Repositioning Taiwan’s Industry: A Service-Added Manufacturing Industry 產業重定位:服務加值型製造業 Tain-Jy Chen National Taiwan Univer...
<ul><li>Strengths of Taiwan’s Manufacturing Industry </li></ul><ul><li>Double capabilities of cost reduction and flexible ...
<ul><li>Why were these capabilities lost? </li></ul><ul><li>Taiwan was no longer a low-wage country. </li></ul><ul><li>Chi...
<ul><li>What was left in Taiwan? </li></ul><ul><li>The middle-stream of the manufacturing industry was left with both up- ...
Example: Notebook PC <ul><li>The concentration of notebook PC production in Eastern China increased the pressure for LCD p...
<ul><li>The ways to maintain materials, components and parts industry in Taiwan: </li></ul><ul><li>Possessing and maintain...
<ul><li>Service-added manufacturing </li></ul><ul><li>Cost-based manufacturing:  </li></ul><ul><ul><li>Production to order...
<ul><li>B2B manufacturer </li></ul><ul><li>Possible services to be added: </li></ul><ul><li>Product development service (O...
<ul><li>B2C manufacturer </li></ul><ul><li>Be able to directly service the consumers rather than servicing them indirectly...
<ul><li>How will the new business model differ from the past? </li></ul><ul><li>Past: </li></ul><ul><ul><li>Taking the ord...
<ul><li>Key assets to be built </li></ul><ul><li>Relational assets – B2B & B2C brands and trust </li></ul><ul><li>Processi...
<ul><li>Build a user-driven production chain </li></ul><ul><li>R&D: </li></ul><ul><ul><li>Invest in technologies that prov...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Production: </li></ul><ul><ul><li>Engage in first-batch pro...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Machinery and Equipment: </li></ul><ul><ul><li>Engage in th...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Materials: </li></ul><ul><ul><li>Develop new materials to e...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Inter-discipline integration: </li></ul><ul><ul><li>Integra...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Technology depth: </li></ul><ul><ul><li>Encourage technolog...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Cross-country resources integration: </li></ul><ul><ul><li>...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Reaching out to consumers: </li></ul><ul><ul><li>Invest in ...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Responding to mega-trends of the global market: </li></ul><...
<ul><li>Build a user-driven production chain </li></ul><ul><li>Exploiting the idiosyncrasy of the local markets: </li></ul...
<ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>Tax incentive: </li></ul><ul><ul><li>Encour...
<ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>The R&D team: </li></ul><ul><ul><li>Mostly ...
<ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>The R&D personnel: </li></ul><ul><ul><li>En...
<ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>The R&D stage: </li></ul><ul><li>R&D locati...
<ul><li>The role of China </li></ul>7- B2B B2C Other manufacturers Taiwanese manufacturers in China Taiwanese manufacturer...
