March 2015 Taiwan Business TOPICS by AmCham Taipei

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TAIWAN BUSINESS TOPICS March 2015 | Vol. 45 | Issue 3

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號執照登記為雜誌交寄 5000

ISSUE SPONSO March 2015 | Vol. 45 | | Vol. Issue March 2015 453 | Issue 3 ISSUE SPONSOR

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Published by the Published by the American Chamber American Of Commerce Chamber Of Commerce In Taipei In Taipei

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CONTENTS NEWS AND VIEWS

6 Editorial

m a r Ch 2 0 1 5 vOlum E 45, N umbEr 3 一○四年三月號

It’s Time to Set Energy Policy

Publisher

發行人

Andrea Wu

7 Taiwan Briefs

吳王小珍

Editor-in-Chief

By Timothy Ferry

總編輯

Don Shapiro

沙蕩

Associate Editor

11 Issues

副主編

Tim Ferry

法緹姆

Reviewing Pharmaceutical Policy; Clarifying Investment Criteria; Making the Rounds

美術主任 /

Art Director/ Production Coordinator

後製統籌

Katia Chen

陳國梅

Manager, Publications Sales & Marketing 廣告行銷經理

Caroline Lee

李佳紋

Translation

翻譯

Jay Chen, Yichun Chen, Charlize Hung

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 2015 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○四年三月中華郵政北台字第5000號執照登記為雜誌交寄 ISSN 1818-1961

Chairman/ Thomas Fann Vice Chairmen/ Scott Meikle / Dan Silver Treasurer: Cosmas Lu Secretary: Fupei Wang 2014-2015 Governors: William E. Bryson Jr., Sean Chao, Rodney Van Dooren, Cosmas Lu, Scott Meikle, Dan Silver, Gordon Stewart, Ken Wu.

COVER SECTION

15 Startups: Making up for Lost Time

新創企業：彌補失落的時光 For years, the regulatory and funding environment in Taiwan was not conducive to fostering new startup enterprises. Many would-be Taiwanese entrepreneurs headed for Silicon Valley or other locations instead. But lately the situation has changed, in part because of government recognition that Taiwan was losing economic opportunities by not doing enough to encourage entrepreneurial initiative. By Matthew Fulco

24 Five Taiwanese Startups to Watch

2015-2016 Governors: Margaret Driscoll, Thomas Fann, Ajit Nayak, Vincent Shih, Stephen Tan, Fupei Wang, Lee Wood.

taiwan business topics • march 2015

The rising stars in the Taiwanese startup scene are an eclectic mix of young tech firms, spanning the restaurant, retail, media, and education sectors. The one thing they have in common is a global distribution plan.

BOOKS

2015 Supervisors: Arthur Cozad, Kai Speth, Neal Stovicek,Wern-Yuen Tan, Neil Waters. COMMITTEES: Agro-Chemical/ Melody Wang; Asset Management/ Christine Jih, Derek Yung; Banking/ Victor Kuan; Capital Markets/ Miranda Liaw, C.P. Liu, Shirley Tsai; Chemical Manufacturers/ Michael Wong; CSR/ Lume Liao, Fupei Wang; Customs & International Trade/ Stephen Tan; Education & Training/ Robert Lin, William Zyzo; Greater China Business/ Helen Chou, Cosmas Lu; Human Resources/ Richard Lin, Seraphim Mar, Vickie Chen; Infrastructure/ L.C. Chen, Paul Lee; Insurance/ Arthur Cozad, Joseph Day, Dan Ting; Intellectual Property & Licensing/ Jason Chen, Peter Dernbach, Jeffrey Harris, Vincent Shih; Manufacturing/ Thomas Fan, Hans Huang; Marketing & Distribution/ Wei Hsiang, Gordon Stewart; Medical Devices/ Cyndi Chang, Tse-Mau Ng, Dan Silver; Pharmaceutical/ Margaret E. Driscoll, David Lin, Jun Hong Park; Private Equity/ William Bryson; Public Health/ Jeffrey Chen, Dennis Lin; Real Estate/ Tony Chao; Retail/ Prudence Jang, Ajit Nayak, Wern-Yuen Tan; Sustainable Development/ Kenny Jeng, Kernel Wang; Tax/ Cheli Liaw, Josephine Peng; Technology/ Revital Golan, Scott Meikle, Jeanne Wang; Telecommunications & Media/ Thomas Ee, Joanne Tsai, Ken Wu; Transportation/ Michael Chu; Travel & Tourism/ Anita Chen, Pauline Leung, Achim v. Hake.

檢討藥品政策；明文規定投資審查標準；拜訪政府部門 By Don Shapiro

陳正杰, 陳宜君, 洪兆怡

訂定能源政策，此其時也

30 The Chinese Leadership and How They Reached the Top

A review of The New Emperors: Power and the Princelings in China, by Kerry Brown.

By June Teufel Dreyer

BEHIND THE NEWS

27 Uber: Transportation or Information Company?

TAIWAN BUSINESS

33 The Ups and Downs of HTC

Despite controversy and heavy fines, Uber persists in seeking its niche in the Taiwan market.

The smartphone maker is diversifying its product lineup in an effort to reverse its fortunes.

By Jens Kastner

By Tim Ferry with Philip Liu

COv Er SPONSOr

March 2015 • VoluM e 45 n uMbe r 3

INDuSTrY

CuS A Dedicated Corporate Citizen

A Report on the Luxury Goods Sector

Microsoft is the worldwide leader in software, services, devices, and

Elevating the Shopping Experience

solutions that help people and business enterprises realize their full potential. At our core, Microsoft is the productivity and platform com-

By Jules Quartly

pany for the mobile-first and cloud-first world. We reinvent productivity to empower every person and every organization on the planet to

38 Aiming to be Asia’s Shopping Destination

do more and achieve more.

Taiwan needs to reinvent itself, and one potential solution is to develop a luxury goods market that is the envy of the region.

Microsoft Taiwan Corporation was established in 1989, and in the more than two decades since then, we have demonstrated our firm commitment to being a responsible local industry partner as well as

41 From Bags to Riches 41 The Jewelry in Taiwan’s Crown

perform our Corporate Social Responsibility.

Precious metals and gems are even more valuable if presented in an elegant design that has artistic and emotional appeal.

As a company, and for our employees as individuals, we value integrity, honesty, openness, personal excellence, constructive self-criticism, con-

42 More Than Just Telling the Time

tinual self-improvement, and mutual respect. We are committed to our

If you thought luxury timepieces have had their day, think again. The watch you wear says a lot about you.

big challenges, and pride ourselves on seeing them through. We hold

customers and partners, and have a passion for technology. We take on ourselves accountable to our customers, shareholders, partners, and

43 Upgrading to First-Class

employees by honoring our commitments, providing results, and striv-

Why settle for less when you can have more, appears to be the Gloria Hotel Group’s business model as it expands its footprint.

ing for the highest quality. Every successful corporation has a responsibility to use its resources

44 Chinese Aesthetic with a Contemporary Asian Style

and influence to make a positive impact on the world and its people. Microsoft’s Global Citizenship Initiative is focused on mobilizing our

Liuligongfang is one of the very few Taiwan companies with the necessary cultural heft and nous to become a luxury brand.

resources across the company and around the world, to create opportunities in the communities where we do business, and to fulfill our commitment to serving the public good through innovative technologies and partnerships.

taiwan business topics • march 2015

It’s Time to Set Energy Policy

or two days in late January, a total of 173 delegates – government officials, legislators, scholars, business leaders, and representatives of civic groups – attended a National Energy Conference called by the Ministry of Economic Affairs. The group debated the crucial issue facing Taiwan following President Ma Ying-jeou’s decision last year to suspend construction of the controversial Longmen nuclear power plant. In the absence of power generation from that facility, what should Taiwan do to ensure sufficient energy supplies in the years ahead? To no one’s surprise, the conference ended with no agreement on the best way forward. Proponents of making Taiwan a “nuclear-free homeland” argued that conservation and greater reliance on green energy would make it possible to close down the island’s existing three nuclear plants (each with two reactors) when their current lifecycles expire between 2018 and 2025. Other participants countered that alternative sources such as solar and wind energy, while beneficial for peak usage, are unsuitable to constitute the base load of the national power supply, as they are unavailable when the sun is not shining or wind blowing. Those experts see Taiwan’s only realistic option – short of accepting zero economic growth, which would be anathema to most of the population – as extending the life of the existing nuclear plants beyond the original 40 years, as has become common practice in many countries around the world. With the failure of the conference to deliver any consensus, the ball is now squarely back in the government’s court. In their speeches at the conclave, President Ma and Premier Mao Chi-kuo said that all options remain open, which should include the possibility of recommissioning the current nuclear units. They stressed

the desirability of maintaining a diverse mix of energy sources in order to achieve flexibility and assure a stable power supply. Not all those who opposed the Longmen plant – whose on-again, off-again construction schedule over many years raised questions about the integrity of the facility – would necessarily object to keeping the existing plants in operation, especially if the alternative is power shortages weakening the Taiwan economy. The 40-year timespan is not an absolute condition. According to a New York Times report, for example, most of the 100 nuclear power plants in the United States have either already been granted license extensions or will likely receive them, generally for an additional 20 years. It is also important to note that the recommissioning process entails rigorous upgrading in components, equipment, and technology that should increase public confidence in the relicensed plants’ safety and reliability. But that extensive replacement and engineering work takes a considerable amount of time to complete. If left until the end of the original lifecycle, the national power supply could suffer a debilitating shortage while the plants are closed down for retrofitting. A more reasonable approach would be to carry out the upgrades in stages, starting now for the first units, timed to coincide with regularly scheduled outages for refueling and maintenance. That cannot be done, however, until the administration gives the green light to the Atomic Energy Council to act on the Taiwan Power Company’s application for license extensions. Time is running out to assure Taiwan’s energy sufficiency. As relicensing appears to be the only practical option, the government needs to act soon to start preparations.

訂定能源政策，此其時也

經

濟部在1月底召開為期兩天的全國能源會議，有173

核四廠興建多年，期間工程數度停擺，有人因此質疑核

位代表 -- 政府官員、立法委員、學者、企業界領袖

四廠的安全性，但不是每個反對核四廠的人都必然反對讓現

與公民團體代表共同出席。馬英九總統去年決定停

有的核電廠延役，特別是如果核電廠如期關閉將導致電力短

建引發爭議的核四廠之後，與會人士利用這次會議討論台灣

缺，進而削弱台灣的經濟。核電廠40年的壽命並非絕對。

面臨的重大議題。在核四廠不能發電的情況下，台灣要如何

〈紐約時報〉就曾報導，在美國的100座核電廠當中，多數已

確保未來幾年電力供應無虞？

經取得延役的許可，或者可能獲准延役，而一般的延役年限

不意外的是，這次會議未就未來的方向達成共識。主張將

為20年。

台灣建設成為「無核家園」的人士說，節約能源加上提高綠

此外，必須指出在核電廠延役的過程中，組件、設備及技

色能源的發電比例，台灣便可關閉現有的3座核電廠。這3座

術都得大幅升級，這應該可讓民眾對於延役核電廠的安全與

核電廠各有兩個發電機組，分別將在2018到2025年之間除

可靠性更具信心。但這些大規模的汰舊換新與相關的工程會

役。其他與會人士則反駁，太陽能和風力發電在發電滿載時

需要很長時間來完成，如果等到原定壽期即將結束的時候才

有幫助，但不適合承擔全國電力供應的主要責任，因為沒有

開始，到時電廠關閉進行更新，全國的電力供應可能出現嚴

陽光或風力時，就無法產生電力。這些專家認為，除非接受

重缺口。

經濟零成長（但台灣多數民眾不會接受），唯一實際的選項

比較合理的做法是分階段更新，最早需要更新的機組現在

是跟世上許多國家採同樣做法，讓現有核電廠的服役年限延

就要開始，配合定期關機添加燃料與維修的時間來進行。但

長到原定的40年以上。

在那之前，政府必須先讓原子能委員會審核台電公司有關核

由於這場會議未能達成任何共識，問題又回到政府手上。

電廠延役的申請。

馬總統和行政院長毛治國致詞時表示，政府不排除任何選

確保台灣電力供應無虞的時機在逐漸流逝。由於核電廠延

項，也包括讓現有的核電廠延役。他們強調要維持能源的多

役似乎是唯一實際可行的選項，政府需要趕緊採取行動，以

樣性，以保持彈性，並確保電力來源穩定。

便展開必要的準備工作。

taiwan business topics • march 2015

— by TI M O TH y f erry —

MACROECONOMICS tHe new Year brinGs sOMe POsitiVe news While no one seems able to agree on whether the new Chinese year is the Year of the Sheep or the Goat, Taiwan’s economy broadly speaking bears more resemblance to a charging Ram. The economy beat most growth forecasts in 2014 to come in at 3.74%, according to the Directorate General of Budget, Accounting and Statistics (DGBAS) – considerably higher than the DGBAS’s own late-year forecast of 3.41%. 2015 is expected to be even better; DGBAS has raised its forecast from 3.51% to 3.78% based on expectations of strong manufacturing performance and rising projections for the global economy. The inflation picture also looks favorable. Taiwan’s Consumer Price Index fell by 0.94% year-on-year in January on the one-two punch of plunging oil prices, which bottomed out below US$50 that month, and declines in heavily weighted housing prices, which slumped 2.17%. The Ministry of Interior reported that total housing transactions decreased by 14% in 2014, and the declines continued

Taiwan sTock exchange PeRFoRMance

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

9750

135

9500

120

9250

105

9000

8750

8500

8250

8000

7750

7500

January data source: twse

unit: nt$ billion

PLANE CRASH — Rescue personnel recover the fuselage of TransAsia Airways flight GE235, which crashed into the Keelung River Feb. 5, killing 43 and injuring 15. photo : cna

into January. Although the inflation index dropped in January, consumers might well have failed to notice, as core consumer prices advanced somewhat, by 0.64%, while food prices rose 4.45%. Since Taiwan imports some 98% of its energy needs, falling energy prices have a strong impact on consumption and have raised consumer confidence to a record level of 88.23 on the index tracked by National Central University. The unemployment rate came to 3.79% in December, the fourth straight month to show a drop. Exports rose in January on a year-toyear basis by 3.4%, to US$25.11 billion, over imports of US$20.32 billion, for a favorable balance of US$4.8 billion. Taiwan’s depreciating currency had an impact on these figures; with the New Taiwan dollar falling to 32:1 against the U.S. dollar in January, the numbers look better in NT$ terms than in U.S. dollars. For example, while total trade in January increased on an annual basis in NT$ terms by 5.5%, it actually declined in US$ terms, by 0.4%.

Taiwan’s technology manufacturing sectors continue to be the main drivers of exports, accounting for 43.5% of the total, or US$10.91 billion. With the inclusion of the machinery sector, which saw annualized growth of 18% in January, the combined machinery and electronics industries comprised 50.6% of all exports, and gained 10.9% yearon-year to reach US$12.70 billion. New export orders, a leading indicator, rose 4.52% in December 2014, the latest figure available from the Ministry of Economic Affairs, while the DGBAS’s Purchasing Managers Index (PMI), an indicator of manufacturer’s sentiment, rose from 50.1 in December to 53.5 in January, also signaling growing optimism.

DOMESTIC transasia airwaYs fLiGHt CrasHes intO KeeLUnG riVer On February 4, TransAsia Airways flight GE235 crashed into the Keelung River just after takeoff, killing 43 and injuring 15.

taiwan business topics • march 2015

The Airbus ATR-72-600 plane carrying 53 passengers – 37 of them Chinese tourists – and five cabin crew took off from Songshan Airport in the heart of Taipei at 10:52 a.m. bound for the offshore island of Kinmen. But it quickly ran into trouble, with the pilot calling in a “Mayday” emergency alert less than two minutes into the flight. At less than 500 meters in elevation, the plane began a rapid descent that the pilot managed to direct between buildings and – with the aircraft tilted on its side – just over the Nanhu Bridge, where it clipped a taxi before crashing into the Keelung River. The dramatic scene was captured on a motorist’s dash cam and quickly made international headlines. The incident was the second major crash for TransAsia Airways in less than a year. Last summer, 48 people were killed when a TransAsia flight crashlanded in a residential neighborhood near Penghu’s Magong Airport during a typhoon. Preliminary information gleaned from “black box” flight recorders indicates that human error may have been a significant factor in the crash. The pilots observed engine failure in the No. 2 engine on the left side of the craft, but apparently mistakenly turned off engine No. 1 on the right side, in effect completely disabling the plane. The pilots attempted to restart engine No. 1 but were unable to gain the necessary lift and ultimately lost control. A representative of the French Bureau of Enquiry and Analysis for Civil Aviation confirmed that the Airbus ATR-72-600 is capable of operating with a single engine, even during takeoff. TransAsia Airway’s stock fell sharply in the aftermath, and the company announced compensation of NT$14.9 million (US$473,000) per passenger to the victims’ families. At the recommendation of the Civil Aeronautics Administration, TransAsia began retesting its remaining pilots who operate the ATR-72-600, grounding

taiwan business topics • march 2015

PRISON BREAK — Police units surround Kaohsiung Prison to prevent the escape of six armed inmates holding the prison warden and chief guard hostage. photo : cna

those who fail and putting them through retraining. The crash in the heart of Taipei also renewed calls to move Songshan Airport outside of city limits.

PrisOn breaK atteMPt enDs in Mass sUiCiDe Six prisoners serving lengthy sentences at the Kaohsiung Prison in southern Taiwan attempted to escape on February 11, starting a 14-hour ordeal that ended in the mass suicide of all six inmates. Led by the alleged leader of the Kaohsiung chapter of the Bamboo Union triad, Cheng Li-te, who was serving a 28.5-year sentence for murder, and accomplice Chin Yi-ming, serving a 46-year term for robbery and other crimes, the six convicts feigned illness to gain access to the prison infirmary. Once inside the infirmary, the six overpowered the guards, taking them hostage, before proceeding to break into the prison armory and seize assault rifles, handguns, and over 200 rounds of ammunition. Shortly afterwards, they attempted to shoot their way out of the prison, but were rebuffed by prison guards as well as local and national police units that had mean-

while descended upon the prison. Warden Chen Shih-chih and head guard Wang Shih-tsang then offered themselves as hostages in exchange for the lower-ranked guards, which the convicts accepted. Amidst sporadic gunfights and intense negotiations, the inmates and their two hostages remained holed up in the prison throughout the night as police SWAT teams and military units, along with the press, took up positions surrounding the prison. The prisoners demanded to meet with Chang An-lo, the alleged “boss of bosses” of the Bamboo Union who claims to be out of the crime business and now heads, the pro-unification Unionist Party. The request was denied, but Chang was able to reach the prisoners on his cell phone and reportedly warned them of an imminent raid by the police. During the night and early morning, police assented to the hostagetakers’ request for food and two bottles of kaoliang liquor. After drinking the kaoliang, the prisoners released the two hostages unharmed and turned their weapons on themselves. The event raised concerns of overcrowded and substandard conditions in the nation’s prison

system, as well gaps in the monitoring of prisoners and the training of guards and police to handle such incidents.

