Taiwan: Major Industires

chinaw atomic number 18 Major IndustiresTAIWAN MAJOR INDUSTRIESThe major industries in chinaw atomic number 18 argon electronics, petroleum refining, armaments, chemicals, textiles, iron and steel, machinery, cement, food processing, vehicles, consumer products, pharmaceuticals.We lowlifeful generate a side at the major industries one by one and then do an analysis on the investment opportunities on one of them.SEMICONDUCTOR diligence chinaware has truly emerged as a worldwide leader in the semiconductor and microelectronics patience and serves as the home of the worlds precede IC foundries, mainland China Semiconductor Manufacturing Corporation (TSMC) and United Microelectronics (UMC), which think about a volume of the grocery store share. chinaware is also an important player in Mask read-only storage barter, IC forwarding and IC testing, accounting for 57.1%, 32% and 36% of bed sheettary grocery store shares respectively. chinaware- miserlyd Advanced Semicon ductor Engineering Inc (ASE) and Siliconware Precision Industries (SPIL) lead the IC packaging perseverance, while ASE Test and ChipMOS Technologies lead the IC testing diligence.Taiwans IC name industry has ranked second only to the US, accounting for 28.4% of the grocery store worldwide. Media Tek, VIA, Realtek and Sunplus are among the top 20 IC send hit houses. Taiwan ranks as the worlds 3rd largest maker of DRAM components, supplying 17.1% of the market place. Taiwan also serves as a samara IC market, with a cherish of US$11 meg in 2002, representing 25.7% of the market in Asia and 8.1% of the global market.Competitive improvement and mart StrengthsTaiwan plays a major role in the global semiconductor industry, as the unique structure of its IC industry fosters mingyly cooperation among diverse yet inwrought elements in the value set up, ranging from IC design and manufacturing to packaging and testing.Investment Opportunities and mart po tenceThe National Si-So ft Project was launched in 2003 in an effort to upgrade Taiwans IC industry from mainly choose manufacturing to RD and innovation oriented production. The jump out aims to make Taiwan the one-stop shop for IC designs, mix-and-match dexterous properties, manufacturing, and testing.The National Si-Soft Project is devoted to articulateing System-on-Chip (SoC) floor in Taiwan. Specific contents of the Si-Soft Project include automation software package, silicon intellectual space (IP), embedded software, and arranging single chip, which are alone essential in IC design. New IC designs go away in snatch drive the learning of information household appliances, photoelectricity, internet technologies, energy, communion, biological chips, and nanotechnology.The project offers various hits such as Providing available IP sources and a more than simplified transaction flow for the IC design industry (including design works), in score to decrease the time required for IC desi gn. ameliorate the competitiveness of practitioners in the system industry as they realize the system knowhow in their own SoC Effectively cultivating star IP vendors in the IP industry Attracting more customers with value-added products (more complete IP features) for chip manufacturers Allowing practitioners in the packaging and testing industries to interchange freely and learn about the most advanced(a) technologies relevant to their field in order to provided enhance their expert expertise DISPLAY AND OPTOELECTRONICSTaiwan has seen signifi throw outt maturement in its alter imaging (CI) industry in recent years. The over entirely production value of the flat panel display (FPD) industry alone has extendd more than twofold since 2001, sum totaling US$7.39 cardinal, of which 83.4% came from the production of large size TFT-LCD units. In Q1 2004, the islands directly Panel Display (FPD) sales reached NT$171.3 gazillion (US$5.1 billion), a 115% increase on the previ ous year, and 2004 sales are projected to reach NT$727.1 billion (US$21.7 billion). As Taiwan manufacturers are parted to sugar mass production on next generation panels (6th, 7th, and 7.5), the total production value of Taiwans FPD industry pass on surpass NT$1 trillion. Taiwan is shortly expected to account for 41% of large-sized TFT-LCD panel supply in 2004, becoming the worlds largest production base. Major TFT-LCD makers in Taiwan, such as AU, Chi-Mei, CPT, QDI, Hannstar, Toppoly, and PVI, get to contributed greatly to the turn over of the CI industry. AU, which receives the majority of its funding from Taiwan, is the third largest panel supplier in the world, and is the largest producer in Taiwan. Chi Mei, the second largest producer in Taiwan, is fast approaching AU in terms of production value.Competitive Advantages and Market StrengthsOver 30% of the key components for FPD, such as polarizers, back smartness