Chapter 4 corporate strategies for global management and competitiveness for sm es

Service. Minding. Esteem. Awareness
Corporate Strategies for Global Management andCorporate Strategies for Global Management and
Competitiveness for SMEs:Competitiveness for SMEs:
The Most Case of TaiwanThe Most Case of Taiwan
by Prof. (Dr.) Kao Kveng Hong

ContentsContents
I. SME in Taiwan at GlanceI. SME in Taiwan at GlanceI. SME in Taiwan at GlanceI. SME in Taiwan at Glance
II. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in Taiwan
III. Best Practice ExampleIII. Best Practice ExampleIII. Best Practice ExampleIII. Best Practice Example
IV. Future Global Strategy PlanIV. Future Global Strategy PlanIV. Future Global Strategy PlanIV. Future Global Strategy Plan

3
Service. Minding. Esteem. Awareness I.I. SME in Taiwan at GlanceSME in Taiwan at Glance
About TaiwanAbout Taiwan
Area: 36,000 sq. km
Population: 23 million
GDP per Capita: US$20,423*
Foreign Trade （ goods ） :
World’s 18th
largest trading nation*
Number of Enterprises: 1.33 million*
Number of SMEs: 1.30 million*
Ratio of SMEs to All Enterprises: 97.67%*
－－
Source : White Paper on SMEs in Taiwan, 2013
Department of Statistics, Ministry of Economic Affairs, 2013

4
Criteria for Identifying SMEsCriteria for Identifying SMEs
SECTORS SMEs
Micro
Business
Manufacturing,
Construction,
Mining,
Quarrying
Paid-in Capital < NT$ 80 million
(US$2.6 Million)
or Employees < 200 persons
Employees
< 5 persons
Service,
Commerce
Preceding year revenue < NT$ 100 million
(US$3.3 million)
or Employees < 100 persons
I.I. SME in Taiwan at GlanceSME in Taiwan at Glance

5
The Current Status of TaiwanThe Current Status of Taiwan
SMEsSMEs
All enterprises SMEs
% of
SMEs
No. of enterprises 1,337,890 1,306,729 97.67
Total employments
(thousand persons)
10,860 8,484 78.12
No. of employees
(thousand persons)
8,495 6,122 72.06
Total Sales (NT$ million)
(US$ million)
37,649,075
(1,254,969)
11,381,770
(379,392) 30.23
Domestic Sales (NT$ million)
(US$ million)
27,797,659
(926,589)
9,633,690
(321,123) 34.66
Direct Export Sales*
(NT$ million)
(US$ * *
million)
9,851,416
(328,381)
1,748,080
(58,269) 17.74
*Indirect Export Around 50% / ** 1 USD = 30 NTD
Source: White Paper on SMEs in Taiwan, 2013.

6
65~70%
Foundation of SMEs
Middle
Layer of
SMEs, Ltd. Co.,
27~34%
Award StrategyAward Strategy
Guidance StrategyGuidance Strategy
Top SMEs,
Ltd. Co., 1~3%
Grouping StrategyGrouping Strategy
1. National Award
2. Rising Star Award
3. R&D Award
4. Business Start-up Award
11 Guidance Systems
1. Mutual Cooperation
2. Industry Cluster
3. Local Cultural Industry
4. Financing Programs
BizStartups
mechanism for supportingmechanism for supporting
entrepreneurial activity &entrepreneurial activity &
innovationinnovation
Conceptual StructureConceptual Structure

7
Vision and StrategiesVision and Strategies
Integrating the SME
financing mechanism
Building a platform
for business start-up
and incubation
Strengthening the
SME management
guidance function
Creating a healthy
environment for the
development of SMEs
Creating an
environment beneficial
to the establishment
and growth
of SMEs
Enhancing SMEs’
information technology
capability