MOre tOP OffiCiaLs resiGn tHeir POsts Minister of National Defense Yen Ming resigned January 27, citing personal and professional reasons. He was replaced by Chief of the General Staff Kao Kuang-chi, who had previously briefly held the position of acting Defense Minister in August 2013. Two days later, Premier Mao Chi-kuo accepted the resignation of Minister of the National Development Council Kuan Chung-ming. Kuan reportedly had expressed determination to leave the post as early as December last year over frustration with the lack of progress on the Free Economic Pilot Zone legislation in the Legislative Yuan and disappointment with the overall political environment. With Kuan returning to the faculty at National Taiwan University, Minister without Portfolio Woody Duh was tapped to take over as NDC minister. Another Cabinet member, Mainland Affairs Council (MAC) Minister

RESIGNATIONS — National Security Council Secretary-General King Putsung, one of President Ma's closest advisers, is one of several top officials to have stepped down recently. photo : cna

econoMic indicaToRs Unit: US$ billion

Year Earlier

Current Account Balance (Q3 2014)p

15.8

14.9

Foreign Trade Balance (Jan.)

4.8

2.95

New Export Orders (Dec.)

43.5

415.9

416.9

Foreign Exchange Reserves (end Jan.) Unemployment (Dec.)

3.79%

4.08%

1.875%

Economic Growth Rate Q3 2014p

3.63%

1.45%

Annual Change in Industrial Output (Dec.)p

7.33%

5.55%

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

6.14%

0.75%

Annual Change in Consumer Price Index (Dec.)

0.61%

0.34%

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

1.20%

0.79%

Discount Rate (Feb.)

p=preliminary

Wang Yu-chi, resigned on February 10 after prosecutors found no evidence to back up charges he leveled last August against his former deputy, Chang Hsienyao. Wang had accused Chang of leaking national secrets to China, including Taiwan’s bottom line in trade negotiations. After investigators cleared Chang of all charges for lack of evidence, Wang submitted his resignation “to take responsibility.” Personnel changes also occurred among high-level presidential staff. On February 5, the Presidential Office confirmed resignations by National Security Council Secretary-General King Pu-tsung, one of President Ma Yingjeou’s closest political advisers, and Presidential Office Secretary-General Timothy Yang, a former foreign minister. King, who cited personal health as his reason for resigning, is reported to have recently undergone at least two heart surgeries. Yang tendered his resignation on the grounds that his mission had been accomplished and that he needed to care for his elderly mother. As per custom, he will continue to serve as a senior advisor to the president. Yang has been succeeded by Tseng Yung-chuan, former deputy legislative speaker. King was replaced by Kao Hua-chu, a former Minister of National Defense who served in that role from 2009 until July 29, 2013,

sources: moea, d Gbas,cbc, boFt

when he resigned to take responsibility for the abuse-death of Corporal Hung Chung-chia.

tinG Hsin OiL bOss reLeaseD On baiL Disgraced Ting Hsin Oil and Fat Industrial Co. chairman Wei Yingchun was released on NT$100 million in bail on January 28 by the Changhua District Court. Wei, one of four brothers making up one of the wealthiest families in Taiwan, was indicted on October 21 for his role in the waste oil scandal that rocked Taiwan at the end of 2014. In that incident, raw materials regarded as unfit for human consumption were allegedly used in the production of edible oils. The court decided that since the three-month holding period had been reached and prosecutors had concluded their investigation, there was no further reason to hold Wei. The bail decision was immediately appealed to the Taiwan High Court by the Changhua District prosecutor’s office, which has been investigating the case since late last year. Rejecting the appeal, the High Court sent the case back to the Changhua District court for reconsideration, which again granted bail but raised the amount to NT$300 million. The release of three other defendants in the case on NT$5 million in bail was also upheld by the Taiwan High Court.

taiwan business topics • march 2015

tsai tHrOws Hat in tHe rinG fOr 2016

Minister of Economic Affairs John Deng’s visit to Washington D.C. in midFebruary, the first by an MOEA head in many years, was overshadowed by his announcement that bans on the import into Taiwan of six different types of beef products from the United States would be lifted. The Council of Agriculture made the decision after experts ruled that products such as marrow and tallow were not internal organs – and thus were not covered by amendments passed by the Legislative Yuan in late 2009 to prohibit the import of such organs. Legislators from both sides of the aisle expressed outrage over the announcement. Local media interpreted the policy change as intended to gain U.S. support for Taiwan’s eventual inclusion in negotiations for membership in the Trans-Pacific Partnership.

Taiwan's JanUaRY 2015 TRade FigURes (YeaR- on-YeaR coMPaRison)

2014

2015

2014

2.88 2.28

2.66 2.24

2.12 2.47

2.43 2.37

europe

2015

2014

2015

2014

exports

24.29 21.34

4.56 2.36

2015

ToTaL

25.12 20.32

4.21 2.83

1.66 2.97

9.25 3.89

2014

U.s.

asean

1.7 3.05

10.34 4.28

Japan

2015

imports

taiwan business topics • march 2015

beef OVersHaDOws Minister’s Visit tO DC

A scaffolding collapse on the site of acclaimed director Martin Scorsese’s new film, Silence, claimed the life of one worker and sent two more to the hospital with serious injuries. The accident happened at the Chinese Culture and Movie Center on January 29 when a ceiling collapsed onto contractors hired to reinforce an existing structure that

2014

I N T E R N AT I O N A L

aCCiDent Mars start Of sCOrsese fiLM sHOOt

2015

had been deemed unsafe by the production crew. The accident killed Chen Yun-long, while his two co-workers were hospitalized with leg fractures and head injuries, according to news sites. Scorsese was not at the scene of the accident, which is being prepared for filming in the coming year.

Democratic Progressive Party (DPP) Chairwoman and 2012 presidential candidate Tsai Ing-wen declared on a February 14 Facebook post that she would seek to run for the presidency under the DPP banner in the 2016 election. Tsai had long been considered the likely candidate to represent the opposition DPP as it attempts to maintain momentum following last November’s elections in which its candidates and allies took six out of the nine major mayoral positions at stake. As popular Tainan mayor William Lai and former DPP party chair Su Tseng-chang have both declared that they will not run, Tsai is so far the only candidate in the party’s forthcoming primary election. The ruling Kuomintang (KMT) is not expected to nominate a candidate until mid-year.

HK/china

UNIT: US$ Billion SOURCE: BOFT/MOEA

MINISTERIAL TRIP — Minister of Economic Affairs John Deng's visit to Wa s h i n g t o n D . C . w a s e c l i p s e d b y announcements that Taiwan would ease import bans on certain U.S. beef products. photo : cna

Denying any such link, the MOEA said it was coincidental that the timing of the announcement corresponded with Deng’s travel schedule.

BUSINESS GerManY’s basf eXPanDs PrODUCtiOn T h e w o r l d ’s l a r g e s t c h e m i c a l company by sales, Germany’s BASF, expanded its investment in Taiwan with the opening of its new facilities in the Kuanyin Industrial Park in Taoyuan on February 5. The new facilities will provide advanced processing chemicals and materials such as ultra-pure electronic grade sulfuric acid (H2SO4) and ammonia water (NH4OH), as well as high-quality metal feedstock, to the semiconductor, display, and metal systems industries. Lothar Laupichler, senior vice president of electronic materials business unit at BASF, said in a statement that the investment reflects the company’s commitment to be closer to its customers and provide “faster and more efficient solutions that satisfy specific needs.”

Issues

Reviewing Pharmaceutical Policy A National Drug Policy Forum brought wide discussion but few conclusions.

he Ministry of Health and Welfare (MOHW) in early February convened a one-day National Drug Policy Forum (originally scheduled to be held in December 2014), bringing together representatives from the various stakeholders: government, hospitals and other healthcare providers, the pharmaceutical industry (both originals and generics), consumer and patient groups, and academic experts in healthcare policy. It was only the second such Forum ever held – and the first since 2008 – and the items on the agenda included a number of thorny issues on which different stakeholders have very different views. Behind those issues are some basic questions about how drug policy should be framed. How, for example, can Taiwan’s National Health Insurance system best control costs to keep the program solvent while still providing patients and physicians with access to the latest innovative medications? What, in addition, is the proper balance between protecting patented drugs and promoting a domestic pharmaceutical industry based primarily on producing generics? The meeting – which lasted into the early evening – ended with few concrete conclusions, but at least with a productive airing of some important topics. Among them: Drug Expenditure Target (DET). For the past two years, the National Health Insurance Administration (NHIA) has implemented a pilot DET program under which a target is set for NHI spending on pharmaceuticals for the coming year, with agreement from industry to make up any difference if the target is exceeded. Industry has regarded the system as more transparent and predictable than the previous mechanism of periodic Price Volume Surveys followed by heavy cuts in reimbursement prices. Now the two-year pilot period has ended, and a decision needs to be made on whether to continue the program. The consensus at the Forum was that the government should make that determination after consulting further with all stakeholders. Balance Billing. NHIA is interested in adopting the concept of Balance Billing for certain categories of pharmaceuticals. Under this system, the health insurance system would cover part of the cost of the drug, while the patient agrees to make up the remainder. A potential benefit of this method is to encourage manufacturers to keep medications on the market even when the reimbursement price has been decreased. But the research-based pharmaceutical industry is wary of balance billing unless some policy changes are first introduced. These include liberalizing current restrictions on patient education so that patients can be better informed about the advantages of a given brand, requiring hospitals to limit their demands for endless rounds of discounting and to abandon their practice of removing one drug

檢討藥品政策全國藥品政策會議引起廣泛討論，但實質結論不多。

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生福利部2月初召開了為期一天的全國藥品政策會議（原定2014年12月舉行），聚集了包括政府、醫院與其他醫療機構、製藥業者（含原廠藥、學名藥）、消費者和病友團體，以及衛生政策領域之專家學者等各界利益相關代表前來參加。繼2008年首次舉辦後，這是多年來唯一舉辦的類似會議。其議程所討論的主題，包含諸多讓各界代表意見分歧的棘手議題。而這些議題基本上都與如何制訂藥品政策有關。舉例來說，臺灣全民健保制度的成本能否做最有效的控管，讓持續穩健經營外，仍有餘力提供病友和醫師取得新藥？還有如何在保護專利藥品，與促進國內藥商製造學名藥之間取得適當平衡？會議持續到傍晚結束，雖然只獲得少數具體結論，但至少某些重要議題上似乎有比較正面的發展。其中包括了：藥品支出目標制（DET）：過去兩年，中央健康保險署試辦了藥品支出目標制，其目的是為下一年度全民健康保險的藥費支出預設目標，並與藥商達成協議，若藥費超過預設目標則啟動藥價調整機制。藥商認為此制度比先前定期藥價調查容易伴隨大幅削價的機制更透明、更易預測。如今，兩年試辦期已結束，要針對是否繼續該項計劃做出決定。會議中各方達成共識，認為政府應在定案前廣泛徵詢所有利益關係人的意見。差額負擔：健保署有意針對某些類別的藥品，採取藥價差額負擔的概念。在這個系統下，醫療保險制度將在患者同意負擔部分藥價的前提下，負擔藥價其餘部分。這種方法的潛在好處在於鼓勵藥商就算健保核價偏低，仍保持市場上藥品的正常供應。但除非事先有相關政策的調整，否則開發性製藥業者對差額負擔制度仍有疑慮。政策的調整應包括放寬目前對病友進行教育的限制，讓病友更

taiwan business topics • march 2015

Issues

from their formulary for every new drug added, and eliminating price comparisons by groupings. The argument is that these changes are needed to ensure the continued availability of original drugs in all categories, which is the avowed purpose of balance billing. Automatic generic substitution. Local manufacturers have been seeking a change in regulations to permit pharmacists to substitute generic drugs for original medicines on a prescription unless the physician has explicitly disallowed that option. Such a system is in place in major markets, including the United States. But some Forum participants countered that the rationale for generic substitution in those markets is significant cost savings, whereas generic prices in Taiwan are unusually high by world standards – often 80-100% that of the original. At the same time, as a generic’s chemical composition is not precisely the same as the original, it is uncertain who would bear the responsibility in case the substitution is ineffective or has an adverse impact. “Orphan drugs.” Pharmaceuticals in this category have been developed to treat relatively rare medical conditions, but because of the low volume they tend to be quite expensive. Although they add to the burden on the NHI budget, their availability is regarded as important from a social welfare perspective. Government officials said they would study the idea of creating a separate funding channel for orphan drugs to relieve the pressure on the regular budget.

加清楚某一藥品的優勢，限制醫院永無止盡地要求砍價，放棄每新增一種新藥，便從處方集刪掉一種藥品的做法，並藉分組來排除價格的比較。這些改變的必要性，在於確保病友能持續使用各種類別的原廠藥，符合差額負擔的推動宗旨。學名藥替代：一直以來，本土藥商無不期盼修法，希望除非有醫師明確禁止該藥品，否則應允許藥師以學名藥替代處方原廠藥。美國等某些市場已然出現這種做法。但有部分與會者反駁，說以學名藥替代的理由顯然是為了省錢，然而與世界一般藥價相比，台灣的學名藥價格異常的貴，通常是原廠藥價格的八成或者同等價格。另外，學名藥化學成分與原廠藥品並不全然一致，萬一替代藥品效果不佳或出現不良副作用，誰能承擔責任？罕病孤兒藥：此類藥物被開發用於治療相對罕見的疾病，但因為使用量少而價格昂貴。雖然孤兒藥增加了健保預算的負擔，但從社會福利角度來看，讓病友有充分機會使用這類藥物仍相當重要。官員表示，將研究建立孤兒藥獨立撥款管道，以減輕正常預算的壓力。 — 撰文／沙蕩

— By Don Shapiro

Clarifying Investment Criteria What is needed now is a full, transparent listing of all the criteria upon which investments will be judged.

ince its establishment in 2012, AmCham Taipei’s Private Equity Committee has held numerous constructive meetings with officials from relevant government agencies, particularly the Investment Commission under the Ministry of Economic Affairs and the Financial Supervisory Commission. The FSC is instrumental in considering investment approvals for cases involving either financial institutions or companies publicly listed in Taiwan. The reason for the Committee’s creation was concern in the investment community that Taiwan’s investment approval process was frequently opaque and inconsistent. Private equity (PE) firms cited instances in which they believed they had fully adhered to the publicly stated legal requirements, only to find that their investment applications were rejected or held up seemingly indefinitely. That outcome was troubling, since the PE companies had already expended substantial time and money in negotiations and due diligence with input from lawyers, accountants, and consultants. As a consequence, Taiwan has 12

taiwan business topics • march 2015

FSC Vice Chairman Huang Tien-mu has given assurances that the investment approval process in future will follow international practice. photo : cna

明文規定投資審查標準投資申請審查需要完整透明的審查標準。

自

2012年成立以來，台北市美國商會私募股權委員會曾與政府相關單位，特別是經濟部投資審議委員會，以及金融監督管理委員會，進行過多次建設性會談。金融監督管理委員會對於投資金融機構，或投資在台公開上市公司的申請審查扮演關鍵性的角色。私募股權委員會之所以成立，是因為投資界認為，臺灣投資審查過程不透明和前後不一致的狀

Issues

received no foreign PE funding in recent years, even though billions of dollars have been flowing into many other markets in the region. Over the past three years, however, the discussions with Taiwan government officials have brought a number of positive developments: • The Executive Yuan drafted amendments to the Statute for Investment by Foreign Nationals and the Mergers & Acquisitions Law to define what constitutes adequate protection to minority shareholders in cases of corporate takeovers. Although the bill has not yet been taken up by the Legislative Yuan, eventually its passage will provide a clear definition of what is required for approval by the government in these cases. • The Investment Commission eliminated a previous guideline that Taiwan’s “national champions” (defined as the Top 100 corporations) are ineligible for takeover by foreign investors. • The FSC dropped some of the more subjective criteria it previously used in reviewing investment applications, such as the impact the deal might have on capital markets or in weakening the capital structure of the target company. • The Investment Commission pledged to present its review criteria in future as formal regulations rather than merely FAQs posted online. The Commission has already removed the English-language version of the FAQs from its website, although the Chinese-language version remains (presumably until passage of the above-mentioned legislative amendments). • High-level officials made public statements welcoming the inflow of PE investment. At a conference in Taipei last November organized by the Asian Venture Capital Journal, for example, FSC Vice Chairman Huang Tien-mu stressed that the investment approval process in future would “respect the market mechanism and follow international practice.” He advised the participants to disregard the “legacy cases” that had been sources of concern. “Clearly we’ve made some substantial progress over the past few years in clarifying the investment criteria,” says William E. Bryson Jr., Senior Advisor of Global Market Advisors and chairman of AmCham’s PE Committee. He notes that what is needed now is a full, transparent listing of all the criteria upon which investments will be judged, such as what would occur with passage of the legislative amendments and replacement of the FAQs with explicit regulations. “PE investors will accept whatever rules the government sets,” he explains. “But they need to have clear and objective regulations so they can judge which projects are going to be feasible and which are not.” — By Don Shapiro

Making the Rounds White Paper follow-up meetings with various government agencies.

況層出不窮。從私募股權公司所引用的例子可知，儘管自認己遵守公開聲明的法律規定，投資申請案最後不是被否決，就是被無限期延宕。這結果令人相當困擾，因為私募股權公司往往已花了大把時間與成本，聘雇律師、會計師及顧問完成談判和盡職調查。也因為如此，近幾年私募股權資金大量流向亞太地區其他市場，來臺投資者少之又少。不過，過去三年與台灣政府的反覆討論，帶來下列若干正面發展： •行政院已草擬修正外國人投資條例和企業併購法，來介定企業收購時，小股東的權益如何充分獲得保障。雖然立法院尚未通過該法案，但最終通過後應能清楚提供政府核准申請案所需的明確規定。 •經濟部投資審議委員會刪除了過去台灣「全國領導企業」（定義為百大企業）不得被外資接管的規定。 •金融監督管理委員會已取消一些較為主觀的審查標準，例如可能衝擊資本市場或削弱目標公司資本結構等。 •經濟部投資審議委員會已承諾未來會將審查標準以正式法規的方式呈現出來，而非只是將《常見問題Q&A》公布在網站上。儘管英文版的《常見問題Q&A》已從投審會的網站移除，但仍會保留中文版的《常見問題Q&A》至上述法案修訂通過為止。 •政府高層已公開發表聲明，表示歡迎私募股權資金的注入。例如：去年11月，由亞洲創業投資期刊在台北舉辦的會議中，金融監督管理委員會副主任委員黃天牧就強調，未來的投資審查過程將「尊重市場機制，並採取與國際一致的作法」。並建議與會人士未來申請時，忽略「過去個案」所帶來的困擾。領先顧問公司資深顧問同時也是美國商會的私募股權委員會主席柏威廉說，「過去幾年在釐清投資審查標準方面確實已有進展」。他同時指出，現在需要的是完整透明的審查標準，包括通過修法、以正式明文規定代替《常見問題Q&A》等等。他進而解釋：「私募股權投資人願意遵守政府所有規定，但是該規定必須明確客觀，足以讓他們判斷哪些投資計畫可行或不可行」。

— 撰文／沙蕩

ach year the various AmCham Taipei committees follow up their White Paper entries with calls on the relevant government offices to discuss the current advocacy issues. Over the past several months these meetings have included: • Environmental Protection Administration, December 22. On behalf of the minister, Chief Secretary Hsieh Yein-Rui met with delegates from the Chemical Manufacturers and Sustainable Development committees.

taiwan business topics • march 2015

Issues

拜訪政府部門 IP&L Committee members at meeting with Director-General Wang Mei-hua of the Taiwan Intellectual Property Office.

