern-Yuen Tan; Sustainable Development/ Kenny Jeng, Kernel Wang; Tax/ Cheli Liaw, Jenny Lin, Josephine Peng; Technology/ Revital Golan, Scott Meikle, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Anita Chen, Pauline Leung, Achim v. Hake.

The Suhua Highway now under construction should reduce accidents, but will it spoil one of the more pristine parts of the island?

By Jens Kastner

TAIWAN BUSINESS

30 Capturing Opportunities with the Internet of Things

By Stephen Su, ITRI

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INDUSTRY

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About Ford Lio Ho Ford Lio Ho (FLH) Motor Co. is a joint venture established between the Ford Motor Co. and the Lio Ho Group Taiwan in 1972. The company has

A Report on the Automotive Sector

focused on creating a strong business that builds great products that con-

A Green Light for Car Sales

tribute to a better world. It continuously introduces a competitive product

34 For Car Companies, Happy Days are Here Again

portfolio via affordable technology and accessible ingenuity. In addition to importing vehicles such as EcoSport, Mustang and Ranger, FLH manufac-

Domestic sales this year will exceed 400,000 units, with another 100,000 for export.

tures and distributes Ford brand vehicles in Taiwan, including Fiesta, Focus and Kuga.

By Timothy Ferry

37 The Premium Segment Takes the Fast Lane

The FLH manufacturing complex includes the body shop, paint shop,

New models are appealing to a wider range of customers, bringing strong growth.

42-year manufacturing history in Taiwan, the company has provided more

engine plant and assembly plants for passenger cars and SUVs. With its than 2 million customers in Taiwan and overseas markets with best-in-class quality, safety, and fuel-efficiency vehicles. Most importantly, FLH is one of

By Don Shapiro

the only four manufacturing bases worldwide at which Ford builds the All-

39 Commercial Vehicles Go Green

New Kuga, the latest global SUV with cutting-edge technology.

Besides diesel trucks with lower pollution, locally produced electric buses are making an appearance on the market.

With about 1,300 employees, FLH develops its business with a strong com-

By Philip Liu

mitment to the environment. In 2010, it led the automobile industry in

42 New Trends in the Used-car Market

joining the “Voluntary Action on CO2 Emission Reduction” initiatives, with commitment to lowering emissions by 15% by 2015 compared to a 2009

Once the domain of small, independent dealers, the secondhand market is being transformed as major auto companies offer “certified pre-owned” cars.

baseline. In May 2013, FLH was recognized by the Environmental Protection Administration for achieving the target ahead of schedule.

By Philip Liu

Community involvement and assistance is another essential part of what we do. We introduced the “Ford Driving Skills for Life” program in 2009,

AMCHAM EVENT

and since then we have continued helping people become safer and

46 2014 American Ball: Bravo Broadway!

greener drivers. We also constantly work together with local partners, contributing to Taiwan society by setting up programs such as the Ford Volunteer Corps and Global Week of Caring.

For an index to 2014 TOPICS articles, go to the TOPICS archive section under Publications on the AmCham website: www.amcham.com.tw

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Online Piracy – a Growing IPR Challenge

I

n recent years Taiwan has made great strides in bolstering its protection of intellectual property rights (IPR) by passing new legislation, tightening enforcement, and raising awareness among judges and prosecutors of the importance of the issue. The improvements in copyright, patent, and trademark protection – and in the past few years of trade secrets – make Taiwan’s longtime inclusion on the U.S. priority watch list of countries with rampant IPR violations seems like a distant memory.

Of the several problem areas still remaining, one – the provision of sufficient protection to pharmaceutical patents – is currently receiving attention from the authorities (see the Issues section for more details). But there is another problem that deserves to be dealt with – the massive illicit downloading of movies, videos, and other copyrighted content, especially from websites hosted offshore. The Taiwan Intellectual Property Office (TIPO) last year suggested enactment of a law to require Internet Service Providers (ISPs) to block domains or IP addresses of websites identified as chronic infringers. But the initiative was dropped in the face of objections that it could be subject to abuse and erode the freedom of the internet.

The issue was revisited in one of the presentations delivered last month at AmCham Taipei’s 2014 Telecom & Media Symposium on the opportunities and challenges posed by the Overthe-Top (OTT) market, which bypasses traditional telecom operators to deliver content to consumers directly from the internet. OTT offers promising potential for the development of legitimate business, but it can also have severely negative effects if not properly regulated.

The presentation at the AmCham symposium outlined just how serious the situation has already become. A survey

of internet piracy of selected English-language popular films between November 2013 and October 2014 showed that Taiwan ranked third in the Asian region for the volume of infringement, surpassed by only Singapore and the Philippines, countries with much stronger backgrounds in English-language usage. For Mandarin-language content, five overseas-based pirate websites are among the 150 most frequently visited sites by Taiwan users.

The easy access to free pirated content makes it very difficult for legitimate sites – such as those run by Chunghwa Telecom, Next Media, and Sanlih TV – to be competitive, and it deprives performing artists, content producers, and distributors of revenue that is the rightful reward for their efforts.

The argument that nothing can be done about offshore operations has been proved invalid, as more and more countries take action to block blatantly infringing sites. In Asia, such measures have already been adopted by Australia, India, Indonesia, Malaysia, Singapore, and South Korea. Within the European Union, 12 countries now conduct site-blocking, with the number soon to rise to 18. Data from the U.K. and South Korea show that online piracy traffic has decreased substantially since the new policy began to be implemented.

Fears that site-blocking could threaten the sanctity of the internet also appear overblown. Regulators would have to go through the judicial system to prove sufficient cause for a site to be targeted, a reassuring safeguard in a country like Taiwan with a democratic system and sound rule of law.

The success of Korea, in particular, in curbing online piracy should serve as an encouraging example. If Taiwan hopes to realize even a portion of Korea’s achievement in developing its creative industries, it will need to ensure that the fruits of creativity are fully protected against theft.

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ྍ఍ந۞યᗟߏĂ̂ఢሀ࿪ᇆăᇆͯ‫ۍצ΁׎׶‬ᝋ᜕̰ܲटĂ

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— BY TI M O TH Y F ERRY —

MACRO CHEERING NEWS ON SEVERAL FRONTS From most standpoints, Taiwan’s economy is performing well ahead of other Asian countries. Growth of 3.41% for 2014 is being forecast by the Directorate General of Budget, Accounting, and Statistics (DGBAS), Taiwan’s official statistics agency. Unemployment also continues to decline, amounting to 3.95% in October, a monthly drop of 0.01% and 0.29% from the same month last year. The annualized rise in Taiwan’s Consumer Price Index also declined from 1.32% in September to 1.07% in October. Consumer confidence was down slightly in October; as measured by National Central University’s Research Center for Taiwan Economic Development (RCTED), the index stood at 82.98, well above the 1999-2014 average of 73.23.

According to the Ministry of Finance, export orders for October doubled market expectations, increasing 13.4% from last year’s level to reach US$44.91 billion. With 10% growth expected over the next two months, export orders for the year as a whole are on track to hit US$480 billion. Yet the actual export volume in October was disappointing, increasing only 0.7% year-on-year, as noted by the Bureau of Foreign Trade (BOFT). The lag of exports in October, following consecutive months of growth, reflects in parts growing unease in the global economy, particularly Europe.

Imports fell in October, by 0.1.4%, reflecting lower oil prices and decreased demand from manufacturers.

DOMESTIC DPP SWEEPS IN LOCAL ELECTIONS In what political analysts describe as a “historic, unprecedented” election,

THE DOCTOR IS IN — Prominent surgeon Ko Wen-je celebrates his election victory as Taipei mayor, together with his wife.

PHOTOS: CNA

the Chinese Nationalist Party (KMT) was given a stern rebuke by voters, winning only six of the 22 mayoral or county executive races in the November 30 balloting. The ruling party lost even in its usual strongholds of Taipei, Taoyuan, and Taichung, and in contests that it won, such as New Taipei City, the margin of victory was unexpectedly narrow.

“It’s been a terrible disaster for the KMT, and an unprecedented victory for the DPP,” says J. Bruce Jacobs, a political scientist at Australia’s Monash University and a long-time analyst of Taiwan’s political environment, describing the results as “a landslide” in favor of the Democratic Progressive Party. In the wake of the election, Premier Jiang Yi-huah resigned to take responsibility for the poor showing. He is being replaced by Vice Premier Mao Chi-kuo, the holder of a doctorate from M.I.T. and a former Minister of Transportation and Communications. In addition, President Ma Ying-jeou stepped down as

dates received nearly 12%. Two major races were won by independents: Ko Wen-je in Taipei City, who is considered a DPP ally, and former KMT member Fu Kun-chi in Hualien County.

While many attribute the trouncing to President Ma’s unpopularity, political analysts Michael Thim and Jonathan Sullivan, in an article for the journal The National Interest, argue that “the KMT’s woes run deeper than the unpopular president.” They contend that “with its gerontocracy and princelings, the party has lost touch with the electorate, neglecting its changing demographics and preoccupations.”

Jacobs says that the KMT needs a “fundamental reorganization,” starting with the resignation of Ma Ying-jeou as party chairman, and sees the only way forward for the party is to bring in “new blood” and new ideas.

Thim and Sullivan credit the DPP for transforming from the “party of the South” into a national party that is more in touch with the needs of young and

KMT chairman.

Of the more than 12 million votes cast for mayors and county executives, DPP candidates received 47% to the KMT’s 40%, while independent candi-

disadvantaged voters. “Clearly momentum has shifted” to the DPP, the writers say. Jacobs cautions, however, that while the DPP’s chances of taking the presidency in 2016 “have obviously gone up

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a lot” in the wake of the election, the opposition party also needs to reform.

“Their leaders need to open up to a wider variety of people, and trust more widely,” he observes.

Below are summaries of the major races.

Taipei KMT candidate Sean Lien lost by a substantial margin to National Taiwan University Hospital surgeon and political neophyte Ko Wen-je, who ran as an independent candidate on the promise that he would rise above partisan differences and govern the city in the interest of all of the residents. Ko nevertheless accepted the tacit endorsement of the DPP and his victory is widely characterized as a victory for the panGreens. Ko garnered 853,983 votes to Lien’s 609,932, a decisive 57% to 40% triumph by the untested candidate over the scion of one of the KMT’s most powerful leaders, Lien Chan.

“Sean Lien wasn’t a good candidate; he wasn’t prepared and he had no experience,” says Jacobs. But he attributes the election results not simply to Lien’s lack of charisma, but also to Ko’s record as a surgeon and his unorthodox campaign. “He did things in a new way and he had a lot of appeal in Taipei,” says Jacobs. “He was humble, and when

THE PREMIER STEPS DOWN — Interpreting the election results as public dissatisfaction with his government’s policies, Jiang Yi-huah tendered his resignation.

PHOTO : CNA

he was attacked, he handled things very smoothly. He obviously appealed to a lot of people as he won every district of Taipei.”

Taichung Taichung, where the KMT’s Jason Hu has been mayor for the past 13 years (the final term as head of the special municipality formed by Taichung City’s merger with the former Taichung County), also went to the DPP. Challenger Lin Chia-lung handily defeated incumbent Hu by 847,284

TAIWAN'S JAN.- OCT. 2014 TRADE FIGURES (YEAR- ON-YEAR COMPARISON)

28.78 22.9

23.15 24.33

24.18 25.63

261.53 230.58

253.33

Europe

2013

2014

2013

2014

Exports

6

2014

27.17 21.03

U.S.

2013

TOTAL

224.36

2014

49.19 28.33

2013

48.24 26.89

16.64 34.88

2014

ASEAN

35.79

103.49 40.95

2013

Japan

15.95

99.36 36.58

HK/China

Imports

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2013

2014

UNIT: US$ Billion SOURCE: BOFT/MOEA

votes to 637,531 – 57% to 42%. The contest was the second time the two faced each other in a race to head the Taichung government. In 2005, Hu – a onetime foreign minister – defeated Lin by a substantial margin. Speaking before supporters after conceding defeat, Hu was quoted in the media as saying: “This is my own failure. I am not good enough and didn’t work hard enough.”

Lin, a Ph.D. in political science from Yale University, thanked his supporters and even those that voted against him, and was quoted in the media as saying “your support will be the force to push us forward in the future.” Many see Hu’s defeat as simply voters tired of the same face at the top after 13 years, but Lin attributed his victory in part to a widening urban-rural gap, which he vowed to eliminate by promoting more even development.

Taoyuan While Ko and Lin were widely predicted to win their races, Taoyuan’s result was far more of a surprise, with KMT incumbent John Wu falling to challenger Cheng Wen-tsan of the DPP 47% to 51%, 463,133 votes to 492,414.

Wu had been polling well ahead of the elections. He was the main force behind

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the Aerotropolis project that is expected to bring as much as US$20 billion in investment to the area, had pressed for Taoyuan County’s elevation to a special municipality, which is due to take place December 25, and initiated a number of popular educational and environmental reforms. However, a corruption scandal involving his deputy mayor tainted Wu’s administration, and with the decline of the KMT’s standing among the public, his being the son of party stalwart Wu Poh-hsiung was no longer an advantage.

Cheng’s campaign platform resembled Wu’s in many respects – he also supports the Aerotropolis and many of Wu’s reforms – but Cheng differentiated himself by promising clean governance and a break with the KMT legacy.

New Taipei City As dissatisfaction with the ruling party has grown, Eric Chu, the relatively popular incumbent mayor of New Taipei City who had defeated current DPP chairwoman Tsai Ing-wen in 2010 in the newly created special municipality’s first mayoral contest, has been seen as one of the party’s few bright lights.

However, with his unexpectedly close victory in the race – Chu squeaked by DPP challenger Yu Shyi-kun by less than 30,000 votes – 959,302 to 934,774 – TAIWAN STOCK EXCHANGE PERFORMANCE

THE RED LINE SHOWS CHANGES IN VALUE AND THE SHADED AREA CHANGES IN THE TAIEX INDEX.

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ECONOMIC INDICATORS Unit: US$ billion

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Current Account Balance (Q3 2014)p Foreign Trade Balance (Jan.-Oct.) New Export Orders (Oct.) Foreign Exchange Reserves (end Oct.) Unemployment (Sept.)

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Annual Change in Industrial Output (Jan.-Oct.)p

5.94%

Discount Rate (Oct.) Economic Growth Rate 2014f

Annual Change in Consumer Price Index (Oct.)

1.07%

Annual Change in Consumer Price Index (Jan.-Oct.)

1.30%

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Chu’s star may have lost some luster.

Polls placed Chu ahead of Yu by 10 points in the run-up to this year’s election, and Chu credited his lead to his administration’s “creative and original policies� such as public daycare centers and organic lunches for schoolchildren, along with urban renewal projects and expansion of the mass transit system.

Yu, a former premier, countered by attacking Chu’s urban renewal projects as simply “prettying up� neighborhoods without effecting real improvement in people’s lives, and criticized Chu for delays to the MRT expansion. Ultimately, while Chu’s near miss may have somewhat lessened his luster, a dearth of talent in the KMT’s bullpen suggest that he will continue to rise in the ranks, with many analysts mentioning him as a potential party chairman and 2016 presidential nominee.

Kaohsiung The chemical pipeline explosions that rocked Kaohsiung this past summer may have put a dent in DPP incumbent mayor Chen Chu’s image, but they had little impact on the outcome of her race against KMT challenger Yang Chiu-hsing. Chu easily sailed to victory with 993,300 votes – 68% of the total, against her rival’s 450,647 or 31%.

Kaohsiung has long been a DPP strong-

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hold and there was little surprise in a DPP victory. Still, Chen’s share of the vote was up from her 52% in the 2010 election, demonstrating the depth of support from her constituents. Chen vowed to continue her policies towards improving social welfare and infrastructure and helping industry to develop.

Tainan Incumbent William Lai, the DPP candidate for Tainan mayor, won in the most lopsided mayoral race around the island, receiving 711,557 votes, or nearly 73% of the total, to the 264,536 votes or 27% for his rival, the KMT’s Huang Hsiu-shuang. Although Lai’s victory was widely anticipated, the extent of his victory should enhance his image as one of the most popular politicians in Taiwan and pundits expect it to further his career in future at the national level if the DPP returns to power.

APEC SUMMIT BRINGS SIEW AND XI TOGETHER At the 2014 Asia-Pacific Economic Cooperation (APEC) summit, held November 10-12 in Beijing, Ma Yingj e o u ’s r e p r e s e n t a t i v e , f o r m e r v i c e president Vincent Siew, met with world leaders including China’s President Xi Jinping and U.S. Secretary of State John Kerry. Because of PRC objections, the

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president of the Republic of China on Taiwan does not attend APEC leaders’ forums, but sends an envoy instead.

Siew and Xi met on November 9, prior to the official start of the APEC summit, to discuss cross-Strait relations following a tumultuous year that saw anti-China sentiment in Taiwan boil over into the Sunflower protest movement, while Ma came out in support of the pro-democracy Umbrella Movement in Hong Kong. Siew was accompanied by Mainland Affairs Council Minister Wang Yu-chi, who became the highest-level Taiwan official to meet with counterparts in mainland China since the Communist takeover in 1949.

Siew and Xi reiterated their commitment to peaceful development of relations across the Taiwan Strait, including deepening economic ties. “It was unavoidable that the two sides would encounter difficulties and resistance due to some differences,” Xi was reported

by China’s state news agency Xinhua to have told Siew, adding that we “must respect each other’s choice of development path and social system.” News accounts report that Siew responded by saying that “movement towards peaceful development” in cross-Strait relations was “not easy to come by” and “should be cherished.”

TECH AGREEMENT REACHED AT APEC An agreement announced by the United States and China at the APEC summit in Beijing is expected to lead to a long sought update to the global Information Technology Agreement (ITA) trade pact under the World Trade Organization (WTO). The ITA covers a host of technology products that account for some 97% of global trade in the information and communications technology (ICT) sector, reducing tariffs to zero and helping to stimulate the US$4 trillion global trade in ICT. The ITA pact, however, took effect in 1997, decades before the invention or wide-

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HANDS ACROSS THE STRAIT — Former Taiwan vice president Vincent Siew and Chinese president Xi Jinping meet at the APEC leaders’ forum in Beijing.

PHOTO : CNA

spread availability of many of the most common ICT products used today, including GPS systems, smartphones, and many medical devices.

Most of the 57 top technology exporting nations, including Taiwan, agreed to include hundreds of new products in a revised ITA, but China, the world’s biggest exporter of electronic products, refused to sign on many important categories of goods, effectively halting negotiations. The announcement of an agreement between U.S. President Barak Obama and his Chinese counterpart Xi Jinping, while not final or binding, nevertheless creates optimism that the ITA will be formally revised at the WTO summit next July in Geneva.

TFDA TO CURB FOOD ADVERTISING TO KIDS The Taiwan Food and Drug Administration (TFDA) in late November promulgated new regulations prohibiting prime-time advertising, on TV channels aimed at children, of foods deemed unhealthy. The rules, which will take effect on January 1, 2016, will apply to snacks, candies, beverages, and ice products, as well as any foods that contain more than specified amounts of fat, saturated fat, sugar, or sodium.

In addition, the regulation prohibits producers of such foods from promoting the products to children under 12 by offering toys for free or a nominal charge. AmCham Taipei’s Retail Committee had objected to the vagueness of that clause, which does not clearly define what items constitute a “toy.” The Committee noted that while advertising food products to children is controlled in some markets, no other major country in the world has attempted to extend such regulations to “promotion” in general.

ROSEY FORECASTS FOR TAX REVENUE The Ministry of Finance announced November 11 that national tax revenues this year are on track to exceed the government’s expectations of NT$1.87 trillion by some NT$90 billion. For the first 10 months of 2014, tax revenues increased 8% to reach NT$1.67 trillion, 4.7% higher than the government forecast and a record for the period. This news would spell the end of the tax revenue shortfalls that have plagued Taiwan for the past two years. The Finance Ministry credited the rise to surging business tax revenues, which grew 16% year-on-year, to NT$395.4 billion.

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Taiwan Down Slightly in Doing Business Survey Moving up to the next level remains a challenge.

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he annual Doing Business survey sponsored by the World Bank always provides a useful yardstick for how Taiwan’s business environment stacks up against those of other countries. This year, with Taiwan – or Taiwan, China as the World Bank insists on calling it – ranked in 19th place out of the 189 economies covered, the news was not quite as encouraging as previously.

Last year, when Taiwan was ranked 16th – the same place as the year before – it appeared that after a strenuous climb up from number 61 in 2009, Taiwan had reached a plateau from which it was proving difficult to ascend any higher. Rather than holding steady at that level, however, Taiwan slipped backward slightly in the recently released Doing Business 2015 ranking as other countries progressed more rapidly.

