Taiwan Business Topics December 2013

www.amcham.com.tw THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

TAIWAN BUSINESS TOPICS December 2013 | Vol. 43 | Issue 12 中華郵政北台字第 號執照登記為雜誌交寄 5000 12_2013_Cover.indd 1

Taiwan Business

Topics

Automotive Industry:

CHECKING THE PERFORMANCE 台灣汽車產業總體檢 Taiwan White Paper mid-point assessment (p. 12) In Electric Vehicles, a shift to commercial applications (p. 25) The U.S. visa waiver, one year later (p. 30)

December 2013 | Vol. 43 | Issue 12

NT$150

ISSUE SPONSOR

Published by the American Chamber Of Commerce In Taipei

2013/12/9 4:35:23 PM

CONTENTS NEWS AND VIEWS

4 Editorial dECEmb E r 2 0 1 3 vOlumE 43, NumbEr 12 一○二年十二月號

An Effective Envoy

發行人

Andrea Wu

吳王小珍

Editor-in-Chief

By Jane Rickards

9 Commentary

Former Vice President Vincent Siew’s speech on TPP at the Brookings Institution.

總編輯

Don Shapiro

沙蕩 美術主任 / 後製統籌

Art Director/ Production Coordinator

Katia Chen

White Paper Mid-Point Assessment; Grappling with New Laws and Regulations

蕭萬長訪美 不辱使命

5 Taiwan Briefs Publisher

12 Issues

白皮書期中評估；設法因應新法 規

By Don Shapiro

陳國梅

Manager, Publications Sales & Marketing

廣告行銷經理

Caroline Lee

李佳紋

Translation

翻譯

Yichun Chen, Frank Lin, Sonia Tsai 陳宜君, 林怡平, 蔡函岑

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 名稱：台北市美國商會工商雜誌 發行所：台北市美國商會 臺北市10596民生東路三段129號七樓706室 電話：2718-8226 傳真：2718-8182 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. © Copyright 2013 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. 登記字號：台誌第一零九六九號 印刷所：帆美印刷股份有限公司 經銷商：台灣英文雜誌社 台北市108台北市萬華區長沙街二段66號 發行日期：中華民國一○二年十二月

COVER SECTION

17 Taiwan’s Automotive Industry: Checking the Performance

台灣汽車產業總體檢 Growth in the automotive sector continues to be sluggish, affected by overall economic conditions and depressed consumer confidence.

Among the bright spots are brisk sales in the luxury segment, a pickup in exports to such areas as the Middle East, and increasing demand for sports utility vehicles (SUVs). Demographic factors are expected to play a key role in shaping the future of the local car market.

By Jane Rickards

中華郵政北台字第5000號執照登記為雜誌交寄

OFFICERS: Acting Chairman/ Thomas Fann Vice Chairmen/ Bill Wiseman / William J. Farrell Treasurer: Sean Chao Secretary: Fupei Wang

U.S. RELATIONS

30 Large Taiwan Delegation at U.S. Investment Summit

2012-2013 Governors: Richard Chang, Sean Chao, Michael Chu, Revital Golan, Louis Ruggiere, Scott Meikle, Lee Wood, Ken Wu.

2013 Supervisors: Susan Chang, Cosmas Lu, Gordon Stewart, Carl Wegner, Julie Yang.

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/ John Tsai; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou; Human Resources/ Richard Lin, Seraphim Mar; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Dan Ting, Lee Wood; 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, Douglas Klein, Ajit Nayak; 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, Achim v. Hake, Pauline Leung.

Taiwan is aiming at the lower-profile market for such vehicles as buses, delivery vans, forklifts, and garbage trucks.

By Timothy Ferry

ISSN 1818-1961

2013-2014 Governors: Thomas Fann, William Farrell, Ajit Nayak, Neal Stovicek, Stephen Tan, Fupei Wang, Bill Wiseman.

25 In Electric Vehicles, a Shift to Commercial Applications

By Don Shapiro

TAIWAN BUSINESS

32 U.S. Visa Waiver, One Year Later The statistical evidence is still inconclusive, but the travel industry sees good potential for promoting more visits to the United States.

By Jens Kastner

BEHIND THE NEWS

35 Taiwan Enters 4G Era with a Bidding Frenzy Six finalists, including two new entrants to the telecom sector, came away with licenses for 4G spectrum.

By Philip Liu

2

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d e c e mbe r 2013 • Volume 43 n umbe r 1 2

iSSuE SPONSOr

FINANCE

39 Dwindling Numbers of Foreign Life Insurers

For the remaining companies, however, a difference in business models makes the market continue to be attractive.

By Don Shapiro

INTERVIEW

Ford Lio Ho Motor Company is a joint venture that was established between the Ford Motor Company and the Lio Ho Group Taiwan in 1972. Entering its 41st year in Taiwan, the company continues to focus

42 A Conversation with State Street Bank’s Jane Hwang

on creating a strong business that builds great products and contributes to a better world. We strive to introduce a competitive product portfolio

By Don Shapiro

through affordable technology and accessible ingenuity.

REFERENCE

With about 1,300 employees, Ford Lio Ho prides ourselves on our strong

45 An index to TOPICS articles in 2013.

commitment to our environment and communities. In 2010, we are

AMCHAM EVENTS

lowering emission 15% by 2015 compared to a 2009 baseline. We and

among the first pioneers in the automobile industry to join the “Voluntary Action on CO2 Emission Reduction” – an initiative with commitment to our suppliers also work together to comply with ISO 14001 standards, ensuring a green manufacturing process. As part of our global vision to create a better world through helping our communities, we introduced the “Ford Driving Skills for Life” program in 2009. Since then we have continued to help people become safer and greener drivers. Every year in the first week of September, Ford Lio Ho joins Ford employees from all around the world in a Global Week of Caring campaign, serving our communities by helping those in need.

Ford is committed to Taiwan and will continue to explore opportunities to introduce new and exciting products. We will take the lead to address

46 2013 Annual General Meeting

the climate change issue, and provide customers with vehicles that are fully competitive in every way: green, safe, smart, and offering the best in driving quality.

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An Effective Envoy

F

ormer Vice President Vincent Siew’s recent mission to the United States at the head of a prestigious 18-member delegation came at an important juncture in U.S.-Taiwan relations and enabled him to communicate some significant messages to key audiences.

Siew and his traveling companions – who included such influential business leaders as Foxconn chairman Terry Gou, Far Eastern Group chairman Douglas Hsu, Formosa Plastics Group vice chairwoman Susan Wang, and TECO Group chairman Theodore Huang – held meetings in New York, Washington DC, and San Francisco with executives from major American corporations. In the U.S. capital, Siew also met with a number of high-ranking U.S. government officials, including U.S. Trade Representative Michael Froman, and delivered an incisive speech at a public forum sponsored by the prominent think tank, The Brookings Institution.

What made the timing particularly appropriate is that U.S.Taiwan bilateral economic relations this year have begun to return to normal, following more than five years in which the usually routine Trade and Investment Framework Agreement (TIFA) talks were suspended because of disputes over restrictions on the import of U.S. beef products into Taiwan. But welcome as the resumption of the TIFA process may be, it has still been unclear whether the two sides can move on to substantially more ambitious objectives in order to restore the vibrancy that the mutual economic relationship once enjoyed.

The former vice president addressed just that topic in his remarks at Brookings (and reportedly covered much the same ground in his conversations with U.S. officials and executives).

The purpose of the delegation’s visit, Siew told his listeners at the think tank, was to “rekindle a close U.S.-Taiwan partnership by demonstrating [Taiwan’s] devotion to its ties with the

United States and by bringing Taiwan back to Washington’s radar screens.” While noting the strides Taiwan has made in opening the “enormous Chinese market to Taiwanese businesses,” he acknowledged the risk of allowing Taiwan’s trade to become “too imbalanced toward integration with mainland China” – as well as the danger of marginalization if Taiwan is excluded from emerging multilateral trade pacts.

The crux of Siew’s message was to request U.S. assistance in enabling Taiwan to join the Trans-Pacific Partnership (TPP) when the agreement, now still under negotiation, is ready for expansion beyond the current 12 members. He outlined the reasons why Taiwan, as a leading trading economy, deserves inclusion in TPP, and why Taiwan’s membership would be good for the United States, in terms of both business opportunities and strategic interests in the Asia-Pacific.

But most importantly, he sought to dispel doubts about whether Taiwan has the “political will and capabilities to liberalize its economy and meet the high standards of the TPP.” Taiwan has no choice but to move in that direction, he maintained. It needs TPP membership to provide “a strong external stimulus and vehicle to carry out structural reforms” to see its economy through a challenging period of transition. On that score, said Siew, there is common ground between Taiwan’s ruling and opposition parties, enabling a policy consensus to be forged.

AmCham Taipei is pleased that this forthright message could be conveyed to Washington by spokesmen of the stature of Vincent Siew and his delegation members. We hope that it will heard within Taiwan as well by anyone who may doubt the urgency of Taiwan readying itself to promote its candidacy for TPP. (See the full text of the Former Vice President’s speech starting on page 9 of this issue).

蕭萬長訪美 不辱使命 副總統蕭萬長最近率團訪問美國，高規格的18人代 表團成員包括知名企業領袖，他這次在美台關係的 重要時刻執行訪美任務，向美方關鍵人士傳達重大

前

訊息。 蕭萬長所率訪問團的成員包括多位重量級工商界領袖，如 鴻海集團董事長郭台銘、遠東集團董事長徐旭東、台塑集團 副總裁王瑞華和東元集團會長黃茂雄，他們在紐約、華盛頓 和舊金山都會晤了美國大企業高層。在美國首都華府停留期 間，蕭萬長也會見多位美國政府高層官員，如美國貿易代表 傅洛曼，他還在知名智庫布魯金斯研究所舉辦的公開論壇發 表內容一針見血的演說。 蕭萬長這次訪美的時機再恰當不過，因為過去五年多期 間，受到台灣限制美國牛肉產品進口的爭端影響，台美貿易 暨投資架構協定（TIFA）會談暫時中止，美台雙邊經濟關係 今年才開始恢復正常。不過，TIFA會談進程重啟雖然可喜可 賀，目前還不清楚雙方是否能繼續向前邁進，追求實質上更 為遠大的目標，以期雙方經濟關係重現一度擁有的活力。 在布魯金斯研究所的論壇演說時，蕭萬長談的正是這個 主題（，據報導他與美國官員和企業高層談話時也大都如 此）。他告訴聽眾，訪問團此行目的是要「重振美台密切的 4

夥伴關係，一方面展現（台灣）重視與美國的關係，一方面 讓台灣重現華盛頓的雷達幕上」。他指出台灣致力「為台商 打開龐大的中國市場」，但也承認若讓台灣的貿易「因與中 國大陸整合而過度失衡」，會有風險；此外，台灣若遭新興 的多邊貿易協定排除在外，也會被邊緣化的危險。 蕭萬長所傳達訊息關鍵，是請美國提供協助在目前仍談判 中的跨太平洋夥伴協定（T P P）由目前的12個成員準備再 擴大時，讓台灣能夠加入。他就商機和亞太地區戰略利益兩 方面的考量來說明台灣作為一重要的貿易經濟體，應該納入 TPP。同時，台灣的加入對美國也有好處。 不過，最重要的是，他力求化解有關台灣是否有「政治意 願與能力促進經濟自由化以達成TPP高標準」的疑慮。他堅 稱，台灣別無選擇，只能朝此方向邁進，因為台灣需要取得 TPP會員資格，提供「強大的外力刺激，來達成內部結構性 的改革」，讓經濟能渡過具挑戰性的轉型期。蕭萬長表示， 長期以來台灣的朝野政黨已有如此共識。 台北市美國商會欣見此一坦率的訊息能夠傳達給華府，尤 其是透過蕭萬長與訪問團成員等大老代言。台灣迫切需要作 好準備，推動加入TPP，我們希望對此可能心存懷疑的人和 台灣內部都能聽到這個訊息。

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— by jane ri ckards —

economic indicaTors

MACROECONOMICS MOre seesawinG Continuing the recent trend of mixed signals, the economy last month showed signs of faltering in terms of GDP growth, but the outlook appeared more positive with regard to export demand.

In late October, the government’s Directorate General of Budget, Accounting and Statistics announced that GDP has grown in the third quarter by 1.58%, a far cry from the August prediction of 2.47%. Financial institutions went on to cut their forecasts for the year as a whole. The Taiwan Institute of Economic Research in early November revised its forecast for the year to 1.93%, beneath the psychological 2% mark, citing a worse-thanexpected performance from the main buyers of Taiwan’s electronics exports in China, Europe, and the United States.

Singapore’s DBS Bank went on to cut its estimate of Taiwan’s GDP growth for this year from an earlier 2.6% to 2%, noting that exports had slowed from growth of 5.1% in the first two quarters of this year to 1.7% in the last quarter, a situation it blamed on a slowdown in China as it undergoes structural adjust-

Taiwan sTock exchange index & value

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

8500

135

8250

120

8000

105

7750

90

7500

75

7250

60

7000

45

6750

30

6500

15

6250

0

October data source: twse

Unit: nt$ billion

Unit: US$ billion Current Account Balance (2013 Q3) Foreign Trade Balance (Oct) Foreign Trade Balance (Jan-Oct) New Export Orders (Oct) Foreign Exchange Reserves (end Oct) Unemployment (Oct) Discount Rate (Nov) Economic Growth Rate 2013 (Q2)p Annual Change in Industrial Output (Sept)p Annual Change in Industrial Output (Jan-Sept)p Annual Change in Consumer Price Index (Sept) Annual Change in Consumer Price Index (Jan-Sept) note: p=preliminary

ments from dependence on exports to building up its own consumer base. Then in late November the Australia and New Zealand Banking Group cut its 2013 forecast from the 2.36% announced in June to 2.18%, also citing poor export performance.

But here’s the rub: export orders, an indication of shipments to come in the next few months, came to US$39.59 billion in October, an increase of 3.2% from a year ago. Export orders have now climbed for four straight months, a sign that consumer demand for tech products, such as smart phones and tablets, have been picking up as Christmas approaches. Orders from China, which with Hong Kong receives around 40% of Taiwan’s exports, rose 3.2% in October on a year earlier, while exports to the United States and Europe were up by 9% and 7.6% respectively.

Despite this good news, actual exports for October fell 1.5% from last year’s mark to amount to US$26.12 billion. Some analysts have suggested that production outages at major Taiwanese oil refineries were the culprit behind falling exports, which in turn has affected manufacturers’ confidence. Unemployment in October remained at 4.24%, the same as a month earlier.

14.91 3.5 28.2 39.59 416

Year Earlier 12.30 3.25 23.2 38.4 399

4.24% 1.875% 2.49% 1.06% 0.47% 0.83% 0.88%

4.33% 1.875% -0.12% 2.44% -1.51% 2.95% 1.84%

sources: moea, dG bas, cbc, boFt

CROSS-STRAIT CHina annOUnCes eCOnOMiC refOrMs China in mid-November unveiled its boldest set of economic and social reforms in nearly three decades, relaxing its one-child policy, further freeing up markets, and abolishing a much-criticized system of force- labor camps, according to international media reports.

The Chinese Communist Party also announced an intention to work towards the establishment of an independent judiciary, with courts to be “appropriately” separated from local government units and judges given more power.

Another aspect of the announced reform is that the pricing of fuel, electricity, and other key resources – now a source of major distortions – would be mainly determined by the markets in the future.

In addition, Beijing pledged to speed up efforts at financial liberalization.

However, the timetable for implementation of the reforms – said to be the most significant since those introduced

by Deng Xiaoping in the late 1970s and early 1980s – remained unclear. Given the vast amount of cross-Strait trade and investment, Taiwan’s businesses, government officials, and economic analysts

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will be closely monitoring how the reforms are carried out.

DOMESTIC COOKinG OiL sCare Has PUbLiC steaMinG Taiwan is experiencing an escalating food scare that started in mid-October when the Chang Chi Foodstuff Factory Co. it was found to be mixing cottonseed oil and other cheap ingredients in what it was labeling “pure” grape seed and olive oil product. In some cases, the coloring agent copper chlorophyllin was used to make the substitutes look more like olive oil. Other suppliers later found to be misrepresenting the products they were selling were the Formosa Oilseed Processing Co. and Wei Chuan Foods Corp., while Flavor Full Foods Inc., the largest sesame oil producer in Taiwan, was found to have adulterated its products with cottonseed oil as far back as 2009. Copper chlorophyllin is banned from use in edible oil products and is believed to cause liver problems if consumed over a long period of time.

By early November, Ting Hsin Oil & Fat Industrial Co., the parent company of Wei Chuan Foods Corp., was ordered to recall 21 edible oil products, and the Formosa Oilseed Processing Co. was fined NT$15 million and ordered to pull its products off the shelves. The chairmen of Wei Chuan and Chang Chi Foodstuff were both questioned by prosecutors and released on bail of NT$10 million and NT$12 million respectively.

The chairman of Flavor Full Foods was also indicted. The scandal even spread to China, with edible oil distributors in Fujian Province filing a cross-border lawsuit against Chiang Chi Foodstuff, and to the United States, where Taiwanese- and Chinese-American consumers were becoming wary of buying food products imported from Taiwan. The Taipei Times reported that a brand of ramen noodles called Wu Mu, manufac-

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tured by Sing-Lin Foods Corp., tested positive for sodium copper chlorophyllin and was removed from the shelves of two of New York’s most popular Asian specialty stores. The government has stepped up food inspections and sent amendments of the Act Governing Food Sanitation to the Legislative Yuan. The revisions would impose much stiffer penalties for violations of the legislation.

saw the change as President Ma’s way of insulating himself from being unseated from his current position as KMT chairman should the party perform poorly in next year’s municipal elections.

Because of public dissatisfaction with government performance and the ailing economy, political analysts and the local media are predicting a setback for the ruling party in the 2014 balloting.

new birD fLU strain iDentifieD

CHianG Great-GranDsOn inDiCteD OVer tas tHreat

A strain of bird flu that scientists thought could not infect humans showed up in a Taiwanese woman in May, according to a recent report published in the journal Lancet Respiratory Medicine.

The woman from central Taiwan was hospitalized with a lung infection, and recovered after being treated with Tamiflu and antibiotics. One of her throat swabs was sent to Taiwan’s Centers for Disease Control, where experts identified it as the H6N1 bird flu. The strain had been widely circulating among Taiwanese chickens, but previously was not known to have the ability to cross over to humans. The incident served as a reminder of how easily viruses can jump across species.

KMt COnGress PLaGUeD bY PrOtests Hundreds of angry protesters threw shoes at police outside the ruling Kuomintang’s national congress, which meets every two years and decides on the main directions of party policy. The plenum was originally scheduled to be held in Taipei in September, but was postponed and moved to Taichung when it appeared that the meeting would be the target of massive demonstrations. The protesters, who chanted “Ma Ying-jeou step down,” included the jobless, social activists, and supporters of the pro-independence Democratic Progressive Party. Inside the hall, the party amended its charter to state that a KMT member who is elected president automatically becomes party chairman. Some analysts

Andrew Chiang, the great-grandson of one president of the Republic of China (Chiang Kai-shek) and grandson of another (Chiang Ching-kuo), was indicted on charges of disturbing the peace and threatening bodily injury to other people. The Shihlin district court released him on bail of NT$80,000 (US$2,700). The 23-year-old Chiang was accused to using Facebook and email in recent months to threaten harm to the Taipei American School, where he had once been a student, and to its administrators. The younger Chiang, an amateur boxer, said his Facebook postings and email comments had been taken out of context.

I N T E R N AT I O N A L tHe GaMbia seVers DiPLOMatiC ties The tiny West African nation of the Republic of the Gambia unexpectedly cut off ties with Taiwan in mid-November, bringing the island’s small handful of diplomatic allies down to 22, mostly small nations in Latin America and the South Pacific. Beijing rejects Taiwan’s claims of sovereignty, including its right to conduct diplomacy as an independent state, insisting that the island is part of its territory. Due to China’s past efforts to isolate Taiwan diplomatically, the number of countries recognizing Taiwan has fallen by around two-thirds from 68 in 1971.

A key element of Ma’s policy of

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détente with China is a “diplomatic truce,” whereby both sides agree not to entice other countries to switch relations by offering large amounts of economic aid. Therefore, if China had secretly sought to poach Gambia, it would have signaled an end to the truce.

But there are no indications that China was behind Gambia’s decision to sever relations. A Chinese foreign ministry spokesman said Beijing had been caught unawares by the move and only learned about the development from the foreign media. He declined to say whether China intends to set up diplomatic relations with the Gambia.

Late in the month, Taiwan’s foreign ministry offered a likely reason for the deterioration in relations with The Gambia: Taipei’s rejection in January of a request by Gambian president Yahya Jammeh for a lump sum payment of US$10 million in aid for use for unspecified “national security” purposes.

countries maintaining diplomatic Ties with Taiwan Belize Burkina Faso Dominican Republic El Salvador Guatemala Haiti The Holy See (Vatican) Honduras Kiribati Marshall Islands Nauru Nicaragua Palau Panama Paraguay Saint Christopher and Nevis Saint Lucia Saint Vincent and the Grenadines Sao Tome and Principe Solomon Islands Swaziland Tuvalu source: ministry oF ForeiGn aFFairs

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PHILIPPINE-BOUND — Members of the Taiwan Root Medical Peace Corps check medical supplies at Taoyuan International Airport before they are shipped to help victims of Typhoon Haiyan. photo : ap/ yin yin yanG

Taiwan’s ambassador to the Gambia, Samuel Chen, said the request was denied because no definite plan for use of the money was divulged and it did not meet Taiwan’s criteria for giving foreign aid. The Gambia reportedly still owes Taiwan US$10 million for repayment of loans, and Taiwanese lawmakers are asking the government how the money will now be collected in the absence of diplomatic relations.

free traDe aGreeMent siGneD witH sinGaPOre Taiwan in early November signed a free-trade agreement with Singapore, its first with a member of the Association of Southeast Asian Nations (ASEAN) and its second – following the pact concluded with New Zealand earlier this year – with a country maintaining diplomatic relations with China. Beijing previously frowned on attempts by Taiwan to enter into such agreements, but did not interfere in the case of Singapore and New Zealand, showing that the Ma administration’s cross-Strait policies are helping Taiwan to avoid economic isolation.

