Taiwan adopts high-tech brand culture

Neihu was once hardly the kind of place cutting-edge technology companies would want to call home.

A decade ago, it was a stretch of flat swampland on the outskirts of Taipei.

But today, a quick tour through the Neihu Technology Park presents a new Silicon Valley: stylish restaurants, cafes and modern buildings.

The 150ha park is central to Taiwan's goal of transforming a manufacturing economy into a knowledge-based one.

The aim is to attract the brains of high-tech firms - their research and development centres - and biotech start-ups, as manufacturing increasingly goes to lower-cost China.

Taiwan has long supplied computers and tech gadgetry to global brands such as Dell and Hewlett-Packard.

It has only been in recent years, amid meagre sub-contracting margins, that companies have been beefing up their ability to innovate and create their own brands.

"Taiwanese companies are now realising the value of marketing and design," said Manfred Wang, who leads a 70-person award-winning design team at BenQ's headquarters in Neihu, a 30-minute bus ride from downtown Taipei.

Aiming to emulate the success of Sony and Samsung Electronics, the US$5.2 billion ($7.3 billion) Taiwan company is stepping up promotion of its purple, butterfly-shaped trademark.

BenQ, which spun off from one of the few internationally recognisable Taiwan brands, Acer, three years ago, expects own-brand gadgets such as hip MP3 players, digital cameras, cellphones and flat TVs to make up half of revenue by 2008.

As part of efforts to transform Taiwan into a "green silicon island", the Government offers tax incentives to attract foreign companies to establish R&D centres on the island. It expects its technology budget to grow 10 to 12 per cent annually.

But some doubt whether Taiwan can continue to improve its environment for innovation when the Government has run a fiscal deficit since 2000.

Taiwan companies tend to be stingy on R&D, with government data showing expenditure from the public and private sectors at US$12.2 billion in 2002, or 2.3 per cent of gross domestic product.

While that was up from 2.16 per cent in 2001, it still lags behind the United States' 2.82 per cent and Germany's 2.5 per cent. South Korea and Japan have allocated more than 3 per cent to R&D, while Taiwan aims for 3 per cent by next year.

"The Government is doing the right thing but the spending growth has been not significant in recent years," said Chen Shin-horng, an economist at Taiwan's Chung Hua Institution for Economic Research.

Most companies seek to improve their manufacturing process to reduce costs, instead of product innovation. A smaller pool of manpower in basic research and innovation is another concern.

"Our companies should think more about what PCs would look like in the future and do something on brands," Chen said.

With competition in the contract computer market encouraging innovation, about 1800 companies, including some telcos and banks, have moved into Neihu, triple the number three years ago.

Neihu hosts Mitac International, which moved up the value-added ladder by making Mio-brand smartphones, and digital camera maker Premier Image Technology.

Other computer hardware makers such as Compal Electronics and Lite-On Technology also have R&D centres in Neihu in the hope that product innovation can help them win contracts.

Taipei mayor Ma Ying-jeou said the main reasons Neihu could attract R&D centres were good telecommunications services and its proximity to big universities and research institutions.

"The cluster effect, which we tried hard to create, has come about."

- REUTERS