Monthly Archives: November 2013

The Gambia severs diplomatic ties with Taiwan

A senior Ministry of Foreign Affairs (MOFA) official has announced that China was not involved in Gambian President Yahya Jammeh’s decision to cut diplomatic ties with Taiwan, according to the Central News Agency. On November 18, David Wang, director-general of the MOFA’s Department of West Asian and African Affairs, made the comment after local media reported on Jammeh’s November 15 Facebook posting declaring that the People’s Republic of China will be recognized diplomatically by The Gambia in the future.

According to Wang, the Facebook post was dated a day after Jammeh informed President Ma Ying-jeou in a personal letter of his decision to end diplomatic ties with Taiwan, effective immediately. “The post did not mean Jammeh would immediately establish diplomatic ties with Beijing,” he noted, adding that he believes the Facebook message was mainly aimed at justifying Jammeh’s choice to sever diplomatic ties with the Republic of China (Taiwan).

The MOFA said in a statement that the ROC Embassy in the West African state will be shut down, its technical mission will be withdrawn and all cooperative programs will be terminated.

Jammeh on November 15 unilaterally announced the decision to terminate the 18-year-long diplomatic relations between his country, officially known as the Republic of the Gambia, and Taiwan. Given that the West African nation did not have ties with the People’s Republic of China at the same time, reported the United Daily News, the decision may be based on Jammeh’s personal choice, who is known to be unpredictable. Last month, Jammeh withdrew his country from the British Commonwealth and three years ago, he unexpectedly severed relations with Iran.

Whatever the reason, The Gambia’s move has posed a huge challenge to the “diplomatic truce” or “flexible diplomacy” policy of President Ma. The policy is aimed at putting an end to the “checkbook diplomacy” competition between the two sides of the Taiwan Strait. Over the past five years, both sides have refrained from luring away each other’s diplomatic allies with monetary incentives, noted the United Daily News.

The Gambia was the first country to sever official relations with Taiwan since President Ma began implementing his diplomatic truce policy five years ago. Without The Gambia, Taiwan still maintains diplomatic relations with 22 countries.

Taiwan Film Days becomes a SF mainstay

Taiwan Film Days (TFD), the only yearly Taiwanese film festival in the States, opened its three-day program on November 1. Hosted by the San Francisco Film Society (SFFS), this year’s line-up included the island’s hit, Zone Pro Site: the Moveable Feast and seven other films.

Three filmmakers were also on hand at the 5th TFD to attend their film’s Northern California screenings and to participate in the Q&A which followed. They included Hou Chi-jen, director of When a Wolf Falls in Love with a Sheep, Hsieh Chun-yi, director of Apolitical Romance, and Mimi Wang, producer of Ripples of Desire.

Starting from Cape No. 7

Since 2006, the Press Division of the Taipei Economic and Cultural Office (TECO) in San Francisco has worked with major Bay Area colleges and universities to hold the Taiwan Film Festival. During certain years, the program would extend to campuses in Utah, Nevada, Washington and Oregon. But, given the division’s limited staff and the extensive multi-state and campus coordination needed, the concentration shifted to partnering with the San Francisco Film Society and localizing the festival in the Bay Area.

In 2009, Manfred Peng, the new press director of TECO, began discussions with Graham Leggat, the then executive director of SFFS, regarding organizing an annual Taiwanese themed film festival. Leggat, both personable and an avid supporter of Taiwan films, agreed to organize a festival and Taiwan Film Days was born.

Founded in 1957, the SFFS holds the annual San Francisco International Film Festival, the longest-running international film festival on the West Coast. Each May, this highly competitive festival screens a selection of 150 films from around the world. SFFS, a proponent of Taiwanese cinema, has played a pioneering role in introducing Taiwan-made films to Bay Area audiences. Its San Francisco International Film Festival has shown over 40 Taiwanese films over the years. Works by leading figures—Hou Hsiao-hsien, Tsai Ming-liang and Edward Yang—have been featured, and prominent actor Lee Kang-sheng was a Festival guest in 1998.

With SFFS’s track record and its extensive mailing list of Bay Area film lovers, this collaborative effort allowed TECO to reach further off campus. Not only was the SFFS a prestigious and trusted institution, its staff members were also well-connected to the American film industry, giving visiting filmmakers from Taiwan a chance to learn more from their host. Also, since the films were selected by a third party with a sterling reputation, the films were given more legitimacy.

