GLOBAL COUNTRY STUDY REPORT PDF 2012/773 - Taiwan.pdf · 1 a global country study report on taiwan...
Transcript of GLOBAL COUNTRY STUDY REPORT PDF 2012/773 - Taiwan.pdf · 1 a global country study report on taiwan...
1
A
GLOBAL COUNTRY STUDY REPORT
ON
TAIWAN
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
In
Gujarat Technological University
Batch : 2010-12
MBA SEMESTER III/IV
Shri Sunshine Group of Institutions
MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
April, 2012
2
INDEX
NO Particulars Page No.
1 Economy Overview of Taiwan 4
1.1 Demographic Profile of the Taiwan 5
1.2 Economic Overview of the Taiwan 8
1.3 Overview of Industries Trade and Commerce 12
1.4 Overview Different economic sectors of Taiwan 13
1.5 Overviews of Business and Trade at International Level 18
1.6 Present Trade Relations and Business Volume of
different products with India
20
1.7 PESTEL Analysis 22
2 Industry/ Sector/Company/Product/Service/New venture
specific study
25
2.1 Introduction of the selected Company / Industry / Sector
and its role in the economy of Taiwan
41
2.2 Structure, Functions and Business Activities of selected
Industry / Sector / Company
56
3.1 Comparative Position of selected Industry / Sector /
Specific Company / Product with India and Gujarat
74
3.2 Present Position and Trend of Business (import / export)
with India / Gujarat during last 3 to 5 years
89
4.1 Policies and Norms of selected country for selected 96
3
Industry/company for import / export including licensing /
permission, taxation & Policies and Norms of India for
Import or export to the selected country including
licensing / permission, taxation etc
4.2 Present Trade barriers for import / Export of selected
goods
106
5.1 Potential for import / export in India / Gujarat Market 115
5.2 Business Opportunities in future 122
5.3 Suggestion & Conclusion 132
6 Plagiarism Test Report 141
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Background of the Country
In 1895, military defeat forced China to cede Taiwan to Japan. Taiwan reverted
to Chinese control after World War II. Following the Communist victory on the
mainland in 1949, 2 million Nationalists fled to Taiwan and established a
government using the 1947 constitution drawn up for all of China. Over the next
five decades, the ruling authorities gradually democratized and incorporated the
local population within the governing structure. In 2000, Taiwan underwent its
first peaceful transfer of power from the Nationalist to the Democratic
Progressive Party. Throughout this period, the island prospered and became one
of East Asia's economic "Tigers." The dominant political issues continue to be the
relationship between Taiwan and China - specifically the question of Taiwan's
eventual status - as well as domestic political and economic reform.
1) Demographic Profile of the Country
Population Size
This article is about the demographic features of the population in Taiwan,
including population density, ethnicity, education level, health of the populace,
economic status, religious affiliations and other aspects of the population.
The population in Taiwan was estimated in July 2011 at 23,188,087 spread
across a total land area of 35,980 km, making it the sixteenth most densely
populated country in the world with a population density of 641 people per km.
During the 20th century the population of Taiwan rose more than sevenfold, from
3.04 million in 1905 to 22.3 at December 31, 2000. This high growth was caused
by a combination of factors, very high fertility rates up to the 1960s, and low
mortality rates, and a surge in population as the Chinese Civil War ended, and
the Kuomintang forces retreated, bringing an influx of two million soldiers and
civilians to Taiwan in 1948 - 1949. Consequently, the natural growth of Taiwan
was very rapid, especially in the late 1940s and 1950s, with an effective growth
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rate as high as 36.8 per 1,000 during 1951-1956. Including the Kuomintang
forces, which accounted in 1950 for about 25% of all persons on Taiwan,
immigration of mainland Chinese (now approximately 13% of the present
population) at the end of the 1940s was a major factor in the high population
growth of Taiwan. Some official government statistics for the period, including
those reported on this page, do not seem consistent with the known size of the
Kuomintang influx.
Net migration rate
During 2004-2010 Taiwan's migration rate was positive. On average the annual
net migration amounted to 22,000 people during that period, which is equivalent
to a rate of 1.0 per 1000 inhabitants per year.
Age
structur
e
Age
range
1980 1990 2000 2010
0-14
years
32.1% 26.9% 21.2% 15.65%
15-64
years
63.6% 67.0% 70.2% 73.61%
65 years
and over
4.3% 6.1% 8.6% 10.74%
Sex ratio
At birth: 1.1 male(s)/female
Under 15 years: 1.09 male(s)/female
15-64 years: 1.03 male(s)/female
65 years and over: 0.99 male(s)/female
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Total population: 1.04 male(s)/female (2010 est.)
Ethnicity (Overview)
Officially, the population of Taiwan consists, of which 84% identify as Taiwanese
included Hakka, while 14% are mainlanders Chinese, 2% are aborigines. A
confounding factor is intermarriage between these ethnic groups - to the extent
that it is doubtful whether the term "ethnicity" can be used at all.
Languages
Overview: Mandarin Chinese (official), Taiwanese (Min), Hakka dialects
Almost everyone in Taiwan born after the early 1950s can speak Mandarin,
which have been the official language and the medium of instruction in the
schools for more than four decades. The Mandarin spoken in Taiwan has minor
differences from that spoken in mainland China, South-east Asia and other
regions of the world.
The majority speak a dialect form of Min Nan (Southern Fujianese language),
commonly referred to as Taiwanese, which was the most common language. The
ethnic Hakka have a distinct Hakka dialect. Between 1900 and 1945 Japanese
was the medium of instruction and could be fluently spoken by many of those
educated during that period. Chinese romanisation in Taiwan uses both Hanyu
pinyin which has been officially adopted by the central government, and
Tongyong pinyin which some localities use. Wade-Giles, used traditionally, is
also found.
On Kinmen (Quemoy), the language spoken is also Min Nan. On the Matsu
Islands, the Foochow dialect, a Min Dong (Eastern Fujianese) dialect, is spoken.
The most widely spoken Taiwanese aboriginal languages today are Amis, Atayal,
Bunun, and Paiwan.
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Religion
The Geert Hofstede analysis for Taiwan is almost identical to the model for
China. Long-term Orientation is the highest-ranking factor. As with other Asian
countries, relationships are a primary part of the culture. Individualism is the
lowest ranking. Like the Chinese, the Taiwanese are a collectivist society.
The Taiwanese migrated to Mainland China starting in AD 500. Taiwan has a
population of approximately 20.5 million. The official language is Mandarin
Chinese. Most businessmen speak and understand English. It is governed by a
multiparty republican system. Taiwan is often referred to as Nationalist China.
Although the Taiwanese practice a variety of religions the culture is strongly
influenced by Confucianism.
About 93% of the population can be considered religious believers, most of
whom identify themselves as Buddhists or Taoists, Christian 4.5%, other 2.5%.
Fertility rate
The fertility rate of Taiwan is one of the lowest fertility rates ever recorded in the
world in historical times. It reached its lowest level in 2010: 0.90 children per
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female. In 1980, the rate was still well above replacement level (2.515), but it
dropped to 1.88 in 1985, 1.81 in 1990, 1.78 in 1995, 1.68 in 2000, 1.12 in 2005.
2) Economic Overview of the Country
Taiwan now faces many of the same economic issues as other developed
economies. With the prospect of continued relocation of labor-intensive industries
to economies with cheaper work forces, such as in China and Vietnam, Taiwan's
future development will have to rely on further transformation to a high
technology and service-oriented economy. In recent years, Taiwan has
successfully diversified its trade markets, cutting its share of exports to the
United States from 49% in 1984 to 20% in 2002. Taiwan's dependence on the
United States should continue to decrease as its exports to Southeast Asia and
China grow and its efforts to develop European markets produce results.
Taiwan's accession to the WTO and its desire to become an Asia-Pacific
"regional operations center" are spurring further economic liberalization.
Real GDP growth
2000 2001 2002 2003 2004 2005 2006 2007
5.8% -1.7% 5.3% 3.7% 6.2% 4.7% 5.4% 6%
2008 2009 2010 2011*
0.7% -1.9% 10.8% 5.4%
Manufacturing has long been overtaken by the service sector in terms of
contribution to GDP. In 1999, the service sector contributed the biggest slice of
GDP at 64 percent, with industry accounting for 33 percent, and agriculture 3
percent.
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The service sector is thriving and shows promise of further growth as the
spending power of the population increases. By the end of 1995, the growth of
the service sector exceeded that of the agricultural and manufacturing sectors by
more than 60 percent and has continued to do so. The different businesses that
fall under the service sector in Taiwan are: finance, insurance, and real estate;
commerce, including wholesale and retail business, food and beverages, and
international trade; social and individual services; transport, storage, and
telecommunications; commercial services, including legal, accounting, civil
engineering, information, advertising, designing, and leasing; governmental
services, and miscellaneous others.
The agricultural sector to GDP has been steadily declining since the 1980s when
Taiwan's government shifted the focus of its economic strategy to
industrialization. Few of the younger generation are willing to work in the
agricultural sector, preferring to pursue better opportunities in the other sectors.
Farmers make up only 8 percent of the labor force and produce less than 3
percent of the island's total GDP according to 1999 statistics. Consequently, the
sector diminished in importance while the manufacturing sector has risen to the
forefront. The agricultural sector will face even more problems when the country
is finally accepted as a member of the World Trade Organization (WTO). To
comply with the WTO's requirements, the government has been systematically
reducing the trade barriers on its traditionally well-protected agricultural goods,
leaving local produce to face increased competition from the foreign agricultural
products that will flood the domestic market when Taiwan becomes a full-fledged
member in the WTO.
Global financial crisis
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Taiwan has recovered
quickly from the global
financial crisis of 2007-
2010, and its economy
has been growing
steadily. Its economy
faced a downturn in
2009 due to a heavy
reliance on exports
which in turn made it
vulnerable to world
markets. Unemployment reached levels not seen since 2003, and the economy
fell 8.36% in the fourth quarter of 2008. In response, the government launched a
US$5.6 billion economic stimulus package (3% of its GDP), provided financial
incentives for businesses, and introduced tax breaks. The stimulus package
focused on infrastructure development, small and medium-sized businesses, tax
breaks for new investments, and low-income households. Boosting shipments to
new overseas markets, such as Russia, Brazil, and the Middle East was also a
main goal of the stimulus. The economy has since slowly recovered; by
November 2010, Taiwan's unemployment rate had fallen to a two-year low of
4.73% and is expected to continue to drop through the first half of 2011. The
average salary has also been rising steadily for each month in 2010, up 1.92%
from the same period in 2009. Industrial output for November 2010 reached
another high, up 19.37% from a year earlier, indicating strong exports and a
growing local economy. Private consumption is also increasing, with retail sales
up 6.4% compared to 2009. After 10.5% economic growth in 2010, the World
Bank expects growth to continue and reach 5% for 2011.
Foreign trade
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The second-largest technology trade show
in the world, is a global IT exhibition which
attracts many foreign investors.
Foreign trade has been the engine of
Taiwan's rapid growth during the past 40
years. Taiwan's economy remains export-
oriented, thus it depends on an open world
trade regime and remains vulnerable to downturns in the world economy. The
total value of trade increased over fivefold in the 1960s, nearly tenfold in the
1970s, and doubled again in the 1980s. The 1990s saw a more modest, slightly
less than twofold, growth. Export composition changed from predominantly
agricultural commodities to industrial goods (now 98%). The electronics sector is
Taiwan's most important industrial export sector and is the largest recipient of
U.S. investment. Taiwan, as an independent economy, became a member of the
World Trade Organization (WTO) as Separate Customs Territory of Taiwan,
Penghu, Kinmen and Matsu (often shortened to "Chinese Taipei"-both names
resulting from PRC interference on the WTO) in January 2002. In a 2011 report
by Business Environment Risk Intelligence (BERI), Taiwan ranked third-best
globally for its investment environment.
Taiwan is the world's largest supplier of contract computer chip manufacturing
(foundry services) and is a leading LCD panel manufacturer, DRAM computer
memory, networking equipment, and consumer electronics designer and
manufacturer. Textiles are another major industrial export sector, though of
declining importance as Taiwan due to labor shortages, increasing overhead
costs, land prices, and environmental protection. Imports are dominated by raw
materials and capital goods, which account for more than 90% of the total.
Taiwan imports most of its energy needs. The United States is Taiwan's third
largest trading partner, taking 11.4% of Taiwanese exports and supplying 10.0%
of its imports. China has recently become Taiwan's largest import and export
partner. In 2010, the PRC accounted for 28.0% and 13.2% of Taiwan's exports
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and imports respectively (excluding Hong Kong). This figure is growing rapidly as
both economies become ever more interdependent. Imports from China consist
mostly of agricultural and industrial raw materials. Exports to the United States
are mainly electronics and consumer goods. As Taiwanese per capita income
level has risen, demand for imported, high-quality consumer goods has
increased. Taiwan's 2002 trade surplus with the United States was $8.70.
Overview of Industries Trade & Commerce
The Taiwan Chamber of Commerce, also known as TCOC, is a
independent, non-profit organization of leading commercial firms, business
associations, and businessmen in the Republic of China (Taiwan).
It was founded on Sept.16, 1946 mainly to represent the interests of
Chinese business community, promote commercial development in line with
government policies, and establish international economic cooperation with
other countries.
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The former body of TCOC was “Taiwan Commerce & Industry Economic
Association” in the Japanese occupation period. After the restoration of Taiwan in
1945, the "Taiwan Commerce & Industry Economic Association" was
immediately disbanded and the association was reorganized as the “Taiwan
Federation of Chamber of Commerce”. On Sept.16,1946, the first provincial
member representatives’ convention was convened in the Sun Yat-Sen
Community Center, Taipei, and Mr. Lin Hsiung-Cheng was the first chairman. At
that time, the “Taiwan Chamber of Commerce” established.
Under the excellent leadership and joint hard work of the chairmen, and
directors and supervisors of previous terms, the chamber always maintain the
objective of promoting domestic and foreign trade, stimulating economic
development, coordinating relationship between peer companies and increasing
mutual benefits. Therefore the chamber has become an important force in the
society that cannot be ignored.
4) Overview of Different Economic Sectors of Taiwan
Industrial output has gradually decreased from accounting for over half of
Taiwan's GDP in 1986 to just 31% in 2002. Industries have gradually moved to
capital and technology-intensive industries from more labor-intensive industries,
with electronics and information technology accounting for 35% of the industrial
structure. Industry in Taiwan primarily consists of many small and medium-sized
enterprises (SME) with fewer large enterprises.
Largest companies in Taiwan
Hon Hai Precision Ind (Technology Hardware & Equip), Taiwan Semiconductor
(Semiconductors), Formosa Petrochemical (Oil & Gas Operations), China Steel
(Materials), Chunghwa Telecom (Telecommunications Services)
(2010)
List of Industries
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Information Technology
Agriculture
Energy
Computer and Peripheral Equipment
Security Systems & Equipments
Electronics
Iron and Steel
Banking, financial and related services
Automobile
Shipping and Transportation
Textiles
Information technology
Taiwan's information technology industry has played an important role in the
worldwide IT market over the last 20 years. In 1960, the electronics industry in
Taiwan was virtually nonexistent. However, with the government's focus on
development of expertise with high technology, along with marketing and
management knowledge to establish its own industries, companies such as
TSMC and UMC were established. The industry used its industrial resources and
product management experience to cooperate closely with major international
suppliers to become the research and development hub of the Asia-Pacific
region. The structure of the industry in Taiwan includes a handful of companies
at the top along with many small and medium-sized enterprises (SME) which
account for 85% of industrial output. These SMEs usually produce products on
an original equipment manufacturer (OEM) or original design manufacturer
(ODM) basis, resulting in less resources spent on research and development.
Due to the emphasis of the OEM/ODM model, companies are usually unable to
make in-depth assessments for investment, production, and marketing of new
products, instead relying upon importation of key components and advanced
technology from the United States and Japan. Twenty of the top information and
communication technology (ICT) companies have International Procurement
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Offices set up in Taiwan. As a signer of the Information Technology Agreement,
Taiwan phased out tariffs on IT products since January 1, 2002.
Agriculture
Agriculture has served as a strong foundation for Taiwan's economic miracle.
After retrocession from Japan in 1945, the government announced a long-term
development strategy of "developing industry through agriculture, and developing
agriculture through industry". Thus, agriculture became the foundation for
Taiwan's economic development, while promoting growth in industry and
commerce. In 1951, agricultural production accounted for 35.8% of its GDP.
Today, agriculture only comprises about 2.6% of Taiwan's GDP or about US$1
billion. In 2002, farming accounted for 43.33% of the industry, with livestock
(30.02%) and fishing (26.41%) making up a significant portion of the rest. Since
its accession into the World Trade Organization and the subsequent trade
liberalization, the government has implemented new policies to develop the
sector into a more competitive and modernized green industry.
Energy
Wind turbines, such as these in Qingshui, Taichung, are part of the government's
efforts to increase sources of renewable energy.
Due to the lack of natural resources on the island, Taiwan is forced to import
many of its energy needs (currently at 98%).[54] Imported energy totaled
US$11.52 billion in 2002, accounting for 4.1% of its GDP.[55] Although the
industrial sector has traditionally been Taiwan's largest energy consumer, its
share has dropped in recent years from 62% in 1986 to 58% in 2002.[55] Taiwan's
energy consumption is dominated by oil (51.8%), followed by coal (30.4%),
nuclear power (8.7%), natural gas (8.6%), and hydroelectric power (0.3%).[56]
The island is also heavily-dependent on imported oil, with 72% of its crude oil
coming from the Middle East in 2002. Although the Taiwan Power Company
(Taipower), state-owned enterprise, is in charge of providing electricity for the
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Taiwan area, a 1994 measure has allowed independent power producers (IPPs)
to provide up to 20% of the island's energy needs.[57] Indonesia and Malaysia
supply most of Taiwan's natural gas needs.[57] It currently has three operational
nuclear power plants with a fourth expected to come into operation by the end of
2012 at a cost of NT$280 billion (US$9.65 billion).[58]
Textiles Industry
Taiwan textiles industry's production value, manufacturers number and the
employees. The textiles industry of Taiwan is highly export-oriented. The export
value of textiles and apparel accounts for more than 80% of total textiles and
apparel production in the recent six years. Textiles industry's production value,
manufacturer number and the employees all reveal a decline phenomenon in the
past 10 years. The production value of textiles in Taiwan was NTD482.3 billion in
2010, down 22% from NTD615.4
Billion in 1997, the manufacturers in 2010 were reduced 1,876 units from 1997,
and there was decline in employment from the number of 285,730 in 1997 to
153,163 in 2010, down 46%.
Telecom Industry
In 2009, the total sales revenue from mobile services reached NTD154.3 billion
in Taiwan, down 5.4% yr-on-yr, and the sales revenue from fixed-line telephone
business was NTD96.8 billion, up 31$ yr-on-yr. In Taiwan, mobile business
income is far more than fixed-line telephone business revenue, because the
number of mobile phone subscribers is bigger than that of fixed-line telephone
subscribers and the charges of mobile services is higher than that of fixed-line
telephone business.
Chunghwa telecom is the largest telecom operator in Taiwan. In 2009, its
consolidated revenue reached NTD184 billion, representing a decline of 1.47%
over the same period in 2008. In 2009, the mobile services accounted for 40.27%
of the business of Chunghwa telecom, fixed-line network business 47.2%, and
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internet and data services 12.42%. The revenue decline of Chunghwa telecom
was primarily incurred by decreasing fixed-line telephone business income.
Steel Industry
Taiwan’s steel industry turned out NT$403.58 billion worth of steel products in
the second quarter for a 4.6% growth from the first quarter or an 11% rise from
last year. In May 2011, China Steel Corporation (CSC)’s steel production volume
dropped 1.1% month-on-month (m-o-m) and 7.0% y-o-y to 770,653 tonnes. This
came on the back of a sales drop of 4.0% m-o-m and 9.8% y-o-y to 783,000
tonnes. However, a rise in steel prices ensured that the steelmaker’s sales
revenue fell just 0.2% m-o-m and 2.6% y-o-y to TWD20.72bn.
Semiconductor Industry
Semiconductor market of Asia, the fastest-growing area, reached US$123.5
billion in 2007, a 6% increase from 2006. Taiwan semiconductor industry grew
5.3% in 2007, outpaced the worldwide average of 3.2% due to the dramatic
growth of 23.6% in IC Design and 8.2% in Packaging. decreased by 3.9%, with a
3.2% increase in foundry and a 13.4% decrease in DRAM. Taiwan IC revenue
(including design, manufacturing, packaging, and testing) totaled NT$1,466.7
billion, a 5.3% growth from 2006, with NT$399.7 billion in design, a 23.6%
increase, NT$736.7 billion in manufacturing, a 3.9% down, NT$228.0 billion in
packaging, an 8.2% up, and NT$102.3 billion in testing, a 10.7% rise.
In 2007, Taiwan IC product revenue reached NT$684.2 billion (Table 1), a 5%
increase from 2006. Memory products comprised 44.2%, down from the 52.7% of
2006 due to the DRAM price erosion. Logic IC comprised 45.1% (38.7% in
2006), Micro component IC 5.8%, and Analog IC 4.8%. Information applications,
comprising 54.5% (59.7% in 2006), remained the largest application area.
Consumer applications reached 30.6% (27.8% in 2006), and communication ICs
accounted for 13.8% (11.4% in 2006).
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The different businesses that fall under the service sector in Taiwan are:
finance, insurance, and real estate; commerce, including wholesale and retail
business, food and beverages, and international trade; social and individual
services; transport, storage, and telecommunications; commercial services,
including legal, accounting, civil engineering, information, advertising, designing,
and leasing; governmental services, and miscellaneous others.
5) Business and Trade at International level
The phenomenal growth of Taiwan's economy can be credited to its brisk foreign
trade. From 1970 until 1990, the country amassed huge surpluses from its
earnings in international trade, which peaked in 1987 when the trade surplus
reached US$18.7 billion. However, several other countries became alarmed at
Taiwan's huge surpluses and the corresponding economic power it might exert
on other economies. The United States demanded that Taiwan remove trade
restrictions and allow more foreign products into the country. Since then, Taiwan
has reduced or removed a significant number of trade barriers, thus allowing
foreign products to compete with local products in the domestic market. From
1992 to 1996, Taiwan's trade surplus declined by nearly 30 percent. However,
from 1998, trade figures have once more shown a steady rise and, according to
the Central Bank of China, Taiwan's foreign exchange reserves in 1999
amounted to US$106.2 billion, one of the highest in the world. In 2000,
Taiwanese exports reached US$148.38 billion against imports of US$140.01
billion, producing a trade surplus of US$8.37 billion.
