Taiwan has become a global example of an economy that thrives on high technology. The island nation, officially known as the Republic of China, has amassed a positive trade balance of $80 billion with the U.S., and similarly impressive statistics with the European community, largely through its dominance in electronics.
But in the past year, the global electronics business has had to face up to tough times. That's been particularly true of the computer industry in the U.S., where the recession has forced makers of high-quality brand-name computers, notably Compaq and IBM, to reduce prices severely. The reductions have affected Taiwan companies in two ways.
First, major computer manufacturers have forced their suppliers of components to cut their own prices or lose contracts. As the country responsible for more than three-quarters of the motherboards--the guts of computers--made in the world, Taiwan has suffered particularly from this need to cut costs. Worse, the low prices of top name-brand machines have removed the major rationale for Taiwan-made computer clones, which have always appealed to customers on the basis of their giveaway prices.
Not surprisingly, several Taiwanese electronics companies have closed down or moved into other businesses during the past 18 months. But others are struggling on, secure in the knowledge that the Taiwan government will continue to nurture high-technology enterprises. Such nurturing includes creating the kind of entrepreneurial environment in which even troubled small firms can thrive.
$9.4 BILLION IN '92
Testifying to the success of that effort is the fact that the production value of Taiwan's information industry grew from $7.77 billion in 1991 to $9.42 billion last year despite the turmoil in the industry worldwide.
The main vehicles for the nurturing are the Industrial Technology Research Institute (ITRI) and the Institute for Information Industry (III). Both work closely with the Taiwan government to set up and implement technology policy.
Founded as a private entity in 1973, ITRI's mission is "to undertake private research with the mission of accelerating the development of industrial technology." It does so in two ways: developing innovative technologies for the establishment of new high-technology industries, and integrating relevant technologies in such a way that existing industries can improve their manufacturing efficiency and product quality.
About half of ITRI's funds come from the government, for specific projects in generic and exploratory research. The institute aims to devote at least half of its research resources to medium. and long-term research. Once projects are completed, they are transferred to the industrial sector.
ITRI stays in touch with changing technology by forming new, specialized laboratories in response to perceived needs--and closing them down when those needs are no longer relevant. …