When promoting the idea of signing an Economic Cooperation Framework Agreement (ECFA) with China a few years ago, the president stressed that it

would ease the way for Taiwan to establish free trade agreements with other countries.

Singapore is Taiwan’s fifth-largest trading partner, with two-way trade amounting to US$28.2 billion a year.

The pact, officially called the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP), was signed in Singapore between de facto ambassadors from the two sides. Taiwanese officials expressed optimism that the agreement will increase opportunities for FTA negotiations with additional countries and perhaps facilitate Taiwan’s candidacy for entrance into the Trans-Pacific Partnership (TPP), a free-trade grouping in which Singapore is a founding member.

taiwan senDs reLief tO tHe PHiLiPPines Taiwan as of late November had provided US$6.4 million in relief to help the Philippines recover from the devastation caused by Typhoon Haiyan, one of the strongest storms on record. The Philippines government said the death toll from Haiyan had risen to over 5,200, with more than 1,600 still missing and over four million displaced. The dona-

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taX issUes HOLD UP PiLOt ZOne PrOPOsaL The Executive Yuan is reconsidering key portions of the draft Free Economic Pilot Zone Act, while still hoping to pass a final version of the bill before the end of December, so that it could be taken up by the Legislative Yuan in its first session of 2014 beginning in March. The sections under review pertain mainly to tax breaks that had been proposed by the Council for Economic Planning and Development (CEPD), the originator of the FEPZ plan. The Ministry of Finance objected to the potential loss of tax revenue, and argued that a free economic zone should rely on the ease of doing business rather than tax incentives to attract investment. Premier Jiang Yi-Huah responded by instructing Vice Premier Mao Chi-kuo and Minister Without Portfolio Schive Chi to reevaluate the approach to taxation that should be incorporated in the law. Besides various tax breaks for corporate investors in the zones, the CEPD draft had proposed halving the personal income tax rate for foreign professionals for their first three years of employment for companies registered in the zones, as a means of making Taiwan more competitive in attracting white-collar talent.

The FEPZs are located at six harbors, the Taoyuan International Airport, and the Pingtung Agricultural Biotechnology Park. The first phase of operation

8

b

r

i

e

f

s

Taiwan's JanuarY To ocTober Trade Figures (Year on Year comParison)

HK/China

Japan

ASEAN

TOTAL

2013

2012

2013

24.3 23.1

2012

2013

2012

2013

Imports

2012

2013

Europe 23 23.9

U.S.

224.5 252.7

26.9

2012

227 250.2

26.9

48

35.8 15.87

2013

46

40.2 15.6

2012

21 27.15

BUSINESS

n

99.2

tions were provided by the Taiwanese government, civic organizations such as the ROC Red Cross Society and the Buddhist Compassion Relief Tzu Chi Foundation, and individual citizens. The Taiwan air force also dispatched cargo planes on 18 flights to the Philippines to distribute 150 tons of aid supplies. Filipinos in affected areas were said to be still in dire need of emergency goods such as tents, drinking water, sleeping bags, and ready-to-eat food.

a

36.6

w

19.8 27.6

i

98.2

a

36.2

t

Exports

has already begun, but the more detailed second phase requires legislative action.

Under the proposed law, companies registered in one of the zones will be able to conduct certain operations elsewhere on the island. Financial institutions, for example, would be able to set up offshore banking or securities units in downtown Taipei to provide asset-management services to foreign companies or wealthy individuals. “In the past, Taiwan has lost both business opportunities and talent because it was unable to compete with Singapore in this kind of private banking,” says George C.H. Lin, whose law firm acted as a consultant to CEPD in drafting the bill. “Under the new concept, Taiwan would be able to retain that financial talent and to develop as a regional asset-management center.”

COOPeratiOn PaCt in MeDiCaL DeViCes The recently established Taiwan Advanced Medical Technology Association (TAMTA), whose charter members are all member companies of AmCham Taipei’s Medical Devices Committee, has entered into a Memorandum of Understanding with the Washington, D.C.-based Advanced Medical Technology Association (ADVAMED) for mutual support and cooperation.

The document was signed by TAMTA

Unit: US$BN Source: BOFT

Chairman James Hsiao and ADVAMED CEO Stephen Ubl. The two organizations agreed to establish working relations and maintain regular communication for the betterment of the medical device industry and advancement of healthcare in Taiwan and the United States. TAMTA expressed its appreciation to AmCham Taipei President Andrea Wu for the Chamber’s assistance during the process of organizing the new Taiwan association.

UniteD tO reOPen san franCisCO rOUte United Airlines in mid-November announced the relaunch of daily nonstop flights between Taipei and San Francisco, starting March 31, 2014.

The carrier’s service between the two cities was discontinued in 2008. UA also announced a special fare set and mileage promotion for this route, with return as low as NT$21,000 and BusinessFirst class NT$76,700 for customers who purchase tickets after November 15 and fly the route before June 20 next year. The fares are subject to taxes and fuel charges of around NT$10,200.

“The new non-stop service will bring more flight options and convenience to Taiwan passengers traveling to San Francisco and beyond,” a news release from United said.

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COMMentarY

strategic implications of taiwan’s Participation in the tPP The text of Former Vice President Vincent Siew’s speech at the Brookings Institution, November 20, 2013

T

he topic of my talk is the Strategic Implications of Taiwan’s Participation in the Trans-Pacific Partnership (or TPP), but my concern is much broader. The fundamental purpose of our visit is to bring Taiwan back to Washington’s attention.

To say that Taiwan has been the staunchest ally of the United States in East Asia is an understatement. For the fundamental values that form the pillars of the United States, including the democratic political institution and liberal economic system, Taiwan embraces, exemplifies, and now is a strong defender of them in its region.

Regrettably, it is now not at all unusual to hear doubts about whether the United States still cherishes a partner and a friend as loyal as Taiwan. And the doubts emerge with good reasons – the United States has now slipped to the third spot with respect to Taiwan’s major trade partners, lagging behind mainland China and Japan. An even more clear but worrisome indicator comes from a recent HSBC report, where it claims the economies of Taiwan and the United States have decoupled. According to the research, before 2008 a 1% increase in U.S. GDP would cause a 6% increase in Taiwan’s exports, but now the linkage is no longer significant. In comparison, a 1% increase in mainland China’s GDP now would cause a 3.8% increase in Taiwan’s exports. For two once closest partners, this recent development is truly unfortunate. But does the United States really care?

My presence here and the people accompanying me here show that Taiwan cares much about the fading linkage with the United States. The delegation is composed of business leaders of top Taiwanese companies, all of which have close business relations with the United States and have business branches across East Asia. The goal of our U.S. trip is simple but significant: to rekindle a close U.S.-Taiwan partnership by demonstrating the Taiwanese society’s devotion to its ties with the United States and by bringing Taiwan back to Washington’s radar screen.

Taiwan is facing daunting economic and strategic challenges, many of which our U.S. friends such as Richard Bush

and Kurt Campbell have appealed for attention and provide advice to both Taipei and Washington. Due to the difficult international political reality facing Taiwan, Taiwan is excluded from any of the major regional trade agreements in Asia and risks being economically marginalized.

It i s not e wor t hy t h at i n 2 010 , Ta iwa n sig ne d a n Economic Cooperation Framework Agreement (or ECFA) with Mainland China. The ECFA opens up the enormous Chinese market to Taiwanese businesses, but without other trade agreements, Taiwan’s external economic relations are highly skewed and imbalanced towards integration with Mainland China but marginalization to the rest of the world. The risk of marginalization undermines people’s confidence on Taiwan’s economic prospects and discourages domestic and foreign direct investments in Taiwan, at a time when Taiwan needs these investments the most to improve its structure of exports and move to higher valueadded goods and services to tackle the challenges of slowed economic growth, stagnated wage increases, and deteriorating income inequality.

W hen advocating the U. S . strateg y of rebalancing towards Asia, former U. S . S ecretar y of State H illar y Clinton acknowledged that Taiwan for decades “has been a faithful, democratic ally of the United States” and remains an “important economic and security partner” in the AsiaPacific. If Washington means what it says, it makes perfect sense to incorporate Taiwan into the Trans-Pacific Partnership Agreement that is the economic pillar of the U.S. rebalancing strategy, for two reasons.

First, Taiwan’s economy is facing a challenging period of transition, where a TPP membership will provide Taiwan with a strong external stimulus and vehicle to carry out structural reforms and rebuild people’s confidence on Taiwan’s economic prospects. Market liberalization and economic confidence will be conducive to investments that are critical to Taiwan’s long-term economic competitiveness.

Second, Taiwan’s geographical location at the center of East Asia and its shared cultural background with mainland China, as well as its law-abiding society, make Taiwan a

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favorable access point for the island’s trade partners to tap into mainland China’s market. In view of these opportunities embedded in a partnership with Taiwan, Tokyo signed a bilateral investment agreement with Taipei in September 2011. By including Taiwan in the TPP, the United States thus lends a much-needed hand to a faithful friend at a critical juncture of Taiwan’s economic development and at the same time, enables U.S. businesses to leverage their partnership with Taiwanese counterparts to foray into East Asia’s dynamic markets.

The TPP, with its combined market scale and economic diversity (accounting for 37.8% of global output and 25.3% of world trade, with members including the world’s first and third-largest economies), offers Taiwan the meaningful opportunity to diversify and rebalance its external economic relations. I thus want to emphasize that joining the TPP is an issue of economic development and prosperity that is fundamental to the basic economic rights of the Taiwanese people. That said, incorporating Taiwan into the TPP would rejuvenate the strong economic linkage between the United States and Taiwan and enable Taiwan to maintain a meaningful range of choices in its foreign relations – both of which have strategic implications for Washington as well.

A much broader TPP with Taiwan could create even more possibilities. A Taiwan inside the T PP will not only open up more of Taiwan’s domestic market but also expand American companies’ access to other regional customers, multiplying the opportunities facing these transnational corporations. Therefore, a Taiwan included i n t he T PP is a n asset to t he t rade pac t – t he isla nd can literally be the pivot point that makes Asia-Pacific economic relations a seamless network.

Some in the United States hold ambivalent attitudes towards Taiwan’s TPP pursuance. Their reasons include that, first, Taiwan simply talks the talk but doesn’t walk the walk; second, Taiwan is no longer an important market for the United States; third, mainland China’s opposition makes Taiwan’s TPP membership impossible; and fourth, other TPP members would not support Taiwan’s participation. To be frank, these excuses are unfounded, and let me dispel these misleading arguments for our U.S. friends.

First, Taiwan has the political will and capabilities to liberalize its economy and meet the high standards of the TPP. The recent foot-dragging on the legislative approval of a service pact between Taiwan and mainland China gives outside observers an impression that Taiwan lacks domestic consensus on economic liberalization. But nothing could be more wrong. The current situation is the outcome of a confluence of free trade, identity politics, and

10

cross-strait political mistrust, and the confluence results from the political reality that Taiwan’s current integration efforts, for better or worse, starts from its relations with mainland China, and people should not be fooled by the apparent gridlock.

Looking back a decade or so ago, Taiwan successfully concluded its WTO negotiations, and the legislature had no difficulty in approving the agreements. More recently, Taiwan signed an economic cooperation agreement with New Zealand, and it took the pact only three months to acquire legislative approval. A Taiwan-Singapore trade pact has just concluded two weeks ago, and there is no difficulty in sight that will block its ratification. This is certainly not to say there will be no harmed domestic interests trying to block liberalization, but from Taiwan’s successful resolving the U.S. beef import row and ratifying the hotly-debated ECFA with Mainland China, the track records are clear: the Taiwanese public generally acknowledges the importance of liberalization as the economic lifeline of this island economy, and the government has the political will and capabilities to push for economic liberalization.

Second, Taiwan remains the United States’ 11th largest trade partner and 16th largest export market. Taiwan is also the eighth largest consumer of U.S. agricultural goods. By incorporating Taiwan into the TPP and further removing trade barriers, the importance of Taiwan’s market could go up further. More importantly and as mentioned already, Taiwan’s institutional affinity to the United States and cultural affinity to mainland China make the island an ideal springboard into the China market for American companies, especially small and medium enterprises. The TPP will open up Taiwan’s market while also enabling Taiwan to serve as a gateway to the rest of Asia and beyond. This shows that U.S. interests in Taiwan are significant.

Third, Mainland China’s attitude towards the TPP has changed. Beijing has recently expressed its willingness to study the feasibility of participating in the pact. Against the backdrop of improved cross-strait relations and institutionalized cross-strait integration, Mainland China’s warmer attitude towards the T PP gives it even less reasons to oppose Taiwan’s participation. Our position is that we hope the United States can help Taiwan to join the TPP negotiation; we also hope the United States can invite mainland China to participate.

Fourth, once the United States decides to invite Taiwan to the TPP negotiation, other members will follow suit.

The existing TPP members are all Taiwan’s important trade partners, who are poised to benefit from Taiwan’s economic liberalization and have no reasons to oppose

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Taiwan’s participation. This is particularly true after mainland China signed the ECFA with Taiwan and showed benevolent at titudes towards similar economic pacts between Taiwan and other countries.

Ou r e conom ic coop erat ion ag reement s w it h New Zealand and Singapore are good examples of the scope of liberalization Taiwan is prepared to consider under the TPP. Taiwan’s bilateral trade agreements with them are both comprehensive and of high quality. These two trade agreements having been signed augurs well for Taiwan’s participation in the TPP. For certain, in addition to the help of the United States, Taiwan needs to do more on its own part. Two high-priority tasks will be to forge a domestic consensus on the long-term cross-Strait economic relations and to lay out a roadmap for participating in the TPP. The deep mistrust between Taiwan’s ruling and opposition parties has led into a gridlock in the debate about a proper cross-Strait economic relationship. But in fact, the two parties have more common grounds than people think: both want Taiwan’s economy to prosper, and both don’t want Taiwan’s freedom of choice to shrink. This common ground should be enough to form a domestic consensus and principle to guide Taiwan’s long-term strategy and objectives on cross-Strait economic relations. The government

and the major opposition party should cooperate to build up such a consensus, which will defuse tensions on crossStrait policies and make Taiwan’s cross-Strait and regional economic integration truly a virtuous circle.

Second, the government needs to be more pro-active in its pursuance of TPP membership. For a trade pact as comprehensive and of high quality as TPP is, the government should not fool itself by thinking that everything can be ready overnight once Taiwan is invited to the negotiation. Instead, the government should acknowledge that to meet the TPP’s standard of liberalization, the economic overhaul will be of a grand scale and require a staged roadmap to communicate with affected sectors, rally domestic support, and prepare for unavoidable adjustments.

By making clear such a roadmap and implementing the parts fully under Taiwan’s own control, the nation demonstrates it is walking the walk in its pursuance of TPP. In this way, any year can be the breakthrough year for Taiwan’s TPP membership.

Ladies and gentlemen, Taiwan today is an even more valuable economic and strategic partner of the United States. U.S. support for Taiwan to participate in the TPP is the first step toward, not an end of, the rejuvenation of the U.S.-Taiwan partnership. It’s time for Washington to bring Taiwan back in!

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Issues

White Paper Mid-Point Assessment Progress has occurred in a number of areas, and the government is offering to make a further push.

T

his midway point in the AmCham Taipei advocacy cycle, which runs from June to June in line with publication of the annual Taiwan White Paper, is an appropriate time to take stock of the progress of the current White Paper issues. In reply to a query from the AmCham office, many of the Chamber’s committees report encouraging progress on at least some of their advocacy concerns.

Some examples include: • The Medical Device Committee’s recommendation that the Taiwan Food and Drug Administration (TFDA) accept documents in English as part of the review process for foreignmade In Vitro Diagnostic (IVD) devices that companies wish to import. In the government’s response to the White Paper suggestion, TFDA stated that translation into Chinese (which had to be followed by verification of the translation) will no longer be required. The change should help reduce the often onerous amount of paperwork involved in the review process.

• In the banking sector, efforts by the Financial Supervisory Commission (FSC) to develop a competitive Formosa bond market as part of a move to promote Taiwan as an offshore trading center for RMB. The FSC was also credited with making it easier for banks to engage in the securities business to provide fixed-income products to their customers.

• In telecommunications, the National Communications Commission’s completion of bidding for licenses for 4G spectrum, paving the way for the introduction of higher-speed mobile service suitable for data communication in the first half of next year.

• The Ministry of Health and Welfare’s introduction this year of a Drug Expenditure Target system on a two-year pilot basis.

Although the pharmaceutical industry still faces a number of issues regarding drug pricing and reimbursement under the National Health Insurance program, the Pharmaceutical Committee regards the adoption of DET as a positive step forward.

• Follow-up to the strengthened Trade Secrets Act passed by the Legislative Yuan last year and promulgated by the President early this year. The Intellectual Property & Licensing Committee credits the Taiwan Intellectual Property Office with holding a series of forums around the island to publicize the content of the law. It also notes that the Ministry of Justice’s Investigation Bureau has taken action to pursue several cases of trade secrets misappropriation.

• Greater willingness by the tax authorities to acknowledge the 12

白皮書期中評估 部分議題已有進展，台灣政府承諾再繼 續改善。

每

年6月到翌年6月之間是台北市美國商 會推動倡議的週期，與年度《白皮書》 的出版時間一致。週期中點是評估當期 《白皮書》議題進展的適當時機。本商會許多委 員會在回覆商會辦公室查詢時，都表示他們所推 動的議題至少有一部分出現令人振奮的進展。 茲舉其中數例： • 醫療器材委員會建議台灣食品藥物管理署， 審查業者欲進口的外國製體外診斷醫療器材 （IVD）時，能接受英文資料。在台灣政府 對《白皮書》建言的回覆中，食品藥物管理 署表示，不再要求將資料翻譯成中文。由於 譯文完成後尚須進行核實，此一改變應有助 於減少審核過程中通常相當繁重的文書作業 量。 • 至於銀行業，台灣金管會致力發展具有競爭 性的福爾摩沙債券市場，以促使台灣成為人 民幣離岸交易中心。在簡化銀行從事有價證 券業務以提供客戶固定收益產品上，金管會 也有功勞。 • 電信方面，國家通訊傳播委員會完成4G頻 譜執照標售，為明年上半年推出適合資料傳 輸的更高速行動通訊服務鋪路。 • 台灣衛生福利部今年推出藥費支出目標制兩 年試辦計畫。製藥業雖還面臨若干健保制度 藥價與給付的相關問題，但製藥委員會將採 納藥費支出目標制視為邁出正面的一步。 • 立法院去年通過修正強化的營業秘密法，並 在今年由總統公布實施的後續發展。智慧財

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Issues economic value and tax deductibility of goodwill generated through M&A activities. The Tax Committee notes that some tax offices (though not all) have ruled in favor of that principle in cases this year, and that the Ministry of Finance has issued internal guidelines on the subject in an effort to minimize disputes between tax offices and taxpayers over the issue.

Although the AmCham committees point to even more White Paper suggestions that have seen little or no progress, the Chamber was recently contacted by the government’s Council for Economic Planning and Development, which has offered to help accelerate the administration’s consideration of the most urgent or important issues. CEPD asked AmCham to submit one or two issues per committee for special review. The AmCham Government & Public Affairs Department is currently coordinating with the committees to put the list together.

“This proposal is a very welcome sign of the government’s intention to do more to foster necessary reforms,” says AmCham President Andrea Wu. “I hope that as a result of this exercise, the 2014 White Paper published this coming June will be able to congratulate the government on dramatic improvements in the business environment.”

產與授權委員會肯定台灣智慧財產局在全台 各地舉辦一系列論壇，宣傳該法內容。委員 會還注意到法務部調查局採取行動，追查數 起侵害商業機密案。 • 稽徵機關對於因併購所產生之商譽，更樂於 承認其價值並認列。稅務委員會指出，台灣 部分（儘管不是全部）稽徵機關今年的案件 裁決結果支持此原則，財政部也對此發布內 部指導細則，以期將稽徵機關和納稅人在此 議題上的紛爭降至最低。 儘管本商會各委員會指出，還有更多《白皮 書》建言的進展極少甚或完全沒有，但曾協助促 使台灣政府加速考慮《白皮書》最迫切或重要議 題的經建會，最近主動聯絡本商會。經建會請求 本商會，就每個委員會的議題各提交一、兩個進 行特別檢討。本商會政府及公共事務部目前正與 各委員會協調彙整問題清單。 本商會執行長吳王小珍表示：「這個提議是 台灣政府打算採取更多行動促進必要改革的非常 可喜跡象。」「我希望此事能讓明年6月出版的 2014年《白皮書》有機會恭賀台灣政府，台灣經 商環境出現引人注目的改善。」

—– By Don Shapiro

— 撰文／沙蕩

Grappling with New Laws and Regulations Several AmCham industry committees are facing the prospect of challenging regulatory changes.