One of the attractive features of Doing Business is that it bases its results on more concrete, measureable elements than do most of the other international competitive surveys, which tend to be somewhat abstract in the concepts they employ. For Doing Business, the assessment includes such highly specific factors as the number of days needed to obtain a construction permit or the cost incurred in enforcing a contract. Overall, the survey covers 10 broad categories: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, and Resolving Insolvency.

A sometimes frustrating feature, however, is that revisions in the survey methodology from year to year often make it hard to compare current and past results. As an example, although last year the announced results of Doing Business 2014 had Taiwan ranked in 16th place, this year’s revised tally has changed the 2014 ranking to 18. In other words, the slippage this time should be regarded as the loss of just one place in the ranking instead of three. In any case, the three countries that have passed Taiwan on the ladder are Germany, Canada, and Estonia.

In what should be welcome news for the often beleaguered state-owned Taiwan Power Co., the category in which Taiwan performed the best was “Getting Electricity,” where it moved up to second place worldwide (behind only Korea), from ninth last year. The category measures the steps and expenses necessary to get a warehouse connected to the power grid – including the total number of procedures and the amount of time elapsed.

The category in which Taiwan ranked the worst – number 93 – 10

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臺灣在經商環境評比 報告排名稍跌 Ш˯ᘆ̿Ҍ˭˘ล̪߱ߏ˘̂߄ጼĄ

世界銀行贊助的年度經商環境評比報 告，向來為臺灣與其他國家的經商環境 比較提供有用的衡量標準。今年，隨著 臺灣—或世界銀行堅稱的中國臺灣—在189個經 濟體中排名第19，消息一出，並未如過往般激勵 人心。 去年，臺灣排名第16名—與前年排名相同—顯 示臺灣在2009年歷經千辛萬苦從第61名向上攀 升後，似乎已到達經證實再也難以提升的穩定水 準。不過，與其說持平在一定水準上，最近公布 的2015年經商環境評比報告排名中，臺灣卻在其 他國家快速進步時，略為下降。 世銀的經商環境評比報告吸引人的特點之一， 在於其結果，比其他大多數國際競爭力調查常用 的抽象概念，更建立於具體且可衡量的元素之 上。經商環境評比報告的評估包含高度特異因 素，像是取得建築許可證的天數，或執行契約的 成本產生等。整體而言，評比報告涵蓋10大類 別：開辦企業、申請建築許可、電力取得、財產 登記、獲得信貸、少數股東保護、繳納稅款、跨 境貿易、執行契約，以及破產處理。 然而，有時令人感到沮喪的一點是，年年修訂 的統計調查方法，經常讓現在和過去的結果難以 比較。舉例來說，雖然去年2014年經商環境評 比報告的結果宣布臺灣排名第16名，今年修訂的 計分方式卻讓2014年排名變成第18名。換句話 說，這回排名下滑應被視為只下滑一名，而非三 名。無論如何，排名超越臺灣的三個國家分別是 德國、加拿大和愛沙尼亞。 對經常遭到撻伐的國營事業臺灣電力股份有限 公司來說，算得上是好消息，那就是臺灣表現最 好的類別「電力取得」，從去年第九名躍升全球 第二名（僅次於韓國）。該類別係評量一間倉庫

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was in “Enforcing Contracts.” This section looks at the procedural steps, and the time and cost of completing them, for resolving a standard commercial dispute in Taipei District Court for a claim valued at about NT$1.2 million. The study found that in Taiwan, there are 45 procedures to go through and that it usually takes 510 days to finish the process, including filing and serving the papers, trial and judgment, and enforcement of the judgment. In contrast, the comparable numbers for Singapore are 21 procedures and 150 days, and for Hong Kong 26 procedures and 360 days.

In describing the importance of this category, the report notes that “without reasonably expeditious dispute resolution, the meaning of freedom of contract can be seriously eroded.”

The second-least-favorable score (no. 52) was for “Getting Credit,” which assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions. While still only in the middle of the field in this category, Taiwan moved up three slots this year by virtue of a reform measure – the inclusion of data from utility companies in credit reports.

Overall, Singapore retained its perennial first place in the global rankings. New Zealand pushed Hong Kong out of second place and into third. Denmark was fourth, and Korea repeated its 2014 ranking as fifth. The rest of the top 10 consisted of Norway, the United States, United Kingdom, Finland, and Australia.

連接電力所需程序和費用，包括步驟總數及所需 花費的時間。 臺灣評比最差的是「執行契約」類別，排名第 93名。這個類別評估的事項，是在臺北地方法院 解決一件新臺幣120萬元左右的一般商業糾紛， 所需的程序步驟、時間和成本。研究發現，這樣 的案件在台灣需要45個法律程序，通常得花510 天才能走完包括提交書狀、審判、判決、以及執 行判決等過程。相反地，在新加坡只要21個法律 程序及150天，而香港只要26個法律程序及360 天。為說明此類別的重要性，評比報告強調， 「未合理迅速解決糾紛，契約自由的意義將遭嚴 重侵蝕。」 第二難看的分數（排名第52）是「獲得信 貸」，該類別評估信用資料共享，及借款人和貸 款人就擔保交易的合法權益。雖然在這個類別排 名仍在中段，臺灣今年卻憑藉一項改革措施—將 公用事業的資料納入信用報告中，而將排名上升 三位。 總體而言，新加坡在全球排名保持其常年領先 地位。紐西蘭將香港從第二名擠到第三名。丹麥 位居第四，而韓國和2014年一樣排名第五。其餘 前十名國家則包括挪威、美國、英國、芬蘭、和 澳洲。

—– By Don Shapiro

Taking Stock on White Paper Issues Progress in the past half year has been encouraging on numerous front.

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mCham Taipei’s Taiwan White Paper is published annually in June, making this month the halfway point in the Chamber’s advocacy cycle and therefore an opportune time to review the progress of the 2014 White Paper issues.

Nearly all of the 22 AmCham committees that presented White Paper position papers with suggestions for improving the business climate have already received responses from the relevant government offices, and representatives of most of those committees have also had face-to-face discussions with the appropriate agencies.

Following are the most noteworthy developments to come out of the current White Paper exercise so far: Healthcare. For years, one of the most important yet intractable White Paper issues has been the Pharmaceutical Committee’s plea that manufacturers of original drugs receive more effective protec-

— 撰文

沙蕩

白皮書議題處理進度 έΔξ઼࡚થົ۞έ៉Ϩϩ३Տѐ7͡ ൴ܑĂώ͡ߏથົѐ‫࣍ޘ‬ᛉฉഇ۞̚ม ᕇĂЯѩᏴд఺࣎ॡ࣏ᑭෛ3125ѐέ៉ Ϩϩ३Чีᛉᗟ۞఍நซ‫ޘ‬Ą

北市美國商會的台灣白皮書於每年6月發 表，本月正巧是商會年度建言週期的中間 點，因此選在這個時候檢視2014年台灣白 皮書各項議題的處理進度。 今年白皮書中有22個委員會提出意見書，針對 如何改善台灣的經商環境提供建言。截至目前這 些建議幾乎都已獲得相關政府部門的回覆。多數 委員會的代表與相關部門官員也進行了面對面會 談。值得注意的主要進展如下： 醫藥。在各項白皮書議題當中，多年來最重要 但最難以處理的議題之一，是製藥委員會要求透 過專利連結與資料專屬權的機制，對原廠藥品的 智慧財產權提供較有效的保護。這項議題最早是 在10年前列入白皮書，但一直沒有進展，直到去

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tion of their intellectual property through mechanisms known as Patent Linkage and Data Exclusivity. The issue first made its appearance in the White Paper a decade ago, but no progress occurred until this past year when the Office of the U.S. Trade Representative (USTR) raised the question as part of the bilateral Trade and Investment Framework Agreement (TIFA) process.

At the 2014 TIFA Council meeting in Washington in April, the Taiwan side committed to implement Patent Linkage – for example, to start building the necessary patent database and devising a system similar to the U.S. “Orange Book” to prevent generics from entering the market while the original drug still holds a valid patent. With support from the Taiwan Intellectual Property Office (TIPO) under the Ministry of Economic Affairs, the Taiwan Food and Drug Administration (TFDA) expects to have draft legislation completed next year for submission to the Legislation Yuan in 2016.

In addition to undertaking Patent Linkage, TDFA has agreed to provide three-year Data Exclusivity protection to new indications of drugs, confirmed that biologics already enjoy five years of protection the same as new chemical entities, and opened the door to considering extension of the biologic coverage to 12.5 years as is done in the United States.

Another positive development was acceptance by the National Health Insurance Administration of the Pharmaceutical Committee’s request for establishment of a tracking system to enable companies applying for reimbursement to trace the status of the application online in the interest of transparency and efficiency (logically a similar system could be implemented for medical devices). The NHIA has also agreed to broaden the representation on the Pharmaceutical Benefit Reimbursement Scheme (PBRS) committee, currently dominated by hospital administrators, to bring wider input into reimbursement decisions.

Chemicals. The sole White Paper issue raised by AmCham’s Chemical Manufacturers Committee this year had to do with the government’s plan to introduce two separate new registration systems for chemicals and products with chemical ingredients– one procedure overseen by the Environmental Protection Administration (EPA) and the other by the Occupational Safety and Health Administration (OSHA) of the Ministry of Labor. The committee’s main requests were that government take industry’s views into consideration in devising the enforcement rules to minimize the burden on manufacturers and importers, and that companies’ confidential business information (CBI) be duly safeguarded during the registration process.

Despite the complex subject matter, the coordination process turned out to be generally satisfactory. Industry was given ample opportunity to present its suggestions, and the authorities accepted a number of them.

These include the establishment of a single registration window to meet both EPA and OSHA requirements, agreement to move toward harmonization of the two systems to the extent possible, extension of CBI coverage to 15 years along with adoption of a more flexible application process, and creation of a grace period during which products already on the market can still be registered under the old regulations.

In the course of the consultations, the EPA also agreed that finished products containing chemicals would be exempt from the registration requirement if they already come under regulation by another government agency, as is the case, for example, with cosmetics’ supervision by the TFDA. Industry remains concerned, however, about one aspect of the new registration system – the low quota of 100 kilograms per year allotted for the import of each special chemical needed by R&D laboratories.

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年美國貿易代表署把此事列入台美貿易暨投 資架構協定（TIFA）的會談議程，才終於有 了突破。 4月在華府舉行的T I F A會談中，台灣方面 同意準備實施專利連結制度，例如開始建立 必要的專利資料庫，並設計一套類似美國 「橘皮書」的做法，防止學名藥在原廠藥品 專利有效期間上市。經濟部智慧財產局亦針 對此事提供了協助。台灣食品藥物管理署除 了要建立專利連結，也同意將資料專屬權的 保護擴充到藥品及生物製劑的新適應症。 另一項正面的發展，是中央健康保險署接 受製藥委員會的要求，將建立一套可提高透 明度與效率的追蹤系統，讓業者可以上網查 詢申請給付的案件受理的情況（理論上，醫 療器材的給付申請應該也可以建立類似的制 度）。健保署並已同意擴大給付項目及支付 標準共同擬訂會議的參與度，使給付決策過 程納入更廣泛的意見。目前這項會議的成員 由醫院管理代表佔了多數。 化學品。台北市美國商會化學製造商委 員會在今年白皮書提出的唯一議題，涉及政 府針對化學品與含化學成份產品建立兩套新 登記制度的計畫，化學品登記制度將由環境 保護署負責，後者則由勞動部職業安全衛生 署負責。化學製造商委員會的要求，主要是 希望政府在擬訂施行規則時，將業者的意見 納入考量，以減輕製造業者與進口業者的負 擔，並且在登記過程中妥善保護企業的商業 機密資訊。 雖然這項議題相當複雜，但協調過程大致 令人滿意。業界代表獲得充分發言的機會， 當局並採納他們的多項建議。業界的建議包 括：為環保署與職業安全衛生署負責的兩套 制度建立單一登記窗口、使這兩套制度盡可 能協調一致、將商業機密資訊受保護年限延 長到15年，並採行較具彈性的登記程序，以 及建立緩衝期，讓已經在市場上的產品可依 原有規定辦理登記。 在諮商過程中，環保署並同意，含有化學 成分的成品如果已由其他政府機關監管，可 以不必向環保署重新登記，例如化妝品已向 台灣食藥署辦理登記。但業界依然擔憂新登 記制度的其中一個層面：研發實驗室需要的 特殊化學品，每項每年的進口配額只有100 公斤，此項額度過低。 金融服務。金融監督管理委員會在過去一 年採取積極態度，設法協助金融業在台灣的 發展，台北市美國商會在這個領域的各個委 員會 -- 資產管理、銀行、資本市場、保險和 私募基金 -- 對此都感到印象深刻。主要實例 是金管會積極打造台灣成為人民幣海外投資 中心，並為國際金融業務分行與國際證券業 務分公司拓展商機。在保險領域，金管會參 考近年白皮書不斷重複提出的要求，已採取 相對措施使台灣整體市場的財務狀況更趨健

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Financial services. The Chamber’s various committees in this sector – Asset Management, Banking, Capital Markets, Insurance, and Private Investment – have been impressed with the forthcoming attitude in the past year of the Financial Supervisory Commission (FSC) in seeking ways to support development of financial industries in Taiwan.

A prime example has been the FSC’s active promotion of Taiwan as an offshore RMB investment center and its expansion of business opportunities for Offshore Banking Units (OBUs) and Offshore Securities Units (OSUs). In the insurance field, in line with a recurring theme in recent years’ White Papers, the Commission has moved to shore up financial soundness in the Taiwan market as a whole by cracking down on companies with inadequate risk-based capital.

Regarding the welcoming of investment in Taiwan by private equity firms – an issue broached in the Overview section of the White Paper – the FSC in recent months has held further discussions with representatives of the PE Committee and has addressed a number of the industry’s issues regarding the transparency and predictability of the investment approval process. Although the Committee is highly encouraged by the progress, it hopes to see an even clearer written statement of policy.

At a meeting in November with AmCham financial services executives, FSC Chairman William Ming-chung Tseng expressed the desire to explore several other White Paper suggestions, including liberalized rules on securities borrowing and lending and permission for brokers to conduct third-party clearing. Recognizing the financial burden that the recent increase in the business tax has caused for certain sectors of the insurance industry, Tseng also offered to coordinate with other executive-branch agencies and the Legislative Yuan to seek to ameliorate the situation.

Cigarette smuggling. Both the Customs and International Trade Committee and the tobacco industry position papers cited the need for stronger enforcement to control the mounting quantity of illicit cigarettes entering the market and offered for sale at low prices. The phenomenon deprives the government of tax and tariff revenue, undermines the business of legitimate enterprises, and thwarts the official policy of discouraging smoking. In a meeting with AmCham committee representatives, the Customs administration gave assurances that steps were being taken to crack down on smuggling, including the training of tobacco-sniffing dogs that will be on duty at every major airport before the end of the year. In addition, customs agents will monitor airport duty-free shops to curb the practice of tour guides prompting incoming Chinese tour group members to buy cigarettes that are then sold into black-market channels after the group leaves the airport.

“All in all, we’ve seen some substantial progress in some key areas over the past year,” said AmCham President Andrea Wu. “We’re confident that much more can be accomplished over the coming six months in advance of the 2015 White Paper’s publication.” With many observers predicting that 2015 could bring the conclusion of the first round of the Trans-Pacific Partnership (TPP), she notes that the coming year will be a crucial period for Taiwan to bolster its candidacy for second-round membership by bringing its regulatory regime further in line with international practices.

—– By Don Shapiro

全，包括打擊資本適足率不足的業者。 今年白皮書的總論部分，曾提到歡迎私募 基金公司到台灣投資的議題。金管會官員最 近幾個月曾與私募基金委員會的代表進一步 會談，討論了有關投資審議過程透明度和可 預期性等業界關注的問題。會談的進展令私 募基金委員會深受鼓舞，但委員會希望見到 當局以書面形式更清楚地說明政府的政策。 金管會主委曾銘宗11月與台北市美國商會 金融服務業主管會談時，表明希望探討白皮 書的另外多項建議，包括放寬證券借貸規定 以及允許券商委託第三方清算。曾銘宗並且 也理解，最近營業稅上調後部分保險業者財 務負擔加重的問題，並表明將願意與其他部 會及立法院協調，設法改善此一現象。 香菸走私。進入台灣市場低價銷售的非 法菸品數量逐漸增多，關務與國際貿易委員 會和菸草業的意見書都提到政府需要加強查 緝。私菸進口讓政府稅收減少，打擊合法經 營的業者，且不利於政府防治菸害的政策。 財政部關務署官員在與台北市美國商會委員 會的代表會談時保證，當局正在積極地進一 步查緝走私，包括訓練嗅菸犬，並在今年底 之前，部署在全台各個主要機場。此外，有 些導遊會鼓勵抵台的中國旅行團代購香菸， 等他們離開機場後，導遊再將香菸賣入黑 市。關務署官員表示，海關人員將加強監督 機場免稅商店，以防止這種行為。 台北市美國商會執行長吳王小珍表示： 「總的來說，我們過去一年在幾個關鍵領 域看到了一些重要的進展。我們有信心，在 2015年白皮書發表之前的未來6個月當中， 還會有更多的成果。」許多觀察家預測，跨 太平洋夥伴協定第一輪談判將在2015年完 成，吳王小珍因此指出，未來一年對台灣來 說極為重要，台灣可以使國內的法規制度更 符合國際標準，以強化本身參與T P P第二回 合會員申請的條件。

— 撰文

沙蕩

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BETTER LATE THAN NEVER, TAIWAN ENTERS THE 4G ERA 晚總比沒有好 台灣邁入4G時代

PHOTO : CRAIG FERGUSON

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T At this year’s Information Month at the Taipei World Trade Center exhibition hall, visitors have the chance to test 4G’s transmission speed with a slalom simulator.

PHOTO : CNA

Taiwan’s 4G operators made up for lost time by rolling out their service in just about half a year after licensing. But competition is fierce, especially with some new players joining the fray, leading to intense pricing pressure. While consumers will be happy with both the rates and the fast transmission speeds, the high cost of the

he second half of the year brought great changes for Taiwan’s ditou zu or “heads-down clan,” as avid smartphone users on the island are aptly called. In May, government-invested Chunghwa Telecom Co. (CHT) launched 4G Long-Term Evolution (LTE) mobile services, enabling subscribers to transmit and receive much larger amounts of data in far less time than has been possible with 3G. Within weeks, Far EasTone Telecommunications Co. (FET), Taiwan Mobile Co., as well as newcomer Taiwan Star Cellular Co., launched their own 4G services, finally bringing Taiwan into the 4G services era.

The fourth generation standard for mobile telecommunications, 4G promises data transmission speeds of 1 gigabyte per second (Gbit/s), seven times faster than 3G. So while 3G offered consumers mobile web access fast enough for browsing and apps, 4G’s faster speeds will allow TV programs and movies to be easily and conveniently accessed on mobile phones.

“Since my smartphone uses 4G, I watch the TV news on it over the internet in real time, including during lunch and in my car after work,” says Taiwan Mobile President James Jeng. “It is much, much faster than 3G. Now everyone can watch movies while commuting on public transportation.”

The public response to the launch of 4G services has been highly favorable. By October 15 over 1 million users had subscribed and the total is set to

spectrum and infrastructure construction will make for tight profit margins for the operators.

台灣的4G業者為了趕進度，在領到執照大約半年 之後就推出4G服務，但本地市場競爭激烈，特別 是有新的業者加入，造成嚴重的訂價壓力。消費 者對價格與上網速度都會感到滿意，但業者需要 支付標購頻段與建構基礎設施的高額成本，獲利 空間有限。

BY JENS KASTNER WITH TIMOTHY FERRY

撰文 / 嚴斯與提姆斯

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年下半年為台灣的「低頭族」， 也就是長時間使用智慧型手機的 人帶來重大變化。5月間，政府 持有股份的中華電信率先推出4G LTE行動網路服務，讓用戶可以傳輸和接收 更大量的資料，所需時間卻比3G節省很多。 幾個星期之內，遠傳電信、台灣大哥大和新 加入市場的台灣之星也推出4G服務，讓台灣 終於進入了4G的時代。 LTE做為行動通訊第四代的標準，資料傳 輸速度達到每秒1G，是3G的7倍。3G讓使用 者可以行動上網和使用應用程式（a p p）， 4G的速度更上層樓，讓用戶可使用手機輕易 欣賞電視節目與影片。 台灣大哥大總經理鄭俊卿說：「我在改用 4G之後，就用手機透過網路收看電視即時新 聞，包括午餐時間和下班之後的車程。4G的 速度比3G快非常非常多。現在大家都可以在 大眾運輸通勤時看電影了。」 民眾對4G服務開通的反應十分正面。到10 月15日，4G用戶已超過100萬，預計到年底

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reach 3 million by year’s end. That would be a 13% penetration rate after just some six months’ operation, the fastest such penetration in the world, according to CHT. South Korea, by contrast, saw only a 2-3% penetration rate in the first six months of its 4G launch in 2012.