Five years ago, Taiwan’s movie industry also underwent a revival with the introduction of Cape No. 7, a local blockbuster. The first Taiwan Film Days was born in the wake of this Taiwanese film renaissance. Through the selection of SFFS, Cape No. 7 and six other newly produced feature films and documentaries tested the American market by selling tickets at movie theaters in San Francisco. The box office result of the three-day festival was good enough that Leggat renewed the festival for the next year. It is now a part of the SFFS fall program, along with more well-established festivals such as French Cinema Now and New Italian Cinema.

SFFS, seasoning Taiwan’s filmmakers

Most of Taiwan’s film companies are small, lacking in foreign language talent and international experience. In order to broaden the visiting director’s experience, SFFS would invite some directors of the participating films to meet American audiences, filmmakers, teachers and students at participating film schools. This allowed the visiting filmmakers to gain a better understanding of the US market.

Since the inception of the Taiwan Film Festival and Taiwan Film Days by the Press Division, it has welcomed more than 50 Taiwanese filmmakers/producers and screened over 70 movies since 2006. As a result, San Francisco has become the “launch pad” for Taiwan filmmakers to test how their movies will translate to an American market.

In 2012, when Taiwanese blockbuster Warriors of the Rainbow: Seediq Bale was screened at cinemas in the US, the box office in the Bay Area took top place among major US cities. In part, this can be attributed to the long-term marketing and steady cultivation of the local audience by TECO for Taiwan-made films.

Since the launch of Taiwan Film Days five years ago, many have come to known Leggat. When he passed away in 2011, Taiwanese directors joined a vast numbers of international directors in expressing their condolences. Since then, two subsequent executive directors have also renewed their support for Taiwan Film Days, with the festival growing each successive year. Inspired by the success of Taiwan Film Days, Hong Kong has also followed TECO’s model by holding its own festival in cooperation with SFFS starting 2011.

A useful tool to promote soft power

Movies have become a tool for Taiwan’s diplomatic offices overseas to promote Taiwan’s soft power. Since the 1990s, Taiwan’s films have steadily appeared in international film festivals, promoting the international appeal of Taiwanese directors. Taiwan’s films showcase the island’s way of life in a manner that is easily assimilated into the general consciousness. And, film screenings required little overseas personnel and are not cost prohibitive to stage, unlike other forms of performing arts or exhibitions.

In October 2010, TECO held Taiwan Film Days as scheduled. About the same time, the Chinese Film Festival opened in San Francisco, screening the Founding of a Republic, one of the most costly films ever to be made in mainland China. In a review of the two festivals, San Francisco Chronicle commented that the two sides of the Taiwan Strait held their respective film festivals, but there were big differences between the topics of their films. “Mainland China makes films with a collective bent and Taiwan makes smaller, more independent and individualistic movies,” the article noted. Along with the review was a poster of Taiwanese film Somewhere I Have Never Traveled, directed by Fu Tian-yu. Fu and other directors invited to attend the screenings of TFD were proud to read that comparison.

An American couple was asked about their loyal support of the festival, buying a book of tickets and watching almost every film screened each year. What accounted for their enthusiasm for Taiwan films? The wife responded that her father was a missionary in mainland China and that is why she is so fond of Chinese culture. She believes that Taiwan’s movies highlight social issues and the humanitarian spirit, which is not seen in most mainland Chinese movies.

Ministry of Culture takes over film promotion

As a city with a high concentration of different ethnicities and cultures; San Francisco is a wonderful venue for TFD. Asians alone account for 30 percent of the city’s population. By and large, the city’s demographic is highly educated, well-traveled and economically comfortable, making it a fertile ground to promote Taiwan’s soft power.

Up to 1,500 people attend the festival each year, with half of them being ethnic Chinese or Taiwanese. And of that segment, half of them are American-born Chinese (ABC). They do not understand Mandarin, but are more economically and politically tied to America. This also is a particularly good group for TECO to nurture since they are also culturally tied to Taiwanese and Chinese culture – or would like to be – yet wield certain influences in the States. An example can be seen during the Q&A session of last year’s Joyful Reunion, when an English speaking ethnic Chinese writer complimented director Tsao Jui-yuan, saying that Tsao’s work gave her a better understanding of Taiwan.

This year, the main sponsor for the festival came from Taiwan’s Ministry of Culture (MOC), a newly formed government agency charged with promoting Taiwan-made films. In previous years, the festival’s main collaborator was the Government Information Office (GIO). However due to restructuring in the Taiwan government, the GIO was disbanded in 2012 and most of its work shifted to the MOC or the Ministry of Foreign Affairs (MOFA). Since TFD is the only festival dedicated to Taiwan-made films in the States, the MOC is committed to continuing and growing the festival from their office in Los Angeles.

