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

Service. Minding. Esteem. Awareness

Corporate Strategies for Global Management and Corporate Strategies for Global Management and Competitiveness for SMEs: Competitiveness for SMEs:

The Most Case of TaiwanThe Most Case of Taiwan

by Prof. (Dr.) Kao Kveng Hong


ContentsContents

I. SME in Taiwan at GlanceI. SME in Taiwan at Glance

II. Global Strategy of SMEs in Taiwan II. Global Strategy of SMEs in Taiwan

III. Best Practice Example III. Best Practice Example

IV. Future Global Strategy PlanIV. Future Global Strategy Plan

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Service. Minding. Esteem. Awareness I. I. SME in Taiwan at GlanceSME in Taiwan at Glance

About TaiwanAbout Taiwan

Area: 36,000 sq. km

Population: 23 million

GDP per Capita: US$20,423*

Foreign Trade （ goods ） :

World’s 18th largest trading nation*

Number of Enterprises: 1.33 million*

Number of SMEs: 1.30 million*

Ratio of SMEs to All Enterprises: 97.67%*

－－

Source : White Paper on SMEs in Taiwan, 2013 Department of Statistics, Ministry of Economic Affairs, 2013

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Criteria for Identifying SMEsCriteria for Identifying SMEs

SECTORS SMEs Micro Business

Manufacturing, Construction, Mining, Quarrying

Paid-in Capital < NT$ 80 million(US$2.6 Million)

or Employees < 200 persons

Employees < 5 persons

Service,

Commerce

Preceding year revenue < NT$ 100 million (US$3.3 million)

or Employees < 100 persons

I. I. SME in Taiwan at GlanceSME in Taiwan at Glance

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The Current Status of Taiwan The Current Status of Taiwan SMEsSMEs

All enterprises SMEs % of SMEs

No. of enterprises 1,337,890 1,306,729 97.67Total employments (thousand persons) 10,860 8,484 78.12

No. of employees (thousand persons) 8,495 6,122 72.06

Total Sales (NT$ million) (US$ million)

37,649,075(1,254,969)

11,381,770(379,392) 30.23

Domestic Sales (NT$ million) (US$ million)

27,797,659(926,589)

9,633,690(321,123) 34.66

Direct Export Sales* (NT$ million) (US$ * *million)

9,851,416(328,381)

1,748,080(58,269) 17.74

*Indirect Export Around 50% / ** 1 USD = 30 NTD Source: White Paper on SMEs in Taiwan, 2013.


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65~70%Foundation of SMEs

Middle Layer of

SMEs, Ltd. Co., 27~34%

Award StrategyAward Strategy

Guidance StrategyGuidance Strategy

Top SMEs, Ltd. Co., 1~3%

Grouping StrategyGrouping Strategy

1. National Award2. Rising Star Award3. R&D Award4. Business Start-up Award

11 Guidance Systems

1. Mutual Cooperation2. Industry Cluster3. Local Cultural Industry4. Financing Programs

Biz Startups

mechanism for supporting mechanism for supporting entrepreneurial activity & entrepreneurial activity & innovationinnovation

Conceptual Structure Conceptual Structure I. I. SME in Taiwan at GlanceSME in Taiwan at Glance

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Vision and StrategiesVision and Strategies

Integrating the SME financing mechanism

Building a platformfor business start-up

and incubation

Strengthening theSME managementguidance function

Creating a healthyenvironment for the

development of SMEs

Creating an environment beneficial

to the establishment and growth

of SMEs

Enhancing SMEs’information technology

capability


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25% ICT

23% Bio

11% Machinery

5% Environment

5% Chemistry

21% Others

2%Tourism

8% Culture130+

75

34.51

Incubators

IPO Companies

Output/Input

2,959Startup Companies

4+4 4 NBIA Soft Landings+4 EBN BIC

6,305Incubated Companies

Incubating Domain

5.4%Of Taiwan Stock Market

Business Incubation in Taiwan Business Incubation in Taiwan I. I. SME in Taiwan at GlanceSME in Taiwan at Glance

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Service. Minding. Esteem. Awareness I. I. SME in Taiwan for a GlanceSME in Taiwan for a GlanceII. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in Taiwan

127.97

130.67

133.12

125

127

129

131

133

135

2011 2012 2013

(in 10,000 firms)

8,337

8,484

8,588

8,300

8,400

8,500

8,600

8,700

2011 2012 2013

(in thousand persons)

99,584

95,954

98,821

94,000

96,000

98,000

100,000

102,000

2011 2012 2013

(firms)Number of firms growsNumber of firms grows

Created 8.5M jobsCreated 8.5M jobs

Net ~10,000 New SMEs Net ~10,000 New SMEs

Note: examples of knowledge-based services are ICT, professional, scientific and technological services.Source: Ministry of Economic Affairs; “White Paper on SMEs in Taiwan”

Growing number of Growing number of knowledge-based servicesknowledge-based services

SME Status and Trend in 2011~2013 (1/2)

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Service. Minding. Esteem. Awareness II. Global Strategy of SMEs in TaiwanII. Global Strategy of SMEs in Taiwan

SME Status and Trend in 2011~2013 (2/2)

Sources: White Paper on SMEs in Taiwan and Industry, Commerce and Service Census

Export Contribution and Propensity Down

Apparent Structural Change in Micro Enterprises

(in 10,000)2001 2006 2011 2006~2011

ACGR

Micro Manufacturer 61.79 74.46 14.88 -27.53%Micro Services 11.95 13.05 79.65 43.58%

Total 73.74 87.51 94.53 1.56%

2011 2012 2013

Export Value (in trillion NTD) 1.65 1.75 1.42

Export Contribution (%) 16.29 17.74 14.48

Export Propensity (%) 14.70 15.36 12.58

Annual Growth Rate (%) 1.85 5.95 -18.53

Products' technology content has increased, which infuses SMEs into the supply chain of larger enterprises, and thus suppressed SMEs’export contribution.

