Entrepreneurs Are Alive and Well in Taiwan

In a campuslike setting an hour south of Taipei, 4,000 engineers and technicians work in a nonprofit, partly government-funded research facility, mostly under contract to private industry. Close by, in a 4-year-old industrial park, fledgling high-tech companies get started with the help of government seed money.

This is the heart of Taiwan’s “Silicon Valley,” an area that’s helping to transform the economy from low-priced merchandise to technologically advanced products competitive around the world.

American-style housing is available at $100-a-month rent. There’s a bilingual school and other amenities to offset low salaries ($16,000 for senior engineers) and attract back to Taiwan a few of the 50,000 of its scientists and engineers in the United States. That’s the only type of trade deficit this island nation runs with America.

About 100 have returned so far. They come, as park administrator Lee Chuo-Hsien observes, “to try to become millionaires.” South Korea is trying to woo back some of its brain drain as well, he notes, but returnees there are joining government or big business rather than starting new businesses; “they’re becoming bureaucrats.”

He sums up in those words why Taiwan thinks that entrepreneurial spirit will give it an edge over South Korea, the nation it sees as its closest competitor. It is private enterprise that has built this country and on which it must count for continued growth. Korea, by contrast, comes to the battle with giant conglomerates, formed in part under government encouragement.

Both are turning their attention to high tech, and while neither can match the export muscle of Japan or the cutting-edge technology of less export-oriented America, both hope they can carve out attractive niches in world markets.

At the southern end of this island, which dates its industrialization only from 1949 when the Chinese Nationalist government retreated here from the Communist army, Taiwan’s ability to achieve its own optimistic goals is evident.

World-Class Facilities

Kaohsiung, Taiwan’s largest port, boasts of being the fifth-largest container cargo terminal in the world, with 11 miles of loading docks and other facilities. It is expanding to handle a 20% annual growth in container traffic, anticipating that the shift of Hong Kong to China’s hands may make it even more attractive for the massive container ships that call here.

The port also boasts a world-class steel mill and shipyard. Barely 8 years old, China Steel Corp. is one of the few in the world’s depressed steel business to be expanding. King Mao-Hui, president, whose blue-gray sports shirt and slacks are the identical uniform of his workmen, is pushing production beyond normal limits in order to meet the demand.

The company’s costs are low enough to meet prices of foreign producers dumping steel here and to earn 11% on annual sales of $1 billion (U.S.). In world markets, it can meet Japan’s price, King says.

One dock away is China Shipbuilding Corp. Unlike the steel plant, it has felt the downturn in world ship construction. Opened in 1975, it was intended to produce giant oil tankers, which soon became superfluous. But orders are picking up now that it is turning out huge container ships.

An example is the Ever Gleamy, just delivered to a Taiwan company called Evergreen Marine that’s about to become the world’s biggest container firm. The ship can carry more than 2,700 containers and operate with a crew of only 17.

China Shipbuilding and China Steel are exceptions to the free enterprise that dominates this economy. They both are government-owned, reflecting the magnitude of the financing necessary to start such operations from scratch.

The government, however, insists that it can’t guide this economy the way Korea has guided its own. The business leaders are too independent-minded. But through the government’s role in places like the industrial park and the research institute, it is trying to leave little to chance as Taiwan battles in the increasingly competitive international economy.

As Lee, the industrial park administrator, puts it with emphasis, “this is do or die, man.”