Many challenges for Taiwan films to break into US market

Each year, Peng and SFFS’s programmers, Sean Uyehara and Rachel Rosen, have sifted through Taiwan’s most recent films, narrowing it down to 20 to 30 films to watch. Once selected, Peng watches the selected films at the festival screenings again. In total, he has watched almost 150 Taiwan movies in the past five years, in addition to repeatedly watching certain movies at smaller venues throughout the Bay Area. With his clear mandate to promote Taiwan-made films, he had never watched so Taiwanese many movies before arriving in the States. Because of this, “Colleagues at other overseas offices have asked for my opinion. I’ve become a semi-professional movie critic, giving recommendations on which films are good to screen at the festivals.” Although Peng happily promotes the movies selected for the festival, he also has a sharp eye for movies that do not make the festival, but are noteworthy. One such film is The Soul of The Bread. Going on his personal instincts, Peng started promoting the light-hearted romantic comedy locally. It soon became a popular audience favorite throughout the Bay Area.

Peng said, “Working to promote Taiwanese films in America, I feel I have kept up with the growth of Taiwan’s film industry. My attitude has changed from being indifferent to one of enthusiasm.” Because of his work, he noted the following challenges for Taiwanese films in entering the US market.

Since the late 1980s, a number of new Taiwanese directors have focused on targeting the metropolitan middle class, catering to international film festivals, and not to Taiwan’s domestic market and the Taiwanese taste. However Cape No. 7 changed all of that. It reversed the direction of Taiwan’s producers, turning their eyes to the underlying theme of uneducated characters in the country side. Coupled with the Taiwanese government’s subsidy based on box office receipts, Taiwan’s filmmakers have readily turned to the domestic film market to seek topics and style, Peng said.

Ten years ago, Taiwan-made films accounted for only 3 percent of the total revenue of the island’s theaters. It now stands at 18 percent as of last year, showing a surge of people going to theaters to watch locally made films. With commercial viability of Taiwan-made films realized, movies have been targeting Taiwan’s young adults, who are the largest consumer segment for films. Recent film plots have included first love, encouraging stories of perseverance and hard work, youthful rebellion into crime, and stories centering on the lower middle class society found in night markets and rural villages, to the marginalized in Taiwan. Peng said it is rather difficult to select six to eight different styles of movies to reflect the different plotlines or not to repeat them during the festival.

Cultural divide still a barrier

Although movies are a universal language, the cultural barrier is still a difficult divide to overcome. It is not easy to attract Americans to spend half a day in a theater watching foreign movies. American theaters only screen a handful of non-English films throughout the year, mainly French and Italian movies. American television channels also rarely play Asian movies. This is the reality that TECO faces in promoting Taiwanese films in the US.

Furthermore, Taiwanese film budgets are far less than that in Europe or America, and usually lack a superstar cast or dazzling special effects. The key for Taiwanese films in standing out is the script. Like the US, there are many instances where a low cost indie film succeeds at the box office by touching on topics or stories that resonate with an audience.

Given this handicap, it is natural for Taiwanese films to localize its subject. However, by localizing the humor, storytelling and centering on Taiwan’s lower middle class, much of the meaning is lost in translation. And if you need to explain a joke, it’s not funny. After watching Din Tao, a very popular Taiwanese movie at TFD last year, some of the American audience were confused by why such a group would want to carry the load of a heavy puppet while traveling around the island, or even climbing the mountain?

After Edward Yang and Ang Lee

Last year, the SFFS specially screened A Brighter Summer Day, directed by Edward Yang, which was the only non-current film shown since the establishment of TFD. Peng was originally dubious of its attraction, since the movie was more than two decades old. But to his surprise, it played to a full house with the vast majority of the audience being non-Asian. It was a testament to the quality of the film since its running time is nearly four hours, and no one seemed bored or left early. At the invitation of the festival, Edward Yang’s widow Peng Kai-li also came to the screening and was deeply touched by the film’s reception. The packed house renewed TECO’s hope about marketing Taiwanese films to a US market.

