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EDITORIAL: Come down
from the clouds
President Ma Ying-jeo’s (馬英九) nomination of outgoing Google executive and
technology veteran Simon Chang (張善政) as minister-without-portfolio last week
raised the hope that a much-needed overhaul of the nation’s high-tech industry
is near, as pressure mounts from primary global rival South Korea.
Chang’s resume makes his appointment persuasive. Chang, 57, was head of Google’s
Asia-Pacific Hardware Operations, and before that he worked at the National
Science Council and was a vice president at local PC firm Acer. With close links
to Taiwan’s high-tech circle, Chang can argue for the government to take a more
effective approach to benefit high-tech firms and make concrete suggestions to
help reshape the industry.
However, Chang cannot restructure an entire industry on his own. All government
agencies will have to work together to drive growth, Chang has said.
His remarks reflect the sad truth that for a long time, a critical problem has
been the government’s poor efficiency and inability to formulate or carry out
adequate policies, which has led to the failure to upgrade the nation’s
high-tech sector. Chang said he wants to bridge the gap between the government
and local technology companies.
Chang’s concern is genuine. Over a long period of time, the lack of government
stimulus programs and financial incentives has meant that Taiwanese companies
have been relying on cost cuts to squeeze ever slimmer profits out of the
manufacturing process. Because of their small scale and their predominant focus
on manufacturing rather than development, they cannot afford the massive
research and development outlays of their global rivals. However, the
exclusively cost-cutting approach is not enough for them to survive intensifying
competition in everything from from chip manufacturing to the PC brand sector.
Taiwan’s shaky DRAM industry is a perfect example. Lacking timely government
capital injections and the advanced technologies available to competitors,
Taiwanese companies are scaling back production in a fight for survival. They
now only play a marginal role in the world’s DRAM industry after their market
share shrank to less than 7 percent at the end of last year from 10 percent at
its beginning.
There are successful Taiwanese companies that still shine on the global stage.
Hon Hai Technology Group and Taiwan Semiconductor Manufacturing Co are two of
them. However, both companies’ chairmen — Terry Gou (郭台銘) of Hon Hai and TSMC’s
Morris Chang (張忠謀) — complain that the government has given them little help in
growing their companies.
Now, as minister-without-portfolio, Chang wants the government to have a greater
say in the development of cloud-computing technology, to make the nation a
leading production center. The government should play a central role in
developing applications of cloud-computing technology in the medical and
education sectors in order to encourage more firms to participate in this
industry, he said.
It is good that the government wants to help, but it has to help in the right
manner. This is the old fashioned and inappropriate way — identify a promising
new industry with stellar growth prospects and then simply encourage firms to
join the game.
The government should learn from history. The nation’s debt-ridden DRAM and LCD
sectors are the unsuccessful cases. Too many companies entered these “promising”
industries after being encouraged to by the government, which only led to
oversupply and a price collapse.
The government should listen more, if Chang wants to do his job better.
Taiwanese corporate executives have been calling for a pro-business environment
that can safeguard their investments and for effective policies that can help
boost their competitiveness against global rivals. With or without Chang, these
things can be achieved — if the government listens.
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