The chemical industry representatives expressed thanks to the EPA for taking the lead in coordinating its new registration system for chemical entities with one being introduced by the Ministry of Labor, thus saving companies from much duplicated effort. The EPA agreed to study the Sustainable Development committee’s suggestion to include additional virgin-fiber paper/tissue products (not just those utilizing recycled paper) under its Green Mark program, provided they come from certified sustainable forests. • Council of Agriculture, December 26. Deputy Minister Chen Wen-de offered the COA’s assistance if members of the Agro-chemical Committee encounter difficulties launching new products due to problems, as raised in the White Paper, with the crop grouping requirements of the pesticide registration system. Retail Committee representatives also discussed difficulties with the certification process for imported organic foods. • National Communications Commission, December 30. Chairman Howard Shyr had positive responses for several of the White Paper issues of the Telecom & Media and Technology committees. These included plans to increase spectrum utilization and efficiency, promote the use of Small Cell base stations, and to bring NCC regulations in line with international copyright-licensing practices by distinguishing between cable TV and IPTV technology licenses. He also promised to take steps to ensure that channel providers are not asked to submit confidential business documents. • Taiwan Intellectual Property Office, January 28. The delegation from the Intellectual Property & Licensing (IP&L) Committee praised TIPO for the training it has provided to prosecutors and judges for handling trade-secrets cases since passage of a strengthened Trade Secrets Act in 2013. Director-General Wang Mei-hua pledged to continue those efforts. She was less certain that satisfactory approaches could be found to crack down on online piracy from offshore websites. • Taiwan Food & Drug Administration, February 6. Retail committee representatives met with Director-General Chiang Yu-mei and her staff to discuss a number of highly technical points about labeling requirements for food additives mandated by recent amendments to the Food Safety and Sanitation Act. “In quite a few cases, the government officials had some positive news for our committees,” says AmCham President Andrea Wu. “But in all cases, it was extremely useful to have face-to-face communication to enhance mutual understanding. The Chamber very much appreciates the open attitude these agencies have shown. It is one of the strengths of Taiwan’s investment climate.” — By Don Shapiro 14

taiwan business topics • march 2015

白皮書發表後與各政府部門的後續會談

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北市美國商會每年的白皮書發表之後，商會的各個委員會會拜訪相關政府部門，針對他們在白皮書中提出的問題進行討論。過去幾個月，這些會談包括： •環境保護署（12月22日）。環保署主任祕書謝燕儒代表署長出面會見化學製造商委員會與永續發展委員會的代表。化學製造商代表感謝環保署主動與勞動部協調新的化學品登錄管理制度，讓業者不必重複跟兩個政府部門交涉。永續發展委員會建議環保署的環保標章規範，擴及更多來自認證為永續森林的原生木漿家庭用紙產品（不限再生紙產品），環保署表示會進一步研究。 •農業委員會（12月26日）。農委會副主任委員陳文德表示，如果農化委員會的會員公司在推出新產品時，因為類似白皮書所提到的新農藥登記系統及採用作物分群制度的問題而遭遇困難，農委會願意提供協助。零售委員會的代表也對進口有機食品認證程序所遇到的問題尋求建議。 •國家通訊委員會（12月30日）。對於電信及媒體委員會和科技委員會在白皮書中列舉的好幾個問題，國家通訊委員會（NCC）主任委員石世豪給予正面回應，包括計劃提高頻譜使用與效率、推廣小型基地台以及在給發執照時區分有線電視與IPTV，使NCC的規定與國際著作權授權實務相符。他並且承諾採取因應措施，以確保頻道業者不會被要求提供商業機密文件。 •智慧財產局（1月28日）。智慧財產權與授權委員會的代表讚揚智慧財產局在營業秘密法在 2013年增訂通過之後，為檢察官和法官提供處理營業秘密相關案件的訓練。局長王美花承諾繼續推動這方面的努力。對於是否能找到理想的辦法打擊海外網站侵權行為，王局長則表示需再研議。 •食品藥物管理署（2月6日）。食品安全衛生管理法最近修正後，對於食品添加物有些標示的規定，零售委員會的代表與署長姜郁美和其他官員討論數則相關的技術性問題。台北市美國商會執行長吳王小珍說：「在好幾個議題上，政府官員給我們的委員會若干好消息，但不論是什麼問題，能夠面對面溝通以增進彼此的瞭解是非常有益的。美國商會對這些政府部門所展現的開放態度十分感激。這是台灣投資環境的優勢之一。」 — 撰文／沙蕩

Cover story StartupS

StartupS: Making up for LoSt tiMe 新創企業: 彌補失落的時光

taiwan business topics • march 2015

Cover story StartupS

T Jamie Lin, founder of AppWorks, which has graduated 190 startups and become Asia’s largest accelerator. photo : cna

For years, the regulatory and funding environment in Taiwan was not conducive to fostering new startup enterprises. Many would-be Taiwanese entrepreneurs headed for Silicon Valley or other locations instead. But lately the situation has changed, in part because of government recognition that Taiwan was losing economic

aiwan has one of the world’s largest technology industries, but has struggled to develop a vibrant startup culture. As the Internet software boom has minted new billionaires in neighbors China and South Korea, Taiwan has watched from the sidelines. Some observers contend that Taiwan is too small to nurture many startups. An island with a population of just 23 million people, they say, lacks the massive domestic market that helps power startups in China or the United States. But South Korea – with a population of 50 million, still considered relatively small by global standards – has emerged in the past few years as one of Asia’s most dynamic startup hubs. South Korean software startups have attracted billions of dollars in investment and support from Google, for example. A more compelling explanation for Taiwan’s startup difficulties lies in the reluctance of its tech sector, investors, and policymakers to fully embrace the Internet age. Its large hi-tech companies remain focused chiefly on contract electronics manufacturing, Taiwanese venture capitalists favor later-stage investments in hardware, and the overall regulatory approach is unfavorable for cultivating startups. In this static environment, entrepreneurship has dwindled. Nevertheless, there are reasons for optimism. Several foreign-funded incubators have sprung up in the past few years, as have an increasing number of entrepreneurship workshops and clubs. Foreign investors say that they see good potential in Taiwan for fostering startups, even if the island

opportunities by not doing enough to encourage entrepreneurial initiative.

多年來，台灣的法規和資金環境不利於扶植新的創業公司，許多有抱負的台灣創業家因而轉往美國矽谷（Silicon Valley）或其它地方實現夢想。但如今情況已逐漸改變：投資人對台灣的初創企業越來越感興趣；政府也體認，未能扶植創業計畫需付出經濟代價。

BY MATTHEW FULCO

taiwan business topics • march 2015

撰文 / 傅長壽

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灣科技業的規模在全球名列前茅，卻一直很難培育活躍的創業文化。鄰近的中國和南韓因網路軟體蓬勃發展，造就不少新億萬富豪，台灣只能望而興嘆。部分觀察家認為，台灣實在太小，無法讓新創公司百花齊放。他們指出，台灣人口僅2300萬，不像大陸或美國擁有龐大的國內市場，可幫助新創公司獲得成長動能。不過南韓人口也只有5000萬，就全球標準而言算是相對小的市場，近年來卻蛻變為亞洲最蓬勃的創業中心之一。南韓的新創軟體公司獲得搜尋引擎龍頭谷歌（Google）的數十億美元投資與奧援，即為一例。台灣難以發展新創公司，較中肯的解釋是科技業、投資人和政策制定者

StartupS

is unlikely to produce another Facebook or Alibaba. In addition, the Taiwan government is moving to become more supportive of startups. In a speech in early February to the Chinese National Association of Industry and Commerce, Premier Mao Chi-kuo stressed the importance of creating a more favorable environment for entrepreneurs, noting that the Ministry of Economic Affairs has been drafting amendments to current laws to make it easier to launch a new business. In addition, the Executive Yuan’s National Development Council (NDC) is aiming to turn Taiwan into a regional innovation hub through a threepronged strategy of deregulating, attracting funds, and building clusters. Of those three areas, funding may be the most urgent. Difficulty securing funding has vexed Taiwanese entrepreneurs since the end of the dot-com boom. While foreign investors are taking an increasing interest in Taiwanese startups, their local counterparts have largely shrugged. Instead of seeking opportunities to back new entrepreneurs at home, experts say, many Taiwanese venture capitalists have followed the island’s hardware manufacturers to China after raising funds offshore. Government policy has also played a role in dampening the environment for

startups – in particular the decision in 2000 to cancel a long-running 20% tax credit on investments in venture-capital funds. When the tax credit was in effect, the number of funds grew from 47 in 1996 to 170 in 2000, while accumulated capital rose from US$820 million to US$4 billion over that period, according to the Taiwan Venture Capital Association (TVCA). But by the late 1990s, when returns on venture capital could be several hundred percent, the government felt it was no

longer necessary to encourage such investments through tax credits, analysts say. As a result, it eliminated the tax credit. Also in the year 2000, the government passed the Statute for Upgrading Industries, which provided tax credits to investors in property development and “strategic industries.” “The big institutional investors [mainly banks and construction companies] had greater incentives for returns when the tax credit was in effect, so they were willing to take risks on the VCs,

Vice President Wu Dun-yih (second from left) presides at a ceremony presenting cash prizes to promising young entrepreneurs. photo : cna

不願充分擁抱網路時代。台灣的科技大廠仍把主要重心放在電子代工，創投業者偏好參與後期的硬體投資，加上整體法規氛圍不利培育新創公司，在這樣的靜態環境下，創業風氣逐漸衰退。不過對台灣的創業環境還是有理由樂觀以對。近年已有數家外資創業育成中心進軍台灣，同時也出現越來越多的創業工作室和社團。外資表示，雖然台灣不太可能孕育出另一個臉書（Facebook）或阿里巴巴，但培育新創公司的潛能其實還是不錯的。台灣政府也計畫更積極支持新創公司。行政院長毛治國二月初向工商協進會發表演說，強調為創業家打造更有利環境的重要性，指出經

濟部正在草擬修法，簡化創辦新公司的程序。此外，行政院國發會希望透過法規鬆綁、吸引資金和打造創新園區的三頭並進策略，讓台灣成為區域創新中心。在前述三大策略中，資金可能是最迫切的一項。自網路經濟榮景結束後，台灣創業家一直為籌資困難所苦。儘管外資對台灣新創公司越來越有興趣，內資卻大多不屑一顧。專家表示，許多台灣創投業者追隨硬體製造業者轉往海外籌募資金，然後進軍中國，放棄在台灣尋找支持新創業家的機會。台灣創業環境低迷，政府政策也是原因之一，尤其是在2000年決定取消投資創投基金長久以來享有 20%稅賦抵減的優惠。據中華民國

創業投資商業同業公會指出，稅負抵減政策實施期間，台灣的創投基金從1996年47支成長至2000年的 170支，同期間的累積資金從8.2億美元增至40億美元。不過分析家表示，到了1990年末期，創投基金的報酬率可高達百分之數百，政府認為不須再透過稅賦抵減鼓勵這類投資，因此在2000 年取消優惠。同年，政府通過《促進產業升級條例》，讓不動產開發和「策略性產業」的投資人享有租稅優惠。台灣創意工場是台北的創業育成加速中心之一，其執行長王仁中表示，「租稅優惠實施期間，大型機構投資人（以銀行和營建業者為主）追求報酬率的意願較高，因

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who would then invest in startups,” says Lucas Wang, chief executive officer of the Taipei-based accelerator TMI Holdings. “When the government offered perks to institutional investors to put their money in real estate instead, funding got harder for VCs – and for startups.” Following cancelation of the 20% tax credit to VC firms, only seven new funds with a combined capital of US$270 million were created in 2001, compared with 32 funds and about US$1 billion the previous year, according to the TVCA. At about the same time, the dotcom bubble burst and Taiwanese investors suffered heavy losses. Yet as Internet startups across the world in e-commerce, search functions, and social media evolved into legitimate billion-dollar enterprises over the next decade, Taiwanese investors remained wary of them. “During the first dot-com boom, Taiwanese investors put NT$200-300 billion into Internet companies and 99.9% of them failed,” says Jamie Lin, founder of the Taipei-based accelerator AppWorks. “Investors have bad memories of getting burned, and since the VC bosses haven’t changed, they don’t want to take the risk again.” As a result, Taiwanese investors ignored the explo-

此願意冒險投資創投基金，接著後者再投資新創公司」，「當政府改為鼓勵機構投資人將錢投入不動產時，創投基金的募資難度提高，新創公司也一樣」。創投公會指出，創投業者的20% 租稅優惠取消後，2001年只有7支新創投基金成立，共募得資本2.7億美元；相較下，2000年出現32支新基金，募資總額10億美元。大約在此同時，網路泡沫破裂，台灣投資人損失慘重。接下來的十年內，世界各地許多電子商務、搜尋引擎和社群媒體等網路新創公司發展成為億萬企業，但台灣投資人對這類公司依然存有戒心。之初創投（A p p W o r k s）是台北另一個創業加速中心，創辦人林之晨指出，「在第一波網路榮景期間，台灣投資人投資網路公司的金額達兩、三千億新台幣，其中百分之九十九點九都賠錢」，「投資人 18

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sive growth of Internet companies that began in the mid-2000s, Lin says, while “VCs got excited again in the U.S. in 2005-2006.” Taiwanese investors tend not to see value in non-capital-intensive startups, says Jeffrey Ling, Taiwan country manager of the South Korean startup Toss Lab, an enterprise messaging service. “Something in the medical or biotech fields is acceptable to them, but an Internet company is not,” he says. “A large user base means nothing to them. They ask right away: ‘have you made money?’ The answer for an Internet startup is almost certainly ‘no.’”

Foreign aid Investors from overseas, both foreign and Taiwanese returnees, are showing considerably more interest in Taiwanese startups. Deeply familiar with Internet companies, this still small but growing group sees opportunity in the earlystage investments their domestic counterparts eschew. Jamie Lin is one of these investors. Lin founded the AppWorks accelerator in 2010 when he returned to Taiwan from New York City, where he earned an

對虧損心存餘悸，而且由於創投公司的老闆都沒改變，他們不願再冒險」。林之晨表示，這導致台灣投資人錯失自2000年代中期開始的網路公司爆炸性成長熱潮，儘管「美國的創投業在2005到2006年間恢復朝氣」。南韓的企業訊息服務新創公司 Toss Lab台灣區負責人林德理表示，台灣投資人對非資本密集型新創公司的價值往往視若無睹。他說，「他們可以接受醫藥或生物科技，但網路公司就不行」，「龐大的用戶群對他們來說根本毫無意義，他們會直接問：『公司賺錢嗎？』但網路新創公司的答案幾乎肯定都是『沒有』」。

外資援助外資和從海外回國的台灣投資人對台灣新創公司甚感興趣。這個族

MBA and worked for the Internet startup Social Sauce. Since its establishment, AppWorks has graduated 190 startups and become Asia’s largest accelerator, managing US$61 million in VC funds. It typically leads seed and Series-A (earlystage) rounds for its startups, investing US$100,000 to $5 million per case. Lin says he founded AppWorks to help Taiwan strengthen its software capabilities, which have lagged behind its hardware-manufacturing prowess. But that goal has evolved into one of building up Taiwan’s capacity to be part of an integrated Internet ecosystem. “Five to ten years down the road, everything is going to be connected. Will Taiwan be part of it?” he asks. “We think the Internet is the key distribution channel for now and the future.” AppWorks’ biggest success story so far is the online restaurant reservation system EZTABLE. The Taipeibased firm’s booking system has 150,000 monthly users, partners with 1,000 restaurants, earned US$16 million in revenue last year, and has expanded to Hong Kong, Indonesia and Thailand. Like Lin, CEO Alex Chen studied and worked in the United States for several years. He co-founded EZTABLE upon his

群對網路公司非常熟悉，儘管規模仍小，卻不斷成長。他們在台灣投資人避之唯恐不及的初期投資中看到機會。林之晨就是其中之一。他在紐約市取得工商管理碩士（M B A）學位，並曾服務於網路新創公司Social Sauce，2010年返回台灣，創立之初創投，至今已協助培育190家新創公司，成為亞洲的最大創業加速中心，管理6100萬美元的創投基金。之初創投通常會為其輔導的新創公司領投種子輪和A輪（初期）投資，每次金額從10萬到500萬美元不等。林之晨表示，台灣的軟體實力落後於硬體製造，他創辦之初創投原是希望協助台灣加強這方面能力，不過後來發展成促進台灣溶入網路整合生態系統。他說：「今後五到十年，所有東西都會互連互通，台灣是否會參與其中？」「我們認為

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return to Taiwan in 2008. “People were not talking about startups in Taiwan then,” he says. “We just wanted to start a company and nobody was doing online booking for restaurants.” Chen notes that EZTABLE’s time in AppWorks was crucial for its later success. The company was struggling when it entered AppWorks, but since graduating from the accelerator in mid-2010, revenue has grown threefold every year. “AppWorks helped us develop a better business model,” Chen says. “We added vouchers to the existing reservation service after we left AppWorks, and vouchers gave us more revenue growth.” Silicon Valley-based 500 Startups is another early-stage seed fund and incubator program with an interest in Taiwanese startups. Among its Taiwan-based investments are the mobile multimedia messaging app Cubie, the children’s entertainment studio Roam & Wander, and BountyHunter, a crowdsourcing platform for ideas and product designs. Those companies attracted investment from 500 Startups because they had strong user bases and a global distribution strategy, says Rui Ma, a venture partner at 500 Startups and the compa-

ny’s head of Greater China investment. “We saw the companies had the ability to scale up fast because they were determined to expand outside of the small Taiwan market from the beginning.” As an example, Ma cites Cubie, which launched in March 2012 and joined 500 Startups in October of that year. It was an early entrant in the Southeast Asia market, a strategy that helped it achieve rapid fast. Cubie now has more than 11 million users. BountyHunter, after developing a large user base in Taiwan and becoming profitable, is now using funding from 500 Startups to expand in the United States and Thailand, Ma says. Companies using BountyHunter include Google, Microsoft, and Lexus. For the Taiwan start-up scene to grow sustainably, Ma says that “local heroes” need to emerge. “Taiwan needs people who can be mentors for the next generation, like Jack Ma [CEO of e-commerce giant Alibaba] or Lei Jun [Xiaomi CEO]” in China. As the first generation of successful entrepreneurs reinvests in and founds new companies, a virtuous cycle takes hold, Ma says, noting that former Alibaba employees have created more than

