Taiwan SME Policy Formulation and SME Development and SME Development Dr. Robert S. Q. Lai Director...

Taiwan SME Policy FormulationTaiwan SME Policy Formulation

and SME Developmentand SME Development

Dr. Robert S. Q. LaiDr. Robert S. Q. Lai

Director GeneralDirector General

Small and Medium Enterprise AdministrationSmall and Medium Enterprise Administration

Ministry of Economic AffairsMinistry of Economic Affairs

TaiwanTaiwan

November 27, 2007 November 27, 2007

Service. Minding. Esteem. Awareness

CACCI Chambers Operation Course

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CONTENTSCONTENTS

I. Foreword

II. Experience of Taiwan’s Economic Development

III. Government Policies

IV. Role of SMEs in 2006

V. Policy Formulation for Fostering SMEs

VI. Key Measures for SMEs Development

VII.Conclusion and Suggestions

3


I. Foreword

*Statistics in 2006

About Taiwan

Area: 36,000 sq. km

Population: 22.87million*

Per Capita Income: US$16,471*

Foreign Trade: World’s 16th-

largest trading nation*

Number of Enterprises: 1.27 million*

Number of SMEs: 1.24million*

Ratio of SMEs to All Enterprises: 97.8%*

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II. Experience of Taiwan’s Economic Development1. An Outline of Taiwan’s Economic Growth

YEAR 1952 2006

Population 8.13million 22.87million

GNP US$1,674million US$374.5billion

Per Capita GNP US$196 US$16,471

Agri. Output/GDP 32.2% 1.53%

Industrial Output /GDP

19.7% 26.81%

Exports US$116million US$224billion

Imports US$187million US$202.7billion

Foreign Exchange Reserves

Less than US$100million US$266.2billion

Sources: Statistics Indicators of Major Countries, Statistic Department, MOEA, March 2007

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Unit: %

Sources: 1. Taiwan Statistical Data Book 2006, CEPD, June 2007 2. Statistics Indicators of Major Countries, Statistic Department, MOEA, May 2007 3. Directorate General of Budget, Accounting and Statistics, 2007

2. Structure of Production (% of GDP by Sector)

Year Agriculture Industry Manufacturing Services

1952 32.2 19.7 12.9 48.1

1960 28.5 26.9 19.1 44.6

1970 15.5 36.8 29.2 47.7

1980 7.7 45.7 36.0 46.6

1990 4.2 41.2 33.3 54.6

2006 1.53 26.81 23.02 71.65

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3. Policies and Strategies in Different Stages of Taiwan’s Economic Development

(1) Import-Substitution / Labor-Intensive Industry : 1953-1962

(2) Export-Expansion / Light Industry : 1963-1972(3) Import-Substitution / Heavy Industry :

1973-1980(4) Industry Upgrade / Strategy Industry :

1981-1990(5) Hi-Tech Industry : 1991-2000(6) Creative R&D Industry : after 2001

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4. Economic Developing Process of Taiwan

19901970 19801950 20001960 2010

Admittedto WTO

Jan 2002

(1) Economic Development Stages

Labor Intensive Industry

Light Industry

Strategic Industry

Creative R&D

IndustryHi-Tech Industry

Heavy Industry

2) 1950 – 2000 Economic Growth Rate : 8.1%(Average) 2001 Economic Growth Rate : - 2.18% 3) 2002 Economic Growth Rate : 4.6%

2003 Economic Growth Rate : 3.43% 2004 Economic Growth Rate : 6.07% 2005 Economic Growth Rate : 4.09% 2006 Economic Growth Rate : 4.62% 4) 2006 GDP Structure : Service Sector 71.65% Industry Sector 26.81% Agriculture Sector 1.53%

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5.The Current Status of SMEs in Taiwan

Source: White Paper on SMEs, 2007

All enterprisesAll enterprises SMEsSMEs% of % of SMEsSMEs

No. of enterprisesNo. of enterprises 1,272,5081,272,508 1,244,0991,244,099 97.7797.77

Total employments Total employments (thousand persons)(thousand persons)

10,11110,111 7,7517,751 76.6676.66

No. of employeesNo. of employees (thousand persons)(thousand persons)

7,5427,542 5,1865,186 68.7768.77

Total Sales (NTD million)Total Sales (NTD million) (USD million)(USD million)

34,326,07034,326,070(1,040,183)(1,040,183)

10,241,21510,241,215(310,339)(310,339) 29.8429.84

Domestic Sales (NTD million)Domestic Sales (NTD million) (USD million)(USD million)

25,594,31825,594,318(775,585)(775,585)

8,678,9928,678,992(262,999)(262,999) 33.9133.91

Export Sales (NTD million)Export Sales (NTD million) (USD million)(USD million)

8,731,7538,731,753(264,598)(264,598)

1,562,2241,562,224(47,340)(47,340) 17.8917.89

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6. Enterprise Ages in Taiwan

Age 2002 2003 2004 2005

2006

Total enterpris

esSMEs

% of SMEs

Less than 1 year

91,435 112,154 108,610 125,667 108,673 108,320 8.71

1 – 2 years 94,036 104,183 110,649 108,989 121,466 120,530 9.69

2 – 3 years 77,477 82,234 87,612 96,365 92,503 91,400 7.35

3- 4 years 70,554 69,545 70,895 79,583 84,648 83,272 6.69

4- 5 years 63,851 64,843 61,321 65,055 71,610 70,133 5.64

5- 10 years 233,742 248,300 245,280 249,414 253,746 247,247 19.87

10- 20 years

279,065 283,225 287,444 298,662 299,282 290,121 23.32

Over 20 years

194,546 207,296 218,365 229,959 240,580 233,076 18.73

Total 1,104,706 1,171,780 1,190,176 1,253,694 1,272,508 1,244,099 100

units: no. of enterprises

Source: Collected from Ministry of Finance Tax Data Center Business Tax statistics.

