There were reasons to celebrate for the delegates from Taiwan. Karnataka promised to build a special “Taiwan City”, a electronic manufacturing hub complete with advanced infrastructure and residential areas. “No other country in the world enjoys such an exclusive park”, noted the host, Chief Minister of Karnataka, Shri Jagadish Shivappa Shettar.
There were about sixty various delegations from Taiwan to India, but very few to Bangalore. This September, a 49-strong representation from Taiwan took part in the EMMA Expo in Bangalore, the show that attracted 262 exhibitors from industrial machinery and electronics sector and featured 100 leading products from Taiwan. It’s was a conscious move on the Taiwanese part who wants to increase its presence in Karnataka, the famed Silicon Valley of India. “When Europe is in a very bad shape, the US is turning bad slowly and China becoming more expensive, India is a place of opportunity for Taiwan”, announced Francis Liang, Taiwan’s deputy minister for economic affairs and the head of delegation. “Karnataka is ‘the word’ for the next ten years for us”, he added.
Why Karnataka? Because its economy is complementary to the Taiwanese: it’s strong in software, while Taiwan's is big in hardware. Large semiconductor producers placed their offices in Karnataka, it’s also a “knowledge city” with excellent science and management institutes and R&D labs located here by companies like GE. Now the government of Karnataka wants to increase the domestic production of electronics with the help of the specialist in the field – Taiwan.
How Taiwan, a 23 million society, is so successful in tapping the huge, diverse and difficult Indian market? Could Poland learn some lessons here?
There was a chance to fish for tips on doing business with India at the dinner hosted by Karnataka’s Chief Minister. It turned out quickly that Poland is not “the word” for Taiwan. For Taiwanese SMEs, the mainstay of the Taiwanese economy, Poland is too far. They prefer to invest in mainland China or Malaysia. There are some big Taiwanese players along the German border but for a country that has 1.23 million small and medium size companies it’s not a staggering number. Trading should be easier. “Promote trade first”, advised the Chairman of Taiwan Electrical and Electronic Manufacturers’ Association, an organization with a match-making mission and about 3,762 members. “Investment might come later”.
Interviewed by email later, Mr Wu Wen-Yea, Deputy Chairman of Taiwan External Trade Development Council, offered some extensive answers to the simple query: how do you do it? We’ve decided to publish it in full.
“Statistically, Poland is attractive”
Interview with Wu Wen-Yea, Deputy Chairman of Taiwan External Trade Development Council
Taiwan is a small country yet it commands an important share of global trade and its relations with India saw a jump in the past two years. What is driving the increased cooperation between Taiwan and India?
India is the seventh largest country in the world with the area of 3.287 million square kilometers, with the second largest population of 1.21 billion people in the world. With fruitful natural resources, wealthy middle class, fast economic growth, and as one of the BRIC nations, India is one of the most popular emerging markets. It also has the advantages of young labor force and advanced software R&D capabilities to attract huge FDI inflows. India’s industries are well known worldwide, in such fields as electronics, telecommunication, software, automobile and biotechnology. Big global companies from Europe and the United States also consider India as an important global manufacturing base and marketing point.
In 2011, India was Taiwan’s 16th largest trade partner. The trade volume between Taiwan and India totaled US$7.56 billion. Imports from India stood at US$3.13 billion (increased 10.5% compared to previous year) and exports to India totaled US$4.43 billion (increased 22%). In 2011 India was Taiwan’s 16th largest import partner and 15th largest export partner. Taiwan’s main import items from India were mineral fuels and steels. Taiwan’s major export items to India were electrical equipment and machinery.
Compared to the companies from Europe, America, Japan and Korea, Taiwanese companies entered India market later. Since electronics, telecommunication, auto spare parts and machinery are well-developed industries in Taiwan, there were steady growths in business contacts between India and Taiwan in recent years. More and more Taiwanese companies are considering India as an important overseas base for their global expansion. I think this is the driving force for further business cooperation between India and Taiwan.
There is an opinion that India is a difficult market to enter and operate in. Does your experience confirm it as true or an outdated myth?
It’s not easy to get into the Indian market. The main hurdle is the cultural difference. In trying to get into the Indian market, foreign manufacturers will realize the importance of social networking and think of ways to overcome the many inefficiencies in the market. Indian manufacturers tend to not make any decisions until the last minute of the transaction. They usually like to keep striving for better terms even though they have already signed the contract. The way India does business is very different from the West.
I can offer two tips for people who are interested in the Indian market. First, before entering the market, foreigners have to learn Ind
ian social values and cultural contexts. The best way to learn India’s culture is to connect with the people and accumulate first-hand experiences in the market.