modules, color filters and driver ICs, are fabricate in Tai wan, and local component makers such as Optimax (polarizers), Forhouse and Radiant (backlights), confederative Material Technology, Cando and Sintek (color filters), Novatek and Winbond (driver ICs), work very closely with panel makers. These component and ruined product manufacturers are clustered around the Taoyuan, Hsinchu, and Tainan areas, creating an integrated supply chain that further strengthens Taiwans position in the global IT industry.Investment Opportunities and Market PotentialAs Taiwan is the worlds second largest producer of panels and the market for components is quite large, the governing is inviting alien suppliers of materials and equipment to build factories in Taiwan, to enable faster and more potent product and service deliveries.Panel makers in Taiwan plan to puddle G5 and G6 production lines, with the goal of becoming the leading panel supplier in the world. The politics aims to generate US$40 billion in FPD production value by the year 2006. In the nex t three to quad years, enterprises excessizing in advanced components will have ample space for lavishly growth electric potential.The disposal offers investors in the color imaging industry special tax reduction and investment bonuss. Combined with a highly complete workforce and abundant experience in the IT industry, Taiwan is the ideal finis for investment in the color imaging industry.Foreign Direct Investments in TaiwanThe color imaging industry in Taiwan has liberal very rapidly in the preceding(a) few years. In light of an increasing assume for flat panels in the global market and whole competition, Taiwans vendors realize the importance of improving their technology and producing the right key components. The be ratio for TFT-LCD components is quite high, with color filters at around 26% and rubbish substrate near 4%. Taiwans government has been active in soliciting contrasted investors to manufacture these key components in Taiwan.BIOTECHNOLOGY AND PHARMACEUT ICALSTaiwans concerted policy efforts to soften inquiry, beatment and production capabilities in the biotech sector have paid off in creating a wealth of investment opportunities. Biotech research at Taiwans top academic institutions is gaining global attention, while development capabilities, fostered through joint industry and government support, are turning these research achievements into commercially viable products. Taiwans matured production and logistics capabilities, evidenced by its over 100 cGMP-awarded pharmaceutical manufacturers, have been widely recognized as powerhouses in this area.Goals for the Coming DecadeHaving established a solid foundation, the Taiwan government has designated the biotechnology industry for further development into a key industry in its Two Trillion, geminate Stars picture and Challenge 2008 National Development Plan. Through the combined efforts of government, academia, research and industrial sectors, Taiwan is poised to nonplus a m ajor hub and logistics operations aggregate for RD, manufacturing, and operations in the biotechnology and pharmaceutical industries within the Asia-Pacific region. The governments plans to march on the industry include achieving targets of NT$150 billion (US$4.34 billion) in investments and 25% yearbook revenue growth by 2008 and five hundred biotech-related companies within ten years.Competitive Advantages and Market Strengths Superior pharmaceutical production and manufacturing capabilities Geographically positioned close to potential markets in Asia allows for enhanced product development for Asiatic markets subtile springboard for entering other Asian markets Ease of communication and lessen cultural barriers Strong venture cracking and fiscal resources Abundance of skillful specia inclines in organic chemistry, optoelectronics, integrated circuitry, automated systems, and other relevant field Excellent research facilities and well-staffed healthcare organizations TELECOMMUNICATIONTaiwan offers much potential in the telecommunications market, with one of the most advanced telecommunications networks in the region. senior high school perspicacity rates in both the fixed-line and mobile phone sectors have encourage growth in telecom products and services. Looking to 2004, the Ministry of Economic Affairs has announce plans to make the telecommunications industry one of Taiwans trillion dollar industries, which will rise the development of wireless applications, 3G, and broadband services.Competitive Advantages and Market StrengthsTaiwan is currently the fourth largest producer of PCs. As PC-related IC design and manufacturing technology in Taiwan have reached world standards, wireless communication and broadband communication products, related components/assemblies and systems products manufacturing technology have all been the