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Trends of Industrial Development and Transformation

Years

Resource Resource DriveDrive

Investment Investment DriveDrive

(Capital)

Innovation Innovation DriveDrive

(Knowledge)

Current Stage Current Stage Of TaiwanOf Taiwan

7. SME’s Development Policy Formation in Taiwan

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8. Relationship of Entrepreneurship & Economic Growth

Transformation and Upgrade

Emergence of new SMEs with technology-oriented & high added value

Straits and Predicament

ClosedMoved out

Replenish

Establish another

new business

Positive Recycle of Economic Development

Enterprises and

Industries

Existed Enterprises

Start-Ups

Economic Development

& Growth

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III. Government Policies

4 Major Investments 10 Major Plans

1 e-Generation HR Training Plan

2 Culture Innovation Industrial Development Plan 3 International Innovation and R&D Base Plan 4 High value-added Industrial Plan

5 Double Tourists Plan 6 e-Taiwan Plan 7 Operation Headquarters Plan 8 Island-wide Transport Skeleton Plan 9 Conserve Water Resources & Ecology 10 New Urban Community Construction Plan

(3) International Logistics to Build Taiwan as Regional Operation Headquarters

(1) Cultivate Talent with View of Internationalization & Innovation Ability

(2) R&D and Innovation to Develop Taiwan into R&D and Global Supply Center of Products with High Value-added

(4) High-quality Living Environment to Build up Taiwan Barrier-free Sustained Living Environment

1. Challenge 2008: National Development Plan ( 336 sub-plans at NT$2.5 trillion budget )

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2 International Arts & Popular Music Center(NT$33.4B)3 M Taiwan Plan(NT$37B)4 Taiwan Expo(NT$30.1B)

5 Convert Taiwan Railway Into High Speed Railroad System (NT$39.9B)6 Third-stage Highway Program(NT$43.9B)7 Convert Kaohsiung Harbor into Continental Container Shipping Center(NT$24.2B)8 Rapid Transit Systems for Northern, Central & Southern Taiwan(NT$142B) 9 Waste Water Sewerage System(NT$39.4B) 10 Ground Reservoir & Desalting Plant(NT$31.5B)

1 Top-ranked Universities & Research Centers (NT$50Billion)

Inn

ovatio

n,

R&

D,

HR

Investm

ent

Cu

ltural

Inn

ovatio

n,

Kn

ow

ledg

eIn

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stry

Intern

ation

al C

om

petitio

n,

Glo

bal

Lo

gistics

Su

stained

En

viron

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t,C

on

venien

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iving

At Least 15 Departments and Institutes Rank No.1 in Asia in 5 Years. At Least One University Ranks Top100 Worldwide within 10 Years

Sites in Northern, Central, Southern & Eastern Taiwan 6,000km Seamless Broadband Twin-nets Held Taiwan Expo 2008

Turn in 8 Phases and Develop 3 New Branches Develop Ilan-hualien-taitung-Nantou Tourism Area Facilitating Daily Living Circles of ResidentsConstruction of Deep-water Harbor, 15,000TEU Container Yard Construct 10 Rapid Transit SystemsPipe Rate of Waste Water Sewerage from 10.7% to 27.3%4 Great Lakes in Taoyuan, Yunlin, Tainan, Kaohsiung-pingtung. Desalting Plant In Kinmen, Matsu, Penghu & Hsinchu Science-based Park

2. New 10 Construction Projects

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Target & Focus Annual Growth of Service Industry at

6.1% Annual Growth of Knowledge Intensive

Service Industry at 8.0%

strategies 1. Deregulation 2. Infrastructure

Environment 3. Industrial Policy4. Incentives for Investment 5. Releasing Public Resources6. Human Resource Development 7. Instigation of Vitality of Private Sector 8. Expansion of Demand 9. Mechanism of Innovation, R&D

Industry Assistance 1. Finance 2. Logistics &

Transportation 3. Communication & Media 4. Medical Service & Care 5. Personnel Training, Dispatch &

Property Management 6. Tourism, Sports & Amusement 7. Culture Innovation 8. Design 9. Information 10. R&D 11. Environment Protection

12. Engineering Consultancy

Ministry of Economic Affairs is the Principal Government Sponsoring Agency for Such Service Industries as Logistics, Cultural Innovation, Design, Information, and R&D

3. Develop Service Industry to Enhance Employment & Upgrade of Living Quality

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4-1 National development goals and vision

The Executive Yuan has reviewed and overhauled the country's socioeconomic framework and developmental direction in response to the rapidly changing socioeconomic environment, both in Taiwan and overseas. With a "prosperous, just, sustainable, and beautiful Taiwan" as its new vision for national development, the government plans to implement a National Development Package Program in three stages, each lasting three years. This program is the government's systematic development blueprint for the period of 2007 to 2015.