130 Internet startups. One of those, the Didi Dache taxi-hailing app, has raised more than US$700 million from investors. The social shopping platform Mogujie, also founded by Alibaba alumni, received US$200 million in Series D funding in June 2014. The company is worth more than US$1 billion, analysts say. Interestingly, Jack Ma himself weighed in on the issue of Taiwanese startups last December during the Cross-Strait CEO Summit in Taipei. In his speech, in which he noted that few new companies had been founded in Taiwan since 2000, he said he hoped to establish foundations that would help young Taiwanese entrepreneurs start new businesses in China and sell their products there. Jack Ma’s offer has generated mixed sentiments among Taiwanese, says Wang Yi-chih, a senior industry analyst and e-commerce expert at the Taipei-based Market Intelligence & Consulting Institute (MIC). Although Alibaba’s e-commerce platform would enable Taiwanese entrepreneurs to better access China’s 600 million Internet users, with Jack Ma’s support increasing their chances of success, China’s market conditions are highly challenging, Wang says. “Almost

網際網路是現在與未來的關鍵分銷渠道。」之初創投目前最成功的輔導個案就是餐廳線上訂位系統易訂網（EZTABLE）。這家台北公司的訂位系統和1000家餐廳合作，每月有 15萬人次使用，去年營收1600萬美元，且版圖已擴及香港、印尼和泰國。和林之晨一樣，易訂網執行長陳翰林也曾在美國深造與工作多年， 2008年返回台灣，和友人一起創辦易訂網。他說，「那時台灣還不流行新創公司」，「我們只想創辦一家公司，當時還沒有人做餐廳線上訂位」。陳翰林指出，接受之初創投輔導的那段期間是易訂網後來能成功的關鍵。易訂網剛參加輔導時，仍處於掙扎求生階段，但2010年中旬從創業育成加速中心畢業後，營收每年增加兩倍。他說，「之初創投幫

助我們開發更好的商業模式」，「從之初創投畢業後，我們在既有的訂位服務中加入餐券銷售，帶來更多營收成長」。總部位於矽谷的500 S t a r t u p s是另一個對台灣新創公司有興趣的初期種子基金和創業育成中心，在台投資對象包括行動多媒體通訊應用程式C u b i e、開發兒童娛樂的森遊（Roam & Wander）公司，以及創意和產品設計群眾外包平台獎金獵人（BountyHunter）。 500 S t a r t u p s創業合夥人兼大中華區投資負責人馬睿表示，前述台灣公司擁有鞏固的用戶群和全球配銷策略，因此吸引500 S t a r t u p s投資，「我們認為這些公司有能力迅速擴展，因為他們一開始就下定決心，要把觸角擴大到台灣狹小市場以外的地區」。馬睿舉例，Cubie拜早期就進軍東南亞市場的策略之賜，發展非常迅

速，如今用戶超過1100萬。Cubie是在2012年3月推出，同年10月成為 500 Startups的輔導對象。馬睿表示，獎金獵人在台灣累積廣大的用戶群後，開始出現獲利，如今利用500 Startups提供的資金，將版圖擴及美國和泰國。谷歌、微軟和凌志等企業都是獎金獵人的服務客戶。馬睿表示，若要讓台灣的創業風潮永續成長，就須有「本土英雄」，「台灣需要能輔導下一代的人，就像馬雲（中國電子商務巨擘阿里巴巴集團董事長兼執行長）或雷軍（小米科技創辦人兼執行長）那樣」。馬睿說，這是因為第一代成功創業家會尋找和投資新的公司，形成良性循環。她指出，離開阿里巴巴的前員工已創辦130家以上的網路新創公司，其中叫車應用程式嘀嘀打車已向投資人募得超過7億美元的資

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choose to stay in Taiwan,” he adds. With that trend in mind, the NDC is aiming to jumpstart what it sees as Taiwan’s latent entrepreneurialism by making the business environment friendlier for startups. Under its new HeadStart program, the Council is working with both foreign and local VCs to establish four US$100 million funds to finance local startup companies. The NDC will invest up to 40% of the capital in each fund. VC investors will receive as much as 80% of the profits that the funds post in the future.

The state lends a hand At a “matchmaking conference,” successful business executives share their experience with local university students. photo : cna

all Taiwanese Internet startups in China over the past 10 years have collapsed due to unwritten rules and legal constraints,” he observes. The China market is less attractive to Taiwanese – especially the nation’s youth – than it was a decade ago, says John Chen, research director at MIC and a China specialist. “The investment envi-

ronment is deteriorating as economic growth slows,” he says. “Wages are higher, the cost of living is rising, and air pollution is growing.” Meanwhile, Taiwan’s government and some companies are allocating funding of their own for startups, Chen notes. “Instead of going to China, the majority of Taiwanese entrepreneurs may rather

金。同樣由阿里巴巴前員工創辦的社群購物平台蘑菇街在2014年6月進行D輪募資時，籌得2億美元。分析師表示，蘑菇街市值超過10億美元。有趣的是，馬雲本人去年12月出席兩岸企業家台北峰會時，發表對台灣新創公司的看法。他在演說中指出，台灣自2000年後就幾乎沒有新創公司創立，他希望成立基金會，幫助台灣創業家到中國創業、販售產品。台灣資策會產業情報研究所資深產業分析師兼電子商務專家王義智表示，台灣對馬雲的前述談話反應不一。王義智說，阿里巴巴的電子商務平台能讓台灣創業家接觸到大陸6億網友，再加上馬雲的支持，成功機率更大，但大陸市場狀況的挑戰相當高。他觀察發現：「由於不成文規定和法律限制，過去十年內進軍中國的台灣網路新創公司幾乎

全軍覆沒。」產業情報研究所資深研究總監兼中國問題專家陳子昂表示，大陸市場對台灣人，尤其是年輕一輩的吸引力已不如十年前。他說，「（中國）投資環境因經濟成長趨緩而惡化」，「薪資高漲，生活成本攀升，空氣污染也日益嚴重」。陳子昂指出，在同期間，台灣政府和部分企業提撥資金投資新創公司。他說：「多數台灣創業家可能就會選擇留在台灣發展，而非前往中國。」

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政府助一臂之力有鑑於這個趨勢，國發會希望使經營環境對新創企業更為友善，藉此助長台灣潛在的創業精神。國發會在「創業拔萃方案」下，與國外及本地的創業投資機構合作，成立4 個各為1億美元的基金，為本地的新

“With these matching funds, we can offer VCs a high return on their investments and lower the risk they face investing in early-stage companies,” says Chen Shu-chen, a senior specialist in the NDC Department of Industrial Development. “We believe this policy will also help increase the interest of domestic investors in local startups.” In January, the NDC announced it would invest US$83 million in four different venture capital firms as part of the HeadStart program. The NDC will provide US$15 million to 500 Start-

創企業提供資本。國發會將在每個基金最多投入資本額的40%。未來在基金獲利時，創投機構最多可以獲得其中的80%。國發會產業發展處專門委員陳淑貞說：「有了這些相對基金，我們可以提高創投機構的投資報酬率，並且降低他們對新創企業投資的風險。我們相信這個政策也能提高國內投資人對本地新創企業的興趣。」在「創業拔萃方案」下，國發會在1月間宣布將對4家創投公司投資8,300萬美元。國發會將對500 Startups提供1,500萬美元，並提供 3,000萬美元給由台灣的創新工業技術移轉股份有限公司與美國科技類非政府組織Battelle Memorial I n s t i t u t e共同主持的合資基金。此外，國發會將對之初創投的新基金投資1,200萬美元，或30%的有限合夥相對資金，對Translink Capital III

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ups and US$30 million to a joint-venture fund run by Taiwan’s Industrial Technology Investment Corp. and the Battelle Memorial Institute, a US-based science and technology NGO. In addition, the NDC will provide US$12 million or match 30% of limited partner (LP) contributions to AppWorks’ new fund, and US$20 million or match 30% of Translink Capital III’s upcoming fund. “We are happy to see support for startups in terms of real money deployed from the government into companies,” says Rui Ma of 500 Startups. F u r t h e r, t h e N D C i s p r e s s i n g t o amend laws seen as impeding startups from operating in Taiwan. As a result of those obstacles, many Taiwanese startups have registered in the Cayman Islands or moved to Singapore. “These laws, which were established in the early years of the Republic of China, are interpreted very strictly,” says Wu Ja-lin, a section chief at the NDC’s Regulatory Reform Center. “The government now wants to loosen them to provide a better environment for startups in Taiwan.” Meanwhile, the NDC is also seeking to make it easier for Taiwanese startups to change the par values of their shares,

since a fixed par value reduces the potential range of return on the investment. Although Taiwanese companies no longer need to set the par values of their shares at NT$10 – the regulation was revised in December 2013 – they are still not permitted to change the par value once it has been declared.

即將成立的基金投資2,000萬美元，或30%的相對資金。 500 Startups的馬睿說：「我們很高興看到政府以實際提供資金的方式支持新創企業。」國發會並且進一步敦促修法，以排除被認為阻礙新創企業在台灣發展的問題。因為有這些障礙，許多台灣的新創企業是登記在開曼群島，或是遷到新加坡。國發會法制協調中心科長吳家林說：「這些中華民國早年訂定的法律，在解釋上十分嚴格，政府現在希望放寬，讓新創企業在台灣能有較好的環境。」同時，國發會也在設法讓台灣的新創企業較容易調整股票的票面價值，因為如果票面價值固定，會縮小投資可能獲利的幅度。台灣上市公司股票的票面價值原本一律訂為每股新台幣10元，後來這項規定在 2013年10月已經修改，但一旦票面

價值公布，還是不能更改。在「創業拔萃方案」下，政府也計劃投入新台幣1億元，把台北花博公園（2010-2011年台北國際花卉博覽會場地）打造成新創企業的群聚中心，希望一年能夠吸引100家公司。分析師說，群聚中心相當重要，因為它把彼此相關的公司、企業家與專業技術人才聚在一起，形成一個臨界質量。隨著群聚中心的成長，新的公司、人才與投資也會相繼投入。台北花博公園的這個計畫，部份是仿效新加坡的Block 71。後者原本是座工廠，2011年由新加坡政府改建為新創企業的中心。Block 71的營運十分成功，剛開始的新創企業家數為250，目前已倍增為500家。今年稍早，Block 71拓展到舊金山，在新加坡與美國的新創業界之間培養更密切的關係。

Startup cluster Under HeadStart, the government also plans to spend more than NT$100 million to transform the Taipei Expo Park (site of the Flora Expo in 2010-2011) into a startup cluster, which it hopes will attract 100 companies a year. Clusters are important because they bring together a critical mass of interconnected firms, entrepreneurs, and expertise, analysts say. As a cluster grows, new companies, talent, and investment pour in. The Taipei Expo Park project was inspired in part by Block 71 in Singapore, a former factory the city-state’s government refitted in 2011 as a hub for its startup community. Block 71 has been a major success, doubling from 250 startups at its debut to 500 today. Earlier this year, Block 71 expanded to San Francisco to foster closer ties between tech startup

communities in Singapore and the United States. As Taiwan fortifies its startup ecosystem, it can also learn from the experience of South Korea. Like Taiwan, South Korea has a relatively small domestic market and became a global economic power in part because of its strength as a technology hardware manufacturer. Hardware remains the bread and butter of its electronics giants LG and Samsung. But in the past few years, South Korean startups have moved into mobile gaming and social media with great success. Kakao is the best-known example. Its KakaoTalk instant messaging service is on 93% of smartphones in South Korea, according to research firm AC Nielsen. After Kakao merged with Daum Communications in October 2014, the combined group’s market value came to US$9.45 billion, according to South Korea’s Yonhap News Agency. The Daum Kakao IPO turned its majority owner and co-founder Kim Beom-soo into a billionaire overnight. Now Kim is reinvesting that wealth into new South Korean startups through his VC firm K Cube Ventures. K Cube’s portfolio includes Frograms, maker of an online movie recommending engine, and

他山之石台灣在強化新創企業生態環境的過程中，也可以跟南韓借鏡。南韓跟台灣一樣，國內市場規模並不大，之所以能在全球經濟扮演重要角色，部分得力於它做為科技硬體生產國的實力。電子大廠樂金與三星仍以硬體生產為主，但過去幾年，南韓的新創企業在行動裝置遊戲與社群媒體方面大放異彩。其中Kakao成功的實例最為人所熟知。根據AC尼爾森的調查，南韓有 93%的智慧型手機，都使用該公司的KakaoTalk即時通訊服務。據南韓的聯合新聞社報導，Kakao於2014年 10月與Daum Communication合併之後，新公司的市值達到94億5,000萬美元。 Daum Kakao首次公開募股行動，讓大股東及共同創辦人金凡秀一夕之間成為億萬富豪。如今他透過自

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Greenmonster, which produces the virtual scrapbook app Take Flava. Changseong Ho, co-founder of the Viki online video subtitling service, sold that company to the Japanese e-commerce giant Rakuten in 2013 for US$200 million. Now he too is using a VC firm of his own – TheVentures – to fund earlystage software startups, including Bridge Mobile, maker of an Internet-based mobile phone call service, and Parking Square, which offers a parking-space app. The surging South Korean startup scene is attracting international attention as well. Google will open a 20,000square-foot center in Seoul this year to provide mentorship and increased global exposure for South Korean startups. South Korea’s success with startups can be traced back to its decision after the 1997-1998 Asian Financial Crisis to make the Internet a strategic industry, says Lin of AppWorks. The South Korean government invested in fiber optics, built a comprehensive nationwide broadband network, and launched programs to strengthen the digital literacy of the population. Lin believes those policies spurred the development of Internet

gaming companies, laying the foundation for the South Korean startup ecosystem. South Korea, Lin notes, has the world’s fastest Internet connection speed and has been a leader in developing 3G and 4G technology. By contrast, Taiwan’s Internet connectivity is the 19th fastest in the world. “South Korea, like the U.S. and China, foresaw the Internet would redefine global commerce,” Lin says. “It also understood that the Internet could make a small country a bigger economic player. But Taiwan did not. Taiwan remained on the manufacturing path, and its competiveness has suffered.” South Koreans have exported software – primarily gaming at first – for a long time and so many products are designed with a global view, says Rui Ma of 500 Startups, who formerly covered that country for the company. “South Koreans are also very aggressive in terms of regional expansion compared to Taiwanese,” she adds. Indeed, South Korean Internet giant Naver, owner of messaging app Line, purchased the Taiwanese startup Gogolook in December 2013 for a

reported US$17.29 million. Gogolook is the maker of the Whoscall app used to identify unknown callers on mobile devices. Whoscall can detect spam calls based on calling time, frequency, and other factors. When Naver bought Gogolook, Whoscall already had 1.2 million monthly users in Taiwan, Japan, and South Korea and a database of 600 million numbers. Gogolook’s strength in data analytics made it an attractive acquisition target for Naver, analysts say. Naver is in the midst of an aggressive campaign to strengthen Line internationally as it competes against Tencent’s WeChat and WhatsApp, two other messaging apps with large user bases.

己的創投公司K Cube Ventures，把財產重新投入南韓的新創企業。K Cube投資的對象包括線上電影推荐引擎Frograms，以及推出虛擬剪貼簿Take Flava的Greenmonster。南韓線上影音字幕公司V i k i的共同創辦人許長生（Changseong Ho, 譯音）在2013年以2億美元代價，把公司賣給日本電子商務巨擘樂天株式會社。現在他也透過自己的創投公司 The Ventures資助剛起步的軟體新創企業，包括網路行動電話服務提供者Bridge Mobile，以及提供找停車位應用程式的P a r k i n g Square。南韓蓬勃發展的新創企業，也受到國際矚目。G o o g l e今年將在首爾成立一個占地20,000平方呎的中心，以輔導南韓的新創企業，並幫助它們與國際接軌。之初創投的林之晨說，南韓新創企業的良好發展，可以回溯到1997 到1998年發生亞洲金融危機時，南韓當局決定將網際網路訂為戰略

產業。南韓政府投資鋪設光纖，建立全國性的寬頻網路，並且推動計畫，提升民眾的數位能力。林之晨相信，這些政策促成網路遊戲公司的發展，為南韓新創企業生態奠定了基礎。林之晨指出，南韓的上網速度全球第一，並且在3G和4G行動通訊的開發方面居領先地位。台灣的上網速度則在全球位居第19名。林之晨說：「南韓跟美國和中國一樣，都預見網際網路將重新界定全球商務。而且南韓瞭解到，網路可以讓小國成為經濟要角，但台灣沒有體認到這一點。台灣還是走製造業的路子，它的競爭力因此受到影響。」 500 Startups的馬睿曾為她的公司掌管過南韓市場。她說，南韓出口軟體已經有很長時間（起初主要是遊戲軟體），有許多產品在設計時就放眼全球。她說：「跟台灣相比較，南韓在區域擴張方面也顯得非常積極。」

確實，開發即時通訊應用程式 L I N E的南韓大型網路公司N a v e r在 2013年12月買下台灣新創公司走著瞧（Gogolook），據說代價為1,729 萬美元。走著瞧的應用程式Whoscall 裝在行動裝置上，可以用來顯示不明來電者的身分。Whoscall可以根據來電時間、頻率和其他因素判定是否為廣告電話。Naver買下Gogolook 時，在台灣、日本和南韓已有120 萬人每月使用Whoscall這個服務，它的資料庫更有6億個號碼。分析師說，Gogolook在資料分析方面的優勢，讓N a v e r想要將它併購。Naver正在積極推動一項計畫，要在面對騰訊的WeChat與WhatsApp 競爭的態勢下，強化它在國際間的地位。WeChat和WhatsApp這兩個即時通訊應用程式，目前的使用人數超過LINE。同時，有些台灣的新創企業在利用台灣身為電子硬體製造國的優勢。總部設在台北的新創公司悅睿科技今年春天將推出為兒童設計的

taiwan business topics • march 2015

Strength in hardware At the same time, some Taiwanese startups are building on the island’s strength as an electronics hardware maker. Taipei-based startup Joyray Technology will release an open-platform smartwatch for children this spring, which will be able to run Google’s Android or Apple’s iOS. Founder and

StartupS

chief executive officer Jerry Chang is a veteran of Foxconn’s smartphone business group and has enlisted the hardware manufacturing giant to produce the smartwatches. Chang sought US$100,000 in funding from the crowdfunding platform Kickstarter and received about 85% of his target sum. He says he may seek the remainder on Indiegogo, a large global fundraising site. But Chang has also persuaded local venture capitalists to provide early-stage funding for product development. While not disclosing the amount they invested, he did say: “These two investors share our vision and believe we can execute toward that direction. They think the smartwatch is an important new emerging product and they should be involved in it.” Analysts expect the global wearable devices market to surge over the next few years. The U.S.-based research firm IDC reports a threefold increase last year in shipments of wearables to reach 19 million, and predicts that the figure will hit 112 million by 2018. U.K.-based Juniper Research sees the wearables market as growing even faster, forecasting that

開放平台智慧型手錶，它可以使用 Google的Android作業系統或蘋果的 i O S系統。悅睿創辦人與執行長張愛群是富士康智慧型手機部門的老將，在準備生產智慧錶時，找上以生產硬體著稱的老東家。張愛群透過群眾募資平台 Kickstarter，想要籌募10萬美元資金，結果籌到大約85%。他說，不足的15%可能會透過大規模的全球募款平台Indiegogo繼續募集。但張愛群也說服了本地的創投公司，提供產品研發所需的早期經費。他沒有透露金額，但說：「這兩家投資者跟我們理念相同，相信我們可以朝該方向推動。他們認為智慧錶是個重要的新興產品，他們應該要參與其中。」分析師預期，全球穿戴型裝置的市場在未來幾年將快速成長。美國研究公司I D C的報告說，去年穿戴型裝置出貨量是前一年的3倍，達到1,900萬個，預測到2018年將成長到1億1,200萬個。英國研究機構

shipments will reach 27 million this year and 116 million by 2017. 3-D printing is another new product category that offers opportunities for Taiwanese firms. And while Taiwan’s XYZprinting is not a startup in the traditional sense – its parent company is the massive electronics conglomer-

ate New Kinpo Group, which earns billions in revenue annually – it nonetheless launched the world’s first all-in-one 3D printer and scanner in October 2014. The printer takes from a few minutes to a several hours to scan an object, depending on the size. It also comes with free software, both to scan the object and to

