Competitive Advantage Case Study

Taiwan as an R&D Hub

OR

Abstract:
A tough election battle lies ahead of Taiwan's President Chen Shui-bian in March 2004. No doubt, his island nation, noted for its PC and semiconductor facilities, remains a manufacturing mecca of the computer industry. The country makes two-thirds of the world's notebook PCs and desktop PC components. By 2003, many multinational corporations (MNCs) had either set up their research and development (R&D) facilities in Taiwan or planned to do so in the near future. Yet, all was not well in Taiwan. Taiwanese companies based in China made most of the machines and parts. The country faced competition in R&D from Korea and China. MNCs could bypass Taiwan and make China their R&D base. Taiwan's own chipmakers were moving out more and more of their chip design and customer support processes to China. In 2003, Taiwan faced a shortage of 10,000 engineers. MNCs in Taiwan either had to pay more and hire available local talent or else scout overseas for the same. The US and British labour unions were concerned over losing jobs to low cost destinations such as Taiwan. However, the Chen administration was working with Taiwan's business and industry to promote the country as an R&D hub through initiatives such as science-based industrial parks, tax incentives, innovative alliances, innovation incubators, financial support via venture capital companies etc.

Pedagogical Objectives:

• To discuss the rise of Taiwan as an R&D hub and the reasons for losing its position to other countries like China and South Korea
• To discuss possible steps that the government can take to regain the lost position

Keywords : Research and development (R&D), Taiwan as an R&D hub, Taiwan, China's R&D, Labour cost, Lean production, Manufacturing overheads, Technology Management Case Study, Original design manufacturer, Industrial park, Industrial upgrading, Venture capital, Small and medium enterprises, Industrial automation and innovation, Intel