In recent years, Taiwanese films have moved from “international” to “localization”, which seems too narrow in terms of topics for overseas film festivals. International selectors at festival films are fully aware of each work by Hou Hsiao-hsien, Edward Yang, Tsai Ming-liang, and Ang Lee. However, after a decade, will there be another group of new directors to carry on Taiwan’s cinematic banner in the international arena? Will the next classic hit at a prestigious international film festival be plucked from the screening list of TFD, asked Peng.

After enjoying the resurgence of its domestic box office, Taiwanese filmmakers need to assume the responsibility of taking Taiwanese films to global audience by telling stories that will captivate the hearts of an international audience. After all, Taiwan’s film industry is no longer as unseasoned, with local government assistance and overseas offices standing ready to help. And given Taiwan’s stature, it still remains the best tool to demonstrate Taiwan’s soft power worldwide.

Taiwan Film Days

Taiwan Film Days focuses on the best contemporary Taiwanese cinema and provides Bay Area audiences with a unique opportunity to view bold new Taiwanese films and engage with visionary filmmakers. Marking its fifth year, San Francisco Film Society’s (SFFS) programmer Sean Uyehara said that without a doubt, this year’s Taiwan Film Days is the most eclectic yet. Included in the line-up are films already screened at celebrated international film festivals such as Cannes, Toronto and Locarno.

The photos below are a sample from the TFD over the last five years. This year’s festival has relocated to the Vogue Theater in the Marina District. Despite the new location, the festival has grown and has proved to be the best TFD yet.


The 5th Taiwan Film Days at the Vogue Theater in San Francisco (November 2013)


Fung Kai (left), director of Din Tao, takes questions from the audience. SFFS’s programmer Sean Uyehara at his right (October 2012)


TECO chief, Bruce Fuh (center), talks to Ted Hope (left), then executive director of SFFS, and Amanda Todd, SFFS’s development manager at the TFD reception (October 2012)


Tsao Jui-yuan (right), director of Joyful Reunion, is greeted by the audience (October 2012)


Manfred Peng, TECO’s press director (right), stands with Wang Chi-tsai (director of Formosa Mambo) (middle) and Huang Hsin-yao (director of Taivalu) (October 2011)


Long lines for TFD in front of New People Cinema in San Francisco (October 2011)


More long lines for TFD in front of New People Cinema (October 2011)

Stanford holds seminar on Taiwan’s trade liberalization

The Center for Democracy, Development, and the Rule of Law (CDDRL) at Stanford University held a conference on the Trans-Pacific Partnership and Taiwan’s Future Development Strategy on October 11 and 12.

Larry Diamond, director of CDDRL, invited scholars from the US, Taiwan, Japan, South Korea, Singapore, New Zealand and other countries to participate in the event.

Six issues addressed were: 1) the evolving structure of the economic and trading environment in East Asia; 2) the history and geopolitics of the Trans-Pacific Partnership (TPP); 3) the challenges of free trade in Taiwan; 4) perspectives of East Asian countries with regard to the TPP; 5) Taiwan’s development for the next phrase; 6) Taiwan’s strategy and the future of the TPP.

Scholars attending the conference met to exchange views about Taiwan’s participation in TPP issues. They generally agreed that the TPP is the best choice for Taiwan to participate in regional trade and economic integration. Further agreeing that the island should take advantage of this opportunity to promote economic structural reforms and industrial upgrading, demonstrating its determination to liberalize and reform so as to solicit the support of the US and other TPP negotiating members.

As an important economic power in the world, Taiwan should not be excluded from Asia-Pacific regional economic integration. Taiwan needs to ratify its free trade agreement with New Zealand, and the trade and services agreement within the Economic Cooperation Framework Agreement (ECFA) with China, and conclude the free trade negotiations with Singapore as soon as possible.

Taiwanese scholars attending the event included Tien Hung-mao (president of the Institute for National Policy Research), Hu Sheng-cheng (fellow at Academia Sinica), Chen Tain-ji (economics professor at National Taiwan University), Ho Szu-yin (professor at National Cheng Chi University), Mignonne Chan (adjunct associate professor at National Cheng Chi University), San Gee (vice chairman at the Taiwan External Trade Development Council), Chu Yun-han (professor at National Taiwan University) and Lee Chun (deputy executive director at the Chung-Hua Institution for Economic Research).

The participating scholars’ reports have been published on CDDRL’s website:¢er=cddrl&x=-1100&y=-133&doctype =.