While 4G is clearly attractive to consumers, however, whether it will be an equal boon to telecoms operating in the market is another question. Several factors may dampen the rate of return on investment, including the service’s late start, the highly competitive market, and uncertainty whether bandwidth will be sufficient to handle the expected volume of usage.

4G has been a long time coming in Taiwan. The island began developing a 4G industry as far back as 2005, but the government, through its Mobile Taiwan (M-Taiwan) initiative, ended up betting on an earlier technology – WiMAX – that wound up being largely supplanted

by LTE. So while Taiwan quickly transitioned from auctioning LTE bandwidth in October 2013 to the start of operations this May, the auction took place long after such neighboring countries as Japan, South Korea, and Hong Kong had set up their 4G LTE systems. Japan’s system was

將達到300萬。這表示推出營運6個 月之後，4G的滲透率就達到13%。 據中華電信表示，4G在台灣普及 化的速度最快。相較之下，南韓在 2012年推出4G服務時，前6個月的 普及率僅2-3%。 4G對消費者的吸引力顯而易見， 但對電信業者是否同樣有利，則是 另外一個問題。有好幾個因素可能 降低業者的投資報酬率，包括推出 時間較晚、市場高度競爭，以及頻 寬是否足以因應預期將會出現的使 用量。 台灣的4G可說是好事多磨。早在 2005年，台灣就開始發展4G產業， 但政府的「行動台灣」（M o b i l e T a i w a n）計畫選擇了一個較早的 技術--WiMAX，但這項技術後來基 本上被L T E所取代。因此，政府在 2013年10月公開拍賣頻段後，很快 在今年5月就有4G服務推出，但頻

established early as January 2010, with South Korea following in 2011 and even China beating Taiwan by five months with a January 2014 launch.

The lag did not merely keep consumers from enjoying movie-watching experiences while riding the subway, but also denied Taiwan the innovation and economic growth opportunities that 4G can provide. At a forum attended by government officials and telecom industry representatives this October, CHT president Shih Mu-piao described 4G service as a “locomotive” that drives the development of industrial innovation and applications, as well as the evolution of the Internet of Things. The Organization for Economic Co-operation and Development (OECD) has found that higher broadband

transmission rates tend to spur higher GDP growth by making the society more efficient and creating telecom-related jobs.

The 4G spectrum auction itself was the subject of controversy. With its 393 rounds of bidding over 40 days and total proceeds of a whopping NT$118.65 billion (US$3.8 billion), the auction was unexpectedly fierce due to a large number of bidders. Besides the existing 3G operators of CHT, FET, Taiwan Mobile, and Asia Pacific Telecom Co., newcomers Ambit Microsystems Corp. and Taiwan Star won 4G spectrum allotments. Ambit belongs to OEM electronics king Terry Gou’s Hon Hai Group, while embattled instant-noodle giant Ting Hsin International owns Taiwan Star. As Asia Pacific is in the process of merging with Ambit,

Above, Chunghwa Telecom executives at the May 29 launch of CHT’s 4G service. Below, Far EasTone Chairman Douglas Hsu presides over a similar ceremony on June 3.

PHOTO : CNA

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there will be five players in Taiwan’s 4G market, compared with the two or three players in most other countries.

2014 teLecom & media symposium

Competing on price

AmCham Taipei’s 2014 Telecom & Media Symposium, “Opportunities & Challenges for Taiwan’s OTT Industry,” was held November 26 at Shangri-La’s Far Eastern Plaza Hotel. The keynote speaker was Huang Yen-nun, deputy executive secretary of the Executive Yuan’s Board of Science and Technology.

A panel discussion followed, moderated by Chen Shin-horng, research fellow at the Chung-Hua Institution for Economic Research. The panelists were Chou Wang-tun, director of marketing & operations at Microsoft Taiwan; Kwan Shang-ren, associate professor at the Shih Hsin University School of Journalism & Communication; and Joe Welch, senior vice president, government relations – Asia, for 21st Century Fox. The event was sponsored by Alcatel-Lucent Taiwan, Microsoft Taiwan, and Taiwan Broadband Communications.

With the help of iPhone 6 sales, the telecom industry hopes to sign up 400,000 4G subscribers before the end of the year. photo : cna

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taiwan business topics • december 2014

With this many competitors, a price war was inevitable. CHT’s dominant swathe of broadband and early entry has made it the one to watch in terms of pricing. The company’s unlimited data plans, dubbed chi dao bao or “all-you-can-eat,” helped hook the first batch of 4G subscribers to two-year contracts. The approach has since been replicated by all the other players in the market, with most initially charging between NT$1000 and NT$1500 a month for the service.

“In late May, we launched two early-bird packages with flat rates and unlimited data plans for subscribers [of packages above a certain tariff],” says CHT’s Shih. “The other operators followed us with very similar packages and exactly the same timeframe and are now anxiously looking also at what Chunghwa does in terms of the flat rate programs’ possible termination.”

Taiwan Mobile’s Jeng blames Taiwan Star, which offered its cheapest monthly flat rate for as little as NT$599, for the prolonged unlimited flat rates that have hit operators’ revenue stream hard. “They are doing exactly what 3G operator Vibo did five years ago,” he says, referring to

段招標時，日本、南韓和香港等鄰近國家和 地區早已建立4G LTE系統。日本的4G系統是 在2010年1月就已建立，南韓是在2011年， 連中國都比台灣早5個月，在2014年1月推出 4G服務。 延遲推出4G服務不僅是讓消費者無法享受 在搭乘捷運時看電影的樂趣，也使台灣失去 4G所能提供的創新與經濟成長的機會。10月 在一場多位政府官員與電信業界代表出席的 論壇上，中華電信總經理石木標說，4G像是 個「火車頭」，能夠帶動產業創新與應用的 發展，也能促進物聯網的演進。經濟合作暨 發展組織研究發現，寬頻傳輸速率越高，往 往可使社會更有效率，並創造電信業相關的 就業機會，帶動更多的經濟成長。 4G頻段招標本身也有爭議。在40天當 中，共開標393次，標售總金額高達新台 幣1,186.5億元（38億美元）。由於競標者 眾，拍賣激烈程度超乎預期。除了原有的3G 業者中華電信、遠傳、台哥大與亞太電信， 新成立的國碁電子和台灣之星也取得4G頻

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Vibo Telecom Inc., which has not turned a profit since it began operation in 2005 and recently merged with Taiwan Star.

“Entering a saturated market as a small player with lower prices did not work out then, and it will not work out now.”

High bandwidth costs, as well as steep network construction costs (CHT expects to spend up to NT$38 billion on network construction, according to media reports), are cutting into telecoms’ profits. Media reports in August quoted Lin Kuo-feng, president of CHT’s mobile business unit, as saying that “intensifying competition has made it an uphill job to recover the massive 4G investment.”

Exacerbating the problem is that unlimited flat rates invite abuse by subscribers who may connect around the clock and transmit huge amounts of data. Such behavior could cause a slowing down of the network, which in turn could deter new consumers from switching from 3G to 4G, as the promise of ever-higher speeds is what consumers are primarily seeking.

But even if chi dao bao schemes soon come to an end, the telecom sector is concerned that the 4G network will run into capacity problems in about three years. This calculation is based on the

譜。國碁是電子業代工之王郭台銘 的鴻海集團旗下公司，台灣之星則 屬於紛擾纏身的速食麵大廠頂新國 際集團。亞太電信正在與國碁談合 併，因此台灣將會有5家4G業者， 其他多數國家則只有2到3家。

價格競爭 台灣有這麼多家業者，價格戰勢 不可免。中華電信的頻寬居業者之 冠，而且較早進入市場，因此該公 司的價格具有指標性。中華電信俗 稱「吃到飽」的無限上網方案，吸 引首批4G用戶簽下兩年合約。其 他業者後來一一跟進，多數提供的 方案是初期每月付費1,000到1,500 元。 中華電信總經理石木標說：「5月 底，我們推出兩個早鳥方案，費率 固定，無限上網（限一定費率以上

NEIGHBORING COMPETITORS — Adjacent CHT and Samsung stores are actively promoting 4G LTE services and related handsets.

PHOTO : CNA

fact that currently only half of consumers use a mobile phone to access the internet, which suggests significant potential for growth in 4G subscriber numbers.

According to the National Communication Commission (NCC), the issue of looming capacity shortage will be partly remedied through a second 4G spec-

trum auction – covering the 2.6 megahertz band – at some point next year. But although local newspapers have reported that the central government has already included the NT$15 billion it expects to make from that auction in its budget, a significant obstacle remains to reaping such a windfall – the determination of

的方案）。其他業者接著也提供非 常類似的方案，實施效期也完全一 樣。他們現在急著要看中華電信會 在何時停止提供固定費率。」 吃到飽固定費率方案延長實施， 讓業者收入大為減少，台哥大總經 理鄭俊卿說，這是因為台灣之星 提供的每月最低費率僅599元。他 說：「他們的做法，跟3G業者威寶 5年前的做法一模一樣。小規模業者 靠低價進入市場的做法當時沒有發 揮效用，現在也不會有效。」威寶 電信2005年開始營業以來，始終沒 有賺錢，最近已跟台灣之星合併。 頻段售價高，網路建構的成本也 高（據媒體報導，中華電信預期建 構網路的費用將達380億元），電 信業者的利潤因此受到影響。8月的 媒體報導引述中華電信行動通信分 公司總經理林國豐的話說，「競爭 加劇，要回收鉅額的4G投資相當困

難」。 固定費率吃到飽的方案讓問題更 形嚴重，因為用戶容易濫用資源， 全天24小時上網，傳輸大量資料。 這種行為可能導致網路速度變慢， 這又可能使3G用戶不願改用4G，因 為消費者追求的主要是不斷加快的 上網速度。 但即使在近期內停止提供吃到飽 方案，電信業者還是擔心4G網路會 在大約3年內碰到容量的問題。這個 估算的基礎，是目前只有大約一半 的用戶使用手機上網，這表示4G用 戶還有很大的成長空間。 據國家通訊傳播委員會（N C C） 表示，容量不足的問題，部分可藉 明年第二次4G頻段拍賣來解決。這 次要拍賣的是2.6MHz的頻段。本地 媒體報導說，中央政府年度預算已 列出150億元的拍賣頻段收入，但要 達成這個目標存在一個明顯障礙--

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existing WiMAX operators to hold onto the same spectrum.

“The WiMAX operators want to change their licenses to 4G LTE, instead of giving the spectrum back to the NCC,” explains CHT’s Shih. He worries that the WiMAX spectrum holders will bring their case to the courts, “and if they go to court, nobody knows how long the process will be, so we don’t understand how the NCC can possibly expect to hold that auction next year.” Taiwan Mobile’s Jeng adds that

“WiMAX operators have been quite successfully lobbying the legislature, so it is all being turned into a big mess.”

He says it would be best to postpone any plans for the 2.6 megahertz auction until the matter can be resolved.

NCC Vice Chairperson Yu HsiaoCheng has sought to calm the operators’ anxieties by stressing that the WiMAX licenses will soon expire, so that that their claims for the right to change to LTE licenses lack legal ground. The WiMAX operators hold six-year licenses

A CHT demonstration shows the superiority of 4G over 3G in the speed of both downloads and uploads.

PHOTO : CNA

使用這個頻段的WiMAX業者拒不退 讓。 石木標說：「W i M A X業者不想 把頻段還給N C C，而想要改領4G執 照。」他擔心這些WiMAX業者會告 上法院，「如果他們提告，沒有人 知道會拖多久，所以我不明白N C C 怎麼能期望在明年招標」。台哥大 總經理鄭俊卿說，「W i M A X業者 在立法院的遊說做得很成功，因此 這整件事變得很複雜」。他說，在 問題解決之前，最好先不要進行 2.6MHz頻段的招標。 N C C副主任委員虞孝成試圖安撫 4G業者，他強調W i M A X執照不久 就會到期，因此相關業者聲稱有權 轉換為L T E執照的說法並無法律依 據。W i M A X業者的執照為期6年， 會在今年底或2015年初到期。虞 孝成並指出，「除了2.6MHz頻段之 外，還有1.9GHz、2.3GHz和3.6GHz 20

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的頻段將會在未來幾年釋出」，將 提供額外容量，足以因應4G需求的 成長。

衝擊評估 經濟合作暨發展組織（OECD）與 其它研究都樂觀預測，採用4G行動 通訊可刺激經濟和創新，但並非所 有專家都看好4G對台灣經濟的可能 影響，曾擔任經建會（即現在的國 發會）主委的台大經濟系教授陳添 枝即是其一。他認為外界對4G的期 待過高。 他表示，「就宏觀經濟而言，從 2G升級到3G確實重要，因為科技 出現戲劇性躍進，能夠分享照片、 使用L i n e之類的免費語音應用程式 （App）等等」，「但從3G到4G的 進化只有資料傳輸速度加快，所 以我認為4G不會造成類似3G的衝

that will expire at the end of this year or the beginning of 2015. Yu further notes that “besides the 2.6 megahertz spectrum, there will be 1.9, 2.3 and 3.6 gigahertz spectrum releases in the coming years,” which will provide additional 4G capacity to meet growth in demand.

Assessing the impact Despite rosy forecasts by the OECD and other studies on how adoption of 4G can stimulate growth and innovation, not all experts are so optimistic about the potential impact of 4G for Taiwan’s economy. National Taiwan University economist Chen Tain-jy, a former head of the government’s Council for Economic Planning and Development (now the National Development Council), for one, considers the expectations for 4G to be overblown.

“The step from 2G to 3G did matter in macroeconomic terms, because that technological advancement was dramatic, enabling picture-sharing, free voice apps such as Line, and so forth,” he says. “But since the evolution from 3G to 4G merely entails higher data transmission speed, I don’t see 4G as having such impact, and I am not aware that it happened in Korea or in other countries that launched

擊；從南韓和其它比台灣更早推出 4G服務國家的情況來看，並未發現 有此現象」。陳添枝認為，電影下 載速度加快對宏觀經濟並不具有重 要性。他表示，4G不同於物聯網 （IoT），對台灣的電子製造業者並 無顯著幫助，而且也「無法讓你的 閱報速度加快」。 此外，許多人認為進入4G時代 的進度延宕對台灣不利，但也有觀 察家反而認為這其實有正面好處。 產業情報研究所資深產業分析師翁 嘉德指出，「因為進度延宕，台灣 業者能以較低的價格採購相關設備 與設施，並應用世界其它地區業者 早已採行的定價模式」，「事實證 明，台灣在2013年11月發出4G執 照後，短短6個月內就讓4G服務上 路。」 由於台灣4G電信業者面臨種種 挑戰，專家目前仍無法斷言市場

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4G earlier than Taiwan.” Chen questions the macroeconomic significance of ever faster movie downloads, adding that 4G – unlike the Internet of Things (IoT) – will not significantly boost orders for Taiwan’s electronics manufacturers and “will not make you read the newspaper faster either.”

Further, while many considered the delay in Taiwan’s entry into the 4G era to be detrimental, other observers believe that the delay was actually positive.

“Because of the delay, Taiwan’s operators have been able to purchase related equipment and facilities at lower prices and use the 4G pricing models already adopted by many operators elsewhere worldwide,” says Richard C.T. Wong, an analyst with the Taipei-based Market Intelligence & Consulting Institute. “This is evidenced by the fact that Taiwan has been able to commercialize 4G services in just six months following the issuance of 4G licenses in November 2013.”

With all of the challenges facing 4G telecoms operators in Taiwan, experts are mulling where the market might be heading. Both CHT’s Shih and Taiwan Mobile’s Jeng consider that Taiwan Star will be a plausible candidate for a merger, especially since the company is currently

subject to a consumer boycott against its parent company, Ting Hsin, over the firm’s role in the recent cooking-oil food safety scandal. Another new development is that Hon Hai’s Ambit is working out a deal with Taiwan Mobile allowing it to use the latter’s base station network for its own subscribers. Ambit reportedly is part of Hon Hai’s plan to escape the low profit margins in the contract manufacturing sector, with founder Terry Gou pursuing a longstanding dream of building a complete ecosystem encompassing Hon Hai’s mobile phone, PC, and TV manufacturing businesses on the one side and 4G and fixed line networks as well as the cloud on the other. As of press time, a proposed merger between Ambit and Asia Pacific Telecom (APT) has been held up by the NCC, but the “new APT,” as it is referred to in the media and by insiders, will likely begin offering 4G service in early 2015.

“Hon Hai’s entry will intensify the price war, as lower price plans are probably the only way for new entrants to grab subscribers in the first phase,” predicts Shih. “This is because neither quality-wise nor in terms of coverage could they possibly compete with the existing networks.”

NCC’s Yu rejects industry calls for the regulator to rein in the competition for the good of operators’ profitability, noting that the NCC regards the market as healthy so far.

The NCC approach is somewhat supported by a recent OECD report. It finds that OECD countries that have the fiercest competition also have “a higher likelihood of more competitive and innovative services being introduced and maintained.” Countering operators’ objection that increased competition reduces their profitability to dangerously low levels, the report does not recommend market consolidation but rather stresses alternative measures such as network sharing of the sort Taiwan Mobile and Ambit have agreed upon. Besides that agreement, Taiwan’s 4G operators are already sharing base stations in subway and train stations, airports, on Taiwan High Speed Rail trains, and other public places.

“Isn’t price war what the government and consumers love to see?” Yu asks.

“Such competition brings about more investment, which translates into higher transmission speed and throughput, more service outlets, better services, and lower tariffs for consumers.”

的走向。中華電信的石木標和台灣 大哥大的鄭俊卿都認為，就表面上 看來，台灣之星是可併購的對象， 尤其是其母公司頂新集團目前正因 油品食安醜聞而受到台灣消費者抵 制。另一個新發展是鴻海旗下的國 碁電子和台灣大哥大達成協議，國 碁可使用台灣大哥大的基地台網絡 為客戶提供服務。 據媒體報導，國碁是鴻海希望擺 脫代工業低利潤計畫的一環，鴻海 董事長郭台銘長久以來一直夢想打 造一個完整的企業生態體系，一邊 是鴻海的手機、電腦和電視製造業 務，另一邊則是4G、固網和雲端 業務。至本刊截稿時間為止，國碁 和亞太電信的購併案仍遭國家通訊 傳播委員會（N C C）擱置，不過媒 體和消息人士聲稱新亞太可能會在 2015年初開始提供4G服務。 石木標預料，「鴻海的加入會

讓價格戰打得更火熱，低價策略可 能是新業者初期搶奪客戶的唯一方 法」，「因為不論是服務品質或覆 蓋率，新業者都無法和既有業者的 通訊網絡競爭。」 業界呼籲N C C，為了業者的獲利 考量，應出面約束市場競爭。但 N C C副主委虞孝成不贊同，表示 N C C到目前為止都認為市場相當健 康。O E C D最近的一份報告在某種 程度上支持N C C的作法。報告指 出，競爭最激烈的O E C D會員國「 較可能會推出並維持更具競爭力和 創新的服務」。報告駁斥業者聲稱

競爭加劇會導致業者獲利降至危險 程度的說法，並不建議市場合併， 而是強調採取類似台灣大哥大和國 碁協議的網絡共用等替代措施。其 實除了這兩家業者達成協議，台灣 4G業者早就在捷運、火車站、機 場、高鐵列車和其它公共場所共用 基地台。 虞孝成說：「價格戰不正是政府 和消費者所樂見的嗎？」「這類競 爭會促成更多投資，然後讓消費者 享有更快的傳輸速度和吞吐率、更 多服務據點、更好的服務，以及更 低廉的價格。」

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055 " .0/45&3 03 " '3*&/% Over-the-top content is a hard nut to crack for Taiwan’s cable TV stations, telecom operators, and regulators.

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s people increasingly use communication apps such as Line and WeChat through fixed line, WiFi, or with mobile flat rates, telecom operators over the past four years have seen their revenue dive as much as 40% on SMS messaging and 20% on voice, even though they have spent huge resources on infrastructure and in spectrum auctions. As for video entertainment, users in Taiwan often turn to mainland Chinese websites such as youku.com and iqiyi.com, which offer pirated content; viewers pay nothing to either the video production firms or cable TV operators that previously had been video’s main suppliers.