Taiwan is a major exporter of industrial products ranging from mechanical
appliances and accessories, electronics, electrical appliances, personal
computers and peripherals, metal products and transport equipment, to furniture
and clothing. The United States has been Taiwan's most important trading
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partner over decades. However, as Taiwan pursued the expansion of its
economy, it began seeking out other trading partners, which resulted in a
decrease in trade with the United States. In the 1980s, 40 percent of Taiwan's
total exports were U.S.-bound; by 2000 only 23.5 percent of the island's total
exports were destined for the American market.
Export from Taiwan country list
Ranking for
2010
Countries
1 America 18 Brazil 35 South Africa
2 Germany 19 Mexico 36 UAE
3 Netherlands 20 Vietnam 37 Czech
4 Japan 21 Iran 38 Ukraine
5 UK 22 Denmark 39 New Zealand
6 Canada 23 Singapore 40 Israel
7 Italy 24 Finland 41 Columbia
8 Sweden 25 India 42 Portugal
9 Poland 26 Romania 43 Norway
10 Philippines 27 Indonesia 44 Chile
11 China 28 Malaysia 45 Argentina
12 Belgium 29 Saudi Arabia 46 Greece
13 Australia 30 Slovakia 47 Lithuania
14 Russia 31 Slovenia 48 Ireland
15 French 32 Korea 49 Switzerland
16 Spain 33 Turkey 50 British Virgin
Islands
17 Thailand 34 Hong kong
20
PRESENT TRADE RELATIONS & DIFFERENT PRODUCTS BUSINESS WITH INDIA
Trade Relations:
The bilateral relations between the Republic of India and Taiwan have
improved since the 1990s; India has expanded economic and strategic
cooperation with Taiwan.
India has sought to cultivate extensive ties with Taiwan in trade as well as
working together over weapons of mass destruction issues, environment and
fighting terrorism. Both sides have aimed to develop ties to counteract Chinese
rivalry with both nations.
The India-Taipei Association (ITA) Office has been established in Taipei
since 1995 to promote non-governmental interactions between India and Taiwan,
and to facilitate business, tourism, cultural and people-to-people exchanges.
The India-Taipei Association has also been authorized to provide all
consular and passport services. In 2002, India became the 28th nation to sign
the Investment Protection Agreement with Taiwan and in 2006, both nations
established the Taiwan-India Cooperation Council. Furthermore, Taiwan
promotes trade with India as a means to reduce the extent of their economic
dependence with China.
Business Products:
The Taiwan government has been trying to strengthen economic ties with
India and since 2003 has designated it as one of the target countries for
investment.
India is a perfect choice since it's a fast-growth country in the region with
surging demand for electronics, including such items as computers, routers,
21
monitors and industrial materials such as machinery tools, moulds, or
other heavy-duty machines, which all happen to be Taiwan's forte.
Taiwan's strength lies in hardware manufacturing and design — especially
in the field of ICT, green technology, machinery and auto parts. India, on the
other hand, is known for its world-famous software R&D expertise. There is
certainly a reason for both sides to combine force to boost their industries.
Taiwan Imports
Taiwan imports were worth 21473 Millions USD in November of 2011. A lack of
natural resources had made Taiwan dependent on imports. Taiwan imports
mostly mineral products and basic metals, electronic products, chemicals,
machinery. Main import partners are Japan (21% of total), Mainland China &
Hong Kong (14%), USA (10%), Europe (10%) and ASEAN countries (11%). This
page includes a chart with historical data for Taiwan's Imports.
Export in 2010 (est.) - $ 273.8 Billion
Import in 2010 (est.) - $ 247.3 Billion
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7) PESTEL Analysis
PESTEL stands for Political, Economic, Social, Technical, Environment and
Legislative. It is a strategic planning technique that provides a useful framework
for analysing the environmental pressures on a team or an organisation.
A PESTEL Analysis can be particularly useful for groups who have become too
inward-looking. They may be in danger of forgetting the power and effect of
external pressures for change because they are focused on internal pressures.
Now let us see the PESTEL Analysis of Taiwan country.
Political view:
Taiwan is part of Republic of China (ROC) and hence it is having democratic
parties to rule the country. Taiwan is having Democratic Progressive Party or
DPP [TSAI Ing-wen]; Kuomintang or KMT (Nationalist Party) [MA Ying-
jeou]; Non-Partisan Solidarity Union or NPSU [LIN Pin-kuan]; People
First Party or PFP [James Soong].
Debate on Taiwan independence has become acceptable within the
mainstream of domestic politics on Taiwan; public opinion polls
consistently show a substantial majority of Taiwan people supports
maintaining Taiwan's status for the foreseeable future; advocates of
Taiwan independence oppose the stand that the island will eventually
unify with mainland China; advocates of eventual unification predicate
their goal on the democratic transformation of the mainland.
Economic view:
Taiwan’s economic performance is greatly dependent on its ability to export
goods and services, which in recent years have amounted to over 70% of GDP.
China, the U.S., and Europe, in that order, are Taiwan’s three most important
trading partners.
Taiwan’s economic outlook is rather bleak (not hopeful). China is now Taiwan’s
only hope to end 2011 with a decent growth rate which for the last 20 years
averaged 5.2% a year.
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Social & cultural view:
In summary, for about 110 years starting with Koxinga's expedition to Taiwan in
1661, Taiwan remained an agrarian, immigrant society where the indigenous
culture slowly became marginalized.
Taiwan’s social environment laid the ground for the Nationalist government's
continuation of Chinese cultural development and modernization after
retrocession. It was on this foundation that Taiwan's cultural and educational
development took off.
Technology view:
The development of science and technology requires a steady influx (an arrival of
something in great numbers) of resources. The majority of Taiwan’s industries
are small- and medium-sized enterprises, with limited resources for R&D.
Industrial research and development has progressed from improving animal,
plant and fish species, to upgrading industrial production technology, and
advancing mechanization. However, faced with limited land and other resources,
these enterprises have, with government guidance, swiftly developed from
traditional industries into capital intensive, high-tech industries.
Ecological view:
Taiwan is developing green cities for regulating pollution rate as per government
prescribed terms and conditions. Recent development states that Taiwan has
successfully managed downsizing level of pollution by opening up green
gardens, cities and etc.
Legal view:
Corporate
Income Tax*:
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Taxable Income Tax Rate
Up to NT$50,000 Exempt
NT$50,001 to NT$71,428 50% of taxable income less
NT$25,000
NT$71,429 to NT$100,000 15% of taxable income
NT$100,001 to over 25% of taxable income less
NT$10,000
Withholding
Tax*: 20% standard rate
Value Added
Tax*: 5%
Transaction
Tax*: 0.3%
(*Source: PriceWaterHouseCoopers, PWC)
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INTRODUCTION OF THE COMPANY
GIANT MANUFACTURING
On a sunny day in 1972 in Tachia, a port city in western Taiwan, a new bicycle
company called Giant Manufacturing officially opened its doors. Back then, the
vast majority of the world bicycle market was dominated by established brands
such as Schwinn Corporation, Derby Cycle, and Huffy Corporation. A handful of
domestic us brands controlled 76% of the us market.
These firms had an enviably entrenched industry position in the us. From the
industry perspective, bicycles were a hard market to break into indeed: the level
of technological expertise was high, the name brand crucial, the distribution
painstakingly complex, and, perhaps most importantly, the distribution networks
of specialty shops were relationship-based and complex (Porter 1980; Porter
1996).
When these hurdles are combined with the high efficiencies of scale intrinsic to
bicycle production, the barriers to entry in that industry were indeed substantial
and Giant’s obstacles were great.
Given this, the rise of the bicycle maker Giant Manufacturing has been
surprising. By 1980, Taiwan was the largest exporter of bicycles in the world and
today with over $ 400 million in total sales; Giant Manufacturing is one of the
largest bicycle producers in the world.
Indeed, in 2001, Giant was named one of Fortune Magazine’s ‘20 best small
companies in the world’ (http://money.cnn.com/magazines/fortune). Perhaps
almost as surprising as Giant’s rise is the fall of the old guard of bicycle
producers.
Derby Cycle had gone into bankruptcy and was largely broken up, Schwann had
been sold out of bankruptcy to Pacific Cycle for a mere $86 million and then
acquired by Dorel Industries in 2004, and Huffy went into bankruptcy in 2004 for
restructuring, emerging in 2005. All this was during a period of 30 years of
healthy growth in the bicycle industry as a whole.
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Giant Manufacturing began in 1972 as a low-end manufacturer and exporter of
bicycles. It received its first large break in 1981 when the largest us bike maker,
Schwinn, hired it to produce bicycles.
Giant provided engineering, technology, and volume sales, and Schwinn
received bicycles that were less expensive than those produced in the us, and
sold them under its own name in the us. By 1984, Giant was producing 700,000
bicycles a year for Schwann.
When in 1985 Schwann and Giant ended their partnership, it was only a partial
break, since Schwann continued to outsource to Giant, though not to as great an
extent as before, but it was nevertheless a significant break.
This acted as a catalyst for Giant, who was at this point outsourcing for many us
bicycle producers, and was therefore spurred to create its own brand. Giant
began selling its own brand of bicycles first in Europe and then, in 1987, in the
us. It routinely offered bike distributors a 15% discount on bikes identical to those
sold by Schwinn without the name brand and could afford to gradually build
volume since it had its supporting production for the us companies.
Back in the 1970s Giant did something very surprising (the significance of which
will be addressed later). It reversed the trend of outsourcing to markets where
labor was cheap, and built a factory in the Netherlands. It chose this location, we
believe, because the Netherlands is considered a trendsetter in European design
and because of the excellent Rotterdam port and a large nearby airport.
Indeed, the Netherlands is also one of the largest recipients of us foreign direct
investment. This factory was meant to pick up on ideas and trends in the
European racing bike tradition. One of the interesting aspects of Giant product
line was that only 75%of it was standard, the remaining 25% was designed by
regional managers to have local appeal. Giant has designers in the us, Europe
and Asia and, twice a year, gathers them all together at its factories in Taiwan to
work out ways to lighten the frame, increase strength, etc.
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Giant has recently begun establishing factories in China. In 1996, for example, it
produced 2.02 million bicycles, of which 1.5 million were produced in Taiwan,
550,000 in China, and 300,000 in the Netherlands. Currently they are the biggest
bike sellers in China, accounting for 3% of all bike sales in this growing market.
INTRODUCTION TO THE INDUSTRIAL BANK OF TAIWAN
Founded in 1999 by Chairman Kenneth Lo, the Industrial Bank of Taiwan (IBT)
has been committed to establishing teamwork and professionalism. In addition to
providing comprehensive financial services, the bank is seeking aggressively
cooperation or strategic alliance opportunities within and outside the financial
industry so as to expand operating scale and pursue sustained growth.
In 2000, IBT initiated its first round of acquisitions: IBT Securities (formerly Sheng
Ho Securities), IBTS Investment Consultation, and IBT Asset Management.
Meanwhile, IBT established a 100% owned subsidiary, IBT Management
Corp.(IBTM), a venture capital management firm. IBTM subsequently raised two
venture capital funds. The bank has tentatively completed its preliminary
conglomeration. In 2006, the bank started its second round of acquisition:
(1) Investing in China Bills Finance Corp.,
(2) Establishing IBTS Asia (Hong Kong) Limited,
(3) Purchasing EverTrust Bank in the U.S. and
(4) Acquiring Shen Hua Investment Trust. These moves have helped the bank to
expand its geographical presence, increase market share and enhance resource
integration.
Currently the IBT Group engages in industrial banking, securities, investment
consultation, asset management, bills finance, commercial banking, venture
28
capital and subsidiaries in the U.S. and Hong Kong. Looking forward, the Group
will continue its acquisition moves and aspire to become a global financial group.
ROLE OF INDUSTRIAL BANK OF TAIWAN
After integrating the firm’s brokerage, underwriting, bonds, futures, investment
trust, investment consultancy, and venture capital divisions, the IBT Group is now
capable of providing our corporate customers with a wide range of financial
services.
Our corporate customers require different financial services. They will need
services of capital injection, guidance on the initial registration at OTC,
application for banking facilities, issuance of corporate and convertible bonds,
hedging of interest and exchange risks, asset securitization, financial consultancy
services, project finance, and asset management, etc.. Thus, IBT is deciated to
meet all the customers' needs at their different business stages.
INTRODUCTION TO TRANSCEND
Transcend was founded in 1988 by Mr. Peter Shu and has its headquarters in
Taipei, Taiwan. Our extensive product portfolio has grown to include over 2,000
memory modules of every type, flash memory cards, USB flash drives, MP3
players, digital photo frames, portable hard drives, multimedia products and
accessories. Transcend products are available for proprietary equipment, as well
as for mass marketed PCs.
Transcend is a global company with offices around the world, thus we are able to
serve all the major markets and provide superior quality of service to our
customers. Our overseas offices were opened in California, USA (1990),
Germany (1992), The Netherlands (1996), Japan (1997), Hong Kong (2000),
China (2000), UK (2005), Maryland USA (2005), Osaka Japan (2007) and Seoul
Korea (2008). Transcend is a strategically integrated Hi-Tech company, not only
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do we design, develop, and manufacture our branded products, but we also
market and sell our own devices. Transcend has a very successful retail store
chain in Taiwan and after we launched our initial foray into e-commerce in May
2000 our on-line sales have grown exponentially.
Transcend has always been a customer driven company, we focus our efforts on
providing the highest quality products with attentive after sales service and
support, that ensures total customer satisfaction. The corporate culture that
exists within Transcend is one of professionalism and teamwork. As a declaration
of our commitment to quality we implemented the Total Quality Control concept
throughout the company, and became the first memory module manufacturer in
Taiwan and the second in the world to receive ISO 9001 Certification.
Transcends Advanced R&D Teams have over 19 years of experience in
developing quality state-of-the-art Hi-Tech products that are at the very cutting
edge of technology. Our commitment to R&D ensures that we will continue to
produce superior quality innovative products keeping us at the forefront of our
industry and leaving the competition far behind.
As a company Transcend can best be described as, a World-Class leader in the
field of memory and consumer electronics, which brings you tomorrow’s World,
Today.
INTRODUCTION TO ACER
Acer Inc. is a multinational information technology and electronics corporation
headquartered in Xizhi, New Taipei City, Taiwan. Acer's products include desktop
and laptop PCs, tablet computers, servers, storage devices, displays, smart
phones and peripherals. It also provides e-business services to businesses,
governments and consumers. Acer is the fourth largest PC maker in the world.
In addition to its core business, Acer also owns the largest franchised computer
retail chain in Taipei, Taiwan.
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The Acer Group is a family of four brands -- Acer, Gateway, Packard Bell and
eMachines. This unique multi-brand strategy allows each brand to offer a unique
set of brand characteristics that targets different customer needs in the global PC
market. Today, the Acer Group still strives to break the barriers between people
and technology. It ranks No. 4 for total PC and No. 2 for notebooks shipments*,
and has a global workforce of 8,000 employees. Revenues for 2011 reached
US$15.7 billion.
In 2006, Acer celebrated 30 years of long-term growth in the fast-paced IT
Industry. Today, the Acer Group stands firm to its commitment in developing
easy-to-use and dependable products that meet our customers' needs. Our long-
term mission is Breaking the barriers between people and technology through the
creation of empowering hardware, software and services.
Acer is devoted to designing IT products that improve usability and add value to
our customers needs -- be it at work or leisure. We believe innovation is not the
mere creation of new technologies and solutions, but the guarantee that users
receive the benefits of these developments, and feel truly empowered.
The Acer Group family of brands -- Acer, Gateway, Packard Bell and eMachines
-- and their respective sub-brands offer products with distinguished brand
characteristics that target different customer needs in the global PC market.
The successful mergers of Gateway Inc. (October 2007) and Packard Bell Inc.
(March 2008) by parent company, Acer Inc., completes the group's global
footprint by further strengthening its presence in the U.S. and Europe.
It began with eleven employees and US$25,000 in capital. Initially, it was
primarily a distributor of electronic parts and a consultant in the use of
microprocessor technologies. It produced the Micro-Professor MPF-I training kit,
then two Apple II clones; the Microprofessor II and III before joining the emerging
IBM PC compatible market, and becoming a significant PC manufacturer. The
company was renamed Acer in 1987.
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In 1993, Acer posted record profits of $75 million; 43 percent of that year's net
was generated by the DRAM joint venture, considered "the most efficient in the
DRAM industry" by some observers. Total sales grew to $3.2 billion in 1994, and
net income increased to $205 million, as Acer America turned its first annual
profit in the 1990s. From 1994 to 1995, Acer advanced from 14th to ninth among
the world's largest computer manufacturers, surpassing Hewlett-Packard, Dell,
and Toshiba.
In 1995, the Aspire PC was unveiled. In 1996, Acer expanded into consumer
electronics, introducing many new, inexpensive videodisc players, video
telephones, and other devices to boost global market share, and in 1997
extended its laptop efforts by buying Texas Instruments' mobile PC division.
Considering two consecutive quarters of net losses in Q2+Q3 2011 and realized
to many products which Acer sells 101 individual notebook, netbook and
chromebook SKUs in the United States only, Acer will cut product lines by two
thirds begins in 2012.
Acer wins international-scale supercomputer contract
TAIPEI, TAIWAN (November 16, 2010) – Acer has been awarded the contract
for Taiwan’s National Center of High-performance Computing’s (NCHC) overhaul
of its major supercomputer in Taichung, central Taiwan. Scheduled for
completion at the end of March 2011, the supercomputer will offer High-
Performance Computing (HPC) services to a wide range of research and
industrial customers in Taiwan. The installation is expected to place in the top
50* of the TOP500 fastest supercomputers around the world.
ISO/TL Management System
Acer is an ISO 9001 and ISO 14001 certified company, meaning our quality
control and environmental management systems meet international standards.
The International Organization for Standardization (ISO) was established in
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Geneva, Switzerland in February 1947 with the goal to promote standardization
of related activities in all countries around the world.
INTRODUCTION OF THE ASUS
ASUSTeK Computer Inc. (trading as ASUS)
Type Public
Traded as LSE: ASKD, TWSE: 2357
Industry Computer hardware Electronics
founded April 2, 1990
Founder(s) TH Tung ,Ted Hsu ,Wayne Hsieh, MT Liao
Headquarters Beitou District, Taipei, Taiwan
Area served Worldwide
Key people Jonney Shih (Chairman),Jerry Shen (CEO)
Products
Desktops, laptops, notebooks, mobile phones, network
equipments, monitors, motherboards, graphics cards, optical
storage, multimedia products, servers, workstations
Revenue US$19.07 billion (2010)
Profit US$390 million (2010)
Employees 113,324 (2010)
Website Asus.com
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ASUSTeK Computer Inc. is a multinational computer hardware and electronics
company headquartered in Taipei, Taiwan. Its products include motherboards,
desktops, laptops, monitors, tablet PCs, servers, video cards, and mobile
phones. It also produces components for other manufacturers, including Apple
Inc., Dell, Falcon Northwest and Hewlett-Packard.
As of 26 November 2009, 29.2% of PCs sold in the previous 12 months
worldwide came with an ASUS motherboard.
ASUS appears in Business Week’s "InfoTech 100" and "Asia’s Top 10 IT
Companies" rankings. Wall Street Journal Asia ranks it number one in quality and
service, and it ranked first in the IT Hardware category of the 2008 Taiwan Top
10 Global Brands survey with a total brand value of US$1.324 billion
ASUS is listed on the London Stock Exchange (LSE: ASKD) and the Taiwan
Stock Exchange (TWSE: 2357).
Company Overview
ASUS Technology Private Limited manufactures and sells computer components
in India and internationally. The company’s products include desktop barebone
systems, servers, notebooks, handhelds, network devices, broadband
communications, LCD monitors, TVs, and wireless applications; and chassis,
power supply, and thermal products. Its products also include audio and graphic
cards, digital home, HSDPA cards, mobile phones, motherboards, multimedia,
optical storage devices, PDAs, peripherals, PNDs, workstations, and Webcams.
The company was founded in 2006 and is based in Mumbai, India with branch
offices in New Delhi, Bangalore, Chennai, and Kolkata. ASUS Technology
Private Limited operates as…
ASUS Technology Private Limited manufactures and sells computer components
in India and internationally. The company’s products include desktop barebone
systems, servers, notebooks, handhelds, network devices, broadband
communications, LCD monitors, TVs, and wireless applications; and chassis,
power supply, and thermal products. Its products also include audio and graphic
34
cards, digital home, HSDPA cards, mobile phones, motherboards, multimedia,
optical storage devices, PDAs, peripherals, PNDs, workstations, and Webcams.
The company was founded in 2006 and is based in Mumbai, India with branch
offices in New Delhi, Bangalore, Chennai, and Kolkata. ASUS Technology
Private Limited operates as a subsidiary of ASUSTeK Computer, Inc.
Companies in Taiwan Have Large Stakes in Markets for PCs, LCDs,
Semiconductors and Mobile Phones; Branded Businesses and Manufacturing
Operations Are Becoming More Distinct.
Taiwan`s information and communications technology (ICT) companies play a
key role in the global supply chain for electronics products. Taiwanese
companies account for about three-quarters of the world`s production of PCs and
half of the world`s liquid-crystal displays (LCDs). In addition, Taiwan makes
about a quarter of the world`s semiconductors and about a fifth of the world`s
mobile phones.
Taiwan has a population of 23 million and a land area of only 36,260 square
kilometers, less than half of a percent of the 9.6 million square kilometers of land
in China. Yet the well-educated, industrious people of Taiwan have helped to
carve out a huge niche in the global ICT industry.
The Economist Intelligence Unit (EIU), a renowned British think tank, last year
announced the results of a global study of IT industry competitiveness. Based on
the study, Taiwan's IT industry rose to second place from sixth place in the
previous year out of a total of 66 nations included in the study. The report noted
that Taiwan`s rise in the rankings owed mainly to its strong performance in R&D,
particularly regarding patented technology.
The Taiwan ICT industry has grown to a size that has resulted in substantial
diversification, and many large companies have separated manufacturing units
from branded operations in order to allow greater specialization in both of
these areas.
One example of this is Acer Inc., which in the last five years has grown to
become the world`s third-largest PC maker by market share. The company no
35
longer does manufacturing in house and spun off its production units into
separate companies including Wistron Corporation. Wistron now does
manufacturing for a wide range of companies including some of the best known
brands in the notebook computer business.
INTRODUCTION TO YOKO TECHNOLOGY CORP
Established in 1992, YOKO Technology Corp. is now a well-known professional
video surveillance system manufacturer in Taiwan. We have been dedicating to
R&D, manufacturing and marketing of video surveillance products. Accumulating
17 years of efforts, we have taken advantage of the vast experience in our core
technologies in CCTV field. YOKO has grown to be a world-renowned video
surveillance system manufacturer. According to the studies of a
famous market survey institute in Japan, YOKO had become the No. 1
manufacturer of the professional surveillance camera around the world in 2004.