Declining number of Taiwanese students in US

According a report released by the American Institute of International Education on November 11, the number of international students studying in the US during the 2012-2013 school year reached a record high of 819,644, an increase of 7 percent over the previous year. Among them, for the first time, the largest number (230,000) are Chinese students. In contrast, the number of Taiwanese students studying in the US fell to 21,867, only the sixth largest group. This was 5.9 percent lower than the previous year and marked the sixth consecutive year of declining numbers of students from Taiwan.

The Central News Agency reported that the second to the fifth largest source of foreign students in the US during the 2012-2013 school year in their respective order are: India, South Korea, Saudi Arabia and Canada. When combining China, India and South Korea, these three countries account for 49 percent of the total foreign student population in the US.

Coming in at sixth place, Taiwanese students are mainly comprised of graduate students (49.7 percent) and undergraduates (27.4 percent). The number of students studying in the US from Taiwan peaked in the 1993-1994 academic year, reaching 37,581, but started to decline in 2007-2008.

Despite decreasing number of Taiwanese students studying in the US, the survey shows an upward trend for Taiwanese students staying in the US to find work after graduation. In 2011 those who applied for US internships after graduation numbered 3,377, and this number jumped to 3,417 last year.

According to the Central News Agency, Miss Yang, who graduated from the University of Southern California (USC), where the majority of international students study, is currently working with a public relations company in Los Angeles. Many of her Taiwanese friends studying electrical engineering at USC are expected to get a high paying job in Taiwan, but they are leery about the culture of overtime and excessively long hours in Taiwan’s technology industry. Most of them have decided to stay in the United States, hoping to accumulate some work experience before returning to Taiwan, said Yang.

Taiwanese singer waves national flag, sets off heated debate

During a November 2 concert at the University of Manchester, UK, Taiwanese singer-songwriter Deserts Chang (aka Zhang Xuan) held a Republic of China (Taiwan) flag given to her by a fan among an audience of 500. While holding the flag, she said “This is the national flag of my home country,” adding “I am very proud to introduce my country!” while a mainland Chinese student countered by shouting, “No politics today.” This short incident caused a heated debate between Taiwanese and Chinese netizens. And now, Chang’s year-end performances schedule on the mainland has been postponed, reported the Liberty Times.

Although it might be natural for singers to show their country’s flag during a performance, this incident has caused a backlash against Chang from the mainland Chinese, many accusing her of supporting Taiwan independence.

On November 5, Chang returned to Taiwan and responded to the accusation that she supports Taiwanese independence on Facebook. She said, “The current political situation in Taiwan is indeed different from those in other ethnic Chinese communities,” and “I have no intention to stress the differences, but I do mind my intention being deliberately distorted… Without a sincere and truthful dialogue, even same cultural background would not bring us closer to each other.”

Deserts Chang was born Chiao An-pu in 1981. Her father, Chiao Jen-he, is a former vice chairman of the Straits Exchange Foundation (SEF), a semi-official organization set up by the Taiwan government to handle matters regarding cross-strait negotiations with the mainland. Due to her family background, her comments drew special attention, according to the United Daily News.

Chiao, who worked for the SEF in the 1990s now runs his own law firm, said he does not know the whole situation, nor did he see his daughter’s Facebook post. But he said Taiwan and the mainland really need reconciliation and understanding, especially in a foreign country. The people on both sides should relax their minds and have mutual respect. “Otherwise, foreigners will only see us as a joke,” he said.

Due to a difference in education, such incidents highlight the frequent problems as more young people from both sides interact with each other, said Wang Yu-chi, chairman of Taiwan’s Mainland Affairs Council (MAC), in the United Daily News. To resolve this problem, the two sides should be more tolerant of the other’s position.

Apple Daily reported that with regard to the decision of “postponing” Chang’s performance in Beijing at the year’s end, Wu Mei-hong, MAC’s spokeswoman, responded on November 14 by saying, “We regret the result of the case,” “We respect the decision which was made by the performer and the sponsoring organization.”

The United Daily News commented that Taiwanese consciousness and Taiwan independence are two different things. Taiwanese consciousness is identifying with the island’s culture and way of life, whereas Taiwan independence aims to cut off cultural ties with the Chinese culture and discard the goal of Chinese unification. Those who label Chang as an advocator of Taiwan independence have done her an injustice.

It is indeed a difficult situation when Taiwan’s emotional identification runs into China’s nationalism and patriotism. Hopefully this incident can pave the way for more tolerant dialogue. People on both sides of the strait should be more open-minded of each other’s differing values and identities, thus promoting mutual understanding, stressed the United Daily News.