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服務加值型製造業

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服務加值型製造業

  1. 1. Repositioning Taiwan’s Industry: A Service-Added Manufacturing Industry 產業重定位:服務加值型製造業 Tain-Jy Chen National Taiwan University August 3, 2006
  2. 2. <ul><li>Strengths of Taiwan’s Manufacturing Industry </li></ul><ul><li>Double capabilities of cost reduction and flexible production. </li></ul><ul><li>These capabilities have been achieved by vertical disintegration and mass production, with the latter being supported by low labor costs. </li></ul>7-
  3. 3. <ul><li>Why were these capabilities lost? </li></ul><ul><li>Taiwan was no longer a low-wage country. </li></ul><ul><li>China provided a better environment for mass production. </li></ul>7-
  4. 4. <ul><li>What was left in Taiwan? </li></ul><ul><li>The middle-stream of the manufacturing industry was left with both up- and down-streams outside of Taiwan. (Two-ends out?) </li></ul>7-
  5. 5. Example: Notebook PC <ul><li>The concentration of notebook PC production in Eastern China increased the pressure for LCD panels to relocate to China, starting from the late-stage assembly (LCM).R&D also moves. </li></ul>7- Fabricated materials (Japan) Glass substrate & Film production (Japan & US) LCD panels (Taiwan) Notebook PC (China)
  6. 6. <ul><li>The ways to maintain materials, components and parts industry in Taiwan: </li></ul><ul><li>Possessing and maintaining tacit know-how in materials and processing technologies </li></ul><ul><li>Transforming cost-based manufacturing to service-added manufacturing </li></ul>7-
  7. 7. <ul><li>Service-added manufacturing </li></ul><ul><li>Cost-based manufacturing: </li></ul><ul><ul><li>Production to order in such a way that cost is minimized, quality warranted, and time to market the shortest. </li></ul></ul><ul><li>Service-added manufacturing: </li></ul><ul><ul><li>Adding a service component to conventional concept of manufacturing so as to enhance the value of the manufactured goods, making the manufacturer indispensable. </li></ul></ul>7-
  8. 8. <ul><li>B2B manufacturer </li></ul><ul><li>Possible services to be added: </li></ul><ul><li>Product development service (ODM) </li></ul><ul><li>Global logistics (inventory cost reduction) </li></ul><ul><li>IP service </li></ul><ul><li>Product design assistance </li></ul><ul><li>Creation of customer-specific product functions </li></ul><ul><li>Innovation-enabled components </li></ul><ul><li>Modularization (disintegrated product design and manufacturing) </li></ul><ul><li>Multi-function integrated services </li></ul>7-
  9. 9. <ul><li>B2C manufacturer </li></ul><ul><li>Be able to directly service the consumers rather than servicing them indirectly through the buyers – establishing a consumer brand. </li></ul>7-
  10. 10. <ul><li>How will the new business model differ from the past? </li></ul><ul><li>Past: </li></ul><ul><ul><li>Taking the order from the buyers without knowing the consumers </li></ul></ul><ul><li>Future: </li></ul><ul><ul><li>Addressing the needs of consumers and producers (called users hereafter) </li></ul></ul>7-
  11. 11. <ul><li>Key assets to be built </li></ul><ul><li>Relational assets – B2B & B2C brands and trust </li></ul><ul><li>Processing know-how, materials, and proprietary equipment </li></ul>7-
  12. 12. <ul><li>Build a user-driven production chain </li></ul><ul><li>R&D: </li></ul><ul><ul><li>Invest in technologies that provide new services to users, or solve their existing problems. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>R&D to catch up with leading technologies. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Never possess key technologies. </li></ul></ul>7-
  13. 13. <ul><li>Build a user-driven production chain </li></ul><ul><li>Production: </li></ul><ul><ul><li>Engage in first-batch production to test the water of the market. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Will not enter the market until mass production is possible. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>The cost falls sharply when Taiwanese manufacturers embarks on mass production. </li></ul></ul>7-
  14. 14. <ul><li>Build a user-driven production chain </li></ul><ul><li>Machinery and Equipment: </li></ul><ul><ul><li>Engage in the design and manufacturing of own machinery and equipment to protect proprietary processing technologies. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Purchase machinery and equipment from Japan, Germany and USA whereupon to pursue high yield rates. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Market entry is possible whenever machinery and equipment is available, resulting in rapid increases in the volume of production, pushing down the prices fast, and unable to prevent cost competition. </li></ul></ul>7-
  15. 15. <ul><li>Build a user-driven production chain </li></ul><ul><li>Materials: </li></ul><ul><ul><li>Develop new materials to enable new functions and services. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Purchase materials from foreign providers. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Shift the rent to material providers when the volume of production increases; always attempt to cut costs in the processing and assembly stages rather than materials. </li></ul></ul>7-