A

設法因應新法規 本商會數個產業委員會可能面臨充滿挑 戰的法規改變。

如

s reported in the item above, in a number of sectors AmCham committees have been pleased with the progress on certain of their issues over the past half year. In some sectors, however, industry has been concerned about the potentially seriously negative effects of some proposed laws and regulations:

同上一篇報導所說，本商會各委員會對 於其就若干產業提出的某些議題過去半 年來出現進展感到欣慰。不過在部分產 業，業界擔心某些法律和規章提案可能造成嚴重 的負面作用。

FOOD PRODUCTS Given the frequent outbreaks of scandals in Taiwan involving the adulteration or misrepresentation of food products, members of the public are understandably unnerved about the safety of what they and their family members are consuming. The authorities have been responding with tougher laws and stricter enforcement.

But in carrying out the crackdown within an atmosphere of public alarm and media frenzy, it is important to ensure that the measures adopted are necessary and reasonable – and that they adhere to standard international practices so that global or regional brands are not asked to comply with special requirements applicable for a market of just 23 million people.

In the food industry, multinational companies are now reviewing

食品 台灣經常爆發涉及食品摻假和標示不實的醜 聞，民眾理所當然會煩惱自己和家人的食安問 題。當局的因應之道是祭出更嚴苛的法律和更嚴 厲的執法。不過在民眾恐慌、媒體狂熱的氛圍中 執行取締，重要的是須確保所採取的措施必要且 合理――而且要堅守國際標準慣例，才不會要求 全球性或區域性品牌遵守只在2300萬人口市場實 施的特殊要求。 食品業的跨國公司目前正在檢視台灣食品藥物 管理署11月底公布的食品衛生管理法施行細則草 案（該法的修正案在今年6月通過），尤其是和 產品標示有關的部分。最終版的施行細則預料會

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Issues a draft of implementation rules released by the Taiwan Food and Drug Administration (TFDA) at the end of November to enforce amendments to the Food Safety Law passed last June, particularly with regard to product labeling. The final version of the rules is expected to go into effect early next year. Some of the industry’s concerns: • The draft avoids the question of whether flavorings must be included among the ingredients listed on the product label, saying the issue will be dealt with separately in future.

Although no other country in the world requires the disclosure of specific flavorings, some lawmakers in Taiwan have been pushing for their inclusion. In the view of the manufacturers, such disclosure would constitute an infringement on trade secrets. If a company’s entire proprietary formula is revealed, competitors would be free to copy that recipe. Rather than comply, some major brands would undoubtedly consider withdrawing their products from this market. The issue will remain alive until the TFDA makes known its final determination.

• Despite the food industry’s consistent objections, the draft includes a requirement that the product label identify the company in whose plant the product was manufactured and give the company’s address and telephone number. In many cases, such factories are contract manufacturers who do not have the actual legal responsibility for the product – and whose identity the brand owner may consider to be confidential business information. It would be more meaningful for the label to carry the contact information of the brand owner. But when the manufacturer is overseas, it should in fact be sufficient for the consumer to know the Taiwan address and phone number of the importer.

• Given the changes being required in product labels, will manufacturers be given sufficient lead time to make the revisions?

Members of AmCham’s Retail Committee note that relabeling is an arduous process, involving the design, internal approval, and incorporation into the production line of new packaging.

Normally a full year is needed. Indeed, the legislation enacted in June called for a one-year grace period, but more than half a year will have passed before the final implementation rules are announced and go into effect. Committee members urge TFDA to include a time extension in the final version of the rules.

COSMETICS Prospective revisions to the law governing regulation of cosmetics are another example of ways in which Taiwan is contemplating deviating from international norms, imposing regulations that are more restrictive than necessary and create a reputation for Taiwan as a difficult place in which to do business. Proposals currently under consideration by the TFDA include the following: • Retaining the existing pre-market registration system for medicated cosmetics, while also requiring industry to submit large numbers of complex technical dossiers (known as Product Information Files or PIF) in a form of post-market control.

This kind of dual-control system is not used in other markets, and industry is concerned that it will prolong the review process, delaying the schedule for launching new products.

In fact, major markets such as the United States and European Union do not require pre-market registration at all for cosmetics or over-the-counter drugs as long as the products 14

在明年初生效。業者擔心的部分問題包括： • 草案迴避產品成分標示是否必須包含調味 料的問題，僅表示未來將另行處理。世上 沒有任何其它國家要求產品明確公開使用 的調味配方，不過台灣部分立委一直推動 要納入管理。就製造商的觀點而言，公開 調味配方會構成侵害營業秘密。如果公司 的整個專有配方被公開，競爭對手就能任 意模仿製作方法。部分大品牌不會遵從這 樣的要求，而是肯定會考慮將產品撤出這 個市場。在食品藥物管理署宣布最後決定 前，此問題仍有轉機。 • 儘管食品業一再反對，草案仍規定產品標 示須註明承製產品的公司，並提供該公司 的地址與電話。在許多情況下，這些製造 廠是代工製造商，對產品並無實際的法律 責任――而且品牌所有者可能會將製造商 資訊視為商業機密。標示中列出品牌所有 者的聯絡資訊，會來得更有意義。承製廠 商若位於海外，其實讓消費者知道進口者 的在台地址和電話應已足夠。 • 要求產品標示改變，那麼製造商是否有足 夠時間進行修改？本商會零售委員會指 出，重新標示是一項艱鉅的工程，涉及設 計、內部審批，以及新包裝產品線的整 合，通常需要一整年。的確，6月頒布的 食衛管理法規定一年的寬限期，不過最終 版施行細則的公布生效過程就會耗去大半 年。零售委員會敦促台灣食品藥物管理 署，在最終版細則中將寬限時間延長。 化妝品 台灣政府有時會想要偏離國際常規，採取不必 要的限制措施，使得外人覺得在台灣經商不易； 而目前政府要修改化妝品管理相關法規的想法， 就是一個新的事例。目前衛生福利部食品藥物管 理署正在評估的提案包括： • 維 持 現 有 的 醫 美 產 品 上 市 前 登 記 系 統 ， 同時規定化妝品業者提交數量龐大的複 雜技術檔案 （亦即所謂的「產品資訊檔 案」），作為上市後的控管機制。只有台 灣實施這種雙重控管機制，產業憂心此舉 將拉長審核程序，延誤新產品預定上市時

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Issues

adhere to basic industry standards. Among the products that potentially would be affected by the amendment are lowrisk OTC goods such as anti-dandruff shampoo, deodorants, sunscreen, and certain types of toothpaste.

• Adopting the European Union’s list of more than 1,500 ingredients prohibited from use in cosmetics, on top of Taiwan’s existing list of 300-some items. The result would be the most restrictive mechanism in the world for cosmetics ingredients, especially since the European system allows for certain flexibility. Items can be removed from the European list if their safety in certain quantities is proven, whereas the Taiwan list is fixed. Unless it is constantly updated, many newly launched foreign products may not qualify for marketing in Taiwan.

• Requiring the manufacturers of all cosmetics sold in Taiwan to adhere to Taiwan Cosmetic GMP (Good Manufacturing Practice) standards. Although the system is expected to be based on ISO 22716 standards, it will not be the same as ISO (so far, no English-language translation has been produced to make an exact comparison possible). Rather than imposing Taiwan’s own standard on a compulsory basis for what is only a midsized market, TFDA is encouraged to offer it as a voluntary model, while accepting other international or industry GMP standards.

MEDICAL DEVICES Implementation rules being considered by the National Health Insurance Administration (NHIA) potentially would not only create hardships for the medical device industry, but also deprive Taiwan patients of the opportunity to choose more innovative products for use in their medical procedures.

In question is patients’ access to devices that are not fully covered by the National Health Insurance program for reimbursement to the hospitals. NHIA has designated five categories of advanced medical devices – including drug-eluting stents and two types of artificial hip joints – as eligible for what is called “balance billing.” The term means that NHIA will reimburse only for the cost of conventional devices (such as bare-metal stents) performing a given function, but that patients may opt for a more sophisticated and expensive version if they are willing to pay the difference in cost out of pocket.

The system has been in place for several years, but NHIA is now proposing to place a cap on the self-paid portion in response to some criticism that the price of the advanced devices often varies widely from hospital to hospital. Industry argues that the only fair method is to let the marketplace establish the price, accepting the reality that not all hospitals have the same bargaining power.

Relying on government officers to set a ceiling raises several prob-

程。事實上，在美國、歐盟等主要市場，化 妝品或非處方藥只要符合業界基本標準，上 市前根本無需登記。可能受到修正法案影響 的產品包括低風險的非處方產品，如抗頭皮 屑洗髮精、體香劑、防曬產品和某些種類的 牙膏。 • 除了現有的300多項化妝品禁用成分之外， 食品藥物管理署考慮採納歐盟標準，進一步 禁用1,500多 種成分。如此一來，台灣將出 現對化妝品成分限制最為嚴格的機制，特別 是因為歐盟的做法仍有些彈性。在歐盟，某 種成分的含量如果經證明在一定限度以內是 安全的，就可以從禁止名單剔除，但台灣計 劃擬定的禁用名單卻是固定的。除非台灣的 禁止名單經常更新，否則在國外上市的許多 新產品可能無法在台灣販售。 • 要求在台灣販售化妝品的所有廠商都要遵守 國內化妝品優良生產規範（GMP）的標準。 G M P照說是以I S O 22716的生產標準為基 礎，但兩者並不相同（到目前為止，台灣化 妝品GMP 標準還沒有英文翻譯，因此無法 進行這兩個標準的詳細比較。）台灣只算是 中型市場，與其強制採行自己的一套標準， 食品藥物管理署不如讓業者自行決定是否 採納，同時接納其他國際性或業界的GMP標 準。 醫療器材 • 台灣健保署考慮中的施行細則可能不只會為 醫療器材業帶來困難，也會剝奪台灣患者選 擇在醫療過程中使用更創新產品的機會。 • 讓病患使用健保並未完全給付醫院的器材， 尚在研議中。健保署已將五類新型醫療器材 （包括藥物支架和兩種人工髖關節在內）納 入所謂「公平付費」的範圍。此一術語代表 健保署將只給付執行特定功能的傳統器材 （例如傳統金屬支架）費用，但病患如果願 意自費支付價差，就可選擇較精密、昂貴的 器材。 • 此一制度已實施數年，但健保署現在提議限 制自費比例上限，以回應外界對各醫院之間 的新型醫材價格經常差異極大的批評。業者 堅稱，唯一公平的方法就是讓市場決定價 格，接受不是所有醫院都擁有相同議價能力 的現實。靠政府官員設定上限會引發數項問 題。如果上限過高，對患者並無好處；但若 太低，會讓製造商打消將最新科技引入市場 的念頭。對某種類的所有器材實施單一上 限，也會讓產品在品質和特色上沒有差異的 空間。 • 還有一個問題是患者是否可以百分之百自費 使用健保完全不給付的器材。截至今年10 月為止，希望器材獲准自費的業者都須先為 產品申請給付。健保署若接受申請，就會派 發一個臨時「非給付代碼」給該器材，讓醫 院能在健保署通常需花一年左右時間做出給 付決策的期間，向病患收取該產品的費用。 • 之後健保署可能派發一個永久自費代碼，但

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Issues lems. If the cap is too high, it brings patients no benefit, but if it is too low, it will discourage manufacturers from introducing the latest technology into this market. A single cap for a whole category of devices also leaves no room to differentiate among products on the basis of quality and special features.

Yet another issue is whether patients may make 100% self-payment for devices that are not covered by NHI at all. As of last October, companies wishing to obtain clearance for a device to be eligible for self-payment must first apply for reimbursement for that product. If NHIA accepts the application, it will assign a temporary “non-reimbursed code” to the device, enabling the hospital to bill patients for that product during the year or so it typically takes NHIA to make a reimbursement decision.

After that, a permanent self-pay code may be assigned, but that occurs for only about 7% of applications – and usually only for implants such as orthopedic devices. According to the industry, another 53% of the submissions are either rejected outright or encounter endless requests for additional information. The remainder fall into an area that the manufacturers regard as tacit rejection. For example, NHIA may deem the product reimbursable under an existing category, or it may rule that the cost of the device should be covered within the fee for a medical procedure. In both cases, no self-payment permitted, but in the case of advanced, innovative products, the amount involved is generally too low for manufacturers to find acceptable.

These decisions, AmCham’s Medical Device Committee notes, are made solely by NHIA evaluators who may lack in-depth knowledge about the procedures and devices. In the end, the policy prevents patients with the ability to pay from obtaining the best possible medical care. If that is done in the name of “equality,” it merely reduces the opportunities for some citizens while bringing no benefit to the rest.

—– By Don Shapiro

只有約7%的申請案會如此――通常只限於 骨科等植入式器材。據業界指出，其它53% 的申請案不是直接被駁回，就是會被不斷 要求補交資料。剩下的則落入被製造商視為 默默拒絕的狀態。例如健保署可能認為器材 可以根據某個既有種類進行給付，或裁決器 材成本應列入醫療程序費用。這兩種情況下 都不會批准自費；但對於先進的創新產品而 言，這樣的給付金額通常會被製造商認為太 低而難以接受。 • 本商會醫療器材委員會指出，前述決定都只 由可能對療程和器材缺乏深度認識的健保署 評估人員決定。結果，他們制定的政策導致 有能力自費的患者無法獲得可能是最好的醫 療照護。如果這是假「平等」之名而行，只 會減少部分民眾接受更妥善醫療的機會，同 時對其他人也沒有好處。 — 撰文／沙蕩

Coming Soon!

The 2014 AmCham Taipei Membership Directory • Contains updated Corporate Listings on AmCham’s more than 500 member companies.

• Expanded listings with company profiles from about 170 member companies.

• Individual entries on the approximately 1,000 individual members.

• Reference material on trade offices and embassies, Taiwan government offices, and other useful contact information.

• Listings of AmCham’s 27 committees with contact data for committee co-chairs.

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Cover story

AUTOMOBILES

Automotive Industry:

CHECKING THE PERFORMANCE 台灣汽車產業總體檢

BY JANE RICKARDS

撰文 / 李可珍

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A

photo : ford lio ho

Growth in the automotive sector continues to be sluggish, affected by overall economic conditions and depressed consumer confidence. Among the bright spots are brisk sales in the luxury segment, a pickup in exports to such areas as the Middle East, and increasing demand for sports utility vehicles (SUVs). Demographic factors are expected to play a key role in shaping the future of the local car market. 受到整體經濟環境不佳與消費者信心不足等因素影響，台 灣汽車產業成長動能疲弱不振。表現較佳的區塊包括：高 級車銷售亮眼，銷往中東等市場的出口上揚，以及休旅車 （SUV）需求持續提升。預料人口型態將是左右台灣汽車 市場發展的關鍵因素。

台

灣經濟成長停滯，加上富人與低薪勞工的所 得差距日益擴大，使得台灣社會漸趨兩極 化。兩極化的現象也出現在汽車市場。雖然 汽車產業在緩慢復甦，獲利來源主要仍仰賴高端客 戶對進口和高級車款的需求，對中價位小型車的需 求則出現下滑。 根據台灣區車輛工業同業公會（TTVMA）數據， 今年1月至10月汽車銷售動能疲軟，較去年同期僅成 長0.7%，累計銷量為30萬4747輛。其中進口車（含 高級車款）銷售90,309 輛，約占整體車市的30%， 和去年相比大幅成長12.6%。另一方面，國產車銷量 為21萬685輛，較去年同期下跌3.6%。這些數據顯 示，即使是全球熱銷的小型車款，例如台灣和日本 汽車廠合作在台生產的和泰豐田Corolla Altis 和裕隆 日產 Tiida，銷售量也呈現下滑趨勢。 分析師指出，年底前多款新車上市，例如10月上 市的2014年款豐田 Corolla Altis和11月底推出的福特 城市休旅車EcoSport，對於全年總銷售量多少應該有 些幫助。台灣區車輛工業同業公會預估，今年台灣 車市可望賣出37萬輛，與去年銷量 36萬5,000輛相 比成長約1%。雖然成長幅度很小，但與2012年下跌 18

stagnant economy and the widening gap between the wealthy and low-salaried workers have been having a polarizing effect on Taiwanese society. The polarization can also been seen in the car market.

Though the automotive sector has been inching towards recovery, the gains have come mainly from wealthy customers’ appetite for imported and luxury cars, while demand for mediumpriced compact cars has been faltering.

Car sales from January to October this year grew by a sluggish 0.7% over the same period of 2012, according to the Taiwan Transportation Vehicle Manufacturers Association (TTVMA), for a total of 304,737 vehicles sold. Imported cars, including luxury models, accounting for 90,309 vehicles or 30% of the total, registered strong year-on-year sales growth of 12.6%. In contrast, sales of domestically made cars cane to 210,685, a drop of 3.6% from the same period last year. The models showing a decline included globally popular compact cars such as Toyota’s Corolla Altis and Nissan’s Tiida produced here in cooperation with the Japanese brands.

Numerous new-product launches toward the end of this year, such as the introduction of the 2014 Toyota Corolla Altis in October and the urban sports utility vehicle (SUV) Ford EcoSport in late November, should boost the year’s overall sales somewhat, analysts say. TTVMA estimates that a total of 370,000 cars will be

3%相比，總是個好的現象。 不過，信用評等機構標準普爾（S t a n d a r d a n d Poor's）子公司中華信評副總裁許智清認為，未來汽 車市場需求可能不會有起色。他說：「我不認為台 灣車市未來幾年具有大幅成長的潛力，因為市場已 相當成熟，而經濟成長率在減緩當中。」 分析師指出，汽車需求量與國內經濟成長趨勢大 致相符，或可能略高於成長曲線。行政院主計總處 預測明年國內生產毛額（GDP） 可望成長3.37%，相 對高於今年2%以下的預估值。根據此項GDP預測， 部分觀察家預期2014年車市景氣將較為熱絡。福特 六和汽車營銷處副總經理劉繼升表示，隨著消費者 信心漸增，他認為明年汽車市場可望成長5%-6%； 中華信評許智清則預估2014年車市成長率將在5%以 下。許智清並補充說，其他亞洲四小龍如香港、南 韓都屬於成熟市場，因此其車市銷售成長也會出現 類似情況。 談到台灣車市銷售排行，豐田汽車仍穩居龍頭 寶座。根據台灣區車輛工業同業公會數據，豐田與 和泰合作生產銷售的車款在台市占率最高，占在台 組裝汽車銷售量的36.7%。其中最暢銷車款是豐田

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AUTOMOBILES

sold in Taiwan this year, a roughly 1% increase over last year’s 365,000. While the growth will be miniscule, it represents a welcome turnaround after the 3% drop in auto sales recorded in 2012.

Still, future demand is likely to be flat, says Raymond Hsu, a director of corporate ratings at Taiwan Ratings, an affiliate of Standard and Poor’s. “I don’t think there will be significant growth potential for Taiwan’s car market over the next few years, as it is a mature market and GDP growth is slowing down.”

Analysts note that car demand is roughly in line with Taiwan’s GDP growth or perhaps slightly higher. The government’s Directorate General of Budget, Accounting and Statistics has forecast relatively higher GDP growth for Taiwan next year of 3.37%, in contrast to the under 2% expected this year, and on that basis some observers are anticipating improved car sales in 2014. Ford Lio Ho marketing and sales director Anderson Liu says that in his personal opinion the car market will see growth of between 5% and 6% next year as consumer confidence improves, while Raymond Hsu forecasts “low single-digit growth” for 2014.

Hsu adds that other “Asian tigers,” such as Korea and Hong Kong, are likely to have similar patterns of automobile sales

growth as they are also mature markets.

When it comes to car brands in Taiwan, Toyota remains king. Its cars manufactured and distributed in partnership with Hotai Motors have the highest market share, accounting for 36.7% of the locally assembled vehicles, according to the TTVMA. The most popular single model is the Toyota Corolla Altis (also a global favorite), with sales of 28,817 models from January to October, and the second most popular car is the Toyota Wish, with sales of 14,499 during the same period. The Nissan Tiida is third with sales of 13,760.

Yu l o n M o t o r s , w h i c h m a n u f a c tures for Nissan and also produces other brands, such as its own Luxgen, at 17.9% has the second-largest market share for locally manufactured cars.

China Motors, which is affiliated with Mitsubishi, has the third-largest market share at 16.7%, and Ford Lio Ho (a joint venture between Ford and the local Lio Ho Group) produces both Ford and Mazda brands and has the next-largest market share at 13.3%, and is aiming at increasing that share sharply.

Toyota, including its luxury brand Lexus, also has the highest market share – 30.5% – in the imported car market.

The Toyota R4V4, a crossover SUV, is

Corolla Altis（在全球各地也是銷售冠軍），1月至10 月共賣出 28,817輛；排名第二的車款是豐田 Wish ， 同期間共銷售14,499輛。第三名是日產Tiida，共售出 13,760輛。 裕隆為日產在台灣製造汽車，同時也生產其他品 牌的車輛，例如自有品牌納智捷（Luxgen）。該公司 市占率達17.9%，為在台組裝汽車市占率第二名。中 華汽車（三菱汽車關係企業）市占率16.7%， 排名第 三；福特六和（福特汽車與六和集團合資企業）生產 福特和馬自達（Mazda）品牌車款，以市占率13.3% 名列第四。目前福特六和正準備積極搶市，期望能大 幅提升市占率。 在進口車市場中，豐田（包含旗下高級車品牌凌志 Lexus）市占率高達30.5% ，同樣位居第一。此外，豐 田RAV4跨界休旅車是最暢銷的進口車款，今年1月至 10月共銷售12,271輛。同期間，凌志RX跨界休旅車 賣出2,856輛，在進口車款中銷量位居第三。 在進口汽車廠牌當中，賓士的市占率為16.2%，居 第二位。賓士C系列小型主管車在今年前10個月共賣 出4,368輛，是進口車當中銷量位居第二的車款。台 灣區車輛工業同業公會表示，福斯汽車（包括旗下的

the most popular imported model, with 12,271 units sold in the first 10 months of this year. The Lexus RX, another crossover SUV, is the third most popular imported car, with sales of 2,856 units over the same period.