GETTING THEM YOUNG — XYZprinting’s mobile 3D printing lab pays a call at an elementary school. photo : cna

Juniper Research對成長率做出更高的預測，認為今年的出貨量將達到 2,700萬個，到2017年將達到1億 1,600萬個。 3D列印是可以給台灣企業帶來機會的新產品類別。台灣的三緯國際並非一般的新創企業（它的母公司是電子大廠新金寶集團，每年營收以數十億美元計），但它在2014年 10月推出全球第一台全功能3D列印掃瞄機。視物體的大小，這部機器掃瞄的時間從幾分鐘到好幾個小時，它並且附有免費軟體，可用來掃瞄物體並且調整大小及顏色和輸出成品。三緯國際在2013年成立，目前是全球第二大3D列印機生產商，僅次於美國的Makerbot。三緯國際在 2015年預料將銷售超過10萬台3D列印機到世界各地，去年的數字則是3 萬台。 James Hill是台北版Startup Digest 電子報的主編，也曾是即時通訊應用程式C u b i e的業務發展經理。他

說：「整合硬體和軟體，是台灣應走的道路。台灣在硬體生產方面有些部分領先全球，新創公司應該利用台灣在這方面的能力，就像倫敦利用它做為全球金融中心的優勢，成為金融科技的樞紐。」金融科技是把科技運用到金融服務，以發展新的商業模式，例如行動支付系統。還有一項正面的發展，是線上訂位服務提供者EZTABLE在1月宣布，已經向本地創投基金CMC Capital與 Hsun Chieh Capital募得500萬美元。這兩家創投公司背後分別是由電子大廠聯發科技和聯華電子支持。台灣的投資者對網路公司一般較不感興趣，EZTABLE執行長陳翰林被問到為何能夠向他們募到資金時表示：「投資人喜歡有個標竿。我們跟他們說，我們想要成為亞洲的 OpenTable。他們瞭解到，既然有人搞線上餐廳訂位的商業模式已經做得有聲有色，對我們投資的風險就沒那麼大了。」

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adjust the size and color and print it. XYZprinting was founded in 2013 and is currently the world’s second-largest maker of 3D printers after the U.S.’s Makerbot. XYZprinting is expected to ship more than 100,000 3D printers globally in 2015, up from about 30,000 units last year. “Integrating hardware and software is the way forward for Taiwan,” says James Hill, curator of the newsletter Startup Digest in Taipei and former business development manager of Cubie. “Start-

ups should take advantage of Taiwan’s hardware manufacturing capabilities, which are some of the best in the world, just as London is using its strength as a global financial center to become a hub for fintech” – applying technology to financial services to create new business models, such as mobile payment systems. In another positive development, online booking provider EZTABLE announced in January it had raised US$5 million from local venture capital funds CMC Capital and Hsun Chieh Capital,

backed by semiconductor giants MediaTek and United Microelectronics Corp. (UMC), respectively. When asked how EZTABLE was able to attract funding from Taiwanese investors typically averse to Internet companies, EZTABLE chief executive Alex Chen replied: “Investors like a benchmark. We told them we wanted to be the OpenTable of Asia. They realized that someone else had already had great success with the online restaurant reservation model, so we seemed less risky to them.”

FiVe taiwanese startups to watch The rising stars in the Taiwanese startup scene are an eclectic mix of young tech firms, spanning the restaurant, retail, media, and education sectors. The one thing they have in common is a global distribution plan.

BY MATTHEW FULCO

Roam & WandeR

Tea party with TuTu and DiDi. photo : roam & wander

Imagine a kid’s tea party – and then make that experience more real with smart toys. That’s how Jason Warren, the American founder of the Taipei-based children’s entertainment studio Roam & Wander, describes the concept behind this up-and24

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coming startup that is backed by WI Harper, TMI Ventures, and 500 Startups. Warren is a Silicon Valley veteran who formerly worked for Microsoft and Motorola before arriving in Taiwan in 2010 to take an executive position at HTC. In 2012, he joined the TMI incubator as an entrepreneur-in-residence and founded Roam & Wander. Warren says he chose to base Roam & Wander in Taiwan because “people do great work at a reasonable cost” and “the quality of life is outstanding.” He also believes Taiwanese software capability is stronger than ever, complementing the island’s longstanding hardware prowess. Roam & Wander’s flagship products are the stuffed pink rabbit TuTu and stuffed brown bear DiDi. Kids can bring the animals to life by downloading their respective apps from the iOS store and then inserting their iPhones or iPads into the creatures’ heads. That brings the stuffed animals to life: they will not only talk but also eat and drink if given toy foods and beverages. “Play is very important to a child’s intellectual and social development,” says Warren, who has a young daughter. “We think kids should spend time engaged in physical, creative play with toys rather than just sitting and tapping away at a screen.” Warren believes Roam & Wander’s “freemium” business model distinguishes it in the increasingly crowded smart toy sector. There is no charge for playing the iPad app “Sticker

StartupS

Games” featuring TuTu and DiDi. And the physical stickers that Roam & Wander rewards players with – mailed to them from the company headquarters in Taipei – are also free. But once kids get the stickers, they start thinking about owning a physical TuTu or DiDi doll, each of which retails for about US$40 online or in stores. Children’s ownership of the stickers shows retailers that the dolls have a customer base, Warren says. The strategy has borne fruit thus far. Roam & Wander has established retail partnerships with France-based FNAC, Amazon, Toys “R” Us, Studio A, and retailers in China. TuTu also won the award for Best New Toy at the Hong Kong Game and Toy fair in September 2014.

colony uses the same system of traditional Chinese characters as Taiwan. In the future, Chung envisions expansion to Singapore and Malaysia.

WRiTePaTh

The neWs Lens Taipei-based media startup The News Lens thinks big. Less than two years old, it aims to become the top new media company in Taiwan by offering a compelling alternative to the tabloid fodder that dominates the mainstream. “Everybody hates the media industry in Taiwan,” says Joey Chung, The News Lens’s chief executive and co-founder. “It’s sensationalist, full of junk, and very biased.” With The News Lens, Chung and his partner, editor-inchief Mario Yang, a former senior editor of Taiwan’s Business Weekly, say they identify important news and then offer objective analysis that lets readers view it from a larger perspective. The site’s content is derived from other news sources as well as generated by a team of freelance writers. “I’m not a media person, per se,” says Chung, who has not previously run a media company but has written six Chineselanguage books and reported for the Taipei Times for a year. “But my partner and I saw an opportunity to bring a more contemporary news platform to Taiwan that makes heavy use of video content and social media.” Chung and Yang launched The News Lens as an aggregator on Facebook in June 2013 and then as a website two months later. Since that launch, The News Lens’s website has grown to 4.5 million unique visitors a month and 9 million page views, a growth rate that Chung says is three to five times faster than the company predicted. In addition to appearing on its main site, video content from The News Lens is broadcast onto screens in taxis, convenience stores, and the Kaohsiung MRT. That content, which does not exceed two minutes, is tailored to young Taiwanese professionals on the move, “people who don’t have time to read the news,” Chung says. In December 2013, The News Lens received angel funding from Marcus Brauchli, a former executive editor at the Washington Post and Wall Street Journal, and Sasa Vucinic, a Serbian journalist who helped found the Media Development Loan Fund NGO. That funding helped The News Lens gain a stronger foothold in Taiwan. Now it has its sights set on international expansion. Hong Kong will be the first new market, as the former British

Charles Chin, founder and CEO of WritePath. photo : writepath

WritePath is a Singapore-registered startup headquartered in Taipei that operates TopAdmit.com, TopScIedit.com, and BizEditors.com – three online editing services focused on college admissions, academic research, and enterprises, respectively. While the company has no full-time editors, it says it uses a team of experienced freelancers “highly trained across management, academia, engineering, and other specialized disciplines.” WritePath’s first site, TopAdmit.com, was founded in 2009 to help students with their college admissions essays. Since that time, the site has grown fast. In the 2013-2014 admissions cycle, TopAdmit.com served clients from 22 countries and revenue grew 50%. “It began as a passion for educational services,” says founder and chief executive officer Charles Chin. “We help students to highlight their qualifications and talents in a way that is compelling to an admissions committee.” Compared to Peterson’s EssayEdge, a major competitor, TopAdmit.com is more globally oriented, Chin says. He believes EssayEdge is focused on the U.S. education market and is less convenient and effective for students who are not native English speakers. “We are very interested in Asian markets, where we see high growth potential,” Chin says. “Mainland China is obviously important, but so are South Korea, Japan, and Southeast Asia.” Meanwhile, TopSCIedit.com, founded in 2012, helps professors and researchers get published in “renowned research journals,” says Chen. TopSCIedit.com has currently set a target of placing one million research papers per year in Asia. taiwan business topics • march 2015

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WritePath’s newest service is BizEditors.com, a crowd-sourcing translation platform that translates to/from Chinese and almost any other language. In June 2014, WritePath announced it had raised US$525,000 in seed funding led by Japan’s B. Dash Ventures, which it plans to use to establish offices in Japan, Korea, and the United States. Other investors included Pinehurst Advisors, Jamie Lin of AppWorks, Gogolook founder Jackie Cheng, and Bernard Chan, former entrepreneur-in-residence at TMI Ventures.

JoyRay TechnoLogy

eZTaBLe EZTABLE operates the foremost online restaurant booking system in Taiwan. Founded in 2008, it is one of the oldest and most successful tech startups in the young Taiwan scene. When Alex Chen returned to Taiwan from the United States, where he had studied applied mathematics and later worked in finance, he founded EZTABLE with his partners because “we just wanted to start a company.” He adds that “nobody was talking about startups in Taiwan at the time.” Chen and his partners concluded that a market exists for online restaurant booking in Taiwan, based on the model of the U.S. company OpenTable, which earns its revenue by charging restaurants. The restaurants pay up front in order to get into the system. But the EZTABLE team soon discovered that Taiwanese restaurateurs were unwilling to pay in advance for an unfamiliar service. “At that point, we shifted gears,” Chen says. “We told them we would give them six free months first, and that if they were satisfied with the results, then they could pay to continue using our service.” That move, along with the chance to be in Jamie Lin’s AppWorks accelerator, has been responsible for EZTABLE’s explosive growth since 2010, Chen says. Revenue has grown 300% a year for the past three years, and the company is expanding into Hong Kong, Thailand, and Indonesia. EZTABLE’s success has attracted the interest of both international and local venture capitalists. In 2012, Rose Park Advisors, an investment firm founded by Clayton M. Christensen, a Harvard Business School professor and his son Matthew Christensen, invested US$1.5 million. In January, EZ TABLE announced it had raised an additional US$5 million. The funding came from local VCs: CMC Capital and Hsun Chieh Capital, backed by the chip-making giants MediaTek and United Microelectronics Corp. (UMC), respectively. EZTABLE is now moving away from its original web-based reservation system to focus on a booking app, which is available for iOS, Android, and Windows. “It’s about convenience for consumers,” Chen says. “In the future, almost everyone is going to be making restaurant bookings on their smartphones or tablets.” Consumers also benefit from using EZTABLE because they accrue points for every reservation they make with the system. The points can later be exchanged for vouchers at participating restaurants. 26

taiwan business topics • march 2015

Joyray Technology founder Jerry Chang holding Jumpy smartwatch. photo : joyray

Former Foxconn executive Jerry Chang heads the children’s wearables startup JoyRay Technology, which is set to launch its Jumpy smartwatch this spring. Chang is betting that his hardware acumen and an open-platform system, which can run Android or iOs, will make Jumpy stand out in the fast-growing and competitive wearables sector. His Foxconn ties are paying dividends already, helping him to source components for Jumpy, as well as recruit talent. Foxconn will also manufacture the watches. But Chang is adamant that Joyray is no typical hardware startup. “We want to build a full ecosystem for which developers can design their own apps,” he says. “It’s important for user retention.” Chang was inspired to found Joyray when he observed his young song intrigued with a Foxconn smartwatch prototype his father had brought home from work. “That watch was designed for adults, but it made me realize that smartwatches should exist for kids too,” he says. “There is vast potential in the children’s market for these devices.” While Jumpy faces many competitors, Chang believes the device’s large screen, detachable watch head, and varied apps will help to distinguish it. He envisions the device as a providing a balance of education, exercise, and entertainment apps. “Bringing the family together is what we want to do with Jumpy,” he says. Jumpy will retail for US$129-$149 and be sold in the United States, Europe, Taiwan, and Japan. As part of the funding drive for Jumpy, which requires US$1-2 million, Chang joined the AppWorks accelerator. Since then, he has raised US$85,000 of his $100,000 crowdfunding target on the Kickstarter platform, and may seek to raise the remainder on the global fundraising site Indiegogo. Previously, Taiwanese venture capitalists had provided an undisclosed amount of early-stage funding for product development.

behind the news

Uber: Transportation or Information Company? Despite controversy and heavy fines, Uber persists in seeking its niche in the Taiwan market.

BY JENS KASTNER photo : a lexander torrenegra f/ wikipedia

ince the market launch in Taiwan of ride-sharing service/mobile app company Uber in mid2013, the company has seen impressive growth on the island. Both ridership and the driver pool have increased by an average of 30% a month, according to the company, and more than 1,000 drivers are now providing over 100,000 rides a month. Many consumers seem to appreciate the chance to use a mobile app to arrange for transport –

often a luxury model at that. As has happened in many markets that the company has entered, however, Uber’s stellar rise has taken regulators off-guard, and its ambiguous legal status has resulted in a number of conflicts with the authorities. As of January 17, Uber has been fined in Taiwan 133 times, for a total sum of NT$16.5 million (US$522,000), for violating the Highway Act and the Automobile Transportation Management Regula-

tions for operating as an “information company” rather than a “transportation business.” Moreover, Uber’s drivers – mostly luxury-car owners with some time to spare and a need for additional income – have been slapped with fines totaling NT$6.6 million (US$209,000) for not holding the required commercial drivers’ licenses. Founded in San Francisco in 2009, Uber has since begun operating in some 200 cities in over 50 countries, and has amassed a valuation of a whopping US$40 billion. However, Uber’s stellar growth has come at a cost, with the company experiencing controversy and opposition in nearly every market it has entered. It has been banned in Spain after complaints by taxi drivers, as well as in New Delhi, India after an alleged rape committed by one its drivers. Uber drivers have been accused of rape in the United States, too, and during the Sydney hostage crisis last December, Uber received negative publicity for abruptly raising prices, seemingly to exploit commuters’ fear of public transportation. Uber’s troubles worldwide stem in large part from its insistence that it is a hugely innovative software company

taiwan business topics • march 2015

behind the news

rather than a transportation business – the same issue that plagues it in Taiwan. Repeating the combative stance the company has taken in other countries, Uber initially responded to Taiwan’s regulators with defiance, blasting the Ministry of Transportation and Communications (MOTC), the regulator for transportation businesses, for “outdated thinking” and for “opposing the tech revolution.” B u t m o r e r e c e n t l y, t h e Ta i w a n branch has been striking a more conciliatory note, just as Uber’s headquarters has begun doing elsewhere. For example, the Wall Street Journal in late January reported on a speech in Munich by Uber CEO Travis Kalanick that was filled with talk about compromising with regulators he once sparred with. “We had some constructive conversations with different government organizations over the past several weeks,” says Uber Taiwan general manager Gu Li-kai. “Before we went into those meetings, there might have been several misconceptions and miscommunication, but now we feel that we are on the right track.” Gu says that several initial sources of friction are now being overcome, such as the question of whether Uber’s drivers are sufficiently insured and vetted. According to Gu, before the

recent conversations, Taiwan’s regulators were unaware of Uber’s measures requiring sufficient insurance coverage of Uber cars and the thoroughness of the background checks conducted on its drivers, which the company says actually exceeds those for Taiwan’s taxi drivers. For example, while Uber does not accept drivers having any sort of criminal record, those with criminal convictions older than “five to seven years,” depending on the offense, may be licensed as taxi drivers. (Certain offenses such as tax evasion are excluded from consideration). “We feel that we already have the strictest procedures in the transportation industry here, but if there are some new suggestions on what to add, we are obviously open to them,” Gu says. As to the authorities’ core demand that Uber register as a transportation business rather than an information business, however, the company’s actions continue to suggest that its position is unchanged. In an email reply to a query from Taiwan Business TOPICS, the MOTC said Uber continues to “illegally recruit drivers on the Internet” and to evade registration fees. The MOTC stressed that during a meeting between Uber and the Executive Yuan in late December, the vice premier made clear that Uber cannot expect any spe-

cial treatment. U n s u r p r i s i n g l y, t h e m a i n f o r c e pressing for a tough stand toward Uber by the government – both the MOTC and the Ministry of Economic Affairs (MOEA), which is responsible for overseeing the information business sector Uber says it properly belongs to – are the local taxi companies and alliances. Their primary complaint is that while taxi drivers must pay licensing fees to the government, neither Uber nor Uber’s drivers do the same. They further protest that while their drivers must prepare for and pass a test to become licensed, drivers connected with Uber can operate without having to go through that process. So strong is opposition to Uber that local media report that certain taxi companies are even offering bounties on Uber drivers. Reportedly, these companies are willing to pay NT$500 to people who provide firm evidence that Uber is still operating in Taiwan, including a picture or video of a Uber car’s license plate, a screenshot of a confirmed dispatch order on the Uber app, a bill for the transaction, and a confirmation slip from the motor vehicle office after filing the report. The association has reportedly raised NT$500,000 to fund the bounty scheme, and the offer stands until the end of March.

Consumer protection

Taxi drivers in Portland, Oregon protest that Uber is operating under a different set of rules. photo : a aron parecki / wikipedia

taiwan business topics • march 2015

Arguably Uber’s second most formidable non-government critic is the Consumer Foundation (CF), which says it looked into Uber’s services in January and found several problem areas. “If the driver has cheated the rider, for example by taking an extra-long route, Uber will say that it’s only a mobile-app matchmaking platform, with no responsibility whatsoever” for the driver’s actions, says CF Vice Chairman Yu Kai-hsiung. “And they don’t even have a telephone number here in Taiwan, meaning there is no real channel for complaints from Taiwanese consumers.” Yu adds that Uber’s privacy policy is available in English language only, and that Uber takes the liberty of changing

behind the news

The Uber headquarters in San Francisco and examples of screens from the Uber app.

fares without prior notification, a practice in breach of the Automobile Transportation Management Regulations. Uber's fares are continually adjusted according to level of demand, while Taiwan's taxi drivers are prohibited from adjusting fares under any circumstances. Gu counters, however, by noting that every move by a Uber car is GPStracked, and that no cash ever changes hands between rider and driver in Uber’s credit-card-only transactions. In the event of a dispute between rider and driver, “Uber is able to look at concrete facts and data,” something a traditional taxi company could not do, he says. “The most common issue that might arise is that the rider feels unfairly charged because the driver took a wrong route. But since all payments are done electronically, we, unlike a taxi association, will be able to directly refund the rider’s credit card.” As to the lack of a telephone complaint hotline, Gu stresses that emails are replied to “within 24 hours.” He adds that Uber detects the language setting on a user’s smartphone, so that “a rider will always see everything [on the app] in the language he is most comfortable with.” Indeed, the CF’s Yu acknowledges that in the one-and-a-half years Uber has been operating in Taiwan, the foundation has not received a single consumer complaint related to the service. “I don’t deny that Uber is an outstanding app platform,” he says. “I just hope they will comply with Taiwan’s consumer rights protection laws.”

