The imbalanced distribution within Taiwan’s manufacturing industry is also a big problem. In South Korea, the electronics industry accounts for only 20 percent of GDP, while in Taiwan it accounts for as much as 40 percent. This is why Taiwan has suffered so badly in the current economic downturn.
This relates to the special treatment the government has shown the high-tech electronic industry in the past. These policies need to be changed.
All parts of a manufacturing industry are capable of performing well so long as goods are produced properly. In door lock manufacturing, a traditional industry, Taiwan’s Tong Lung Metal Industry Co is ranked among the world’s top five companies, with an annual turnover of more than US$100 million. Handbag manufacturer Louis Vuitton, another example of a traditional industry, makes large amounts of money for the French economy every year.
Even the manufacturers of small hearing aids are capable of making a lot of money. For example, in 2009, the sales volume of manufacturers of hearing aids in Singapore and Switzerland reached approximately US$400 million in each country, much more than in China, the US or Germany.
Yet another example of a traditional industry making plenty of money is Danish toy manufacturer Lego, which has 10,000 employees and sells its products in 130 countries.
Taiwan’s service industry has unfortunately never received adequate attention from the government. One example of this is how an aquatic therapist is capable of earning NT$100,000 (US$ 3,444) per month, yet the government does not even have basic regulatory provisions in place for this vocation.
Ministries are merely concerned with whether an operation is illegal and should be prohibited. There is no industry guidance or attempts to create jobs. Compared with the support the government has given the manufacturing sector, it would seem that Taiwan’s service industry must rely on itself.
If the government continues to treat the service industry this way, it is debatable if an industry which accounts for 70 percent of Taiwan’s output value will be able to support the next wave of economic growth.
The key to success for small economies is simple: create an environment characterized by free competition for all businesses.
Tu Jenn-hwa is an assistant professor at the Graduate Institute of National Development at National Taiwan University.
Translated by Drew Cameron