Accordingly, the MOEA has formulated the "Stage I: Three-Year Sprint Program － Industrial Development Package Program" in accordance with the Executive Yuan's two administrative priorities of “big investments" in Taiwan and caring for the disadvantaged through a policy of “big warmth." The MOEA will focus its efforts on the two flagship programs of "Building a Superior Investment Environment " and "Initiating a New Era in Industrial Development," and hopes to achieve the per-capita GDP goals of US$20,000 by 2009 and US$30,000 by 2015.

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VisionVision

Development goals for 2015Development goals for 2015

GoalsGoals2006 2015

Industrial structure (％ )

Agriculture 1.53 1.2

Industry 26.81 22.7

23.02 20.0

Services 71.65 76.2

Real growth rate (％ )

Agriculture 5.4 1.0*

Industry 6.9 3.9*

Manufacturing 7.2 4.3*

Services 3.7 5.5*

* Note: The growth rates of industries in 2015 are the average growth rates from 2006 to 2015.

5% average annual 5% average annual economic growth &economic growth &US$30,000 per capita US$30,000 per capita GDPGDP

A prosperous, just, A prosperous, just, sustainable andsustainable and

beautiful Taiwanbeautiful Taiwan

National development goals and visionNational development goals and vision

Manufacturing

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Service. Minding. Esteem. Awareness Development Development goals for 2009goals for 2009

2006 2009

1. Industrial structure (％ )

Agriculture 1.53 1.5

Industry 26.81 24.1

Manufacturing

23.02 20.8

Services 71.65 74.4

2. Real growth rate (％ )

Agriculture 5.4 1.0*

Industry 6.9 4.2*

Manufacturing7.2 4.9*

Services 3.7 5.5*

3. Energy efficiency

1. Energy productivity (NT$/1 liter oil equivalent)

111.62 116.3

2. Energy intensiveness (1 liter oil equivalent/NT$1,000)

8.96 8.6

* Note: The listed growth rates of industries in 2009 are the average growth rates from 2006 to 2009.

US$20,000 per capita GDP

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1.1. Promoting high-value output in all industries; Promoting high-value output in all industries; upgrading industries across the board.upgrading industries across the board.2. Promoting Taiwan brands; creating profit via 2. Promoting Taiwan brands; creating profit via

product differentiation.product differentiation.3. Integrating manufacturing and services, boosting 3. Integrating manufacturing and services, boosting

industrial capacity. industrial capacity. 4. Improving energy efficiency, pursuing a win-win 4. Improving energy efficiency, pursuing a win-win

situation for energy, industry, and environmental situation for energy, industry, and environmental protection.protection.

5. Emphasizing social justice and balanced industrial 5. Emphasizing social justice and balanced industrial development.development.

ConceptsConcepts

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Building a superior investment environment

Building a superior investment environment

◎ Providing land on preferential terms

◎Ensuring an ample labor supply

◎Providing funding assistance

◎Development of emerging industries

◎Industrial upgrading and transformation

◎Balanced industrial development

Initiating a new era in industrial development

Initiating a new era in industrial development

◎Establishing mechanisms for encouraging private investment

◎Improving efficiency of the environmental impact assessment (EIA) process

4-2 Current major economic policies

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1. Criteria for Identifying SMEs

Manufacturing, Construction, Mining, Quarrying

Commerce, Service

Capital < US$2.3Million

Preceding year revenue < US$2.9Million

Employees< 200 persons

Employees< 50 persons

Employees < 20 persons

Employees < 5 persons

SECTORS Micro Business

SMEs

Basic Exception

IV. Role of SMEs in 2006

21


2. Statistics of SMEs in Taiwan

Source: White Paper on Small and Medium Enterprises in Taiwan, MOEA

(% of total)

Year Number of

SMEs

Number of employment provided by

SMEs

Sales value in US$ billion

Export sales value in US$

billion

1998 1,045,117 (97.76%)

7,265,000 (78.21%)

214.4 (30.36%)

38.3 (23.79%)

1999 1,060,738 (97.73%)

7,344,000 (78.25%)

219.9 (28.95%)

38.1 (21.11%)

2000 1,070,310 (98.08%)

7,405,000 (78.06%)

229.4 (28.98%)

41.5 (20.03%)

2001 1,078,162 (98.18%)

7,288,000 (77.67%)

197.5 (28.38%)

37.5 (20.65%)

2002 1,104,706 (97.72%)

7,361,000 (77.86%)

215.7 (29.51%)

38.9 (19.28%)

2003 1,147,200 (97.83%)

7,425,000 (77.56%)

256.2 (31.47%)

39.1 (18.11%)

2004 1,176,96 (97.73%)

7,553,000 (77.18%)

293.0 (30.60%)

44.7 (16.91%)

2005 1,226,095 (97.80%)

7,648,000 (76.93%)

313.3 (29.46%)

47.58 (17.6%)

2006 1,244,099 (97.77%)

7,751,000 (76.66%)

310.34 (28.84%)

47.34 (17.89%)

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3. The Age of Most SMEs is 10 to 20 Years, which Shares 23.32% in SMEs. The Age over 20 Years Shares 18.73%. And the Ownership Structure is mostly of the Single-owner Type （ 58.33% ）

4. The Number of newly Start-up SMEs is 108,320 in 2006. SME Maintains its Vitality and Spirit of Entrepreneurship

5. Average Number of Persons Employed by SMEs is 6.23 (27.16 in Manufacturing Sector)

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(1) After getting the assistance measures of management, financing & credit guarantee, etc., many SMEs become large enterprises.