Over-the-top (OTT) messaging and content – the term used for messaging apps and audio, video, and other media delivered over the internet with-

out the involvement of an intermediary – is taking a bite out of telecoms’ earnings.

And despite what are often clear copyright violations, government regulators seem powerless to help, as the providers of pirated OTT content are typically located outside their jurisdictions. “If you ask who is in control of the internet (in Taiwan), you get no answer,�

Huang Yan-nan, Deputy Executive Secretary of the Board of Science and Technology, Executive Yuan, observed at the AmCham sponsored Telecom Symposium – Opportunities and Challenges for Taiwan’s OTT Industry, held late November. “Taiwan has almost no regulation over the internet.�

Yu Hsiao-cheng, Vice Chairperson of the National Communications Commission (NCC), Taiwan’s telecom regulator, adds that “we have not yet decided how

1)050 )0/( 4)&/ :* )551 888 &550%": /&5 /&84 )5.

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(to regulate OTT), and it is a very difficult task for any regulator, given that people use the internet freely across borders.�

The impact of OTT content on viewership via traditional channels such as TV has been strong. Mindy Lee, a Taiwanbased vice president for marketing and communications with Fox International Channels, says that viewership in the whole Taiwanese cable-TV sector has been dropping by about 5% per year in recent years “because people after work go on the web to see videos, rather than turning on the TV.�

OTT content includes legitimate paid third-party content providers such as Hulu and Netflix, as well as media streaming sites such as Next Media’s Nexttv.com.tw and Chunghwa Telecom’s arrangement with cable service operator kbro. But in Taiwan readily available websites offering pirated content have been far more popular than legitimate third-party content providers. According to the Alexa rank – a measure of web traffic – pirate website ck101.com is the 33rd most widely used site in Taiwan, and plus28.com ranks 81st, while a legitimate site such as Chunghwa’s cht.com.tw ranks 172nd, and Nexttv.com.tw ranks 447th.

To counter this phenomenon, Lee says, Fox this year has adopted a new strategy of shortening the time gap between U.S. and Asian premieres, so there is less chance to post the pirated version on the internet before the original debuts. “For popular American TV series like the Walking Dead, we premiere just one day after the U.S. to avoid piracy affecting our ratings,� Lee says.

An additional new strategy employed

TELECOM

by Fox as well as kbro is to offer series that have gained immense popularity through internet piracy but present them as whole seasons and in a much better quality than what viewers had seen on the web.

Internet piracy is of course a global issue, and in many regions is growing rapidly, but at least a couple of nations seem to have hit on effective strategies for reducing the impact. The U.K and South Korea, for example, have seen dramatic reductions in pirated OTT content by making use of a variety of measures, particularly site blocking of offending websites.

OTT communication apps such as Line, WhatsApp, and others are equally problematic for telecoms. These services earn money by charging for extras like cutsie cartoon stickers and “corporate accounts” (meaning advertising), while WhatsApp charges US$.99 for each download. These apps have captured a significant amount of telecoms revenue.

WhatsApp was recently purchased

by Facebook for US$19 billion – an astronomical price that reflects more the number of users (450 million) and their level of engagement rather than its limited revenue stream. In the run-up to

cooperate with telecom operators in the first place, he says. “The beauty of OTT is that everything is for free, so you can grab customers and ad revenue around the world,” Jeng says.

That said, Chunghwa Telecom nevertheless found it worthwhile to make a deal with Line, offering monthly data packages with free Line for only NT$50 extra charge. In other words, the data the subscriber transmits while using Line is not taken into account as part of the monthly capacity allowance.

“OTT is a monster,” says Chunghwa president Shih Mu-piao “But it can just as well become our friend in attracting subscribers.”

its IPO, which it subsequently cancelled, Line reported it has 490 million users and analysts value it at somewhere between US$10 billion and $20 billion.

Taiwan’s NCC recently moved to begin regulating messaging apps as telecom services, subject to the same rules as traditional SMS and phone service providers. Critics say that this will stunt the development of the OTT ecosystem, and it remains unclear when – if ever – such a ruling would go into effect.

Taiwan Mobile President James Jeng says he doubts that Taiwan’s telecom operators have any promising strategies to employ to minimize the harm done to their business by the OTT providers. The crux of the problem is that there are no weighty incentives for OTT providers to

53"$,*/( 5)& *.1"$5 Despite the Taiwan population’s seeming smartphone addiction, only tepid growth has occurred in total consumer expenditures on telecom services in recent years. The figure rose from NT$248 billion (US$8.3 billion) in 2008 to NT$288.3 billion (US$9.6 billion) last year, an annual average increase of just a little over 3%. Industry observers consider that the slow growth reflects traffic that has been diverted from the telecom operators by OTT voice providers such as Line and WeChat.

Another reflection of the growing popularity of OTT is the steep decline in the amount of time Taiwanese users are devoting to voice calls. According to NCC data, the volume has dropped from 29.3 billion minutes in 2006 to a projected 21.7 billion for 2014 [see the accompanying graph].

With voice-focused service losing importance and video applications over the internet consuming most mobile network capacity, the design of telecom service packages under 4G pricing structures is stressing data-oriented service. At Far EasTone (FET), for

— By Timothy Ferry and Jens Kastner

WHERE HAS THE TIME GONE? The number of minutes spent on voice calls is plummeting 50 40 30 29.3

30.2

32.5

35.8

39.6

42.4

43.2 37.5

20

21.7

10 0 2006

2007

Source: NCC data

2008

2009

2010

2011

2012

2013 2014 forecast Unit: billion minutes

example, the company has bundled voice minutes, data allowance, and texts into 4G rate plans, so that customers only need to choose one monthly fee and all their needs are fulfilled,” explains president Yvonne Li. “In 3G, by contrast, customers need to choose voice and data monthly fees separately.”

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41*--07&3 '30.

5)& $00,*/( 0*- 4$"/%"Samuel Yin, center, head of the Ruentex Group, accompanies two of Ting Hsin’s Wei brothers to a press conference about the edible oil scandal.

PHOTO : CNA

L

ast year’s 4G spectrum auction was much fiercer than expected, due mainly to the addition of two new players in the telecom sector – Ambit Microsystems and Taiwan Star. Ambit belongs to Terry Gou’s Hon Hai Group and Taiwan Star to the Wei family’s Ting Hsin International, both Taiwan-based conglomerates that made their fortunes chiefly in China, in electronics manufacturing and instant noodles sales respectively.

While Ambit is seen as a force to be reckoned with, serious doubt has been cast over Taiwan Star’s prospects. This past September, Ting Hsin’s owners were at the center of an ugly food safety scandal involving tainted cooking oil, leading to consumer boycotts against the

entire group. Adding to the group’s woes, Taiwan’s nine major state-run banks froze credit lines to its companies.

“The growth rates of Taiwan Star in both subscriber number and revenues are no doubt affected by the scandal, meaning it will find it difficult to reach the break-even point,” says Kuang Chiuhuang, an assistant professor at National Cheng Kung University’s Institute of Telecommunications Management.

“Although its churn rate [subscriber loss rate] will be stable for a while, given that most of its two-year contracts for mobile services were done before the scandal unfolded, the company’s capital would be burned out quickly if it cannot change the adverse image.”

Huang adds that Taiwan Star is there-

Chairman Wei Ying-chiao and other executives promote Taiwan Star, an investment of the embattled Ting Hsin group.

PHOTO : CNA

fore a potential acquisition target both for Far EasTone and the Hon Hai Group, “since they could expand their market shares from that merger activity.”

If Taiwan Star instead decides to try to weather the boycott, however, it will have to shoulder high costs not only for advertising and brick-and-mortar service outlets but also for the completion of its 4G base station network. The number of base stations an operator has installed is crucial for good coverage, which in turn is vital for customer satisfaction.

Spotty signals in rural and mountainous areas are the number-one complaint of consumer rights advocates.

But building a comprehensive network is extremely costly. “The hardware for just one such base station costs around US$50,000, while the rental fee for the rooftop or plot of land where it is installed can reach to between US$1,000 and US$2,000 per month in urban areas.” Renting space to lay the wire from the base station to the data terminal is also costly, “setting the operator back by at least another US$600 per month” for each station, says Kuang.

Telecom operators are reluctant to divulge the number and locations of their 4G base stations, “since they dread possible public backlash over health concerns,” in the words of an industry insider. But to give some indication of the volume, Taiwan Mobile alone reportedly plans to deploy between 8,000 and 10,000 4G base stations.

Ting Hsin, which according to media reports is currently looking to divest itself of Taiwan-based assets, seems in no position to provide Taiwan Star with the financial support it will need.

— By Jens Kastner

24

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&/$063"(*/( 4."35 $*5: "11-*$"5*0/4

A

s a measure to accelerate Taiwan’s development of 4G wireless services, the Ministry of Economic Affairs (MOEA) plans to fund operators of smart city applications starting in 2015 for a total of three years. Paid for by a NT$15 billion (US$500 million) fund allocated in late 2013 to speed up 4G development in Taiwan, telecom or information technology operators will be invited to apply for subsidies for 4G smart city applications such as those involving water management, air quality improvement, and electricity saving. “We want to help Taiwan compete in 4G-related manufacturing, services, and total solutions with South Korea, which launched 4G services in 2011[three years ahead of Taiwan],� says Lin Ching-chin, chief of the Industrial Development Bureau’s Information Technology Division. “Another of our objectives is that more Taiwanese cities will

CHT unveils its Hami Pass service, which bundles nearly a hundred apps for a monthly fee of NT$150.

be honored in the Intelligent Community of the Year Award, following Taipei, Taichung, and Taoyuan, which have all previously made it into the award’s Top 7.�

The award is given out each year by the Intelligent Community Forum (ICF), a New York-based think tank “that studies the economic and social development of the 21st Century community,� according to its website.

The MOEA is projected to allocate a budget of NT$5.18 billion for the smart city subsidy, with NT$2.5 billion planned for the first year, NT$1.3 billion for the second year and NT$1.4 billion for the final year. Lin points out that while international companies are generally “very welcome to join Taiwan’s efforts in developing smart city applications, the subsidy can only be applied for by foreign companies that already have established a foothold in Taiwan.�

Richard C.T. Wong, an analyst with the Taipei-based Market Intelligence and Consulting Institute, affirms the strategic wisdom of the project. “Other than leveraging the existing 4G infrastructure of operators, the project also helps consolidate the resources of the government, industry, and academia sectors,� he says.

As an additional measure to help the 4G business, the government has been releasing public buildings, including post offices, fire stations, police stations, and other government buildings, for the establishment of 4G base stations. In late November, the National Communications Commission (NCC) also announced that all new public housing projects and business premises covering at least 1,000 square meters will “soon� be required to install fiber-optic cables as part of the infrastructure to enable high-speed broadband internet services. — By Jens Kastner

PHOTO : CNA

104*5*0/*/( 5)& &-&$530/*$4 4&$503 '03 1045 (

F

irst-generation mobile telecommunication (1G) was analog, 2G was digital, 3G provided mobile data communication and web-browsing, and now 4G’s faster speeds make video streaming easy and convenient.

Although 4G was only recently launched in Taiwan, already the industry is looking ahead to the next generation of mobile data transmission: 5G. At this point, what 5G might actually encompass remains undefined, as no

standards have been adopted. But what it is intended to do is clear – provide the connectivity to drive the Internet of Things (IoT) that is being widely touted as the next big revolution in technology.

According to the technology website Techopedia.com, IoT is “a computing concept that describes a future where everyday physical objects will be connected to the Internet and be able to identify themselves to other devices.�

Potential IoT devices range from the

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COVER STORY TELECOM

mundane – like a thermostat that communicates with a cellphone or car to adjust the home temperature before the homeowner arrives – to such extremes as a driverless car that can maintain its position by exchanging data with the roadway it drives upon.

Prerequisites for the realization of IoT are sensory technology that allows for data collection, computational ability to make use of this data, and network connectivity that will enable these systems to communicate. 5G wireless networks will enable these connections, supporting “1,000-fold gains in capacity, connections for at least 100 billion devices, and a 10 Gb/s (Gigabytes per second) individual user experience capable of extremely low latency and response times,” according to 5G: A Technology Vision, a position paper by Chinese telecom equipment and manufacturing company Huawei.

5G and the expansion of the Internet of Things (IoT) will bring faster speeds, huge strides in reliability and the integration of different communication technologies. As far as Taiwan is concerned, it also promises lots of new devices which Taiwan, with its strong electronics manufacturing sector, seems to be well positioned to tap into.

Kuang Chiu-huang, an assistant professor at National Cheng Kung University (NCKU)’s Institute of Telecommunications Management, observes that while R&D centers owned by technology giants such as Google and Amazon will likely stay in the United States, OEM and ODM manufacturing of devices will potentially take place in factories in Taiwan or Taiwan-invested plants in China.

The government-affiliated Industrial Economics & Knowledge Center (IEK) of the Industrial Technology Research Institute (ITRI) plays a prominent role in crafting Taiwan’s national roadmap for the electronics sector. Although the Hsinchu-based institute sees no single IoT device outstripping the mobile phone in the next ten years, it predicts the whole spectrum of IoT devices by 2020 to together create about five times more sales in units than the mobile phone.

Stephen Su, General Director of IEK, adds 26

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The ceremony for an agreement between MediaTek and National Taiwan University to jointly establish a research center on 5G technology.

PHOTO : CNA

that Taiwan’s ICT manufacturers, such as MediaTek and Taiwan Semiconductor (TSMC), are also investigating market and technology trends in the IoT. Su sees the IoT as an opportunity for Taiwanese electronics manufacturers to reposition themselves further downstream. “We advocate venturing toward the consumer space where Google and Amazon already are, while not forgetting our hardware design and manufacturing competences,” he says. He recommends that Taiwan focus on niche segments, such as healthcare services and retailing logistics, where the island already is strong.

S u u r g e s Ta i w a n e s e e l e c t r o n i c s companies to take a close look at developing remote fitness devices and diagnostic tools involving traditional Chinese medicine (TCM) and the Chinese lunar calendar, as Western rivals would not easily get involved in those areas. “China has a quarter of the world’s population, and among these people the trust in TCM and the lunar calendar is overwhelming,” Su says.

As for other opportunities for Taiwanese companies, NCKU’s Huang points to “small cells,” in which Taiwan is already expected to gain an impressive 21% global market share this year, according to ITRI. Small cells are mini cellular signal transmitters that can serve as “signal enhancers” and “network extenders” to

fill in gaps in mobile coverage. Unlike base towers that are built atop mountains and buildings and beam cellular signals for kilometers around, small cells are integrated into buildings and rooms and beam signals only in that local proximity.

Small cells work by routing traffic from the mobile carrier’s network via a local internet connection. As the bandwidth that cell signals depend on is finite, small cells are considered vital in enabling the proliferation of connected devices without overwhelming bandwidth capacity.

“While 4G data goes from the phone to a base station to the central terminal, in 5G it will be from the phone to a cloud made up of many small-cell base stations,” Huang explains.

Meanwhile, Su says that IoT devices will feature computing capacity, storage, and data-transfer functions, with sensors certain to play much more of a role than they do now. “Given that the mobile phone will still be the hub, there will be some applications where your IoT product will have all these functions, and there will be some that will simply be sensors without much computer or storage but linked to a data center or the cloud,” he says.

Taiwan already performs well in manufacturing all of these components, particularly sensors, and should be able to reap significant benefit as the IoT evolves.

— By Jens Kastner

BEHIND THE NEWS

8&*()*/( 30"% 4"'&5: "/% 5)& &/7*30/.&/5 The Suhua Highway now under construction should reduce accidents, but will it spoil one of the more pristine parts of the island?

BY JENS KASTNER

F

rom time immemorial, people travelling overland to and from Taiwan’s east coast have done so at the risk of life and limb. But at long last the days of landslides and falling boulders burying vehicles and their passengers are now numbered. In late October, the highly anticipated SuaoHualien (Suhua) Highway improvement project passed a major milestone with the completion of the Dongyue Tunnel, the first of eight new tunnels that will be built as part of the NT$49.3 billion (US$1.6 billion) project connecting Yilan County’s Suao with Hualien County’s Chongde Village.

Upon completion of the entire project, which is scheduled for the end of 2017, travel time for the whole stretch along the coastline will be reduced from the current 2.5 hours to about 80 minutes. All construction companies as well as consultancies involved in the project are Taiwanese, with a total of 1,500 workers deployed, according to the Directorate General of Highways (DGH).

“We must provide an all-climate road since Suhua is the only road connecting the east coast region to Taipei,” says Shiah Ming-shen, Deputy Director

SETTING THE COURSE — Reference to maps facilitates the discussion at a meeting of the planning task force for the Suhua Highway improvement project.

PHOTO : CNA

of DGH. “There simply is no alternative to the project because the old road is dangerously serpentine, with each and every downpour or earthquake easily triggering landslides with terrible consequences.”

Shiah notes that within the past decade, the road has had to be completely closed an average of 28 times a year due to natural hazards, with some closures lasting up to four days. DGH statistics also show that an average of 109 serious traffic accidents occur per year, many of them “owing to heavily-loaded gravel trucks slipping into oncoming traffic,” Shiah explains.

Besides involving entirely new tunnels and stretches of surface road, the Suhua project will also make use of relatively stable existing portions of the old

Provincial Highway No. 9, commonly called “Tai 9,” such as the section between Dongao and Nanao, both townships in southern Yilan County near the border with Hualien County.

Of the 38.8 kilometers where “Tai 9” is so precarious that it needs to be replaced by the new Suhua Highway, the tunnel segments being built account for 60% of the total length. The construction work is tricky because of the geological structure of the area. Taiwan’s mountains were formed by the collision of the Eurasian and Philippine tectonic plates, and are comprised mostly of fragile sedimentary rock that easily crumbles and is highly susceptible to landslides caused by heavy rainfall or earthquakes. Due to wind patterns off the Pacific Ocean, the Suao-Nanao

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BEHIND THE NEWS

region also receives the most rainfall of anywhere in Taiwan, adding to the risk of landslides.

The project was long opposed by environmentalist groups concerned about its potential impact on the ecology of the relatively unspoiled east coast. As a result the scope of the project was scaled back, and the new road will still be designated as a provincial highway rather than a national freeway.

In addition, some exceptional measures have been implemented to reduce the environmental impact of the construction. “We don’t use explosives for tunnels near inhabited areas, and we bring the gravel we have drilled out of the mountains by train, instead of trucks, in order to reduce the impact,” says Shiah. “And the Suhua project’s heavy focus on tunnels helps protects natural conditions in the first place, as drilling affects much less space than surface road construction.” The gravel is carried to the town of Sinma in Yilan County, where most of it is sold for cement production, concrete reinforcement, and land stabilization.

In the end, however, what carried the day in enabling the project to go forward was not government assurances about the environmental precautions but rather a natural disaster that took a heavy toll in human lives. In October 2010, Typhoon Megi triggered lethal landslides on the road near Dongao.

A total of 26 people were killed, most of them tourists from mainland China,

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plus their bus driver and tour guide.

Their bodies have never been found.

The incident swung public opinion in support of efforts to improve the highway’s safety. “Once the road is completed, such a disaster will not be repeated,” Shiah affirms. “Although there will only be one lane in each direction, the road will be of an advanced standard and very wide, with much of the width assigned for emergency use.”

He adds that the speed limit will be set at a relatively slow 60km/hour.

Some of the old scenic portions of “Tai 9” will be kept open after the new highway is inaugurated, but access will be restricted to “bicycles and small vehicles that travel for the purpose of leisure at a speed under 30km/hour,” says Shiah.

Assessing the impact As the new Suhua Highway takes shape, researchers – particularly a team from National Donghwa University in Hualien – have been rigorously evaluating the project’s potential impact on the environment, economy, and lifestyle in the region. Tai Hsing-sheng, an economist at Donghwa’s College of Environmental Studies, holds that the major change actually has already been occurring since 2008, when the newly elected Ma Ying-jeou government swiftly lifted a ban on inbound tourism from China.

“The number of hotels and B&Bs in the region has increased drastically

since then, and so has the number of trains to and from Taipei, most importantly the fast Puyuma Express and Taroko Express,” Tai says. “Those trains will also connect to Taitung in 2022, when the electrification project that recently began will have been completed.”

He also notes that land prices in several townships near Hualien City as well as in Taitung County’s Dulan, which in recent years has developed into a popular surfer and artist community, “have doubled or even tripled in the last 10 years.” This growth was because of tourism in general, and expectations in particular that the new road will facilitate future development, with “the investors typically hailing from Taipei and mainland China,” he says.

