2016 White Paper on Small and Medium Enterprises in Taiwan- Development Strategy for SMEs in Smart Economy 

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摘要:

Small and medium-sized enterprises (SMEs) continue to make up the backbone and have been one of the main driving forces of Taiwan’s economic development over the past half century: recognized as export vanguard early on, key partners in supply chains and industrial clusters later, and recently focal point of local economy, entrepreneurship, and industrial upgrade and transformation. Global economic growth in 2015 was 2.6 percent, slightly lower than 2.7 percent in 2014, mainly attributable to lackluster growth in most advanced economies and worse-than-expected economic activity in emerging and developing countries amid stubbornly low commodity prices and weak global trade. As an export-oriented economy, Taiwan is highly sensitive to the difficult macroeconomic and trade environment. Both Taiwan’s exports and imports with major trading partners fell in 2015. However, Taiwan maintained trade surplus with mainland China, Hong Kong, the United States, and ASEAN 10 member countries, though growth of trade surplus in 2015 was slowed down (except growing surplus with the United States). Due to lack of export momentum, 2016 Taiwan economic growth will need more support from domestic demand. The “Five Innovative Industries Plan” promoted by the new government in 2016 will serve as a major tool for Taiwan’s industrial transformation in the global trend of smart manufacturing, promote innovation and new businesses, and improve Taiwan’s overall environment by creating a cluster effect that links local and global industries. Facing unfavorable circumstances in the global value chain (mainland China’s rising supply chains, in particular), Taiwanese SMEs, especially those play an important role in the upstream supply chain supporting large enterprises’ production and exports, have to consider strengthening their competitiveness by cooperating with large companies or form clusters in overcoming trade barriers. The main development strategy for SMEs going forward will focus on the trend of smart economy, which creates opportunities for SMEs to innovate and start new business ventures through Internet of Things (IoT) and to upgrade and transform themselves through smart manufacturing by strengthening their typical competitive advantage in flexible production with customization, rapid manufacturing, and creative vitality. 2016 White Paper on Small and Medium Enterprises in Taiwan comprises three parts. Part One presents an overview and discussion of the most recent operational results, developing trends, and strategic directions of SMEs in Taiwan. Part Two provides in-depth discussion on strategies to drive SMEs’ upgrade and transformation through smart manufacturing and seize business opportunities for SMEs in the IoT era. Part Three reviews various government policy measures related to SMEs and examines their goals, implementation and results. Part One consists of five chapters, covering macroeconomic environment, SMEs’ current state and development, and SMEs’ strategy and government policy measures in response to the changing economic and business environment. Directorate-General of Budget, Accounting and Statistics of Executive Yuan announced in May 2016 that Taiwan’s economy grew much slower at a mere 0.65 percent in 2015, and the 2016 economic growth forecast was slashed to 1.06 percent, which could place Taiwan last among the Four Asian Tigers with GDP below 1.5 percent for two consecutive years. It is of critical importance for the government to adopt effective policy measures with more forward looking and innovative thinking to cope with the potential severe downside risk in the economy and the cloudier picture of macroeconomic and business fundamentals. As for the performance of SMEs in 2015, the number of SMEs reached a record level of 1,383,981, up 2.29 percent from 2014, and accounted for 97.69 percent of all enterprises in Taiwan. In addition, the number of employed persons in SMEs increased to 8,759,000, up 1.03 percent from 2014 - the highest level in recent years - and represented 78.22 percent of all employed persons in Taiwan. The annual sales of SMEs in 2015 came to NT$11,803 billion, down slightly by 0.31 percent from 2014, accounting for 30.36 percent of the total annual sales of all enterprises in Taiwan. In 2015, a total of 98,320 new SMEs were created. With regard to industrial structure in Taiwan, the number of SMEs is mostly concentrated in the Service sector, with the proportion being 79.7 percent. 