  16. 16. <ul><li>Build a user-driven production chain </li></ul><ul><li>Inter-discipline integration: </li></ul><ul><ul><li>Integrate technologies from different fields to create new functions and services (knowledge combination). </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Most companies are thinly specialized in their knowledge base. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Production chain and job division, so is the location of production, are dictated by international buyers who perform the role of knowledge combination. </li></ul></ul>7-
  17. 17. <ul><li>Build a user-driven production chain </li></ul><ul><li>Technology depth: </li></ul><ul><ul><li>Encourage technology accumulation within the company. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Shallow technology capability of individual companies with high turnover rates of technological personnel. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Quick dispersion of technology throughout the industry, leading to fast increases in production volume, but unable to maintain the technological edge. </li></ul></ul>7-
  18. 18. <ul><li>Build a user-driven production chain </li></ul><ul><li>Cross-country resources integration: </li></ul><ul><ul><li>Build a capability to integrate technology resources across countries. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Licensing technologies from foreign countries to complement with a small assortment of indigenous technologies. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Both the production and market ranges are limited by the technology licensor, forbidding cross-country integration. </li></ul></ul>7-
  19. 19. <ul><li>Build a user-driven production chain </li></ul><ul><li>Reaching out to consumers: </li></ul><ul><ul><li>Invest in consumer research to build a capacity for genuine product innovation. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Never understood the consumer needs. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>ODM-type innovation only (serving the buyers, not the users). </li></ul></ul>7-
  20. 20. <ul><li>Build a user-driven production chain </li></ul><ul><li>Responding to mega-trends of the global market: </li></ul><ul><ul><li>Develop products and technologies in response to mega trends of the global market, such as energy saving, aging and environmental conservation. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Only responding to buyer demands and regulations in the advanced markets. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Defensive technological development strategies. </li></ul></ul>7-
  21. 21. <ul><li>Build a user-driven production chain </li></ul><ul><li>Exploiting the idiosyncrasy of the local markets: </li></ul><ul><ul><li>Develop products and technologies that address the special needs of the local markets. </li></ul></ul><ul><li>Past pattern: </li></ul><ul><ul><li>Product and technology development were always outward looking. </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Unable to develop a local-based competitive edge in the world market. </li></ul></ul>7-
  22. 22. <ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>Tax incentive: </li></ul><ul><ul><li>Encourage innovation, not production or capital investment; promote value rather than volume. </li></ul></ul><ul><li>Benchmark for a good company: </li></ul><ul><ul><li>Most efficient company -> Number one -> Only one </li></ul></ul><ul><li>Aim of R&D policy: </li></ul><ul><ul><li>To enable low-cost production -> To enable unique services </li></ul></ul>7-
  23. 23. <ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>The R&D team: </li></ul><ul><ul><li>Mostly engineers -> A mix of engineers, scientists, and artists </li></ul></ul><ul><li>The R&D theme: </li></ul><ul><ul><li>Top down approach -> Bottoms up approach (The users dictate the R&D theme) </li></ul></ul>7-
  24. 24. <ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>The R&D personnel: </li></ul><ul><ul><li>Encourage long-term development of R&D personnel; avoid short-term exploitation of R&D resources (such as R&D military service). </li></ul></ul><ul><li>Research collaboration between colleges and enterprises: </li></ul><ul><ul><li>Encourage R&D collaboration between colleges and local enterprises to support a locally centered industry cluster. </li></ul></ul>7-
  25. 25. <ul><li>Strategies supporting a user-driven production chain </li></ul><ul><li>The R&D stage: </li></ul><ul><li>R&D location: </li></ul><ul><ul><li>Relocate part of product development to China and focus on technology research in Taiwan. </li></ul></ul>7- Basic R&D Technology development Product development Basic R&D Technology development Product development
  26. 26. <ul><li>The role of China </li></ul>7- B2B B2C Other manufacturers Taiwanese manufacturers in China Taiwanese manufacturers in China & others Taiwanese manufacturers in Taiwan OEM / ODM brand marketers Chinese consumers World consumers World consumers Materials & Equipments

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