Local scholars who have been observing the case expect that Uber and the authorities will soon come to an understanding. Tu Meng-ru, a professor of transportation science at National Taiwan Ocean University with a particular research focus on e-commerce and logistics management, predicts that Vice Premier Simon Chang – who formerly served as the Minister of Science and Technology and before that as Google’s Asia-Pacific Infrastructure Chief Operating Officer – will be the major force in working out an accommodation. “Taiwan has record-high penetration rates for Facebook, Google, smartphones, and so forth, and the government wants to learn from such innovative software companies,” says Tu. As a result, he expects the government to adopt a policy of accepting Uber as long as the company more strictly obeys Taiwan’s laws and pays regulatory fees. Daniil Matzkuhn, a Taipei-based tech-blogger, says the authorities are particularly curious to learn how Uber has been able to perfect the online2offline (O2O) business model of finding consumers online and connecting them to real world goods and services. “If it could combine O2O and Taiwan’s high smartphone penetration rate as craftily as Uber has been doing, Taiwan’s offline service sector could be a lot more successful,” he says. Tu recommends that Uber include taxi drivers in its driver pool to appease the taxi unions, “which do have some influence in elections” He also suggests that Uber’s headquarters give more

autonomy to its Taipei branch. “If they manage to localize like Toyota in the U.S. or like McDonald’s here in Taiwan, then we will see a good end to the story,” Tu says. He sees such localization as taking the form of cooperation with the local taxi associations to offer services that are safely and conveniently arranged electronically, while being cheaper than the regular, high-class Uber cars. Tu regards such an outcome as a win-win-win situation for the taxis, Uber, and consumers. Judging from a February 4 announcement by the MOTC, the government is also looking at ways of adapting in response to the Uber challenge. The ministry said it is mulling a classification system for taxi fares that would divide the vehicles into general and premium tiers. Obviously inspired by what Uber has been doing, the system would regard only relatively new vehicles with larger engine displacements as qualified for premium status. MOTC envisions a fleet of around 800 to 1,000 Mercedes Benz, BMW, and Lexus taxis, with fares allowed to exceed those of the general models, comprised mostly of Toyota Camrys. The new service would be available only in Taipei and New Taipei City, “due to their citizens’ relatively higher standards of living,” the ministry said. Uber’s Gu says that such a premium taxi fleet would pose no threat to Uber’s popularity. He welcomes the MOTC initiative, he says, since “the more attractive options the Taiwanese consumer has, the better.”

taiwan business topics • march 2015

books

The Chinese Leadership and How They Reached the Top The interplay of numerous factors influences who becomes a member of the Political Bureau Standing Committee.

BY JUNE TEUFEL DREYER

The New Emperors: Power and the Princelings in China, by Kerry Brown. I.B. Tauris, London and New York, 2014. 244 pp. ISBN 978 1 78076 910 3 eISBN 078 0 85773 383 2

taiwan business topics • march 2015

t noon on November 15, 2012, seven men filed onto the dais in Beijing’s Great Hall of the People, thus ending months of speculation. A journalist for one major Western news outlet had even conducted an informal contest, asking entrants how many members of the Political Bureau Standing Committee (PBSC) there would be, their names, and the policy portfolios they would hold. While some guesses were more accurate than others, such was the aura of mystery around the selection process that no one got the outcome completely right. Among the oddities preceding their entrance onto the stage, the meeting at which the chosen ones were anointed, the Eighteenth Party Congress, had been postponed twice; the heir apparent had mysteriously disappeared for two weeks; and one of the early front-runners, Bo Xilai, was in prison, convicted of trying to cover up his wife’s murder of a business partner reputed to have been her lover. Against this stranger-than-fiction backdrop, the end result seemed anticlimactic. The appearance of the new leadership was collectively bland, even

boring. All were Han Chinese, male, late middle-aged, and had black hair, rumored to be chemically enhanced to preserve the appearance of youth. They wore tailored navy suits, crisp white shirts, and conservative ties. Not even the most hyperbole-prone pundit would have been tempted to call them the “Seven Samurai.” Kerry Brown, a former First Secretary of the British embassy in Beijing and now director of the China Studies Centre at the University of Sydney, brings his impressive qualifications to bear in examining the background of these men, the super-elite of the Chinese Communist Party (CCP) and ultimately of the People’s Republic of China (PRC) itself. Party General Secretary/PRC President/Central Military Commission head Xi Jinping gets his own chapter, as does Premier Li Keqiang; the others are considered sequentially in a single chapter. But behind their consistent and unremarkable surface appearance, the author finds a surprising amount of diversity. Xi, as is well-known, was a princeling – positioned by both birth and marriage connections among the chil-

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dren of parents who had fought the communist revolution and reaped the benefits of victory for themselves and their families. He had first been introduced to the nation at the Seventeenth Party Congress in 2007 as the putative successor to Hu Jintao. Even so, Xi’s path to power had not been entirely smooth. His father, Xi Zhongsun, had been accused of complicity in an alleged plot against Mao Zedong and hence was sidelined in the years just prior to the Cultural Revolution. Though undoubtedly difficult for both the elder Xi and his family, the purge meant that the son was never able to join a Red Guard rebel group, which might well have caused him problems later in life. Xi Jinping was one of the millions of youth sent to the countryside to experience the hardships of peasant life, which also proved a blessing in disguise. Unable to attend school to obtain a formal education, Xi somehow managed to acquire both bachelor and Ph.D. degrees from Beijing’s prestigious Tsinghua University. The latter degree, Brown notes, is suspected of being “outsourced.” Xi somehow skipped the normal intermediate step of a master’s degree as well. After serving as private secretary to Central Military Commission (CMC) member Geng Biao, Xi was posted first to Hebei and then Fujian provinces, with attacks on corruption becoming a hallmark of his speeches. There were setbacks in his path to the top: for example, at the Fifteenth Party Congress in 2007, Xi came in last in balloting for full membership in the Central Committee (CC), receiving only alternate, non-voting, status.

Additional setbacks Unmentioned by the author were two other stumbles, the first in Mexico City in February 2009 when he lectured Western powers most undiplomatically, saying that “some foreigners, with full bellies and nothing better to do, engage in finger-pointing at us. First, China does not export revolution; second, it does not export famine

and poverty; and third, it does not mess around with you. So what else is there to say?” Unreported by China’s official media, but widely known through social media, the remarks raised private doubts about Xi’s capacity as a leader. A second setback occurred only few months later, at the CC’s Fourth Plenum in 2009. Since, as head of the Party Secretariat and vice-president of the PRC, Xi was heir-apparent to Hu Jintao, he was expected to be named a vice-chair of the CMC. He was not, leading to much speculation about the succession. Though Brown does not dwell on it, Xi’s disappearance from public view just before the Eighteenth Party Congress has never been satisfactorily explained, with most Chinese skeptical of the official explanation that he was recovering from a soccer injury. Yet he did succeed to the top post. One must wonder whether Xi’s determination to be a strong leader and his attacks, thus far successful, on his putatively corrupt rivals are connected to efforts to settle scores for the past setbacks. In contrast with Xi, Premier Li Keqiang has been quite unlucky. He comes from a more –– though not entirely – humble background, trained initially in law, and received a “real” Ph.D. in economics from the equally prestigious Beijing University. Li impresses those who have met him with his sharp mind and smooth operating style, in contrast to his famously awkward mentor, Hu Jintao, who oversaw Li’s rise through the ranks of the Communist Youth League that Hu once headed. Brown sees Li as a more personable version of Hu – a problem solver rather than a policy initiator. Shortly after being placed in charge of Henan, a succession of disastrous fires occurred in the province, earning Li the nickname of “the governor with three fires.” Next, Li was confronted with a tainted-blood scandal that made international headlines and caused him to clamp down hard in the name of stability, compensating some of the noisiest complainants and enforcing a news blackout. Only two months after his transfer to Liaoning, a coal mine

Xi Jinping, accompanied by U.S. Vice President Joe Biden, during a 2012 visit to the United States.

photo : wikipedia

explosion killed 214 workers, exposing major defects in mine safety. More explosions followed, this time in a karaoke hall and bath house. Apparently Li’s efforts at crisis management favorably impressed his superiors, as did Liaoning’s economic growth rate during his time there. Though clearly Hu Jintao’s favorite to succeed him in the highest party and governmental posts, Li had to settle for second best, however. The other five members of the PBSC also show a range of different backgrounds and characteristics. Wang Xishan, whose degree was in history, had not even joined the CCP until he was in his 30s; Zhang Dejiang studied in North Korea in the late 1970s; Liu Yunshan had worked as a journalist in Inner Mongolia, and Zhang Gaoli was an executive in a state oil company for nearly 20 years before entering government service. Most surprising of all must be Yu Zhengsheng, whose brother, a bureau chief in the Ministry of State Security, defected to the United States in 1985, creating a scandal that would normally have tainted his family members beyond redemption. Some, like Zhang Gaoli, have connections with business networks, while others, such as Zhang Dejiang, seem almost antagonistic to them. Some, including Xi Jinping, amassed sub-

taiwan business topics • march 2015

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stantial local support for their careers in central government; others, though serving in various provinces, did not. And whereas Xi’s rise was aided by a strong family network, Yu Zhengsheng’s was marred by his, with several relatives even having committed suicide.

Drawing conclusions What then should one make of the data? Brown’s aim goes far beyond the presentation of biographical information, seeking to tease out the factors that made the difference between alsorans and those who emerged at the pinnacle of party leadership. He is skeptical of the importance of factional loyalty, terming it “a somewhat ossified and static notion.” On the question of ideology – what these people actually believe – Brown opines that they believe in themselves, in power, and in the importance of maintaining that power. They act with real ruthlessness to achieve it. Family and what the author calls tribal alliances based on family connections continue to matter, as they did in pre1949 China. Brown reports that in the run-up to the Eighteenth Party Congress there were frequent reports of family meetings, with evidence of contestation within them. Also critically important, according to the author, are provincial links, with the path to Beijing often running through the provinces. In addition, business and money are “key and becoming more important.” The CCP has uniquely melded a Marxist ideology to cutthroat capitalistic entrepreneurship, even bringing its avatars into a party that supposedly represents workers and peasants. However, Brown notes, patronage is also important, as are military and institutional ties. Here, a bit more attention to how the People’s Liberation Army (PLA) acts on and influences the members of the PBSC, either as individuals or as an institution, would have been helpful. For the past two decades, even as the PLA has become increasingly powerful and its members increasingly publicly outspoken, even to the point 32

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of differing from official government policy, there has been no military representative in the PBSC. Within the past several years, there have been hints that, contrary to Mao Zedong’s dictum, the party may not always control the gun. Yet ominously, the first part of Mao’s sentence on the topic, “political power grows out of the barrel of a gun,” remains relevant. As Brown weighs these factors, he suggests that it would be advisable for a would-be future leader of the PRC to first seek the support of the elite, presumably meaning the party elite, and business. Least influential are the support of intellectual and military elites. Xi Jinping’s success rests on the fact that he alone combined the full range of these networks. There is a bit of the post hoc ergo propter hoc juxtaposition of cause and effect in this analysis. Did Xi’s success really depend on these bases more than did countless other wannabe leaders? Or did the analysis start with the conclusion of Xi’s success, note the networks he tapped into, and work backward? Additionally, some of the critical factors affecting why these men succeeded while others did not may simply not be publicly available. Particularly in the PRC’s opaque system, nefarious deeds often remain hidden. Bo Xilai’s actions came to light almost accidentally when his chief of police, becoming concerned that Bo meant to blame him for complicity in the murder, fled to the American consulate-general in Chengdu in an apparent attempt to claim asylum. Until former PBSC member and security chief Zhou Yongkang fell afoul of Xi’s anti-corruption campaign, his misdeeds were also unknown. These cases may well be the visible tip of an iceberg of unknown, but presumably large, size. Further, the important networks Brown has documented interact with individuals in different ways at different times – ways that are scarcely predictable. In the end, what may matter most is luck. Still, however the lucky seven rose to their lofty positions, they face a common dilemma. In Brown’s elegant phrase, it is imperative that the

leadership re-establish the “emotional connection with the population” that existed in the early years of the CCP. This task will not be easy. As Brown points out, Chinese society has become more diverse, and also more outspoken. People are increasingly more likely to protest worsening pollution, the confiscation of land, and official abuses of power. Income disparities have not only become greater, but more visibly so, thereby exacerbating tensions, while social media have made it easier for people to share their grievances despite efforts to block and censor the news. To maintain stability and keep themselves in power, the leadership must create a steady stream of deliverables. Maintaining economic growth in an era of apparent global decline, and a domestic ecosystem at a dangerous inflection point, is a daunting challenge. The essence of Xi’s “China dream” is a society in which the PRC’s citizens have a living standard comparable to that of much of the developed world, and a nation that is innovative and able to produce its own intellectual property. Undoubtedly, he also wishes to see a situation in which the Chinese president is as visible and respected as that of the United States. At the same time, Brown believes, the leadership is aware that the country has in the last 150 years all too often collapsed in disarray and failure when it tried to take on the West. The leaders must guide the country in such a way that it does not splinter into disunity or become overwhelmed by internal instability. This means they will have to find a way to mobilize the already fragmented, sometimes fractious worlds within China of different networks and power groups so that they work together to deliver the dream.

— June Teufel Dreyer is a professor of political science at the University of Miami in Coral Gables, Florida. She is the author of such books as China’s Political system: Modernization and Tradition, now in its ninth edition.

TAIWAN busINess

The Ups and Downs of htc The smartphone maker is diversifying its product lineup in an effort to reverse its fortunes.

BY TIM FERRY WITH PHILIP LIU

HTC Desire Eye. photo : htc

aiwan’s leading smartphone brand HTC last November launched its first own-brand, non-smartphone or tablet product: the Re, a mini still and video camera. Resembling a periscope, the L-shaped camera with one-button activation is aimed at the booming market for “lifestyle cameras” pioneered by GoPro – and with sales booming, the company has already announced an updated ver-

The HTC Re camera photo : htc

sion to be released later this year. The Re is not the only new venture for HTC. Its Re launch coincides with a tie-up between HTC and U.S. sports clothing and accessories maker Under Armor to create fitness-related wearable devices, as well as a collaboration with Google to manufacture its Nexus 9 line of tablets. All three moves signal HTC’s push to diversify away from a singular focus on the already saturated smartphone market and towards more burgeoning tech sectors such as wearable devices. “In a mature market like smartphones, it’s reasonable for branded phone makers to deliver products which can clearly present diversification and creativity,” says Avril Wu, sector analyst and vice president for Taiwan technology analytics firm Trendforce, citing the Re camera as one such example. She views such diversification as benefiting the company by allowing HTC to “expand the application of mobile technology” into new product lines such as wearables, and equally important to help the maker build up its ecosystem in the rising Internet of Things (IoT) sector of connected devices and appliances.

Vicky Yeh, smartphone market analyst with the Industrial Economics and Knowledge Center (IEK) at Taiwan’s Industrial Technology Research Institute (ITRI), says that HTC is trying to “transform from a smartphone brand name to a personal computer and electronics brand name.” HTC hasn’t given up on its core smartphone business, but here too the company has also diversified its product lines away from top-tier models aimed at rich markets towards lower-priced models offered in emerging markets. Will these new ventures be enough to restore HTC to its once lofty perch at the top of the global smartphone industry? Diversification into wearables and IoT-related tech should offer attractive potential opportunities. Market forecasts predict annual sales in IoT-related devices and components ranging from 30-50 billion units valued at some US$300 billion by 2020. HTC has earned a reputation for offering bold new products to the market, including some of the world’s first Android and Android 4G LTE phones, and has been recognized as an innovation leader

taiwan business topics • march 2015

TAIWAN busINes s iPhone. Although many suspected by Boston Consulting Group, that the real target of Apple was Fast Company magazine, and Google, instead of going head to Bloomberg, all signs that the comhead in battle against the search pany is well-positioned to take giant, Apple instead waged war advantage of these new sectors. on Android developers. Further, But HTC is also known for getting while Samsung was also in Apple’s too far ahead of the market, only crosshairs, smaller and less expeto have consumers shift direction rienced HTC represented an easier behind them, as previously seen target. in HTC’s costly investments in 3D The litigation in U.S. and forcameras and sophisticated audio eign courts distracted HTC and that contributed little to revenue cost the firm billions of US doland profits. lars. Even more importantly, it A push into emerging marstopped nearly half of HTC’s shipkets also offers great potential, as HTC Chair Cher Wang shows the motherboard of the ments into the United States at the global smartphone sales are skynew Desire Eye smartphone model during a presentaborder in 2012, including flagrocketing, propelled by strong tion at this year's World Economic Forum in Davos, Switzerland. ship models One X and Evo 4G demand in developing countries photo : wikipedia LTE. The impact on HTC’s market such as China and India. But in share and income was devastating. these markets, Chinese smartThe patent wars “ruined HTC’s constiphone vendors such as Huawei and turer of touchscreens, smartphones, tution,” says IEK’s Yeh. ZTE already dominate, offering surand notebook PCs, including one of Moreover, while HTC was tied up in prisingly good phones for less money, the earliest mobile devices, Compaq’s litigation that was eventually settled in and these vendors now collectively Pocket PC. HTC’s collaboration with November 2012, China’s smartphone own some 38% of the world market, Compaq led to ventures with Microindustry was just ramping up. ZTE according to Trendforce. soft, Google, and even with telecoms and Huawei began by offering cheaper Perhaps the most significant obstacle such as T-Mobile, O2, and Vodafone, smartphones for emerging markets that standing in HTC’s way back towards all of which also wanted to produce were quickly supplanting the developed its previous heights, though, is that the their own-spec phones. world as areas of growth for the smartchasm separating its current status from According to presentation matephone industry. its 2011 glory days may be simply too rials provided by IEK, HTC began to A c c or ding to Tr e ndF or c e , Chi wide to bridge. develop its own-brand smartphones in na’s smartphone industry has been HTC’s rise and subsequent decline 2006, and from 2008 to 2011 the comexpanding at an annual clip of 50% are the stuff of legend in Taiwan. The pany enjoyed great success in developed since its inception in 2011, with its company rose from ODM obscurity to world markets. It produced the world’s global market share reaching 38.6% in heights of consumer branding and sales first Android-based smartphone, the 2014. In 2014, the three leading Chirarely attained by Taiwanese firms, but HTC Dream, launched in October nese brands – Lenovo, Huawei, and then plummeted from lists of top 10 2008, followed by its well-received Xiaomi – each delivered over 60 million smartphone vendors following years User Interface (UI) software, Sense, in units, joining Samsung, Apple, and LG of patent litigation, shifting market 2009, and the first Android 4G LTEon Trendforce’s list of top smartphone trends, and ever-stiffening competition. enabled phone offered in the United brands. Their shipments are expected to HTC’s market cap shrank from 2011’s States, the HTC Evo, in 2010. By 2011, rise to over 530 million in 2015. US$33.8 billion to the current US$4.06 HTC’s market valuation exceeded By 2012, heightened competition billion, relegating the erstwhile market former leader Nokia and the company in the top-tier segment from Apple leader to the “Other” column in market held over 10% of the global market for and Samsung led HTC to shift focus share charts of smartphone vendors. smartphones. However, this early suctowards emerging markets. But here cess also led the company directly into they faced another challenge; as latethe middle of the smartphone patent What went wrong? comers in entering China, India, and wars that would eventually engulf all of other markets, they had to play catch the top players. HTC was founded in the late 1990s up. And China’s rising sophistication In March 2010, Apple filed suit by a partnership consisting of chairin branded electronics eroded HTC’s against HTC in both the U.S. District person Cher Wang – a scion of the quality advantage, while production Court of Delaware and the InternaWang family of international conglomlocated in higher cost Taiwan put the tional Trade Commission (ITC) for erate Formosa Plastics Group – and company at a price disadvantage. patent infringement, citing at least 20 CEO Peter Chou. The firm started out The old strategy of offering better patents that allegedly copied Apple’s as a contract ODM/OEM manufac34

taiwan business topics • march 2015

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quality at a lower price – the strategy employed by Taiwan’s electronics industry across many segments – was no longer working. “In the mid-tohigh-end markets, HTC was squeezed by Apple and Samsung, and in the middle to low-end, it was squeezed by the Chinese vendors and manufacturers,” observes IEK’s Yeh. The impact on HTC’s finances has been dramatic. In 2013, the company suffered a net loss of NT$1.329 billion (US$44.3 million), on sales of NT$203.4 billion (US$7.7 billion), and its share price began its inexorable slide from 2011 high of NT$1,238 to its closing price of NT$147 on February 11. By 2013, HTC had dropped to 11th place in terms of market share, trailing far behind market leaders Samsung and Apple, at 31.6% and 15.5% respectively. The numbers improved in 2014, with fourth-quarter results showing revenues up 12% year-on-year to reach NT$47.9 billion (US$1.5 billion), with slim profits of NT$500 million (US$15.9 million). It marked HTC’s third consecutive quarter of profitability. The company is estimated to have earned after-tax net profits of NT$1.81 per share in 2014, much better than the NT$1.6 per share in the red in 2013.