Among the import brands, MercedesBenz has the second biggest market share, at 16.2%, and its compact executive C-class model is the second most popular imported car, with sales of 4,368 vehicles through October. Volkswagen (including its subsidiary Audi) takes third place among the imported cars with a market share at 13.3%, followed by BMW at 12.2%, the TTVMA says.

M-shaped division Raymond Hsu notes that the car market is moving towards two extremes: customers either want high-end luxury imported cars or small, fuel-efficient models. The divide reflects Taiwan’s so-called M-shaped society, with the shrinkage of the middle income segment.

Demand for high-priced imports is growing relatively faster than for small fuel-efficient cars.

Imported cars, both luxury and midrange vehicles, currently account for around 30% of Taiwan’s car market, a

奧迪Audi）以13.3%的市占率位居進口車第三位，其 次是寶馬（BMW），市占率12.2%。

M 型社會的落差 許智清指出，汽車市場出現兩極化現象：消費者要 的不是頂級豪華進口車，就是省油的小型車。這個現 象反映出台灣中產階級縮小的情況，也就是所謂的M 型社會。相較於對小型省油車的需求，高價進口車的 需求成長較為快速。 中華信用評等協理許立德說，豪華和中等價位進 口車五年前在台灣整體汽車市場的市占率約20%，目 前成長到大約30%。根據中華信評最近一份報告，進 口車銷量增加是受惠於進口關稅調降。外國汽車銷 到台灣面臨的關稅，在2001年是30%，如今則降為 17.5%。台灣賓士副總裁司達恆說，許多台商在中國 大陸經商有成之後回到台灣，也是高價進口車輛需求 增加的原因之一。 許智清說，賓士的銷售情況特別好。他說，賓士幾 年前在台灣所有廠牌的汽車銷售排名在第八和第十之 間，目前則是台灣銷量第六的汽車品牌。司達恆舉出

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Cover story step up from the approximately 20% of five years ago, notes David Hsu, an associate at Taiwan Ratings. The increased popularity of imported cars, according to a recent report from Taiwan Ratings, has been aided by tariff reductions that have brought duties down from the 30% imposed in 2001 to today’s 17.5%. Andy Stockhecke, vice president of sales and marketing for Mercedes-Benz Taiwan, adds that the return to Taiwan of many businesspeople who have made money operating factories in China over the past

decade or more has also contributed to the higher demand here for more expensive vehicles.

Raymond Hsu describes MercedesBenz as a standout performer. It is now the sixth most popular brand in Taiwan overall, after hovering between eighth and tenth place just a few years ago, he says. Mercedes-Benz data cited by Stockhecke also shows that the company’s market share as a proportion of imported cars has risen from 14.9% last year to its current 16.8%, while year-on-year sales

ELEGANCE — Mercedes-Benz’s introduction of the latest in its flagship S-class luxury sedans. Automotive product launches have become splashy events in Taiwan. photo : mercedes-benz

的賓士銷售數據也顯示，賓士在台灣進口車市場所 占比率在去年是14.9%，今年上升到16.8%；去年賓 士在台銷量比前年增加3.4%，今年的年增率則上升 到9.6%。 因此，賓士有個大型計畫，要在未來兩年讓全台 灣的13家賓士銷售據點改頭換面。司達恆說，賓 士在台多數銷售據點當初設立的時候，「銷售量和 售後服務內容都跟現在很不一樣，因此需要大幅擴 充」。 賓士在台北近郊關渡的銷售據點經過裝修之 後，最近低調開幕。它的空間比過去寬闊很多，裝 潢現代化，外觀不再是原本1980年代的風格，而是 以大型玻璃帷幕取而代之。賓士也計劃在高雄開設 新的據點，預計在2015年開幕。 台灣奢侈品市場發達的原因之一，在於業者持 續增加產品種類，而且行銷策略成功。司達恆說， 賓士增加上市車款，包括比較小型、平價的車種， 因此可以吸引更多收入階層的客源，以及想要藉著 擁有高品質流行車款來表現自我的年輕族群。他 說：「如今高檔車未必就是大型車；它可以是運用 高級材料和尖端技術的小型車。」他說，在過去一 年左右，賓士推出多款A系列和B系列小型車，使得 20

growth has shot up from 3.4% in 2012 to 9.6% in 2013.

As a result, Mercedes-Benz has extensive plans to overhaul its 13 dealerships across the island over the next two years. Most of the facilities were originally built “for a different type of volume in sales and aftersales from what we are doing now and need to be significantly expanded,” says Stockhecke. The company recently held the soft opening of a dealership in Guandu on the outskirts of Taipei. The revamped building is much larger, with modern furnishings and big glass walls replacing its 1980s-style façade. There are also plans for a new dealership in Kaoshiung, scheduled to open in 2015.

The success of the luxury market in Taiwan generally is also attributed to the way companies have been able to expand their product offerings and promote them effectively. Stockhecke says by widening the product range to include smaller and less-expensive options, Mercedes-Benz is now appealing to new income segments and younger people wishing to express their individuality by owning a stylish, high-quality vehicle. “A luxury car no longer means a big car,” notes Stockhecke.

“It can mean luxury materials and leading technology in a compact car.” Over

在新台幣200萬元這個心理門檻以下的車種選擇變得 更多。 予模珉是旺報的一位主管，負責汽車專欄。他 說，賓士今年業績亮麗，原因也包括做了促銷和提 供購車誘因。他說：「他們行銷策略和貸款方案具 有彈性，提高了購車的便利性。」司達恆說明，有 些C系列車款提供最多新台幣120萬元的無息貸款， 而且購車之後，可以享受頭三個月免還款的「假 期」。他說，由於台灣高級車市場競爭激烈，價格 也比過去更有競爭力。他舉賓士旗艦車種S系列四門 轎車為例說，它平常售價是從新台幣550萬元左右起 跳，但在最近的促銷活動中，一款S系列的柴油車只 賣458萬元。 休旅車是另一個在台灣大受歡迎的車種。它一 般具有四輪傳動功能，讓車子可以在柏油道路上行 駛，也可以開上崎嶇路面和地形。根據台灣區車輛 工業同業公會的統計，台灣休旅車銷量在今年前十 個月達到59,664部，比去年同期增加22.8%。予模珉 說：「休旅車市場在快速擴張。」原因在於消費者 欣賞休旅車的彈性，而且它的高度讓駕駛人─特別 是女性─有更大的安全感。

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the last year or so, Mercedes Benz has launched various compact models in its A-class and B-class range, with more vehicles now available below the psychological threshold of NT$2 million, he says.

Andrew M. M. Yu, a director at the Want Want China Times who writes a regular car column, notes MercedesBenz has also done well this year because of its sales promotions and incentives.

“They have a flexible sales strategy and loan policy that makes it easier for people to buy their cars,” he says. Stockhecke explains that with some Mercedes-Benz C-class models, buyers can obtain interest-free loans of up to NT$1.2 million to finance the purchase, and can enjoy a “payment holiday” for the first three months of ownership. Due to fierce competition in the luxury car sector in Taiwan, prices also have become more competitive, he says. As an example, he cites the Mercedes-Benz flagship S-class luxury sedans, which normally carry price tags starting at around NT$5.5 million; in recent promotions a diesel model was on offer for NT$4.58 million.

Another type of car that is becoming very popular in Taiwan is the SUV (sports utility vehicle), which is usually equipped with four-wheel drive for offroad as well as on-road capability. In the

first 10 months of this year, according to TTVMA data, sales of these vehicles grew by 22.8%, with 59,664 cars sold. “The SUV market is booming,” says Andrew Yu, since consumers appreciate their flexibility, as well as their height – which gives people, especially women drivers, a greater sense of safety.

Ford Lio Ho in late November launched its second new SUV in the market this year, the Ford EcoSport, which followed a remodeled Ford Kuga. The Ford EcoSport, judging from promotional videos at the car launch, is being marketed to young, adventurous Taiwanese and boasts a range of hightech features, including a device known as SYNC that responds to voice instructions from the driver. First introduced in Taiwan in the new Ford Focus, the SYNC system allows customers to make phone calls or play their favorite music using voice commands in Mandarin Chinese.

Aiming for resurgence Thomas Fann, the president of Ford Lio Ho, says the company is aggressively trying to reposition itself in the Taiwan market. Two decades ago, it was the market leader, but its position has now dropped to fourth place. Ford’s year-on-

福特六和今年稍早推出改款的Kuga休旅車之後， 11月底推出另一款休旅車EcoSport。從上市活動當 中放映的行銷影片看來，EcoSport主要銷售對象是喜 歡冒險的年輕人。這款車配備多項先進科技，包括 一個稱為SYNC的功能，可以讓駕駛以聲音來進行操 控。SYNC聲控系統最先是搭載於台灣上市的福特新 款Focus ，讓車主可以用國語聲控打電話或播放喜愛 的歌曲。

福特要東山再起 福特六和總裁范炘（Thomas Fann）表示，公司 正積極在台灣市場重新布局。20年前，福特汽車曾 是產業龍頭，如今市占率已下滑至第四名。范炘指 出，福特六和今年推出改款的Kuga休旅車與EcoSport 之後，銷量比去年同期成長32%，但福特六和決定再 接再厲，要成為台灣前三大汽車品牌。 福特六和在台灣若能東山再起，就會跟母公司在 美國本土市場的發展一樣。2007-2008年全球金融 危機期間，美國汽車產業受到嚴重衝擊，通用汽車 （General Motors）和克萊斯勒（Chrysler）接受政

year growth this year, boosted by the launch of its remodeled Ford Kuga and EcoSport, is a steep 32%, says Fann, but the company is determined to work even harder and transform itself into one of Taiwan’s top three brands.

A resurgence in Taiwan would mirror Ford’s turnaround in its home U.S. market. When the U.S. auto industry was hard hit during the global financial crisis of 2007-2008, Ford opted out of the U.S. government bailout that rescued General Motors and Chrysler, and instead was able to secure a line of credit and rely on restructuring and new product development to weather the recession.

Now the only U.S. automaker retaining a major presence in the Taiwan market, the company implemented a “One Ford” plan around the world to focus entirely on its backbone brands of Ford and the luxury-market Lincoln, and make them more competitive. “We put all our resources into Ford and didn’t want any distractions,” Fann says.

As a result, Ford has disposed of its other businesses over the past few years, selling Jaguar and Land Rover to India’s Tata Motors and its ownership of Volvo’s car division to China’s Geely Automobile. The company also brought out new models that offered enhanced fuel

府紓困，福特則選擇自力更生。它取得銀行的信用 額度，透過債務重組與開發新產品來渡過景氣衰退 期。如今，福特是台灣汽車市場唯一還有高能見度 的美國品牌。該公司於全球推動One Ford計畫，專注 於生產福特品牌汽車與林肯（Lincoln）高級車，讓產 品更具競爭力。范炘表示：「我們傾全力生產福特 汽車，不想分散注意力。」 因此，過去幾年來福特汽車出售其他業務，包 括將旗下品牌積架（J a g u a r）和荒原路華（L a n d Rover） 賣給印度塔塔汽車（Tata Motors），富豪 （V o l v o）汽車部門則轉售給中國的吉利汽車。此 外，福特發展低油耗與搭載高科技配備的新車款 在全球上市，包括成長快速的亞洲市場。范炘指 出，「福特汽車在中國每年成長50%以上」，並計畫 建造好幾座新的工廠。 台灣區車輛工業同業公會秘書長陳明德說，汽車 產業今年值得一提的另一項發展是出口大幅提升。 他指出，1月至10月出口成長13.2%，銷到國外的 64,926輛汽車約占台灣整體汽車產量的24% 。外銷 主力是賣到中東地區的豐田Corolla Altis。陳明德認 為，汽車出口成長，歸功於台灣汽車廠成本相對低

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Cover story efficiency and high-tech features, and launched them worldwide, including fastgrowing Asia. “In China, Ford is growing by more than 50% a year” and has plans for a string of new plants, Fann says.

Another notable development this year has been a significant increase in car exports, says TTVMA secretary-general Chen Min-teh. In the January-October period, he notes, exports increased by 13.2%, and the 64,926 cars exported amounted to about 24% of overall auto production. The bulk of the cars were Toyota Corolla Altis models that were exported to Middle-Eastern countries.

Chen attributes the export build-up to Taiwan’s ability to manufacture efficiently at relatively low cost while maintaining high quality. “In future, we will increase our sales to other countries,” he says.

One of those potential markets could be China, if the current negotiations on the “trade in goods” portion of the Economic Cooperation Framework Agreement (ECFA) bring agreement on a Taiwan proposal to open cross-Strait trade in built-up vehicles on the basis of a quota system. Given the difference in size of the two markets, the proposal would allow to Taiwan to ship 10 cars to the mainland for every unit that it imports from there.

In a recent report, Taiwan Ratings also points to opportunities to expand car manufacturing in Taiwan through the existing cooperation channels Taiwanese manufacturers have with Japanese brands.

“The previously strong yen has led several Japanese auto makers to develop manufacturing partnerships with their Taiwanese counterparts in a bid to reduce costs through the development of a global manufacturing system over the past two years,” the report says. “Taiwanese players offer suitable technological and manufacturing partners by leveraging their lowcost manufacturing bases, mature technology, decent quality and good longterm relationship with Japan.” The attractiveness of working with Taiwan may be boosted by the increasing business links between Taiwan and China, as many Japanese companies find it easier to penetrate the mainland market if they go through Taiwanese partners.

Yulon Motor’s Luxgen brand cars may have a local market share of less than 5%, estimates Raymond Hsu, but its models assembled in China have been doing very well across the Strait. According to the Taiwan Ratings report, Luxgen sold 31,000 units of SUVs in China in 2012, almost 10 times the number sold in Taiwan. The cars are produced by Yulon’s

廉，而且能兼顧生產效率與優良品質。他說：「未來 我們將增加對其他國家的出口。」 如果台海兩岸經濟合作架構協議（ECFA）的「貨 品貿易」談判進行順利，雙方能就台灣方面依配額開 放整車貿易的建議達成共識，中國就可能成為台灣汽 車外銷的潛在市場之一。由於兩岸市場規模不同，這 項提議主張中國大陸每賣一輛車到台灣，台灣可以外 銷10輛車到大陸。 中華信評近期發布的報告也指出，利用台灣車廠 與日本品牌既有的合作管道，有機會擴充台灣的汽車 產量。報告指出：「之前日圓強勢上漲，過去兩年來 促使數家日本汽車製造商與台灣同業建立生產夥伴關 係，期望透過發展全球生產體系降低成本。台灣廠商 能夠提供低成本的生產基地、成熟的技術、良好的品 質，再加上與日本長期友好的關係，可說是理想的技 術與生產夥伴。」台海兩岸之間經貿關係趨於緊密， 也可能增加了台灣的吸引力，因為許多日本企業發 現，透過台灣的合作夥伴，要打入中國市場會比較容 易。 據中華信評副總裁許智清估計，裕隆汽車旗下品牌 納智捷（Luxgen）在台灣市占率可能不到5%， 但在 22

50%-owned Chinese subsidiary, Dongfeng-Yulon Motor Corp. Despite slowing growth in China’s automobile market, a result of Beijing’s policies aimed at preventing economic overheating, growth in the China market and the expansion of exports could be the next big drivers for Taiwan’s automobile companies, Taiwan Ratings says. Raymond Hsu notes that car sales in China currently amount to 20 million units a year, over 54 times the level in Taiwan.

Social changes Fann of Ford Lio Ho notes that although car demand is stable, car makers still need to be alert to structural changes in society that may affect consumer tastes. One such factor that he cites is the rise of globalization in tandem with the ubiquity of digital connectivity.

As a result, Taiwan’s car industry can no longer be viewed in isolation or Taiwanese consumer tastes be viewed purely as a reflection of Taiwan’s unique culture.

“Because of the internet, because of the speed of spreading information, we see a gradual convergence of customer tastes around the world,” says Fann.

“People want similar things, whether the customer is from China, from Taiwan, or

中國組裝的車款在對岸的業績卻相當可觀。中華信評 報告顯示，2012年納智捷在中國賣出31,000 輛休旅 車，幾乎相當於台灣銷量的10倍。在中國銷售的納智 捷是由裕隆汽車中國子公司-- 東風裕隆汽車（裕隆持 股五成）負責生產。在中國政府預防經濟過熱的政策 影響下，中國汽車市場成長步調趨緩，儘管如此，中 國市場成長前景與出口擴張可能會是台灣汽車製造商 未來的主要利多因素。許智清認為，中國汽車年銷售 量總計達2,000萬輛，相當於台灣總量的54倍以上。

社會變化 福特六和總裁范炘指出，雖然汽車需求持穩，汽車 製造商仍然需要留意社會上可能影響消費者喜好的結 構性變化。他舉出的一個實例，是全球化趨勢興起和 隨時隨地可以上網這兩個同時存在的現象。因為有這 個兩個現象，台灣汽車產業不能再閉門造車，國內消 費者的喜好也不再只是單純反映台灣的獨特文化。范 炘說：「因為有了網路，資訊快速傳播，我們發現全 球的消費者品味漸趨一致。不論是中國、 台灣或北 美的消費者，大家想要的東西都很類似。」

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from North America.”

Another reason why car trends in Taiwan tend to follow global developments is that Taiwanese are tech-savvy and frequently research the models they are interested in, including foreign-made models, on the internet. “Consumers walk into salesrooms and tell the salesman ‘don’t tell me about this – I know more about it than you do.’ This is the power of the internet,” Fann says.

(Justin Mao, public relations manager for Mercedes-Benz Taiwan, adds that competition has grown fiercer because the internet allows consumers to make a lot of comparisons before they buy a car.)

In addition, the local market in future is likely to be characterized by a wider variety of different types of cars as young Taiwanese become more individualistically minded, says Fann. “In the old days, options were limited and people stayed with the safe choice. Tastes were traditional and conservative, and everyone was satisfied with basically the same kind of vehicle.” But in future, consumers are likely to see their car as an extension of the family home due to the hightech connectivity that links car devices to household devices – plus many people may wish to accessorize their car the way they would decorate their home to

SPORTY UTILITY — Ford Lio Ho has positioned its new EcoSport SUV as a vehicle for young families with a sense of adventure. It also carries a number of high-tech features. photo : ford lio ho

express their individuality.

Another trend noted by both TTVMA’s Chen and Ford Lio Ho’s Fann is the declining importance of the local distributor for foreign brands, who used to play the role of handling the complicated import procedures and was adept at navigating local business practices.

Instead, the foreign car companies are tending to set up operations here to sell to Taiwanese consumers directly.

“As the world is progressing,” explains Fann, “there is less need for an

台灣車款潮流往往隨著全球流行趨勢變動的另 一項原因在於，台灣人善於使用新科技，願意花時 間上網研究有興趣的車款，其中也包括進口車。范 炘說：「消費者來到門市，會跟銷售人員說『不用 多作說明了，我懂的還比你多。』這就是網路的力 量。」（台灣賓士的公關部經理毛淵慶也認為，汽 車市場競爭越來越激烈，因為消費者在購車前早已 多方比較。） 此外，范炘表示，由於台灣年輕一代崇尚個人主 義，台灣汽車市場未來可望有更多樣的車款供消費 者選購。「過去車款的選項很有限，消費者往往會 買能讓他們覺得安心的車款。大家的購車品味都很 傳統而且保守，選擇的車款基本上都一樣」。然而 未來汽車設備與家庭設備透過高科技相互連結，消 費者可能會把車子視為家的延伸 --- 而且許多人或許 會想為愛車添購配件，就像居家佈置一樣，藉此展 現個人化的品味。 台灣區車輛工業同業公會秘書長陳明德與福特六 和總裁范炘並指出另一項趨勢 ：外國品牌的台灣經 銷商漸趨沒落。過去台灣經銷商負責處裡複雜的進 口流程，也擅長本地生意手法；現在外國汽車廠商

auto company to appoint an independent distributor, even in an emerging market.”

A few decades ago when transportation was difficult to arrange and importexport procedures were complicated, car companies found it easiest to work through a distributor, he notes. But these days foreign companies tend to prefer having own branch here to gain greater control over sales and added flexibility in introducing new models if required.

Chen notes that Mercedes-Benz, Volvo, and Audi maintain their own oper-

逐漸在台灣設立營運據點，直接賣車給消費者。 范炘說：「世界不斷進步，即使是在新興市場， 汽車公司指定獨立經銷商的需求越來越低」。他指 出，幾十年前運輸不便，進出口程序複雜，汽車廠 商認為透過經銷商來銷售是最有效率的作法。如今 外國車廠偏好在台灣設立分公司，以便對銷售有更 好的掌控，在有必要引進新的車款時，也會更有彈 性。 陳明德指出，賓士、富豪和奧迪在台灣都有自己 的營運據點，今年11月初，馬自達也宣佈將設立自 營行銷體系，從2014年中開始將直接銷售給台灣消 費者，不再由福特六和經銷。范炘表示，這個改變 與福特汽車One Ford 計劃下精簡營運的內部政策有 關。但是陳明德對此表示樂觀其成，因為更多外國 汽車品牌（如南韓的起亞汽車Kia）可能在台設立分 公司，將可望活絡國內汽車市場，最後甚至可能選 擇在台灣製造。 范炘指出，福特六和正在研究捷運路線不斷增加 等交通基礎建設的變化對台灣民眾消費行為帶來的 影響。他說，由於搭捷運非常方便，台北地區許多 上班族不再開車上下班：「這可能表示，民眾買車

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EXPANSION — The capacity of the Ford Lio Ho plant in Zhongli, seen here through the frame of the All New Ford Focus, is being expanded to meet demand. photo : ford lio ho

ations in Taiwan, and in early November Mazda announced that it will set up its own distributorship to sell directly to Taiwanese consumers starting from mid-2014, rather than continue to have its cars distributed through Ford Lio Ho. The change is a result of Ford’s internal policies of streamlining operations under its One Ford plan, says Fann. But Chen expresses optimism that more foreign automobile brands, such as Korea’s Kia, may set up branches here in future, which

will in turn enliven the car market and possibly lead to eventual manufacturing activity here by those brands.

