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COPYRIGHT 2003 FDCH e-media
Original Source: NIGHTLY BUSINESS REPORT
DARREN GERSH, NIGHTLY BUSINESS REPORT ANCHOR: It`s an island the size of the Maryland with an economy the size of Russia. It`s a world leader in notebook PCs, LCDs and wireless networking. And now it wants the world to take a new look at this mix of high-tech, ancient culture and stunning scenery. It`s Taiwan, an island of innovation.
Good evening, everyone.
The markets were closed today for the Thanksgiving holiday. So tonight we`re going to take a look at one of the places that makes our own high tech economy run: Taiwan. We call it "Innovation Island." Taiwan is a key supplier for market leaders like HP (HPQ) and Dell (DELL). But in high- tech, you have to move fast to stay ahead.
Taiwan is a dangerous place to visit before the holiday shopping season. Suddenly you realize you really need a spiffy new tablet PC. These sleek wireless gizmos look pretty good, too. And please, don`t even get me started on the LCD TVs. This island can give a visitor a powerful case of techno-envy. And in a way, that is the Taiwanese entrepreneur`s role in the global economy: to pump out new technology, whether it`s notebook computers for Dell or PDAs for HP, and to do it cheaper and faster than anyone else.
BOB YANG, EXECUTIVE VP, INDUSTRIAL TECHNOLOGY RESEARCH INST.: All these people, they`re also engaging global competition too. So getting the new technology, taking the most advantage of these new technologies is absolutely crucial for their survival.
GERSH: And for years, the island has not only survived, but thrived. Taiwanese companies make more than half the world`s computer monitors, two- thirds of the world`s notebook computers, and almost all of the motherboards. But Taiwan`s advantage is under assault.
YANG: Taiwan, I think, especially with the rise of China, can no longer stay in the comfortable cocoon of the low-cost manufacturers. We need to become innovators. We need to become strong in design, in creating new product.
GERSH: That`s a message that reaches to the top of Taiwan`s government. Vice Premier Lin Hsin-I runs economic policy in Taiwan. Like the former auto industry CEO he is, Lin pulls out a flip chart to explain where Taiwan is and where it needs to be.
The bottom line of the graph is the value chain beginning with R&D, moving to manufacturing, and finally marketing and branding. The vertical line is value-added.
LIN HSIN-I, VICE PREMIER, TAIWAN: These two sides is the high value-added.
GERSH: Innovation and marketing, these high-profit, value-added sweet spots, are in the corners of the graph. Manufacturing is at the bottom.
LIN: So it`s the smiling curve.
GERSH: So where would Taiwan - you want Taiwan to move where on this smile graph here?
LIN: In Taiwan, very strong in this manufacturing and assembly. So we have to segment, different segment with the developing countries, with upgrading more value-added manufactures.
GERSH: Over and over again, people here talk about the need to move off the bottom of the smiling curve and move up to nanotechnology, biotechnology and other knowledge industries. If that sounds familiar to Americans it should.
LIN: We can see that American firms, they are grading up, more new economy, more high value-added, more high-tech industry. I think it is a similar case.
GERSH: There is another similarity with the U.S., this rich country now finds it is too expensive to produce low-end products...
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