YOKO has successfully developed a variety of CCTV Camera, Quad Processor,
Multiplexer, DVR, IP Camera, Video Server, Portable Product, CCTV Lens,
Monitor and other peripherals to meet all requirements from customers. It is the
best solution for “one-stop shopping ".
Our strong R&D team always devotes efforts to the full range of CCTV products.
All of YOKO merchandise are derived from a precise design, manufacturing and
testing process which assures good functions, stable quality, fast and punctual
delivery, as well as competitive pricing. We have hence gained a prestigious
success and recognition among our customers in the world. YOKO has grown to
be a high-tech manufacturer and integrator of video surveillance system.
In order to provide better service to our customers and accommodate to YOKO's
rapid growth, we relocated our business headquarters to a new site in September
2005. In the future, we will continue to build up the channels and locations
necessary for YOKO to become the world leader in CCTV equipment.
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INTRODUCTION TO ORANGE ELECTRONIC CORPORATION LTD.
Company Name : Orange Electronic co., LTD
CEO : Aliber Hsu
Country : Taiwan Republic of China
Major Business Focus : Importer, Exporter, Manufacturer, OEM, ODM
Primary Export Products: TPMS, PWM motor controller, Ignition, regulator, auto
electronic parts.
Major Export Markets : United State, Mainland China, Japan, Republic of
Korea, Taiwan, Republic of China, United Arab Emirates, Germany, France,
United Kingdom, Canada, Saudi Arabia……(2011-01-07)
Orange Electronic Co., Ltd. Was found in 2005 in Tanzih, Taichung, committed to
high temperature, radio frequency and power management of three core
technology research, focus on wireless tire pressure monitoring system (TPMS),
currently world’s sixth largest supplier of tire pressure monitoring system,
production capacity has one million production level.
Orange Electronic North America is one of the nation’s most premier automotive
accessory providers supplying aftermarket and original equipment tire pressure
monitoring systems (TPMS). Operating out of Cincinnati, Ohio, Orange Electronic
is the North American affiliate of our parent company Orange Electronic.
Orange prides itself on high quality, easy to use TPMS and vehicle accessories
at competitive prices. The entirety of Orange’s product line is factory, wireless
and quality certified at multiple levels and in multiple countries, ensuring the
highest international quality and production standards. Avoiding the “middle-
man”, Orange is able to maintain low prices with straight-to-dealer shipping.
37
Orange’s TPMS sensors have a two-piece construction that saves users
expensive replacement costs. If the less costly valve is damaged, there is no
need to replace the sensor. A factor of the two-part construction, Orange sensors
can also be angled to conform to a wide range of tire rims, reducing the number
of SKU’s needed in-house.
Through our certified radio frequency (RF) patented technology, Orange TPMS
can be integrated into a variety of wireless devices including on-dash displays,
GPS, DVD and rear-view mirrors.
Since 2007 all vehicles are required to be equipped with a TPMS system.
Orange Electronics’ objective is to simplify and standardize the aftermarket
replacement of TPMS systems. With every vehicle utilizing TPMS, increases in
driver safety and tire tread life as well as savings in gasoline and carbon-
emissions will be realized in the US and abroad.
SEMA (Specialty Equipment Market Association) is an automobile aftermarket
association formed in 1963 bringing together aftermarket manufacturers, original
equipment manufacturers, car dealers, installers and retailers. Each year this
organization hosts the premier automotive specialty products show attracting
over 100 countries and 100,000 visitors worldwide.
At the 2007 show, Orange Electronic placed 1st in the new product category with
our retrofit TPMS kit. This award truly indicates that Orange TPMS is one of the
highest qualities and necessity as TPMS is newly mandated for all new vehicles
produced in the United States.
Orange Electronic passed many national certifications
Orange Electronic has placed a strong focus on creating innovative products of
the utmost quality. Indicative of this commitment, Orange has gained a number
international quality and safety certifications.
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The company's growth process, gradually made such as the U.S. FCC,
European E-mark, the Japanese ARIB, South Korea MIC, Taiwan, Canada IC,
and Taiwan NCC and other major countries around the world of wireless
regulatory approvals, as well as through such FMVSS138, SAE J2657, CE ....
And so on TPMS certification testing standards, as well as ISO9001, TS16949
automotive quality standards such as global management system for product
quality endorsement is on the market consumers.
Orange electronic focus on U.S. market early, in view of the U.S. federal
government began to legislate for vehicles with TPMS, the market completely
dominated by the original supply, and worldwide supplier of TPMS technology
does not exceed 10. Orange's efforts to overcome technical barriers and
electronic access barriers abroad, completely specializes in market analysis and
develop a unique strategy for the use of information, early layout was not favored
by the major vendors selling after market), to provide OE replacement parts and
TPMS retrofit kits.
INTRODUCTION TO YULON
With the aim of "Using Generators to Save the Nation", the founder of the
company Mr. Ching-Ling Yen established the company on September 10, 1953.
Under the superior leadership of Mr. Yen, the company has not only built up a
solid and concrete foundation of automobile industry for our nation but also lead
the development of related industries and makes a remarkable contribution for
the progress and prosperity of our society. Mrs. Vivian Wu was elected by the
board of chairmen to be the 2nd chairperson of our company after the founder
Mr. Yen died on March 20, 1981.
In the beginning, YULON was named "YULON Machinery Co., Ltd", and the
business scope included machinery manufacturing and sales. YULON signed up
a technical collaboration agreement with Nissan in February 1957, and changed
the name to be "YULON Motor Co., Ltd" and officially manufactured sedan and
commercial truck.
39
From 1961 to 1980, the economy of Taiwan started to bloom, the average
income of the citizen was over 2,000 US dollars a year and the automobiles
market scale had reached 150,000 cars a year. With the assistant programs &
policy from the government, YULON started to expand production capacity and
open up the automobiles¡¦ market in Taiwan and took the lead of the entire
development of automobiles¡¦ industry in Taiwan.
From 1981 to 1990, the economy of Taiwan grew rapidly, the average income of
the citizen was over 10,000 US dollars a year and the automobiles market scale
had reached 350,000 cars a year. In order to build up car design capability in
Taiwan, YULON established the Sanyi manufacturer and engineering center in
1981, to bring in the most recent production technologies, to purchase production
equipments and to train production experts. "Feeling 101" was launched in 1986
and was the first motor vehicle designed and manufactured by our nation in
Taiwan. "Give the R. O. C. its own wheel".
From 1990 till now, the economy of Taiwan has become internationalized and
freedom, the average income of the citizen is even reached 13,000 US dollars a
year, the automobiles market scale has reached 400,000 to 500,000 cars a year
and YULON has set up a new standard of business management and
competition among traditional industries. In order to be adapted the entering to
WTO of our nation in the near future that will result in bringing all imported cars to
our local market, YULON moved Taipei headquarter, Taoyuan engineering
center, and Sin-Tien factory to Sanyi. By centralizing all workplaces, YULON was
able to reduce the cost of communication, reform company organization,
reconsolidate corporate resources as well as increase the competitiveness. The
benefit and efficiency of "workplace centralization" is quite remarkable and has
been well recognized and duplicated by the others.
In order to meet the challenge of current tough market situation and after the
upgrade of engineering center to YULON Asia Technology Center (YATC) in
November 1998, YULON used ¡§three circles strategy¡¨ to start the third wave of
40
corporate restructuring, and with our new corporate culture of "Innovation,
Speed, and Teamwork" to reach the optimal new vision of "The Leader of Moving
Value Chain in the Ethnic Chinese Auto Market". Responding to the globalization
of business strategy, YULON had moved the parts center from Chu-pa to Sanyi
plant and built up YULON Asia Parts Center (YAPC) in year 2000 to be the
logistics center of Taiwan, Mainland China and Hong Kong. In 1999, YULON
announced the investment to Nissan Motor Philippines Corporate (NMPC) and
moved forward to Southeast Asia market. In addition, in order to enforce the
product lines, YULON signed a formal alliance agreement with RENAULT and
became RENAULT sole distributor in Taiwan in year 2000.
On May 20th, 2003, YULON Motor and NISSAN Motor had a co-announcement,
YULON Motor split to two independent companies; one is YULON Motor Co.,
Ltd. and the other one is YULON-NISSAN Motor Co., Ltd. YULON will aim to
produce 120,000 cars in Taiwan and fulfill the goal of becoming the center of
manufacturing service. The goal of YULON¡¦s automobile business is to provide
the moving convenience to the consumers, and in the same time, to increase the
customer-made products as well as to develop the business of automobile
accessories and peripherals market. By assisting NISSAN in designing,
researching and manufacturing, and by more collaboration with NISSAN,
YULON-NISSAN will be able to anticipate NISSAN¡¦s operation in the Mainland
China¡¦s auto market and reach the goal of selling 550,000 cars in 2006 and
increase to 900,000 cars by 2009. In the future, YULON group will continue the
faith of "Keep the root in Taiwan, look forward the market in Mainland China and
international market", and make the best effort to pursuit the vision of "become
the biggest automobiles group among ethnic Chinese market".
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Introduction of the selected Company / Industry / Sector and its
role in the economy of Taiwan
Giant Organization Chart:
Positioning of Giant Bicycle
Market share of giant
Giant has become a USD$1.2 Billion empire making it the largest bicycle
company in the world with a 10% global market share......and it all started here in
a factory on the nondescript outskirts or Taichung, Taiwan
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The Giant Bicycle Company aims at taking us even beyond our automobiles –
into the world of cycling and wellness. Giant Manufacturing Co. Ltd. founded in
1972 is a Taiwanese bicycle company which bills itself as the world’s largest
bicycle manufacturer. Giant has manufacturing operations in Taiwan,
Netherlands, and China. Giant today is a top brand by itself and sells in over 50
countries through 10,000 retail stores.
So how does a small company from a small country become a big global
brand?
Great leadership King Liu was a charismatic leader with a powerful an inspiring
vision –To be the world’s best bicycle company. It was in Taichung in west-
central Taiwan a young 38 year old after trying his hand on several small
businesses chose to manufacture bicycles. He realized that riding bicycle was a
worldwide trend and his vision went way beyond the profitability of business – he
was into the growth of both cycling and cycling culture. Underlying his vision was
a strong belief that cycling is good for people’s health and well being and good
for the environment.
In the first decade of Giant’s growth overseas sales were very low and it was not
because of quality – it was more due a perception of lack of trust in a ‘Made in
Taiwan’ product. King Liu resolved to make Taiwan as synonymous with bikes as
Switzerland was with watches. It became his dream to turn Taiwan into a cycling
nation.
Building Brand started from Taiwan: That’s when Giant began to market
bicycles under their own brand name in Taiwan. King Liu’s cycling trip was
symbolic of cycling being a combination of lifestyle and leisure and also a natural
expression of success in life. As a result Taiwan enthusiastically celebrates the
first Sunday of May as national cycling day.
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Giant went into an image change overdrive from the older heavy bicycle
stereotype to state of the art high-end bicycles. Commitment to sport of cycling
reflected through sponsorships of professional and amateur teams at
International and regional levels. Global Giant Mountain Bike Team and ONCE
level 1 road team became trend setters. Such sponsorship allows product
developers to see their designs in real world settings leading to further product
development.
Balancing innovation and efficiency simultaneously
(a) Innovative and entrepreneurial capabilities were triggered through the
bicycle ‘cluster effect’. Michael Porter in his cluster theory highlights how
several competitive benefits (innovation, knowledge exchange etc)
accrue when interconnected players within an industry are concentrated
in close proximity – in this case the Taiwanese bicycle cluster.
(b) Giant achieved cost efficiency by moving manufacturing facilities to China.
The cluster effect also helped reduce transaction costs, R&D costs and
attracts international customers due brand power generated by cluster.
Global Giant Local Touch – this ability was another source of competitive
advantage. Giant’s worldwide HQ oversees global considerations and
coordination such as brand mgt, product R&D & finance etc. Global
standardization through their superior wheel system and a light bicycle frame
system were patented and standardized (75%) for their products globally to
achieve economies of scale.
The local touch was captured through Giants regional sales companies who
were given freedom to collect analyze and react to local consumer needs and
market trends with 25% customization. As a result Giant US and Giant Europe
sell different selections of bicycles. To understand the Chinese environment and
draw maximum value from Chinese JV partners’ unique lower cost manufacturing
44
skills Giant practiced Guanxi in a spirit of trust and mutual respect and
cooperation.
Overseas Expansion
The Dutch just love their bicycles and ride them everywhere. It was natural for
Giant to pedal into this bicycle-friendly nation as an entry into the European
market. Here again King Liu rode more than 500 kilometers heralding a Green
World on Wheels Tour
Gain firsthand experience riding in one the most cycling friendly nations in the
world. It is King’s hope that his Green World on Wheels Tour will open up
communication with The Netherlands as Taiwan continues to improve its own
cycling infrastructure.
In 1980s Giant overtook American manufacturers with lightweight bicycles and
the European market with MTB (Mountain Bikes). In addition to light weight
frames were their high-quality shock absorber and aluminiumalloy bikes.
The Giant name now is synonymous with technological innovation and the state-
of-the-art throughout the global bicycle industry. Giant continues in 2011 to top all
other manufacturers in prestigious events and reviews of best bikes in the world
market.
Industrial Bank of Taiwan
Chairman Kenneth Lo
Positions Held
Chairman of Industrial Bank of Taiwan, Chairman of IBT Management
Corp., and Chairman of Boston Biotech Venture.
President Henry Peng
45
Position Held
President of Industrial Bank of Taiwan
As they approach the 21st century, our government has allowed the
establishment of industrial banks, turning a new chapter in our financial industry.
Industrial Bank of Taiwan became the first government-approved industrial bank
as a result of our solid business plan and quality of our staff members. We have
been striving to live up to the expectations of our clients by rendering
professional services through our service-oriented commitment.
Via strategic alliances with internationally renowned investment banks, we could
continuously roll out financial products that meet customer requirements. After
our bank’s listing on the local exchanges, we hope to enter the international
financial arena to provide strong support to our corporate clients in their overseas
business efforts. We also hope to become, ultimately, one of the best investment
banks in the Asia-Pacific region.
Banking industry faces a huge challenge after Taiwan’s accession into WTO and
the emergence of financial holding companies. The declining profit margin from
traditional banking business poses significant threat to our existing business. In
addition to our traditional banking businesses, we are devoted to developing new
value-added businesses and increasing shareholders returns. Meanwhile, we
have been working closely with many financial institutions to broaden our product
offerings.
Going forward, we will continue to enhance our earning capabilities and create
a win-win situation for both clients and shareholders.
CORE VALUES OF THE COMPANY
46
The IBT focuses on core values of “honor,” “integrity,” “team work,” “innovation,”
“professionalism,” and “meritocracy.” With visions and professionalism, the bank
continues to enhance its earning capabilities and pursue a sustainable growth.
IBT is dedicated to our clients, shareholders, employees and society. For clients,
we will deliver high-quality professional services and develop innovative financial
products to meet their needs. For shareholders, we strive to achieve sustained
growth to ensure maximum return. For employees, we promote teamwork and
have sound incentive plan. For society, we intend to actively participate in public
service to make a better tomorrow for our society.
ORGANIZATION STRUCTURE OF TRANSCEND
47
BUSINESS ACTIVITIES OF TRANSCEND
For over 20 years, Transcend has produced high reliability DRAM memory
modules and flash-based devices for use in both commercial and industrial
environments. Continuing research and development investment allows
Transcend to create advanced products for industrial computing applications
worldwide. Leveraging years of industrial-grade manufacturing expertise,
Transcend has built a great reputation as one of the world’s most innovative
developers of high quality and reliable industrial-grade memory devices.
Transcend offers comprehensive IPC solutions. Our clients include leading
vendors in the industrial computing field and our products are widely used in a
variety of industries, such as industrial automation, medical equipment,
military/defense, data acquisition, banking/ATM, gaming, transportation,
POS/POI, kiosks, and digital signage.
Transcend’s industrial-grade products target at extremely demanding
applications in rugged environments in terms of shock, vibration, humidity and
temperature. In addition to standard products, we offer customized industrial-
grade products to fit your specific application demands.
Structure of Acer Computers
Client-server organizational structure
In order to carry out its vision of a decentralized confederation of business
units, Acer reorganized itself into a “client-server” organizational structure In the
clientserver structure, all of Acer’s business units and affiliated companies were
48
expected to act as clients or play dual client/server roles in support of other
member companies. The clients and servers were separated according to either
product lines or regions. Strategic Business Units (SBUs) were responsible for
the design, development and production of components and systems and were
also responsible for OEM sales and marketing. Regional Business Units (RBUs)
were primarily Acer-brand marketing companies, responsible for specific regional
territories. They developed new distribution channels, assembled finished
products, provided support for dealer and distributor networks, and created new
joint ventures in key local markets.
Acer established four special functional teams (IT, logistics, customer service,
and brand management) directly from headquarters to oversee these four key
functions throughout the various business groups. The IT Steering Committee,
responsible for coordinating IT across the entire Acer Group, consists of chief
information officers (CIOs) from each of Acer’s business units. In addition
headquarters may also assign cross-group task teams to implement short-term
projects that cut across business units.
Functions & business units of Acer computers
Acer International Services Group (AISG)
Acer Computer International
(Marketing, sales and assembly of
Acer brand products in Asia, Africa,
the Middle East, Australia, New
Zealand and CIS countries)
AASOFT (software content
development)
SERVEX(software content
development)
Acer Sales And Service Group (ASSG)
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Acer Sertek(marketing, sales and
assembly of Acer brand products
in Taiwan and mainland China
Acer Marketing Services
(marketing, sales and assembly
of Acer brand products in
mainland China)
Weblink International Inc.(channel
management for computer
peripherals and software)
Vision Tech Information
Technology Inc(distributor for
Computer Associates software)
HI TRUST(e-commerce security)
Acer Semiconductor Group (ASG)
Acer Semiconductor
Manufacturing Inc. (design and
manufacture of IC logic chips and
DRAMs)
Acer Laboratories Inc.(design and
manufacture of core logic
chips,multimedia chips and I/O
controllers)
Acer Testing Inc. (IC testing
services)
Acer Technology Inc(design and
manufacture of memory modules)
Taiwan Semiconductor Technology
Corp (IC packaging services)
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Acer Information Products Group (AIPG)
Acer Inc (design and manufacture
of computer
systems,components and
consumer electronics products,
OEM sales)
Acer Netxus Inc. (high-speed
network systems,
Internet/Intranet onnection
systems)
Acer Neweb (wireless
communications equipment)
Acer America Corp.(marketing,
sales and assembly of Acer brand
products in North America)
Acer Europe B.V.(marketing, sales
and assembly of Acer brand
products in Europe)
Acer Softech (software design)
Acer Peripheral Group (APG)
Acer Peripherals Inc. (API)
color monitors, multimedia TV,
CD-ROM drives,keyboards,
scanners and mobile phones
Acer Display Technology (ADT)
design and manufacture of plasma
display panelsand LCD modules
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AMT
design and manufacture of
rewriteable media foroptical
storage and printers
Structure, Functions and Business Activities of Asustek Company
TH Tung, Ted Hsu, Wayne Hsieh, and MT Liao founded ASUS in 1989 in Taipei,
Taiwan – all four founders worked as computer engineers for Acer. The company
explains the name ASUS as originating from Pegasus, the winged horse of
Greek mythology.The new organization used only the last four letters of the word
in order to give the resulting name a high position in alphabetical listings.
In 2008, shipments from ASUS, Elitegroup Computer Systems (ECS), Gigabyte
Technology, and Micro-Star International (MSI) totaled 104.86 million devices.
ASUS led with 52 million units, followed by ECS with 20 million, MSI with 18
million, and Gigabyte with 16.6 million.
Relationship with Intel
In the early 2000s, Taiwan-based motherboard manufacturers had not yet
established their leading positions in the computer-hardware business. Intel
Corporation would supply any new processors to more established companies
like IBM first, and the Taiwanese companies would have to wait for
approximately six months after IBM received their engineering prototypes. As of
2009, ASUS receives Intel engineering samples ahead of its competitors.
Corporate restructuring, 2007
52
In January 2007, ASUS started restructuring its operations. The company split
into three distinct operational units: ASUS, Pegatron and the Unihan Corporation.
The ASUS brand was applied solely to first-party branded computers. Pegatron
handled OEM manufacturing of motherboards and components, and the Unihan
Corporation focused on non-PC manufacturing such as cases and molding. In
January 2008, Pegatron acquired the Unihan Corporation as a subsidiary from
Asus.
In the process of restructuring, the highly criticized pension-plan restructuring
effectively zeroed out the existing pension balances. The company paid out all
contributions previously made by employees.
Open Handset Alliance:
On 9 December 2008, the Open Handset Alliance announced that ASUSTek
Computer Inc. had become one of 14 new members of the organization. These
"new members will either deploy compatible Android devices, contribute
significant code to the Android Open Source Project, or support the ecosystem
through products and services that will accelerate the availability of Android-
based devices."
Operations:
As of 2009 ASUS has manufacturing facilities in Taiwan (Taipei, Lujhu, Nangan,
Guishan), China (Suzhou), Mexico (Ciudad Juárez) and the Czech Republic
(Ostrava). The ASUS Hi-Tech Park, located in Suzhou, China, covers 540,000
square meters, roughly the size of 82 soccer fields.
ASUS claims a monthly production capacity of two million motherboards and
150,000 notebook computers.
ASUS operates 50 service sites in 32 countries and has over 400 service
partners worldwide. It provides support in 37 languages.
ASUS has its headquarters in Beitou District, Taipei, Taiwan
Products
53
ASUS produces motherboards, graphics cards, sound cards, optical disc drives,
personal digital assistants (PDAs), computer monitors, laptops, servers,
computer networking devices, mobile phones, computer cases, computer
components, a tablet, and computer cooling systems. It also has motion sensing
technology in their ASUS Wavi bringing motion recognition to PC.
Business Activity of YOKO
YOKO TECHNOLOGY CORP. is a manufacturer of closed circuit television
(CCTV) products. The Company provides charge coupled device (CCD) and
complementary metal oxide semiconductor (CMOS) cameras, video processors,
digital video recorders (DVRs) for surveillance, Internet protocol camera, wireless
monitoring modules, global positioning system (GPS) trackers and CCTV
peripheral equipment. The Company's products are used for site surveillance of
industrial, commercial, medical, apartment buildings and residential buildings
fields, as well as operation evidence, security, disaster prevention and burglary
prevention. Its CCD cameras are also used in video phones and video
conference systems. During the year ended December 31, 2010, the Company
obtained approximately 69% and 25% of its revenue from its camera and video
processor businesses, respectively. The Company distributes its products in
domestic markets and to overseas markets, including the Americas, Europe and
the rest of Asia.