Ford Lio Ho is also studying how changes in the transportation infrastructure, such as the proliferation of new mass rapid transit (MRT) lines, are affecting consumer behavior in Taiwan, Fann says. In Taipei, many people no longer use cars for their daily commute because of the convenience of using the MRT, he notes. “This may mean the

的目的已和十幾二十年前有所不同。」 范炘認為，在預測台灣汽車市場的未來趨勢時，台 灣社會走向高齡化是個考量因素。崇尚個人主義的年 輕世代，想要的可能是造型特殊並配備高科技裝置的 入門車，才能在量產的主流車款中與眾不同。已進入 空巢期的退休人士可能偏好適合購物或週末出遊的小 型車，而不是之前選擇的家庭用房車。 本文的受訪者一致指出，低油耗和環保也是重要趨 勢。台灣區車輛工業同業公會的祕書長陳明德說，台 灣今年開始實施所謂的第五期汽車空氣污染物排放標 準，跟歐洲的五級標準十分類似。今年1月，環保署 為柴油車輛訂定新的排放標準，10月則宣布適用於汽 油車輛的標準。相關規定為台灣上市的新車設定碳氫 化合物、氮氧化物、一氧化碳等氣體的排放上限。陳 明德說，大貨車和大客車等大型車輛今年1到10月的 銷售量下滑了26.8%，原因可能是符合新排放標準的 車輛往往售價較高。 交通部數據顯示，台灣領有牌照的730萬輛汽車當 中，有51.5%的車齡超過10年，有27.2%超過15年。 舊車比較耗油，製造的污染較多，而且安全性可能不 如新車。為鼓勵車主汰舊換新，中國國民黨籍立法委 24

purpose of buying a car may be different than it was 10 or 20 years ago.”

He also considers the aging of Taiwan society to be a factor when looking at future trends in the car market. While the individualistic younger generation may want entry-level cars that have unusual styling and high-tech features that distinguish them from the mass-produced mainstream, retirees who are now “empty nesters” may prefer smaller cars suitable for shopping or day trips on weekends rather than the family-sized vehicles they previously drove.

Fuel efficiency and environmental friendliness are also important trends cited by all the interviewees. TTVMA’s Chen notes that Taiwan this year implemented what are called its “fifth stage” emission standards, which are very similar to Euro 5 emission standards in Europe. In January the Environmental Protection Administration set the new standards for diesel vehicles, followed by an announcement in October of comparable standards for gasoline-powered cars. These standards define acceptable limits for exhaust emissions of total hydrocarbons, nitrogen oxides, carbon monoxide, and other gases from new vehicles sold in Taiwan. Chen notes that sales of heavy vehicles such as trucks and

員江惠貞建議允許二手車外銷，台灣區車輛工業同業 公會則提議讓10年以上車齡的車主換購新車時，可以 享有貨物稅折扣的優惠。後面這項提議已經討論好幾 年，但政府似乎因為擔心稅收減少而不願採行。 為因應環境和能源的挑戰，美國、歐洲和日本的汽 車製造商在過去10年陸續推出使用電瓶驅動的汽車或 油電混合車（台灣電動車發展情況請參考邊欄）。這 些汽車廠也在研發使用替代燃料的汽車，包括柴油和 生質燃料車。福特六和總裁范炘表示，一項新的技術 已經出現，有可能會對電動車做為未來全球主要交通 工具的地位構成挑戰，那就是以氫氣為燃料，唯一的 排放物是水蒸汽。韓國的現代汽車最近在洛杉磯汽車 展發布一款以氫氣為燃料的小型休旅車。據稱它的售 價跟高檔休旅車相當，缺點是加氣站很少，而且造價 昂貴。 雖然國外有這些趨勢，但司達恆指出，環保因素 對台灣的汽車買主來說，似乎不是最重要的考量。他 說：「台灣汽車市場的一個現象是，民眾要買車時， 會考慮車子的外型、材料還有技術，但不是很重視油 耗。至少高級車款的買主是這樣。」但如果油價進一 步攀升，這個心態預料將會改變。

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buses fell 26.8% from January to October this year, probably because vehicles that comply with these new emission standards tend to be more expensive.

M i n i s t r y o f Tr a n s p o r t a t i o n a n d Communications statistics show that 51.5% of the 7.3 million cars registered in Taiwan are more than 10 years old, and 27.2% are over 15 years old. Old cars are less fuel efficient, more polluting, and arguably less safe than newer models.

To encourage car owners to replace the old vehicles, Kuomintang lawmaker Chiang Huei-chen has suggested a plan to permit second-hand cars to be exported to overseas markets, while the TTVMA has proposed a decrease in the commodity tax on the purchase of a new car when the buyer is scrapping an existing vehicle

that is more than a decade old. Although this proposal has been discussed for several years, the government does not seem inclined to adopt it for fear of losing tax revenue.

In response to the environmental and energy challenges, carmakers in the United States, Europe, and Japan over the last decade have been introducing more battery-powered and hybrid electric cars (see the following story on electric car development in Taiwan). They have also been working on alternative-fuel vehicles, including those powered by diesel and biofuel. Ford Lio Ho’s Fann notes that a new technology has emerged – enabling cars to run on hydrogen and exhaust only water vapor – as a possible challenge to electric vehicles as the future of world

transportation. Recently, Korea’s Hyundai Motors unveiled a hydrogen-powered small SUV at the Los Angeles auto show that reportedly will be released on the market at prices in line with luxury models. The downside is that refueling stations are scarce and costly to build.

Despite trends overseas, Stockhecke notes that environmental concerns do not appear to be foremost in the minds of Taiwanese car buyers. “One aspect of the Taiwan market, at least in the luxury segment, is that when people buy a car, they look for styling, they look at materials, they look at the technology involved – but they don’t rank fuel efficiency very highly,” he says. If the price of oil should surge further, however, that mentality could be expected to change.

In Electric Vehicles, a Shift to Commercial Applications Taiwan is aiming at the lower-profile market of such vehicles as buses, delivery vans, forklifts, and garbage trucks.

BY TIMOTHY FERRY

N

ot too long ago, Taiwanese companies were at the forefront of what seemed to be the next big technological innovation: batterypowered electric vehicles (EV). Battery maker E-one Moli was the first to supply batteries to BMW’s groundbreaking MiniE electric car in 2008, while motors made by Fukuta propelled the Tesla Roadster to performance heights.

But as the industry has developed, with EVs becoming at least a significant niche market, Taiwanese manufacturers seem to have been sidelined by bigger, more famous components suppliers from Japan, the United States, Europe, and even Korea. Fukuta is no longer listed as the motor supplier for the Tesla

Taiwan has been supplying electric-powered buses and jeepneys to the Philippines. photo : cna

Model S, and Tesla just signed a massive new deal for battery cells with Japanese maker Panasonic, with Samsung SDI as a backup source. Meanwhile, BMW no longer obtains batteries from E-one Moli for its latest line of EVs, the BMW i3, and LG Chem of Korea is the supplier for the Chevrolet Volt range-extended EV and the Ford Focus EV. Are Taiwanese electronics makers out of the competition in the global EV supply chain?

Not exactly. Global supply chains can be fairly opaque, and who is actually behind the manufacture of components is not always clear. According to a spokesperson for Fukuta, the company is still the only supplier of electric motors

for the Model S, but as the motors are assembled in Tesla’s California plant, Tesla is able to claim that it builds the motors itself. In fact, Taiwan’s Automotive Research and Testing Center (ARTC) says that 12% of the components of every Tesla Model S are manufactured

by Taiwanese suppliers, including battery connectors by Bizlink, power systems by CanDoTech, transmission gears by Hota, and touch panels by TPK, yet none of these names appear on publicly available supplier charts.

More importantly, though, as the EV industry has grown, the needs of EV manufacturers have exceeded the manufacturing capacity of Taiwan’s many small and medium-sized electronic components taiwan business topics • december 2013

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Cover story makers, according to James H. Wang, deputy general director of the Mechanical & Systems Research Laboratories at the public/private Industrial Technology Research Institute (ITRI). He says that when EV makers such as Tesla and BMW were producing very few units, “Taiwanese makers were able to handle the demand.” But now, the EV makers have expanded to the point that their suppliers need to be big operations that can handle mass production. “Even if the output of electric cars is 10,000 or 20,000 per year, in terms of batteries it’s a huge number” that could max out the capacity of most local battery makers, Wang explains.

On the other hand, the global EV market still tiny in comparison to both the total auto market and Taiwanese companies’ more usual 3C markets. As a result, Taiwanese electronic components makers hesitate to make substantial investments to enlarge manufacturing capacity. Already, the EV industry has seen several notable failures, including the bankruptcies of U.S. battery makers Ener1 and A123 Systems, as well as high-profile Fisker Automotive, when demand failed to meet expectations.

Wang says that local electronics makers will ask: “Where is the market to justify my investment?”

So where does this leave Taiwanese makers? Wang says that ITRI recommends that domestic SMEs carefully consider their capacity and capability before entering an industry sector. In practice, that means starting with a niche

application rather than the main market, and in the EV field it calls for going after the commercial over the consumer market.

The commercial EV market offers a number of advantages over the more widely publicized consumer segment.

ITRI’s Wang notes that the market for commercial EVs is “more controllable and the market volume is more manageable in terms of both manufacturing and technology.”

Equally important, it’s where industry analysts expect to see the fastest and biggest growth. Industry analytics firm IDTech forecasts that “over the next decade, the largest global EV value sector will be industrial and commercial for land, water, and air – accounting for nearly 50% of the total hybrid and pure electric vehicle business.” The report, Electric Vehicle Forecasts, Trends and Opportunities 2014-2024, predicts that consumer EVs, including “personal electric cars, bikes, leisure boats, light aircraft, and so on will be about 35% of the EV business to 2024.” The remaining 15% will be comprised of military EVs.

Range and recharging Commercial applications for EVs avoid many of the major obstacles holding back acceptance in the consumer market. Despite continuing improvements in battery technology, for example, EVs are still limited in how far they can be driven on a single charge – causing

TAIWAN-MADE MOTORS — Taiwan’s Fukuta says it continues to be a supplier to Tesla for the Model S electric car. photo : wikipedia

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what has been dubbed “range anxiety.”

In addition, the amount of time generally needed to recharge the batteries is a full eight hours on a household charger.

The most popular consumer EV on the market, the Nissan Leaf, has a U.S. Environmental Protection Agency (EPA)-certified range of 135 kilometers (84 miles) when fully charged, more than enough for most local driving. But without the availability of a network of fast-charging DC power stations, owners are unlikely to take the Leaf on a road trip. The highend Tesla has a range of up to 424 kilometers (265 miles), the farthest of any EV on the market, and the company promises to install a network of fast charging stations across the United States. But this range comes at a price – US$100,000.

These issues, though, are not major problems for commercial vehicles such as city buses or delivery/repair vans with their predictable routes and limited ranges. As ITRI’s Wang notes, commercial vehicles are used for “specific applications, confined to specific areas where the charger can be deployed and also the route distance is manageable.”

Another obstacle to widespread consumer acceptance of EVs is the high price tag. While the Nissan Leaf is advertised in the United States as starting as low as US$21,000, that price quickly approaches US$30,000 with add-ons, about twice the price of a typical internal combustion engine (ICE) driven vehicle in the same class. Even with government subsidies and tax breaks that can knock about US$7,000 off the price tag, the sticker shock still deters most consumers. For businesses, however, the total cost of ownership outweighs the high initial cost, and very often the long-term cost of operating an EV is lower than that of an ICE vehicle. First, fuel costs are much lower with EVs. The 2013 Leaf is rated by the U.S. EPA as having the equivalent of 115 miles per gallon – far better than even the best ICE vehicles on the market, and those savings are replicated in commercial vehicles. Recharging is also more convenient as it can be done at a depot, eliminating the need to either refuel at a gas station or maintain a messy and dangerous petroleum fuel source in the depot.

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But savings don’t stop at the gas pump. EVs have substantially fewer moving parts than ICE vehicles, which greatly reduces the need for maintenance. Wang notes that in a pilot project launched by ITRI that converted 15 delivery vans into EVs, the maintenance departments of the delivery companies involved report that the EV vans require very little attention. The vans use a permanent-magnet electric motor developed by ITRI that can travel 45 kilometers on the equivalent of a liter of gasoline, about the same fuel efficiency as an ICE motor scooter.

EVs also often perform better in terms of industry needs. Electric motors have instant full torque, which makes them ideal for hauling heavy loads or moving uphill. For this reason, electric forklifts have already largely replaced conventional propane or diesel models.

Government policy is yet another factor contributing to the growth of both the consumer and commercial EV markets. But while the consumer market is being propped up by government largesse in the form of costly subsidies and tax breaks, the commercial market is driven less by subsidies and more by regulatory restrictions on pollution and noise. In many instances, governments are forcing commercial fleets to reduce emissions and improve fuel efficiency, which adds the overall attractiveness of EVs. The deployment of EVs can have the added incentive of enhancing a company’s image, particularly for highly visible delivery vans and public buses.

To promote and develop the domestic EV industry, the Taiwan government established the Intelligent EV Campaign in 2010. Stephen Teng of ARTC’s Intelligent EV Promotion Office says that the program includes the establishment of national standards for EV use, along with measures to foster EV industry development. “ARTC accepted this EV industry development program and coordinated all related activities with government sectors, private companies and research institutes,” says Teng.

To make EVs more attractive to local drivers, the government is toughening fuel consumption regulations for ICE vehicles by around 15%, as well as tight-

ening CO2 emissions standards. EVs have also been exempted from commodity and license taxes, says Teng. In addition, the government promises to build a network of charging stations, although the plan has been slow in being carried out.

E-buses and garbage trucks A RT C s a y s t h a t 3 1 3 E V s & 5 4 E-buses are currently running in Taiwan, with over 1.5 million accumulated kilometers. Local maker Rich Electric built and operates 44 E-buses in Taiwan, and at the 2013 Taiwan Automotive International Forum & Exhibition in August, Smith Electric Vehicles of the United States signed a Letter of Intent to form a joint venture with Taiwan’s Taikang Technology Corp. to manufacture 5,000 electric garbage trucks for local municipalities before expanding into other markets.

Taking the lead in several projects to test appropriate technologies and business models based on these technologies is the Taiwan Automotive Research Consortium (TARC), formed by four research institutes – ARTC, ITRI, the Metals Industry Research Development Center (MIRDC), and the Chungshan Institute of Science and Technology (CSIST). TARC works closely with local parts, systems, and vehicles makers.

Among its projects is the above-mentioned conversion of delivery vans into EVs. These vans use electric motors developed in ITRI labs, as well as batteries manufactured by E-one Moli using ITRI-developed safety technology.

One innovative approach to EVs involves Taiwan’s largest farmers market, located in Taichung. About 800 diesel tractors have been used in the market to haul produce, generating considerable noise and exhaust. A number of them have now been converted to emissionsfree EVs, and eventually EVs will make up the entire fleet, making for a cleaner, quieter environment. The shift from diesel to electric tractors also presents an enormous business opportunity for Taiwanese EV makers. Similar produce markets are found throughout Asia, and unlike Western countries where such industrial equipment has already been electrified, most of the tractors used are still ICE-driven.

Commenting on this market potential, ITRI’s Wang says that “the volume may be small for General Motors, but it’s definitely not small for Taiwan.”

While Taiwanese makers may have fallen out of contention as suppliers for big stakes players like BMW, Wang says the many SMEs on the island have the ability to spot and exploit niche opportunities like the produce markets. The simplicity of EVs compared with ICEs makes them readily amenable to custom manufacturing off common platforms, and Taiwan’s strategic location in the center of the region facilitates its makers’ access to potential markets. Wang notes a trend in the industry “towards smaller-volume, higher-value products.” This approach meshes well with Taiwan’s “Hidden Champions” policy of moving away from commodity manufacturing towards greater concentration on valueadded production with higher margins.

Already Taiwan has developed some significant players in the EV industry.

Local automaker Yulon actually builds a road-approved EV under its Luxgen label and is also in the battery charger industry.

Pihsiang Industries has also entered the EV-battery industry and builds a wholecar EV for the export market. Although CEO Donald Wu admits that “we still have a lot to learn” about manufacturing EVs, Pihsiang’s E-buses and mini cars have been well received in the European market. “Response is excellent,” Wu says. “We can’t catch up with orders at the moment.”

Other players include RAC EV and Aleees in the E-bus segment; Fukuta, TECO, and Delta Electronics for electric motors; and Chroma ATE, Rich Electric, Lite-On, and Delta in controllers. Delta is also a big player in charging stations, along with Lite-On and Fortune Electric.

E-one Moli and Amita are manufacturers of battery cells, while Simplo manufactures battery packs and Aleees and FEMTC make battery cathodes.

For the moment, Taiwan has largely exited the higher-profile consumer EV market. But with market opportunities in industrial and commercial vehicles growing rapidly worldwide, Taiwan might become a hidden champion in the industry after all.

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advertorial

The

Kuga Connection

I

t was just a few months ago that Ford Lio Ho introduced its latest compact SUV, the Kuga, to the Taiwan market, and already it’s become a hit with consumers. The Kuga offers an array of hightech features, including an Intelligent All-Wheel Drive system that instantly adapts to changing terrain and conditions, Active City Stop that automatically applies the brakes at low speed to prevent a collision, and the Ford SYNC onboard computer system that gives hand-free control over music and phone calls – and can even read text messages aloud. The Kuga also sports an innovative tailgate that opens and closes when you just wave a foot beneath the rear bumper – no hands required.

“We’re bringing a world-class vehicle to Taiwan,” boasts John Lawler, the chairman and CEO of Ford Motor China, touting the segment-leading features offered by the Kuga. “What you’re going to see the Kuga do here – like it’s doing in other markets around the world – is setting the bar for what the customer wants and expects, and we’re happy to provide it for them.”

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The Kuga’s innovations extend far beyond the cabin.

It is equipped with a turbocharged 1.6 or 2.0 liter EcoBoost engine that generates more power than a similarly sized conventional engine, allowing drivers to save 20% on fuel while reducing CO2 emissions and other pollutants by 15%.

Although the Kuga replaces the Escape as Ford’s leading SUV, it is not just a revamped Escape. In fact, it is an entirely new vehicle that in many ways represents a revitalized Ford Motor Co. and the success of its global One Ford Plan. The brainchild of Ford CEO Alan Mulally, the One Ford Plan is an ambitious program to streamline Ford’s product lines and development. Ford now builds on only nine different “platforms” (what used to be called chassis). For example, the brawny compact SUV Kuga shares a platform with the mid-size Focus sedan. By reducing the number of platforms, Ford is able to build cars more efficiently and control production costs more effectively.

But the One Ford Plan is not only about manufacturing efficiency. With its globe-spanning research and development centers and market reach, Ford is able to draw upon the vision and expertise of specialists all around the world. Lawler notes that every Tuesday, corporate executives and technology experts get together

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advertorial

on a conference call that spans the globe. During the conference call, he notes, the participants share their market insights and discuss current issues of relevance.

“We all work together,” explains Lawler, noting that people who sit in during one of the conference calls are amazed at the breadth of the issues covered. Drawing on these global resources is “what allows ups to bring our product to market as quickly as we do,” says Lawler.

The success of the plan hinges on a key insight.

Despite differences in region, culture, and climate, the needs of consumers around the world are not so different after all. Everywhere, says Lawler, customer needs boil down to what Ford calls its Four Pillars: Quality, Green, Safe, and Smart. “They might be emphasized differently in different places,” he notes, “but undoubtedly, these are always the top four.”

The Kuga meets all four of these standards. Auto reviews tout the SUV’s powerful engine that delivers quick off-the-line speed with smooth handling and performance. The super-efficient EcoBoost engine wrings far more power out of a much smaller engine. Besides the gasoline-powered EcoBoost, Ford Lio Ho in the future plans to offer other types of power trains in the

Taiwan market. The parent company has made great strides in diesel technology, as well as in various green options from hybrids to battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and others.

In addition, the Kuga offers an array of built-in safety features, including drowsiness detection and lane departure systems and reinforced side panels for collision protection.

Kuga is an especially smart car as well. Its advanced technologies range from a parallel parking system that actually parks the car for the driver to the SYNC system that allows drivers to synchronize their communications technology – smartphones and tablet computers – directly with the Kuga’s onboard system. “Were trying to take what customers use in their daily life and use it seamlessly in the car,” notes Lawler. He notes that Ford is already in talks with major content providers to establish “channels” and other communications networks for the car, and has opened up the system to app development.

Developed in partnership with Microsoft, the SYNC system has been a hit with consumers around the world.

