In his address to the 2013 Hidden Champions Summit sponsored by the Ministry of Economic Affairs (MOEA), Premier Sean Chen reiterated the importance of backbone enterprises to Taiwan's economic development and said they are a major link in the Executive Yuan's Economic Power-Up Plan.
The premier cited President Ma Ying-jeou's 2013 New Year's Day Message in which the president used the English term "hidden champion" to refer to such enterprises, showing his recognition of their importance to the nation. The premier expressed hope that backbone enterprises promoted by the MOEA will propel Taiwan's economic development to new heights.
Premier Chen explained that backbone enterprises, which The Economist refers to by the German term Mittelstand, are not the same as small and medium-sized enterprises (SMEs) in general. Of the 1.3 million enterprises in Taiwan, 1.28 million are SMEs; they provide 75 percent of the country's job opportunities and contribute over 30 percent of national revenue.
Backbone enterprises, in particular, harness three major features: market niche, core technologies and global perspectives. That is, they own high-quality core technologies, dominate a niche market and pursue global strategies and sales.
The Economist thinks highly of Germany's Mittelstand firms and has reported several of their success stories. In its November 25, 2010 story "Mittel-management," it cited a company that manufactures doors, another specializing in castors for hospital beds and another that produces ovens for professional kitchens. Eschewing competition with multinational corporations, they instead develop high-quality products for small but stable and profitable niche markets. When these firms offer products that attract notice, their influence grows in turn, and they can even become household names.
Taiwan should aspire to the German model, said the premier, who visited SMEs all over Taiwan last year and found that many of them indeed produce unique and high-quality products coupled with international perspectives.
The MOEA is implementing a new program to annually help 50 selected enterprises receive technological guidance, enhance their core technologies and find niche markets. The MOEA will also seek financial help for those enterprises to obtain funds to become more competitive.
SMEs have always been a key element of Taiwan's economic development, the premier said. Many foreign magazines reported that Taiwanese SMEs' flexibility and endurance helped the country weather the 1997 Asian financial crisis. "These same firms can now become Taiwan's backbone industries," the premier remarked.