Taiwan Electronic Security Industry
Europe remains the largest regional market for electronic security systems. Asia-
Pacific is the fastest growing regional market, posting a CAGR of more than
5.0% over the analysis period. Enthused by burgeoning economies such as
China and India increase in foreign investments, and rise in new business
establishments, Asia-Pacific has been witnessing increasing adoption of
electronic security systems in recent years. By product, alarms represent the
largest product market. CCTV/Video Surveillance Equipment market is the
54
fastest growing segment waxing at a CAGR of more than 7.0% over the analysis
period. The accelerated growth in adoption of network video surveillance
solutions and rising sophistication of video analytics are the major factors driving
this robust growth in CCTV/Video Surveillance market.
Taiwan’s safety and security industry provides products and services to
individuals, enterprises, various government agencies and public infrastructures.
There are 4 major sectors in the safety and security industry: (1) Industrial Fire,
Safety & Security; (2) Safety Apparatus; (3) Information and Telecommunication
Security; and (4) System Integration Services. The Safety Apparatus industry
holds the highest market share among the 4 sectors while the Industrial Fire,
Safety and Security industry has the longest history.
According to the Topology Research Institute and Market Intelligence Center,
Institute for Information Center, in 2008, the total output value of Taiwan’s safety
and security industry was NT$142.72 billion (US$4.46 billion), and in 2010, it was
estimated to reach NT$243.71 billion (US$7.61 billion), with a 9.6% in CAGR
from 2005 to 2010. Enhanced by the ever growing global market demands and
supporting government policies, the safety and security industry is seen as the
next prominent industry in Taiwan.
Global Tire Pressure Monitoring Systems Market to Reach $3.0 Billion by
2017, According to New Report by Global Industry Analysts, Inc.
GIA announces the release of a comprehensive global report on Tire Pressure
Monitoring Systems (TPMS). Driven by resurgence in automotive industry and
stringent legislations focusing on active road safety measures, the global tire
pressure monitoring systems (TPMS) market is projected to reach $3.0 billion by
the year 2017. Focus on fuel efficiency, growing popularity of run-flat tires and
product innovation/differentiation strategies adopted by manufacturers are
expected to drive future gains in the marketplace.
55
Given the rise in automobile accidents both as a result of errors in judgment
made by the driver and by mechanical failures caused by poor maintenance,
automotive safety technologies are rising in popularity. Poised to gain against
this backdrop are intelligent automotive technologies that revolve around safety,
comfort and convenience. Currently in the spotlight is Tire Pressure Monitoring
System (TPMS), which harbor the potential to reduce the number of accidents
caused by under-inflated tires. Numerous accidents occur annually as a result of
unevenly inflated tires, which compromise the stability and balance of the vehicle,
thereby increasing the risk of car crashes. The economic cause associated with
accidents and the push extended by the public authorities remains prime factors
driving developments in TPMS.
Tire Pressure Monitoring System (TPMS) is a market driven largely by
legislations. Several legislations already in place like in the United States and yet
to be implemented in Europe and Asia, have and will continue to shape growth
patterns in the market. Over the last decade, governments around the world have
focused on legislating active road safety measures, given the rise in the number
of casualties on road worldwide. Unlike in the United States where the TPMS
legislation was solely driven by safety issues triggered by the massive recall of
tires due to tread separation in the year 2000, in Europe TPMS legislations are
driven by fuel efficiency benefits and reduction of CO2 emissions. With the
exception of South Korea, Asia-Pacific, in comparison, has no mandatory TPMS
legislations and market penetration currently remains low. However, success in
lobbying efforts in mandating TPMS in the region could result in Asia emerging
into a driving force in the world TPMS market.
Given that market opportunities for TPMS are largely dependent upon the overall
health of the automobile industry, the recent economic recession temporarily held
back growth in the global tire pressure monitoring systems (TPMS) market. The
unusually pronounced length, depth and magnitude of the current recession sent
ripples of unrest across the entire automotive value chain including the market for
TPMS. The trickle down impact of the depressing business climate in the
56
automotive industry on this market was reflected in the growth rates, which
largely failed to meet the optimistic expectations of the pre-recession era. While
slump in new car sales displaced business opportunities at large, postponements
of aftermarket purchases of safety systems, solutions and products, as a result of
consumers’ preference to delay or even cancel discretionary purchases during
difficult economic conditions, squeezed opportunities for TPMS in the aftermarket
sector. Expensive aftermarket electronic installations especially have been
impacted, a direct fallout of weakening employment rates, consumer income and
spending power.
Major players in the marketplace include Alps Electric Co Ltd, Bendix
Commercial Vehicle Systems LLC, BorgWarner BERU Systems GmbH,
Continental AG, Delphi Automotive LLP, Dunlop Tech GmbH, General Electric
Company, Hella KGaA Hueck & Co., Kavlico Corporation, NIRA Dynamics AB,
PressurePro, Pacific Industrial Co. Ltd., Robert Bosch GmbH, Schrader
Electronics Ltd, Silicon Microstructures Inc., Transense Technologies Plc, TRW
Automotive Holdings Corp., and VTI Technologies Oy.
57
Positioning of Hero Bicycle
Market share of Hero Bicycle
Hero Cycles is the industry leader commanding a whopping 48% market share of
the Indian bicycle market collectively across all segments (Source: Nielsen).With
a turnover of Rs. 1450 crore (US$ 302.10 million) and an expanding product
repertoire, the company is all set to maintain its position of being not just India's
largest bicycle company but as also the world's single largest manufacturer of
bicycles.
Market
The Indian bicycle industry has become the second largest in the world with an
annual production of more than 12 million bicycles – defying the conventional
market wisdom that predicted the bicycle to be the dodo of the 21st century.
According to figures from the Engineering Export Promotion Council, India's
bicycle and components exports were valued at Rs. 856.30 crore (US$ 178.40
million) in 2005/06 and rose to Rs. 890.02 crore (US$ 185.40 million) in 2007/08.
The numbers for the industry continue to be robust in spite of the global
slowdown. Much of this is attributed to domestic demand generated by several
state governments who have, under various social welfare schemes, placed
orders for 1.5 million bicycles in 2009 (Source: Medium Industry Development
Board, Punjab).
According to the board, in the course of the resent year, the orders are
expected to increase to 2.5 million units. The current average annual domestic
demand for bicycles in India is about 10 million. This largesse translates into a
25% increase in annual off take. Hero Cycles is the industry leader commanding
58
a whopping 48% market share of the Indian bicycle market collectively across all
segments (Source: Nielsen).
With a turnover of Rs. 1450 crore (US$ 302.10 million) and an expanding product
repertoire, the company is all set to maintain its position of being not just India's
largest bicycle company but as also the world's single largest manufacturer of
bicycles.
Achievements
Hero Cycles greatest achievement is that the company put the Indian bicycle
industry on steroids when it muscled its way to the top of the world's pyramid,
more than 20 years ago.
It has never relinquished that spot and continues to be listed in the Guinness
Book of World Records. Anticipating the emerging sophistication in Indian
markets, Hero Cycles launched a number of high-end models. These included a
specialised range of fitness bikes as also the first Mountain Terrain Bike (MTB),
the first City Bike and the first Racer Bike in India.
In keeping with its aggressive marketing strategy Hero Cycles set another
landmark: it became the first manufacturer in the world to cross the magical
production figure of 100 million bicycles in 2006, its Golden Jubilee year. In the
same year it achieved the proud distinction of becoming the first company to
manufacture 5 million bicycles.
With a powerful history and an envious record, Hero is also India's largest
exporter of cycles. It has a strong presence in 56 countries, including the highly
evolved and competitive markets of the US, the UK, Germany, Spain and several
other countries in the European Continent. Not surprisingly the company has won
the Engineering Export Promotion Council Best Exporter Award continuously for
the last 28 years.
Recent Developments
Environment and fitness consciousness are the new market mantras and the
bicycle happily fulfils both demands. This new twist to modern, urban living is
59
gradually filtering through to all – including town planners; there is now talk of
cycle tracks becoming an essential part of cityscapes.
In keeping with the changing aspirations of the high-end Indian consumer, Hero
Cycles has geared itself to launch an enhanced range of top-end fun machines.
Four new models targeted at the urban adult, including the radical Thunder and
Octane – the all-aluminium alloy light-weight all-terrain bikes have already been
unveiled. To establish a greater connect with the high spending urban adult
customer, Hero has reoriented its market strategy.
The brand has added a quotient of glamour to the business of biking by opening
stores at high footfall locations such as malls. Due for launch are six premium
bicycles developed to cater to the high demand in the fancy children's bike
segment. In a landmark technological initiative, Hero has set up India's first
German paint plant with the revolutionary extra durable and shining (EDS)
technology.
This programme will ensure that every Hero cycle retains its lustre and colour
brilliance for up to five years. In the very recent past the company has entered
into a strategic tie-up with ADIDAS to manufacture bicycles and bicycle
components especially branded for them.
Brand Values
A brand is built when it delivers on its promises. In the case of Hero Cycles one
part of that promise was commitment to quality, corporate integrity and customer-
centricity. The other part was defined by the level of social responsibility a
company shoulders and discharges. What has emerged from the meeting of
these personal
Philosophies are true success. Hero's brand values are embodied in its
corporate vision of providing an inexpensive, durable vehicle of transport at
affordable prices.
'Engineering Satisfaction' is the catchphrase that drives the company, today.
Now fully integrated into its work culture, this slogan is responsible for the
company's environment friendly manufacturing processes and to the brands'
60
initiatives for benefitting the common man. In every one of these functions – and
everything else in between – Hero Cycles has demonstrated its willingness to go
that extra mile – just like a true Hero.
Strength of Hero Bicycle Today’s
Hero Cycles manufactured 25 bicycles a day in 1956
Today the company turns out one bicycle every 5.4 seconds, around-the-
clock, around the year
One in every ten Indians has owned a Hero cycle at sometime in their
lives
Hero Cycles manufactures the widest range of bicycles including multi-
speed variants
Financial Services
To assist our corporate customers in obtaining efficient funding supports at
different stages of their business operation, IBT provides various professional
banking services in both local and foreign currencies. These services include
short and long term financing for working capitals, guarantees, syndications, and
factoring services. In addition, we also provide general trade finance services,
cross-strait banking services, and a forfaiting service, which helps business solve
the L/C negotiation problems with high-risk countries.
(A) Financial services
General lending services
IBT provides various short-term loans to satisfy the working capital needs
of our corporate customers.
Trade finance
61
IBT provides trade finance services such as factoring, which enables a
transfer of creditor’s right from your company to IBT. Through this service,
your company may enjoy more financial flexibilities through the credit
facilities as well as professional account management services from IBT.
Policy related subsidized lending schemes
As an industrial bank, IBT supports the formulation and implementation of
public policies concerned with domestic industrial development. IBT
renders support to local industries by offering subsidized lending at
preferential terms, assisting its customers in special projects such as the
procurement of automation equipments, revitalizing traditional industries,
or special lending projects for mergers and acquisitions.
Policy-related Subsidized
Subsidized loans for the procurement of automation equipments
In order to support our government’s policy on industry automation, we provide
customers with subsidized loans to fund the purchase of automation equipments
as well as computer hardware and software in the hope of expediting Taiwan’s
industry upgrade process.
Subsidized loans to private enterprises for the procurement of pollution
control facilities
To keep in line with the environmental-protection policies, the Executive Yuan
has specifically offered lending facilities at favorable interest rates to private-
owned enterprises.
Loan for merger and acquisition of enterprises Subsidized
The relevant lending regulations are established by the Executive Yuan to assist
industries in improving their business structure and maximizing their
62
management efficiency in accordance with Article 44, Item 1, Rule 2 of the
“Business Merger and Acquisition Act” and Article 21, Item 1, Rule 2 of the
Statute for Upgrading Industries.
Subsidized loans for revitalizing traditional industries
The lending scheme was initiated by the Executive Yuan with a view to assist
traditional industries in improving their business structure and enhancing the
competitiveness of their products, so as to achieve the purpose of industry
upgrading.
Subsidized loan to stimulate the tourist business
The lending scheme was initiated by the Tourist Bureau, Ministry of
Communications and Transportations to elevate the overall quality of the tourist
business and develop the tourist industry into an important strategic industry of
the country. The approach was made in line with the government’s strategic plan
to double the number of tourists, as approved by the Executive Yuan in their
conference dated 8 May 2002 under the “Challenge 2008, National Development
Plan”. The relevant schemes are established based on Article 48 of the “Statute
for developing the tourist business” and item 5 of the “Guidelines for operations
relating to mid and long term fund utilization”
(B) Foreign exchange business
Trade finance
The trade finance business includes import and export business, L/C
negotiation and cross-strait banking services, etc.
OBU business
Exempted from the local foreign exchange control regulations, the
Offshore Banking Units (OBU) in Taiwan enables your company to better
63
diversify the use of capital, thereby enhancing the market competitiveness
of your company.
(c) Corporate business
IBT also provides tailored and integrated financial advisory services based
on individual requirements of our customers. These services include
general planning such as the method of fund-raising (e.g. syndication
loan, private fund-raising, etc.), management consultancy, fund allocation,
as well as special advisory services such as debt reorganization, strategic
mergers and acquisitions.
Syndication
The purpose of syndicated loan is to provide our customers with an
efficient channel to raise large funds in the financial market, so as to
satisfy the funding requirements such as major capital expenditure or
mid/long term operational funds.
Industrial Bank Of Taiwan - Financial and Strategic SWOT Analysis Review
This comprehensive SWOT profile of Industrial Bank Of Taiwan provides you an
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64
The profile contains critical company information including*,
- Business description – A detailed description of the company's operations and
business divisions.
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strategy.
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opportunities and threats.
COMPATATIVE POSITION OF TRANSCAND WITH INDIA
What makes Transcend a popular brand in all the categories we operate in is that
we have put in lot of efforts in brand building and that has certainly helped in
creating brand awareness. Besides, we focus a lot on innovation as well, which
helps the company in offering quality products to the marketplace.
The company has been operating in India for the last 15 years and the Indian
market definitely finds a significant place in the company's overall strategy.
Apparently, it has been putting in special efforts to make its presence felt locally
here in India. In these 15 years, what we have witnessed is that the Indian
market has changed a lot. Especially in the last couple of years, if you see, the
mobile market has grown dramatically. This clearly indicates that India is a
grooming market. And going forward, we will see immense role to be played by
the IT and mobile channels towards this growth.
Brand awareness is the traction for users, but it depends on how reliable the
brand is. Transcend provide lifetime warranty for RAM and memory card and
Transcend Care (service center) is to ensure that all users experience a hassle-
free services for all Transcend products.
We interact with customers more and more, as we want to be in a situation
where customers here should feel that Transcend is an Indian brand. We also
make sure that all our channel partners cover every region of India so that we
65
don't miss out on any opportunities coming our way and they provide all the
services in the best possible way. I believe these are the reasons that makes us
leap ahead of competitors.
For example, in order to connect with consumers in India, it has been using the
social networking (Facebook) platform immensely along with e-marketing.
Through this platform, which is only for Indians, it has been trying to be in touch
with its Indian partners as well as end-users. Today, it has around around four
lakh e-members. Transcend has been trying to bring in more and more members
so that it can touch base with them directly, taking their feedback about the
company and the areas where it can improve.
Channel partners are again very important to the company's business, as it
believes that they are the face of the company here in India. It is they who
interact with the customers, take their feedback and help the company develop
products accordingly. The partners listen to customer demands and pass on the
message to the company so that it can adjust to those demands in no matter of
time.
It has three to four major partners here in India, including Beetel, Supertron, and
Mediaman. And to address the service issues, it has Accel Frontline as its
partner. The company keep its partners updated with e-letters weekly or bi-
weekly sharing all the information from its end. And its account managers are in
touch with the distributors on a daily basis so that they are well updated.
In Indian market, parallel import is a serious issue. It makes difficult to maintain
reasonable market prices and it also increases cost in providing after-sales
service in India. Transcend puts strong focus on every direct customer who helps
us penetrate the local market. By cooperating with these local customers we are
able to provide better services to the end consumers.
However, the parallel import and the gray markets have been heavily hit by the
favorable duty structure introduced by the government. The customer is now
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ready to pay a little extra for the warranty and service. As a result the authorized
channel partners selling brands of repute have registered impressive sales
growth. However, when it comes to flash cards, a lot of them (approximately one
fourth of the market size) are still being traded and sold through the unorganized
sector because they are generally bundled with cheap Chinese mobile phone
imports.
Comparative Position of Acer computers with other pc producers in India
When the IBM-PC was introduced in 1981, it soon became the de facto standard
in the PC industry. IBM controlled the market until other PC makers, particularly
Compaq, were able to develop IBM-compatible machines that competed directly
with IBM. By the late-1980s, a number of new competitors had entered the
market with IBM “clones,” including AST, Dell, Gateway 2000, Packard Bell and
Toshiba. These companies competed simply on price, or by specializing in
particular products (such as Toshiba’s laptop PCs) or distribution channels (such
as Dell’s direct sales). A third tier also developed, consisting of no-name PC
clones, or “white boxes,” usually assembled by local firms from standardized
designs and components. Traditionally, first-tier PC companies, such as IBM and
Compaq, competed in the high-end market with better, more reliable PCs, and
more innovative products and services. In turn, they charged a premium over
second and third-tier vendors. In early 1990s, however, with more
standardization of components and experience gained by all manufacturers, the
differences among PCs from different vendors narrowed significantly in terms of
performance, reliability and functionality. When Compaq changed its strategy in
1992 by cutting prices and aggressively expanding its market share, the
competitive structure of the industry changed dramatically. Other premium
brands such as IBM and HP were forced to match Compaq’s prices, and second-
tier vendors lost their price advantage. Companies such as AST and Packard-
Bell have since seen their market shares plummet as a result. One way in which
all PC vendors came to compete was by turning increasingly to Taiwanese
67
companies to provide low cost components, and to build PCs on an OEM basis
(Dedrick and Kraemer, 1998). Brand name PCs from Compaq, Dell, HP and
others were often built by unknown companies such as Mitac, FIC, Inventec and
Quanta. Among the Taiwanese PC makers, only Acer decided to promote its own
brand name PCs around the world, in addition to building PCs for OEM
customers.
By the late 1990s, the PC market was compressed into two tiers: premium brand
names and everyone else. With larger sales volumes and better distribution
channels, the first-tier vendors are able to cut production costs and expand
market share. Their strong presence in corporate markets also enables them to
dominate the market for high margin servers, which sustain their profitability even
as they compete on price in the low end desktop market. Thus, the market is
shifting toward consolidation. The top four PC vendors, Compaq, IBM, HP and
Dell, controlled 36% of the world market in 1997, and their share is expected to
rise in coming years.3 The main victims of this consolidation have been the
second tier producers, such as AST and Packard Bell, who have seen their
market shares plummet, even after receiving large cash infusions from their new
owners, Samsung and NEC.
the growth of the PC industry in the 1980s, a number of distribution channels
evolved to reach a highly diffuse market that included large corporations, small
and medium-sized businesses, schools, government agencies, and consumers.
These include specialty computer dealers and value-added resellers (VARs),
which play a key role in customizing systems and services to meet the individual
needs of business customers. In addition, PCs are now sold by computer
superstores, department stores, electronics stores and other retail outlets, which
provide varying levels of service and support. All of these outlets are supported
by distributors, who handle a number of brands and a wide array of product lines.
This distribution network is referred to as the indirect channel or just “the
channel,” and accounts for the majority of PC sales even today.
68
However, an alternative to the indirect channel has grown rapidly in recent years.
Starting in the mid-1980s, Dell Computer sold PCs directly to end-users over the
telephone, and offered custom configuration to meet customer requirements. As
a result of its effective execution of this direct sales model, Dell’s sales grew to
$2 billion by the end of 1992, and reached $12 billion in 1997.4 Gateway 2000
used a similar strategy aimed at the consumer market and saw its sales grow to
$6.3 billion by 1997.5 Both of these companies were able to reduce their costs by
“cutting out the middleman,” while also developing close direct relationships with
their customers. Starting in the mid-1990s, Dell and Gateway offered sales,
product configuration, and services over the Internet, creating a new distribution
channel for PCs. Selling on the Internet further reduces distribution costs, as the
transaction can be completed entirely electronically. It also expands the vendor’s
reach at a very low marginal cost, because the Internet is a public infrastructure
that can be accessed by customers anywhere in the world.
The combination of direct sales and Internet commerce has shaken the entire PC
industry and forced the leading indirect sellers to react. Market leader Compaq
has responded with a hybrid strategy that includes direct sales and custom
configuration in cooperation with contract manufacturers, VARs and distributors.
Hewlett-Packard and IBM have stayed with the indirect model but are
increasingly outsourcing production to reduce costs. Acer’s position in the PC
industry value chain can be seen in Figure 1. Unlike most PC companies, Acer
produces most of the components that go into its PCs. It also is the only major
company to mix brand name and OEM sales, and has a diversified product line
comparable to the much larger IBM and Compaq.
Acer’s business strategies are presented in Table 1 in comparison to the top
three PC vendors, Compaq, IBM and Dell. Acer has sold its own brand name
PCs through the indirect channel, but is now offering direct sales online in the
U.S. It is also shifting from build to forecast production to build to order, a trend
seen throughout the industry. Acer’s key markets have been small business
69
customers, consumers and OEM customers, whereas major players such as
IBM, Compaq and Dell concentrate heavily on the large corporate sector.
Acer Compaq Dell IBM
Revenues (’98) $6.7 billion $31 billion $12.3 billion $81.7 billion
PC business Brand name and
OEM
Brand name Brand name Brand name
Channel Indirect Indirect Direct Indirect
Production Build to forecast,
but
shifting to build
to
order.
Build to
forecast,
but shifting to
build to order
via
channel and
direct
Build to order Build to
forecast
but shifting to
build to order
via
channel.
Manufacturing
Capability
In-house design,
manufacturing of
components and
peripherals,
notebook
manufacturing.
PC
assembly.
In-house
design,
mother board
manufacturing,
PC
assembly.
Notebooks
Outsourced
In-house
design,
outsourcing of
motherboards.
PC
assembly.
Notebooks
outsourced
In-house
design,
manufacturing
of
components
and
notebooks. PC
assembly;
outsource
consumer PCs
Product lines PCs,
peripherals,
components,
semiconductors,
software,
PCs,
peripherals,
plus large
systems
and services
PCs,
peripherals
Large
systems,
PCs,
components,
peripherals,
70
services with
DEC
acquisition
software,
services,
Customers/
Markets
Small & medium
corporate users;
leader
in developing
countries
Large, small
corporate &
consumer; US
and
global markets
Large, small
corporate &
consumer;
U.S. and
Europe,
expanding
globally
Large, small
corporate &
consumer;
U.S.
and global
markets
Comparative Position of Taiwan IT Industry with India
In the past decade, India’s information technology services industry emerged as
an important player in the global IT services market. The country’s share of this
market, valued at more than $350 billion, increased from 1.5 percent in 2000-
2001 to 1.9 percent in 2002-2003. While worldwide revenue of IT services grew
less than 2 percent during this period, India’s IT services industry experienced 22
percent revenue growth1,2—a pace comparable to the rise in Hong Kong’s
electronics industry during the 1970s.3 The outsourcing of IT services by
multinational corporations (MNCs) is driving this rapid growth.