While Ford is going for a global strategy, that doesn’t mean that it has given up on localization. “As we go into every market, localization is a big part of what we’re doing to bring value to the client. At every turn with every product, we look at the local market needs and at what we can do to work with our partner suppliers to meet them,” explains Lawler. “It’s undoubtedly a key component of our One Ford Plan.”

Ford has a long history in Taiwan. The company formed a joint venture with the Lio Ho Group in 1972.

The relationship has been highly successful over the years, and the introduction of the Ford Kuga, following quickly in the footsteps of the new Mustang and the revamped Focus, demonstrate Ford’s commitment to the local market.

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U.S. RELATIONS

Large Taiwan Delegation at U.S. Investment Summit President Obama and other high-ranking officials address the delegates in first-ever such conference.

BY DON SHAPIRO

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cials at the highest level, hen the U.S. as well as from a “Who’s government Who” of private-sector execrecently conutives. President Barack vened the first-ever large Obama delivered remarks international conference following the first day’s lunto promote foreign direct cheon. Other distinguished investment (FDI) into the government speakers during United States, the Taiwanese the conference included representatives constituted Secretary of State John one of the largest national The Taiwan delegation took a group photo with Secretary of ComK e r r y, S e c r e t a r y o f t h e contingents to participate in merce Penny Pritzker and Under Secretary Francisco Sanchez. photo : ait Treasury Jacob Lew, Secthe event. retary of Commerce Penny The SelectUSA Investment Pritzker, and Under Secretary of Commerce for International Summit was hosted by the U.S. Department of Commerce’s Trade Francisco Sanchez. U.S. Trade Representative Michael International Trade Administration and held October 31 and Froman served as the moderator for a panel discussion, as did November 1 at the Marriott Wardman Park Hotel in WashSenior Advisor to the President Valerie Jarrett and Chairman ington, D.C. In all, the event drew approximately 1,200 of the Council of Economic Advisors Jason Furman. attendees, including business leaders from 58 countries, as well Among the companies whose top executives participated in as officials from 47 U.S. states, three U.S. territories, and the panels at the conference were BlackRock, Bloomberg, BMW District of Columbia. The 44-person Taiwan delegation, led North America, the Carlyle Group, Caterpillar, CB Richard

by American Institute in Taiwan (AIT) Director Christopher Ellis, Deloitte, Dow Chemical, Flextronics, Google, Honda, Marut, consisted of executives from 32 business organizaHSBC, Rolls-Royce North America, Samsung Electronics tions in such fields as chemicals, energy, engineering consulting, North America, Sanofi, and Walmart. The panels covered financial services, food services, and information and commusuch subjects as U.S. leadership in advanced manufacturing, nications technology. the dynamism of America’s technology and service sectors, Until a few years ago, the U.S. federal government played America’s world-leading universities as potential partners for little role in investment promotion, leaving that function to education and research, opportunities for private investment state governments and individual localities. But in June 2011, in U.S. infrastructure, and the United States as an export platthe SelectUSA program was created by an Executive Order of form, taking advantage of the 20 Free Trade Agreements that the President to leverage federal government resources to help the U.S. has concluded with other countries. A subject of parspur U.S. economic performance and domestic job creation ticular interest was the energy revolution under way in the by attracting increased foreign investment. U.S. embassies United States as a result of the rapidly expanding exploitation and missions around the world were mobilized to support of shale gas and shale oil – a transformation that is expected the program. In Taiwan, which was designated as a priority to lower production costs and greatly increase U.S. manufacmarket under the SelectUSA initiative, that function is being turing competitiveness in the years to come. performed by the AIT Commercial Section. In addition to Other panels dealt with the nuts and bolts of carrying out Director Marut, Commercial Section Chief Helen Hwang also investment projects, including investment procedures, access to accompanied the Taiwan delegation to Washington. financing, the availability of business visas, and the regulatory The two-day summit provided an unprecedented opportuenvironment. nity for the attendees to hear about business opportunities in “People are looking at lower energy costs here,” President the United States from a procession of U.S. government offi30

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Obama said in his speech. “They're looking at stability. They're looking at the increased productivity of our workers. All these things are adding up. And people are saying, why would we want to be outside the world’s largest market when we can get our products made effectively here, and this is a great platform from which we can export all around the world.”

The President also pledged that with SelectUSA, “for the first time, companies who want to do business in America will have a single point of contact at the federal level to cut through red tape. We’re going to help you navigate national, state, local rules and regulations so that you can invest faster, open facilities faster, create jobs faster.”

Members of the Taiwan delegation were full of praise for the conference. “It was definitely worthwhile – the meetings were very informative, giving us a lot of very valuable information,” said Sean Lien, the former chairman of the EasyCard Corp. who participated as senior advisor to the Evenstar Group, an investment company of which he is a co-founder.

“A lot of Taiwanese businesspeople don’t have enough upto-date knowledge about U.S. government policies and what is being done to enhance efficiency and expedite the whole investment process. Even someone like me who used to work in the States doesn’t have the latest information. This conference was a great chance to learn about the new energy programs and policy initiatives.”

Lien said he was impressed to hear President Obama speak about his administration’s determination to “cut through red tape and help the various state governments to make it easier for foreign companies to invest.” He said Evenstar would be interested in exploring investing in companies that will be pursuing FDI projects in the United States, for example in the energy sector. “The innovations coming out of the energy sector are opening up a lot of opportunities,” he noted. “We will start looking to those possibilities.”

Another delegation member, Kevin Hsieh, executive vice president and COO of DS Technology (DST), said “AIT did a

fantastic job” in arranging for Taiwanese business representatives to attend the Summit. “I felt very honored to be there in the same room as President Obama, Secretary of State Kerry, and the other top officials. The Obama administration has a very definite agenda to bring more investment into the U.S. and to bring American companies back to the U.S. to create jobs, and it clear from listening to their speeches that officials from the very top are quite committed to this program.”

DST is a photovoltaic system integrator that manufactures its own solar modules. Two years ago it set up a stateof-the-art plant in Gallup, Arizona in order to be closer to the American market. Hsieh said he “gained a lot of insight” from the conference about the differences in policies and programs in individual states – information that could be useful in considering future investment projects. “Otherwise we would have had to travel from state to state” to gather the same data,” he said.

AIT’s Hwang noted that the Taiwan delegation was “a very cohesive group” that “benefited from learning from one another” as well as from the conference program. “Although they come from different industry sectors, they shared a similar interest and goal in investing in the United States.”

Hwang mentioned the “pull factor” that sparked many of the companies’ desire to set up operations in the United States. “Taiwan is exporting so much equipment and components to the U.S., and their customers are telling them that they’d like their suppliers to be closer to them,” she said. “To be more responsive to customers is one of the strongest and most compelling arguments for having an operation in the United States.”

Having more of its companies operating in the U.S. will also have a positive impact on Taiwan, Hwang said. “It brings market diversification, a cross-fertilization of ideas, and opportunities for innovation, and of course it makes a great contribution to enhancing people-to-people ties in the relationship with the United States.”

Hon Hai (Foxconn) Plans Major U.S. Investment Just a few weeks after the SelectUSA Investment Summit, one of Taiwan’s largest manufacturing companies, Hon Hai Precision Industry (also known as Foxconn) announced plans to invest US$40 million in Pennsylvania. Terry Gou, the company’s founder and chairman, said that US$30 million would be invested over two years to build a high-tech plant in Harrisburg to make components for telecommunications equipment and internet servers. Another US$10 million will go to Carnegie Mellon University in Pittsburgh to fund research and development in robotics. Hon Hai has an existing small manufacturing facility in Harrisburg, but the new project will add about 500 jobs to the approximately 30 employees currently working there. The company is a major OEM supplier to Apple, Hewlett-Packard, and other major U.S. brands.

Although the Hon Hai decision was not directly related to the SelectUSA Summit, it underscored the conference’s theme that the time has come for international companies to take a new look at investment opportunities in the United States. Hon Hai Chairman Terry Gou, who in November joined a high-profile delegation to the United States of Taiwan business leaders led by former Vice President Vincent Siew, described his company’s investment plans in Pennsylvania as part of a manufacturing “renaissance” now going on in the United States.

Taiwan Investment in the U.S. – Facts and Figures • Taiwan is the 30th largest Source of FDI in the U.S. (2011 data) • Size of Taiwan FDI stock in the U.S.: US$7.9 billion (2012) • Number of U.S.-based employees of Taiwan firms: 12,900 (2010) • Value of assets owned by Taiwan affiliates in the U.S.: US$34.8 billion (2010) • Value of U.S. exports by Taiwan firms: US$945 million (2010) • Value of R&D investments in the U.S.

by Taiwan firms: US$116 million (2010) source: ait

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U.S. Visa Waiver, One Year Later The statistical evidence is still inconclusive, but the travel industry sees good potential for promoting more visits to the United States.

BY JENS KASTNER

I

be lessened interest by local n what both U.S. and tourists in planning trips to Taiwan officials regard U.S. destinations. as the most significant When Taiwan’s Vice Presdevelopment in relations ide nt Wu De n- yi h cut t he between the two sides ribbon to open last year’s ITF, in some time, qualified he forecast that VWP incluRepublic of China passsion would bring a 50% port holders were included increase in Taiwanese travel within the U.S. Visa Waiver Program (VWP) EASIER TRAVEL - The first Taiwan tourists to benefit from U.S. visa to the United States, while o n N o v e m b e r 1 , 2 0 1 2 . waiver treatment arrive at New York's Kennedy Airport on Nov. 1, local media at around the 2012. photo : cna same time quoted AIT as proThe change made them elijecting a rise of 47% by 2017. gible to stay in the United But trying to evaluate the actual results exhibition, was the show’s biggest forStates for up to 90 days without having in the first year of VWP privileges for eign representation. to apply in person for a visa from the Taiwan presents some statistical chalStill, several factors seemed to seriAmerican Institute in Taiwan (AIT) in lenges. According to figures from the ously dampen the U.S. exhibitors’ Taipei, saving them time, effort, and the U.S. Departure of Commerce’s Office enthusiasm. One was the lack of clear NT$4,800 (US$160) application fee. of Travel and Tourism Industries, it evidence that VWP had succeeded in Just before the first anniversary of would seem that VWP indeed had a substantially increasing Taiwanese Taiwan’s inclusion in VWP, a number positive impact. Its data shows that travel to the United States during the of organizations and travel operators in the first and second quarters of this past year. Another was concern that active in the U.S. travel market particyear, the number of Taiwanese visiregardless of what had transpired over ipated in the 2013 Taipei International tors to the United States rose by 21.4% the last 12 months, the effect of the Travel Fair (ITF) held in late October. and 28.5% respectively over the same partial U.S. government shutdown from The prominent American pavilion, periods in 2012.

October 1 through October 16 would located right by the entrance to the

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Statistics from the Taiwan Tourism Bureau paint a drastically different picture, however – a decrease in outbound Taiwanese travel to the United States by 26.1% in the first half of the year. Because travel to Europe suffered an even steeper drop of 54.8% in the first seven months of the year, while travel to Japan and Singapore increased by 54.1% and 30% respectively in the same period, it appears that a major shift in travel patterns has been under way. “The Taiwanese increasingly are forsaking their annual longhaul trip to the West to the benefit of several short-haul ones per year to East Asian destinations,” concludes Janet Chang, a professor at the Chinese Culture University’s Graduate Institute and Department of Tourism Management.

The trend became discernable after the 9-11 terrorist incident, but has become even more marked in recent years.

But how to account for the discrepancy between the U.S. and Taiwan statistics? One possible factor is that the Taiwan Tourism Bureau’s data is based on which box passengers leaving Taiwan tick on their exit forms, which may not necessarily be the same as their actual final destination. Someone on his way to the United States after a stop-over in Tokyo, Seoul, or Shanghai would not be counted as a U.S.-bound passenger. (As a result of this methodology, to cite another example, the Taiwan Tourism Bureau sometimes puts the number of Taiwanese travelers to the U.K., Italy, or Switzerland at “zero”).

On the other hand, the U.S. figures may give an overly rosy impression of the situation, noted industry observers interviewed at the ITF. In 2012, in expectation that Taiwan would soon be included in the VWP (the U.S. government had announced in December 2011 that Taiwan was a candidate for the program), many would-be Taiwanese visitors to the U.S. postponed their trips until they could take advantage of the policy change. The consequence was to distort the basis for comparison, reducing the number of travelers in 2012 and increasing the number in 2013 beyond what would ordinarily be the case.

OPENING DAY - Vice President Wu Den-yih (fourth from the right) joins AIT Director Chris Marut in inaugurating the U.S. Pavilion at the 2012 International Travel Fair. photo : cna

For its part, however, the ROC flagcarrier, China Airlines, seems to have no doubts about the actual trend. CAL reports a substantial increase in passenger volume to the United States since Taiwan joined the VWP. “Of all routes, the one to Honolulu posted the steepest increase of 57%, a clear result of the visa waiver program,” says Anita Wang of the airline’s Media Affairs office. Starting from June this year, CAL resumed direct flights from Taipei to Honolulu; the two nonstop flights a week supplement the previous service with a stop-over in Tokyo.

In July, Hawaiian Airlines also inaugurated three-times-a-week nonstop service between Taipei and Honolulu, citing the expected increased traffic due to VWP as the rationale. At ITF, Connie He, operations manager of Wasabi International Tours, a tour operator based on the “Big Island” of Hawaii, welcomed the VWP inclusion and subsequent promotions by China Airlines and Hawaii Airlines over the last year as bringing “a lot more Taiwanese” to the Hawaiian Islands. She noted that the direct flights carry the advantage of a 1 a.m. takeoff time, “meaning you can get a good night’s sleep.” The same holds true on the return trip.

Although Guam is not directly affected by the VWP, as Taiwanese could long travel to the territory

without a visa, Jon Cramer, vice president of Skydive Guam, also noted a recent increase of Taiwanese customers. “Taiwanese used to make up about 2% or 3% of our market, but over the course of the year it has become 5%,” he said.

Continued uncertainties On a less positive note, Wasabi’s He mentioned the difficulties caused by the partial U.S. government shutdown in October. Hawai’i Volcanoes National Park on the Big Island, a major tourist attraction, closed during that period to the great disappointment of visitors.

“Customer numbers dropped between 10% and 20% on the Big Island during the shutdown, but have since recovered,” she said.

If the shutdown was a relatively insignificant one-time blip to Wasabi’s business, it amounted to a major blow for some others. Janice Cheng of FlyUSA, a Taiwanese travel agency specializing in U.S.-bound incentive and other group tours, said the company encountered a double disappointment.

First the boom that FlyUSA had eagerly expected due to the VWP inclusion failed to materialize, and then came the shutdown, which “brought down our business by 60% year on year.” She described it as the third most frustrating

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PROMOTING TRAVEL TO THE U.S. — The prominent American pavilion, located right by the entrance to the exhibition, was the biggest foreign representation at the 2013 International Travel Fair. photo : courtesY oF taitra

development of career as a travel agent, after 911 and SARS. Worse still, Cheng foresees that the shutdown’s damage will be continuing.

“We know that the Grand Canyon, Yellowstone, and so forth will now be open until January 15, because the U.S. government budget until then has been decided on, but we don’t know what will happen after that,” she said. “Taiwanese interested in visiting the U.S. next year ought to be making their plans now, but they don’t know now if they’ll be able to see what they’re interested in.” She considers that customers will “simply think that now is not a good time to travel to the U.S. and book Japan instead.”

Jemy See, executive director of Discover America, Taiwan, an alliance of travel agencies, tourism offices, and airlines serving the U.S. market, put it even more bluntly: “The shutdown is a disaster.” He says he gets phone calls every day from people who are worried about committing to spending their money and then finding out that 34

they can’t see the national parks and volcanoes.”

Despite the conflicting indicators on the general state of Taiwan’s U.S.bound travel, China Airlines is planning to expand flights on U.S. gateway routes – Los Angeles (LAX), San Francisco (SFO), and New York (JFK) – while also conducting feasibility studies on additional direct flights to destinations such as Seattle (SEA), Dallas (DFW), Houston (HOU), and Chicago (ORD), according to Anita Wang. In Hawaii, Wasabi is planning to continue promoting travel to the islands by supporting Taiwanese TV travel shows – arranging the Hawaiian itineraries for their crews and providing them with shuttle services.

Idaho Commerce, the state government’s business promotion bureau, has been conducting similar programs to foster tourism through cooperation with the Taiwan media. According to Nancy Richardson, the bureau’s International Tourism Specialist, Idaho commerce over the past year has

brought journalists to Idaho from masscirculation dailies the Liberty Times and Apple Daily to enable them to produce travel stories featuring the state’s hallmark natural scenery and many outdoor activities. Guam Skydive’s Cramer also stressed the need for good media strategies, noting that Skydive has lately been getting a great boost in interest among young Taiwanese customers due to a thrilling music video by Mandarin pop star Fan Yi-chen (Van Fan), which was shot with him doing the company’s skydive and subsequently went viral on YouTube.

With regard to the cruise business, Holland America Line sales representative Vivien Tseng said that at a time when flight tickets from Taiwan to the United States have become more expensive than the cost of the actual eight-day cruise, the main priority for her company is to design low-cost last-minute offers and to educate Taiwanese travelers that cruises in the United States are not necessarily “the realm of the rich and retired school teachers.”

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Taiwan Enters 4G Era with a Bidding Frenzy Six finalists, including two new entrants to the telecom sector, came away with licenses for 4G spectrum.

BY PHILIP LIU

T

he grueling bidding for LongTerm Evolution (LTE) mobilephone service licenses – better known as fourth-generation (4G) – ended October 30 after nearly 400 rounds of bids over more than a month.

In the end, the six finalists had committed to paying a total of NT$118.65 billion (US$3.96 billion), which was NT$82.75 billion (US$2.76 billion) higher than the floor price of NT$35.9 billion (US$1.2 billion) – a premium rate of 231%. Taiwan is now poised to enter a new era of telecom service that promises to bring major changes to daily life and help inject more vigor into the local economy.

Chunghwa Telecom (CHT), the former monopoly telecom provider in which the government is still the controlling shareholder, emerged as the biggest winner in the competition, obtaining 35 MHz (megahertz) of bandwidth, the maximum available to a single bidder. Its spectrum will include part of the coveted C5 section in the 1,800 MHz frequency band.

Companies with C5 licenses will be able to engage in immediate operation, as there are no existing 2G or 3G licenses

in that spectrum and abundant related equipment is available on the market.

CHT is paying a dear price for that victory, however. Its total tender offers of NT$39 billion (US$1.3 billion) are about equal in value to its entire profits last year. Just the 15 MHz bandwidth in the C5 section cost the company NT$25.685 billion (US$856 million), 8.5 times the floor price.

CHT Chairman Lee Yen-sung says that pending approval by the regulator, the company plans to launch 4G service in the second quarter of next year.

It has pledged to set up 7,000 4G transmission bases within five years, at a cost of some NT$40 billion (US$1.33 billion), providing coverage to over 96% of the population.

The two other major existing mobile-phone carriers – Taiwan Mobile a n d F a r E a s To n e – b o t h w o n 3 0 MHz of bandwidth. Taiwan Mobile is spending NT$29 billion (US$967 million) and Far EasTone NT$31.3 billion (US$1 billion), equivalent to two times and three times their 2012 profits respectively. Cliff Lai, president of Taiwan Mobile, says the company expects to launch 4G service next year.

The timing for Far EasTone is likely to be the same. Li Bin, president of Far EasTone, notes that among the three spectrum sections garnered by Far EasTone, C3 and C4, both in the 1800 MHz frequency band, are contiguous, allowing the company to provide optimal service at a rapid transmission rate. Before they can start their 4G service, though, Taiwan Mobile and Far EasTone will have to negotiate the exchange of spectrum sections, as the C1 section won by Taiwan Mobile is currently being used by Far EasTone for 2G service, while the latter’s C4 section is now in use by Taiwan Mobile for the same purpose.

Ambit Microsystems, a unit of the Hon Hai Group, a leading EMS (electronic manufacturing service) provider in the world, was among the newcomers to the telecom sector to bid successfully for spectrum. It gained two sections with a total of 20 MHz in bandwidth at a cost of NT$9.18 billion (US$306 million), prompting chairman Terry Gou to declare: “Hon Hai is in the game for real.” In the face of the fierce competition from CHT, however, Ambit failed to achieve its goal of

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The NCC spokesman explains the bidding rules at a press conference in mid-August as the Commission prepares to kick off the 4G auction. photo : cna

obtaining spectrum in the ready-for-operation C section.

As a result, Gou says he will take his time in preparing the launch of the 4G service, perhaps within two years. The 4G venture is part of Hon Hai’s overall development strategy of combining the group’s established strength in manufacturing electronic devices with new forays into telecom and cloud computing. The company plans to develop various smart 3C products and medical-care systems for linkage through 4G or even more advanced network services. For its 4G service, Gou says the group will focus on data transmission, mainly for graphics and videos, with customers receiving free service for the voice communication and text messages that will occupy only a small portion of the network’s total bandwidth. He says Hon Hai has sufficient capital but will seek strategic partners for the 4G ventures to provide expertise in technology and marketing.

According to the chairman, Hon Hai aims to eventually enter the international market for 4G service, rather than focus on Taiwan alone.