(2) Among them, 226 enterprises listed on Taiwan Stock Exchange market, 276 listed on GreTai Securities market, 141 listed on Emerging Stock Securities market.

(3) For example, aceracer and FoxconnFoxconn are the benchmark enterprises.

6. Government Assistance

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V. Policy Formulation for Fostering SMEs 1. Philosophy – Service, Minding, Esteem, Awareness

65~70%Foundation of SMEs

Middle Layer of SMEs,

Limited Co., 27~34%

Award StrategyAward Strategy

Guidance StrategyGuidance Strategy

Top SMEs, Incorporation

Co., 1~3%

Grouping StrategyGrouping Strategy

1. National Award2. Rising Star Award3. R&D Award

11 Guidance Systems

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

Start-u

p S

ME

sE

nterp

rises

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

25


2. Vision and Strategies

Implementation of Financing Support

Mechanism for SMEs

Set up A Platform of Entrepreneurship

and Incubation for SMEs

Strengthen the Guidance Function

of Management for SMEs

Create Sound Developing Environment

of SMEs

Entrepreneur Park for the Growth

and Development of SMEs

Enhance the Application Ability

of Information Technology

of SMEs

26


3. Award and Commendation

Business ModeBusiness Model/Qualityl/Quality

National Awards of SMEsNational Awards of SMEs

Market ShareMarket Share Rising Star AwardRising Star Award

R&DR&D•SME Innovation Research AwardSME Innovation Research Award•Excellent SBIR Creation/ R&D Alliance/ IndusExcellent SBIR Creation/ R&D Alliance/ Industry Upgrade/ R&D Achievement/ Industry Cotry Upgrade/ R&D Achievement/ Industry Contribution Awardsntribution Awards

InnovationInnovation Business Start-up AwardBusiness Start-up Award

27


4. Measures in Strategies

(1) 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. Promotion of general planning affairs

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(2) Building a Platform for Enterprise 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

29


(3) Enhancing SMEs’ Information Technology Capabilities

a. Strengthening SMEs’ information management

capabilities

b. Promotion of knowledge management

applications

c. Strengthening SMEs’ quality management

capabilities

30


(4) 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

enterprises e. Helping small enterprises to survive and

develop

31


(5) 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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(6)Balanced industrial development SME development visionSME development vision

2006 2009

1.35 million SMEs in Taiwanearn over NT$13.8 trillion and

employ more than 7.99 million persons

1.35 million SMEs in Taiwanearn over NT$13.8 trillion and

employ more than 7.99 million persons

Vision, strategies and goals for 2009Vision, strategies and goals for 2009

1.24 million SMEs in Taiwan earn over NT$10 trillion andemploy more than 7.75 million persons Goals

33


Specific measures

Assisting weak industries

Guidance for

SMEs

Guidance for local industries

Developing and diffusing common technologies and materials. Examples: Application of new functional materials in bamboo carbon textiles and

germicidal, odor-reducing textiles. Promotion of MIT certification; enhancement of image of products with common

marks. Examples: Taiwan-made “Shoe Mark," “Towel Mark,” “Sock Mark,” etc. Strengthening product labeling to prevent poor-quality foreign goods from damaging

local markets. Examples: Requiring that imported towels bear labels and shoes bear brands;

strengthening inspection. Use of a trade relief mechanism to assist ailing industries. Examples: Towels, shoes

Guidance for distinctive local industries Establishing special zones for specific traditional industries; promoting the formation of

clusters. Glass zone: Expected to attract 25 companies and investment of NT$6 billion; will

generate annual sales of NT$12 billion and create 1,000 jobs. Sock zone: Guidance is being provided to 1,000 companies with a total annual

production value of NT$3.12 billion.

Incubation of innovation and value-added Establishment of four incubation support centers and provision of assistance to 2,000

innovative, globally competitive enterprises. Narrowing the digital gap among industries Assistance for the development of 120 industrial e-communities and the use of e-commerce

by 75,000 SMEs. Helping SMEs improve quality Guidance for the establishment of 120 industrial quality clusters (with more than 1,200

companies), and assistance for more than 60 enterprises in passing international quality certification.

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VI. Key Measures for SMEs Development

1. Eleven Guidance Programs to Assist SMEs

(1) Finance and Credit Guidance System

(2) Management Guidance System

(3) Production Technology Guidance System

(4) Research & Development Guidance System

(5) Information Management Guidance System

35


(6) Industrial Safety Guidance System

(7) Pollution Control Guidance System

(8) Marketing Guidance System

(9) Mutual Support & Cooperation Guidance System

(10) Quality Enhancement Guidance System

(11) Business Startup & Incubation Guidance System

36


2. Advocacy of SMEs --the Fair Legal Environment

(1)Undertake Research and Collect Information on SME- related Legislations. The Statue Governing the Development of Small and Medium Enterprises Is Revised frequently in Line with Changes in the Overall Environment.

(2)Work with SMEs and SME Associations to Draw up Legislations Relating to SMEs, then Making Decisions in Small and Medium Enterprise Policy Review Committee. Advocacy of SMEs Legal Rights for their Healthy Development.

