How Taiwan became the king of exports

Donald Lu, managing director of the Taiwan Trade Centre, reveals his nation’s secret to export success

How did Taiwan get so good at exporting?

Because, let’s be honest, Taiwan is the workshop of the world. Other countries look to us to find out how we do so well.

Let’s start with the facts.

Today, Taiwan is the world’s 20th largest economy and is home to some of the most innovative companies and enviable brands in existence. Over the past three decades there has been a dramatic – and almost continuously upward – trend in Taiwanese exports. Indeed, Taiwan’s bilateral trade partnership with the UK has strengthened considerably over the past few years. While Taiwan imports from the UK grew 15.49 percent to £1.25 billion, the island’s exports to Britain increased by 27.6 percent to £3 billion pounds in 2011.

So what’s going on?

“There was a 160% increase in the number of Taiwanese patents filed with the US Patent Office between 1998 and 2011”

Taiwan’s economic miracle was largely a result of an overhaul in government policy and a rethinking of the country’s role in global trade, during the early 1970s. Taiwan was to transform its economy, to become a creative market and producer of high quality and technologically advanced equipment. In order to make this happen, there were major changes in government policy in three key areas: education, innovation and export.

Prior to the 1970s, Taiwan had been a labour-oriented economy which was able to produce consumer products at highly competitive prices. The government began by reforming the education system from top to bottom and encouraged students to take up courses in technology, science and engineering. Furthermore, the government worked hard to retain talent. The country had suffered from a ‘brain drain’ as many of its most talented citizens sought employment elsewhere. A range of policies to incentivise workers to remain in Taiwan were introduced. In 1973, for example, the Industrial Technology Research Institute (ITRI) was founded as a not-for-profit research and development body. The institute became a hub for innovation and some of the most well known Taiwanese companies today can trace their origins to ITRI.

Encouraging innovation effectively was a major challenge for Taiwan. But the government set its ambitions high. Funds are now readily available to encourage design and innovation, and prizes in recognition of talent, such as the Taiwan Excellence Awards, have proved invaluable. Like the UK, Taiwan’s companies are overwhelmingly SMEs and we recognised the importance of providing support and funding to these companies.

Over the past decade, the reforms of the 1970s that were implemented to encourage innovation have paid off. To highlight this point, there was a 160% increase in the number of Taiwanese patents filed with the US Patent Office between 1998 and 2011 and today our companies produce some of the most advanced products in the world. Take, for example, the world’s thinnest phone, made by HTC or Giant’s road bicycle, which saw Marianne Vos to gold at the London Olympic Games.

The Taiwan Excellence Awards recognise the best of our brands but we also use them as a vehicle to promote products externally. With companies such as Trend and D-link, Taiwan today is well known for its ICT products. But the Taiwan Excellence Awards have helped to demonstrate innovations in other sectors. In fact, we have been taking advantage of the London Olympics to showcase our sporting brands which include Giant and Merida. We also promoted products from technology companies such as HTC, Asus and Acer.

The Taiwan External Trade Development Council (TAITRA) works alongside companies to support them in developing their marketing strategies, branding and product distribution. TAITRA has been instrumental in promoting free trade partnerships with key partners and has played a significant part in forging new trade channels within high growth economies.

The Taiwanese government is continually working with businesses to identify future opportunities. We plan to continue on our path to become a knowledge-based economy and we have identified several sectors on which we want to focus, including tourism (you may have seen our advertising campaign in London), bio-technology and green energy.

If the UK is to remain a world-leading exporter, it too must foster innovation, support small business and tap into high growth economies.