For example, General Electric’s oft-cited 70-70-70 strategy mandates the
outsourcing of 70 percent of its IT service requirements, of which 70 percent are
given to strategic suppliers, who in turn execute 70 percent of the work outside
high-wage countries.
GE currently subcontracts more than $500 million worth of IT services to
India, representing about 8 percent of the country’s IT services export market.
A major factor underlying the boom in IT service outsourcing is the need for
MNCs to remain globally competitive by relocating labor-intensive operations
overseas to low-wage countries.
71
By moving away from the traditional corporate model of vertical integration to a
more flexible “quasi-integrated” model that links various networks of suppliers
and distributors, firms seek to complement high economies of scale with low
input costs.3-7
The information technology (IT) is one among the few modern industries that has
not only increasingly become an important industry in itself but also emerged as
enabling part of infrastructure for efficiency gain in other sectors of the world
economy. As an industry, it has increasingly become a significant contributor to
the gross domestic product (GDP) growth and employment generation.
As an enabling factor, IT has become an important source of modernization and
restructuring of the overall economic activities in several economies in the world,
including India and Taiwan. The performance of this industry has been crucial for
both developed and developing economies.
One of the common and salient features of both India and Taiwan is that both
economies are known for their IT prowess in the world. IT industry has played a
key role in putting both countries on the global map. Export is the dominant
component of total revenue of the IT industry in both the countries.
For instance, in 2010 the Indian IT industry is estimated to report a revenue of
US$ 73.1 billion, of which around 69.0 percent would comprise the export.
However, their specialisation and competencies within the IT industry are starkly
different from each other. India is known for its ability in software and services
and is one among leading exporters of same, while Taiwan is famous for its IT
hardware products and is one among top exporters in the world.
The IT industry in India has grown at much faster rate than the average GDP
during the same period. The share of the industry has increased both in GDP
and total external trade, especially in country's exports.In 2010, the shares of IT
72
industry in India's GDP and total exports (merchandise and services) were more
than 6.0 percent and around 26 percent respectively. Similar to India, IT industry
has played a critical role in Taiwan's economy.
The industry has not only substantially contributed to the GDP but IT related
products have become some of the largest contributors to the Taiwan's export
basket. In fact, Taiwan is the largest supplier of some IT goods, such as
Notebook PC and LCD Monitors etc. in the world.
The biggest contribution of IT industry in India has been in terms of its export
earnings. India has become one of the largest trading countries in services in the
world and IT has played the most critical role in this phenomenon.
As can be observed from the figure 4, total Indian exports (goods and services)
have increased at a phenomenal rate during last ten years. Total exports have
increased from US$ 59.0 billion in 2000 to about US$ 286 billion in 2008.
However, the global financial crisis has had an adverse impact on export
earnings which decreased to US$ 263 billion in 2009.
Comparative Position of YOKO in India
Today people like to secure every moment of their lives. The best thing
about CCTV cameras is that they provide seen every moment in instant.
There has been a subsequent rise in the importance of CCTV cameras in
India over the last few years. One of the reasons behind this growing
importance is largely due to the increase in social growth.
India is home to a host of domestic and foreign CCTV camera
manufacturers. But there are a few CCTV camera brands that rule over
the industry. There are many CCTV cameras available in the market, but
when you need to security system then go with trusted brands. The top
digital camera brands in India are Sony, Canon and Kodak.
The CCTV camera market in India has shown significant growth over the
last few years. The Growth of the Indian CCTV camera market grew by
73
almost 10 to 12% every year. Although the Indian electronics market has
numerous players but there are just a few companies that dominate the
CCTV camera market in India.
POSITION OF YOKO
"For YOKO, India is one of the most prospective markets. Of our
worldwide sales, India contributes only one per cent. Within the next three
years, we want to take this to 5-6 percent."
The company hopes its brand name will help it increase the market share
and is spending more on promotion this fiscal.
YOKO had less than 15 percent market share among the Mantra Softech
last year. This year YOKO is targeting 20 per cent with a lot of marketing
activities.
74
Trade between India And Taiwan
75
Foreign Trade of Taiwan
76
PRESENT POSITION AND TRADE OF BUSINESS IN INDIA
There is an impression that India is world class in information technology
(IT). This is mainly due to the success of India's software industry and
77
contribution of people of Indian Origin in IT revolution in the United States.
The fact that IT sector in the country has increased at an incredible rate of
35% per year for the last 10 years reinforces the view that India is world class
in IT. At the same time, India remains a poor country both in terms of
the per capita income (PCI) and the human development index (HDI). As
per 2004 Human Development Report, India is among the countries with the
worst disparities between their gender related development
index (GDI) and HDI values. Although the per capita income in the country during
the last 10 years has increased at the rate of 4.1% per year, more than 250 million
people still live below the official poverty line. While some have
benefited from tremendous economic growth over the last decade,
however, for India's poorest, there has been very little to celebrate. There is no
doubt that inequality in income and inequality in various infrastructure
facilities such as access to clean drinking water, decent housing, proper
healthcare, good education, etc., is rising in the country.
This paper tries to examine whether IT can contribute to India's economic
development in a broader way. It also examines the role of public policy,
arguing that government should promote IT use and make it accessible
to every section of the society besides removing the infrastructure
constraints, strengthening the training and education system, and
introducing the flexible labor laws.
In IT, India has built up valuable brand equity over the years. In IT enabled
services (ITES), India is emerging as one of the most preferred destinations for
business process outsourcing (BPO). The importance of IT industry in the
Indian economy can be gauged from the fact that its contribution to the
national gross domestic product (GDP) has increased by seven fold in a
span of just one decade from 0.6% in 1994-95 to 4.3% in 2004-05 (Table 1 on
Assuming that the Indian economy and IT sector will replicate the past
six years performance during the next six years and value added in IT sector
is two third of its sales revenue, the contribution of IT sector to
national GDP will be around 8.5% during the year 2010-11, quite similar to that in
5
1
6
78
the United States (US) today. The IT sector revenue is expected to increase
from Rs. 1276 billion in 2004-05 to Rs. 6435 billion in 2010-11.
Hardware segments. Although IT services and software continues to remain
the key contributor to the IT sector's revenues, ITES-BPO is emerging as
the fastest growing segment of the sector (Figure 1). Between the year 2000-
01 and 2004-05, contribution of ITES-BPO to the IT sector's total revenue
increased from 7.4% to 20.2% whereas the
Corresponding figure for IT services and software fell from 64.5% to 58.5%.
Presently, ITES-BPO segment of the industry is almost as big as the hardware
segment.
Services and Software vs. Hardware
The services and software segment of I T industry in India is more robust
than its hardware counterpart. India has become one of the most favored
destinations for sourcing software and ITES. The revenue of IT services &
software and ITES-BPO taken together reached US $ 22.2 billion during 2004-
05 out of which US $ 17.3 billion was earned through export. India ranks high in
comparison to its competitors such as China, Philippines, Ireland,
Australia, Canada, etc.,
Complications in the local indirect tax structure and high rates of excise
and sales taxes have only added to the industry's woes. It is also evident from
the fact that while pharmaceutical and automobile companies are encouraged
to do R&D through a 150% write-off on expenditure, no such facility has ever
been extended to hardware. Again, while labor laws have been amended for IT
services & software and ITES-BPO segment, no such initiative has been
taken for the hardware segment). Prof i tably manufacturing
semiconductors and other sophisticated hardware components typically
requires infrastructure, large s c a l e investments in capacity, and
accumulated experience that India does not possess, and is not in a position to
acquire easily (Singh, 2002). However, India does perform numerous hardware
assembly tasks internally, almost entirely for the domestic market.
79
Hardware components are typically imported from the Southeast or East Asian
countries. As was the case with several East Asian countries, it is also possible
for India to transform its capability from assemblers of sophisticated components
produced elsewhere to producer of hardware through learning by doing. The
design of hardware typically involves the development and use of
a p p r o p r i a t e software codes, therefore, hardware design could be a
promising area for the Indian IT sector. It is imperative that India should focus
on the areas where software expertise matters more than the manufacturing
infrastructure.
Obviously, it will still require significant improvement in infrastructure,
broader labor law reform, and careful assessment of market demand. As Desai
(2000) pointed out, there is a need for flexible labor laws not only to boost
hardware segment of the industry but also to realize full benefits of growth in
India's IT sector. In fact, a flexible and transparent regime of labor laws would
contribute to increased employment and productivity and, therefore, appropriate
legislation would be in the interest of both workers and manufacturers (Rigidity in
labor laws is one of the main reasons of sluggish growth in employment in
India. It is amazing to know that India's employment elasticity of output
growth is declining dramatically, e.g., from 0.52 during 1983-1994 to 0.16
during 1993-2000.Therefore, the growth rate of employment declined from
2.7% per annum during 1983-94 to 1.1% during 1993-2000 when the growth
of output, i.e., GDP, accelerated from 5.2% to 6.7% per annum).
Product with India and Gujarat
In order to develop distribution channels around the world for its brand name
products, Acer developed what it calls its “global brand, local touch” strategy. The
essence of the strategy is to work with local partners, providing them with a well-
known brand name supported by Acer’s low-cost global manufacturing
resources. In exchange, Acer gained access to local markets without having to
develop capabilities on its own for each market. To implement the strategy, Acer
80
formed joint ventures with partners in several foreign markets in which the
partners take a majority interest. With the joint ventures, the complementary
assets of both parties (global brand name and local market knowledge) are
combined to enhance both parties’ competitive position. One aspect of Acer's
strategy has been to raise money in local financial markets and even list its
subsidiaries on local stock exchanges in Mexico and Singapore. This gives the
company access to a wider range of capital resources and enables it to provide
stock option incentives to local managers based on the bottom line performance
of their own businesses. Acer has stated a goal of listing in 21 markets by the
early 21st century, although its recent troubles and reorganization make that
unlikely. The “global brand, local touch” strategy allowed Acer to expand quickly
into foreign markets without a large initial investment. Its partners share the
financial successes as well as the risks, and since the local partners have a
majority interest, they play a major role in the day-today management of the joint
ventures.
Selling PC brand from 1991 to 1996.9 Likewise, Acer Computer International has
made Acer a leading brand in a number of emerging markets, particularly in
Southeast Asia. Acer is unique among PC makers in its willingness to give up
control of its local operations. Doing so motivates each unit’s management team
to maximize its own growth and profitability, which in turn will also directly benefit
the Acer Group’s overall success. On the other hand, this decentralized structure
created problems in coordinating corporate activities and in managing inventory
and logistics across the company.
The bicycle maker Giant Manufacturing has been surprising. By 1980, Taiwan
was the largest exporter of bicycles in the world and today with over $ 400 million
in total sales; Giant Manufacturing is one of the largest bicycle producers in the
81
world. Indeed, in 2001, Giant was named one of Fortune Magazine’s ‘20 best
small companies in the world’ (http://money.cnn.com/magazines/fortune).
Perhaps almost as surprising as Giant’s rise is the fall of the old guard of bicycle
producers.
Recent figures from the Interbike Directory (www.interbike.com) show that 94.5%
of bike riders ride for recreation or fitness, while 5.2% do so for transportation,
and 0.03% for racing. In 1984, Taiwan was exporting 6,328,000 bikes with a total
value of $ 281,596,000 and an average cost of $ 44.5. The majority of these
were low-cost bikes for large retail outfits. By 1990, Taiwan was exporting
8,942,000 bikes with a total cost of $ 909,937,920 and an average cost of $
101.76.
This was the period in which Taiwanese firms (led by Giant) began to produce
high-end bikes for us bike companies. In 1996, 9,692,000 bikes were sold for $
984,185,670 at an average price of $ 101.55. It is interesting to notice that no
significant change in the average value of bikes exported occurred between 1990
and 1996.
What happened was rather that Taiwanese companies acting as outsourcers
decided to sell their own brand. From when Giant launched its own brand in 1985
to today, it has gone from producing all subcontracted bikes for others to doing
this with only a third of their production – with the other two-thirds produced for
their own label.
Despite a bad performance of us bike companies in the last decade, the bike
industry as a whole did relatively well in the 1990s. In 2000, Managing Global
Transitions Innovation and the Interrelatedness of Core Competencies 55 the
industry as a whole (including retail value of bicycles, related parts, and
accessories) was worth about $ 5.0 billion. In 1995, it was worth $ 5.2 billion, in
1994, $ 5.0 billion, in 1993, $ 4.3 billion, in 1992, $ 4.5 billion, in 1991, $4.0 billion
and in 1990, $3.6 billion.
82
These numbers suggest that the industry is mildly healthy with a general trend of
growth. But despite these seemingly placid numbers, the bicycle industry was
undergoing dramatic changes.
But the specific nature of the outsourcing that Schwinn and others did with Giant
allowed Giant to crack the middle- and high-quality us bike market despite
barriers to entry. Economies of scale were not an issue for Giant or a few other
outsourcers in Taiwan (Makadok 1999; Raff 1991; Wernerfelt and Karnani 1987).
Giant was already producing millions of bikes for export to us companies; it was
therefore able to divert excess capacity after Schwinn scaled back manufacturing
in 1985 by introducing its own line first in Europe, and, in 1987, in the us. It was
able to produce, with maximum cost efficiency, even when it was selling only a
few bikes under its own brand because its factories were running at near full
capacity for others.
Today, after over a decade of double-digit growth, Two-thirds of Giant bikes are
produced under its own brand. Schwinn began a trend which led to the erosion of
barriers to entry in the industry as a whole. This effect was not achieved by a
destruction of any specific.
Difficult labor relations in the us, combined with high domestic wages were
causing a flood of companies to outsource to Asia (as well as, to a more limited
extent, South America). Taiwanese companies were already exporting a large
number of low- quality $ 40–50 bicycles into the us.
But the high- and middle-quality bike market was not like some other us goods,
such as vcr’s and tv’s, which were judged largely on simple price/quality ratios
and ‘gee-wiz’ features. High-quality bike making was more and more becoming
an art which required a close connection to enthusiasts, an insight into trends,
and craftsmanship. The high-end($ 1,000–4,000) bike market was growing at
double-digit rates
Nevertheless, Schwinn’s decision to manufacture in Asia seems to have been in
some way inevitable sooner or later. Once any major bike maker had outsourced,
83
taking advantage of cheaper wages abroad, then, in order to keep up with their
competitors in a cost/quality calculation, all major middle- and upper-end bike
makers were also pressured to manufacture in a low-cost nation in order to
continue to compete on cost (with the exception of a few specialty bike producers
within niche markets).While collusion (which is illegal) might have avoided this
problem if enough major players agreed not to move manufacturing abroad,
other, legal options, could have been taken when faced with such a dilemma.
Looking to outsource in the middle- and high- quality bike market, have done?
The most obvious place to look for such a strategy is in the Giant’s recent move
to produce in China, the new low-cost center for global production, where wages
are 1.16 $/hour (5.41 $/hour in Taiwan).
This is a 1: 0.21 Taiwan/China wage ratio, higher than the 2.44 :1 us/Taiwan ratio
(13.42 $/hour vs. 5.41 $/hour). Bike production in China is growing; China is
currently producing 21% of all bikes sold in the World.
Giant’s founder King Liu has committed himself to producing and selling bikes in
China. In 1996, Giant made 550,000 bikes in China; in 2001, it was expecting to
make 3.2 million bikes there, two-thirds of them for export. But rather than hiring
Chinese firms to produce their bikes, Giant and other Taiwanese bike firms
opened fully-owned subsidiaries in China.
In a recent board meeting, Liu, standing in front of pictures of racing bikes, said
the following about the recent competition in production and distribution in China:
‘A lot of the competition there has actually been companies backed by Taiwan.
It’s just that they’re over in China now’. Continued production in Taiwan and in
Denmark has maintained Giant’s closeness to other core markets and designed
an advantage.
Giant produces each and every one of its top bikes in Taiwan, not China, by the
same group of highly skilled engineers. Its design teams in the us, Europe, and
Asia are constantly working on improving design, trying out new designs in Giant
84
factories, and responding to demands of regional managers by creating whatever
these managers believe will be popular for sale in that region.
While manufacturing in China makes sense, especially with Giant in complete
control of the factories, Giant has no plans to close down its factories in the
Netherlands or Taiwan. Giant has in fact recently invested in a new 11,520
sq.meter facility in Europe.
These factories, which are close to their markets, are seen as valuable resources
for innovation and learning. Making bikes in Europe may not be cheap, but it is
the only way to truly understand and respond to European demands and to pick
up tricks that are then brought back to Taiwan in the bi-annual meeting of
designers and engineers from around the world. Innovations are then spread
throughout the company.
By expanding into China, Giant is less likely than Schwinn to erode its core
capabilities. In fact, since China was the source of over half of Giant’s profits in
2000, it seems likely that Giant will use its manufacturing capacity in China to link
itself tightly with the needs and dynamics of that market Chinese factories will
increasingly become more than just centers for producing bikes to be exported;
they will increasingly become linked sales in China and will use production to fuel
innovation for Chinese factories.
The close link between production and innovation will be crucial. As information
and demands from Chinese distributors are instantly transformed into products
that can hit the market, Giant is likely to turn its Chinese factories into more and
more valuable centers for capabilities and innovation.
POLICIES AND NORMS OF TAIWAN FOR IMPORT/EXPORT
The liberalization of Indian economy started with the external sector.
The Rupee was devalued in two stages in July 1991. This was
immediately followed by abolition of direct export subsidies. Import
85
licensing was abolished for many items, including capital goods. A new
type of import licence called Exim Scrip was introduced. Exim Scrip was
available against export of goods and it was freely transferable in the
market. The licence was valid for import of a broad range of goods. So,
importers wanted Exim Scrips but only exporters could earn them. The
premium on sale of the Exim Scrip was an incentive for the exporters.
6.1.02 In February 1992, the Union Budget introduced a dual exchange
rate mechanism. Under the Liberalised Exchange Rate Mechanism
(LERMS), Reserve Bank of India sold foreign exchange for essential
purposes at official exchange rates. Other importers had to buy foreign
exchange at market determined rates, whereas the exporters could sell
foreign exchange at a composite rate i.e.60% at market rates and
40% at official exchange rates. Exim Scrips were abolished after dual
exchange rate mechanism was introduced.
6.1.03 The liberalization process called for abolition of controls. The 1992-
97 Export and Import Policy (Exim Policy) heralded historic changes. It
was the first five-year Policy. It was co-terminus with the Eighth Five
Year Plan. The Policy recognized that trade can flourish only in a regime
of substantial freedom. It reinforced the direction set by the trade policy
reforms initiated in July 1991. The Policy complemented the changes in
industrial and fiscal policies.
Hand Book on Foreign Trade Policy and Guide to Export & Import
The fundamental feature of the new Policy was to substantially
eliminate licensing, quantitative restrictions and other regulatory and
discretionary controls. Earlier, all goods were restricted for imports
unless specifically permitted for imports. The new Policy ordained
that all goods could be freely imported unless specifically
restricted, through a Negative List of Imports.
The Negative List was kept as small as possible and the Policy of the
Govt. was to prune the list from time to time as the economy gained in
86
strength. The restrictions were on the grounds of public policy. The
restrictions were considered necessary for economic reasons as well as
on grounds of safety, security, environment, employment and the like.
In the 1992-97 Policy, the List of Restricted Items consisted of 11 categories
as under: (a) Consumer Goods (11 entries) (b) Precious, Semi-precious
and other stones (5 entries) (c) Safety, Security and related items (6
entries) (d) Seeds, Plants and Animals (4 entries) (e) Insecticides and
Pesticides (2 entries) (f) Electronic Items (9 entries)(g) Drugs and
Pharmaceuticals (9 entries) (h) Chemicals and Allied Items (2 entries) (i)
Items Relating to Small Scale Sector (16 entries) (j) Miscellaneous Items
(15 entries) (k) Special Categories (2 entries) 6.1.07 Also, eight categories
of items like Fertilizers, Petroleum Products, Edible Oils etc. imported only
by Designated Canalising Agencies like STC, MMTC, IOC etc. but for which
the Govt. could grant licences to others to import.
4) Present Position and Trend of Business (import / export) with India /
Gujarat during last 7 years
Year Exports to
India
Growth
compared
to previous
year (%)
Imports
from India
Growth
compared
to previous
year (%)
2004 1,070.2 -- 860.5 --
2005 1,567.9 46.51 857.2 - 0.38
2006 1,471.1 - 6.17 1,245.3 45.28
2007 2,342.0 59.2 2,542.4 104.16
87
2008 3,007.5 28.42 2.338.4 - 8.02
2009 2,531.4 -15.83 1,623.9 -30.56
2010
(Jan-Apr) 1,008.7 23.3 1,054.7 242.2
Reference: Statistics of export and import between Taiwan and India (2005-10)
(1 unit =1 million USD)
Among the "BRICs" (Brazil, Russia, India and China), India is the closest country
to Taiwan besides China. In addition to its geographical proximity, India offers
vast labour, a stable economy and an advanced ICT investment environment. It
is the 13th largest export market for Taiwan. India ranks higher, or has surpassed
the UK, Australia, Italy, Canada, France, Brazil and Russia, and offers much
better trade growth than these other trade partners.
According to a report by the Economist Intelligence Unit (EIU), India will
surpass China to become the world's fastest growing economy by 2018. In
addition, the World Economic Outlook report by the International Monetary Fund
(IMF) estimates India's economic growth rate to be 7 per cent, way above than
the 2.1 per cent of the developed countries. The report ranked India as the
world's second largest market. India and China, as per the report, are the two
major engines for global economic growth.
India has become an important market for Taiwan. Although Taiwan
entered the Indian market later than the Japanese and Koreans, it has still
managed to achieve an incredible high rate of growth (59 per cent and 28 per
cent in 2007 and 2008, respectively).
88
Yes, last year imports declined by 15.8 per cent over the previous year,
but various state projects actually grew by 26.6 per cent in Q4. The first three
months of this year saw exports expand by 33.5 per cent to reach $765,470
million. It is projected that Taiwan will increase exports to India this year by at
least 20 per cent.
India's vast market, labour pool and market beckons many prospects.
TAITRA has been organising Emma Expo India since 2007 in order to enhance
Indo-Taiwan business ties and promote greater industry interaction and
technology transfer and investment opportunities.
Policies and Norms of country Taiwan for Acer computers for import
export including licensing, permission, taxation etc
How does Taiwan view its relations with India?