37


3. SME Credit Guarantee Fund (1) Established in 1974, Provide Credit Guarant

ees to SMEs which Are Promising but Short of Collateral. Help Obtain Finance from Financial Institutions

(2) Credit Guarantee Service Statistics

No. of guaranteed enterprises 151,260

No. of cases guaranteed 3,290,714

Amount guaranteed 3,844

Amount financed 5,685

* Statistics from 1974 to the End of August, 2007

Unit: No., NT$billion

38


4. Platform of Entrepreneurship and Incubation for SMEs

Vision: To Foster Taiwan as an Entrepreneur SocietyVision: To Foster Taiwan as an Entrepreneur Society

Knowledge and Information providing

FinancingSupport for

Start-ups

Incubation Services

To Develop the Asia Entrepreneurial

Development Center(AEDC)

39


4-1 Incubation Services

(1) Purpose

A. Help SMEs Access Resources of Innovation and

Entrepreneur

B. Enhance SMEs Ability in R&D and Start-up New

Business

C. Facilitate More Competitive SMEs and Promote

Economic Development

40


(2) Goals of the Policy Creating a Learning Mechanism for Starting New Business. Building up a Society of Knowledge-based

Entrepreneurship

(3) Strategies of the Policy Building the Mechanisms of Knowledge and Information

Provision for Entrepreneurs. Enhancing the Function of Incubation Service. Assisting the Acquirement of Financing for Start-Ups.

41


(4) Enhancing the Function of Incubation Service(1/6)A. Definition & Type of Incubation CenterA. Definition & Type of Incubation Center

1) Definition1) Definition:: Incubation centers are locations for the cultivation of innovation businesses, products

and technologies, and for helping SMEs to upgrade and transform themselves. By providing start-ups with office space, instruments, equipment, R&D technology, helping them to secure financing, and by providing management consulting and other business services, they facilitate the effective integration of resources, helping to reduce the costs and risks that start-ups have to bear in the early stages of business development, and increase the possibility of new businesses successful rates.

2)Type:2)Type:

3

9

9

77

0 10 20 30 40 50 60 70 80

No.

Private Sector

Public Sector

Research Institute

University

type

78%

9%

9%

4%

42


3)Number of Incubators in Taiwan3)Number of Incubators in Taiwan

82

91 95 98

6973 73

79

3 3 3 3

61

49

27

7265

35

9

6058

46

33

25

57

70

0 0 1 1 1 20

10

20

30

40

50

60

70

80

90

100

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Total no. ofincubators

Sponsoredby SMEA

Invested bySMEA

(4) Enhancing the Function of Incubation Service(2/6)

43


B. Function of IncubatorsB. Function of Incubators

i. To reduce risks and expenses of investment and increase successful rate of start-up enterprises.

ii. To foster new products, new business-model and new technology.

iii. To provide guidance in commercializing R&D achievements.

iv. To provide a location for cooperation of academia and industries.

v. To provide testing services and speed up the development of products.

vi. To provide training courses, information and consultation.


44


machinery $ ElectricMachinery19%

Multimedia & Broadcasting6%

Biotechnology10%

IT & electronic36%

Livelihood Industry4%

Architecture3%

Raw Material3%

Tourism & Recreation1%Distribution and Logistics

1%

Chemical & Petrifaction2%

Planning & Aerospace0%

Environmental ProtectionIndustry

4%

Medical Industry3%

Education, Culture, Arts2%

Others6%

IT & electronic

machinery $ ElectricMachinery

Multimedia & Broadcasting

Biotechnology

Environmental ProtectionIndustryMedical Industry

Planning & Aerospace

Architecture

Chemical & Petrifaction

Livelihood Industry

Raw Material

Distribution and Logistics

Tourism & Recreation

Education, Culture, Arts

Others

C. Incubating Domain in TaiwanC. Incubating Domain in Taiwan


45


D. Performance of Incubation ServicesD. Performance of Incubation Services

YearYearPerformancePerformance 20042004 20052005 20062006 1997~20061997~2006

Input 1.Subsidy for Incubation Center (NTD, billion) 1.861.86 2.142.14 1.641.64 1515

Ou

tput

1.No. of Fostered SMEs 1,1311,131 1,3261,326 1,2821,282 26042604

2.No. of Fostered Start-ups 279279 333333 507507 765765

3.Capital Increase (NTD, billion) 4343 5757 5252 398398

4.Multiple of Output and Input (Capital Increase/Subsidy) 2323 2727 3232 2626

5.No. of Employment being Created 11,47711,477 22,64822,648 25,35325,353 59,74259,742

6.No. of Patent Acquired 160160 416416 400400 976976

7.No. of Technology Transfer 8787 144144 205205 436436

8.No. of Registered Enterprises 1010 33 00 3535

Note： 1.Statistics Range： Incubation centers subsidized and invested by SMEA, MOEA. 2.The incubating process is limited within 3 years in principle. Statistics number of fostered SM

Es and employment are based in newly incubated SMEs in the year. 3.Aim to foster 1,000 SMEs in 2006.


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Established in 2000.12.29Joined in Nan-Kang Biotech Incubation Center in 2004.12Major Technology of NatureWise ：

R&D in biotech, selling medicine, Chinese herbal medicine and health food.

Achievements ：1.Main product “LipoCol Forte” had earned the first license of the Committee on Chinese Medicine and Pharmacy, Department of Health, Executive Yuan.2. Won the 2005 Taipei Biotech Award-Technology Commercialization.