8
25%
ICT
23%
Bio
11%
Machinery
5%
Environment
5%
Chemistry
21%
Others
2%
Tourism
8%
Culture
130+
75
34.51
Incubators
IPO Companies
Output/Input
2,959Startup Companies
4+4 4 NBIA Soft
Landings+4 EBN BIC
6,305Incubated Companies
Incubating Domain
5.4% Of Taiwan Stock Market
Business Incubation in TaiwanBusiness Incubation in Taiwan

9
Service. Minding. Esteem. Awareness I.I. SME in Taiwan for a GlanceSME in Taiwan for a GlanceII. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in Taiwan
127.97
130.67
133.12
125
127
129
131
133
135
2011 2012 2013
(in 10,000firms)
8,337
8,484
8,588
8,300
8,400
8,500
8,600
8,700
2011 2012 2013
(in thousand persons)
99,584
95,954
98,821
94,000
96,000
98,000
100,000
102,000
2011 2012 2013
(firms)
Number of firms growsNumber of firms grows
Created 8.5M jobsCreated 8.5M jobs
Net ~10,000 New SMEsNet ~10,000 New SMEs
Note: examples of knowledge-based services are ICT, professional, scientific and technological services.
Source: Ministry of Economic Affairs; “White Paper on SMEs in Taiwan”
Growing number ofGrowing number of
knowledge-based servicesknowledge-based services
 SME Status and Trend in 2011~2013 (1/2)

10
II. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in Taiwan
 SME Status and Trend in 2011~2013 (2/2)
Sources: White Paper on SMEs in Taiwan and Industry, Commerce and
Service Census
Export Contribution and Propensity Down
Apparent Structural Change in Micro Enterprises
(in 10,000)
2001 2006 2011 2006~2011
ACGR
Micro Manufacturer 61.79 74.46 14.88 -27.53%
Micro Services 11.95 13.05 79.65 43.58%
Total 73.74 87.51 94.53 1.56%
2011 2012 2013
Export Value (in trillion NTD) 1.65 1.75 1.42
Export Contribution (%) 16.29 17.74 14.48
Export Propensity (%) 14.70 15.36 12.58
Annual Growth Rate (%) 1.85 5.95 -18.53
 Products' technology content has
increased, which infuses SMEs into
the supply chain of larger
enterprises, and thus suppressed
SMEs’export contribution.
 Over 1,000 SMEs have grown into
large firms, and thus drives down
SMEs’ propensity to export.
 Facilitate the development of micro-
manufacturers and put efforts into
innovation and key IP in order to
fuel the future growth engine in the
post-financial crisis period.
 Innovate the business model for
micro-services, and boost the
growth of knowledge-based services
with potentials.

11
III. Best Practice ExampleIII. Best Practice Example
 O’right International: The sustainable green business
 Introduction
 Name ： O’right International
 Founded ： 2001
 Primary Activity ： Personal Care Product
Manufacturing
 Capital ： 110 Million NTD
 Green economic benefits:
1. Annual sales reaches 240 million NTD, scaling 4 times from
2006, and employment has doubled
2. Currently exporting to 25 countries, and the export growth rate
in 3 years is over 50%
 Green Recognitions:
Gold Award and Special Award (2014), iF Design Award (2014), FT-
Standard Chartered Taiwan Business Award (2014), EPIF 2014
International Green Classics Award (2014), etc.
Sales 240 Million
Policy Support
Results

12
IV. Future Global Strategy PlanIV. Future Global Strategy Plan
 Comprehensive Strategy

13
13
Accelerate the globalization of high
growth SMEs
Bridging international resources and funds to
build global high growth SMEs
Support SMEs with high growth
potentials
Optimize the business environment
Reinforce operational capacity
Incubate innovative startups
Leverage inte-ministry resources to incubate
startups with potentials
 Develop common key factors and functional assisting
resources forglobal markets
 Promote high growth startups via the leverage of post-
incubation mechanism
 Targeted Strategy: The High Growth SMEs

14
14
 Policy Derivitives

15
 ConclusionConclusion
Taiwan, Your Best Business Partner!Taiwan, Your Best Business Partner!
Taiwan has the world-class
entrepreneurship and industrial
cluster environment. We look
forward to further cooperation
with the other countries around the
world.
Taiwan has the world-class
entrepreneurship and industrial
cluster environment. We look
forward to further cooperation
with the other countries around the
world.

