After 51 years of Japanese colony, starting 1945, Taiwan revitalized her textile industry via six stages: (1) recovery, (2) cotton product development, (3) export expansion and emerging product scope, (4) growth, (5) maturity and upgrading of technology, and (6) transformation, outward investment, and innovation. During the developing process, the role of government policies, such as investment friendly taxation and environment; development of small and medium sized enterprises; textile specific policy/regulation and institutions; development of complementary industries and a reasonable labour market and regulations play the important role. Current manufacturing strength has shifted to cross-strait division of labour in China and Southeast Asian countries. How to deal with the post quota era of changing WTO rules (e.g. rules of origin) will be the critical factors in influencing the success of ASEAN + China economic integration and the competitiveness of Taiwan’s textile industry. KEY WORDS: Taiwan, textile and garment industry, small and median sized enterprises, regulation and institution, Rules of Origin (ROO).
