After being updated on the economic stimulus plan by the Ministry of Economic Affairs (MOEA) in a political affairs meeting on September 19, Premier Sean Chen said that since the plan is crucial to improve Taiwan's economy and boost its global competitiveness, related government agencies should work closely with one another and put forward concrete measures by the end of September to put the plan into action as soon as possible.
The objectives of the plan, which was announced by the Executive Yuan on September 11, are to create innovative and diverse industries, develop new export markets, cultivate industry talents, spur investments in public construction and enhance government efficiency. To create innovative and diverse industries, the government will advance the "three industries, four reforms" program (referring to the creation of a service-oriented manufacturing industry, an internationalized and high-tech services industry and a specialty-oriented traditional industry) to optimize Taiwan's industry structure. In the first stage, the MOEA highlighted the industries of smart living, machine tools, logistics, information services and creative fashion textiles as references for future industrial promotion. The scope of the campaign will be extended next year, and other responsible government agencies will be included.
With regard to creative fashion textiles, the MOEA said that the Taiwanese textile industry has long focused on Original Equipment Manufacturing (OEM) and Original Design Manufacturing (ODM), or producing and designing products to meet the specifications of contractors. According to market data, however, branding can bring a high level of added value and profit to the purchasing companies, which resell these products in a wider market under their own name and logo. Resellers' share of the retail profit can be as much as 64 percent, limiting the producers' (OEMs/ODMs) profit rate to 36 percent, proving the importance of branding and retail marketing. The Taiwanese textile industry is now gradually developing its own brand and retail channels so it can foray into the value-added product market, according to the MOEA.
The ministry cited the Jechiarng Garment Factory Corp. Established 30 years ago, its former business model was to take orders in Taiwan, produce the goods in factories on the island or abroad and export them to the global marketplace. However, the price values and profit margins of the company orders deteriorated year after year, so in 2011, Jechiarng changed its business model from OEM to Own Branding & Manufacturing (OBM). It created its own brand, Cozie, and forayed into the domestic online shopping market. More than 775 Cozie product lines and some 219,500 pieces sporting Made in Taiwan (MIT) certification from the MOEA's Industrial Development Bureau (IDB) have been sold.
Another model is Fu Chu Knitting Co., Ltd., a world-class manufacturer of woven silk tights, whose "Vogmate" tights have the second largest market share in Taiwan. Its hosiery production is highly computerized and completely automated, as the Industrial Technology Research Institute of Taiwan cooperated with it to develop differentiated products that are high-tech, high-value-added, functional and healthy. Fu Chu's internationally competitive collection includes antibacterial, moisture-wicking stockings, healthy stockings that resist the biting midges endemic to Taiwan, and anti-varicose stockings that are also antimicrobial and deodorant, among others. Last year, the hosier received a National Industrial Innovation Award from the government for its creativity.
According to the MOEA, Taiwan's functional textile products are very competitive overall; however, they are relatively weak in design and branding. In the future, the government will help manufacturers make use of information communications technology (ICT) and turn rapid design centers into support industries to facilitate the introduction of fashion aesthetics and trends, the strengthening of design capability and the development of brands and marketing channels. Designs and brand names are anticipated to upgrade the entire value chain and lead Taiwan's textile fashion industry toward globalization.
Investment in this industry is expected to reach NT$10 billion (US$333.33 million) by 2020, while production value is projected to increase by NT$150 billion (US$5 billion), bringing the textile industry's total production value to around NT$700 billion (US$23.33 billion). The establishment of five international brands, 10 Internet brands and two marketing brands is also anticipated.
In smart living, "human-friendly" has become a developmental focus for the global ICT industry. In order to help the domestic ICT industry ride the next wave of industrial growth, the IDB has promoted the reorientation of the manufacturing industry toward service. It hopes to shift domestic ICT firms' primary competitive advantage from having manufacturing prowess to being user-centered: that is, to developing intelligent gadgets and solutions based on human-friendly concepts. This transformation is expected to generate new services, raise the industry's added value and increase the competitiveness of their global exports.
The IDB's industrial upgrade and transformation efforts have three major foci:
1. Customer orientation: strengthen companies' understanding of their users' needs and promote service-orientated products
2. Vertical integration: link related industries to improve efficiency and maximize economic benefits
3. Extend the dominance of manufacturing industry chains, generate derivative services businesses and create new service industries in response to the needs of the market.
"The main goal of promoting service-oriented manufacturing is for the industry to grasp customers' needs and export their successful offerings to the global market," IDB director-general Shen Jong-chin said.
With the help of the IDB, Asustek has released a more user-friendly e-book reader thanks to the cooperation of Tzu Chi, a religious charity organization in Taiwan. Asustek designed the e-reader, TZ-900, to meet the specific needs of the community. It improved the design based on feedback from a survey of 2 million members. Following this successful experience, which allowed both the customer service and design departments to enhance their capacities, Asustek successfully obtained Google's approval to develop a tablet PC carrying both companies' brand names.
Another good example is Shuttle Inc., a Taiwan-based computer hardware designer and manufacturer. Once a purely OEM/ODM company, with the help of the IDB, Shuttle Inc. developed an e-reader for elementary and secondary schools in Taipei City and made its interface more user-friendly thanks to feedback from participating schools.
The spirit of service-oriented manufacturing is epitomized in the creation of this e-reader, the IDB said, as the market survey and the design concept were centered on the teachers, students and parents. Shuttle exported this successful experience in education, selling its e-reader in mainland China and central and southern America. Hence, the IDB upheld it as an excellent example of service-oriented manufacturing.