beneficiaries of a multiplier effect.A evolution number of Taiwan manufacturers boast manufacturing and marketin g capabilities for research and development of xDSL, DLC, SDHH, DWDM, and cell-phone related products. If these are combined with telecommunications service capabilities of irrelevant companies, transgressicularly in the area of content services, their ability to enter newly developing markets will surely stimulate a new wave of product demand.Taiwans foremost technological advantages enable it to benefit from US and Japanese RD resources. Taiwans central placement in the Asian Pacific region provides ideal access to the emergent Mainland China and Southeast Asian markets and to manufacture highly-competitive communications technology products. For manufacturers locomote into newly developing markets, Taiwan remains the most advantageous base for business operations in the region.Investment Opportunities and Market PotentialIn order to establish Taiwan as a broadband communications technology island, the government has classified telecommunications as a strategic industry, all owing it to benefit from a host of investment and tax incentives.The Related Industries Promotion Plan is expected to facilitate the establishment of communication-oriented SoC IC design, fiber-optic components/assemblies, production facilities, software and telecommunications service industries innovation. IT product manufacturing is expected to reach its goal of surpassing US$ 30 billion by 2007.At the same time, in order to comply with telecommunications industry liberalization and national infrastructure requirements, Taiwan has in recent years gradually liberalized the 3G and wired network markets. Estimates for 2005 anticipate US$50 billion in equipment purchase orders and US$20 billion in telecommunication service industry revenues. Market opportunities are tremendous, devising Taiwan the ideal investment destination for the equipment manufacturing industry and content service providers.MATERIALS AND FINE CHEMICALSThe production value of the material and exquisitely chemica l industry in Taiwan has comed approximately US$44.38 billion annually, with petrochemical materials, polymer, electrical materials and mulct chemical products as major output. Taiwan is the largest producer of ABS, the second largest supplier of PTAs, and the fourth largest in PVCs, supplying the Taiwan national market and the worlds major markets, especially Mainland China.With a well-developed supplier chain and marketing channels all over the world, Taiwan plays a key role in umpteen markets today. In fact, a growing number of leading companies, such as Chi-Mei, Nan Ya Plastics and Formosa Plastics in the material industry, and UPC, Dahin, Lee Chang Yung Chemical in the fine chemical industry, are emerging more visibly in the planetary markets. In addition, Eternal Chemical and Chang Chun Plastics in the electrical material industry, and Taiwan Shiseido, Grand Glory Biotechnology, Taiwan Sugar, and Taiwan Salt in the cosmetics industry are already well-established in their respective markets.As the IT industry becomes more competitive, Taiwans material and fine chemical industry has been focusing on semiconductors, plane display materials, print circuit boards, nanotechnology materials and other high value-added products.Investment Opportunities and Market PotentialsTaiwan is home to a great number of talented RD and design people who are well-educated and possess experience with international companies, fashioning the island more advantageous location for multinational companies to localize as part of a globalization strategy.In recent years, Taiwans IT industry has shown impressive progress the semiconductor, TFT-LCDs, and print circuit board industries are seeing dramatic growth and have reached large- overcome production levels, thereby gaining strength in the international markets. The materials and fine chemical industry in Taiwan will be highly essential in supporting the IT industry and meeting its austere demands. The Challenge 2008 Nation al Development Plan, a government-support project that shows a list of plans and incentives on land lease, funding, taxes, and other benefits, demonstrates the value that the materials and fine chemical industry brings to Taiwan.Taiwan has created vast opportunities for both international and domestic firms, with Mainland China as the biggest and most prominent market. With its strategic geographical location and experience in world trade, Taiwan makes the ideal center for manufacturing and market development in the Asia-Pacific region.FINANCE, SECURITIES AND INSURANCEWith orthogonal exchanges reserves of over US$200 billion at the end of 2003, and a forecasted 4.5% economic growth rate for 2004, Taiwan continues to maintain a robust economy, due in part to government action on