Tag Archives: 2012 World Competitiveness Scoreboard

Taiwan revitalizes spirit of entrepreneurship

In the 2012 World Competitiveness Scoreboard released by the International Institute for Management Development (IMD) in Lausanne, Switzerland, Taiwan ranked first in the category for entrepreneurship. In another index by the Global Entrepreneurship and Development Institute (GEDI), Taiwan came in 11th worldwide and No. 1 inAsia.

Global Views magazine reported that the White Paper on Small and Medium Enterprises in 2012 published by the Ministry of Economics showed that there are 1.279 million small and medium-sized companies in Taiwan, accounting for 97.6 percent of total enterprises and employing 80 percent of the island’s workforce. Translated, this means one out of every 18 Taiwanese people are “business owners.”

Despite these figures, Taiwan’s entrepreneurship has begun to show a decline as stagnant economic growth becomes more entrenched. According to the official numbers, Taiwan’s entrepreneurship has passed its peak. The number of newly established small and medium-sized businesses has never been able to surpass 100,000 a year, and has even dropped to below 8 percent.

Global Views reported that 85 percent of revenues from these companies come from domestic consumption. That means they fight for domestic market share, not in overseas markets.

According to Taiwan’s 2011 Small and Medium Enterprises report, over 770,000 stores fell mainly into two categories, either “wholesaler and retailer” or “restaurant and lodging.” This accounted for 60 percent of all Taiwanese businesses, while only 135,000 companies, about 1 percent, belong to the “manufacturing industry.”

Overdependence on the domestic market by these new businesses and a lack of competition for exports makes them vulnerable to closure, unable to weather economic hardships for a couple of years. As a matter of fact, these simple imitators of current operational models with low barriers to entry are not indicative of true entrepreneurship.

Global Views noted that most young men born to a rich family do not consider entrepreneurship a worthy goal in life. Instead, they prefer stable job opportunities. They like to work for public agencies or well-established corporations, jobs are stable and more predictable.

Recently, a college professor was surprised to find one of his students running a bakery after completing his master’s degree in high-tech management, an occupation entirely different from his studies. The teacher said with a sigh that the student believed that there was no possibility of his success in the high-tech sector due to the lack of financial support and resources.

Another professor, who often led collegiate groups overseas for international competitions, found that most of his students started their stores with an interest in being of service or in promoting simple cool techniques. But when compared with loftier ideals of dealing with climate change or solving deeper social issues presented by other international teams, Taiwanese young people pale in comparison. “Simply put, our young men do not think big, and have no intention of changing the world,” the professor told Global Views.

Although stability might hold more appeal for most Taiwanese workers, there are still exceptions such as Yang Li-wei. Less than 40, he already runs two high-tech firms – eLand Cloud Services and Tornado Technologies. An entrepreneur in college, and part of the first batch of “student CEOs” in Taiwan, he said happily, “I have been running businesses since my first year of graduate school, and have never been hired by others.” He teaches in the business school at National Taiwan University.

Yang is often asked to serve as a competition judge or counsel student teams. He realized that Taiwanese youth like to start their shops for services or entertainment products, more as a hobby or for personal pleasure, without planning to expand the business. Yang said, “It is OK to start running a small store, but it is not your destination.” He reminds people about the difference in scale between a store, a business and an industry.

What Taiwan needs to do is to offer the younger generations more opportunities to try and venture further so as to help them to stand up, to move around, and to lead the nation. Only 5 to 10 percent of people were born to be true entrepreneurs, and just a few can change the future of Taiwan, concluded Global Views.