NatureWise Biotech & Medicals Corporation(Nan-kang Biotech Incubation Center)(Nan-kang Biotech Incubation Center)

Before Current Status

Capital 112 million 154 million

Trade 8 NTD million 26.57NTD million

No. of Employees

6 19

E. Case of Incubation CenterE. Case of Incubation Center


47


(5) Since 1996, Have Set up 98 Incubators Spread over Taiwan. Among Them, Universities Share 78%, Research Institutions Share 9%, Government 9%, Private Sector 4%

(6) Have Incubated over 2,000 SMEs, Created Investment Amount NT$28.9billion (US$920million)

(7) Successfully Incubated Paradigm Enterprises Include Electronics, Information Technology, 3D Animated, Communication, Bio-tech Industries, etc.

48


(8) Regional Distribution of Incubators in Taiwan

Northern Taiwan 46.3%

Central Chinese Taipei 21%

Southern Taiwan 27.3%

Eastern Taiwan 5.4%

Source: Calculated based on data from SMEA

49


Expanding service capacities of incubators

Building up fine-quality incubating environment

Evaluating the performance of incubation services

Training the professional managers of incubators

Facilitating the cooperation and inter-action of incubators

Popularizing the incubation information and Service

Guidance and assistance programs forincubators

• Legislation• Compiling the guidelines of operation for incubators

• Training programs• exchanging incubation experiences

• Fairs • Visit tour of incubators• NBIA、 AABI、 APEC Meetings • Year Book of incubators• Incubation Journals• Bi-monthly Publication

• Evaluation Mechanism of Performance for incubators

Strategies Measures

(9) Measures for Enhancing the Function of Incubation Service

50


4-2. Financial Support for Start-Ups(1/4)4-2. Financial Support for Start-Ups(1/4)(1)Sources of Financing

SMEs SMEs & &

Start-upsStart-ups

Capital Capital MarketsMarketsCapital Capital MarketsMarkets

Private FundsPrivate FundsPrivate FundsPrivate Funds

Government Government AgenciesAgencies

Government Government AgenciesAgencies

DomesticDomestic BanksBanks

DomesticDomestic BanksBanks

SME SME Investment Investment CompaniesCompanies

SME SME Investment Investment CompaniesCompanies

SME SME Development Development

FundFund

SME SME Development Development

FundFund

National National

Development Development

FundFund

National National

Development Development

FundFund

LoansLoans

RewardReward

investinvest

Invest (15%)Invest (15%) invest

invest

invest

invest

Incubation Incubation Fund AccountFund Account

Incubation Incubation Fund AccountFund Account

VCVCVCVC

SME Credit SME Credit Guarantee Guarantee

FundFund

SME Credit SME Credit Guarantee Guarantee

FundFund

Guarantee

investinvest

51


(2) Financing Supporting Measures(2) Financing Supporting Measures

i. SME Incubation Trust Investment Account

ii. SMEs Investment Companies

iii. Entrepreneur Loans for Micro-enterprises

iv. Strategic Alliance with Venture Capital

v. Various Programs of SMEs Loan

vi. SME Credit Guarantee Fund

vii. SME Call Center

viii.Low-interest R&D Loan Schemes

4-2. Financial Support for Start-Ups(2/4)4-2. Financial Support for Start-Ups(2/4)

52


(3) Government Policy Support on Financing(3) Government Policy Support on Financing

PeriodPeriodItemItem

20062006

Financing amount supported by the SMEG Financing amount supported by the SMEG credit guarantee credit guarantee

CasesCases 261,824261,824

SumSum 530,459530,459

Financing Diagnostic GuidanceFinancing Diagnostic GuidanceCasesCases 210210

SumSum 9,2839,283

R&D Policy LoansR&D Policy LoansCasesCases 480480

SumSum 1,062.41,062.4

Sum: NTD millionSum: NTD million

Note: USD1=NTD32


53


(4)Case : Tong-Jou Aluminum-Can Manufactory Co., Ltd. (4)Case : Tong-Jou Aluminum-Can Manufactory Co., Ltd. Established in April 2002. Capitalization: NTD 2,000,000. Employees: 4.

Main products: aluminum tube and aluminum can by ODM. 70% of sales are for export.

2003-The manager acquired the Micro-enterprise Start-up Loans at the age of 62.

2004-The manager was awarded the first of Micro-enterprise Start-up Loans model award.

2004-2005:The company acquired the R&D Loan of NTD 6,160,000 with 85% credit guarantee from the Small and Medium Business Credit Guarantee Fund.

With the support of the R&D Loan, the company is developing the machine and container for vaporizing essential oil.

2004-The company acquired the intellectual property patent. They promoted the products successfully to the international market by cooperating with Innovation Incubation Center at Oriental Institute of Technology.

2003-2006-The revenue increases each year from NTD 8,000,000, 10,000,000, 14,000,000 to 18,000,000. The capitalization in 2007 is boosted to NTD 5,000,000. The employees also increased to 18.

Established in April 2002. Capitalization: NTD 2,000,000. Employees: 4. Main products: aluminum tube and aluminum can by ODM. 70% of sales are for export.

2003-The manager acquired the Micro-enterprise Start-up Loans at the age of 62.

2004-The manager was awarded the first of Micro-enterprise Start-up Loans model award.