16
Thank you for your attention!
For more information, please visit
http://www.moeasmea.gov.tw

17
• Supplements

18
Financing ResourcesFinancing Resources
SMEsSMEs
&&
Start-upsStart-ups
CapitalCapital
MarketsMarkets
CapitalCapital
MarketsMarkets
Private FundsPrivate FundsPrivate FundsPrivate Funds
GovernmentGovernment
AgenciesAgencies
GovernmentGovernment
AgenciesAgencies
DomesticDomestic
BanksBanks
DomesticDomestic
BanksBanks
SMESME
InvestmentInvestment
CompaniesCompanies
SMESME
InvestmentInvestment
CompaniesCompanies
LoansLoans
RewardReward
invest
invest
Invest (15%)Invest (15%)
invest
invest
invest
invest
IncubationIncubation
Fund AccountFund Account
IncubationIncubation
Fund AccountFund Account
VCVCVCVC
SME CreditSME Credit
GuaranteeGuarantee
FundFund
SME CreditSME Credit
GuaranteeGuarantee
FundFund
Guarantee
investinvest
SMESME
DevelopmentDevelopment
FundFund
SMESME
FundFund
NationalNational
FundFund
NationalNational
FundFund
Policy Measures for SMEsPolicy Measures for SMEs

19
Information Technology Division
 Enhancing SMEs’ Information Technology Capabilities
a. Strengthening SMEs’ information
management capabilities
b. Promotion of knowledge management
applications

20
Enhancing SMEs Information Technology
Information
Portal
Talent Cultivation
Communication
& Network
Online Sales
e-Operation
Supply Chain
Management
Knowledge
Management
Micro Business Small Business Medium Business
Corporation Operation e-Network Service Project
SME e-Enablement Talent Cultivation Project
Bridging the Digital Divide of the SME Project
Industry-Specific e-Commerce Project
SME e-Business Service Project
SME Supply Chain Management
Integration Project
Knowledge Management
Promotion Project
(Below 5 employees) (Below 20 employees ) (Below 200 employees )
e-Infrastructuree-Applicatione-Commerce
•The Guidance Service that’s Always By Your Side, Lifting SME e-Dream off the Ground
•Provide e-Business Enabling of Independent Enterprise, Clusters, and Industries.
DiagnosticService
SME e-Learning Project
e-Commerce

21
Financing Division
 Integrating the SME Financing Mechanism
a. Strengthening the functions of the One-stop Service
Center
b. Holding various SME Joint Services to help SMEs
solve financing problems
c. Encouraging the development of sound financing and
accounting systems
d. Promoting Credit Guarantee Fund, Joint Assistance
Fund to offer SMEs various diagnosis, financing and
credit guarantee
e. Establishing trust investment account for start-up
enterprise and incubation

22
Policy Planning DivisionPolicy Planning Division
 Creating a Healthy Environment for the Development of SMEs
a. Advocating the fair laws for SMEs
b. Research on and analysis of SMEs’
business environment
c. Providing legal consulting services
d. Promotion of general planning affairs

23
Management Consulting DivisionManagement Consulting Division
 Strengthening the SME Management Guidance Function
a. Strengthening management quality and
promoting upgrading and transformation
b. Helping SMEs to secure business opportunities
of government procurement
c. Development of industries with local characteristics
d. Promotion of mutual assistance between enterprises
e. Helping small enterprises to survive and develop

24
Business Start-up and Incubation Division
 Building a Platform for Business Start-up and Incubation
a. Establishment of a mechanism for supporting
entrepreneurial activity and innovation
b. Strengthening the SME innovation and incubation
function
c. Strengthening SME manpower resource development
d. Participation in international activities and
cultivation of international SME talent

25
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