internationalization and liberalization policies.Competitive Advantages Market Strengths As a growing number of global industries are migrating to the Far East, Taiwan is an ideal location to establish a financial base. Multinational companies in Taiwan have access to more precise information on the Asia-Pacific region as they expand their business. In recent years, East Asia has become an important investment location for European and American countries. Taiwans stock up market index is covered in both Dow Jones and Morgan Stanleys stock indices, to the benefit of distant investors. In addition, the government has loosened restrictions on foreign jacket in the Taiwan stock market, bringing more attention to Taiwans market.Investment Opportunities and Market Potential In pursuing its goal of becoming the financial center of East Asia, Taiwan is revising its financial policies to bring them to international standards. Examples of such policies includeLifting constraints on offshore banking units (OBUs) Policies include expanding the depth and breadth of foreign currency market, and broadening the offshore banking units market and foreign currency overnight rate market to attract foreign financial institutions and enhance Taiwans position as a regional funding center. Taiwan will so expand its stock and bond markets, improve market regulation and efficiency, and upgrade the internationalization of the securities market. Foreign investors can buy and sell securities, bonds and public warrants freely without restrictions of time or location, have more versatility in managing investments, and vitalize the market. on spillage liberalization of capital markets for foreign investors the ROC government has opened up its stock market to foreign investors with minimal restrictions. With the introduction of more financial commodities in the market and more diversified channels for funds, Taiwans capital markets are hatchway to increasing foreign investors, who are now allowed to manage derivative financial products instead of spot commodities. In addition, foreign capital is now permitted in the private placement market, and these newly available commodities are attracting more foreign investment. Opening the insurance market to foreign investors Fifty-five insurance companies are currently in operation in Taiwan, of which 21 are foreign-owned. different measures to liberalize the Taiwan insurance market include relaxing restrictions on the approval of commodities liberalized rates investment policies and procedures the opening of cross-strait insurance exchanges the promotion of risk- found capital (RBC) systems information disclosure systems and a certified actuary system. With monitoring of all foreign insurance companies in Taiwan to ensure compliance with policies on remuneration for Taiwan citizens, the foreign insurance industry in Taiwan can operate in a fair and reasonable business environment. In addition, with the islands excellent location and workforce, Taiwan has the potential to become the Asian insurance market hub for foreign investors. Increasing the liquidity of financial capital in the stock market The Securitization of fiscal Assets Law was implemented on July 24, 2002, with the aim of improving and increasing the liquidity of financial assets, including fully liberalized foreign investments in the public and private placement of securitization of financial assets. Several domestic banks are in the process of cooperating with foreign financial institutions in this regard. gibe to the rules for MFN and National Treatment, foreign invested banks in Taiwan can compete on an equal footing with domestic banks. They are all granted licenses and can operate as fully-functional branches in Taiwan. In addition, as stated in the Banking Law and Financial Holding Company Law, a foreign financial institution whitethorn invest up to a 100% spot in a domestic bank. Moreover, foreign banks and financial holding companies that have sufficient experience and a good reputation can hold shares of up to 100% under their original name. Foreign financial groups may merge with Taiwans local financial institutions u nder the Merger Law for Financial Institutions, which has been established for the purpose of regulating the merger of financial institutions, expanding economies of scale, enhancing the efficiency of financial institutions and protecting proper competition environments. The law provides a friendly intelligent environment and mechanism for the operation of Asset Management Companies. Flexible government restrictions allow foreign investors to set up their operations headquarters in Taiwan to conduct multilateral trade a growing arch for foreign companies to gain a more competitive edge. ANALYSIS OF THE Taiwanese BIOTECHNOLOGY SECTORTaiwans biotechnology industry includes biotechnology, pharmaceuticals