Taiwan faces impact from Shanghai Free Trade Zone

This March, when China’s newly appointed Premier Li Keqiang paid his first visit to Shanghai, he mentioned that the city should be further liberalized, expanded and have a pilot free trade zone. In less than three months, the Shanghai Free Trade Zone was formally launched together with the aim of joining the Trans-Pacific Partnership (TPP) headed by the United States, reported Business Weekly.

Currently there are 12 members of the TPP, with a combined economic output accounting for 40 percent of the global total, and a combined total volume of about one third of global trade.

Hsu Bo-hsiang, a researcher at the Taiwan Institute of Economic Research, told Business Weekly that the TPP is a critical and high standard trade agreement, requiring not just full tariff reduction, but also intellectual property protection, labor standards, environmental standards, and promotion of small and medium-sized business development. One of its stipulations is that state-owned enterprises are not allowed to compete with private businesses for profits. Just this single requirement will hinder China’s ability to join and may potentially change its economic system.

The Shanghai Free Trade Zone serves as a pilot experiment for the opening of China internationally and for its economic liberalization domestically. If it proves to be a failure, it will be contained in one part of China. If successful, it can be expanded to other major cities like Tianjin, Chongqing, Xiamen and Hong Kong.

While promoting free trade and reform on the one hand, China is also pursuing the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement comprised of 10 ASEAN member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, the Philippines, Singapore, Thailand and Vietnam) plus China, Japan, South Korea, Australia, New Zealand, and India.

Once established, the Shanghai Free Trade Zone immediately instigated financial changes, the most eye-catching being the free flow of capital, liberalization of the Chinese currency, and the free flow of commodity goods.

Taiwan, which is not a member of the TPP or RCEP, has to go further in order to merge with the Chinese market. Business Weekly reported that Liu Fang-rong, general manager of Franklin Resources, said the financial reform test in the Shanghai Free Trade Zone poses a severe threat to the banking industry of Taiwan. According to his analysis, the majority of profit earned by Taiwanese bankers comes from two sources: the offshore banking unit (OBU) and the credit card business.

Currently, the free flow of capital and goods in and out of China from Taiwanese merchants’ OBU business still has to go through Taiwan’s banks. Once the Shanghai Free Trade Zone is fully established and China’s currency is liberalized, Taiwanese business will be able to go directly to the new trade zone. Besides attracting Taiwanese businesses, this new arrangement is set to attract companies from Hong Kong and Singapore as well.

Liu noted that the strength of Taiwanese businesses such as Foxconn, Quanta Computer, and Pegatron as exporters to China, should not be overlooked. As long as Taiwanese banks can hold on to the OBU businesses of these Taiwanese giants and prevent them from shifting to other banks in the new zone, this will continue to be an ample market for Taiwan.

The establishment of the Shanghai Free Trade Zone means that the Free Economic Pilot Zone in Taiwan which was established in July, must move forward quickly. Taiwan’s zone must also be more open and liberal than Shanghai’s, allowing it to be more competitive, stressed Business Weekly.

What happened to Taiwan’s Acer and HTC?

Two of Taiwan’s most prominent high-tech brands, computer vendor Acer Inc. and smartphone-maker HTC Corp., are feeling the pinch. Both have come off the competitive battlefield worse for wear, reported Commonwealth monthly. With Apple’s growth slowing and Microsoft’s acquisition of Nokia after unsuccessful forays into mobile devices, this winter will definitely bring a reshuffling among these high-tech giants.

Acer, founded 37 years ago, is Taiwan’s standard-bearer of brands, but has suffered two consecutive years of heavy losses and is not showing any signs of recovery.

Sixteen-year-old HTC has lost NT$900 billion (US$10 billion) in market value in just two years and this downward trend has continued in the third quarter of this year. HTC is forecasted to ship about 20 million smartphones this year, barely half the total it shipped at its 2011 peak. And now, it is in danger of being overtaken by Chinese smartphone brand Xiaomi, launched just three years ago.

However, if HTC chairwoman Cher Wang is worried, there were no signs of this during an interview with Commonwealth. “I think smartphones are still in their infancy, with still plenty of opportunities, such as smart cities. There are inevitably ups and downs when building a brand.”

Taiwan’s small home market a disadvantage

Without a big home market, Taiwanese high-tech companies are naturally at a disadvantage in the crucial area of defining standards, such as source codes and basic communications patents. Taiwan is also not interested in adopting the Korean model of pouring the entire country’s resources into forging one big brand, like Samsung.

