Branding Taiwan

I just saw an article on China Economic News (CENS) on how Taiwan companies are trying to develop their own international brands. Many/most successful companies in Taiwan are successful OEM/ODM/EMS/Contract manufacturers (take your pick). Two outstanding examples are Hon-Hai and Quanta. However, there are also some very successful and increasingly ubiquitous brands including ACER, ASUS, TrendMicro and Giant.

Apparently some manufacturers are now looking to develop their own brands. As one of my MBA professors said to me a few years ago, there is very little money on the manufacturing side of the value chain. Many companies in Taiwan have developed strong foreign customers who have their own brands and make enormous profits through their own brand equity. The Taiwanese manufacturers on the other hand only reap small profits. They are now looking to redress this imbalance.

However, CENS observes:

Brand development requires the devotion of more effort to the cultivation of talent, and to the encouragement of talented personnel to explore their creativity and innovation in the development of unique products. Such efforts are often seen in high-tech industries, and some domestic high-tech firms have been well rewarded for the development of their own brands. Among these success stories are Asus, TrendMicro, D-Link, and BenQ, all of which made the list of Taiwan`s top 10 brands in 2007.

And here is the problem! Many Taiwan companies are run, in a fellow writer's words "like giant Mom 'n Pop stores." Very little attention is given to external communications. Websites are usually an absolute mess with very little consistency in terminology and very little thought as to what the value-proposition of the company and the product is.

Many companies also resort to phrases like the one above, "Brand development requires the devotion of more effort to the cultivation of talent, and to the encouragement of talented personnel...," which actually says very little about what actually needs to be done. Company CEOs are also very strong minded about how they perceive the marketing material should be and even if the company slogan is grammatically incorrect in English, they will not change it because they like it.

Many Taiwanese companies think the product is good enough to establish the brand of the company. I beg to differ! I would even argue they should know better. Most companies have grown up through manufacturing and should surely realize by now how easy it is to make stuff.

Communications is the key! Yet they place so little emphasis on communicating what their company is about and, when they do communicate, many of the press releases are a grammatical mess which are really difficult to read. This is true even for some companies on Interbrand's Top Taiwan Brand list.

If Taiwanese companies are truly interested in developing strong brands, they really need to pay attention to their communications at all levels. Productivity is good and innovation critical but communicating clearly and concisely (although this post is certainly not concise) is also important.

(Article: Taiwan Brands Make Inroads in Global Market)

Forbes' Inaugural Taiwan's Top 40 Richest List

I stumbled on this yesterday, slightly outside the purview of a tech blog, but still relates to Taiwan and Taiwan business. The net worth of the Top 40 is impressive. According to Forbes.

For decades after the end of World War II, Taiwan's relationship with China was strained because of politics. Today, changes on both sides of the Taiwan Strait are leading to hopes for better relations between the two, a trend that is already boosting wealth in Taiwan.

That is the main theme from our inaugural list of Taiwan's 40 richest. Taiwan's main stock index and property prices have gained this year on hopes that the island, under newly elected President Ma Ying-jeou, will seek closer ties with the mainland. To that end, Taiwan is prepared to open itself to goods and money from the mainland in ways that it hasn't in more than a half a century.

"There is a lot of room to increase business between both sides," says Stephen Liao, vice president and head of research at Grand Securities. Among the industries that would particularly benefit from closer ties are retail, tourism and property, he says.

The combined net worth of the island's 40 richest is $77 billion, more than their counterparts in South Korea or any Southeast Asian nation. They lag Hong Kong's top 40 by $102 billion and China's by $43 billion, but considering Taiwan's political isolation and relative size, the group holds its own.

Yeah, maybe these guys can get richer when more money flows into Taiwan from the Mainland but at what cost? According to the article property prices are already on the rise. Average property prices around my neighborhood start at around USD500,000 and I have seen two apartments recently for more than USD1,000,000. We even saw one for USD3,000,000. Average Taiwanese people earn a little over USD1,000 per month. They cannot afford these apartments and that is why the companies can remain competitive. A very cheap highly-educated work force. (Most of the people in my company have Master's degrees from overseas).

While I have a lot of respect for Taiwan's entrepreneurship (hence a blog focusing on Taiwan's businesses), I don't think opening more links with China will improve the lives and wealth of the average Taiwanese person, and their relative financial position may even deteriorate. I will give credit to Ma though, I saw an article (cannot find the link) where he said he wanted to increase the average Taiwanese salary to NTD900,000 (USD30,000) per year. Even so, they will still not be able to afford apartments and houses in Taipei. Its just too expensive.