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sector, Star Mobile Telecommunications, managed to win only 10MHz of bandwidth at a cost of NT$3.65 billion (US$122 million), a far cry from the ambitious objectives it spoke of before the auction. Star Mobile is an investment of the Ting Hsin Group, known for its “Master Kong” instant noodles that have been highly popular in China. The poor showing comes on the heels of the withdrawal of a technical team consisting mostly of former employees of Taiwan Mobile, headed

by Li Ta-cheng, Taiwan Mobile’s former vice chairman. Taiwan Star Mobile will not be able to kick off its operations until 2017, since the B1 section it won is currently used by Asia Pacific Telecom, whose license is good until the end of 2016. The company may therefore have to negotiate an alliance with Asia Pacific Telecom, which itself won a 10MHz section in the auction with a bid of NT$6.415 billion (US$214 million). Taiwan Star Mobile has already reached an agreement with VIBO Telecom, a 3G operator with 1.8 million subscribers, to take a stake in the company, according VIBO chairman Rock Hsu.

Intense process The auction was a tortuous, seemingly endless contest that lasted 393 rounds over 40 working days starting September 3. At 9 a.m. each day, sixmember teams from the seven bidders would enter their designated bidding rooms at the National Communications Commission (NCC) office on Jinan Road, after yielding their mobile phones and other mobile communications devices. Each room was furnished with two dedicated lines for the teams to communicate with the control centers at their headquarters. Ten rounds of bidding took place every day. Should a team fail to offer tenders for four consecutive rounds, it would be eliminated from the competition. After the end of daily bidding at 4 p.m., the NCC posted the highest bids on its website without specifying the bidders.

The bidding soon developed into what CHT president Shih Mu-piao described as a “show hand” card game, with the government in the role of the dealer and the bidders as gamblers offering ever larger wagers. In addition

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to striving to gain their desired spectrum, the competitors also made every effort to boost the license costs for others. On September 11, following 53 rounds of bidding over six days, the team from Shinkong Synthetic Fibers called it quits, saying the stakes had surpassed its expectation. As the bids continued to hit new highs far beyond the original predictions, some voices began to be heard calling on the NCC to put the brakes on the frenzy, but the regulator declined to change the rules in the middle of the game. When the NCC finally announced the end of the contest on October 30, following the absence of effective new bids for two consecutive rounds, it came as a great relief of the exhausted bidding teams. The 4G licenses will be valid until the end of 2030.

The result of the auction made Taiwan’s 4G licenses among the most expensive worldwide. Particularly on a per capita basis, Taiwan’s bandwidth price far exceeds that of most other nations, including Germany, Spain, Italy, Sweden, and Singapore, although it is lower than South Korea’s. By comparison, the bidding for 3G licenses in 2002 lasted 180 rounds over 19 working days, with the winning bids totaling NT$48.9 billion (US$1.6 billion) in value – a premium rate of 45% of the floor price – in exchange of 85 MHz in bandwidth.

The influx of funds to the national treasury will bring welcome relief to a revenue-hungry central government.

The winning bidders are required to pay the floor prices within 30 days, with the remainder to be paid in installments over 10 years at 5% interest.

Bidders may choose to pay the entire sum at once, as CHT has pledged to do.

The winning bidders will also have to submit business plans, including operational schedules, system equipment to be used, and service contents and rates, for review by the NCC before it will issue the operating permits.

The business plans are expected to call for the adoption of tiered service rates that reflect the volume of use for various value-added services – forsaking the “all-you-can-eat” model of fixed rates that has been prevalent for

3G service. “Plural rates will be inevitable, in view of the high license fees,” says CHT’s Shih. The various service packages would be tailored to the needs of different customer groups.

In Japan, Hong Kong, and Singapore, for example, 4G services are charged according to consumption volume and transmission speed; when the consumption volume exceeds the set amount, the transmission speed slows accordingly.

An immediate challenge for the mobile carriers will be to provide sufficient incentives to persuade current 2G subscribers to migrate to 3G, so as to empty the bandwidth now allocated to 2G service (mostly in the C1-C4 sections of 1,800 MHz frequency band) and make it available for 4G use.

Thanks to these incentives, the number of 2G subscribers had already dropped to 4.8 million as of the end of September, down by 1.2 million so far this year. Although the NCC has extended the deadline for 2G licenses to the end of June 2017, it will permit carriers to launch 4G service in the C sections as long as the interest of existing 2G subscribers is not affected.

The advent of the 4G era will revolutionize daily life and work for many local people, enabling them to access video materials at high speed, anytime

and anywhere. The 4G mobile transmission speed of 100 Mbps is 10 times the maximum speed for 3G service. As a result, a high-definition film with 2GB capacity can be downloaded in a mere two minutes, compared with one hour for 3G. This high-speed video transmission is indispensable in an era of cloud computing, and among other things will pave the way for widespread use of mobile TV. Among CHT’s plans for 4G is to promote the service in the projected Taoyuan Aerotropolis to create an optimal business environment in the proposed “aviation city.” With the company’s support, a “smart industrial alliance” for the Aerotropolis, which has already attracted 38 members, will come into being in December. The alliance aims to combine the 4G service with the R&D strength of Taiwan’s information-communications technology (ICT) industry to build a “smart aviation city” and facilitate the export of related ICT systems on a turnkey basis.

Ramifications for industry Domestic manufacturers are also accelerating their preparations to make inroads into the 4G device market, especially 4G-supportive smartphones

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and tablet PCs. Among the companies that have already rolled out such terminal devices are ASUS, HTC, and Quanta. For other local firms, including Hon Hai subsidiary Microelectronics Technology, M.gear, and Universal Microwave Technology, the business opportunity lies in supplying equipment for 4G transmission bases. Chip makers also stand to benefit. MediaTek, a leading fabless IC maker, has developed dual-mode TD-LTE/FDD-LTE chips, suited for use in the Chinese telecom market, while Faraday Technology is supplying ASIC chips, tailored for 4G-LTE bases, to 4G equipment manufacturers in both Taiwan and China.

To facilitate the development of 4G devices and their penetration of the Chinese market, the government-backed Industrial Technology Research Institute (ITRI) is setting up a 4G testing field in Taichung. The first such facility on either side of the Taiwan Strait, it will enable companies in both Taiwan and China to test the interoperability, internet speed, and signals of devices under development.

As its 4G LTE operations start up, Taiwan will join a rapidly expanding worldwide trend. The Global Mobile Suppliers Association (GSA) reports that 200 LTE networks in 76 countries were operational as of the end of July, an increase of 54 networks from the end of 2012, with the number projected to hit 260 by the end of this year. The Topology Research Institute, a Taiwanbased research company, forecasts that the number of LTE subscribers worldwide will top 100 million by the end of the year, up 85.6% over a year earlier, and skyrocket to near 600 million by 2016.

Taiwan has been a laggard in LTE deployment, especially in comparison with such neighboring countries as Japan and South Korea – quite unlike its pioneering entry into the 3G era. South Korea has even launched two LTE-advanced networks, boasting transmission speed of 150 Mbps, 50% higher than regular LTE. The underperformance in Taiwan is attributed to the government’s previous policy of embracing WiMAX technology as the route to 4G service.

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The strategy proved to be a failure after the retreat of Intel from the WiMAX camp that it had initiated.

WiMAX, based on internet protocol (IP) technology, is more suitable for computer-based data transmission, while LTE has evolved from 3G and 3.5G technologies based on voice communications – and therefore enjoys the advantage of existing customer bases in many markets.

According to the NCC, the four WiMAX operators had only 127,600 subscribers as of the end of September this year, more than three years after their launch in 2010. Despite that figure, Global Mobile claims to have some 100,000 subscribers, mainly in the Hsinchu and greater Taipei areas.

Vee Telecom Multimedia, another active WiMAX operator, claims to have 60,000 subscribers, mainly in Taichung, Taipei, and Kaohsiung. The company previously acquired two of the original WiMAX operators, VMAX Telecom and Tatung InfoComm. The remaining two WiMax license-holders, Far EasTone and First International Telecom, have not actively promoted the business.

Both Global Mobile and Vee Telecom plan to transform their systems into LTE networks. Experts note that such transformation involves a change only in the facilities for the “last-mile” connection from the base stations to subscribers.

Those facilities reportedly account for just 20% of the cost of the network.

Still, the request by WiMAX operators to convert their networks to LTE

will pose a major headache for the government, which will have to decide what to do about the 2.6GHz frequency band they now occupy when their licenses start expiring in the middle of next year. Simon Chang, the minister without portfolio in charge of science and technology, has said that the government must find a solution for the WiMAX operators (especially Global Mobile and Vee Telecom, the only two with networks covering over 70% of their operating regions), since they engaged in the industry in support of the government’s industrial development policy. A previous plan allowing their direct conversion to LTE by paying license fees comparable to the levels set in the 4G-license auction appears to be unfeasible in view of the recent tender’s exorbitant prices.

With the battle for 4G licenses barely over, the government has already set its eyes on 5G technology in order to gain a head start in the continuing race for broadband mobile communications worldwide. Although international standards for 5G are not expected to be ready until 2018, a draft program calls for Taiwan to begin preparations by means of intellectual-property deployment, technological development, and broadband infrastructural construction.

Taiwan observers are well aware that Korea’s Samsung this May announced successful development of 5G core technology, boasting transmission speed of 1Gbps, which it says will be commercialized by 2020.

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FINANCE

Dwindling Numbers of Foreign Life Insurers For the remaining companies, however, a difference in business models makes the market continue to be attractive.

BY DON SHAPIRO

W

hen CTBC Life Insurance (until recently known as Chinatrust Life) absorbs the operation of Canadian insurer Manulife Taiwan on January 1, 2014, it will represent the departure of one more foreign life insurance company in what has been a steady exodus from the market in recent years. Two years ago, CTBC Life came into existence by acquiring and renaming the Taiwan operations of the U.S. company, MetLife.

In other recent deals, Allianz Taiwan Life took over the Taiwan operation of HSBC Life in the middle of this year by for a reported US$18 million, and New York Life has agreed to sell its Taiwan subsidiary to the Yuanta Financial Holding Co. for a reported US$3.3 million – a transaction that is still pending regulatory approval. New York Life turned to Yuanta after a previous agreement to sell to the Taishin Financial Holding Co. failed to get the green light from the Financial Supervisory Commission (FSC) because of other issues the regulators had with Taishin.

Other players that have exited the market over the past four years include Winterthur of Switzerland (part of the AXA group), Aviva of the United

DECLINING MARKET SHARE FOR FOREIGN COMPANIES ON NEW BUSINESS 50 40 30

25% 18%

20

16% 10%

10%

11%

2011

2012

2013 Jan-Oct

10 0%

2008

2009

2010

Note: Measured by Adjusted First-Year Premiums Source: Life Insurance Association

Kingdom, ING and Aegon of the Netherlands, and A.I.G. of the United States from its Nan Shan Life entity. Britain’s PCA Life Assurance (Prudential U.K.) made a partial departure by selling off its agency operation while continuing to offer policies in the market through the bancassurance channel.

In some instances, company-specific reasons were behind the decision to leave Taiwan. In the case of A.I.G., for example, the sale of the Taiwan unit

was largely prompted by pressing financial difficulties at the parent company.

A.I.G., which was one of the financial institutions at the center of the 2008-2009 worldwide financial crisis, needed cash to repay the U.S. government after receiving a massive federal bailout to keep the company from going under. With New York Life, for another example, the move was part of a corporate decision, following a change in the top leadership, to abandon most inter-

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FINANCE

national markets in order to concentrate on business in the United States.

More broadly, however, the retreat from Taiwan by so many international players can be attributed to the sluggish worldwide economic conditions that prevailed in the several years following the global financial crisis – combined with some particular conditions specific to the Taiwan market. At a time when many international insurance companies were pressed for cash, the difference in accounting standards in Taiwan compared with Europe and North America made it possible for many insurers withdrawing from this market to reap a windfall, in some cases reaching into the hundreds of millions – or even billions – of dollars.

“When these companies depart, they are able to release a huge amount of capital,” explains a former executive with a multinational life insurance company here. “It’s the difference between the total reserve requirements that foreign companies need to cover here and what their local counterparts are required to hold in reserve. Every company operating here – foreign or local – needs to meet the reserve requirements set by Taiwan’s FSC. But in addition to that, the foreign companies need to hold a lot more in reserve under the rules of the jurisdiction where their parent company is registered.”

The most stringent requirements are those under the International Financial Reporting Standards (IFRS) originating in Europe. Canada and the United States each have their own Generally Accepted Accounting Principles (GAAPs). All of them are far stricter than what is found in Taiwan, where virtually all the insurance companies would be considered seriously undercapitalized under the international standards. When a Taiwan branch is sold, the foreign company can therefore typically gain access to a vast amount of cash that no longer has to be held in reserve to meet requirements set by overseas regulators.

In addition, the need to tie up more capital in reserves adds to a multinational insurance company’s costs, and ends up making its products less com40

petitive than those offered by local insurers. “In the West, regulations on reserves force insurance companies to take the current economic environment into account when setting reserves,” explains the head of a multinational company in Taiwan. “Interest rates are low now, so reserves should go up. But in Taiwan that’s not required. You can keep the same percentage of reserve as you had 20 years ago.”

Further, the prolonged low interest-rate environment exacerbates the “negative spread” – the gap between the cost of funding a company’s obligations to its customers and the yield it can obtain from its investments. That adds to the financial pressure on many companies, especially if they hold a large block of insurance policies that were written when interest rates were higher, and that guarantee much higher returns than are currently profitable.

As a result, foreign insurance companies have another motivation to leave the Taiwan market: ridding themselves of this “legacy” block of older policies that may pose a long-term financial drag unless interest rates rise considerably.

Who are the buyers?

But for every multinational company seeking to withdraw from the market there have been local counterparts willing to pay a decent price to take over the operation. One reason is the fierce competition among the major domestic life insurers. Acquisition of a foreign-owned company is a quick way to increase market share in an effort to strengthen one’s competitive position. Fubon Life, for example, was able to expand its business through its purchase of ING’s operations in 2008.

China Life, part of the Koo’s Group of companies, bought out AXA Winterthur Taiwan in 2007 and acquired most of the assets of PCA Taiwan in 2009.

Another rationale stems from the change in government policy that led to the creation of financial holding companies (FHCs) in the early 2000s. The objective was to enhance efficiencies and create synergies in the financial services industry by breaking down the

barriers that kept banking, securities, and insurance institutions totally separated. An FHC is allowed to own companies that engage in each of those sectors, and all of them are regulated by the same government agency, the FSC (albeit by different bureaus).

The background of some FHCs left them without a strong presence in the life insurance market, however.

Entering into a deal with a foreign company looking to depart from Taiwan was a much more practical option than trying to build up an insurance business from scratch. Yuanta Financial Holding, for example, grew out of the securities sector; purchasing New York Life’s Taiwan operation will immediately make Yuanta a player in the life insurance category.

Similarly, CTBC Financial Holding saw a need in recent years to expand beyond what CTBC Life Insurance CEO Frank Kuen-Bao Ling calls the group’s “core business of banking” – referring to its CTBC Bank (formerly called Chinatrust Bank). “As a financial holding company, it’s best to have kind of integration among banking, securities, and insurance,” he told Taiwan Business TOPICS. “That’s why financial holding companies like Cathay, Fubon, and Shinkong that have all three components have been able to develop quite fast.” With such integration, FHCs can offer their customers “one-stop shopping,” for example using the banking relationship as a platform for promoting securities and insurance business as well.

Ling says the acquisition of MetLife provided the group with a solid foundation in the insurance sector, and the addition of Manulife – which unlike MetLife has a well-developed corps of its own agents – will bring the benefit of another sales channel. According to local media reports, the MetLife deal was worth US$180 million, while the sale of the smaller Manulife operation was put at US$24 million. CTBC is now seeking to grow further through M&A action by acquiring another local company, Taiwan Life, if it gains regulatory approval. Ling says he continues to be optimistic about the long-term

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FINANCE

potential of the Taiwan life insurance market, based on the high savings rate, widespread consumer acceptance of insurance as an investment vehicle, and the expectation that interest rates will be rising.

Who’s staying?

With the drop in the number of companies active in Taiwan, the market share for multinational life insurers – measured in terms of the industry standard of adjusted first-year premiums – has plummeted from 25% in 2008 to a current 10-11%. Of the remaining foreign companies in the market, the biggest players are Allianz from Germany and Cardiff of France.

Others include Prudential and Cigna from the United States, and Ace, part of a Swiss-based international group.

“What enables these companies to survive is that they’ve found a niche,” says a former head of one of the multinational insurers. For most of the survivors, that niche has been a focus on investment-link products – policies that are tied to investment instruments such as mutual funds. “Investmentlink products have no interest-rate risk,” explains an experienced industry source. “Any volatility gets passed along to the customer, because they’re buying mutual funds.”

In the case of Cigna Taiwan, CEO Arthur Cozad attributes the company’s profitability to its strategy of concentrating on “the not-so-glamorous protection side of the business,” particularly major medical, dread disease, and other health plans. That approach also involves less vulnerability to the negative spread than savings-oriented policies. In addition, Cigna holds down costs by relying on direct marketing, such as through call centers and the internet, rather than using an agency network, says Cozad.

In written material provided to Taiwan Business TOPICS, Prudential of Taiwan, an affiliate of Prudential Finance of the United States, stresses its long history of 23 years in the Taiwan market and the deep understanding of Taiwan consumers’ needs that enable

CHANGING HANDS — In a reverse auction a year ago, TransGlobe Life Insurance won the right to take over the failed Kuo Hua Life, which had been under government receivership. photo : cna

it to be a “different and better” company. Its agency force is built on a “Life Planner Model” that accentuates a high level of customer service and professionalism, gearing products to clients’ specific protection needs.

“Prudential is seeking to be an allaround player – operating in multiple channels, including its own agency network, and offering a full range of product,” says a competitor. “It is trying to cultivate professional financial advisers who can maintain a continuing relationship with clients. The focus is on quality rather than quantity. You can do well with that market positioning, but it’s not so easy to build scale.”

Those remaining in the market continue to be upbeat about future business opportunities here. In particular, they note the growing need for protection and retirement-oriented policies as Taiwan nears the point of transforming from an aging to an aged society.

But among many analys ts both inside and outside the industry, there is also apprehension about the long-term implications of the under-capitalization of the sector cited earlier in this report, especially since the Taiwan government

has set the objective of adopting the more stringent IFRS accounting rules.

So far one company, Kuo Hua Life, was declared insolvent and taken into government receivership in 2009. After two failed rounds of reverse auctions to find another party to take over and reorganize the company, a third bidding in November last year ended with the sale of Kuo Hua to TransGlobe Life.

Under the deal, TransGlobe, which was created four years ago when local investors bought out Aegon Life Taiwan, received NT$88.4 billion (about US$3 billion) from the government’s Insurance Stabilization Fund to rescue Kuo Hua. The transaction has depleted the Fund, raising concern about how any future cases of troubled insurers could be handled.

Industry sources say the most likely course for the regulator to follow is to move toward IFRS standards on a phased basis, requiring local insurers to increase capital in increments to meet the new standards at each stage. “The Taiwan IFRS is likely to be quite different from IFRS in Europe, but it still offers a way to deal with the problem,” says one industry executive.

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INTERVIEW

A Conversation with State Street's Jane Hwang

As chairman of AmCham Taipei in 2007, Jane Hwang presided over the annual Hsieh Nien Fan banquet.

With her on the dais are then Director of the American Institute in Taiwan Steve Young and then ROC President Chen Shui-bian.

On her retirement as head of State Street Bank and Trust Company's Taipei Branch, a former AmCham Taipei chairman reflects on Taiwan’s financial sector, the Chamber, and her future plans. Below are excerpts from an interview conducted by Taiwan Business TOPICS editor-in-chief Don Shapiro at the 113 Cafe.

photo : amcham

How did you get started in the banking industry?

After I got my MBA from Indiana University, I worked for Mellon Bank in Pittsburgh for a year, and then came back to Taiwan in 1988 when my husband took a teaching position at National Taiwan University. I interviewed with a few foreign banks, and accepted an offer from the Bank of Boston Taipei Branch. First I started as a credit analyst, then I had to go through a loan officer development program in Boston before I was sent back to Taipei to become a loan officer. In 1994 I went to Boston again because of family reasons. The Taipei branch manager arranged for me to be interviewed by the head office, which invited me to take a position in global relationship management with multinational firms.

I stayed with Bank of Boston until 1998, then switched to State Street, which is a very different type of firm, very much concerned with capital markets. After half a year with State Street in Boston, they sent me to the Taipei branch as head of the marketing and credit departments in May 1999.

When the branch manager left at the end of the year, I was promoted to take that position. Soon afterwards the bank agreed for me to be involved with the 42

American Chamber of Commerce, so we joined as a corporate sustaining member and I started to participate in the Banking Committee. I was co-chair in 2002-2003, and later also became active in Capital Markets Committee, where I was one of the co-chairs from 2004 until just recently.

How does Taiwan stack up as a place for doing business in financial services?

Certainly some progress has been made. For instance, the establishment of the Financial Supervisory Commission in 2005 means we now have a single body with responsibility over the banking sector, securities sector, and the insurance sector, as well as having an examination bureau. So 2005 was a landmark in the development of the regulatory structure. While there’s been significant progress on the supervisory front, I think we could have used more progress in the product innovation area.

In the 1990s, the Taiwan economy was considered very progressive in the Asia Pacific region, but since then, while it has continued to progress, the other neighboring economies have advanced at an even faster pace. The opening up has been much faster in Singapore, Korea and Hong Kong, leaving Taiwan lagging behind.

In terms of wealth management products, for example, there are so many restrictions in Taiwan that people find it so much easier to buy product from offshore. Much of this has to do with the rigidity of the civil-service personnel system in Taiwan. The mentality of many civil servants is that the more you do, the more mistakes there will be, and then you’ll be criticized – so it’s better not to do too much. There’s not much encouragement for permitting innovation for fear of making mistakes.