2004-2005:The company acquired the R&D Loan of NTD 6,160,000 with 85% credit guarantee from the Small and Medium Business Credit Guarantee Fund.

With the support of the R&D Loan, the company is developing the machine and container for vaporizing essential oil.

2004-The company acquired the intellectual property patent. They promoted the products successfully to the international market by cooperating with Innovation Incubation Center at Oriental Institute of Technology.

2003-2006-The revenue increases each year from NTD 8,000,000, 10,000,000, 14,000,000 to 18,000,000. The capitalization in 2007 is boosted to NTD 5,000,000. The employees also increased to 18.


54


PotentialPotentialEntrepreneursEntrepreneurs

Consulting Consulting ChannelChannel

By TelephoneBy Telephone

(0800-589-168)(0800-589-168)

By By WebsiteWebsite

Question Question CategorizedCategorized

Common questionCommon question1.1. Call CenterCall Center2.2. Data Base Data Base

Individual questionIndividual question1.1. On-site consultantOn-site consultant2.2. Joint consultant Joint consultant

Contents of Contents of ServicesServices

• Business PlanBusiness Plan• Financing Financing

AssistantAssistant• Marketing Marketing InformationInformation• Accounting ServiceAccounting Service• Legal ServiceLegal Service

(1) Knowledge and Information Providing (1) Knowledge and Information Providing

a. Entrepreneur Consultation / Knowledge Center

4-3. Fostering Entrepreneurship (1/4)4-3. Fostering Entrepreneurship (1/4)

55


Objective Trainees(Innovation-oriented personality)1. New enterprises established

within 3 years 2. Plan to start a new enterprises

College of EntrepreneurCollege of EntrepreneurCollege of EntrepreneurCollege of Entrepreneur

Programs: Programs: EMBA CoursesCase StudyField VisitSeminarBusiness Plan

Online-learning Programs (http://emba.moeasmea.gov.tw)Online-learning Programs (http://emba.moeasmea.gov.tw)Online-learning Programs (http://emba.moeasmea.gov.tw)Online-learning Programs (http://emba.moeasmea.gov.tw)

Application for e-learningApplication for e-learningApplication for e-learningApplication for e-learning

E-learning courses of EntrepreneurE-learning courses of EntrepreneurE-learning courses of EntrepreneurE-learning courses of Entrepreneur

Competition of Business PlanCompetition of Business PlanCompetition of Business PlanCompetition of Business Plan

Nominate to Entrepreneur Lab Nominate to Entrepreneur Lab Nominate to Entrepreneur Lab Nominate to Entrepreneur Lab Transfer to Entrepreneur Consultant CenterTransfer to Entrepreneur Consultant Center Transfer to Entrepreneur Consultant CenterTransfer to Entrepreneur Consultant Center

SuperiorsSuperiors

Others Others

b. Entrepreneur Learning Center


56


c. Entrepreneur Lab

Entrepreneur Consulting/

knowledge Center

Entrepreneur Consulting/

knowledge Center

(1) Select 100 entrepreneurs for entry into Entrepreneur Lab

(2) Conditions: Must have preparatory capacity and a feasible business plan

(1) Select 200 entrepreneurs for entry into Entrepreneur Lab

(2) Conditions: the best business plans written in the course of a systematic entrepreneurial course training

(1) Through promotional activities, select 200 for entry into Entrepreneur Lab

(2) Conditions: Provide a feasible entrepreneurial business plan, which after assessment can begin to receive entrepreneurial guidance

Entrepreneur Learning

Center

Entrepreneur Learning

Center

Entrepreneur LabEntrepreneur Lab


57


Commend to join and win The 4th Business Start-Up Award

(2) Case : Wretch Limited Company(2) Case : Wretch Limited Company

CharacteristicsCharacteristics

WRETCH was founded in 1999 by 6 university students in National Chiao Tung University and registered in March 2005, providing service of immediate photo album on the Internet. It has offered an exclusive Internet photo album to each user for free on campus. In accordance with Google in Stand-ford University, WRETCH run a win-win situation between company’s profit , user’s right and interests. There are 2.8 million members in 2006. Now WRETCH has been merged into YAHOO with USD 21 million in March 2007.

Government Guidance and assistanceGovernment Guidance and assistance

Authorized Capital: NT 20 million


58


Five SupportingFive Supporting FrameworksFrameworks

Business Start-up Assistance

and Incubation

Provide Financing Assistance

Advisory Committee Consisting of Women Entrepreneurs

Supporting Team of Women Volunteers

Set up Consultancy Windows

Establish Cooperation

Network

e-Commerce Empowerment

Business Match Making

Platforms

Bridging the Digital Divide of the SME Project

Share Success Experience

Set WE e-Commerce Website

Set WE Portal in TWN Trade Web

Business Start-up Consulting and Training

Business Incubation Center

Young Entrepreneur Loan

Micro-enterprise Start-up Loan

Business Start-up Phoenix Loan

4-4. Women Entrepreneurship Promotion4-4. Women Entrepreneurship Promotion

59


6. Micro Business Start-Up Loan (1) Purpose Enhance the Entrepreneurship & Assist the

Middle-age Unemployed Person to Create New Business in Knowledge Economic Era

(2) Loan Source Banks’ Own Capital (3) Eligibility Must be Unemployed, Age 45 to 65 Years Old,