48.9 percent of SMEs are in Wholesale and Retail Trade, followed by Accommodation and Food Services industry (10.4 percent), and Manufacturing (10.3 percent). By the forms of organization, 54.3 percent of SMEs are sole proprietorships. By regional distribution, 46.6 percent of all SMEs were concentrated in Northern Taiwan. In terms of market entry and exit, SMEs often display more flexibility than large enterprises. That explains the left side concentration of the distribution of the years in existence for SMEs: share of SMEs in existence below 10 years is 49.6 percent (vs. 23.3 percent of large enterprises). However, there were nearly 50 percent SMEs had been going concerns 10 years or more by the end of 2015. Six Special Municipalities combined represent 77.0 percent sales and 73.3 percent employed persons of SMEs, and have 996,191 SMEs, representing 72.0 percent of all SMEs in Taiwan. The dawning of the era of smart economy has had a huge impact on the business environment for SMEs. The government has made efforts to help SMEs through counseling, subsidies and measures to promote industrial clusters, international marketing and networking, start-ups, and SMEs’ upgrade and transformation. Part Two consists of two chapters, in which two special topics are tackled through an in-depth analysis on the significant challenges and opportunities faced by SMEs in recent years and the corresponding strategies. They are “Promoting SMEs’ Upgrade and Transformation through Smart Manufacturing” and “Internet of Things (IoT): Opportunities for SMEs.” Smart manufacturing promotes an ecosystem among material suppliers, equipment manufacturers, distributors and end users. An SME excels in its niche market does not necessarily try to become a consolidator or a leader in smart manufacturing. However, it must be prepared to be linked in the ecosystem and find the right position in the value chains. Smart manufacturing is the next revolution in manufacturing that will rewrite the rules of competition. Can SMEs take advantage of this trend to upgrade and transform their businesses, or are they at risk of being left behind? Most SMEs do not have enough understanding of smart manufacturing concept, nor realize the existing incentive measures. Though not a deciding factor, the government can play a leading role to help spur SMEs’ innovation and enhance their competitiveness linking to smart manufacturing value chains by setting up a platform to offer SMEs information on incentives, mentoring, talent cultivation, technologies and financing. For capable SMEs willing to invest in smart manufacturing, the Small and Medium Enterprise Administration (SMEA) could (1) invite experts to help find productivity stage of SMEs; (2) understand SMEs’ real urgent need through professional diagnosis and consultants’ on-site interviews; (3) ask legal entities to help SMEs make proposal to obtain government’s assistance; and (4) cultivate backbone SMEs through professional diagnosis and follow-up assistance and selecting successful SMEs as industrial demos to convince SMEs by lowering entry barriers for latecomers through demos and diffusion. Further analyses are presented in Chapter 6. With the potential to streamline and deliver greater time and cost savings to a broad spectrum of enterprise tasks, in recent years, IoT, driven by the widespread adoption of smart mobile communication and falling prices of sensors and cloud computing, is about to come to fruition. According to BI Intelligence, IoT devices will outnumber smartphones in 2017, and 2018 will see outbreak of opportunities for IoT adoption. Major international companies, including Microsoft, Google, Apple, Intel, Samsung, Taiwan’s Acer and Advantech, have been aggressively transforming and positioning in IoT economy, and hope to establish ecosystems through open IoT platforms to stimulate technology innovations and applications in all fields. The essence of IoT is openness and cooperation. IoT is not mainly driven by large companies as traditional view claims because most large enterprises are too slow in product development process and too return-on-investment (ROI) driven. This approach is not suitable for the development of a large number of IoT products and services using different technologies. SMEs’ typical strengths in speed, flexibility and innovation fit well in IoT era to develop their own niche markets by offering diverse, customized products and services in small quantity batches. SMEs can innovate quickly in IoT ecosystem: a variety of open IoT platforms provides easy and simple process to promote a wide spectrum of application development, making it possible for SMEs to scale up swiftly at low cost and grow rapidly as more customers join the network. Case studies in Chapter 7 also indicate that forming partnerships is essential for SMEs to quickly grasp opportunities in IoT market and attract more funding and strategic alliances with third-party services, brands, and hardware. In response to the coming outbreak of IoT industry that is perceived as the driving force of the next digital revolution, the Taiwanese government has introduced many policy measures designed to spur innovation and enhance its national competitiveness. Further analyses are conducted in Chapter7. Part Three consists of five chapters that review various government policy measures related to SMEs and examine their goals, implementation and results. Many SMEs in Taiwan possess unique technology and innovative products, but lack the scale, capital, technology, and talents of many large businesses with which they regularly compete. Taiwanese government has been working actively to establish effective policy measures to facilitate the development of SMEs and resolve the hurdles facing SMEs. Multiple policy measures were taken by relevant government departments to assist SMEs in funding and credit guarantee, marketing, talent cultivation, technology upgrading and transformation, start-up promotion, incubation and acceleration mechanism, free trade policy, and improved legal and regulatory environment.