The government is studying the German experience of "hidden champions" to uncover high-potential small and medium-sized enterprises (SMEs) in Taiwan and develop them into the backbone of the nation's economy, said Premier Sean Chen on August 8.
As Taiwan sees declining exports, decreasing market shares and fewer overseas orders, the government will help these SMEs carve more niches in the global market by cultivating their technologies, innovation abilities and product brands.
Following a briefing by the Ministry of Economic Affairs (MOEA) on plans to develop "backbone industries," the premier added that the term hidden champion was made known by German author and business leader Hermann Simon. "Hidden" means the company is relatively unknown, and "champion" denotes that it not only occupies a top spot but is a fighter as well, he said.
According to Premier Chen, Germany currently has around 450 such small-scale operations that are leading the world in their respective fields. Dubbed "Mittelstand" in German, these SMES thrive on their core technologies and competitive advantages.
"They represent admirable business models for Taiwan to emulate," said Chen.
Premier Chen cautioned domestic SMEs from falling into complacency, emphasizing that it is not sufficient to rely solely on contract manufacturing orders; companies must absorb the technologies as well. He added that the proposed "backbone industries" project aims to help businesses use existing resources to develop key manufacturing technologies that will uniquely position them in the market.
The project will be implemented not in isolation but as part of a coordinated government effort to grow Taiwan's companies, Chen added. Focuses of related programs include enhancing businesses' grasp of the basics of industrial technologies in their fields, cultivating technical personnel and deploying intellectual property strategies.
According to the MOEA, the seven hallmarks of a hidden champion are: clearly defined business goals; a dominant position in a small market; close, direct working relationship with customers; value-driven rather than price-driven performance; all-around innovation in products, processes and service; intense competition within their fields; and deep value chains and the ability to work independently from business alliances.
Through the backbone industries project, the Executive Yuan hopes to take lessons from Germany's enterprising spirit to develop unique advantages for domestic industries, while at the same time provide quality job opportunities, promote technological innovation, and bring quality Taiwan brands to the world.