Who Have New Business Plan ‧New Start-up Business, or ‧Business Within One Year (4) Loan Size For Each Person NT$1million Is Maximum

60


(5) Interest Rate 3% Per Year. Fixed Rate (6) Guarantee 80% of Loan Guaranteed by SME Credit

Guarantee Fund (7) Purpose of Loan ‧Working Capital ‧Real Estate, Machinery and Equipment (8) Loan Period 6 Years Maximum (9) Other Matching Measures Provided ‧Management & Technical Assistance to Help Ensure Success ‧Awards to Excellent Entrepreneurs ‧Regular Report to Executive Yuan

61


Years Old 45 ~ 49 50 ~ 54 55 ~ 59 60 ~ 65 SUM

Woman 1,448 1,080 456 289 3,273(40.93)

Man 2,364 1,495 608 256 4,723(59.07)

TOTAL 3,812 1,575 1,064 545 7,996

Sector Manufacturing Trade Eating-drinking Place

Other Services

SUM

Woman 113 1,178 753 1,229 3,273

Man 252 1,792 676 2,003 4,723

TOTAL 365 2,970 1,429 3,232 7,996

Entrepreneur capitalized Micro Business Start-Up LoanUnit: number, (%)

Entrepreneur capitalized Micro Business Start-Up Loan by Sector Unit: number

* Statistics from January 2003 to Jan. 2007

62


7. Enhancing SMEs Information Technology

SME Operation Service E-network Plan

e-SM

E C

luster

Cultivate SME e-human Resource PlanSME e-learning Plan

SME Knowledge Management Plan

KnowledgeInformation

Industry SME

e-Market

place

Industry-specific

SMEe-business

Plan

Need onTraining

Reduce SME Digital Gap Plan

Talent Supply

SME Need on Entrepreneurship, Financing, Management, e-business, etc.

SMEs Join

the Supply

Chain Plan

SMEe-enable Service Team

System

Co

nn

ection

KnowledgeInformation

KnowledgeAnalysis &feed back

KnowledgeAnalysis &feed back

Need onTraining

Talent Supply

63


8. Building Up the SME Service Network Mechanism

SME Service Network Mechanism

23 Local Service Centers

Center / Local Associations

Entrepreneur Volunteers

Bank Service Centers

Virtual Internet Service www.moeasmea.gov.tw

One-Stop Solution Center

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1. Conclusion1. Conclusion1)1) Small and medium enterprises are the foundation of Taiwan’s Small and medium enterprises are the foundation of Taiwan’s

economic development and a mainstay of social stability. Yet, we face economic development and a mainstay of social stability. Yet, we face a quickly changing economic and trading environment that requires a quickly changing economic and trading environment that requires upgrading and transformation.upgrading and transformation.

2)2) Maintenance of political and social stability, timely implementation Maintenance of political and social stability, timely implementation of effective policies and vigorous private entrepreneurship stand out of effective policies and vigorous private entrepreneurship stand out as key factors of success in Taiwan experience.as key factors of success in Taiwan experience.

3)3) Thus, government should have long-term vision and initiate feasible Thus, government should have long-term vision and initiate feasible action plans to meet the needs of SMEs. action plans to meet the needs of SMEs.

4)4) Entrepreneurship has become a global trend and is anticipated to Entrepreneurship has become a global trend and is anticipated to create common value, giving hope for brighter tomorrows. create common value, giving hope for brighter tomorrows.

VII. Conclusion and Suggestions(1/3)

65


VII. Conclusion and Suggestions(2/3)

1)1) Consider adopting innovation-oriented development strategy Consider adopting innovation-oriented development strategy and selecting a group of strategic industries on which and selecting a group of strategic industries on which government would concentrate its resources to promote their government would concentrate its resources to promote their development.development.

2)2) Innovation policies should provide channels for start-ups to have Innovation policies should provide channels for start-ups to have access to the supports of financing, R&D, marketing and access to the supports of financing, R&D, marketing and commercialization, and should promote technological and commercialization, and should promote technological and human skills upgrading.human skills upgrading.

3)3) By building up a platform of entrepreneurship and incubation By building up a platform of entrepreneurship and incubation and in doing so spreading seeds which may grow into thriving and in doing so spreading seeds which may grow into thriving companies, we can create a knowledge-based entrepreneurial companies, we can create a knowledge-based entrepreneurial society.society.

2. Suggestions2. Suggestions

66


4)4) Government should collaborate with civic organizations for Government should collaborate with civic organizations for promotion of foreign trade, thereby helping companies to promotion of foreign trade, thereby helping companies to access international markets.access international markets.

5)5) Keep exchange rate stable to promote saving, and turn Keep exchange rate stable to promote saving, and turn saving into productive capital. saving into productive capital.

6)6) Provide start-up capital but coupled with self capital and Provide start-up capital but coupled with self capital and management assistances for newly set-up SMEs to raise management assistances for newly set-up SMEs to raise successful rate.successful rate.

7)7) Create a favorable environment for SMEs without being Create a favorable environment for SMEs without being crowded out resources by large enterprisescrowded out resources by large enterprises

VII. Conclusion and Suggestions(3/3)2. Suggestions2. Suggestions

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Thank you for your attention!

For further informationhttp://www.moeasmea.gov.tw

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Taiwan SME Policy Formulation and SME Development and SME Development Dr. Robert S. Q. Lai Director...

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