The Hualien County government counted 8.77 million visitors to the county in the January to October period, representing a 17.8% increase over the same period of 2013. County officials attribute this strong growth rate mainly to a rise in the number of mainland tourists, who made up more than half of the total.

The DGH ’s Shiah pr e dic ts t hat tourist numbers will be only marginally affected by the Suhua Highway’s completion, “because the existing Hsuehshan Tunnel [located on the Taipei-Yilan Freeway and often badly congested] will serve as a filter for cars coming from Taipei.” In other words, the route is already pretty much filled to capacity.

BEHIND THE NEWS

Lue Chi-chuan, chairman of Donghwa University’s Department of Tourism, Recreation and Leisure Studies, disagrees. He predicts that the number of domestic visitors to Hualien from northern and western Taiwan will “surely be boosted when Taipei residents can in theory make daytrips to Hualien.�

H e f o r e s e e s , h o w e v e r, t h a t t h e number of Chinese tourists will be unaffected. “The visitor flow from China is basically a reflection of political strategy by the Chinese government, meaning they will come whether or not there’s a new road,�

Lue says. “The only thing the road will change for them is that they won’t hop on the train to get from Hualien to Suao anymore. Instead, they will also do that whole leg by bus.�

The Chinese tour groups usually come to Hualien by bus from Pingtung in the south, taking the train in order to avoid the most dangerous stretch of road where their compatriots lost their lives during Typhoon Megi in an incident that was heavily covered by the

mainland media. While the tour groups are on the train, their buses travel empty from Hualien to Suao, picking up the passengers at the train station there for the ďŹ nal leg to Taipei.

Alternatively, a newly inaugurated high-speed ferry, the Nachan Rera, provides another means of circumventing the Suao-Dongao stretch of roadway. In the first half of the year, the ferry carried some 82,000 passengers between Suao and Hualien.

Beyond tourism, the new road’s impact on the east coast’s economy is expected to be marginal. “The nontourism sectors hardly saw any change over the last 10 years, with the standstill attributable to the government policy of not approving any significant industrial development for the good of tourism and organic agriculture,� says Tai. “Hence, the only major nontourism industry in the Hualien region is, and will continue to be, the production of cement, sold to the northwestern part Taiwan and even to the Chinese mainland.�

On the other hand, the agricultural

sector may beneďŹ t from the better road conditions, as “they would lower transportation costs for farm produce from the region to Taipei by up to 50%,â€? says Tai. M o r e b r o a d l y, Ta i a n d L u e a r e decidedly pessimistic about the eventual overall impact of the Suhua Highway on the region. They expect that many more domestic tourists will arrive in their own vehicles, causing trafďŹ c jams, noise, and air pollution. “You will also see more man-made structures such as hotels and parking lots popping up everywhere,â€? Lue says. “Traditionally, the main draw to the area was easy accessibility to unspoiled nature, but all signs are that future visitors, including our traditional target groups from Japan, Korea, and the West, will be very disappointed.â€?

Tai laments that although the government may be able to build a good road, “neither the central nor local governments have come up with sophisticated plans for the east coast region’s future development� in an environmentally friendly way.

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TAIWAN BUSINESS

$"1563*/( 0110356/*5*&4 8*5) 5)& */5&3/&5 0' 5)*/(4

BY STEPHEN SU

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T

hroughout 2014, the hottest buz z w ords a b o u t in d u s tr y opportunities have had to do with the Internet of Things (IoT). There are also variations on the wording such as the Internet of Everything (IoE) and Internet of X-factor (IoX) that simply underscore the abundant but still elusive future opportunities in products and service applications.

IoT is not just another technology innovation awaiting market adoption, but rather a paradigm shift that will lead to another industry revolution. Over the next 10 years, most likely no single consumer product will enjoy a larger sales volume than mobile phones, which will serve as a gateway enabling many IoT devices and sensors of different forms and functions to be connected to the internet network.

According to most market forecasts, collectively these devices and sensors may add up to some 30-50 billion units by 2020 – about 6-8 times the number of mobile phones. The global market for IoT is projected to increase to more than US$300 billion annually by 2020.

Smart applications for IoT show multiple promising business opportunities: healthcare, sports and leisure, energy

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and the environment, manufacturing, security, transportation and logistics, education, etc. Among different IoT product types, smart home sensors and smart wearables like mobile watches will be leading the way.

International Data Corp. (IDC), the global market intelligence firm, defines IoT as a “network of networks of uniquely identifiable endpoints – or ‘things’ – that communicate without human interaction using IP connectivity.� In other words, for IoT it is not enough simply to have connection between people and devices with internet data. The key is to have sufficient artificial intelligence so that no human interaction is needed for valueadded applications.

While the future seems highly promising for business opportunities for all these IoT applications, at the moment no one is in a position to predict what the killer applications might turn out to be. Due to this uncertainty, Taiwan companies now have a chance to be at the same starting line with other global players–unlike the PC and mobilephone eras during which Taiwan mainly took the role of follower behind global market leaders.

Since many of the emerging IoT applications and systems will require both hardware and software integration, Taiwan’s traditional strengths in ICT hardware design and manufacturing will favor industries like IC design, IC foundry, semiconductor packaging, mobile phones, sensors and other electronic components, precision mechanics, etc. Both large and small companies will have equal opportunities in selecting emerging IoT applications to build ecosystems. However, Taiwan needs to strengthen its position in industries involved in system software, branded consumer products, and service exports.

In addition, as IoT applications will cover a wide spectrum of traditional industries like healthcare and tourism, Taiwan also needs to leverage its ICT strengths in forming cross-disciplinary industry alliances between traditional industries and ICT industries.

Data Economy vs. Energy Economy For more than a century, the key factor in the world economy has been energy, with oil and gas as the most valuable natural resources, powering

TAIWAN BUSINES S

industrial growth and even influencing global politics. However, the leading oil and gas company, ExxonMobil, has not generated growth in its market cap since 2011. Its global ranking among companies by market cap has dropped from first place to second, overtaken

by Apple, and three other oil and gas companies have dropped out of the top 10 in terms of market cap in the same period. While energy companies’ ranking has been declining, three of the top 10 companies by market cap are now in businesses related to the internet and software: Apple (1st), Microsoft (3rd), and Google (4th – up 20 places since 2011). Apple’s market cap has increased by 60% during that time, Microsoft’s by 75%, and Google by 129%. These trends indicate the coming of the Data Economy, consisting of value-added integration and applications of emerging technologies like IoT, big data, and the cloud – and show that the Data Economy is beginning to command higher value from investors than the traditional Energy Economy.

There are similarities between the Energy Economy and the Data Economy. In the Energy Economy, value-add is generated from four stages of activities: exploration, drilling, processing, and applications of natural resources like oil and gas. In the Data Economy, value-add is generated from similar activities but through data processing. While natural resources are limited and will be depleted in the Energy Economy, the Data Economy’s resource – data–will never run out but rather will continue to expand in volume. Furthermore, data is not restricted to physical country borders, can be openly accessed, and can be reused multiple times for value-added applications.

In the Data Economy, therefore, big data analytics – analyzing data, combining domain knowledge, and translating these resources into customized services – becomes the most important tool for generating value-add. Just as shale gas/oil is one of the most important game changers for the next 100 years in the Energy Economy, big data analytics will be

IoT Helps Raise the Data EconomyValue Over the Energy Economy

Similarity: Value-add from exploration, drilling, processing, applications of resources Difference: Data explosion, borderless, open, multi-usage 4063$& *53* &,

a huge game changer for the foreseeable future. Since the infrastructure of IoT basically consists of a centralized system and distributed devices connected through internet communication, big data analytics can have an enormous impact on the value of businesses engaged in the Data Economy.

As an example, one of the early applications of IoT currently is the use of smart watches for healthcare monitoring. Since personal data can be collected from a smart watch for many hours a day, seven days a week, the volume of data collected can greatly exceed the amount traditionally analyzed by medical professionals. Without the use of some type of big data analytics to digest such a large amount of data and formulate medical recommendations by artiďŹ cial intelligence, the vast data collection from wearables such as smart watches will not add any value to end users.

Internet of the Minds IoT is usually divided into three forms of interaction among different entities via a communication network: People-to-Machine (P2M), People-toPeople (P2P), or Machine to Machine (M2M). Among these entities, data is being transmitted and processed

either by centralized computing or distributed nodes. Supporting this data communication is a wide spectrum of technologies encompassing cloud computing, communications protocols, human-machine interface, wireless sensor networks, big data, cyber-physical systems, artificial intelligence, exible displays, and many others.

While most market forecasts focus on how big the device-related opportunities will be for smart watches or smart home meters, less attention is being paid to how to collect and analyze data. In this regard, all companies pursing IoTrelated business opportunities need to be reminded that “People-centricâ€? should be the focal point of all business models and technology development. “Machine-centricâ€? or “Data-processingâ€? are important elements in the IoT value web, but should be utilized only to support the provision of innovative services to satisfy the unmet needs of “Peopleâ€? in Business-to-Consumer (B2C) or Business-to-Business (B2B) business models. By emphasizing People-to-Services (P2S) and integrating it into the offering of IoT applications, the Internet of Minds (IoM) will be established as a critical success factor for IoT. As a case in point, iRobot is famous for developing household robots for vacuuming and oor-washing purposes.

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31

TAIWAN BUSINES S

These products already have certain user-friendly features that users find appealing, such as automatic return to the home-base charging dock when running out of battery life, and sensors to detect when the robot is approaching a wall. In the future, similar new household robots will be connected to the internet via a wireless network to enable them to carry out IoT functions such as allowing caretakers to monitor the security of elderly patients or making it possible for the robot to carry on small talk with lonely elderly users.

These are appropriate P2S features that connect the minds of people (unmet needs, wish lists) with the minds of machine (artificial intelligence, friendly user interface) to establish IoM. As mentioned above, since no one knows which of today’s many emerging IoT applications will become tomorrow’s killer apps – thus putting Taiwan companies on an equal footing with all global competitors – it would be best for Taiwan to adopt an approach similar to that of a Special Operations Force (SOF) in unconventional military operations. Special Ops usually refers to a small, elite military force trained to perform unconventional missions. The U.S. military has many such units for different purposes, such as the Army’s Green Berets, Rangers, and Delta Force, the Navy SEALs, and the Air Force’s Special Operations Squadrons. Unlike conventional warfare, a Special Ops unit often needs to conduct operations with quick deployment and surgical precision around targets. Rather than involving synchronized massive planning across different military units, it requires comprehensive support within the same military unit for self-sustaining operations. It is designed to quickly establish defendable beachheads for later battles to be won.

The Taiwan government and industries should form similar “Special Ops Teams� for selected IoT applications.

Each such application would be strategically chosen for its high impact with regard to potential market size, yet also carrying a high degree of uncertainty in terms of risks associated with technological maturity or potential sub-

32

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Internet of Minds (IoM) as Critical Success Factor for IoT Internet of Minds (IoM) = IoT + People-to-Services (P2S)

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stitution by other technology. As a result, it would be preferable to make a small but early investment in technology or business-model exploration for each IoT application, rather than making a massive effort that requires complex coordination and often slows down development speed. The aim is to fast-develop some IoT applications to pilot test in a new ecosystem, then adjust the design of the product or service based on early feedback. While not all selected IoT applications will become winners, hopefully a select few would attain early success.

The “Special Ops� units should be cross-disciplinary, public-private partnership teams consisting of representatives from both private industry and research institutes like the Industrial Technology Research Institute (ITRI), but championed by a single government ministry to minimize bureaucracy. They should concentrate on strategic IoT applications that already have a degree of established lifestyle-related ecosystems in Taiwan.

Some examples of such applications could be smart transportation based on Taipei’s YouBike or Mass Rapid Transit system, smart retailing based on the

24-hour convenience store infrastructure, and smart healthcare leveraging the existing National Health Insurance system and community culture of volunteerism. Hopefully more of these lifestyle-related ecosystems will soon transform Taiwan industries’ innovation focus from “Manufacturing in Taiwan� to “Lifestyle in Taiwan.�

In sum, Taiwan can capture the emerging IoT opportunities through the IoM and Special Ops Teams. By focusing on “People-centric� products and services while leveraging traditional advantages in technology and products, Taiwan could quickly build pilot ecosystems that could cultivate new business models, develop high valueadded innovations, and integrate system solutions in IoT applications.

— Stephen Su is General Director of ITRI’s Industrial Economics and Knowledge Center (IEK). He holds an MBA from the Kellogg School of Northwestern University and a master’s in Electrical Engineering from Caltech.

INDUSTRY

F

CUS

A Green Light for Car Sales

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33

INDUSTRY

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For Car Companies, Happy Days are Here Again Domestic sales this year will exceed 400,000 units, with another 100,000 for export.

BY TIMOTHY FERRY

IN THIS SURVEY

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W

ith over 380,000 vehicles sold in the first 11 m o n t h s , Ta i w a n t h i s year seems sure to record its biggest year in car sales in about a decade.

Toward year-end, sales are somewhat lower than average as consumers have been distracted by the elections and many are waiting to make their purchases in the new model year of 2015. Still, the final figure for 2014 is expected to approach 420,000 units, making it the best total since 2005’s record-breaking 514,000.

A variety of factors have contributed to this healthy picture, including an improving macroeconomic climate, falling oil prices, and rising consumer confidence. For many, though, it is simply time to buy a new car. “It’s already a decade since the peak year of car sales in 2005, and now a lot of those car owners are ready for a replacement vehicle,� observes Chen Min-teh, Secretary General of the Taiwan Transportation Vehicle Manufacturers Association (TTVMA). “That was a big factor this year and it will continue next year.�

In recent times, the worst year for Taiwan’s auto industry was in

2008, when sales dropped to 229,297 vehicles as Taiwan’s export-driven economy was hit hard by the global economic crisis. Since then, the market has been steadily improving, but the gains are not being shared equally throughout the industry.

While the entire passenger car market is growing, imports are increasing faster than sales of domestic cars. The market share for imports has climbed from only 14% in 2005 to a current 33%.

Taiwan’s domestically assembled cars are primarily marketed under license from international brands.

Ford Lio Ho, for instance, is a joint venture between the Ford Motor Co. and Taiwan’s Lio Ho Group, assembling several of Ford’s top sellers such as the Fiesta and Focus in its Taoyuan plant. Yulon Motors is the contract manufacturer for Nissan and also makes and sells cars under its own Yulon and Luxgen names, while its affiliate China Motors assembles Mitsubishi vehicles. Hotai Motors Corp. is the local distributor for Toyota Motor’s Toyota and Lexus brands, and is Toyota’s joint venture partner in Kuo Zui Motors, which turns out Altis, Camry, and other models at a

A Report on the Automotive Sector

imports and domestics is not a big issue for purchasers, particularly for younger drivers. “Even though (Volkswagen models) are a little more expensive, the parents can afford it,” she says.

The burgeoning share of the market taken by imports also reflects in the rising premium segment, which outpaced the non-premium segment in 2014 (see the following story in this section) .

New models in the mix The slew of models offered by many of the automakers this year also has had a strong influence on the market, notes Chen Min-teh. Among the launches have been a new Vios and Yaris from Toyota, Nissan Livina, Mitsubishi Outlander, Honda Fit and City, Hyundai Santa Fe, and Kia Morning.

President Thomas Fann of Ford Lio Ho, which will release several updated models in 2015, says the debut of so many new models reflects a reviving global economy. “During the downturn (post-2008), companies slowed down development of new products, but when things improve they hurry up again,” he observes. “Now everyone is eager to participate in the market.”

Kenny Wu, general manager of Hotai’s Toyota Vehicles Division, notes that the introduction of a remodeled brand can have a strong impact on sales, as high as a 30% surge in the first six months. With the introduction of updated Vios and

Yaris models this year, Toyota’s strong 2014 performance reflects the “new car effect.” Wu anticipates less of an impact for Toyota in 2015 due to the unveiling of fewer all-new models, although he notes that a nominally “minor change” planned for the Camry will actually involve a very different exterior design and new engine and transmission.

Although Taiwan’s auto market is enjoying renewed momentum, it is still far from a booming market and brands are engaged in cutthroat competition for market share. “Taiwanese consumers are very sophisticated – they are probably some of the toughest customers in the world,” says Ford’s Fann. “They are tech savvy. All the customers who come to our showrooms probably have done their homework from the internet – they know almost as much as we do about the vehicle.”

To attract such consumers, all players in the market are incorporating the latest in smart and safety technologies as standard features on certain of their models, including Blind Spot Detection Systems, Lane Departure Warning Systems, and Night Vision Systems. The locally made Ford Focus and Kuga even include automated parallel parking systems, while L.C. Chen, president of Volvo Car Taiwan, notes that the industry’s concept of safety is being broadened from protective to preventive, with systems that detect dangers and may even take control of certain aspects of driving to avert an accident.

MARKET SHARE OF DOMESTIC AND IMPORTED VEHICLES Total Sales Volume

No. of Cars Sold

plant in Taoyuan.

Eight of the top 10 brands in Taiwan’s passenger vehicle market are locally produced, with Toyota holding a commanding 33% market share, followed by Nissan at 12.61%, Ford at 6.29%, and Honda at 6.18%.

Nelly Liao, PR and Market Intelligence Manager for Beldare Motors Limited, the Volkswagen-importing unit for the Taikoo Motors Group, attributes the growing acceptance of imports to brand value. “If consumers need to pay the same amount of money, they want to have an imported car for the brand image and the safety,” she observes, adding that driving an imported car confers status as well. “In Taiwan the consumer feels that if you drive an import, you seem to be richer and more successful.”

While imports tend to enjoy stronger brand images in Taiwan than locally made cars, more competitive prices have been the biggest factor in their market gains. Innovative, modular manufacturing techniques that use common platforms (the frame and engine/drivetrains) across models – and even, in the case of Volkswagen, across brands – allows automakers to save on R&D expenses while achieving economies of scale, significantly reducing costs and prices. So despite higher labor costs, especially in Europe, and Taiwan’s hefty 17.5% import duty, prices for imports continue to decline. Taiwan’s domestic manufacturers, by contrast, lack the scale needed to drive down costs-per-unit. The net effect is that prices for imports and domestic makes are converging.

“Before, domestic companies needed to reach sales of about 1,000 units a month for a given model to be competitive,” explains TTVMA’s Chen. “Now the level has increased to about 1,500.”

Chen says that costs are becoming an issue to the extent that some Taiwan companies are considering giving up domestic production of certain models to start importing from their foreign affiliates instead. He sees domestics continuing to lose ground against imports for market share, with a possible 50/50 split developing over the next decade.

According to Beldare Motors’ Liao, the remaining price differential between

550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0

86

87

Domestic Car Share

Imported Car Share 100%

86

86

83

81

79

77

90% 74

73

70

80% 67

70% 60% 50%

14

13

14

17

16

19

21

23

26

27

30

33

40% 30% 20% 10%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 2014 (est.)

Source: TTVMA from MOTC data

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0%

INDUSTRY

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CUS Audi made a splash by holding a product launch at a super-yacht boatyard.

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Automakers are also increasingly competing on fuel economy and “green credibility� in the Taiwan market. Technologies have advanced to the point where smaller engines can produce the same power and torque as bigger ones, but with far lower fuel consumption. “You don’t need a big engine any longer, and you don’t need to choose a hybrid,� says Beldare’s Liao. “You can choose a normal gasoline engine and still reduce the impact on the environment.�

Ford cars in Taiwan come with the option of the turbocharged, highly efficient Ecoboost engine. Fann says that its two-liter twin turbo, plus the variable chain controlling intake and outtake, can generate the same power and torque as a 3.5- or even 3.7-liter engine.

Ford has also pioneered the tiny, three-cylinder, one-liter sized Fox engine.

The width and length of an A4 piece of paper, the Fox engine incorporates more than 100 patented techniques and is available in the Fiesta model. “It’s so hot globally we are constantly short of supply,� says Fann.

The market for hybrid electric vehicles is also growing in Taiwan, led by Toyota’s domestically produced hybrid Camry. Hotai’s Wu says the market has improved as customers have become more accepting of the quality and cost of the battery. He notes that many hybrid owners, especially taxi drivers, are enthusiastic about the pronounced fuel savings.

Currently, Taiwan encourages the uptake of hybrid and electric vehicles by reducing the commodity tax on the vehicle. But critics maintain that the

36

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policy has mainly benefited imported luxury hybrids and doesn’t further the long-range of goal of promoting an electric vehicles market. The Ministry of Finance is under pressure to revise the policy, but Toyota anticipates less impact as its hybrid Camry is locally produced and will still likely retain the tax advantage.