“A small country has to consolidate its resources. To some extent, it has to have the capitalist spirit,” said Chiu Yi-chia, the dean of National Chengchi University’s Graduate Institute of Technology, Innovation and Intellectual Property Management. Taiwan’s high-tech policies, Chiu said, put too much emphasis on fairness and diversity, making the industry akin to being a sheep (socialism), with a skin of wolf (capitalism). As a consequence, Taiwanese tech brands are inherently at a disadvantaged without a concentration and not enough sustaining strength to take on the global market.

Internationalization is not the only key for growth

From Acer, AsusTek to HTC, everyone is up against the same fundamental challenge. If you want to fight a global battle, you need international talent. “Taiwan does not have a national image or market development advantages to sell, so Taiwanese companies must rely on above average salaries when hiring top international talent,” observed Bei Lien-ti, a professor at National Chengchi University’s Department of Business Administration.

Commonwealth reported that Acer and HTC have paid top salaries to attract an internationalized sales force, but it has not translated into improved results. “Can we really call using a bunch of foreign executives to make a bunch of cross-border acquisitions internationalization?” asked a resentful former HTC manager.

So why are Taiwanese tech companies unable to work with an internationalized team over the long term? “Because Taiwanese do not have boards of directors with strong functions and sound operations,” said Chiu. He notes that the management of Taiwanese tech brands generally depends too much on an all-powerful CEO. “Only if the board mechanism is sound can the company build the strength of its management step by step,” Chiu said.

Understanding the market to cultivate niche

Commonwealth noted another key to brand marketing is in finding an appropriate price point based on the product’s positioning in the market. But because HTC’s customers have largely been telecom operators and Acer’s customers have been distributors, neither has been able to get a firm grasp of the end user, making it more challenging for them to develop insight into consumer needs.

HTC relied on its edge in technology, including producing the first Android smartphone, to become the preferred supplier of telecom operators around the world. But after rising to the height of the industry, HTC neglected the rapid shift in the smartphone market to mid-range and low-cost models.

“Small countries can still outwit bigger rivals, as long as they understand how to focus,” said Liu Shuen-zen, a professor at National Taiwan University. Taiwan can open a new battlefield and cultivate B2B brands, he suggested, pointing to the Swiss model as one worth emulating.

“Switzerland emphasizes precision and focus. Through its sharp concentration and technical proficiency, Switzerland commands 80 percent of the global market for currency ink, and its watches generate high margins,” said Liu, who believes Taiwan could also become a global “hidden champion” in several niche markets.

Acer and HTC both posted losses for the third quarter, and their short-term prospects remain uncertain. But considered over the long haul, the hard road traveled by Taiwan’s high-tech brands remains worth pursuing. After all, success is built on the pillars of failure, noted Commonwealth.

Heng Leong Hang pushes Dyson to the top in Taiwan

How big is Taiwan’s market? When speaking demographically, Taiwan is one sixtieth the size of mainland China’s population. Based on per capita income, it is only one third the size of Denmark’s. But for the high-end British brand Dyson vacuum cleaner, Taiwan is the largest overseas market out of the 29 countries where the products are sold, according to Business Weekly.

According to marketing firm GIK, Dyson’s products took the top five spots of the ten most popular vacuum cleaners in Taiwan from January to July this year. Last year, the firm grabbed a market share of NT$600 million (US$20 million) out of Taiwan’s total NT$1.5 billion (US$50 million) market. This made Taiwan the largest distributor of Dyson products in the world, beating large markets like China and India, and overtaking affluent countries like Denmark and Israel (excluding Britain and US where Dyson has direct ownership of the businesses.)

In 2006, when Dyson products were first introduced to Taiwan, Dyson’s British headquarters believed that Taiwan would be a small market. Chen Cheng-hong, chairman of Heng Leong Hang (HLH) told Business Weekly that few Taiwanese use carpet and vacuum cleaners, nor was it considered a daily necessity. Besides, Dyson vacuums cost nearly US$1,000 each, six times the price of popular Taiwanese models.

The fundamental hurdle from the beginning was that Dyson’s products were not competitively priced, added Chen. However, HLH decided from the outset not to compete on price. Instead, Chen set up an independent business unit exclusively for Dyson products, hiring extra personnel, and spending 20 percent more than other Dyson distributors.

Chen also extended the warranty for the vacuum cleaners to five years, the longest among local sellers. This meant HLH itself was responsible for the extra costs of after-sales services.

