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

4

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

5

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

6

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.

7

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

8

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.

9

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

10

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

11

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

12

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.

13

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

14

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

15

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

16

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

17

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).

18

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

19

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

22

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.

23

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*:

24

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)

25

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.

26

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.

27

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

29

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.

30

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.

31

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

32

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

33

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.

36

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.

38

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".

41

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

42

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.

43

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

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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

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64

The profile contains critical company information including*,

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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

66

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

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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

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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.

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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

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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

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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

122

.

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.