Second, there are great gaps between the rich and the poor in India. There are huge numbers of people in the bottom of the pyramid but also many in the top. Therefore, manufacturers should design their products differently to meet the consumers’ demands. Price is an important factor for Indian consumers, but they also widely accept branding and marketing promotion, so manufacturers can use advertising and brand marketing to strengthen their product image and create additional value.
The middle class of India have different perceived beliefs of foreign and local brands. Therefore, manufacturers can try enhancing brand image and intensifying their product differentiation efforts.
What would be your advice to a relatively small country that, like Taiwan, has many small and medium size companies? What’s Taiwan’s “secret” approach to India that Poland could learn from?
Many factors contributed to the Taiwan economic miracle. I would like to share with you two of the more important factors. Firstly, large numbers of small and medium enterprises (SMEs) that are flexible and adaptive to economic changes make up the staple of Taiwan’s economy. Secondly, large-scale science and industrial parks were set up to develop industries in the fields of information & communications technology (ICT) and optoelectronics.
Different from many other countries, Taiwan's economy is made up primarily of SMEs. They have been the backbone of Taiwan's economy for decades. There are over 1.23 million SMEs in Taiwan, accounting for 98% of our enterprises that operate with good flexibility and entrepreneurial spirits. They have incredible amounts of experience in response to evolving markets, technologies, and economic condition.
Taiwan is also well-known for its dynamic industry clusters, ranging from such fields as bicycle, hardware, LED, to saxophones. All these enterprises have contributed significantly to Taiwan’s economic miracle, and most of these cluster members are SMEs.
Another factor is the establishment of large-scale science and industrial parks. The first one, Hsinchu Science and Industrial Park (HSP), was established on December 15, 1980, that mainly housed semiconductor and optoelectronics ventures. HSP played a key role in the take-off of Taiwan’s high-tech industry.
Due to the success of HSP, the Taiwan government continued to set up new science and industrial parks in central and southern Taiwan, attracting more ICT and optoelectronics manufacturers to station in the parks and build their R&D centers. The science and industrial parks throughout Taiwan have created the most favorable environment for the development of Taiwan’s high-tech industry and have allowed the industry to become ever more competitive in the world market.
These are the ways Taiwan established strengths to explore markets all over the world, including India. Maybe they can also be considered by Poland.
Is Poland an interesting investment and trade destination for Taiwan? Should more be done to promote business opportunities in Poland?
Poland is located in north-central Europe, bordered by Germany to the west; the Czech Republic and Slovakia to the south; Lithuania, Belarus and Ukraine to the east; and the Baltic Sea to the north. Its advantageous geographical location connects the major European cities through road, rail, air and ocean freight, thus making it the hub of the Europe. Taiwan External Trade Development Council (TAITRA) also has a branch office, the Taiwan Trade Center Warsaw, in Poland to promote bilateral economic and trade exchange.
Poland joined the European Union on May 1, 2004 with its market size of more than 38 million people, connecting the European Union market as a whole. With its high-quality labor, and the relatively low cost comparing to other Western European countries, the grants provided by the European Union have significantly improved its infrastructure. Besides, Poland’s stable political and economic environment, coupled with foreign investment incentives such as preferential treatment and tax cuts attracted companies in the European Union to invest in Poland. Poland’s huge market potential cannot be ignored.
In 2006, there were only 16 Taiwanese companies invested in Poland. The number increases to 24 in 2012. The industries that Taiwanese companies invested in included information technology, sea forwarder, garments, bicycle, shoes and textile. The Taiwanese companies included Asus, Evergreen, MSI, COMPAL, and many others.
In 2011, Poland was Taiwan’s 44th largest trade partner. The trade volume between Poland and Taiwan totaled US$968 million. Imports from Poland totaled US$218.9 million (increased 12.1% compared to 2010), while our exports to Poland amounted to US$749.3 million (decreased 16.8%). Poland was Taiwan’s 55th largest import and 32nd export country in 2011. The main import items from Poland were organic chemicals, electrical equipment and machinery. Taiwan’s major export items to Poland were electrical equipment, machinery, iron and steel, and auto spare parts. Statistically, Poland is attractive for Taiwanese companies both in trade and investment.
In addition to the long-term promotion efforts by the Taiwan Trade Center Warsaw, my recommendation to the Polish government and private sectors is to enhance trade opportunities between Taiwan and Poland through trade meetings in Taiwan. This way, Taiwanese firms can understand more of Poland's industrial, economic and trade advantages. TAITRA, as the most well established trade promoting organization in Taiwan, will be glad to provide related assistance to foster more economic cooperation between our two countries.
Joanna Irzabek, a journalist, has extensively travelled and worked in the countries of the Middle East and South Asia. Her articles have appeared in magazines such as Polityka and Newsweek Polska. A graduate of Scandinavian Studies from the University of Gdańsk, she studied theory of international relations at the Norwegian University of Science and Technology, Norway, and journalism at the London School of Journalism, UK.