Segments getting blurry Along with growing imports and premium markets, another global trend showing up in Taiwan is the blurring of segments. Taiwan loosely follows the European classification system, starting with A-class micro cars, B-class subcompacts, and so on, rising in size and displacement. But with smaller cars offering more interior room while bigger cars feature smaller engines, the demarcation between segments is becoming less clear.

One apparent casualty of this squeeze is the mid-size C-D segment of family sedans, which includes such global stalwarts as the Ford Mondeo (called the Fusion in the United States), Toyota Camry, and Honda Accord. Ford’s Fann notes that “five years ago it was probably one of the biggest segments and now it’s only 3 or 4% of the total industry.�

One reason, explains Fann, is that C cars such as the Ford Focus are getting larger but are still cheaper than their C-D counterparts, giving the C-D segment stiff competition.

In addition, the rise of the SUV – the J-segment – provides a roomier and

more practical alternative to the family sedan. In the first 10 months of 2014, sales of SUVs were up 28.7% over the same period last year. “SUVs have been increasingly popular in Taiwan, especially as prices have come down and fuel efficiency has improved,� notes TTVMA’s Chen. He concurs that much of that growth has come at the expense of C-D segment sedans, whose sales volume dropped 15% year-on-year in the same 10-month period.

Beldare’s Liao observes that the SUV class offers additional benefits to women motorists, allowing for greater visibility for the driver as well as sufficient size to thwart something she says many women complain about – bullying by male drivers. “Most male drivers think that if you’re a woman, you can’t drive very well,� she says. “But if you drive an SUV they won’t take advantage of you on the road because they won’t know who the driver is.�

Her comments point to another emerging trend in Taiwan’s auto market: the growing influence of the female driver. “The car industry is a male-dominated industry, so we don’t pay much attention to female drivers, despite a lot of research saying that the buying power and economic independence of women is growing,� notes Volvo’s Chen. In rebuilding Volvo’s image in Taiwan, the company has been emphasizing elements of Volvo’s design that reflect the relative equality enjoyed by women in Nordic countries. Unlike most brands vying in the premium segments, which are heavily skewed towards men, Volvo’s customers divide evenly between men and women.

To build and retain brand loyalty, the various players in the Taiwan auto market are also focusing more on the sales and service experience. Hotai’s Wu mentions that it is remodeling Toyota showrooms with reception desks closer to the door to make it easier to welcome people as they enter, and introducing a “Hybrid Corner� where Toyota’s line of hybrids can be showcased and the

A Report on the Automotive Sector

technology explained. The changes are not limited to just the showrooms, and Wu says that Toyota will be fielding a younger salesforce, wearing redesigned, more professional uniforms, who will wield iPads containing all the information needed to make a sale. “With a young-looking showroom and younger salespeople, we want to deliver a very young image,” says Wu. Volvo will incorporate cloud and Internet of Things technologies into its service process. In the future, Volvo cars and service centers will employ sensors and communication equipment to jointly monitor the status of the vehicle, alerting the driver to maintenance needs and any potential problems. Ford also promises a

new look for its network of showrooms, as well as upgraded service centers.

Another new wrinkle for the Taiwan auto industry is the growth of exports, which this year should reach a record level of about 100,000 units – nearly all of them Toyota Altis models shipped to the Middle East. Recognizing the quality of the output from the Kuo Zui joint venture, the parent Toyota Motor Co. in Japan has been incorporating increasing volumes of the Taiwan-made vehicles in its global marketing plans. Combined with another 100,000 units of Altis sold domestically, the export program provides sufficient economy of scale to permit competitive pricing. All together, Kuo Zui this year will turn out a record

200,000 cars, a new high for any Taiwan auto maker.

Considering that the Taiwan auto industry as a whole has annual production capacity of 700,000 units, far exceeding current needs, there is plenty of room for additional output for export if sufficient scale could be achieved for particular models. With that objective in mind, TTVMA has long been urging the government to negotiate an arrangement with China to permit cross-Strait trade in built-up vehicles. Chen Min-teh says the industry continues to hope that the crossStrait Trade in Goods Agreement currently being negotiated will include provisions allowing trade in complete vehicles on a tariff-free or low-tariff basis.

The Premium Segment Takes the Fast Lane New models are appealing to a wider range of customers, bringing strong growth.

BY DON SHAPIRO

“

A good economy, good market, and good exchange rates” is the way Edward Butler, the marketing director for Audi Taiwan, sums up the reasons why the premium segment of Taiwan’s car market is growing at an even faster clip than the market as a whole.

Such premium cars are all imports, and the strength of the New Taiwan dollar, especially against the Euro and the yen, has helped make sticker prices look more attractive to local buyers of German and Japanese vehicles. In addition, the Taiwan economy – while far from enjoying the boom days of old – has been performing rather well compared with many other parts of the world. With the major international brands “in a highly competitive situation where many markets are struggling,” says Butler,

The latest entry from Lexus, launched last month, is the classy RC F coupe.

“manufacturers are pushing very, very hard to promote their business here.”

Mercedes-Benz and BMW, the longtime market leaders in Taiwan, are being increasingly challenged for market share

PHOTO : HOTAI

by Lexus and Audi.

Ryan Lai, general manager of the Lexus division at Hotai Motor Co., the local distributor for Toyota and Lexus, cites another factor for the strong sales

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in the premium segment – the existence in Taiwan of an M-shaped society, with more and more people having the wealth to buy a luxury vehicle. In fact, says Thomas Fann, president of Ford Lio Ho, the trend towards premium cars is a “global phenomenon.� Citing possible links to the growing income inequality seen in much of the world, he observes that “the richer people really don’t care too much about how much the vehicle costs.� He also notes surging numbers of retired baby boomers contributing to the growth in the luxury car market. “They are retired and have an empty nest.

Where else are they going to spend their money?�

Ford’s luxury brand, Lincoln, was launched in the China market this fall, but so far there are no plans to offer it in Taiwan. Instead, Ford has been bringing in limited quantities of its iconic Mustang sports car.

Yet another contributor to the growth by premium brands has been the effort in recent years to extend their product lines by bringing out smaller, often sportier models, to appeal to a younger car-buyer. “Worldwide we’ve introduced more entry-level cars into the market – we call it NGCC for new-generation compact car – and it’s enabled us to expand the market and reach new groups of customers,� says Kim Lin, general manager for public relations at Mercedes-Benz Taiwan. “Combining that business with the stable growth enjoyed by our traditional segments has brought very good results.�

In the first 10 months of this year, the premium market saw the number of vehicles sold increase by 19.8% over the same period last year. That compared to only 14% for the non-premium segment.

BMW and Audi were both up by around 19% and Lexus by more than 20%, while Mercedes-Benz, already the sixth largest seller overall on the passenger car market with a 5% market share, registered 17% growth. Kim Lin notes that “for 20-some months already, from 2012 until now,� Mercedes-Benz “has set a new sales record every month – it’s quite amazing.�

For 2014 as a whole, sales are forecast of some 68,000 premium vehicles,

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The updated CLS400 “Shooting Brake,� left, and the CLS400 Coupe, are just two of the latest offerings by Mercedes Benz in Taiwan.

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and based on projections that Taiwan will continue to enjoy decent GDP growth in 2015, most of the makers expect the market momentum to be sustained. Some in the industry, however, are a bit concerned that the impulse to purchase an expensive new car might be affected by the political uncertainties generated by last month’s elections, especially with the 2016 presidential campaign drawing near. “Although the purchasing power will still be there, the luxury-segment buyer tends to become more conservative when there’s uncertainty in the external environment,� explains one industry veteran. “For them, it’s a type of investment, not just a transportation tool.�

Rolling out new models The more common sentiment in the industry, however, is that the new models steadily being introduced will stimulate continued consumer interest.

At Lexus, for example, Ryan Lai notes within two months following the release of the NX300 compact SUV hybrid in August, the company received over 1,900 orders, with some customers having to wait until the new year to get delivery. “It’s the hottest selling model Lexus has ever brought out in Taiwan,� he says.

Another new model launch in November was for the fashionable RC 350F, Lexus’s first offering in Taiwan of a coupe, set to

compete with similar models from BMW and Mercedes.

Next year, mainly because of the coinciding of production cycles, Lexus will be launching new models each month from August to the end of the year, including a turbo-engine version of the NX300. “It’ll be a year of a lot of change,� says Lai. Given the impetus from the new models, Lai expects only moderate impact from an expected revision in government policy to remove subsidies – in the form of reduced commodity taxes – for imported hybrids. The change is a likely response to legislators’ criticism that the subsidies should not apply to luxury imports, and that the original intent of the program was to promote fully electric vehicles. “Of course, hybrids also contribute to improving the environment,� says Lai. At Mercedes-Benz Taiwan, this year’s new models included a new generation of the popular C-class executive-car compact, the GLA crossover small-sized SUV, its “flagship� S-class coupe, and a CLA four-door coupe. An even larger number of launches is planned for 2015. “In Taiwan, in particular, customers have a very strong new-car mentality,� says Kim Lin. Since setting up its own operation in Taiwan in 2009 after previously having been represented by an agent, Audi has been aggressively seeking to expand its

A Report on the Automotive Sector

foothold in the market. “Before, Audi wasn’t reaching its potential in Taiwan,� says marketing director Butler. “Mercedes and BMW were dominating the premium segment, whereas Audi is usually right up there with them in most markets.�

He says Audi has been making rapid inroads – this year it expects to sell close to 5,000 cars here, compared with only 900 in 2008 – by building on the image of being “very innovative and dynamic – a sort of sportier, cooler premium car.� The brand has consciously tried to appeal to the younger set. “Their father or grandfather drives a Mercedes or BMW,� says Butler. “They think ‘we are a different generation. We don’t have to behave the same way.� “When we launch a new car we try to do something spectacular that will create word of mouth and drive brand awareness,� says Butler. For the launch this past April of a new version of the A8 sedan, for example, the company cooperated with Kaohsiung-based Horizon Yachts to take a hundred guests out for a cruise on a 54-meter super-yacht. The group was then ushered into one of the

yacht-builder’s hangars, converted for the evening into a venue for fine dining and entertainment with one long table.

Audi is also emphasizing social media.

This month it has set up eight-meter-tall LED screens in the Xinyi shopping district to create a giant Christmas-tree effect; members of the public are being invited to take photos of themselves at a booth on the site, or to send them in by email, for posting on the tree.

Butler also stresses that Audi is proud of its technological advances, such as the A8’s lightweight aluminum body, matrix headlights with receptors that automatically adjust the intensity of the beam, and Quattro 4-wheel drive “that keeps you glued to the road in extreme conditions.�

A potential new entrant in the premium category is Volvo (now owned

by Chinese automaker Geely), which has begun importing its updated XC90 luxury SUV. The new XC90 is Volvo’s first model priced high enough (over NT$2 million) that the 10% luxury surtax kicks in.

Beyond luxury, of course, there is super-luxury – represented by such potent

brand names as Maserati, Lamborghini, Ferrari, Rolls Royce, and Bentley. With cars priced at NT$13 million on up, it doesn’t take a high volume of sales to make for a profitable operation. James Chen, director for marketing & PR for Bentley in Taiwan, says that at least 300 “high-luxury� cars will be sold in Taiwan this year. He says Bentley currently accounts for about 60 of those vehicles, and expects to bring the number up to 100 next year.

Chen describes the Bentley customers as 95% male and mainly in their fifties.

Many of them are in the construction or real estate businesses, have made their fortune in China, but are now back in Taiwan spending their money on luxury housing and automobiles. Bentley PR manager Vivi Chang says some of the customers are “collectors� who may own several different super-luxury brands and use them for different purposes – perhaps driving the Ferrari to a nightclub to impress women but switching to a Bentley the next day to attend a business meeting. “High-luxury� may be a niche market, but what a niche!

Commercial Vehicles Go Green Besides diesel trucks with lower pollution, locally produced electric buses are making an appearance on the market.

BY PHILIP LIU

I

n recent years the major international makers of commercial vehicles, led by Japanese brands, have been scrambling to introduce environmentally friendly models in the Taiwan market. They are seeking to tap the substantial demand arising from Taiwan’s increasingly rigorous environmental requirements, notably implementation of the fifth-stage regulations on the emission of CO2 and other pollutants that went into effect on Jan. 1, 2012 for new diesel-powered vehicles.

The dominant player in the local light truck market, the Yulon Group’s China Motor Co. (CMC), producer of Mitsubishi-brand passenger and commercial vehicles,

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has been at the forefront of the move. In September last year, CMC rolled out a modified “Veryca,” a small vehicle with engine displacement of 1.2-1.3 liters, at a price of NT$443,000 (about US$14,700) as its entry-level model. The price tag is NT$16,000 higher than the original level, but is still the lowest among similar models on the market. CMC is targeting annual sales of 10,000 cars, consolidating its 90% market share in that segment.

The following month, the company launched a medium-sized 3.49-ton commercial vehicle bearing its own “Leadca” brand and priced at NT$896,000 (US$29,800), to help it retain customers in the category now that the price of comparable Mitsubishi commercial vehicles meeting the environmental requirements has exceeded NT$1 million.

“Leadca” was designed and developed

by CMC, but incorporates a diesel engine from Cummins of the United States, a leader in the field, and gearbox from ZF of Germany. The market reception has been favorable, and the model now accounts for 15% of the company’s sales of 3.49-ton trucks.

CMC also offers the similarly sized Canter model of the Mitsubishi Fuso, priced at NT$1.1-1.2 million. The model is especially popular among logistics and freight companies, and its 7,000 units in annual sales make up the bulk of the 9,000 vehicles sold each year in that segment.

Other Mitsubishi models filling out the CMC commercial-vehicle lineup include 6.9-8 ton medium-capacity trucks and New Fuso models in the 11-ton, 15.6-ton, and 17-ton categories. Overall, CMC occupies about a 70% share of a local commercial-vehicle market that last year reached sales of some 17,000 units.

Liu Hsing-tai, president of CMC, says competition in the commercial-vehicle market is likely to thin out, as some foreign auto companies – given the limited size of the market – may not be willing to make the heavy investment necessary to offer models conforming to Taiwan’s new environmental requirements.

The major players, however, are remaining in the game with new models that fit the environmental trend. This

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September, Hotai Motor, the Toyota distributor in Taiwan and the second-largest supplier of trucks in the market, rolled out 6.5- and 8.5-ton models of gasoline-electric hybrid vehicles from Hino, Toyota’s truck-building affiliate.

Although the new models are priced some NT$280,000 higher than conventional Hino vehicles with similar capacities, Hotai president Su Tsun-hsing says he is confident of a positive market reception, noting that savings in fuel consumption should enable users to recoup the extra cost in three years. Equipped with nickel-hydrogen batteries with a life span of up to 10 years, the two models are expected to see use mainly for logistics, recycling and garbage collection, and utility vehicles. Hotai aims at selling about 100 such hybrid vehicles a year.

Isuzu, another major Japanese player in the light truck market, in July last year introduced a 3.49-ton truck meeting the fifth-stage emission requirements. Hochung Auto, the local agent, has so far put in place an after-sales service and repair/maintenance network of eight directly managed outlets and 35 franchise garages.

European brands Backed by their cutting-edge technology in fuel efficiency, the leading European commercial-vehicle brands have also been deepening their engagement in the local market, especially in the heavy-duty sector. Golden Stout Industry, the agent for Mercedes-Benz commercial vehicles, for instance, in June last year opened an NT$80 million plant in Taoyuan for assembly of Mercedes-Benz Actros trucks. The monthly capacity is 60 units. This May it also launched the Actros 1836 LS, featuring a shorter axis of 3300 mm that makes the truck more maneuverable, better suited to the limited land space in Taiwan. To promote its passenger cars and commercial vehicles, Mercedes-Benz Taiwan this year opened five large-scale showrooms, in Guandu of New Taipei City, Taichung, Tainan, Taoyuan, and Taipei.

After having carved out a solid local presence, Volkswagen plans to set up a Taiwan branch in 2015 to market its

sedans and such commercial vehicles as the Caddy, Crafter, and Kombi. Taikoo Motors, VW’s existing Taiwan agent, will continue to sell Volkswagen cars, though on a non-exclusive basis.

Formosa Plastics Transport Corp., part of the Formosa Plastics Group (FPG), also introduced a hybrid truck from DAF, a major Dutch commercial-vehicle producer, to Taiwan in late 2013. It is the latest addition to a lineup of DAF trucks, with capacities ranging from 12 to 45 metric tons, which the company has been assembling and selling here as the local agent. Chairman Chen Sheng-kuang predicts that annual sales of DAF trucks by the company will top 2,000 by 2016, boosting the sales value to NT$3 billion.

Half of the output is for export to Southeast Asia.

Meanwhile, Taiyu Motor, also under FPG, has been promoting sales of 3.49and 7-ton Daily trucks from INVECO of Italy in its role as the local agent. Like most other European models, these are conventional trucks, with engines placed in front of the driver, similar to an automobile, for lower wind resistance, better driver safety, and a more spacious cabin compared to the snub-nosed, cab-over-engine design of most Japanese trucks.

MAN, a leading heavy-duty truck manufacturer in Germany, is marketing Sitrak heavy-duty trucks, jointly developed by the company and its Chinese partner, China National Heavy Duty Truck Group. Tsai Si-min, executive director of Dayi Co. Ltd., the local agent, predicts that by 2018 Sitrak models will take 30% of the heavy-duty truck sector, which has annual demand for about 3,000 trucks.

Korean brands are also striving to retain their presence in the Taiwanese market with new models meeting the environmental requirements. Sanyang Industry, as the agent for Hyundai, is offering two models, the Porter and Grand STAREX, priced at NT$659,000 and NT$899,000 respectively. In addition, Kia has sold about a thousand 3.5-ton Kaon trucks since the local debut in July 2012.

Competition is also heating up in the bus market, where there is substantial demand for replacement vehicles as well

A Report on the Automotive Sector

as new buses both for public transport and tour coaches. For the convenience of the handicapped, elderly and infirm, many municipal governments are substituting low-floor buses for conventional ones. Taipei already has 2,400 low-floor buses in operation, accounting for 60% of the city’s total of 4,000 buses. Meanwhile, tour-bus firms have plans to expand or upgrade their fleets to assure ample and safe transportation for the influx of Chinese visitors following some major accidents involving such travelers in recent years. Currently some 15,000 tour buses are in operation.

Shunyi Motor, an affiliate of CMC Motor, for instance, has invested tens of millions of NT dollars to set up a production line to build bus bodies to match imported Mitsubishi chassis for assembly into complete vehicles. The assembly operation is carried out with the assistance of Mitsubishi technicians.

In another local development, Global Motors in 2005 came out with its own bus chassis after years of R&D. The chassis are combined with imported parts, including gearboxes and steering-wheel systems from ZF of Germany, engines from Cummins of the United States, and braking and suspension systems from WABCO of Germany. Mass production began in 2009, and the local market reception has been excellent. As a result of the initiative, Global Motors this year won the “Golden Torch” award granted by the Outstanding Enterprise Management Association.

Other domestic firms are setting their sights on the emerging electric-bus market, hoping to take advantage of government incentives. The “Development Strategy and Action Plan for Smart Electric Cars” adopted by the Executive Yuan in May this year calls for installation of 10,000 electric buses in the 10-year period of 2014-2023, including substituting 8,000 electric buses for diesel models in urban areas. Many of the vehicles will be used as shuttle buses by government agencies and private enterprises.

In addition to exemption of excise and license taxes, the government will provide hefty subsidies for purchase of electric buses, as well as for the installation of battery charging and replacement

Despite the higher price tags, Hino is confident that its new hybrid models will enjoy a good market in Taiwan.

PHOTO : HOTAI

stations. The program calls for a total budget of NT$20 billion.

Hsieh Yien-ru, chief secretary of the Environmental Protection Administration and formerly director of its Department of Air Quality Protection and Noise Control, describes the replacement of diesel buses as an urgent need, as the World Health Organization (WHO) has listed diesel-oil waste as a first-category carcinogen.

During the presumed 10-year lifespan of the 6,200 electric buses in major cities, it is estimated that they will bring about the reduction of 6,054 tons in CO2 emissions, 1,530 tons of carbon hydrogen compounds, 24,936 tons of nitrogen oxygen, and 646 tons of particulates.