Diversification As HTC’s business stabilizes, diversifying its product lines will hopefully expand its range and increase sales. At the product release of the Re in New York City last November, Peter Chou noted that the camera is an outcome of an R&D effort that has focused on audio and image in recent years. Cher Wang said in media interviews that Re is a natural extension of HTC’s innovation from mobile phones into the budding sector of mobile devices, adding that the company will offer even more such devices in the future. On other occasions, Chou has stressed HTC’s intention to create new value by rolling out cloud-based products and other non-smartphone products.

Another example of the company’s diversification strategy is its contract production of Google’s latest tablet-PC model Nexus 9, marking the resumption of tablet production following the disappointing performance of its two own-brand models two years ago. As HTC’s shipments are down across its product lines, the return to contract manufacturing is apparently meant to bolster its output volume for the sake of economies of scale. HTC has more involvement in Nexus 9 than a pure contract producer, though, since the device is furnished with HTC’s proprietary BoomSound stereo speaker. In addition, HTC can sell the tablet under its own brand in markets approved by Google. Market reception to Nexus 9, notably in Japan and the U.K., has been satisfactory, as shown by initial supply shortages. The earlier-mentioned partnership with Under Armor is aimed at promoting the U.S. company’s UA Record brand of fitness apps, including popular fitness tracking app MapMyRide. While neither Under Armor nor HTC has disclosed exactly what devices HTC will produce, tech blogs predict it will likely be a line of wristwatch-type devices. According to the HTC website, Robin Thurston, Under Armour’s senior vice president in charge of its Connected Fitness brand, cited HTC’s “fearless commitment to innovation” and its “attention to detail and premium design” as reasons the company chose HTC as its partner. To back up its innovation, HTC last April set up a Creative Lab in its R&D center in Seattle, boasting a workforce of 250, dedicated to software development. In addition, Cher Wang signed an agreement with China’s Guizhou provincial government in October for establishing a big-data online precision marketing and interactive center in a hitech industrial park. While HTC is trying to bolster its bottom line with new product lines, it is also strengthening its smartphone offerings. The company launched two new smartphone models at the end of 2014, the Desire Eye and Desire 820, both targeting the medium-price sector. The

two models supplement Butterfly 2, the company’s high-end flagship model, and the mid-level model HTC One M8. HTC is vigorously pushing the models worldwide, especially in the emerging markets of China, India, and Southeast Asia. Media reports say that HTC will launch new models at the Mobile World Congress in Barcelona Spain this month, as well as a smartwatch. The number of new models underscores the company’s resolve to revitalize its presence on the global smartphone market. Among HTC’s biggest shortcomings has been what experts see as mediocre marketing. HTC has strived to project a distinct brand image and retain loyal followers by employing international celebrities as spokespeople, such as actor Robert Downey Jr., in the second half of 2013, at a cost of NT$360 million (US$12 million), and baseball star Robinson Cano, at an undisclosed cost. But the results were roundly criticized as being confusing and did little to stimulate sales. Aware of the weakness in marketing, Cher Wang took over the task herself during a top-management reshuffle in the fourth quarter of 2013, leaving Peter Chou to concentrate on product design and development. The effort so far has produced only limited success at best, according to market observers. Most securities analysts are still harboring a conservative outlook for HTC, predicting a low share price range of NT$90-100 in the coming 12 months. Kao Hsin-shan, tech-industry analyst at Barclays Securities Taiwan, for instance, notes that despite changes in the product lineup, HTC’s gross margin will remain low, as acute competition, notably in China and India, will continue to dampen the profit level. Market observers hesitate to predict that HTC’s new moves can propel the company back to the top of the consumer tech game. But noting that Cher Wang still has the “brand name d r e a m , ” a n d b a s e d o n t h e f i r m ’s improved performance over the past half year and renewed emphasis on product diversification and emerging markets, neither are they are dismissing the possibility out of hand.

taiwan business topics • march 2015

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INDUSTRY

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A Report on the Luxury Goods Sector

Elevating the Shopping Experience

BY JULES QUARTLY

photo : jules quartly

taiwan business topics â&#x20AC;˘ march 2015

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AImING To BE ASIA’S ShoppING DESTINATIoN Taiwan needs to reinvent itself, and one potential solution is to develop a luxury goods market that is the envy of the region.

IN THIS SURVEY

• Aiming to be Asia’s Shopping Destination p38

• From Bags to Riches

p41

• The Jewelry in Taiwan’s Crown

p41

• More Than Just Telling the Time

p42

• Upgrading to First-Class

p44

• Chinese Aesthetic with a Contemporary Asian Style p46

nly the select few will ever enter Taipei 101’s Prestige Club lounge, tread on its thick, golden-tan pile carpet, and admire the bronze-beige décor. Reserved for that elite group is the pleasure of sitting in the luxuriously upholstered chairs and looking out through expansive plate-glass windows on the marbled 101 mall atrium below. A special electronic card is required to access level six, where the lounge is located. Refreshments are gratis, and the attentive service is butler-like. Guests feel like they have arrived in a different world – cer-

tainly far removed from the cheap and cheerful night-market clothes, food, and trinkets that make up the usual image of Taiwan. But that contrast is entirely the point. Taiwan once more needs to reinvent itself and move up the value chain if it is to continue to thrive. It is therefore striving to position itself as “Asia’s shopping destination,” an emporium for luxury goods and superior service. To effect such an image makeover is not an easy sell, concedes Taipei 101 Mall Manager Thomas Tai, who is well aware of the stiff competition posed by Hong Kong, Singapore, Seoul, and even special economic zones in Malaysia. But he regards the goal as achievable. “We set the luxury benchmark,” he says of Taipei 101. To b e c o m e a P r e s t i g e C l u b member, it is necessary to spend NT$1.1 million – not in a year, but in one day. And to retain membership, the feat must be repeated every year. This exclusive club has some 1,300 to 1,500 members, which indicates the extent of the wealth residing in Taiwan. Even though Chinese tourists Taipei 101 Mall Manager Thomas Tai. photo : jules quartly

taiwan business topics • march 2015

A Report on the Luxury Goods Sector

are a significant part of Taiwan’s luxury goods market, as are other Asian and international visitors, the business must rely on a solid domestic customer base. At Taipei 101, 70% of customers are, in fact, local. “We think this is constructive and positive,” Tai confides, noting that it largely insulates the market from the vagaries of external political and economic conditions. He expresses confidence that this solid foundation will assure further expansion in Taiwan’s luxury market for at least the next two years. In its Luxury Goods Report in Taiwan, published in July last year, the London-based market intelligence firm Euromonitor was equally bullish about prospects here. The report noted that “affluent consumers in Taiwan remained unaffected by the sluggish economy and continued with steady demand for luxury goods.” Taiwan’s people, the report continued, place “increasing importance on status, image and wealth, resulting in younger consumers pursuing lavish lifestyle choices, such as indulging in luxury goods rather than saving money or investing.” This sea-change in traditional attitudes is driven by the enhanced exposure of luxury brands in the media, particularly through linking them with the power of celebrity. Later marriage and lower birth rates are also factors. Taiwan’s youth would prefer to enjoy life, it would appear, rather than settle down and start families.

Only those who spend NT$1.1 million in a single day get to be members of the Taipei 101 Mall's Prestige Club. photos: taipei 101

One of the advantages of the luxury goods market is its relative immunity to the plague of financial malaise. While portions of the national economy have been slowing down or even dying off, this sector has boomed. Those who can afford luxury goods don’t need to curb their purchasing, a fact that is unlikely to change in the near future. Share prices worldwide of exclusive merchandise companies have risen by 6% annually on average over the past 20 years, according to a study by Bain & Company, which describes itself as “the world’s leading advisor to the global luxury goods industry,” in collaboration with Fondazione Altagamma, the Italian luxury-goods manufacturers’ industry foundation. Taipei 101 Mall’s retail sales figures share this positive trend. While the country’s department stores registered a relatively anemic growth rate of 3.1% in 2013 compared with the previous year, retail sales figures at 101 rose

5.5% to reach NT$9.9 billion, compared with the previous year’s NT$8.7 billion and NT$7.4 billion in 2011. Although final 2014 figures are not yet available, they are expected to continue the upward trajectory. Taipei 101 has also been receiving more visitors – 9 million in 2014, a big jump over the 6 million in 2013 – partly because the Xinyi MRT line began operations, bringing riders practically to its door. This year a record 10 million people are expected to make the pilgrimage to 101’s hallowed halls.

The cross-Strait factor Chinese visitors account for up to a third of the spending at 101. They are immediately recognizable, as most travel in groups led by guides waving pennants. In 2014, Taiwan received 2.8 million China visitors, and the number is expected to rise to 3 million this year,

At the Taipei 101 Mall, 70% of the customers are Taiwanese. photo : jules quartly

taiwan business topics • march 2015

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A wide-angle view of the Taipei 101 Mall atrium. photo : taipei 101

according to the Tourism Bureau. For all “overseas Chinese,” the number of arrivals in Taiwan in 2014 was 5.2 million. As Euromonitor notes: “Rising numbers of (mainland) Chinese tourists with high spending powers and a strong desire for luxury brands also attributed to growth of luxury goods in Taiwan.” While the Taipei 101 management is focusing primarily on the domestic market, it is fully aware of the power of the yuan. It is therefore welcome news that well-to-do Chinese tourists seem to be gravitating to Taiwan for their shopping and leisure rather than to Hong Kong or elsewhere. Hong Kong, in fact, is becoming more of a low-cost destination for its mainland compatriots, with budgetconscious day-trippers trailing around suitcases full of infant milk powder and elbowing out wealthier tourists. Luxury retailers in the Special Administrative Region are reporting weaker sales, even though the total number of mainland visitors is climbing, reaching a staggering 47.2 million last year. The wealthy are instead heading in this direction, or to Japan and South Korea. One company seeking to cash in on the flow of Chinese visitors is Ever Rich. It runs the duty-free stores at Taiwan’s principal airports, harbors, and offshore islands, such as Kinmen and Penghu, plus a flagship, six-story outlet in Taipei’s Neihu district.

Stand in the spacious lobby and watch as coaches disgorge excited Chinese tour groups. The group members stampede toward the impressively long escalator up to the sixth floor, where they get a couple of hours to select from more than 500 major brands on offer before eventually descending to the first floor to pick up Taiwan snacks and tea to carry back as gifts for relatives and friends. Most of the goods are on a “preorder” basis, meaning the merchandise is actually picked up at the airport departure gate so as to qualify for the dutyfree tax allowance. While customers also include outbound Taiwanese travelers, some local nationals buying locally sourced goods, and significant numbers of Japanese tourists, the emphasis is definitely on the Chinese. They are the most numerous (90% of the total) and also the biggest spenders. Recently, however, there has been some fallout from Beijing’s anti-corruption drive. “Our luxury market did not grow quite as much as expected in 2014,” says an Ever Rich spokesperson. “There were more Chinese travelers but actually not as much boutique or luxury shopping.” Perfumes continue to sell well, but ostentatious gifts not so much, though some manufacturers have been reducing the size of the logos on branded goods to make them less conspicuous. Ever Rich’s latest initiative to rake in the yuan is the luxury Golden Lake Hotel

and Asia’s biggest downtown duty-free plaza, on the offshore island if Kinmen, opened this past December. Just a 10-kilometer ferry trip from the Chinese city of Xiamen, the complex provides significant incentives for China’s brand-hungry hordes – at least those in Fujian Province – to choose Taiwan’s outlying island over Hong Kong. The Taiwan government has done its part to facilitate matters by easing regulations on landing visas for Chinese. The new rules came into effect on January 1 and apply to residents of the country’s major cities, who are allowed to travel to Taiwan independently. Entry and customs formalities can be completed in about two minutes, and visitors can stay for 15 days. While Ever Rich is certainly doing its part to try to turn Taiwan into Asia’s shopping destination (for its efforts, it was given the 2013 DFNI Asia/Pacific Award for Travel-Retail Excellence in 2013), another company leading the way is the Gloria Hotel Group. “There is no denying that Chinese tourists contribute tremendously to the Taiwan market, but the full-price market still heavily relies on local customers in Taiwan,” says John Chen, the company’s chairman and chief executive. (See the accompanying story in this section for details about Gloria’s new outlet mall project in Taoyuan). “Taiwan customers have become more brand-conscious and aware,” Chen says, noting a corresponding shift in emphasis to the experience of luxury, rather than just the goods themselves. “As expressed in our slogan, `Luxury, Authenticity, Value,’ these core values are exactly what the majority of customers look for. We aim to provide a luxurious shopping experience in which consumers will find authentic branded products at value prices.”

The influx of Chinese tourists has been a boon for Taiwan's luxury-goods market. photo : jules quartly

taiwan business topics • march 2015

A Report on the Luxury Goods Sector

FRom BAGS To RIChES

The Ever Rich duty-free empire got its start with handbag manufacturing. photo : ever rich

he story of Ever Rich Duty Free Shop Corp. Chairman Simon Chiang neatly encapsulates the changing fortunes of Taiwan’s luxury goods market, particularly when it comes to bags and leather goods. Born to a poor, farming family in the South, the young Chiang was sent off to Taipei by his mother to learn a craft, namely making luxury handbags. Starting as a factory apprentice at 14, he learned

quickly, and just two years later opened his own leather goods store. Before long, he was selling European-made bags to the local market and beyond. In fact, he became the national distributor for top brands like Gucci, Celine, and A. Testoni, which is how he came to learn of the power of marketing and good service. He founded Ever Rich in 1995, and two years later established the country’s first duty-free shop that wasn’t run by

foreign retailers. Located at Kaohsiung airport, it was the first of many dutyfree stores, and now the company is busy building hotels and malls in various parts of the country. The latest venture, on the offshore island group of Kinmen, is a luxury hotel and Asia’s biggest downtown duty-free plaza. It caters largely to Chinese tourists, who are responsible for much of the steady growth of the luxury goods market over the past decade or so. For Chiang, as for Taiwan more broadly, the challenge is to leverage market knowledge to provide authentic products at an attractive price. “Our chairman’s principle target is not just to sell good products anywhere in the world, but a good experience, too,” says an Ever Rich spokesperson. “We want our public facilities to show Taiwan’s identity and the very best that Taiwan has to offer, not only by buying in the best products, but by creating `an international enterprise with localized service.’” Ever Rich’s Chiang has moved up the value chain, from making bags to being a distributor for prestigious foreign brands and finding a competitive and profitable market niche.

ThE JEwELRY IN TAIwAN’S CRowN Precious metals and gems are even more valuable if presented in an elegant design that has artistic and emotional appeal. photo : jules quartly

surefire hedge against low interest rates, inflation, or economic meltdowns, precious metals and stones have never gone out of fashion as a form of investment. While the customer may pay a pre-

mium for a great or novel design and for purchasing at a luxury maison, the advantage of good jewelry is the assurance of authenticity in case the owner should choose to cash in one day. “High-end jewelry retains its value when the economy is

going down. It’s as simple as that,” summarizes Michael Chia-Hao Liu, the Taipei 101 corporate spokesperson. High-end jewelry has of late been one of the best sellers among all luxury segments at Taipei 101 and accounted for

taiwan business topics • march 2015

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photo : ever rich

30% of revenues in 2014, an increase of 51% on the previous year. Part of the reason for the good business is that most first-tier brands not only maintain outlets in the mall but use the space to present their whole collections, including the latest designs. As a result, shoppers can easily find what they want, or have seen in the online catalogue. Unlike watches (limited editions aside), designer clothes, and bags, high-end jewelry’s basic materials have a residual value that can always be traded for their full worth. In addition, jewelry is always welcome as a gift. The global slowdown demonstrated the continued value of investing in jewelry, which maintained “solid value

growth overall,” according to Euromonitor. “Imported jewelry dominated the market in Taiwan, particularly in terms of real jewelry. U.S branded jewelry enjoys wide recognition among local consumers. Brands from European countries are considered high-end jewelry, well known for excellent designs and quality.” Increasingly, Euromonitor notes, domestic companies are trying to get a foothold on the jewelry bandwagon and attempting to compete with international brands. The annual Taiwan Jewelry & Gem Fair at the Taipei World Trade Center acts as a platform for young designers and manufacturers, as well as introducing overseas companies to

moRE ThAN JUST TELLING ThE TImE If you thought luxury timepieces have had their day, think again. The watch you wear says a lot about you.

taiwan business topics • march 2015

explore the local market. Meanwhile, Ever Rich has positioned itself to take a slice of the expanding pie and develop its own brand-name jewelry. Its selling point is authentic materials, but also jewelry that is connected to Taiwan’s imagery, such as a sunrise on Alishan. In addition to the value of the raw materials, this type of jewelry has a story behind it, making it a gift that has practical, artistic, and emotional appeal. In an article for the Ever Rich dutyfree magazine, the curator and director of Hu’s Art Company, Hu Chao-sheng, describes how his collaboration with Ever Rich Jewelry developed. “When we held internal discussions or talks with Ever Rich, we always focused on an idea we shared: since this is a Taiwan brand, it must reflect the culture. Our creativity was derived not only from modern Taiwan art but also from lifestyles and fashions, and even floral art and photography.” The brand image was promoted through presentations, sales, and also exhibitions. As an Ever Rich spokesperson put it while strolling through the company’s sparkling jewelry exhibition space in the flagship duty-free store in Neihu: “If you have a famous brand from your own country, then the country’s international image naturally goes up.” It is precisely through these kinds of initiatives that Taiwan may be able to move up the value chain in the luxury goods market.