India’s rapid economic growth has of late outpaced that of Japan and the US by
more than three-fold, demonstrating its strong potential for development. India,
the largest country in south Asia, is also one of the four Bric nations. Therefore,
Taiwan attaches great importance to its relations with India. Our government has
encouraged Taiwanese enterprises to redirect investments into India, an
economic powerhouse, to avoid putting all of Taiwan’s eggs in one basket, I
mean mainland China. Premier Wu Den-yih has instructed government agencies
to formulate concrete projects to boost investment in India and lessen
dependence on mainland China market. We hope that India will reciprocate by
adopting a more pragmatic and flexible policy towards Taiwan
.India-Taiwan trade is just about 1 per cent of your country’s total foreign
trade. How can the two sides boost their bilateral trade?
Since we established representative offices in each other’s countries in 1995, all
facets of our relations have grown steadily. Two-way trade has jumped from
$930 million to a projected $5 billion this year, an incredible increase of 600 per
89
cent. However, compared with Taiwan’s bilateral trade of $70 billion with
southeast Asia and $200 billion with mainland China, clearly there is ample room
for further development of trade relations.
We encourage Taiwanese business to invest in India. The most effective way to
do this is to foster people’s understanding about India. Considering your
country’s immense size and the higher concentration of Taiwanese in southern
India, we hope to open another office there. Taiwanese make approximately nine
million trips overseas every year, but primarily to the US, Japan, Europe and
southeast Asia. With large number of Buddhists in our country and India being
the cradle of Buddhism, your country has much to attract the Taiwanese. We are
confident that Taiwanese tourists would flock to India, if visa waivers or landing
visas could be arranged between us.
POLICY AND NORMS FOR IMPORT/EXPORT IN INDIA
India’s 'One-China' policy stops it from having official diplomatic relation with
Taiwan or the Republic of China (RoC).
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New Delhi recognises only the People’s Republic of China (the mainland China)
and not the RoC’s claim to be the legitimate government of territorial China. But
ever since the two countries set up representative offices in each other’s capitals
in 1995, the relations between them have grown. In an interview with Anirban
Bhaumik of Deccan Herald, who was recently in Taipei, Taiwan’s foreign minister
Timothy Yang expresses the hope that India would make its policies towards the
RoC more flexible to boost the trade and economic ties. Excerpts:
India’s rapid economic growth has of late outpaced that of Japan and the US by
more than three-fold, demonstrating its strong potential for development. India,
the largest country in south Asia, is also one of the four Bric nations. Therefore,
Taiwan attaches great importance to its relations with India. Our government has
encouraged Taiwanese enterprises to redirect investments into India, an
economic powerhouse, to avoid putting all of Taiwan’s eggs in one basket, I
mean mainland China. Premier Wu Den-yih has instructed government agencies
to formulate concrete projects to boost investment in India and lessen
dependence on mainland China market. We hope that India will reciprocate by
adopting a more pragmatic and flexible policy towards Taiwan
Since we established representative offices in each other’s countries in 1995, all
facets of our relations have grown steadily. Two-way trade has jumped from
$930 million to a projected $5 billion this year, an incredible increase of 600 per
cent. However, compared with Taiwan’s bilateral trade of $70 billion with
southeast Asia and $200 billion with mainland China, clearly there is ample room
for further development of trade relations.
We encourage Taiwanese business to invest in India. The most effective way to
do this is to foster people’s understanding about India. Considering your
country’s immense size and the higher concentration of Taiwanese in southern
India, we hope to open another office there. Taiwanese make approximately nine
million trips overseas every year, but primarily to the US, Japan, Europe and
91
southeast Asia. With large number of Buddhists in our country and India being
the cradle of Buddhism, your country has much to attract the Taiwanese. We are
confident that Taiwanese tourists would flock to India, if visa waivers or landing
visas could be arranged between us.
The Kuomintang government led by President Ma Ying-jeou is pursuing a flexible
diplomatic policy, stressing that both sides of the Taiwan Strait have to face
reality, pioneer a new future, shelve controversies and pursue a win-win
situation. During the four rounds of cross-strait talks so far, 12 agreements and
one MoU were concluded, covering direct air and sea transportation, direct postal
service, opening of Taiwan to tourists from mainland China, financial cooperation
and food safety.
Mainland China is Taiwan’s largest export destination. We hope both sides can
sign an economic cooperation framework agreement (ECFA) soon to boost two-
way trade, safeguard the investments and intellectual property rights of
Taiwanese business people, and attract more foreign investors to Taiwan. We
hope that deepening economic and cultural cooperation with mainland China will
help lay aside our prejudices and find a practical solution to cross-strait disputes.
The FTA between Asean and mainland China creates a free trade area with 1.8
billion people. In addition to its potential economic and commercial impact, it is
likely to result in diplomatic and psychological marginalisation of Taiwan in the
short term. To avoid this, we have concluded two rounds of negotiations with
mainland China. We cannot allow ourselves to fall behind when regional
integration gains momentum in Asia.
Taiwan, India and mainland China are all in Asia. For the sake of regional peace
and stable development, I firmly believe, no country is willing to see conflict here.
Despite a few trade and border disputes, relations between mainland China and
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India have gradually improved. We would be happy to see both countries agree
to shelve their differences to pave the way for closer bilateral relations.
India and Taiwan are both democratic countries and share the same values, so
we hope that India will seize this opportunity to further develop Taiwan-India
relations.
No. We believe that Beijing understands our need to upgrade our self-defence
capabilities. We are grateful to President Barack Obama administration for
reiterating US commitment to abide by its arms-sale obligations as per its Taiwan
Relations Act. On Jan 29, 2010, the Obama administration officially notified
Congress of the new arms sales package to Taiwan, reassuring us that the US is
firmly behind us. This boosts our confidence and our ability to engage in peaceful
dialogue with mainland China.
Policies and Norms of India for Import or export including licensing permission,
taxation etc
Industrial Approval Policy
The major highlights of Industrial Approval Policy include the following:
Industrial Licensing has been virtually abolished in the Electronics and
Information Technology sector except for manufacturing electronic
aerospace and defence equipment.
There is no reservation for public sector enterprises in the Electronics
and Information Technology industry and private sector investment is
welcome in every area.
Electronics and Information Technology industry can be set up
anywhere in the country, subject to clearance from the authorities
responsible for control of environmental pollution and local zoning and
land use regulations.
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Large Industries (where investment in plant and machinery is more
than Rs.10 crores) and exempted from licensing are only required to
file information in the prescribed Industrial Entrepreneurs'
Memorandum (IEM) with the Secretariat for Industrial Assistance (SIA),
Department of Industrial Policy and Promotion, Ministry of Commerce
& Industry, Government of India and obtain an acknowledgement.
Immediately after the commencement of commercial production, Part
B of the IEM has to be filed. No further approval is required. Forms can
be downloaded from the website of the Department of Industrial Policy
and Promotion, Ministry of Commerce & Industry
Small Scale Industries (where investment in plant and machinery is
more than Rs.25 lakh but less than Rs.5 crores) and Medium
Industries (where investment in plant and machinery is more than Rs.
5 crores but less than Rs. 10 crores) are required to register with the
District Industries Centre (DIC).
Foreign Investment Policy
India welcomes investors in Electronics and IT sector. Government of
India is striving to bring greater transparency in policies and procedures to
provide an investor friendly platform.
A foreign company can start operations in India by registration of its
company under the Indian Companies Act 1956. Foreign equity in such Indian
companies can be upto 100%. At the time of registration it is necessary to have
project details, local partner (if any), structure of the company, its management
structure and shareholding pattern.
A joint venture entails the advantages of established contracts, financial
support and distribution-marketing network of the Indian partner. Approval of
foreign investments is through either automatic route or Government approval.
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Government of India facilitates Foreign Direct Investment (FDI) and
investment from Non-Resident Indians (NRIs) including Overseas Corporate
Bodies (OCBs), predominantly owned by them to complement and supplement
domestic investment. Foreign technology induction is encouraged both through
FDI and through foreign technology collaboration agreement. Foreign Direct
Investment and Foreign technology collaboration agreements can be approved
either through the automatic route under powers delegated to the Reserve Bank
of India (RBI) or otherwise by the Government
Automatic Approval
Foreign Direct Investment upto 100% is allowed under the automatic route
from foreign/NRI investor without prior approval in most of the sectors including
the services sector. Foreign Direct Investment in sectors/activities under
automatic route does not require any prior approval either by the Government or
RBI (For details please refer to RBI website at. In pursuance of Government’s
commitment to further liberalise the Foreign Direct Investment (FDI) regime, all
items/activities have been placed under the automatic route for FDI/NRI and
OCB investment, except the following:
All proposals that require an Industrial Licence, which includes:-
o The item requiring an Industrial Licence under the Industries
(Development & Regulation) Act, 1951
o Foreign investment being more than 24% in the equity capital of
units manufacturing items reserved for small scale industries
o All items which require an industrial licence in terms of the
locational policy notified by Government under the New Industrial
Policy of 1991.
All proposals in which the foreign collaborator has a previous venture/tie
up in India.
All proposals relating to acquisition of shares in an existing Indian
company in favour of a foreign/NRI/OCB investor.
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All proposals falling outside notified sectoral policy/caps or under sector in
which FDI is not permitted and/or whenever any investor chooses to make
an application to the FIPB and not to avail of the automatic route.
Fiscal Policy
The salient features of the Fiscal Policy as applicable to the Electronics
Hardware Sector are as follows:
Peak rate of customs duty is 10%. The customs duty on 217 Information
Technology Agreement (ITA-1) items* is zero%. The Agreement covers
the following main categories of products and components: Computers
and peripherals; Telecommunication equipment; Electronic components
including semiconductors; Semiconductor manufacturing equipment;
Software and Scientific instruments.
All goods required in the manufacture of ITA-1 items have been exempted
from customs duty subject to Actual user condition.
Customs duty on specified raw materials / inputs used for manufacture of
electronic components and optical fibres and cables is 0%.
Customs duty on specified capital goods used for manufacture of
electronic goods is 0%.
Customs duty on LCD Panels and Set Top Box is 5%.
Parts, components and accessories of mobile handsets including cellular
phones are exempted from basic customs duty and excise duty/CVD.
Full exemption from 4% special CVD on parts for manufacture of mobile
phones and accessories has been reintroduced for one year i.e. upto
6.7.2010.
The mean rate of excise duty (CENVAT) is 8%.
Microprocessors, Hard Disc Drives, Floppy Disc Drives, CD ROM Drives,
DVD Drives/DVD Writers, Flash Memory and Combo-Drives are exempted
from excise duty.
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VAT on IT items is @4% and non-IT electronic items are @12.5%. CST is
2%.
Foreign Trade Policy
In general, all Electronics and IT products are freely importable, with the
exception of some defence related items. All Electronics and IT products,
in general, are freely exportable, with the exception of a small negative list
which includes items such as high power microwave tubes, high end
super computer and data processing security equipment.
Second hand capital goods are freely importable.
Zero duty Export Promotion Capital Goods scheme (EPCG) which allows
import of capital goods at zero% customs duty is available to exporters of
electronic products. The export obligation under EPCG Scheme can also
be fulfilled by the supply of Information Technology Agreement (ITA-1)
items to the DTA provided the realization is in free foreign exchange.
Special Economic Zones (SEZs) are being set up to enable hassle free
manufacturing and trading for export purposes. Sales from Domestic Tariff
Area (DTA) to SEZs are being treated as physical export. This entitles
domestic suppliers to Drawback/ DEPB benefits, CST exemption and
Service Tax exemption.
Supplies of Information Technology Agreement (ITA-1) items and notified
zero duty telecom/electronic items in the Domestic Tariff Area (DTA) by
EOU/EHTP/STP/SEZ units are counted for the purpose of fulfilment of
positive Net Foreign Exchange Earnings (NFE).
The import of second hand computers including personal computers/
laptops and refurbished/reconditioned spares are restricted for import.
However, second hand computers, laptops and computer peripherals
including printer, plotter, scanner, monitor, keyboard and storage units can
be imported freely as donations by the following category of donees
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subject to the condition that the goods shall not be used for any
commercial purpose and are non-transferable:
o Schools run by Central or State Government or a local body
o Educational Institution running on non-commercial basis by any
organization
o Registered Charitable Hospital
o Public Library
o Public funded Research and Development Establishment
o Community Information Centre run by the Central or State
Government or local bodies
o Adult Education Centre run by Central or State Government or a
local body
o Organization of the Central or State Government or a Union
Territory
India’s Foreign Trade Policy and Procedures are available on the website of the
Department of Commerce, Ministry of Commerce & Industry
Policies and Norms of India for Import & Export
Import Policy:-
1. The liberalization of Indian economy started with the external sector.
The Rupee was devalued in two stages in July 1991. This was immediately
followed by abolition of direct export subsidies. Import licensing was abolished for
many items, including capital goods. A new type of import licence called Exim
Scrip was introduced. Exim Scrip was available against export of goods and it
was freely transferable in the market. The licence was valid for import of a broad
range of goods. So, importers wanted Exim Scrips but only exporters could earn
them. The premium on sale of the Exim Scrip was an incentive for the exporters.
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2. In February 1992, the Union Budget introduced a dual exchange rate
mechanism. Under the Liberalised Exchange Rate Mechanism (LERMS),
Reserve Bank of India sold foreign exchange for essential purposes at official
exchange rates. Other importers had to buy foreign exchange at market
determined rates, whereas the exporters could sell foreign exchange at a
composite rate i.e.60% at market rates and 40% at official exchange rates. Exim
Scrips were abolished after dual exchange rate mechanism was introduced.
3. The liberalization process called for abolition of controls.The 1992-97
Export and Import Policy (Exim Policy) heralded historic changes. It was the first
five-year Policy. It was coterminus with the Eighth Five Year Plan. The Policy
recognized that trade can flourish only in a regime of substantial freedom. It
reinforced the direction set by the trade policy reforms initiated in July 1991. The
Policy complemented the changes in industrial and
fiscal policies.
4. The fundamental feature of the new Policy was to substantially
eliminate licensing, quantitative restrictions and other regulatory and
discretionary controls. Earlier, all goods were restricted for imports unless
specifically permitted for imports. The new Policy ordained that all goods
could be freely imported unless specifically restricted, through a Negative
List of Imports.
5. The Negative List was kept as small as possible and the Policy of the
Govt. was to prune the list from time to time as the economy gained in strength.
The restrictions were on the grounds of public policy. The restrictions were
considered necessary for economic reasons as well as on grounds of safety,
security, environment, employment and the like.
6. In the 1992-97 Policy, the List of Restricted Items consisted of 11
categories as under:
(a) Consumer Goods (11 entries)
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(b) Precious, Semi-precious and other stones (5 entries)
(c) Safety, Security and related items (6 entries)
(d) Seeds, Plants and Animals (4 entries)
(e) Insecticides and Pesticides (2 entries)
(f) Electronic Items (9 entries)
(g) Drugs and Pharmaceuticals (9 entries)
(h) Chemicals and Allied Items (2 entries)
(i) Items Relating to Small Scale Sector (16 entries)
(j) Miscellaneous Items (15 entries)
(k) Special Categories (2 entries)
7. Also eight categories of items like Fertilizers, Petroleum Products,
Edible Oils etc. imported only by Designated Canalising Agencies like STC,
MMTC, IOC etc. but for which the Govt. could grant licences to others to import.
8. The Policy, however, did not allow import of second hand goods, except
machinery for select sectors. The machinery had to be not more than 7 years old
and have a residual life of at least General Provisions Regarding Imports and
Exports 21 five years. Some other sundry restrictions and relaxations of no
significant impact were also maintained.
9. The Policy announced that certain categories of exports and exporters
would be eligible to receive Special Import Licences (SIL). These included
deemed exports, Export Houses, Star Trading Houses and manufacturers who
acquire ISO 9000 (series)
or BIS 14000 (series) certification of quality.
10. The Special Import Licences were valid for import of specified items in
the Negative List of Imports i.e. items that could not be imported freely. These
licences were freely transferable. So, the exporters who earned these licences
100
could earn a premium by selling the licences to those who wanted to import the
items that could not be otherwise imported without a licence.
11. The 1992-97 Exim Policy aimed at simplicity and transparency. It was
supplemented by a Handbook of Procedures that was notified a month later i.e.
on 30th April 1992. In line with the liberalized approach, the Handbook attempted
to prescribe simple and transparent procedures that were easy to comply with
and administer. It sought to rationalize various forms and make them computer
compatible.
12. The Exim Policy abolished Actual User condition for freely importable
goods. Such a condition was applicable only for goods imported under a licence
or when notified so through a Public Notice. Imports by travellers were governed
by Baggage Rules, notified by the Customs.
13. Although the Policy was intended to remain stable for a period of five
years, changes were required in the direction of liberalization and in response to
any adverse situation. So, the Govt. used to amend the Policy as and when
necessary through Public Notices and the Policy was also reviewed every year.
Such reviews sometimes brought about significant changes.
Clarifications were also issued from time to time regarding the correct
interpretation of the Policy through IPC Circulars and instructions to the operating
staff at the licensing offices and the Customs.
14. The Handbook of Procedures 1992-97 specified that the import
licenses would indicate the value in Rupees as well as foreign currency terms
and that in case of depreciation of the Rupee, the value need not be got
enhanced so long as the foreign currency value of the licence covered the value
of imports in foreign currency. This position continues even today.
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Trade barriers for giant bicycle
It is sometimes known as the problem of the commons. Some resources are
precious for a group of people but very hard to guard from the exploitation of any
one member. As a whole, and even individually, it would be very well if no one
ever exploited this resource. But given that at any time one member can exploit
102
it, and that this decision would put cooperating members at a disadvantage, it is
rational for all members to exploit.
Above we have described the weakening of core competencies of the US bicycle
firms and the undermining of their capacity for knowledgeable relationships with
their customers. But there remain significant barriers to entry that the US firms
enjoyed in the middle- and upper-level bike market in the 1980s:
1. Distribution networks: While less expensive bikes were sold through large
retail stores such as K-Mart and Wal-Mart, middle- and upper-echelon bikes were
sold predominantly through specialized retailers. The US bike firms had hard-to-
crack relationships with these smaller retailers. It would take years for a new
entrant to crack enough of these stores to gain large numbers of bike sales.
2. The middle and upper quality bicycle market enjoyed enormous efficiencies of
scale to be economical. To run a full bike factory, which can produce hundreds of
thousands of bikes each year, requires enormous overhead as exemplified by
Porter (1985). The combination of 1) a complex distribution system with 2) the
need for large scale production in order to sell at a competitive price makes
the market extremely difficult to crack. The paradox is apparent: you need to sell
enough to be able to lower costs enough to sell. But with a distribution network
that takes a decade to crack, a decade of steep losses is needed, during which
the producer subsidizes cost in order to build volume and market share.
3. In the middle- and upper-end bicycle market there was an additional hurdle.
The technical ability to make good bikes was orders of magnitude more difficult
than the challenge of making cheap bikes (a market in which Asian firms had
long ago become major players).
It required an intimate connection with enthusiasts, practiced engineers, and long
ingrained know-how. Numerous essays on organizational learning emphasize
how complex tasks become engrained into the workers who do them and cannot
be easily transferred or re-learned.
103
Porter (1975) outlines the potential barriers to entry in an industry just after he
notes that ‘[the five forces] reflect the fact that competition in an industry goes
well beyond the established players. Customers, suppliers, and potential entrants
are all “competitors to firms”’. He lists these barriers as:
• Economies of scale,
• Product differentiation,
• Capital requirements,
• Access to distribution channels,
• cost disadvantages independent of scale (such as proprietary technology).
As argued above, from an industry perspective the US quality bike market had a
strong position in at least four, perhaps five of these five areas (the possible
exception being capital requirements since a bike factory can be inexpensive if it
is designed to make only a small number of bikes).
The problem arose from a prisoner’s dilemma (Cable and Shane 1997; Kogut
and Zander 1996; Radner 1992). In an oligopoly, a company can pursue its own
self-interest by undercutting its competitors, knowing that this will start a war, or it
can pursue the interests of the group and forgo the short-term benefits of
defection. By ‘cooperating’ or acting in the interests of the group, the firm may
maximize its long-term interests.
As Porter (1980, 88) says ‘the dilemma arises because choosing strategies or
responses that avoid the risk of warfare and make the industry as a whole better
off. May mean that the firm gives up potential profits and market share. Schwinn
was the first of the major bike producers to move significant portions of its
middle- and upper-end bikes abroad through outsourcing.
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it had very strong competitive reasons for doing this, even if its Chicago factory
strike had not exacerbated the problem. In 1996, wages in Taiwan, in the
relevant norm, were below average: 5.41 $/hour vs. 13.22 $/hour in the US.
Production of this sort, furthermore, was something at which Taiwanese firms
had proven very adept. Schwinn had every expectation that their bikes from
Taiwan would be less expensive and better.
But to produce bikes in Taiwan, Schwinn had first to teach the Taiwanese how to
produce such high quality bikes. Therefore, in 1981, it shipped its best engineers
and its most sophisticated machinery to Taiwan and began training the workers
at Giant plants in the art of making fine bicycles (which involved the use of both
machine and hand labor).
The organizational routines were actually handed over to Giant voluntarily
(Nelson and Winter 1982). This decision undermined the barrier of proprietary
technology and product differentiation – remember that a few years later Giant
was able to build distribution by offering bike shops exact replicas of Schwinn
bikes at a 15% discount. The barriers of know-how and efficiencies of scale in
turn undermined the barriers of product differentiation and access to distribution
channels and capital requirements.
Prahalad and Hamel (1990, 85) predicted the possibility of a transition from
supplier to competitor, since once ‘Asian competitors have built up advances in
component markets first, they have then leveraged off their superior products to
move downstream to build brand share. And they are not likely to remain the low-
cost suppliers forever. As their reputation for brand leadership is consolidated,
they may well gain price leadership.
The numbers support this speculation. In 1984, Taiwan was exporting 6,328,000
bikes with a total value of $ 281,596,000 and an average cost of $ 44.5. The
majority of these were low-cost bikes for large retail outfits. By 1990, Taiwan was
exporting 8,942,000 bikes with a total cost of $ 909,937, 920 and an average
105
cost of $ 101.76. This was the period in which Taiwanese firms (led by Giant)
began to produce high-end bikes for US bike companies.
In 1996, 9,692,000 bikes were sold for$ 984,185,670 at an average price of $
101.55. It is interesting to notice that no significant change in the average value
of bikes exported occurred between 1990 and 1996. What happened was rather
that Taiwanese companies acting as outsourcers decided to sell their own brand.
From when Giant launched its own brand in 1985 to today, it has gone from
producing all subcontracted bikes for others to doing this with only a third of their
production – with the other two-thirds produced for their own label.
Despite a bad performance of US bike companies in the last decade, the bike
industry as a whole did relatively well in the 1990s. In 2000, the industry as a
whole (including retail value of bicycles, related parts, and accessories) was
worth about $ 5.0 billion. In 1995, it was worth $ 5.2 billion, in 1994, $ 5.0 billion,
in 1993, $ 4.3 billion, in 1992, $ 4.5 billion, in 1991, $ 4.0 billion and in 1990, $
3.6 billion.