A local producer of electric buses, RAC Electric Vehicles rolled out a 26-seat model of its own development in 2008 and received Ministry of Transportation and Communications (MOTC) certification in 2010. The buses run on an advanced lithium-ion battery that features high power storage and is relatively lightweight. Bus companies can charge the battery at night, giving enough capacity for driving throughout the following day. With the help of government subsidies for purchasers, sales have increased to 50 units this year, including 15 big buses and 35 medium-sized vehicles. Several of the units are being used as shuttles among the various factories belonging to the Taiwan Semiconductor Manufacturing Co. (TSMC) in the Hsinchu Science-based Industrial Park.

The government subsidy covers 40-49% of the NT$9 million price tag for a large electric bus, bringing the cost

down to about the same level as that of a diesel model.

Alex Tsai, the president of RAC, says he is upbeat about the company’s prospects, noting that the local market demand will exceed 10,000 buses in the next 10 years, according to the government’s forecast. “In addition, we are in talks with local partners for entry into the U.S. and Southeast Asia,” reports Tsai.

The company also offers electric trucks, for which it is eyeing markets in China and Southeast Asia.

Another supplier, Aleees, has secured a beachhead on the local electric-bus market with sales so far of 44 electric buses, including seven that when into service in late November in Taroko National Park. This year Aleees also received two orders from China – for 700 buses from Nanchang city of Jiangxi Province and 200 from Yuyao city of Zhejiang Province. The company’s electric buses are equipped with lithium ferrous phosphate batteries and Siemens motors.

After gaining safety certification from MOTC, a third manufacturer, Pihsiang Machinery Co., has contracted with the Yilan county government to deliver 35 medium-sized electric buses, priced at NT$8-9 million each. It also has customers in Europe. The buses use lithium iron phosphate (LFP) batteries of the company’s own manufacture.

The combination of electric buses and diesel trucks meeting stricter government specifications should help Taiwan make further gains in improving air quality for the benefit of all residents.

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New Trends in the Used-car Market Once the domain of small, independent dealers, the secondhand market is being transformed as major auto companies offer “certified pre-owned” cars.

BY PHILIP LIU

M

ajor automotive companies in Taiwan have been vigorously moving into the used-car market – mainly for sales of their own brands – in an effort to tap the huge business potential and facilitate sales of their new cars.

The most recent entrant is the Ford Lio Ho Motor Co., which this July began selling “Ford Assured” used Ford cars at four of its dealers – in Taoyuan, New Taipei City, Tainan, and Kaohsiung. The program is to be extended to other locations around the island in the coming year. Ford Lio Ho offers quality certification and warranties for the secondhand cars it is offering. It stresses that the “Ford Assured” vehicles are relatively new and have a clear origin, as most of them were previously driven by Ford managerial staff or were used by the company for display purposes or test driving.

Quality certification is available for each vehicle that passes a check of 158 items by Ford technicians, including the chassis, engine, and gearbox, as well as a test drive. Buyers therefore have the assurance that problematic cars have been excluded, such as those that were involved in crashes, submerged in floods, or stolen and given a forged engine number. In addition, the cars come with a warranty of one to two years or a maximum driving distance of 40,000 kilometers. The warranties cover some 100 key parts and components for eight major systems, including the engine, transmission, and electrical and fuel injection systems. In addition, buyers can return the used cars if they are dissatisfied with the quality within a 10-day testdriving period.

Most of the competitors in the Taiwan market have had similar certified-quality used-car programs – known as CPO (cer-

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tified pre-owned) systems – for at least the past several years. One attraction was the huge volume of the domestic used-car market, where sales last year reached 550,000 units, compared with 380,000 for new cars.

Another motivation was the potential of the used-car operation to facilitate sales of new vehicles, since 90% of new-car sales in Taiwan are for replacement purchase. The ability to trade in a used car easily and for a good price serves to encourage car owners to buy new models.

Thanks to their expertise and equipment, the major auto firms are in an advantageous position in selling their own CPO cars, as they can accurately detect hidden problems, thereby assuring quality.

Hotai Motor Co., the general agent in Taiwan for the Toyota Motor Co., started the trend in 2004 when it set up a subsidiary, Hozhi Motor, to engage in the CPO-car business. It wished to take advantage of the huge used-car market for Toyota models, as the brand holds a high market share (around 37%) among domestically produced autos. In addition, Toyotas are able to command relatively high prices in the used-car market, amounting to about 70% of the original price for a three-year-old car.

(The level is similar for another Japanese brand, Honda).

Encouraged by the thriving business of Hozhi in northern Taiwan, Hotai then established Horong Motor in 2012 to follow the CPO business model in southern Taiwan, and then Hozhong Motor in 2013 for central Taiwan.

The CPO business has contributed significantly to the business of Hotai Finance, which last year was the market leader with some NT$55 billion (US$1.8 billion) in new loans. The channel has also offered an outlet for old cars retired by Hoyun

Leasing, another Hotai affiliate.

Sales of Lexus, the premier brand from Toyota, have been a major contributor to Hotai’s CPO car business. As with Ford, the cars include those that were previously driven by the company’s managers or used for exhibition or trial driving, as well as vehicles that had been on lease. But even most of the cars that formerly had private owners have a clear maintenance records, since an estimated 90% of Lexus owners take their cars to a Lexus facility for repair and maintenance. All CPO Lexus cars are entitled to a minimum warranty of two years or 40,000 kilometers of driving, and buyers can return the cars in their original status within a 14-day trial period if dissatisfied. So far, Hotai has sold some 5,000 CPO Lexus cars.

Other foreign premier auto brands are also promoting the CPO business, seeing it as a way to introduce their models – often deemed as symbols of social status – to new customers. Audi Taiwan, for instance, has set up showrooms in Taipei, Taichung, and Kaohsiung for its CPO cars. Besides offering a safe and reliable source for used cars, it provides complete repair and maintenance records, warranty, and a seven-day trial period. If the car is undamaged and was driven for less than 500 kilometers, the buyer has the option of exchanging it for another car in stock.

Mercedes-Benz Taiwan has also been selling CPO cars – again, mostly vehicles that had been used by the company executives or for display or trial driving, with some only having been on the road for a few months. The motivation is to develop brand loyalty that may later translate into sales of new Benz cars and also to reduce the number of Benz cars on the market through unauthorized “parallel” imports.

A Report on the Automotive Sector

Along the same lines, Pan-German Motors, the distributor of BMW cars, has been engaged in CPO sales. It notes that its CPO cars have all undergone rigorous checks by its technicians regarding appearance, inner structure, chassis, engine, and electric system.

Creating alliances Seeing a large business potential, some auto companies have been tapping the used-car market more broadly, not just for their own CPO cars. Fortune Motor, the general agent of the China Motor Co. (CMC), part of the Yulon Group and the producer of Mitsubishi vehicles in Taiwan, set up the SUM used-car alliance in 2004. SUM has since become the leading used-car brand on the island, with 400 used-car dealers and 270 garages as members, including 70 operations owned

by Fortune Motor itself. According to Fortune and SUM manager Liu Yi-hsian, SUM now holds a 40% share of the used-car market. “Alliances have become the mainstay of the local used-car market, as they have more credibility and can provide better protection to customers,� explains Liu. “Generally speaking, used cars with less than one year of usage are priced at 80% of the new-car equivalent, and an extra 5% discount is given for every additional year of usage.�

Cars sold by the member dealers bear quality certificates issued by SUM after the latter’s technicians complete a check of 136 items of the cars, providing assurance they were not victims of flooding or major accidents, and are not stolen cars with forged engine numbers. The check also validates the accuracy of the driving-distance record on the odometers.

SUM’s vehicles come with a one-year or 20,000 kilometers warranty for the engine, gearbox, power steering system, and starter motor.

T h e Yu l o n M o t o r C o . h a s a l s o stepped into the used-car market, setting up the SAVE used-car alliance whose verification system checks 168 items in nine major systems of the car. To date, the alliance’s team of technicians has examined over 260,000 used cars. A warranty of one year or 20,000 kilometers covering major systems is available on cars sold by

With 400 dealers in the alliance, SUM has become the leading used-car brand in Taiwan.

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member dealers.

Branded alliances such as SUM and SAVE have become a mainstay on the domestic used-car market, attracting the participation many used-car dealers in order to win the trust of consumers in a rather chaotic market. Quality certification from such alliance usually enables member dealers to command a premium of 10-20% on the prices they offer.

Another such group, the Best-quality secondhand-car alliance, was founded in 2011 by Lin Sung-hao, a veteran in the car-repair and used-car businesses. The alliance, which has ISO9001:2008 certification, certifies the cars sold by its member dealers, guaranteeing they are not flooded cars, former taxis, cars of major accidents, or stolen cars and providing a warranty for the engine, gearbox, power steering system, and compressor.

Non-alliance dealers often seek thirdparty certification to strengthen their credibility. Minlung Auto, a used-car d e a l e r i n Ta i p e i , f o r i n s t a n c e , h a s arranged for certification from TĂœV Rheinland of Germany, especially for premier European brands.

Consumers can even find used superluxury cars on the market. Examples of such glamorous vehicles, including Lamborghinis and Bentleys, are sitting in the showroom of New Lucky Auto in Hsinchu, whose customers include executives of hi-tech firms in the area. Manager Chou Hsin-kan says these cars, obtained from the general agents, sometimes have been driven for less than 2,000 kilometers. A two-year used Lamborghini Aventador LP 700-4 can be purchased at

a 20% discount from the original price of NT$25.38 million (US$846,000).

Because of the difficulty in securing a steady supply of used super-luxury cars, however, Chou says the company will switch its focus to used premium cars, such as Porsche.

Even alliance membership, however, cannot totally prevent the fraud and forgery long prevalent in the used-car market. According to industry insiders, for instance, some less scrupulous dealers buy cars that have been in a collision at low cost and transfer the engine number to stolen cars, giving the latter a legitimate identity. Others collude with technicians to alter the distance shown on the odometer in order to fetch a higher price from buyers. This type of fraud may evade the detection even of veteran dealers, especially for purchases made at auctions. The problem is often discovered by technicians of the original auto firms, using specialized computers or checking maintenance records, when the new owners bring the cars in for maintenance or repair.

To evade responsibility, some dealers exclude liability for such fraud in the transaction contract, a provision that may appear in fine print. Legal disputes often arise. To decrease the risk, Tseng Ching-wei, former chief editor of AutoNet, advises used-car buyers to choose popular rather than special models, whose original owners may tend to overuse their cars. Other experts advise buyers of secondhand cars to choose vehicles that are only a few years old to avoid exorbitant repair costs.

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ADVERTORIAL

A Message from the International Research-based Pharmaceutical Manufacturers Association (IRPMA)

Preparing for the National Drug Policy Forum

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t the end of this month, Taiwan will conduct its second National Drug Policy Forum (the first was held in 2008), providing an opportunity for the exchange of views among government officials, industry representatives, healthcare providers, scholars, and other experts on how to create a more favorable drug-policy environment for the benefit of all stakeholders IRPMA, whose membership consists of American, European, and Japanese manufacturers of original drugs, has proposed a list of seven topics that it suggests be addressed by the Forum. Of the seven, the first four topics relate to the operation of the Taiwan Food and Drug Administration (TFDA) and the other three to the National Health Insurance Administration (NHIA), both units of the Ministry of Health and Welfare.

What follows is a summary of those issues: 1. How to make the new-drug review process more efficient without compromising assurance of safety and quality. Currently the approval process takes considerably longer than in most other countries, delaying the entry of effective new treatments into the market. To help streamline the system, IRPMA urges the elimination of regulatory requirements unique to Taiwan, relying instead on international guidelines and standards. In addition, IRPMA members in principle would be willing to accept an increase in some review fees if the additional revenue is earmarked for hiring more professional personnel to expedite the review process and for more education and training to increase their professional expertise. The goal should be to complete all procedures and issue the product license within 300 calendar days.

2. Permit the registration of multiple manufacturing sources on one license to reduce the risk of drug-supply shortage or discontinuation.

At present, licenses issued by the TFDA allow only one manufacturer to be registered for each stage of manufacture. But that policy poses the risk of supply problems in the event of natural disasters, fires, or constraints on production capacity. In the interest of risk management, many advanced countries (including the U.S., Canada, Australia, EU, and Switzerland) and some neighboring countries (such as Singapore and Korea) have adopted regulations and practices making it possible for multiple manufacturing sources to be registered on a single license.

IRPMA recommends that Taiwan follow suit in providing more flexibility in drug manufacturing and supply.

3. Use patent linkage and data exclusivity rights to enhance intellectual property (IP) protection. An IRPMA survey showed that at least 65 generic drugs had obtained licenses before the patents on the original drugs had expired – and some of the generics had even received reimbursement prices. Currently the patent-holder is able to take action only after discovering that the infringing product is already on the market, and even then the legal process is lengthy. The average trial in patent cases takes over seven months, with 26% of the cases taking longer than a year. In addition, pharmaceutical IP cases are particularly complicated, making the proceedings even longer than average – and still the initial court ruling is subject to appeal. By the time the case is over, the original manufacturer – even if it wins the lawsuit – will have suffered heavy damage to its business.

Implementation of a patent linkage system, as is done in the U.S. and many other countries, protects the patent-holder by subjecting all applications for new drugs and generic drugs to a patent check. In addition, the applicant for a generic drug must declare that the original drug’s patent is no longer valid, and the original manufacturer is notified of the application. Until the matter is resolved (in the courts, if necessary), the review process is suspended.

The government has expressed its intent to create a patent-linkage system, but the change will require both executive and legislativebranch action. IRPMA suggests a timetable for completing all stages – including formation of a patent database, drafting and announcing new regulations, and submitting a draft bill to the Legislative Yuan – before the end of 2015.

4. Implementing a rigorous system of Separation of Dispensing from 44

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Prescribing (SDP). Staff physicians at Taiwan hospitals can only prescribe medicines listed in the hospital formularies, which are selected through a process based largely on the profitability of the drug for the hospital. Most hospitals also maintain a “one-in, one-out” policy limiting the number of items in the formulary, as well as a system of grouping medications with similar functions as a way to increase profit. This approach may jeopardize patients’ access to the most appropriate medication for their particular conditions.

IRPMA urges the government to set clear principles to eliminate the profit motive as a factor in drug dispensing, adjust hospital fees to reduce hospitals’ need to rely on revenue from drug dispensing, and require hospitals to release outpatient prescriptions to community pharmacies. Although full implementation of these steps may need some time, clear goals and timetables should be set for their completion. The government should also engage in more public communication and education to create broader awareness of the benefits of SDP. 5. Continue the Drug Expenditure Target (DET) program, adding R-zone protection for certain products. The DET program – in which industry agrees to make up the difference between a set annual target for NHI drug expenditure and the actual figure, if higher – has been implemented on a pilot basis for the past two years. The approach deserves to be continued, as it has brought more predictability into the system, enabling both industry and NHIA to better engage in planning. For patients and physicians, it also brought greater stability to the drug supply, reducing the need for frequent changes in medications.

But one weakness of the current DET system is the heavy burden it places on the “3A” category of drugs: those whose patents have expired for five or more years and which have received reimbursement for less than 15 years, as well as drugs with patent coverage other than the compound patents recognized by NHIA. The 3A drugs have no longer received the “R-zone” (reasonable zone) protection of a 15% allowable margin between the reimbursement price and the actual transaction cost, subjecting them to heavy price cuts. The R-zone should be restored for certain products, particularly biologics, which are usually covered by process rather than compound patents.

6. Expediting the new-drug pricing and reimbursement (P&R) process and harmonizing new-drug pricing with international standards. Due to the long P&R process (some 415 calendar days on average), low rate of approval (only 42% for “discussion” cases), and extremely low pricing (53.4% of the benchmark A10 median), Taiwan patents and physicians have inadequate access to new drugs. The efficiency of the Pharmaceutical Benefit and Reimbursement Scheme committee (PBRS) needs to be greatly enhanced to shorten the process, and newdrug pricing improved to reach at least 70-80% of the A10 median.

In addition, the mark-up mechanism theoretically in place for innovative products should be fully implemented, and patient representatives should be given a voice in the P&R process.

7. Create proper conditions before implementation of balance billing.

One way to help control NHI costs is through balance billing, in which NHI would cover a portion of the cost and the patient the remainder.

Before balance billing can be successfully implemented, however, some changes in policy are needed. One is to relax current restrictions on drug advertising to permit greater patient awareness of the advantages of a given brand. In addition, NHIA should exercise its authority to restrain hospitals from demanding continuous rounds of discounting, maintaining a “one-in, one-out” policy in their formularies, and carrying out price comparisons by grouping. Without these changes, no original drugs will be available for prescription in certain drugs groups, undermining the whole purpose of balance billing.

IRPMA looks forward to a fruitful discussion of these issues at the National Drug Policy Forum. We are confident that with effective policy reform, Taiwan’s much-admired NHI will enjoy greater and greater success in the years to come.

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來自中華民國開發性製藥研究協會的消息

為全國藥品政策會議做準備 ͡‫غ‬Ăέ៉૟Г‫ޘ‬ᓝҖБ઼ᘽ‫߆ݡ‬ඉົᛉĞഅ‫ٺ‬3119ѐ ࢵѨᓝҖğĂࠎ߆‫ࣶءع‬ăᘽຽ΃ܑăᗁࠧˠࣶᄃጯ۰ ૞छ೩ֻຍ֍Ϲ߹۞፟ົĂВТଣ੅ྍтң౹ౄ˘࣎ਕ ૉౄ჊ٙѣ࠹ᙯЊ̄۞ᘽ‫߆ݡ‬ඉᒖဩĄ Ϥ࡚ăለă͟րࣧฟ൴ᘽᇄٙ௡ј۞̚රϔ઼ฟ൴ّᄦᘽࡁտ ‫ົם‬ĞJSQNBğĂ೩΍˛ี‫ޙ‬ᛉдᘽ߆ົᛉ੅ኢ۞ᛉᗟĄ఺ֱ ᛉᗟ̚Ă݈αีᄃࢴ‫ݡ‬ᘽ‫ۏ‬გநཌѣᙯĂ‫ีˬ΁׎‬ᄃ̚δઉ૵ܲ ᐍཌຽચѣᙯĂ఺‫࣎׌‬ಏҜౌᔴᛳ‫ٺ‬኎Ϡ჊ӀొĄͽ˭ߏ఺ֱᛉ ᗟ۞ໄࢋĈ 一，增進新藥審查的時效，同時確保國人用藥安全且藥品品質 無虞 ! ன̫ᘽ‫ݡ‬ᆶߤ඀Ԕᄃкᇴ‫઼΁׎‬छ࠹ͧ෱ॡధкĄᘽड़р ۞າᘽซˢέ៉ξಞ۞ॡมЯѩ‫ޢؼ‬Ąࠎ˞ֹᆶߤ඀Ԕ Հѣड़தĂJ S Q N B‫଺៰ײ‬ୢέ៉፾ѣ̝‫ڱ‬ఢࢋՐĂԼଳ ઼ᅫ఼ϡ۞ఢቑᄃᇾ໤ĄѩγĂࡶਕ૟ᆶߤ෱೩੼ٙᆧ ΐ۞ќˢĂͽ૞ഠ૞ϡ͞ёདኛՀк૞ຽˠࣶ‫ם‬ӄΐిᆶ ߤॡ඀Ă֭೩ֻ΁ࣇՀк࠹ᙯିֈ੊ቚͽ೩‫چ‬૞ຽਕ˧Ă JSQNBົࣶ̳Φࣧ‫˯݋‬ТຍЪநአፋొЊᆶߤќ෱ૄ໤Ą ‫׎‬ϫᇾᑕྍߏдˬѺ࣎͟ፌ͇̰Ԇјٙѣᆶߤ߹඀Ă८൴ ᘽ‫ݡ‬ధΞᙋĄ 二，允許單一藥品可登記多重生產鏈，以減少缺藥或斷藥的風 險 ! ϫ݈ĂUGEBధΞᙋ่Ξ൳੃ಏ˘ϠயᙥĂӈՏ˘ᄦౄล ่̯߱ధಏ˘ᄦౄᇄĄҭߏࡶዎ࿃͇խăͫᛋٕ‫טࢨ΁׎‬ யਕ۞ְІĂ఺ᇹ۞߆ඉົ၆ֻఱ۞ᘦ‫ؠ‬ౄјࢲᐍĄૄ‫ٺ‬ ࢲᐍგநࣧ‫݋‬Ă઼࡚ăΐो̂ă፫߷ăለ༖ᄃ༄̀ඈАซ ઼छ̈́າΐ‫؂‬ă‫ݑ‬ᔹඈߙֱዐ‫઼ܕ‬छĂ̏གྷд‫ڱ‬ఢٕ၁ચ ᆸࢬ̯ధಏ˘ᘽ‫ݡ‬Ξ൳੃кࢦϠயᙥĄJSQNB‫ޙ‬ᛉέ៉ଳ ৼТᇹү‫ڱ‬Ăࠎᘽ‫ݡ‬ᄦౄăֻఱ೩ֻՀкᇅّĄ 三，藉由專利連結與資料專屬權加強智慧財產權的保護 !