Over 1,000 SMEs have grown into large firms, and thus drives down SMEs’ propensity to export.

Facilitate the development of micro-manufacturers and put efforts into innovation and key IP in order to fuel the future growth engine in the post-financial crisis period.

Innovate the business model for micro-services, and boost the growth of knowledge-based services with potentials.

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Service. Minding. Esteem. Awareness III. Best Practice ExampleIII. Best Practice Example

O’right International: The sustainable green business Introduction Name ： O’right International Founded ： 2001 Primary Activity ： Personal Care Product

Manufacturing Capital ： 110 Million NTD

Green economic benefits:1. Annual sales reaches 240 million NTD, scaling 4 times from

2006, and employment has doubled2. Currently exporting to 25 countries, and the export growth rate

in 3 years is over 50% Green Recognitions:Gold Award and Special Award (2014), iF Design Award (2014), FT-

Standard Chartered Taiwan Business Award (2014), EPIF 2014 International Green Classics Award (2014), etc.

Sales 240 Million

Policy Support

Results

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Service. Minding. Esteem. Awareness IV. Future Global Strategy PlanIV. Future Global Strategy Plan

Comprehensive Strategy

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13

Accelerate the globalization of high growth SMEs

Bridging international resources and funds to build global high

growth SMEsSupport SMEs with high

growth potentialsOptimize the business environment

Reinforce operational capacityIncubate innovative

startupsLeverage inte-ministry resources to incubate startups with potentials

Develop common key factors and functional assisting resources for global markets

Promote high growth startups via the leverage of post-incubation mechanism

Targeted Strategy: The High Growth SMEs


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14

Policy Derivitives


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Service. Minding. Esteem. Awareness ConclusionConclusion

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

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Thank you for your attention!

For more information, please visithttp://www.moeasmea.gov.tw

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• Supplements

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Financing ResourcesFinancing Resources

SMEs SMEs & &

Start-upsStart-upsCapital Capital MarketsMarkets

Private FundsPrivate Funds

Government Government AgenciesAgencies

DomesticDomestic BanksBanks

SME SME Investment Investment CompaniesCompanies

LoansLoans

RewardReward

investinvest

Invest (15%)Invest (15%) investinvest

investinvest

Incubation Incubation Fund AccountFund Account

VCVC

SME Credit SME Credit Guarantee Guarantee

FundFund

Guarantee

investinvest

SME SME Development Development

FundFund

National National Development Development

FundFund

Policy Measures for SMEsPolicy Measures for SMEs

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Information Technology Division Enhancing SMEs’ Information Technology Capabilities

a. Strengthening SMEs’ information

management capabilities

b. Promotion of knowledge management

applications

c. Strengthening SMEs’ quality

management capabilities


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Enhancing SMEs Information Technology

Information Portal

Talent Cultivation

Communication& Network

Online Sales

e-Operation

Supply Chain Management

Knowledge Management

Micro Business Small Business Medium Business

Corporation Operation e-Network Service Project

SME e-Enablement Talent Cultivation Project

Bridging the Digital Divide of the SME Project

Industry-Specific e-Commerce Project

SME e-Business Service Project

SME Supply Chain Management Integration Project

Knowledge Management Promotion Project

(Below 5 employees) (Below 20 employees ) (Below 200 employees )

e-Infrastructure e-A

pplicatione-C

omm

erce

•The Guidance Service that’s Always By Your Side, Lifting SME e-Dream off the Ground•Provide e-Business Enabling of Independent Enterprise, Clusters, and Industries.

Diagnostic

Service

SME e-Learning Project

e-Commerce


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Financing Division Integrating the SME Financing Mechanism

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


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Policy Planning DivisionPolicy Planning Division Creating a Healthy Environment for the Development of SMEs

a. Advocating the fair laws for SMEs

b. Research on and analysis of SMEs’

business environment

c. Providing legal consulting services

d. Promotion of general planning affairs


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Management Consulting DivisionManagement Consulting Division Strengthening the SME Management Guidance Function

a. Strengthening management quality and promoting upgrading and transformation

b. Helping SMEs to secure business opportunities of government procurement

c. Development of industries with local characteristics d. Promotion of mutual assistance between enterprisese. Helping small enterprises to survive and develop


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Business Start-up and Incubation Division Building a Platform for Business Start-up and Incubation

a. Establishment of a mechanism for supporting

entrepreneurial activity and innovation

b. Strengthening the SME innovation and incubation

function

c. Strengthening SME manpower resource development

d. Participation in international activities and

cultivation of international SME talent


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One Town One Product

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

Small Business & Entrepreneurship