These numbers suggest that the industry is mildly healthy with a general trend of
growth. But despite these seemingly placid numbers, the bicycle industry was
undergoing dramatic changes.
We argue that the major barrier to entry in the bicycle industry was
the interconnection between cutting edge technology, economies of scale, and
large distribution networks (Cohen and Levinthal 1989; Herriot, Levinthal, and
March 1985; Levinthal 1997).
In many cases, under normal circumstances, it would be prohibitively expensive
to do all three from a standing start. In order to sell the bikes at a competitive
rate, a company would have to produce a large number of them.
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Yet it would take years for a company to crack a complex decentralized
distribution market like the market for bike retailers in the US. Thus, an entering
bike company has to rely on producing extremely high quality hand-made bikes
and slowly increase distribution as it moves down market; otherwise it risks
losing money for years if it attempts mainstream distribution.
Not all markets have this dilemma. Inexpensive bikes, for example, are sold
largely by large retail chains such as K-Mart and Wal-Mart that could be
negotiated with for large quantities of bikes. Taiwanese and other Asian
firms were therefore able to crack that market in the 1970s without too
much difficulty. These markets truly did compete for the lowest price in a
relatively static technological environment.
But the specific nature of the outsourcing that Schwinn and others did with Giant
allowed Giant to crack the middle- and high-quality US bike market despite
barriers to entry. Economies of scale were not an issue for Giant or a few other
outsourcers in Taiwan (Makadok 1999; Raff 1991; Wernerfelt and Karnani 1987).
Giant was already producing millions of bikes for export to US companies; it was
therefore able to divert excess capacity after Schwinn scaled back manufacturing
in 1985 by introducing its own line first in Europe, and, in 1987, in the US.
It was able to produce, with maximum cost efficiency, even when it was selling
only a few bikes under its own brand because its factories were running at
near full capacity for others. Today, after over a decade of double-digit
growth, two-thirds of Giant bikes are produced under its own brand.
Schwinn began a trend which led to the erosion of barriers to entry in the
industry as a whole.
This effect was not achieved by a destruction of any specific barrier listed by
Porter (1975); instead it consisted of undermining the relationship between
barriers. The barriers seemed to be interrelated in this market in such a way that
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giving up production in the way Schwinn did may have led to the erosion of all
other barriers.
TRADE BARRIERS BETWEEN INDIA AND TAIWAN
The current fashion of regionalism has brought about changes in preferential
treatments that lead to the enhancement of trade and investment. These
occurrences have promoted the international specialization of industrial
production. For countries that are outside of preferential trade agreements
(PTAs), their industries could face the rise of production costs and negatively
affect their economies. Therefore, if they do not sign PTAs, they would risk
diminishing their global competitiveness. Since EU, and the Americas have
already reached a high level of regional integration, Asia has also begun to
pursue regionalism.
In the face of the rise of regionalism, India has continued to shift its economic
and trade policies, to focus on countries in the Asian bloc, such as increasing the
linkage with China and strengthening ties with ASEAN through Look East Policy.
The objective is to raise the level of India’s investment and exports to countries
within the Asian bloc. In the case of Taiwan, the rise of recent regionalism has
placed Taiwan outside of East Asian regionalism because of political reasons. To
protect against the negative impact of being an outsider, Taiwan’s businesses
have promoted FDI instead of directly exporting from Taiwan to maintain markets
for their products.
Against the backdrop, this paper aims to explore Taiwan-India economic
relations under regionalism. Specifically, what would India and Taiwan
respectively respond to the rise of regionalism in Asia? More importantly, the
ultimate objective of the paper is to find out the approaches that could be
considered or employed to strengthen bilateral economic relations in the face of
regionalism.
The Development and Effect of Regionalism
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With the current wave of regionalism evolving, regional trade agreements (RTAs)
continue to mushroom across the globe despite the establishment of the official
multilateral trading system, World Trade Organization (WTO), in 1995. As of
June 2006, there are 197 notifications of RTAs in force to GATT/WTO If RTAs
reportedly planned or already under negotiation are concluded, the total number
of RTAs in force might well approach 300 in the near future. Pascal Lamy, the
Director-General of the WTO, even points out that "[b]y 2010 around 400 of such
agreements could be active.” In contrast to other regions like Europe, North or
South America, Asia has been relatively lack of regionalism after the Second
World War. Yet, the situation has begun to change owing to such major factors
as the 1997 Asian financial crisis, the success of NAFTA, the expansion of the
EU, the gridlock in WTO talks, deepening of economic interdependence, and the
rise of China. The Asian governments indeed have embarked on "institutional"
cooperation or integration in a variety of forms to support market-driven
economic integration or develop its own regionalism.
However, the questions of whether RTAs resulted in higher or lower welfare for
their members as well as whether they serve as "building blocks" or "stumbling
blocks" for worldwide freeing of trade have remained under debate.
In particular, as the coverage and depth of preferential treatment may vary from
one RTA to another, the net effect of regionalism will certainly depend on its own
architecture and participating partners. According to Viner, the earlier theorist on
customs unions and free trade areas, usually a regional integration agreement
which discriminates in favor of the members by reducing trade barriers or
improving market access can lead to "trade creation" or to "trade diversion" on
particular productions. More specifically, trade creation is the substitution of a
lower cost source of supply form a partner country for a higher cost domestic
source in one or more of the participating countries. Trade diversion is the
substitution of a higher cost source of supply from a partner country for a lower
cost source of supply from third countries as a result of the elimination of the tariff
with respect to partner countries
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Trade creation extends reliance on comparative advantage, whereas trade
diversion does the opposite. Besides, the reduction in trade barriers, based on
the subsequent studies, may also increase competition in the area and thereby
lead to an overall reduction in costs of production.
But, unlike conventional regionalism, current wave of RTAs extend well
traditional liberalization in goods and even services to include a wide range of
trade facilitation measures in areas such as customs procedures, standards and
conformance, quarantine measures, government procurement and harmonization
of business law and tax practices, as well as provisions in areas such as
competition policy, investment, intellectual property, digital commerce, labor and
environmental measures. Effects caused by these non-trade provisions of RTAs
in some senses are more dynamic and complex. For instance, RTAs provide
preferences that may by and large alter the incentives facing firms, both those
located within the preferential trade area and those located outside, so the
formation of a FTA is likely to influence direct investment flows. Some also argue
that "investment provisions can be used as discriminatory protective devices, so
that a preferential agreement that balanced the interests of like-minded countries
may not be in the interests of the rest of the world." In other words, the new wave
of regionalism would cause "investment" creation or diversion in addition to trade
creation or diversion.
So, does regionalism create trade, bring investment, stimulate economic growth,
shift comparative advantage towards high value-added activities, facilitate
technology transfer, or induce political stability and cooperation? The answer is
probably "all of these things depend on the particular circumstances of each
FTA." However, theories do suggest that "trading partners who do not participate
in a preferential arrangement will be hurt even when global welfare as whole is
enhanced." Based on the simulation conducted by Goto and Hamada, for
example, it is clear that economic integration gives participating members more
monopolistic power and better terms of trade or investment, and those that are
left behind have to suffer from the reciprocal of these effects until the advent of
110
the world free trade. Certainly some exceptions could occur, but outsiders as
whole will be harmed in various dimensions as theories and empirical case
studies suggest.
As a result, participating in regionalism by forming RTAs or FTAs has become
states’ strategic economic or trade policy. As Table 1 shows, more and more
formal institutional trade agreements, in particular FTAs, are formed and
proposed with Asian economies, which is also shaping the future of the region.
Among others, ASEAN as the earliest regional grouping has all the more become
the hub of forming FTAs in Asia. It has been making tremendous efforts to
establish free trade agreements (FTAs) with its major economic partners,
including China, Japan, Korea, Australia, New Zealand, and India. The East
Asian FTA based on ASEAN+3 or ASEAN+6 countries is also initiated
A trade barrier is generally anything that makes trade difficult or even impossible.
Examples of trade barriers range from government-instituted tariffs to cultural
preferences. Trade barriers have negative effect on exporters because they
interfere with the normal supply and demand and make international trade more
complicated. They also negatively impact importers and ultimately consumers
since they interfere with competitive sourcing, which can result in higher prices.
The global trend in recent years has been to eliminate as many trade barriers as
possible. Organizations like the World Trade Organization (WTO) have been
established with the purpose barriers involved in regional trade.
Trade barriers are as ancient as trade itself, and there are many reasons
countries impost trade barriers. Trade barriers initially arose in the form of tariffs
levied to generate revenue. For many countries, tariffs are a major source of
income and are critical to the national economy. Tariffs, quotas and non-tariff
barriers such as excessive regulations are now commonly used to protect
domestic industry from foreign competition. Finally, countries often use barriers as
tools of foreign policy. Very high or low tariffs can be used to reward or punish
other nations in support of foreign
111
Why do countries having trade berries?
Trade barriers are as ancient as trade itself, and there are many reasons
countries impost trade barriers. Trade barriers initially arose in the form of tariffs
levied to generate revenue. For many countries, tariffs are a major source of
income and are critical to the national economy. Tariffs, quotas and non-tariff
barriers such as excessive regulations are now commonly used to protect
domestic industry from foreign competition. Finally, countries often use barriers as
tools of foreign policy. Very high or low tariffs can be used to reward or punish
other nations in support of foreign policy. Very high or low tariffs can be used to
reward or punish other nations in support of foreign policy initiatives. This is the
premise of most free trade agreements and embargoes, boycotts and sanctions.
For all of these reasons, trade barriers are sensitive and controversial issues.
Import Duties/Tariffs: For many countries, tariffs are important to the national
economy and can help raise funds for important social programs. WTO members
have agreed to utilize product- identifying codes called Harmonized Tariff
Schedule (HTS) for imports and Schedule B for exports. The first 6 numbers of
HTS and Schedule B codes are identical for all WTO member countries. This has
simplified tariff application, made it less arbitrary, and thus easier to reduce tariffs
on groups of products.
Export Subsidies:
A federal program of financial assistance to aid domestic producers is considered
an export subsidy. This means the government provides a domestic company
some kind of financial ass istance in order to make that company’s product
cheaper than a similar imported product. This makes imported products relatively
more expensive and less appealing to domestic consumers. Alternatively, a
subsidy can make it easier for a domestic producer to sell goods in foreign
markets, where they might otherwise not be price-competitive. Many subsidies
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are controversial and are alleged to be protectionist (because a country is
protecting its domestic producers through the subsidy) and harmful to
international trade. Governments maintain subsidies to fund core industries or
fledgling industries in order for them to remain viable in the face of foreign
competition. This can be done through tax breaks, grants, etc. The WTO sets a
ceiling for subsidies, and any subsidy that exceeds that limit is illegal and takes
market share away from un-subsidized competitors.
Restrictive Tariffs:
Governments select certain import items to “limit” by placing restrictively high
tariffs on them, effectively keeping foreign suppliers out of the market.
Licensing:
Import and export licensing is meant to be used to protect national interests by
limiting access to dangerous imports and ensuring that critical technology is not
shared with terrorists or rogue nations. If too excessive, they can limit access to
foreign markets.
POTENTIAL FOR IMPORT/EXPORT IN INDIA
Among the "BRICs" (Brazil, Russia, India and China), India is the closest country
to Taiwan besides China. In addition to its geographical proximity, India offers
vast labor, a stable economy and an advanced ICT investment environment. It is
the 13th largest export market for Taiwan. India ranks higher, or has surpassed
the UK, Australia, Italy, Canada, France, Brazil and Russia, and offers much
better trade growth than these other trade partners.
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According to a report by the Economist Intelligence Unit (EIU), India will surpass
China to become the world's fastest growing economy by 2018. In addition, the
World Economic Outlook report by the International Monetary Fund (IMF)
estimates India's economic growth rate to be 7 per cent, way above than the 2.1
per cent of the developed countries. The report ranked India as the world's
second largest market. India and China, as per the report, are the two major
engines for global economic growth.
India has become an important market for Taiwan. Although Taiwan entered the
Indian market later than the Japanese and Koreans, it has still managed to
achieve an incredible high rate of growth (59 per cent and 28 per cent in 2007
and 2008, respectively).
Yes, last year imports declined by 15.8 per cent over the previous year, but
various state projects actually grew by 26.6 per cent in Q4. The first three months
of this year saw exports expand by 33.5 per cent to reach $765,470 million. It is
projected that Taiwan will increase exports to India this year by at least 20 per
cent.
Reference: Statistics of export and import between Taiwan and India (2005-
10) (1 unit =1 million USD)
Year
Exports
to
India
Growth
compared
to previous
year (%)
Imports
from
India
Growth
compared
to previous
year (%)
2004 1,070.2 -- 860.5 --
2005 1,567.9 46.51 857.2 - 0.38
2006 1,471.1 - 6.17 1,245.3 45.28
2007 2,342.0 59.2 2,542.4 104.16
114
2008 3,007.5 28.42 2.338.4 - 8.02
2009 2,531.4 -15.83 1,623.9 -30.56
2010
(Jan-Apr) 1,008.7 23.3 1,054.7 242.2
Taiwan: 1.Sourcing Taiwan 2010:
In order to develop the Indian market, TAITRA held Sourcing Taiwan 2010 on
3rd March this year and invited 16 crucial Indian buyers to purchase various
products, such as metal processing machinery, building material, auto parts as
well bicycles, fitness equipment, consumer electronics and electronic
components. Total business from Sourcing Taiwan 2010 is projected to have
reached $5.67 million.
2. Emma Expo India:
The economy of India has developed stably these years to consolidate links
between East Asia and South Asia. Furthermore, the Indian government also
offers good investment conditions, such as foreign tax credits and rent relief.
Since 2007, Taiwan has been executing Emma Expo India as a B2B platform to
provide opportunities for the Indian and South Asian procurement units to trade
directly with outstanding Taiwanese suppliers. Moreover, through this event, we
could connect the overseas sources of Taiwanese enterprises with those seeking
better investment prospects.
3. Trade Missions
TAITRA is undertaking several delegations to India in 2010 including Taiwan
Construction and Environmental Protection Industry to South Asia, Taiwan
Renewable Energy Delegation to India and Taiwan Network Communications
Industry Delegation to India.
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Potential for import export in India
Information technology today has become an integral part of home
improvement. It can make a huge difference to the way your interiors and
outdoors look and express.
T
he Indian Information technology industry, despite an overall slowdown
of the economy, continues to grow at a healthy 15% per annum.
I
nvestments in the last 5 years have aggregated over Rs. 2000 crores and
production during 2006-07 stood at approx. 340 million sq mts.
T
he Indian Information technology industry is divided into organized and
unorganized sector.
T
he organized sector comprises of approximately 16 players. The current
size of the organized sector is about Rs.2625 Crores.
T
he unorganized sector accounts for 70% of the total industry bearing
testimony of the attractive returns from this sector. The size of the
unorganized sector is approximately Rs.6125 Crores.
Revenue earning industry - excise mops up over Rs. 350 crores annually
from the organized sector itself.
With proper planning and better quality control our exports (presently
insignificant) contribution can significantly increase.
Information technology as a product segment has grown to a sizeable
chunk today at 340 Millions Square meters production per annum.
However, the potential seems to be great, particularly as the housing
sector, retail, IT & BPO sectors have been witnessing an unprecedented
boom in recent times.
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T
he Information technology sector has been clocking a robust growth of
12-15% consistently over the last few years. Today, India figures in the top
5 countries in the world manufacturing ceramic tiles.
T
he Information technology industry in India has followed similar trends
internationally which have been characterized by excess capacities and
falling margins. Countries like Malaysia, Thailand, Indonesia, Sri Lanka
and Vietnam are setting up their own plants
The Information technology industry in India has followed similar trends
internationally which have been characterized by excess capacities and
falling margins. Countries like Malaysia, Thailand, Indonesia, Sri Lanka
and Vietnam are setting up their own plants. China has as a major
competitor. Producers from Spain and Italy have the advantage of lower
transportation costs while exporting to USA and Germany.
. In India, the per capita consumption is as low as 0.30 square meters per
person compared to China (2 square meters per person), Europe (5 to 6
square meters per person) or Brazil (2.5 square meters per person).
Rising disposable incomes of the growing middle class and 40 million
units of housing shortage hold out a great potential.
A major change that took over the Information technology industry, was
the introduction of vitrified and porcelain tiles. These new entrant product
types are said to be the tiles of the future. Internationally these tiles are
already the major sellers. This category of products account for 13% of all
organized sales in this industry.
The Indian Industry has developed an export market although at the lower
end. In volume it constitutes less than half a percent of the global market.
(Presently India does not figure in the list of major exporting countries).
But this reality could change as Indian exports are rising at the rate of 15%
per annum. The top-end of the global export market is presently
dominated by Italy (40.8%) and Spain (26.4%).
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(Source: Compiled using information from Corporate Catalyst India,
ASCER and other associations.)
Import/Export Potential
India is heavily dependent on imports of electronic goods from countries like US
and China to meet its domestic demand. More than 70 per cent of the domestic
market is served by imports, according to a joint study done by the Associated
Chambers of Commerce and Industry of India (Assocham) and Ernst and Young.
The report revealed that Indian industry spends only $10 million on research and
development (R&D).
Despite India being a preferred investment destination for global players to
expand their business considering the potential benefits they derive from the
nation, cutting down on R&D expenditure doesn’t seem to present a favourable
situation for the Indian electronics industry. The industry which took off long back
in 1920 with valves and vacuum tubes have come a long way with achievements
made possible in the field of space, defence, consumer electronics, information
technology and telecommunications. But despite the industry reaching out to
wider segments, the R&D spend continues to shrink. This seems to be the key
factor for buyers to rely mainly on imported goods. Sajjan Jindal, President,
Assocham, says, “In spite of 150 per cent tax exemption under Income Tax Act
Section 35 (2AB) the scanty spending on R&D by electronics industry is
increasing India’s dependence on electronics imports.”
The Assocham report said, “Imported electronic goods counted to $19.77 billion
in recent times, as export earnings were $3.17 billion. More than 35 per cent of
imports in India are sourced from China.” China has always been at par when it
comes to electronics manufacturing and R&D aspect. There production volumes
are high leading to cost-effectiveness and with favourable policies in terms of
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technological, economical and social aspect they have placed themselves as a
strong force both locally and globally.
Imports from China pose a big threat to Indian manufactures as heavy number of
imports leads to competition for the local players. “Due to heavy imports in this
segment, manufacturing and R&D had both taken a backseat for the last five
years. Manufacturing and R&D both go hand-in-hand and require major
consideration,” states Kunal Supnekar, director, Tara Relays Pvt Ltd. Further R S
Saini, partner, Sunrise Electronics adds,“Overall 85-90 per cent of the
components are imported and only 10-15 percent are locally made. Lack of
component manufacturing and unavailability of components like semiconductors
and microcontrollers leads to dependency over imports.”
A joint effort between the industry and government can help India emerge as a
strong force in the global arena. A master plan with a long-term vision is essential
for the growth and expansion of the electronics industry. This can be in terms of
attracting more manufacturing facilities in India and thereby increase in R&D
activities. Also there should be proper approach in terms of policy promotion to
attract big multinationals
Export of electronic goods registered a growth of 62.50 percent (42.40 percent in
US$ terms) during the year 2008-09 over the year 2007-08. In value terms,
export of electronics goods increased from Rs. 1600 crore (US$ 397 million)
estimated in the year 2007-08 to Rs. 2600 crore (US$ 565 million) during the
year 2008- 09. Annual average growth in export consumer electronics goods
from India during the past five years is estimated to be 25.80 percent (25.84
percent in US$ terms).
The export potential of India's Electronic industry has been recognized by all
developed nations across the world. As per the NASSCOM-McKinsey report,
Electronic industry export from India in the year 2008 is projected to be 62% of
total Indian exports.The Electronic sectors, the online businesses, and the
software products of India are renowned all over the world for their quality and
119
cost efficiency. With its huge growth potential, the Electronic sector of India has
emerged as a preferred investment area for the Electronic biggies across the
world.
As per the NASSCOM- McKinsey report, the Electronic sector of India will
provide 2.2 million job opportunities for the skilled Indian workforce by the end of
2008.
The Government of India has taken all the necessary initiatives and policy
measures to facilitate exports from India. Efforts are also on to reach the full
potential of the India's Electronic industry. There is no doubt that growth of Indian
exports crucially depends on the foreign demand for the same.
Future Opportunity In Indian Market
In present scenario in Indian car manufacturer company are not using this Tire
Pressure Monitoring System but in future may be this all company have been use
such safety provided services. Generally TPMS use in luxuries car so in Indian
companies also use this product for provide safety services to customers. First of
all we have see that what is the market of luxuries car in India today and their
development in India.
Indian Luxury Car Market – An Insight
The recent growth in the luxury car market in India is much more than mere
market dynamics in a particular car segment. It is a reflection of the changing
lifestyle of the affluent class in the country. In India, the luxury car segment
(Average Price 25-30 Lakh) has been growing at an average rate of 20% or
above during recent years; it seems to be least affected by the global
financial crisis. During worst recession period when world was facing low
market demand trends, Indian luxury car segment grew at 23% to 6,671
vehicles according to the Society of Indian Automobile Manufacturers
(SIAM) despite a 0.5% decline in passenger car sales, to 11.04 lakh
vehicles (April-December 2008 Report). But financial year ended March 2010
120
has shown growth of automotive sector up by 25% to 15.26 lakh vehicles.
This indicates optimistic sign of recovery of sector. While the Indian auto
industry is expected to grow at 17% to 19% on an average, sales of
luxury and super-luxury cars are expected to grow exponentially.
Luxury car segment accounts only for 3-4% of total car sales in India. But what
lures the international majors is the fact that this segment is growing at
25%-plus (2009 sales), much higher than 15-17% growth registered by the
small passenger car segment over the past few years. This growth of luxury car
sales is driven majorly by increased wealth-creation within average Indian
population and the desire of individuals to join the millionaire-club by
flaunting their wealth.
Growth of Indian economy has been faster than other emerging economies
during recent times. Globally, India had the highest growth-rate (22.7%) of
121
millionaire population during the year 2007. India added 23,000 millionaires from
2006 to 2007, taking total figure to around 123,000 millionaires; wealth as
measured in US Dollars (Merrill Lynch Cap Gemini Report). However,
during recession, the country noticed a decline of 31.6% in number of
millionaires. But post-recession recovery was much faster compared to other
economies. These numbers are expected to grow up to 1, 40,000 by the year
2010. This robust growth in the number of millionaires in the country,
being one of the highest globally, paves the way for further growth of the
luxury car market.
In addition, the average age of an Indian millionaire has come down to
35-40 years from the earlier average of 50 years. An increasing number of
young entrepreneurs and professionals from various fields are buying luxury
cars and this affluent segment has been boosting sales volumes. If we look
into city-wise wealth distribution, the Northern region in India (comprising of
cities like Delhi, Chandigarh, Ludhiana, Shimla, and Jalandhar) comprises
higher density of millionaire population than rest of the parts. This region
therefore has the highest luxury car sales. After this come, Greater Mumbai,
Ahmedabad, Pune, and Chennai. These cities have a luxury car sales pattern
which is still higher compare to rest of the country.