J S Q N B‫ܕ‬ഇ۞አߤඕ‫޽ڍ‬΍ĂҌ͌ѣ̱˩̣ีጯЩᘽд ࣧᇄய‫ݡ‬૞Ӏ‫ז‬ഇ̝݈ಶజ८൴ᘽ‫ݡ‬ధΞᙋĂ‫ֱߙ̚׎‬ᘽ ‫ࠤݡ‬Ҍజ८ࣞઉܲᆊĄϫ݈૞ӀᝋٙѣˠΪਕд൴ன΁ᇄ ‫ܬ‬ᝋய‫̏ݡ‬གྷ˯ξ̝‫ޢ‬ଳ‫ޠڱפ‬ҖજĂ࠹ᙯ९Іᆶநٙ෱ ॡม˵‫ܜ̴ޝ‬Ą˘І૞Ӏ९ІᆶநπӮ෱ॡ෹࿅˛࣎͡Ă ‫˫̚׎‬ѣ37Ʀ۞९Іᆶநഇม෹࿅˘ѐĄѩγĂᘽ‫ݡ‬ംੑ ᝋ஝ঘࢬШ͍ࠎኑᗔĂֹ଀ᆶந඀ԔՀΐ෱ॡĂ෹࿅πӮ ࣃĂ‫ܐ‬ᆶҿՙ˫଀ኛՐ˯෦Ą‫ޞ‬९ІᆶநඕՁĂࣧฟ൴ᘽ ᇄಶზ౼෦Ă˵ົዎ‫צ‬ໂ̂۞થຽຫεĄ ! ߉Җ૞Ӏాඕ‫ޘט‬âтд઼࡚ඈ‫΁׎‬ధк઼छ۞ү‫ڱ‬Ă ၆ٙѣາᘽᄃጯЩᘽ۞Ϧኛ९ІౌซҖ૞ӀᆶߤĂѣӄ‫ٺ‬ ᜕ܲ૞ӀٙѣᝋˠĄѩγĂጯЩᘽϦኛᇄυืᓏ‫ࣧځ‬ᇄᘽ ‫ݡ‬૞Ӏᝋ̏൑ड़Ă˵ᑕ఼ۢࣧฟ൴ᘽᇄѣᙯጯЩᘽ̝Ϧ ኛĄੵ‫ܧ‬ѩᜪᇋᒔ଀ྋՙĂ൑ኢߏӎ౅࿅෦఩Ăᆶߤ඀Ԕ ౌυืᇶઃĄ !! έ៉߆‫ع‬അགྷܑϯѣຍᙸ൴ण૞Ӏాඕ‫ޘט‬Ăҭߏ఺࣎ត ࢭυืѣҖ߆ăϲ‫۞ܝొع߆࣎׌ڱ‬ЪүĄJSQNB‫ޙ‬ᛉĂ ‫آ‬д3126ѐѐ‫݈غ‬Ԇј࠹ᙯԼࢭՎូĂ‫̚׎‬Β߁૞Ӏྤफ़ ऱ۞‫ޙ‬ϲăᑢ‫֭ؠ‬൴οາఢ‫ؠ‬Ăͽ̈́૟ਨ९ਖ਼Ϲϲ‫ੰڱ‬ᆶ ᛉඈĄ

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想了解更多資訊，請透過以下方式與我們聯絡： 中華民國開發性製藥研究協會 台北市南京東路五段188號9樓之八

www.irpmn.org.tw

四，落實醫藥分業 ! έ៉ᗁੰ۞ᗁरజࢨ‫ט‬Ϊਕଂᗁੰ఍͞ะ̚Ᏼፄฟϲ఍͞ ۞‫ีݡ‬Ăҭᗁੰ఍͞ะ‫۞ีݡ‬ᏴፄֶፂĂ͹ࢋߏྍᘽ‫ݡ‬ග ᗁੰ૲ֽ۞ӀማкဿĄ̂кᇴᗁੰ˵ଳ‫פ‬Ķซ˘ኻ˘ķү ‫ڱ‬Ăࢨ‫ט‬ᗁੰ఍͞ะ۞ีϫᇴĂٕ۰ߏϡТᙷᘽ‫˘ࠎ̶ݡ‬ ௡͞ёֽͧᆊͽᆧΐӀማĄѩү‫ڱ‬ΞਕП̈́ঽˠᒔ଀౵ዋ Ъᘽ‫ڼݡ‬ᒚ۞ᝋৈĄ !

JSQNB‫ޙ‬ኛ߆‫ع‬న‫୻ؠ‬຾ࣧ‫݋‬Ă݇ੵᒔӀજ፟၆ᘽ‫ݡ‬አ጗ ֹϡ࿅඀۞ᇆᜩĂአፋᗁᒚග;Ăֹᗁੰ̙ืֶያᘽ‫ݡ‬Ӏ ማྃ෭ᗁᒚ‫ڇ‬ચĂͷᗁੰ‫ܝ‬෧఍͞ᑕૻ‫ט‬ᛖ΍ĂϤۤડᘽ Ԋአ጗Ąᔵ൒Бࢬར၁఺ֱԼࢭົᅮࢋॡมĂ̪υืన‫ؠ‬ ‫ځ‬ቁϫᇾᄃॡมܑĄ߆‫˵ع‬ᑕྍΐૻ̳В໛఼ᄃିֈĂឰ ̂ிᄮᙊᗁᘽ̶ຽ۞ᐹᕇĄ 五，繼續試辦藥品支出目標制，並對特定種類藥品增加R-zone的 保護 ! ᘽ‫͚ݡ‬΍ϫᇾ‫ט‬ĞE F UğĂϺӈϤຽ֖ࠧྃ࿰న۞ઉܲ ᘽᆊ͚΍ѐ‫ޘ‬ϫᇾᄃྵ੼۞၁ᅫ͚΍̝มम෼Ă̏д࿅Ν ‫׌‬ѐྏҖĄѩ‫ޘט‬ᑕྍ޺ᜈ߉ҖĂЯࠎιᆧΐ˞ᘽ‫ֻݡ‬ග ྻүវր۞Ξ࿰ീّĂֹຽࠧᄃઉܲཌౌՀਕѣड़ఢထֻ ᅮĄ၆‫ٺ‬ঽˠᄃᗁरֽᄲĂ‫݋‬ቁܲ˞ᘽ‫ֻݡ‬ගᘦ‫ؠ‬ĂᔖҺ གྷ૱ೱᘽĄ ! ҭߏĂϫ݈EFU۞˘࣎৿ౝĂߏ4B̂ᙷᘽ‫ݡ‬Ğ૞Ӏ̏གྷ࿅ ഇ̣ѐͽ˯Ăᒔ଀ઉܲග;Ϗ྿˩̣ѐćͽ̈́ጾѣઉܲཌ ᄮ‫̼ؠ‬Ъ‫ۏ‬૞Ӏ̝γ૞Ӏ۞ᘽ‫ݡ‬ğٙዎ࿃۞ӧᙱ఍ဩĄ4B ᘽ‫̏ݡ‬གྷ՟ѣЪநᘽᆊડมĞS.{pofğ۞ܲᅪĂ˵ಶߏઉ ܲග;ᆊॾᄃ၁ᅫϹ‫ٽ‬јώ̝ม26Ʀ۞Ξତ‫צ‬ᆊमĄ఺ֹ ଀఺ᙷᘽ‫ݡ‬ዎ‫ࡃ಼̂צ‬ᆊĄJ S Q N BᄮࠎĂᑕྍޭೇߙֱ ᘽ‫۞ݡ‬S.{pofĂ͍‫ߏ׎‬Ϡ‫ۏ‬ᄦ጗ĂЯࠎιࣇ఼૱ѣᄦ඀૞ ӀĂ҃‫̼ܧ‬Ъ‫ۏ‬૞ӀĄ 六，加速新藥核價審核程序，使新藥核價與世界接軌 ! ! າᘽ८ᆊᆶ८඀Ԕ͉‫ܜ‬ĞπӮࡗ526࣎͟ፌ͇ğĂᆶ८८ࣞ தҲĞາᘽ੅ኢ९८ࣞத่53ƦğĂͽ̈́‫ܧ‬૱Ҳ۞າᘽ८ ᆊĞ˩઼̚Ҝᆊ̝64/5ƦğĂֹέ៉۞ঽˠᄃᗁरӀϡາ ᘽ‫ڼ‬ᒚ۞ଐԛໂ‫ޞ‬ԼචĄВТᑢ‫ົؠ‬ᛉ۞੅ኢड़தυื̂ ಼೩‫چ‬Ăͽᒺൺॡ඀Ăາᘽ८ᆊ˵‫آ‬೩‫چ‬Ҍ˩઼̚Ҝᆊ̝ 81ƦҌ91ƦĄੵѩ̝γĂϡຍдረᐽ౹າᘽ‫۞ݡ‬ΐᆊ፟‫ט‬ ื൴೭၁ᅫड़‫ڍ‬Ąາᘽᆶߤ੅ኢ࿅඀̚Ăঽଈ΃ܑ˵ᑕྍ ѣ൴ᓏ۩มĄ 七，實施差額負擔之前，應有完備的配套措施 ! मᗝ࢑ፉߏ‫ם‬ӄଠ‫ט‬ઉܲјώ۞౉शĂ఺ᇹ˘ֽઉܲᄃঽ ˠΞͽ̶Ҿ࢑ፉ˘ొЊ۞෱ϡĄҭߏमᗝ࢑ፉ۞јΑ߉ ҖĂѣᏥ‫߆ֱߙٺ‬ඉ۞ԼࢭĄ‫ٸߏ˘̝̚׎‬ᆵனҖ၆ᘽ‫ݡ‬ ᇃӘ۞ࢨ‫ט‬Ăֹϔிѣ፟ົ၆‫ٺ‬প‫ݡؠ‬ൕѣᔿ‫ځ‬О෪Ąѩ γĂઉܲཌᑕྍࢨ‫ט‬ᗁੰుѐࢋՐᘽᆊमĂд఍͞ะ‫ีݡ‬ ˯ଳ‫פ‬Ķซ˘ኻ˘ķү‫ڱ‬Ă֭ͽhspvqjoh͞ёซҖ̶௡ͧ ᆊĄࡶ൑఺ֱԼࢭĂΞਕౄјТ̶௡ᙷҾᘽ‫̚ݡ‬൑ࣧᇄᘽ ‫ݡ‬Ξͽฟϲ۞‫ڶې‬Ăಉεमᗝ࢑ፉ۞࡚ຍĄ !

JSQNBഇ‫ޞ‬Б઼ᘽ‫߆ݡ‬ඉົᛉ၆˯ࢗᛉᗟ۞੅ኢਕѣ၁ኳ ј‫ڍ‬Ă˵எ‫߆ܫ‬ඉԼࢭࡶਕயϠड़‫ڍ‬Ăέ៉ֳ᜖͵ࠧ۞Б ϔઉܲдϏֽೀѐ૟ՀΐјΑĄ

For more information, please contact: International Research-based Pharmaceutical Manufacturers Association (IRPMA) 9F-8, 188 Nanjing E. Rd., Sec. 5, Taipei 10571, Taiwan Tel: +886-2-2767-5661 Fax: +886-2-2746-8575 5"*8"/ #64*/&44 501*$4 t %&$&.#&3

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AMCHAM EVENT

Boogieing at the American Ball

T

he 2014 American Ball – held on Saturday, November 8 – proved once again that members of AmCham Taipei are not only good at doing business, they also know how to party. In line with the evening’s theme of Bravo Broadway!, the 300-some attendees were transported to New York’s Theatre District. The ballroom of the Grand Hyatt Taipei glittered with reminders of the “Great White Way,” including posters of some of the great musicals that have been performed there. As a final touch, hot dogs vending carts were rolled in during the evening, helping to recreate the atmosphere of midtown Manhattan.

Entertainment was provided by the VMJ dance troupe, with performances inspired by the Wizard of Oz, Wicked, Phantom of the Opera, and other great Broadway shows. And the room rocked until after midnight as partygoers danced to the energetic beat from live band Adoga and music spun by DJ Sona.

A special treat was the husband-and-wife team of emcees, Richard Lin and Cindy Shueh Lin – two successful business executives (and both former AmCham Board members) who wowed the audience with their singing ability.

The ball was organized jointly by AmCham Taipei and the American Institute in Taiwan (AIT), and both AmCham Chairman Thomas Fann and AIT Director Christopher Marut made welcoming remarks.

The evening began with a welcome drink of Jacob’s Creek Sparkling Chardonnay Pinot Noir, after which attendees dined on a delectable and elegant five-course meal. The gourmet menu designed by the Grand Hyatt

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chefs featured seafood terrine with clams and lemongrass (“The King and I”), truffle chicken consommé with mushroom raviolis and seared coral mushroom (“Mamma Mia”), banana passion-fruit sherbet (“Carmen”), a main course of oven-roasted U.S. beef tenderloin (“Chicago”), a dessert of iced mango lemongrass parfait (“Miss Saigon”), and an assortment of macarons and witches’ fingers (“Wicked”).

The dinner was accompanied by Jacob’s Creek Shiraz Cabernet, Jacob’s Creek Chardonnay, and The Glenlivet 12-year-old Single Malt Scotch Whisky.

Available at the bar were cocktails made with Beefeater, Absolut Vodka, Malibu, Kahlua, and Dita.

The event was made possible through the generosity of a number of sponsoring companies. These included Grand Prix Sponsor United Airlines; Wine & Liquor Sponsor Pernod Ricard; Gold Sponsors Audi Taiwan, HSBC Bank, and Grand Hyatt Taipei; and Silver Sponsors Air Products, BlackRock, Corning Display Technologies, McDonald’s Restaurants (Taiwan), New Deantronics, and Philip Morris International.

The raffle grand prize from United Airlines was two round-trip business-class tickets between Taipei and San Francisco. Other gift sponsors were the Macau Government Tourist Office, 3M Taiwan, Everrich Dutyfree, Grand Hyatt Taipei, Hotel One Taichung, Howard Plaza Taipei, the Landis Taipei, Le Meridien Taipei, Mandarin Oriental Taipei, Palais de Chine Hotel, Procter & Gamble, Promisedland Resort, the Regent Taipei, Shangri-La’s Far Eastern Plaza Hotel, the Sherwood Taipei, Silks Place Tainan, Taipei Marriott Hotel, W Taipei, and the Westin Taipei.

AMCHAM EVENT

GRAND PRIZE SPONSOR

WINE & LIQUOR SPONSOR

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S E E I N G TA I W A N

Treat Yourself to a Soak in Taiwan’s Tranquil Hot Springs

T

aiwan’s stunning landscape is the result of constant geological activity over millions of years. Because of the continuing collision between the Philippine Sea Plate and the Asian Continental Plate, the island’s already impressive mountains are rising approximately four centimeters per year. Like other places located where tectonic plates push against one another, Taiwan occasionally suffers earthquakes. However, being on the “Pacific Ring of Fire” also brings one major benefit – an abundance of geothermal springs in which visitors can soak away stress.

Mineral-enriched waters warmed by 交 通 部 觀 光 局 廣 告 55# "%

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the Earth’s natural heat percolate up to the surface at more than 100 locations around Taiwan. The precise total varies from season to season. Dry weather may cause an old spring to dry up, just as a landslide may reveal a new one.

Luxurious hotels have been built at some springs, allowing devotees to stay overnight and soak in the comfort of private suites. Others, by contrast, remain entirely undeveloped, and can only be reached by those willing to hike across rugged terrain. Every region in Taiwan is blessed with hot springs, so even if family or business commitments tie you to one city or county, adding a hot-spring experience to your itinerary

should not be difficult to arrange.

From the international tourist’s perspective, Taiwan’s hot springs have certain advantages over their Japanese counterparts. Whereas segregation by gender and nudity are required at the majority of Japan’s famous onsen, swimsuits are worn at the majority of public hot-spring pools in Taiwan.

Families can splash and soak together in these places, many of which are open-air and set against a backdrop of mountains and forests.

As in Japan, each hot-spring guest is expected to wash his or her body thoroughly before getting in the water. In many springs, the temperature exceeds 45 degrees Celsius, so before getting fully immersed, you should gradually acclimatize your body to the heat by scooping water and pouring it over yourself, then slowly lowering yourself in, one limb at a time. Many first-timers are surprised when told that after indulging in a hot spring, they should not shower before dressing, but rather let their skin benefit from the trace quantities of sulfur, sodium carbonate, and other minerals in the water.

Luxuriating in a hot spring isn’t the only fun thing to do in wintertime.

Because crisp, dry weather is the norm, November to March also happens to be prime hiking season in Taiwan’s mountains. The highest of these, Jade Mountain (3,952 meters or 12,966 feet), happens to be Northeast Asia’s tallest peak.

S E E I N G TA I W A N

Hiking is an activity that naturally meshes with hot springs, and visitors staying in Xinbeitou or Wulai – both of which are less than an hour from downtown Taipei – have an abundance of choices when it comes to trails. And for those heading to Guanziling in Tainan, there’s no better way of working up a pre-soak sweat than marching to the top of Mount Dadong, 1,241 meters above sea level.

During the Japanese colonial period, which lasted from 1895 to 1945, Guanziling’s turbid waters gained a reputation for being able to relieve fatigue and beautify skin.

Guanziling also happens to be where, on October 15 this year, celebrities, government officials, and members of the general public gathered to mark the passage of 300 years since the area’s hot springs were first mentioned in a written document. Between November 8 and the end of the year, Guanziling is hosting a series of anniversaryrelated activities, including the tasting and sale of local fruit and coffee (grown in nearby Dongshan), feasts centered on barrel-broiled chicken (a renowned local specialty), plus attractive hotspring-and-lodging packages.

These events are part of the 2014 Taiwan Hot Spring Fine-Cuisine Carnival (running from October 3, 2014 to January 30, 2015), which celebrates the pairing of top-notch food with the opportunity to pamper oneself in a natural spa. Bathers typically do not eat much before enjoying a hot spring, and so usually emerge with healthy appetites.

Other local events falling under the umbrella of the island-wide carnival are the New Taipei Wulai Hot Springs and Food Festival, the Nantou Hot Springs and Flowers Festival, and the Sichongxi Hot Springs Tourism Activity.

Wulai District covers more land than Taipei City, but because so much of it is mountainous, it has a mere 6,100 residents. A third of them are Atayal indigenous people, and for many tourists the area’s Austronesian culture and cuisine are a major draw.

Those on a budget will enjoy the free-admission public hot springs beside

the azure waters of the Nanshi River.

They are within walking distance of the main village, its restaurants and bus stop. If you are able to explore the district’s more remote corners, you will also discover excellent spots for birdwatching and butterfly appreciation.

Nantou is Taiwan’s only landlocked county, and should feature on the itinerary of all who visit the island for its unspoiled highland scenery, rich aboriginal culture, and charming leisure farms. Backed by the Nantou County Government and running from October 25 to February 28 next year, this segment of the carnival is being celebrated in two locations: Dongpu and the Beigang River Springs District.

Dongpu makes for an excellent overnight stop before exploring the New Central Cross-Island Highway, one of Taiwan’s most scenic high-altitude roads. The Beigang River Springs District is somewhat more accessible, being less than half an hour’s drive from the eastern end of Freeway 6.

Another good hot-springs location, Sichongxi, is located in Taiwan’s deep south, and is sometimes visited by those on their way to or from Kenting National Park. Like Guanziling, it was a renowned hot-springs resort during the Japanese colonial era, but it has never grown larger than a village.

Located on Road 199 – along which you may well see more cyclists and Formosan rock macaques (Taiwan’s only species of monkey) than cars – it is

an excellent base for exploring one of Taiwan’s most pristine regions.

Several of the hot springs joining the festival can be reached by Taiwan Tourist Shuttle Travel Service (www. taiwantrip.com.tw) or Taiwan Tour (www.taiwantourbus.com.tw), two bus systems tailored to meet the needs of visitors. Schedules, plus details of routes and fares, can be found on the websites.

For more information, visit the festival’s official website (www.taiwanhotspring.net; currently in Chinese only) or the ROC Tourism Bureau’s website (www.taiwan.net.tw). Alternatively, drop by any of the visitor information centers at each airport and major railway stations.

An excellent resource for those needing up-to-the-minute information is the tourism hotline at 0800-011-765. The hotline – with English, Japanese, and Chinese speakers answering the phones – is free for calls within Taiwan.

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