A Report on the Luxury Goods Sector

here was a time when Taiwan was famed for producing fake Rolex watches. They were so good it was hard to tell them apart from the real thing – though being sold in a night market might have been a bit of a giveaway. The story goes that the Swiss watchmaker was so impressed by the replica versions made here that it sent representatives to find out how Taiwan manufacturers managed to build such quality timepieces at such a low cost. While the story may be apocryphal, it does illustrate the fact that Taiwan has moved up the value chain and has become more of a guarantor of quality than a producer of fakes. That dubious honor now resides in China. At the Taipei 101 Mall, watches make up about 13% of total sales. Not bad for an item that has little practical function in an age when the correct time is ever present, updated by cellphone towers and synced with data networks. Not bad when the most interesting watches are arguably mini-computers gauging your body fat and determining how many steps you have walked in a day. But there’s more to watches than telling the time. There’s the look, the investment angle, and – even more importantly – their value as status symbols. “What better way to declare your success than with a classy timepiece on your wrist?” says watch expert and auctioneer George Schooling. “High-end watches, by their very nature, are all about precision and quality. There is a timeless appeal about knowing that this watch will not let you down – and on the rare occasion it does, any respectable watchmaker or brand will stop at nothing to repair it for you. It is worth remembering the kind of people who buy these luxury watches tend to be high achieving, precise people themselves,” Schooling opines. “Brand is also important. A Burberry or a Calvin Klein watch is much more likely to depreciate. Stick to the known watchmakers such as Cartier, Omega, and Rolex – unless the watch is so outrageous that the price can only go up, as with the Chanel J12 Tourbillon High Jewelry. Encrusted with white gold and diamonds and containing a fine move-

ment, it has everything. Even with its US$1.27 million price tag, it can only appreciate in value.” The most popular luxury watch in Taiwan has been and still is Rolex, which local collectors take a shine to because of its history, stretching back to London in 1905, its reliability, and sell-on value. It had a market value share of 11% in 2012, according to the most recent Euromonitor report, the only brand to be in double digits. While Taiwanese previously tended to buy their watches abroad for reasons of price and authenticity, nowadays they need travel no further than Taipei 101 Mall, or a plethora of other retail outlets in the country’s major cities. International standard after-sales services are also now available locally. Still, Chinese tourists account for the bulk of the business. Prices in Taiwan for timepieces are reportedly 20-30% less than on the mainland, plus visitors qualify for a refund on the 5% Value Added Tax. Wealthy visitors may buy products costing in the tens or even hundreds of thousands of U.S. dollars. “Serious collectors have to come here,” says David Tao, Taipei 101’s director of mall operation, since Taiwan i s o n e o f t h e w o r l d ’s t o p f i v e m a rkets for watch collectors. As for 101, it boasts impressive outlets from most of the world’s best watchmakers. Patek Philippe, for instance, has set up its biggest flagship store worldwide in the mall and – most significantly – will earmark at least 1% of its production of limited edition watches, which works out to about

450 timepieces, for the store. Limited editions nearly always represent a safe bet against inflation because they have scarcity value. But there are other forces in play if you’re collecting as an investment, says Schooling: “The right kind of watch will go up in value, or at the very least, retain its value. People do buy them for investment and have done well, but it does not apply to all of them. “Diamonds and precious metals all help but they do need to be combined with a ‘limited’ release. Essentially, market forces operate here – so the more demand there is and the fewer editions there are, the higher the likelihood the watch will go up in value.” “I think there is a strand of watches that will always do well, and those are ones with the highest quality movements within the watch,” Schooling continues. “The tourbillon watches have always been popular and continue to be associated with exclusivity and luxury.” Aficionados are a demanding lot and don’t want just a pretty face to sell them a watch. Rather, they want someone who is knowledgeable about the technical details and mechanical movements to explain the potential purchase’s selling points. Hence, good service is crucial. “For a serious watch lover, specialist stores are always the best places. They will tend to have people who can advise you – albeit a little biased – but part of the appeal of the luxury watch brands is client service, so they will serve your interest as well as theirs. Duty-free is great for a lower-end luxury watch, if you don’t really care about investment value.”

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UpGRADING To FIRST-CLASS Why settle for less when you can have more, appears to be the Gloria Hotel Group’s business model as it expands its footprint.

photo : G loria hotel

ne of the reasons why Taiwan is more a business-class rather than first-class destination for luxury goods is that apart from buying things, there is little else for international men or women of means to do in their accustomed manner. To become Asia’s number-one shopping destination, Taiwan will have to compete with the premium-class delights on offer in Hong Kong, Seoul, and Singapore, including their deluxe hotels, spas, butler service, and Michelin-starred dining options. This first-class market is not just about luxury goods (the hardware) but also the experience (software), a fact that has been recognized by Gloria Hotel Group Chairman and Chief Executive John Chen. “We believe luxury has always been an experience and will continue to be,” he says. “To be luxurious is

to offer a perfect combination of service, goods, and value.” “Unfortunately, as in many industries here, available products [in the hospitality field] are somewhat one-dimensional. As one of the major hotel operators in Taiwan, we believe a richer portfolio of hotels will definitely have a positive impact on attracting luxury tourists from all over the world,” Chen confides. “We have also noticed that seasoned tourists prefer to stay at hotels that are not luxurious in the traditional sense, but unique in style, which reflects their lifestyles more closely.” Gloria Hotel is leading the way in this respect. In May, it plans to open its latest boutique-style Hotel Proverbs Taipei. Once again it has collaborated with designer Ray Chen, who worked on two other hotels in the company’s expanding hotel chain, the Hotel Quote Taipei and Gloria Residence.

Construction under way on the Gloria Outlets mall near the Taoyuan High Speed Rail station.

taiwan business topics • march 2015

photos: Gloria hotel

A Report on the Luxury Goods Sector

Armani is one of the brands that will be present in phase one of Gloria Outlets. photo : Gloria hotel

In August, the group is set to open up phase one of Gloria Outlets, which will eventually accommodate 260 major luxurybrand tenants offering located discounts of 35-70%. The super mall will be located in Taoyuan near the High Speed Rail station and just 10 minutes away from the international airport, making it easily accessible to both domestic consumers and international visitors. The complex will also contain a deluxe hotel, office space, and cinemas. In addition, the mall will include an onsite airport check-in center to enable international travelers to shop till they flop, VIP Lounge, information center with bilingual service staff, free WIFI, large-scale food court, cafes, and restaurants with a variety of Western and Asian cuisines, plus other amenities. All of which is designed to create a first-class experience. “The model of an outlet requires it to be a distance away from the full-price market to avoid cannibalization,” Chen says, adding that the convenient transportation link will allow it to “be the first or last stop of everyone’s visit to Taiwan.” He says the mall will “not only quench people’s desire for shopping, but also drive the growth of the retail industry in Taiwan.” “Full-price department stores usually cater to customers that reside within a five to 10-kilometer radius of the sites, whereas Gloria Outlets can cover shoppers within a much greater area – up to 60 kilometers,” says Chen. He predicts sales of between NT$3 billion and $4 billion annually.

“We aim to provide a platform that satisfies both the needs of brands and shoppers,” he notes. “By creating the right shopping experience, we are ensuring the satisfaction of the shoppers and maximizing the sales of the brands.” Teaming up with The Outlet! Company, a developer and operator of outlet centers from the United States, the Westernstyle operation will include luxury brands such as Italy’s Giorgio Armani, Salvatore Ferragamo, and Versace, Spanish luxury house Loewe, and the New York-based Coach. Importantly, Gloria Outlets will not be carrying retail offerings already existing in Taoyuan and Taipei, but rather add to the mix to develop new markets, Chen insists. “As an outlet shopping mall, Gloria Outlets will not be competing with the existing department stores. In fact, it will trigger another growth of the retail industry by completing the inventory cycle.” The second phase of Gloria Outlets is scheduled to start in the spring next year, while the final two phases will commence in winter 2016 and the first half of 2017. The company sees itself as contributing to a virtuous circle for Taiwan’s economic development. Its new facilities will create new jobs, many of them well-paid. In turn, such jobs help expand the market for luxury products. “The expansion of a high-income population creates more opportunities for luxury shopping, which naturally leads to more internationally well-known luxury brands setting up in the Taiwan market,” says Chen.

taiwan business topics • march 2015

INDUSTRY

CUS

ChINESE AESThETIC wITh A CoNTEmpoRARY ASIAN STYLE Liuligongfang is one of the very few Taiwan companies with the necessary cultural heft to become a luxury brand.

t is little wonder that Taiwan, as a relatively recent arrival to the international high-end consumption market, does not really have a major luxury brand to call its own. Few countries do, in fact. According to an Economist report in December, Europe is still the primary home of luxury-goods makers and accounts for 70% of the world’s consumption. Whether it is cars and yachts from Germany, fashion and fine wines from France, spirits from the United Kingdom, or leather from Italy, Europe tends to rule the roost in this sphere. The economic powerhouse of the United States has produced fewer luxury goods of note, though its high-end electronics (especially Apple products) are among the market leaders. Where the United States has found a niche is in leather bags, says an Ever Rich spokesperson. Instead of buying Gucci and Prada, the new rich are favoring Coach, Tory Burch, and Michael Kors. “The American brands are producing bags with more flair – exciting designs in vibrant colors that younger people seem to prefer,” notes the spokesperson. But consumer tastes are constantly changing, providing opportunities for “new-world” countries to make their mark, as Australia, South Africa, and the Americas have done in wines. China is just starting to become an exporter of upmarket goods, while Japan has been doing so for some time, seeking the advantage that comes from greater revenue from less production. It is not enough to be able to produce an object that is better than the

taiwan business topics • march 2015

Many of the luxury Liuli products are not only decorative but functional as well. photo : liuli

A Report on the Luxury Goods Sector

competition’s. The product also needs to be marketed brilliantly and then attain a reputation, which like a fine wine matures with time. For top-of-the-line brands, the goal is to be regarded as a classic, always in fashion. One Taiwan brand that is striving to reach the pinnacle of international acceptance as a luxury goods maker is Liuligongfang & Co. Founded by actordirector Chang Yi and actress Loretta H. Yang in Tamsui in 1987, it produces artistic glassware. It works have been exhibited in more than 30 countries and collected not just by the wealthy but also by prestigious galleries and museums, including London’s Victoria and Albert Museum. While Liuligongfang has expanded its operation and now has hundreds of employees around the world, it has also sought to become a lifestyle brand based on traditional Chinese aesthetics combined with a “tactile style of contemporary Asian living.” In addition to

Liuligongfang has sought to be a lifestyle brand based on traditional Chinese aesthetics. photos: liuli

opening “lifestyle outlets” in Taiwan that merge culture, dining, art, and lifestyle, the brand’s TMSK Restaurant in Shanghai was singled out by The Times of London as one of Asia’s finest dining establishments. A recent Liuli event at Songshan Cultural Park called Living Well, hosted by the company’s mini-museum and Liuli Café, showcased the “fresh incarnation” of this emerging style and highlighted the need to sell more than just goods, but also an experience or lifestyle.

“To guide the international development of your brand, you must help your culture to be understood and appreciated by other cultures,” says Nana Chen, head of public relations at Liuligongfang. “Liuli has a unique technique enabling the company to make unique products, which is very rare in this business. Liuli is very well known in China for its products – but the design might look too Chinese for Occidental people. The challenge for Liuli is to find new designs that stay Chinese but appeal more to world culture.” It is a stiff challenge to become a leading brand, but Liuli has a head start, as was recognized by Vincent Bastien, former CEO of Louis Vuitton and now professor of marketing at the HEC School of Management in Paris when he called Liuli “one of Asia’s most promising brands.” The company has extended its lifestyle experience to include cafes and restaurants. photos: liuli

taiwan business topics • march 2015

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Taiwan: Where Celebrations Never Let Up

fter the excitement of Thanksgiving, Christmas, and New Year, many residents of Western countries find the first month or two of each year a little sluggish. In Taiwan, however, this is an extremely buoyant period. The Lunar New Year kicks off sometime between late January and midFebruary (in 2015, it began on February 18), and is soon followed by the Lantern Festival and Yanshui’s Beehive Rockets Festival [for more details, see the Seeing Taiwan column in the January issue of Taiwan Business TOPICS]. Overlapping with both is the Pingxi Sky Lantern Festival, running from February 22 to March 5. If you have looked at web pages or leaflets on Taiwan’s tourist attractions, there is a good chance you came across an image of a night sky filled with glowing paper lanterns. The photo was likely taken during the festival, which is held in New Taipei City’s Pingxi District. 交通部觀光局廣告 TTB AD

taiwan business topics • march 2015

The old town of Pingxi is just 11 kilometers east of Taipei 101, but set amid rugged mountains. Before the discovery of coal transformed this region, isolated homesteads released lanterns at dusk to let their neighbors know all was well. In recent years the custom has been embraced by tourists, who write wishes for health, happiness, prosperity, or true love on their lanterns before launching them into the sky. Pingxi is best reached by a scenic b r a n c h r a i l w a y, a n d r e a d y - t o - f l y lanterns are available year-round. What makes the annual Sky Lantern Festival special are the scheduled mass lift-offs of lanterns several times each evening. Have your camera ready! More than 300 kilometers down-island from Taipei is the town of Neimen, and like Pingxi it is set among the hills that dominate Taiwan’s interior. The district is known island-wide thanks to the Neimen Songjiang Battle Array,

which this year kicks off March 28. This multi-day martial arts spectacular celebrates the traditions of the local militias that kept remote villages safe in the days of yore. It also has a religious function, and climaxes on the birthday of Guanyin, the Buddhist bodhisattva of compassion known in other parts of the world as Avalokiteśvara. Guanyin’s birthday is the 19th day of the second lunar month, which in 2015 falls on April 7. The event features both traditional temple-affiliated groups and modern troupes. The former evolved out of local defense units, and their displays feature ritualized dueling with swords, pikes, and even farm tools. Until well into the 19th century, Neimen – now part of Kaohsiung City – was a dangerous frontier district where battle-array members had to be ready to fight using whatever was at hand. City-based troupes, by contrast, often add tap dancing, hiphop, or cheerleading moves to their drills. Background information about the festival can be found on the official website (www.who-ha.com.tw). Another special event during this season is the Purple Butterfly Valley Two-Year Butterfly Viewing Event, which began on October 4 last year and continues until March 31. It showcases the annual 250-kilometer migration of hundreds of thousands of butterflies from Taiwan’s south to the northwest. During the cooler months, four purple-crow butterfly species – all have wingspans of 60 to 75 millimeters and eye-catching patches of blue and purple – gather in exceptional numbers in a

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handful of locations in Taiwan’s south and southeast. The best known and most accessible are in Kaohsiung City’s Maolin District, a mountainous area inhabited by members of the aboriginal Rukai tribe. This migration is one of Taiwan’s most remarkable natural phenomena. At times, a single tree in Maolin may host well over 1,000 butterflies. Taiwan offers excellent butterfly-watching throughout the year. Of the island’s 400-plus butterfly species, 56 are found nowhere else on Earth. Maolin is an exceptionally attractive place to visit in any season. Details of the Butterfly Viewing Event, local aboriginal culture, and hiking options can be found on Maolin National Scenic Area’s trilingual website (www. maolin-nsa.gov.tw). Like Neimen’s Battle Array, the Taichung City Mazu International Festival is an extravaganza inspired by Taiwan’s exuberant temple culture. Mazu is Taiwan’s most prominent folk deity. The faithful believe she was once

a human being, born into a family surnamed Lin in Meizhou, a fishing community in Fujian (the coastal Chinese province nearest Taiwan) on the 23rd day of the third lunar month in 960 A.D. Credited with miracles during her lifetime, she developed a reputation after her death as a protector of fishermen and sailors. Over 800 shrines around Taiwan and its outlying islands are dedicated to Mazu, among them Zhenlan Temple in Taichung City’s Dajia District. Founded

in 1732, it has long been the starting and ending point of Taiwan’s largest annual pilgrimage. Each spring, the temple’s principal Mazu icon embarks on a nine-day tour to scores of affiliated temples in Taichung and three nearby counties. Hundreds of thousands of devotees accompany the icon, eager to show their loyalty and hoping to receive the deity’s blessings. Diehards walk the entire distance, more than 300 kilometers, sleeping in temple dormitories and courtyards along the way. The festival includes entertainments ostensibly laid on for the gods and goddesses, but enjoyed by everyone. In addition to Taiwanese opera and traditional puppetry, zhentou troupes perform lion dances, dragon dances, and stilt-walking stunts. Details of these three spectaculars, plus several others scheduled for 2015, can be found on the Taiwan Tourism Bureau’s official “Time for Celebration” website (www.eventaiwan.tw). Those planning to visit Taiwan should bear in mind that the country has so many festivals that the website can highlight only a fraction of them. Green-thumbed visitors may enjoy the Taiwan International Orchid Show (TIOS, www.tios.com.tw), held at the Taiwan Orchid Plantation in Tainan City’s Houbi District from March 7

to 16. One in every six orchids sold in the world is cultivated in Tainan City. Last year, TIOS attracted 330,000 visitors from 36 countries, many of whom signed up for package tours so they could enjoy the nearby hot springs at Guanziling or locally grown coffee in Dongshan. Culture vultures will find checking the websites of Taiwan’s many museums highly rewarding. From February 7 to May 3 this year, for instance, the Taipei Fine Arts Museum (www.tfam.museum) is hosting an exhibition titled The Testimony of Food: Ideas and Food. Given food’s importance to the local way of life, this should be a fascinating and wide-ranging examination of how food is seen and depicted by artists. If you prefer gritty reality to pretty pictures, consider visiting When the South Wind Blows - the Documentary Photography of Taixi Village, an exhibition running at Taichung City’s National Museum of Natural Science (www.nmns. edu.tw) until June 14. Like many places in rural Taiwan, Taixi faces a range of challenges including population outflow and the younger generation’s unwillingness to engage in farming and fishing. For general travel information, go to the Tourism Bureau’s website (www. taiwan.net.tw) or call the 24-hour tourist information hotline (0800-011-765, toll free within Taiwan).

taiwan business topics • march 2015

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