Taiwan Innovation Stifled by Culture of Timidity ; Political Parties Agree That Once-Powerful Tech Sector Is in Need of Help

By Mozur, Paul | International New York Times, January 15, 2016 | Go to article overview

Taiwan Innovation Stifled by Culture of Timidity ; Political Parties Agree That Once-Powerful Tech Sector Is in Need of Help


Mozur, Paul, International New York Times


As voters choose a new president this weekend, a rare point of agreement between Taiwan's fractious political parties is that the tech industry needs help.

With its offices sporting wood flooring, a bright orange roof and conference rooms named after target markets in Southeast Asia, AppWorks, one of Taiwan's few start-up accelerators, has the look and feel of the American counterparts it's modeled on.

But its founder, Jamie Lin, 37, does not sound much like the optimistic entrepreneurs in Silicon Valley. Instead, he is glum about the future for Taiwan's tech industry.

"It's like you're riding on the Titanic, and you know it's going to hit an iceberg, and you're trying to turn the rudder, but you know it's not turning fast enough," he said in a recent interview.

Five years ago, Taiwan's tech industry was riding high. The device maker HTC had surpassed Apple to become the largest smartphone vendor in the United States, while the computer company Acer had leapfrogged Dell to become the world's second-largest personal computer maker. Such successes helped lift Taiwan's economy, building on the island's longtime work on computer chips and moving it into the next phase as a tech power.

That trajectory has turned. Last year, share prices of the computer makers Acer and Asustek plummeted 43 percent and 22 percent as the PC market sagged, while HTC plunged 45 percent. Taiwan electronics exports have been falling since February 2015, and in the third quarter, the island's gross domestic product contracted partly because of weakness in the tech sector.

As voters head to the polls to choose Taiwan's new president this weekend, a rare point of agreement between the island's fractious political parties is that the tech industry needs help. Just days before the election four years ago, major Taiwan tech figures took to television to argue that the policies of the current president, Ma Ying-jeou, of improving relations with China would lift the industry.

Yet rising competition from Chinese manufacturers and slowing growth there has had a mixed impact on Taiwan tech since. With the Democratic Progressive Party's Tsai Ing-wen -- who polls say is likely to win a decisive victory -- vowing to renew Taiwan innovation and build out a new tech hub here, a key part of the island's immediate political future depends on whether it can be turned around.

Taiwan's tech problem, as Mr. Lin sees it, is the result of a culture and government that have failed to generate the talent and flexibility to move beyond the manufacturing prowess that made the island a tech hub in the 1980s and 1990s and forward to the software and Internet industries driving Silicon Valley's current boom. The dilemma became apparent to him in 2009 when he saw a commercial for Apple's iPhone.

"The commercial said whatever you want to do, there's an app for that," Mr. Lin said. "Immediately I realized that's the end of Taiwan. We're so good at making cheap computers and phones, but we're so bad at making an app for anything."

Taiwan's tech industry is rooted in a conservative business culture built around a now-aging first generation of high-tech industrialists, critics said. Unlike Silicon Valley, which has the 31-year-old Mark Zuckerberg of Facebook, and China, which has the 44- year-old Tencent founder Pony Ma, Taiwan's tech leadership includes Morris Chang, 84, of the chip maker Taiwan Semiconductor Manufacturing Corporation, and Terry Gou, 65, the founder of Foxconn, the Taiwan-based contract manufacturer.

That has solidified a "survival mentality" unsuited to innovation, with tech executives unwilling to spend on the marketing and design that could set their firms apart from competitors, said Willy Shih, a professor at Harvard Business School who studies Taiwan's tech companies.

One example of that philosophy was on display recently at Silicon Power, which produces branded portable hard drives and USB drives. …

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