and aesculapian devices. In 2003, the total annual revenue for these industries in Taiwan was approximately NT$131.6 billion, of which NT$29.6 billion came from biotechnology0.9 per centum of the total global revenue-represented by 223 companies, each with an average revenue of N T$133 million. moving in scope covered included genomics, drugs, diagnostics, agricultural biotechnology, environmental biotechnology, protein drugs, contract research organizations, biochips and bioinformatics. The islands pharmaceutical industry returned NT$61.4 billion,0.4 percent of the global total with 429 companies active in this sector, averaging NT$143 million per company. The medical devices industry returned NT$40.6 billion,0.6 percent of the global total, coming from 397 companies, with an average revenue of NT$102 million each. The biotechnology workforce size is 35,610, of which 7,200 are in the biotechnology industry, 14,224 in the pharmaceutical industry and 14,186 working in the medical devices industry.Status of Biotechnology Development in Taiwan (2003) Units NT$100 million Industry Biotechnology Pharmaceutical Medial devices Total Revenue 296 614 406 1,316 egress of Companies 223 429 397 1,049Size of work force (number) 7,200 14,224 14,186 35,610Export value* 113 45 288 446 signification value* 120 339 425 884 national sales vs. export 6238 937 2971 6634Domestic market demand* 303 908 543 1,754BIOTECH INDUSTRY ANALYSIS MICHAEL PORTERS FIVE FORCES MODELAdvantages and opportunities in Taiwans biotech industryAdvantages 1. Active and continuous efforts to build up an attractive investment environment by the government 2. Large input to investment of up- and mid-stream RD and infrastructure 3. Close bond with fast growing Asian markets 4. Sufficient domestic capital for investing from intensive partners 5. Solid foundation and ex perience from the past development of the electronics industry 6. Proper environment for the development of small- and medium-sized enterprises and the diligent and self-assertive entrepreneurial spirit of the Taiwanese 7. Ample biotechnology and pharmaceutical professionals based both locally and overseas 8. Relatively homogenous ethnic Chinese population, ideal for the development of an Asian-prevalent-disease-related biotech industry 9. Qualified RD personnel who are open of establishing a knowledge economy to reflect Taiwans uniqueness 10. Advanced traditionalistic agricultural technology to support development of agricultural biotechnology Opportunities 1. The key industry in the governments Challenge 2008 six-year national development plan 2. The listed incentive industry among newly encouraged emerging strategic industries 3. Rising demand in better living standards in the Asia-Pacific and growing economy and market for potential development 4. Increasing number of strateg ic alliances and technology impartation cases 5. RD and precision processing sectors are ready to take advantage of the growing global trend towards outsourcing in the biotechnology industry. 6. Right timing for timeless business opportunities in post human gene decoding 7. High value-added, long life cycle and value chain of biotechnology many points of entry available, from RD to marketing 8. Flourishing biotechnology RD service industries (technical evaluation, RD design, intellectual property services, and start-up incubation services) 9. Many large-sized high-quality medical centers, providing optimal conditions for undertaking clinical trials 10. suck up market segmentation from temperate zone products of advanced countries with Taiwans sub-tropical climate to develop Asian sub-tropical agricultural biotechnology 11. Plentiful related information amount from National Health Insurance program 12. Diseases associated with a modern inactive lifestyle, with potential for drug and disease screening technology platforms Objective.RECOMMENDATIONS1. Although there are a few biotech companies but all of them are small scale operators. Hence a consolidation programme can be started.2. Since biotech is going to help pharmaceutical companies in a big way so pharma companies can make a conscious effort to start RD centers with emphasis on biotechnology.3. Although the government is supportive of the sector but not many FDIs have been invited. The government can specifically invite FDIs in this sector.4. Large companies like Biocon and Brighton Research labs should be asked to set up facilities. They can be promised access to markets in mainland China through Taiwan.5. Most of the rough materials required is being imported, so the government can devise strategies to develop auxiliary industries and make the sector self sufficient.6. Newer and more challenging topics can be taken up to study. Like human genome sequencing which would help in determining the genet ic causes for diseases like cancer and AIDS.