In addition, there are many regulations that are unique in Taiwan, so global investors have to remember to be very careful when entering into this market. For example, securities lending here is very different from elsewhere.

You have to be mindful of rules that are very specific to Taiwan. In other countries, what is called SBL – the securities borrowing and lending business – is mostly done by agent banks. The agent banks actually have their own internal credit standards, and they review annually what kind of exposure they can give to brokers in terms of securities lending.

But here there is no such concept as agents – securities lending has to go through government-administered systems. It’s pretty much controlled at

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INTERVIEW the center. The approach is so different that it can’t be interfaced with global systems.

The result is that your market cannot grow bigger. If it’s unique to Taiwan, then only Taiwan securities can be lent and borrowed. This is not a huge market by global standards. The global pool is so much bigger, but it can’t easily be accessed. It limits the size of growth. We’re told there are some historical reasons for the uniqueness, and that’s the way things have to be done. Investors have to remember that there is a special set of rules, and only if absolutely necessary will you lend or borrow. If it’s not necessary, then you don’t do it.

To overhaul the system in order to interface properly with the global markets would require a huge investment in revamping the IT infrastructure.

That would require a lot of financial resources, and some sectors might be negatively impacted. So it seems the regulators don’t consider the situation conducive to making such an overhaul.

What other regulatory changes would improve the business environment?

We deal with numerous back-office issues. The banks are required to file a lot of reports every day, which adds a lot of cost for the banks. I’m not sure if anyone in the government even has time to look at the vast amount of data that is generated. Every time the bank remits money, you have to file certain forms. And this is still done all by paper, not electronically. It just adds on to the cost of doing business, and it’s unique to Taiwan. If you try to explain to the global team why we have to do this, it’s really hard for them to understand. But we have to – otherwise we’re in breach of compliance.

But again, unless there’s an overhaul of the IT infrastructure, it would be very difficult to change. The disincentive to make such a big investment is one reason it doesn’t happen, and perhaps some people prefer to do it the old way in order to maintain employment levels. But while this is going on, newer economies are able to leapfrog Taiwan. They’re not so bound by this old infrastructure, and so can build new systems. They don’t have to go through

this painful experience.

I feel the pain for the back office, because they have so much work to do. We understand their difficulty, but there isn’t much that we can do about it. It depends on the government’s sense of priority and determination. If the priority is really to be able to compete globally, then things should be done differently.

Let me add that there are some bright spots for Taiwan. It’s a very pleasant living environment. Over the years the traffic has improved a lot, and so has the air quality. The people are friendly, and the healthcare system is quite good and affordable. I see the biggest challenge for Taiwan and for some neighboring countries as the aging society. In 10 years, younger people will

have to support a larger non-productive population, assuming there’s no change in immigration policies or reform of the retirement system.

How do you see Taiwan’s role within the region?

It’s important to be engaged with neighboring countries, to sign more trade agreements with East Asian countries and with China. This should be a priority, because you don’t want to be isolated and you want to be able to do business easily with your neighbors.

And you don’t want to stand out as a country that’s the most expensive to do business with.

Good progress has been seen in cross-Strait business. However, your own system needs to be able to stand on

AmCham Taipei’s 2007 Washington Doorknock delegation, led by Jane Hwang, in front of the Eisenhower Executive Office Building next to the White House. photo : amcham

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INTERVIEW its own as well. There are many smaller economies in the world. You have to find your own model, and you don’t have to emulate the big economies. You can find your own unique strength.

Taiwan needn’t be afraid so much of foreign competition. There is probably a tendency to protect the local financial service sector. But I don’t think there’s anything to be afraid of. The two can both flourish. The foreign companies will bring some new models and new products, and their local counterparts can learn from that.

Over the years you can see that the foreign companies in financial services are less and less important players in this market. They don’t have much influence. The regulations are made in such a way that you can feel that not much consideration is paid to the foreign participants. The currency front is one example. Taiwan is so careful not to let global investors impact exchange rates at all, but this economy has progressed beyond the stage where that should be a prime consideration.

Exchange rates may have some influence in the short run, but in the longer term the strength of your financial institutions is much more important.

Do you believe the local banking sector would benefit from further consolidation?

Consolidation would be a good thing, but as a lot of the large banks are controlled by the government, the problem becomes more complicated.

If they could promote some consolidation – together with privatization – that would bring more efficiency. But it would also mean fewer high positions to be filled.

A key point is that the banking industry should be treated as an industry – not given so much in the way of national missions, such as providing the funding for infrastructure development. If the government wants to build up the infrastructure, it should devise other approaches for the financing.

What prompted your retirement and what are your future plans?

I wanted to add some other dimensions to my life. Our baby boomer generation has many issues to be 44

Jane Hwang poses with Anita Chen, then AmCham Taipei’s Director of Government and Public Affairs, at the 2007 American Ball. photo : amcham

explored, and we should be actively engaged in that process, not just passively receiving information. There are a lot of books advising how to raise your children, but not too much literature to teach you how to age – how to deal with the issues that come with aging.

A few years ago, my husband and some of his college classmates invested in this small outlet, the 113 Café. This is a very small place, but we want to use it as a center to promote thinking about those important issues for people in their “golden years.” In 2014, every month we’ll pick a different theme, and then send out program announcements for guest speakers, discussion groups, and other events on the weekends. The website – www.113cafe.com.tw – is currently only in Chinese, but next year we plan to make it bilingual.

Taipei has many outlets focusing on younger people, but not too many that focus on this generation. We face tax issues, inheritance issues such as how to set up your will, and how to invest at this stage of life. We want to be entertained and pursue a meaningful quality of life – so the program will include books, music, and theatre. We’re also very health conscious and want to know what’s good for our body, what’s good for our soul. We want to travel and see the world – what destinations should we consider and what form of travel? And we’re living in a crowded city without too much space – therefore how to do balcony gardening?

Our goal is to help give people a sense of purpose when they are in retirement or close to retirement, so they will remain happy and healthy.

This is our generation, so we need to something. We don’t want to give our children a burden.

In addition, I plan to continue with my longtime love for singing. I’ll continue to take lessons from my voice teacher and give occasional recitals. I’m also a member of the National Taiwan University Alumni Chorus by virtue of my husband’s affiliation with NTU. Finally, what has your AmCham experience meant to you?

Being active in AmCham gave me the opportunity to learn a lot about organizational ability and leadership qualities, and also how to advocate a position effectively. These are things you don’t necessarily learn as well from your job.

As the co-chair of a committee you need to work with different kinds of personalities – with people who are themselves company executives and don’t have to follow your orders. You need to learn how to coordinate and encourage, to influence and persuade. You develop certain communication skills that are also very conducive to advancement in your career.

On the job, your work is largely confined to your company or industry, but through AmCham you can interact with people from different industries, which gives you a much wider perspective.

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Expressing Our Appreciation to TOPICS’ 2013 Cover Sponsors The following four pages are devoted to an index of the articles that appeared in Taiwan Business TOPICS over the past year. In addition to the reference value, the index serves as a reminder of the broad range of subject matter that the magazine has covered in the past 12 months. If you have found these reports to be enjoyable reading and useful to your business, thanks are due to the companies that were instrumental in supporting the magazine through their role as cover sponsors: Abbott Laboratories, Citi, Corning Display Technologies, Ever Rich DutyFree, Ford Lio Ho Motor Co., Fubon Financial Holding, Standard Chartered Bank, and United Airlines.

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taiwan business topics 2013 index of articles

page no.

13 46 9 14 19 28

article Eliminating Illegal Pesticides What to do About Betelnuts?

The Future of Taiwan Agriculture Interview with Agriculture Mnister Chen Bao-ji After Beef, is a Fight Over Pork Next?

Agricultural Applications: Promising New Outlet for Taiwan's LEDs

issue February August October October October November

Special report Editorial APCAC Concerence Events Events Analysis American Ball Events

2013 Business Climate Survey A Sucessful APCAC Conference A 2020 Vision for US-Asia Partnership A Special Hsieh Nien Fan AmCham Taipei's 2013 CSR Forum 2013 Doorknock Team Finds More Positive Atmosphere AmCham Goes Hollywood!

2013 Annual General Meeting

February April April April September October November December

38 4 23 32 47 22 46 50

AUTOMOTIVE

Cover section Cover section

Taiwan's Auto Industry: Checking the Performance In Electric Vehicles, a Shift to Commercial Applications

December December

17 25

COMPANIES

Taiwan Business

Trailblazer in Multimedia Software and Digital Content (Brogent)

February

30

CROSS-STRAIT

Cover section Industry Focus Cover section

A Small Student Invasion from China The Latest Craze: Renminbi-Related Business Exceptions to the Ban [on Chinese Workers]

May May August

23 38 27

Editorial Special report Cover section Editorial 2013 Taiwan White Paper Behind the News Editorial Cover section Behind the News Cover section Cover section Issues

The Key to an Improved Business Outlook 2013 Business Climate Survey Lack of Start-up Ecosystem Takes a Toll Becoming a Startup Island AmCham's annual macro and micro analysis Moving Forward to Create Free Economic Pilot Zones A Promising Initiative [Free Economic Pilot Zones] Competing with Korea The Competitiveness Conundrum The See-Sawing Economy How Will Recent Political Struggles Affect the Economy?

White Paper Mid-Point Assessment

February February March May June August September September September November November December

6 38 22 4 39 6 15 27 17 20 12

Cover section Cover section Cover section

Questions About Higher Education No Opportunities for Foreign Universities A Small Student Invasion from China

May May May

13 18 23

section

AGRICULTURE

AMERICAN CHAMBER

ECONOMY

SPECIAL ISSUE

IN TAIWAN 2013

CU

US

WINE& DINE

IN D

Taiwan Business

Topics

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

S

EDUCATION & TRAINING

Tr A an R sp ep or or ta t TR tionon th S e Y FO ecto r

Issues Industry Focus Cover section Cover section Cover section Market Trends

category

Taiwan Business

Topics Upgrading Industry 產業升級

TAIWAN BUSINESS TOPICS

TAIWAN BUSINESS TOPICS

March 2013 | Vol. 43 | Issue 3

January 2013 | Vol. 43 | Issue 1

中華郵政北台字第

中華郵政北台字第

46

IS S UE S P O NS O R

號執照登記為雜誌交寄 5000

號執照登記為雜誌交寄 5000

January 2013 | Vol. 43 | Issue 1 www.amcham.com.tw

NT$150

NT$150

March 2013 | Vol. 43 | Issue 3 www.amcham.com.tw

I SSUE SPONSOR

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taiwan business topics 2013 index of articles

page no.

12 17 19

ENERGY

Cover section Cover section Cover section

article Securing Sufficient Energy Supply Can U.S. Shale Gas Save the Day? A Question of Trust [Nuclear Energy]

issue April April April

FINANCE

Issues Industry Focus Industry Focus Interview Finance

Insufficient Tax Revenue? Promote Payment by Plastic The Latest Craze: Renminbi-Related Business In the Stock Market, More Internationalization A Conversation with State Street's Jane Hwang Dwindling Numbers of Foreign Life Insurers

March May May December December

11 38 42 42 39

Wine & Dine Wine & Dine Wine & Dine Wine & Dine Wine & Dine Wine & Dine Wine & Dine Wine & Dine Wine & Dine Industry Focus Industry Focus Industry Focus Industry Focus Issues

Chinese Food in Taiwan: Just How Authentic is It? More Expat Restaurateurs Fruitful Island Taiwan Starts to Take to Cheese Taiwan's Own Willy Wonkas Feeling Hot and Thirsty/ Have a Beer Cook it Yourself -- Night Market Favorites A Culinary Tour of Pingtung New Restaurant Update 2013 For Local Companies, the Watchwords are Diversification and Sophistication Welcome Tourists [Tourist Factories] Incidents Raise Food-safety Awareness in Taiwan Showcasing American Food Products in Taiwan Grappling with New Laws and Regulations

January January January January January January January January January September September September September December

6 10 16 20 26 30 34 38 42 38 40 41 45 13

GOVERNMENT

Industry Focus Issues Issues

PCC Prepares to Exit from the Scene Taiwan at Plateau in Doing Business Survey Grappling with New Laws and Regulations

October November December

39 13 13

HEALTHCARE

Taiwan Business Life in Taiwan Industry Focus Industry Focus Industry Focus Issues

Shift in Focus for Medical Tourism A Healthcare Blend of East and West The Koo Way to Better Cancer Care What to do About Betelnuts?

New Attention to Long-term Care Grappling with New Laws and Regulations

March May August August August December

24 30 44 46 48 13

HUMAN RESOURCES

Doing Business Cover section Cover section Cover section Taiwan Business

Leading Through Partnership Attracting Talent An Easier Path to Permanent Residence Exceptions to the Ban [on Chinese Workers] How to be More Employable

February August August August September

32 17 22 27 30

section

category

FOOD AND DRINK

THE AMERICAN CHAMBER OF COMMERCE IN TAIPEI

Topics SPECIAL ISSUE

Travel & Culture

TAIWAN BUSINESS TOPICS July 2013 | Vol. 43 | Issue 7 中華郵政北台字第 號執照登記為雜誌交寄 5000

NT$150

July 2013 | Vol. 43 | Issue 7 www.amcham.com.tw

ISSUE SPONSOR

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taiwan business topics 2013 index of articles

48

article

section

category

issue

page no.

Industry Focus Industry Focus Industry Focus Industry Focus

The Millennium Generation Meets Taiwan's Job Market HR Executives Taking on Expanded Roles in Many Enterprises CHRMA: Cradle of HR Managers Sourcing Strong Leadership Talent in Taiwan Today

November November November November

36 38 40 42

INDUSTRY

Cover section Cover section Taiwan Business Industry Focus Taiwan Business Market Trends Taiwan Business

Upgrading Industry Going from Commodity to Specialty Chemicals Occupational Safety and Health Getting More Attention Incidents Raise Food-safety Awareness in Taiwan Taiwan's Unmanned Aerial Vehicle Industry Takes Off Agricultural Applications: Promising New Outlet for Taiwan's LEDs Can 3D Printing Live Up to the Hype?

March March March September October November November

15 20 27 41 29 28 31

INFRASTRUCTURE

Industry Focus Industry Focus

Civil Engineering Firms Diversify Operations PCC Prepares to Exit from the Scene

October October

36 39

INTELLECTUAL PROPERTY RIGHTS

Issues Issues Issues Cover section Law

Safeguarding Trade Secrets Eliminating Illegal Pesticides Border Control for Digital Piracy Capturing Innovation Through Patents Reflections of a Counterfeit-fighter

February February March September September

11 13 12 24 32

INTERNATIONAL

Issues Issues Issues

Update on Myanmar Tailwinds for ICAO Status Taiwan Spurs APEC Proposal

April August September

10 15 13

INTERVIEWS

Law Cover section Interview

Reflections of a Counterfeit-fighter: Jeffrey Harris Agriculture Miniser Chen Bao-ji A Conversation with State Street's Jane Hwang

September October December

32 14 42

INVESTMENT

Issues Issues Issues Cover section

Update on Myanmar Boosting Foreign Investment Enhancing the Investment Environment Bucking Up Foreign Investment

April May August November

10 10 14 22

LAW

Issues Law Law

Does the PDPA Go Overboard?

Taiwan Employment Law for the Busy Executive International Scrutiny Helps Taiwan Advance Human Rights

February March August

12 42 35

LIVING IN TAIWAN

Life in Taiwan Cover section Leisure Time

Service Clubs Thrive in Taiwan An Easier Path to Permanent Residence Taiwan Golf Scene Pleases All

February August October

35 22 44

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taiwan business topics 2013 index of articles

section

category

article

issue

page no.

42 30 32

MANAGEMENT

Law Taiwan Business Market Trends

Taiwan Employment Law for the Busy Executive A Primer on the Office Leasing Market Go Social,Go Global

March August October

MEDICAL DEVICES

Issues Issues

Getting Medical Devices to Market More Rapidly An Association for Advanced Medical Technology

March September

13 12

PHARMACEUTICALS

Issues Editorial Industry Focus

Patented Drugs: Questions of Definition Drug-Pricing Scheme Needs Reconsideration Domestic Drug Industry Coming of Age

April August August

8 8 50

POLITICS

Behind the News Cover section

Brain Trusts for the Political Parties How Will Recent Political Struggles Affect the Economy?

May November

33 20

REAL ESTATE

Taiwan Business

A Primer on the Office Leasing Market

August

30

TECHNOLOGY

Taiwan Business Taiwan Business Cover section

Ramping up Taiwan's Software Industry Trailblazer in Multimedia Software and Digital Content (Brogent) Capturing Innovation Through Patents

February February September

27 30 24

Industry Focus Industry Focus Industry Focus Industry Focus Industry Focus Behind the News

Constructing the "Taiwan Cloud Valley" Trending in Taiwan: Mobile Apps Getting Ready for 4G Complications to Delivering LTE The Internet of Everything Taiwan Enters 4G Era with a Bidding Frenzy

April April April April April December

34 36 39 40 43 35

Cover section Cover section Cover section Editorial Taiwan Business Issues Issues Cover section Cover section Editorial Issues

Liberalizing Trade New Opportunity for Opening in Services Coming Soon: Trade Pacts with Singapore and New Zealand Looking Beyond TIFA USTR Report on U.S.-Taiwan Trade Issues Is There TPP in Taiwan's Future?

Zeroing in on Trade Obstacles Taiwan and Korea Play the FTA Game After Beef, is a Fight Over Pork Next?

Accelerate Preparations for TPP Scrutinizing Taiwan's Hopes for TPP Entry

February February February March May August September September October November November

15 20 26 6 24 13 11 20 19 8 14

Industry Focus Industry Focus Industry Focus Industry Focus Industry Focus Issues Issues

Taiwan Rides a Strong Tailwind [Air Cargo] Taipei MRT: Growing Year by Year Kaohsiung MRT: Striving for Higher Volumes Taxis Take to a New Business Model Driving a Taxi for the Sake of Freedom Clearing the Runway for Chartered Jets Tailwinds for ICAO Status

March March March March March April August

32 35 37 38 41 9 15

Taiwan Business Issues Issues Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Travel & Culture Industry Focus Taiwan Business

Shift in Focus for Medical Tourism Progress Toward Offshore Casinos Promoting Duty-Free Shopping Temple Procession Troupes Evolve with the Times Getting in Touch with Your Inner Farmer Taitung -- More than Worth the Trip Putting Keelung Back on the Map Blessed by Bats Exploring the Liuzhangliu Cemetery Deciphering a Taiwanese Gravestone Taipei Zoo combines Fun, Education, and Conservation New Leaderwship for Taipei Symphony Orchestra Be Funny or Be Embarrassed Taipei's Changing Hotel Scene Welcome Tourists [Tourist Factories] U.S. Visa Waiver, One Year Later

March May May July July July July July July July July July July July September December

24 9 12 6 10 14 18 24 28 31 32 37 41 44 40 32

Editorial Taiwan Business Issues Industry Focus Editorial Cover section Editorial U.S.-Taiwan

Looking Beyond TIFA USTR Report on U.S.-Taiwan Trade Issues Zeroing in on Trade Obstacles Showcasing American Food Products in Taiwan Telling the Taiwan Story After Beef, is a Fight Over Pork Next?

An Effective Envoy Large Taiwan Delegation at U.S. Investment Summit

March May September September October October December December

6 24 11 45 4 19 4 30

TELECOM & MEDIA

TRADE

TRANSPORTATION

TRAVEL AND TOURISM

U.S.-TAIWAN RELATIONS

taiwan business topics • december 2013

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A nnuA l

G e n e r Al

M e e t i n G

New Board Members Elected for 2014

T

he tremendous demographic-driven growth taking place in the Asia Pacific – led by China but also representing strong potential in India and the ASEAN countries – was the theme of the keynote address at AmCham Taipei’s 2013 Annual General Meeting, which took place November 19 at Shangri-La’s Far Eastern Plaza Hotel. The speaker, Dave L. Schoch, Group Vice President and President of Asia Pacific for the Ford Motor Co., noted that vast numbers of people in the region are now reaching the stage where they have the purchasing power to become major consumers. As a result, Ford is putting US$5 billion in investment into the Asia Pacific to increase production capacity to support the expected growth.

At the meeting, eight new members of the Board of Governors were also elected to serve a two-year term, as well as five Supervisors with a one-year term of office.

The 2014-2015 Governors are William E. Bryson, Jr. (Jones Day), Sean Chao (Morgan Stanley Taiwan), Douglas Klein (Swire Coca-Cola Taiwan), Cosmas Lu (Barclays Bank, Taipei Branch), Scott Meikle (Micron Tech Asia Pacific Taiwan), Dan Silver (Abbott Laboratories Services Corp., Taipei Branch,Vascular Division), Rodney Van Dooren (Philip Morris Taiwan), and Ken Wu (Alcatel-Lucent Taiwan).

They join the 2013-2014 Governors: Thomas Fann (Ford Lio Ho), William Farrell (Boyden Executive Search), Ajit Nayak

50

(Procter & Gamble Taiwan), Neal Stovicek (Far Eastern Group), Stephen Tan (Baker & McKenzie), Fupei Wang (Ogilvy Public Relations), and Bill Wiseman (McKinsey & Co.).

The newly elected 2014 Supervisors are Anita Chen (Park Strategies), Midee Chen (Pepsico Foods Taiwan), Joseph Lin (CBRE Ltd. Taiwan Branch), Louis Ruggiere (Hawley & Hazel Chemical/Colgate), and Vincent Shih (Microsoft Taiwan).

taiwan business topics • december 2013

12_AGM.indd 50

2013/12/9 5:46:10 PM

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