Of course, these upgrades increased operating cost by 50 percent, so Chen also charged 20 to 30 percent more than Dyson charges in the UK in order to make a 10 percent profit, reported Business Weekly.

Like other high-end home appliances, Dyson adopted a similar marketing strategy toward its ethnic Chinese consumers, targeting women and top-end sales. HLH immediately found out this strategy did not work in Taiwan.

Initially, over 70 percent of Dyson products in Taiwan were purchased by men, mostly engineers at the Hsin-chu Science Park (Taiwan’s Silicon Valley), according to Business Weekly. Hsieh Ming-hui, professor of international marketing at National Taiwan University (NTU), noted that there are a large number of engineers with an electronics and mechanical engineering background in Taiwan. They are the people who are willing to pay for technology. Plus, inventor and spokesman of the firm, Sir James Dyson, offered the same appeal as a movie star to his male audience.

C. Y. Huang, professor of management at NTU, also points out that HLH was fully aware that engineers tended to collect information from online forums and are good at explaining high-tech principles in simple terms. So by capitalizing on these initial loyal fans to share their thoughts on websites, HLH simplified the mechanical principles of Dyson products, thus enlarging its consumer base.

Through word of mouth from these engineers, sales of Dyson products doubled each year from 2007 to 2011. The ratio of male customers to females changed from 7:3 to about half and half. Today, Dyson has successfully entered the female market, moving from being a niche product to the mainstream, noted Business Weekly.

More young Taiwanese find work in Southeast Asia

In recent years, an increasing number of young Taiwanese people have gone to Singapore to seek work, with almost 6,000 making the move this year alone. This phenomenon is largely driven by the fact that wages in Taiwan have stayed at the level they were 16 years ago, with starting salaries for entry-level workers also remaining in the doldrums. At the same time, demand for service sector workers in Singapore is booming, and in Macau, demand for workers is especially driven by the casino-based economy.

The combination of these two trends has resulted in large numbers of young Taiwanese people working in Southeast Asian countries, with the majority of them working in entry-level positions within the service sector, reported Global Views monthly.

Every day more than 20 young Taiwanese people loaded down with luggage prepare to fly to Southeast Asia to take up new jobs there. Already this year, as many as 5,000 Taiwanese workers have headed for Singapore, about 1,000 have made the move to Macau, and several hundred have relocated to the Philippines. The majority of them are working full time, with about 400 taking up internships.

Elvis Thong, managing director of the Inter Island Group (Singapore), the largest recruiting firm hiring Taiwanese workers for Singapore, told Global Views that his company only recruited 280 Taiwanese workers in 2012, but by September of this year, there were already 700 applications.

According to a recent survey, it is estimated that there are about 70,000 young Taiwanese people willing to work in Singapore, Macau and the Philippines. Global Views reported that in addition to engineers and medical doctors, Southeast Asian countries are seeking to fill entry-level service sector positions.

The listing of jobs that Singapore needs to fill mostly includes restaurant waiters, sales staff, counter clerks, and kitchen assistants. Although these are entry-level positions, they still pay better than similar positions in Taiwan.

“Taiwan’s service sector is one of the best in the world. We Singaporeans have to learn from you,” said Thong, adding that Singaporeans do not like to do service sector jobs. So there is a huge demand for workers from overseas.

Sherry Hsia, general manager of Byte-In Integrated Marketing Corp. in Taiwan, said that the advantage Taiwanese workers have includes their language skills. In addition to Mandarin, many young Taiwanese workers speak good English, as well as Hokkien (a dialect commonly spoken in Taiwan, Fujian province in China, and among ethnic Chinese communities in Southeast Asia). Singapore used to hire a lot of workers from mainland China, but employers have found that Taiwanese workers have a better attitude to work and are more loyal, making Taiwanese recruits more desirable, said Hsia.

Chiu Li-chin, the vice-president of the UNI Profession Group in Taiwan pointed out that young Taiwanese workers are the most driven of all foreign workers. They are keen to learn, and want to prove their capability. They are also demanding, and have a strong self-esteem, unlike other expatriate workers who are only motivated by the desire to make money. “Taiwanese workers are also known for not answering back, even when their bosses scold them,” she said.

According to Global Views, a large number of Taiwanese workers employed overseas will return home, bringing with them an international perspective and new skills. On the other hand, with so many young Taiwanese workers making a good living overseas, many of them may never return to Taiwan. This factor will become all the more visible as young Taiwanese workers, who were expected to drive Taiwan’s economy in the future, remain overseas.