The historical regional sales data of luxury cars sold in India, shows that 32-
35% of the total are sold in Delhi region only. This is possibly due to the
psychological preference shift among the North Indian population to show
off their wealth.
Delhi is followed in this list by Mumbai, and Punjab state, where Ludhiana
and Jalandhar are at the top two slots. Delhi also happens to be the biggest
market for Mercedes-Benz, Mumbai ranks second followed by the states of
Gujarat, Karnataka, Tamil Nadu and Punjab. This geographically distributed
population could be clustered into classes on the basis of overall behavioral
patterns observed in luxury brand consumers
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.
Although Taiwan entered the Indian market later than the Japanese and
Koreans, it has still managed to achieve an incredible high rate of growth. Rahul
Chopra, editor-in-chief, EFYTimes caught up with Yuen-Chuan Chao, president
and CEO, TAITRA (Taiwan External Trade Development Council) to understand
where India stands in Taiwan's global scheme of things and what all measures
have been taken by TAITRA to boost bilateral trade between the two countries
with respect to the electronics industry.
Vision with regard to the future of Indo-Taiwanese trade with respect to the
electronics industry
With its rapidly expanding economy, India is witnessing a surge in demand for
home appliances and ICT products and services. Additionally, the Indian
government is keen to develop the hardware market to match the nation's
advances in software. This opens up many opportunities for strengthening the
123
ties between the two countries as Taiwan's relative strength in hardware could be
meshed with India's in software. This bilateral coupling up of software and
hardware could take place in wireless networks, energy (LED, green power),
medical electronics (distant healthcare, equipment), digital (electronic
government, virtual classroom) and auto electronics.
On the global map, how important is India as a market for Taiwan?
Among the "BRICs" (Brazil, Russia, India and China), India is the closest country
to Taiwan besides China. In addition to its geographical proximity, India offers
vast labour, a stable economy and an advanced ICT investment environment. It
is the 13th largest export market for Taiwan. India ranks higher, or has surpassed
the UK, Australia, Italy, Canada, France, Brazil and Russia, and offers much
better trade growth than these other trade partners.
According to a report by the Economist Intelligence Unit (EIU), India will surpass
China to become the world's fastest growing economy by 2018. In addition, the
World Economic Outlook report by the International Monetary Fund (IMF)
estimates India's economic growth rate to be 7 per cent, way above than the 2.1
per cent of the developed countries. The report ranked India as the world's
second largest market. India and China, as per the report, are the two major
engines for global economic growth.
India has become an important market for Taiwan. Although Taiwan entered the
Indian market later than the Japanese and Koreans, it has still managed to
achieve an incredible high rate of growth (59 per cent and 28 per cent in 2007
and 2008, respectively).
Yes, last year imports declined by 15.8 per cent over the previous year, but
various state projects actually grew by 26.6 per cent in Q4. The first three months
of this year saw exports expand by 33.5 per cent to reach $765,470 million. It is
projected that Taiwan will increase exports to India this year by at least 20 per
cent.
India's vast market, labour pool and market beckons many prospects. TAITRA
has been organising Emma Expo India since 2007 in order to enhance Indo-
124
Taiwan business ties and promote greater industry interaction and technology
transfer and investment opportunities.
What are the key industry sectors (in electronics) that offer higher chances of
trade growth between India and Taiwan?
1. PC and peripherals: Electronic components and finished products are the
strength of Taiwanese manufacturers in tapping the Indian market. With a
10.4 per cent market share, Taiwanese technology firm Acer became
Indian's third largest PC vendor in the second half of 2009, next to HP and
Dell. Acer also expanded its product line of servers and PCs to meet its
competitors head on.
2. 3G mobile equipment and phones Indian government auctioned licences
for 3G mobile communications in April and lit the 3G business opportunity.
3. Taiwan's HTC Corporation and India's Bharti Airtel launched 3G-
compatible mobile phones.
4. Inventec, a Taiwan-based original design manufacturer, joined hands with
Reliance Communications to launch a CDMA mobile phone. The company
is proactive towards exploring new prospects in the Indian market.
LEDs
(1) LEDs or light-emitting diodes offer many advantages over traditional
light sources. LEDs are highly efficient, come in smaller size, are highly
rugged, and also offer lower energy consumption and longer lifetime. The
list of LED applications keeps on expanding. Besides the applications for
displays and traffic signals, the market for illumination and mobile
electronics just keeps expanding. With the rise in optical networks and
infrared wireless communications, the LED industry promises huge
potential.
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Taiwan is the major global production base for HB (high-brightness) LED.
Global LED industry production comes to $50 million with a 5 per cent
growth rate. Taiwan has been ranked the world's no. 2 market in HB LED
production, next to Japan.
Can you elucidate upon any recent initiatives taken to increase business
between Indian and Taiwan...especially with respect to the electronics
industry?
Indian: This year, for the very first time, the Indian government sent a
high-level IT delegation led by Rakesh Singh, additional secretary,
Ministry of Information Technology to Computex Taipei 2010. The
delegation including Indian local officials in charge of the IT sector,
investors and top executives from leading IT companies, visited several
key Taiwanese suppliers to explore future collaborative opportunities.
Taiwan: 1.Sourcing Taiwan 2010: In order to develop the Indian market,
TAITRA held Sourcing Taiwan 2010 on 3rd March this year and invited 16
crucial Indian buyers to purchase various products, such as metal
processing machinery, building material, auto parts as well bicycles,
fitness equipment, consumer electronics and electronic components. Total
business from Sourcing Taiwan 2010 is projected to have reached $5.67
millions.
2. Emma Expo India: The economy of India has developed stably these
years to consolidate links between East Asia and South Asia.
Furthermore, the Indian government also offers good investment
conditions, such as foreign tax credits and rent relief. Since 2007, Taiwan
has been executing Emma Expo India as a B2B platform to provide
opportunities for the Indian and South Asian procurement units to trade
directly with outstanding Taiwanese suppliers. Moreover, through this
event, we could connect the overseas sources of Taiwanese enterprises
with those seeking better investment prospects.
126
3. Trade Missions
TAITRA is undertaking several delegations to India in 2010 including
Taiwan Construction and Environmental Protection Industry to South
Asia, Taiwan Renewable Energy Delegation to India and Taiwan Network
Communications Industry Delegation to India.
What kind of challenges do Taiwanese firms face when trying to tap into
the Indian market? Does TAITRA provide any support for its Indian
partners?
The key challenges Taiwanese firms face when tapping into the Indian
market are the cultural and linguistic gap and the differences in business
practices. We suggest Taiwanese exporters, who are willing to sell in
India, (1) to find a proper agent or consignee, (2) to set pricing policy
according to Indian consumers' buying habits and (3) to develop niche
products for the Indian market.
1. TAITRA has overseas offices in Chennai and Mumbai, which help
Taiwanese businesses and manufacturers in collecting and sharing the
latest business updates. Our overseas offices also assist trade missions
and initiate procurement meetings for Indian and Taiwanese companies.
We also carry out seminars that provide market information related to
India.
2. TAITRA and International Enterprise (IE) Singapore co-organised on 14
April 210 their first forum to encourage collaboration between Singapore
and Taiwanese companies to grow their business in India. Three speakers
who were familiar with the Indian market were invited to share their insight
with Taiwanese companies.
What kind of support does TAITRA provide to Indian firms that want to do
business with their Taiwanese counterparts?
TAITRA has an ongoing programme which aims to encourage Indian
127
buyers to do business with Taiwan. The comprehensive reimbursement
programme compensates visiting groups of buyers or major individual
buyers for their roundtrip ticket, accommodation and/or other expenses
incurred during their visit to Taiwan.
TAITRA brings together the real strength of Taiwan at Emma Expo India
2010 for Indian firms to scout and negotiate with. That's where many 1-on-
1 procurement meetings will allow Indian executives to meet face-to-face
with the best of Taiwanese business.
Acer’s first restructuring in 1992 was focused on a reengineering of the
manufacturing process and reorganization of the company on the client-server
model. The role of IT in this restructuring was minimal, and barely rates a
mention in the various company documents, press reports, and academic studies
of the company during this time. The lack of a coherent IT strategy was one
factor that led to subsequent problems, as Acer struggled to manage its rapid
growth and decentralized business model. As a result, the second restructuring
undertaken in 1998 has emphasized IT as a key element. It is too early as yet to
measure the impacts of this restructuring, but it is clear that Acer will not succeed
unless the IT elements of the plan are well conceived and executed.
If Acer is to maintain its competitiveness in the PC business, it needs to improve
its use of IT to achieve better coordination and improve its productivity. While
Acer has put a team in place to handle IT across the whole group, it will have to
be responsive to the needs of individual business units as it moves to implement
corporate systems and develop a common infrastructure
Acer also plans to develop 3 regional call centers (North America, Asia, Europe)
that can offer customers 24 hour, follow-the-sun service. Now there are two call
centers for the Americas, one in Texas and one in Costa Rica. Customer calls
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are logged into a database called the “Turbo Selling Engine.” This data is not
only used for customer service, but is also used to communicate with current
customers and encourage them to stay with Acer as they upgrade to new PCs.
Current Planned
IT organization Decentralized Global planning, local
implementation
Information platforms Non-standardized Standardized
Use of EDI Some suppliers and key
customer (IBM)
Suppliers and customers
E-commerce Limited capabilities in
U.S.
Only
Available worldwide with
build-toorder
capabilities for PCs.
Other
business units also
implementing
ecommerce
applications
Servers Mainframes,
minicomputers,
workstations, NT servers
Run “Acer on Acer” using
NT servers
as much as possible
Telecommunication
network
Many service providers Single service provider,
possibly
outsource completely
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IT spending as % of
revenues
0.63% 1.5%
Information access Passive Proactive
Service By phone On line
Abundant resources in financial market:
For Taiwan capital is not a problem, they have overseas reserve in the amount of
US$190 billion (official). As of June 2003, Taiwan had 202 Venture Capital (VC)
companies, with a total paid-in capital of US$4.74 billion. From 1996 to 2002,
they have invested in 7560 projects with a total investment of US$4.27 billion.
Certainly, government is making efforts in facilitating access to efficient capital
Markets. The recent abolition of QFII system is one of the indicators of the
Government’s efforts in eliminating investment obstacles to attract foreign
Investment into Taiwan's capital market.
At the same time, the government is also conducting researches on the
establishment of industrial holding companies and financing companies. We
expect the government to expedite its financial Reform to facilitate Taiwan to
become a global funding center.
Opportunity for strategic alliance:
Partnering with Taiwan's industries/business to enter the vast Asian market:
Taiwan's excellent relations with foreign manufacturing and service industries
provide a good opportunity for cooperation with foreign investors and for access
to the Asian market.
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Since Taiwan and mainland China have both joined the WTO, Taiwan
industries/business have become more eager to explore new business
opportunities in mainland China, either on their own or through joint venture with
other international investors.
Partnering with Taiwan business to develop a whole range of high Value-added
knowledge-based service industry in the Asian Market:
For the service industry, in addition to the financial reform that we mentioned
previously, the government has come up with other measures to facilitate the
introduction of new ideas and technologies to improve the quality of the service
sector.
Meanwhile, the government is also actively promoting the development of
logistics and distribution business, human resource training, healthcare,
communications and media, R&D and technology, information technology,
cultural innovations, construction and manufacture engineering, environmental
protection, product design as well as tourism.
Major Challenges facing the Indian electronic manufacturing market are an
infrastructure that needs to be improved at the earliest possibility, easing of
foreign investment procedures, which are underway, and a restructured
government tariff that now makes domestically manufactured goods more
expensive than imported goods with zero tariff.
There are also other problems, which are hampering the growth of the Indian
electronics industry. Some of them are:
Lack of world-class infrastructure
Lack of clear-cut government policy for the industry
Very little expenditure in Research and Development area.
Power of Marketing not harnessed to the maximum
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Opportunities
While the Electronics sector in India is currently small, there are several
advantages that India offers that can be effectively leveraged to achieve higher
growth. These can be categorised under three heads:
Manpower
Market Demand
Policy and Regulatory Support
Man Power
India produces over 500 PhDs, 2,00,000 engineers, 3,00,000 non-engineering
postgraduates and 21,00,000 other graduates each year. The Indian Institute of
Technology and The Indian institute of Management produce graduates and post
graduates with best-inclass skills and capabilities in technical and management
fields. India’s capabilities in IT and engineering make it an attractive location for
sourcing engineering service.
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Main challenges for Taiwanese organizations:
The main challenges Taiwanese firms face when tapping into the Indian market
are the cultural and linguistic gap and the differences in business practices and
solutions.
Some suggestions for Taiwanese exporters who are willing to sell in India:
1. Find a proper agent or consignee
2. Set pricing policy according to Indian consumers’ buying habits
3. Develop niche products for the Indian market.
Free trade agreement
India and Taiwan have begun efforts on a feasibility study for the opening of
formal talks on a free trade agreement (FTA). Taiwan’s Chung-Hua Institution for
Economic Research and the Indian Council for Research on International
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Economic Relations are in cooperation assessing the possibility of a Taiwan-
India FTA.
The two sides will wait for the result of the study before deciding when to begin
FTA conciliation. India and Taiwan have already signed an investment promotion
and protection agreement and are likely to seal three more deals on double
taxation avoidance, temporary duty-free admission of goods, and customs
cooperation.
Trade forecast
India and Taiwan are estimated to double bilateral trade to US$10 billion by 2015
through food processing, information and communication technology and
electrical engineering tie-ups.
Taiwan expects bilateral trade to double to US$10 billion in the next five years
from over US$4 billion in 2009. In 2010 (calendar year), Taiwan expected
bilateral trade between the two nations to touch US$6 billion (data has not been
verified). Presently, the mainstream of Taiwanese investments in India is in the
information and communication technology sector.
Currently, major Taiwan-based ICT companies like Acer, BenQ, DLink and
Transcend have a support of operations in India. In the last 10 years, Taiwanese
companies have invested about US$1 billion in India.
Taiwanese also invited Inviting Indian airlines to operate direct flights between
Delhi to Taipei, so that it would not only help in enhancing trade and investment,
but would also help in building a people-to-people interface. Presently, none of
the Indian airlines have direct flights between the two countries.
Other potential areas could be:
Trade facilitation
Sanitary and phytosanitary
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Technical Barriers to trade
Taiwan is the world’s 16th principal economy and fifth largest economy in Asia
(after Japan, China, India and South Korea). It has the world’s third largest
foreign exchange funds with more than US$255 billion. Taiwan is the world’s
fourth largest information communication maker internationally, and the second
after the United States in Information Communication design.
Taiwan leads the world in market share output of 23 IT items, with the result that
every 8 out of 10 computers in the world use some Taiwanese system or the
other. Above all, Taiwan is one of the biggest investors all over the world. Its per
capita income of US$15,000 is among the region’s best.
The charisma of India
Taiwanese strategy-makers, aware that maintaining the technical and ground-
breaking edge is the key to long-term sustained growth in an age of global
economic interdependence – something that Taiwan risks losing as its
businessmen deepen their ties with a communist China that is weak in innovation
and strong on cheap labor – want to establish strategic R&D alliances with global
innovation centres. And here, the outlook of collaboration between Taiwan’s
computer hardware industry and India’s world-class software industry is said to
be extremely capable.
In fact, India’s Nasscom and its Taiwanese counterpart, known as III, have
recently agreed to work together in producing computer V whose price will be
less than Rs. 6,000. They are going to establish a research institute in Chennai.
Tamil Nadu has emerged as the focal point of Taiwanese business in the last few
years; with many Taiwanese companies establishing their offices in the southern
coastal state of India. There is no denying the truth that Taiwan has become
recently aware of India’s potential as an economic partner.
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Over the last few years, Taiwan and India have made some development in
educational exchanges. Apart from their contacts with a number of leading Indian
universities, Taiwan’s research institutes and think tanks have expanded their
presence in India.
Indian think tanks and bodies like the Institute for Defense and Analyses Studies,
the Observer Research Foundation, the Confederation of Indian Industries, the
India International Center, the Center for Policy Research and the National
Institute of Advanced Studies, among others, have exchange programs with their
counterparts in Taiwan. However, these exchanges, welcome no doubt, need to
be much more intensified to assume meaningful dimensions.
There can be equally helpful exchanges of information between the intelligence
agencies and militaries of India and Taiwan on a range of issues such as
terrorism, cyber-hacking, navigation security and sea-piracy. Similar exchanges
take place between the Taiwanese agencies and their counterparts in the U.S.,
South Korea and Japan, to name a few.
Even if one treats the interactions between Taiwan and the U.S. as exclusive and
quite multifaceted, the fact that Tokyo and Seoul share strategic information with
Taipei is interesting in the sense that they have much more at stake than New
Delhi in maintaining friendly relations with Beijing, considering their quantum of
deal with and investments in mainland China, let alone their geopolitical links.
Beijing may not like such interactions, but then the overall national interests of a
country in enlightening relations with another must not be made hostage to the
Beijing-factor.
There are demographic similarities between India and Taiwan. The latter has
been experiencing below replacement rate fertility levels of around 1.6 (and
declining) for many years. Average life expectancy is 77 years and increasing.
The elderly will make up 20 percent of the total population of Taiwan by 2020,
and this will add in median age and a reduction in working age persons to the
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entire population ratio. In contrast, India is in a demographic gift phase, with
growing working age to total population ratio till 2045. Yet after that, its ratio will
decline quite gradually, and the ratio will remain higher than for Taiwan.
Taiwan can expand its economic room and cope with population ageing by taking
benefit of India’s relatively young manpower through outsourcing and off-shoring
many actions. These may range from routine business process outsourcing types
to those connecting such activities as research, and design. MNCs, together with
those from China, are basing their research and design centres in India. Taiwan’s
contribution in selected areas of research and design could provide win-win
opportunities.
It is said in this context how a portion of Taiwan’s pension assets, which are
projected to be US$150 billion by 2015, can be invested in India to attain high
returns. These in turn can help in achieving financial security for the aged in
Taiwan.
The world economy has grown up fast and many economic systems have been
established under the regional cooperation. The economy integration of ASEAN
and Asia countries has been brought a new and giant influence. The regional
economic corporation has already become a tendency.
While the new economy system is growing up and getting bigger, Taiwan is in
the situation that is facing new challenges and opportunities of its economy. The
“marginalization” problem has been mentioned by scholars and enterprises in the
recent years36. The key points of lowering the damage from the “marginalization”
problem are trying to carry out the possibility of tariff preferential and expanding
the range to zero-to-zero, especially in the Information Technology Agreement
(ITA). As the electric machinery equipments is the main part of Taiwan’s export
trade, if ITA has new progress on the tariff preferential, it still can decrease the
damage even without the free trade agreement which Taiwan has not sign up
with the foreign countries.
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Taiwan must realize its advantage on the trade part and take the initiative side.
Taiwan must stand on a stable position in this cooperative economic tendency.
The new economy system needs an experienced and developed country to
provide assistance in improving the part of technology and development of local
exploitation.
Taiwan can focus not only on the electric equipment but also iron and steel
industries, spin and weave industries, compound leather industry, and petroleum
industry and food products.
Taiwan also should face the over-dependency problem to China. Taiwan should
understand that investment and trade should not over-depend on one country. It
will have potential investment risk. Especially Taiwan and China still have
instable political factors. Over-dependent on trade with China will make Taiwan in
a disadvantageous situation. Moving some part of trade from China to ASEAN
countries is a better way to improve the over-dependency problem.
Seeking signing up free trade agreement with ASEAN countries is also a
guarantee for Taiwan’s economy. It can not only protect Taiwan trade and
economic position in Southeast Asia but also deepen the cooperation of both
sides.
In Asia, Taiwan is a developed country and one of the four newly industrial
Economic systems with Singapore, Hong Kong and South Korea. But in recent
years, the competitiveness is getting weaker. In opposition to China, the
economy of China has been growing fast and having the name of “World
Factory”. If Taiwan does not have real actions on improving the over-dependency
problem to China or seeking deeper cooperation with other countries in
Southeast Asia, it will not only make Taiwan in a “marginalized” situation but also
lose its competitiveness by itself.
Under this disadvantageous situation, Taiwan should use its advantage of trade
and economy to stable its competitiveness with other foreign countries and its
economic position in Southeast Asia and Asia. Although the sovereignty problem
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with China is still an obstruction to Taiwan, economic issues should not get
entangled with political issues.
The 21st century is a century of strategic alliance. Taiwan has traditionally
focused on manufacturing activities and gained worldwide recognition for her
competitive advantage of efficient production.
However, with the increasing competition from a number of developing countries
led by mainland China, Taiwan should rethink the policies in assisting domestic
industries in their restructuring and upgrading so as to maintain her niche and
competitiveness.
Some people think "Globalization" will undermine the importance of national
economic policy and will threaten their local business.
Economic policy in the age of globalization is by no means irrelevant.
"Localization", in my view, is upgrading our traditional industries and know-how
through our international partners and enabling them to accommodate the local
environment.
In the past, manufacturing power determined competitiveness; but now
knowledge determines competitiveness. The challenge would always exist.
Only a sound legal, economic, and social structure environment would attract any
Industry worldwide to establish business operation in Taiwan.
Cameras have helped to prevent some crimes, but have aided in solving many
more. YOKO benefit from the implementation of a similar system because those
existing systems are structured in much the same manner as much more
extensive systems. There will, of course, be obstacles - most notably in the
public’s response to new systems. However, we believe that the benefits of such
a system - both in crime control and in general campus security - will outweigh
the costs.
Business Opportunities in future in Indian market for TPMS
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In India DCS Trading & Services Pvt. Ltd. Launched and promoting TPMS
360HD for off highway equipment with large bore sensors to accommodate the
bigger valve stems that typically associated with massive tyres. TPMS stands for
tyre pressure monitoring system. It does exactly what it sounds like: monitors the
pressure inside all of the tyres on off highway vehicles. TPMS designed to
monitor and display tyre pressure from 10PSI up to 188PSI.
So in future orange electronic can capture the Indian market which is greatest
opportunity for them to enter in new market and increase their market share and
also profit. India has not luxury car manufacturer till but other luxury car is selling
India with large market share. In India BMW, AUDI, MERC such luxury cars are
available that all cars already using TPMS services. TPMS is mainly use for
safety purpose so Indian company also use such services in their car and
provided services to their customers. Tire Pressure Monitoring system not use
only in luxuries car but also use in Sport cars, Bike, Truck , Bus, etc. so Orange
electronic can develop their business in India giving franchise and in other ways.
So we can say Orange electronic have greatest that will be develop their
business relation with India and on the basis of they can sale their other
electronic product in India.