Anyway, for what its worth, Taiwan's richest list is below with links to their short Forbe's biographies:

1. Tsai Hong-tu & family
2. Y.C. Wang
3. Terry Gou
4. Tsai Wan-tsai
5. Cher Wang & Wen Chi Chen
6. Jeffrey Koo Sr.
7. Lin Rong San
8. Wei Ing-Chou & family
9. Tsai Eng Meng
10. Lin Yu-Lin
11. Eugene Wu & family
12. Barry Lam
13. Chao Teng-Hsiung
14. Douglas Hsu
15. Shi Wen Long
16. Luo Jye & family
17. Chang Yung-fa
18. Tsai Ming-Kai
19. Leslie Koo
20. Jason Chang
21. Lin Ming-cheng
22. Tsai Chi Jui & family
23. Long-Shing Liao
24. Suhon Lin
25. Tseng Shin-yi
26. Rudy Ma & family
27. Kenneth Yen & family
28. Paul Liao & family
29. Chen Ching-Chih & family
30. Samuel Yin
31. Wu Chung-Yi
32. Lin Yu-chia & family
33. Hou Bo-ming & family
34. Chen Yung-tai
35. Show Chung Ho
36. Wu Ping-Chih & family
37. Allen Horng & family
38. Bruce Cheng
39. Steven Pan & family
40. Ting Piao Chiao & family

(Forbes' Article: Taiwan's 40 Richest)

World's Top 100 IT Companies

I missed this. Not sure when it came out though but BusinessWeek recently announced their 2008 top 100 IT companies. So how did Taiwan do? According to BusinessWeek:

Despite regular predictions that an ever more confident China will eclipse Taiwan, the island remains Asia's clear technology leader. This year's version of the BusinessWeek IT 100 has 37 Asian names, up from 35 a year ago, and once again, Taiwan dominates the list. With 16 companies (including Foxconn International, listed in Hong Kong but controlled by Taiwan's Hon Hai Precision), the island is behind only the U.S., which has 36.

Yep, out more than 30,000 tech companies surveyed around the world, 16% of the top 100 are Taiwanese. Taiwan's tech super-highway is still going strong and continues to astound the world. So which Taiwanese companies were the winners and losers: See the list below:

2008	2007	Company
9	29	ASUSTek
10	43	High Tech Computers
17	4	Hon Hai Precision Industries
31	63	Compal Electronics
40	28	Wistron
50	59	Taiwan Semiconductor Manufacturing Corporation (TSMC)
52	85	Quanta Computers
53	--	AU Opto Electronics
62	--	Transcend
71	92	Acer
73	--	Chicony Electronics
76	67	PowerChip Semiconductors
82	77	Inventec
83	--	Foxconn Technology
86	--	Delta Electronics
88	96	Advanced Semiconductor Engineering
92	--	Nan Ya PCB
93	42	Nanya Technology

And who lost out?

Well, Siliconware Precision Industries (ranked 53 in 2007) and D-Link (ranked 99 in 2007) dropped out from the list. But some other companies snuck themselves in.

BusinessWeek does comment on their methodology and their concerns that US tech companies are becoming increasingly less dominant.

How do you pick the best-performing tech companies in the world? At BusinessWeek, we sort through the financial results of 30,500 publicly traded companies and rank the tech players on four criteria: shareholder return, return on equity, total revenues, and revenue growth. The companies leading the list are those with the lowest aggregate ranking.

Amazon.com and Apple took the top two spots this year. Still, the dominance of U.S. companies is in decline: The country has 33 companies among the IT 100 this year, down from 43 in 2007. When we first started compiling the list in 1998 to rank tech's top performers, 75 of the winners were U.S. companies.

What is interesting from this list is five of the Taiwanese companies listed above (Compal, Hon Hai, Inventec, Wistron and Quanta) are all contract manufacturers. And of course, TSMC is a pure-play foundry. Many of the top-tech companies do not have brands but rather just do ODM/EMS/Contract manufacturing for more established brands.

It still amazes me that this little Island we call home (390 km long x 140 km wide with approximately 23 million people) can continue to produce the elite organizations in technology. This is a significant motivation to continue this blog!

I wonder how many people in the western world know about these companies? Probably hardly any! Is it important for them to know? Probably not! But in the context of the geopolitics of the region, and the realization that Taiwan is essential to the Global economy may give people pause for thought when thinking about cross-strait relations with China. Enough said!

BusinessWeek 1: Asia's Top 10 IT Companies
BusinessWeek 2: The InfoTech 100

Wireless Taiwan

As we have noted on this blog before, WiMAX is becoming big in Taiwan. Intel have invested significantly in WiMAX in Taiwan and yesterday Digitimes notes Motorola has made a significant investment in Taiwan's WiMAX industry:

Motorola will soon set up its first WiMAX IOT (interoperability testing) center worldwide in Taiwan, fulfilling the commitment of an MOU it signed with Taiwan's Ministry of Economic Affairs (MOEA) in October 2007 aimed at helping foster the development of the WiMAX industry in Taiwan

Monday also saw the opening of the first annual WiMAX show in Taiwan with a significant number of international and local companies putting up displays. Perhaps the most notable comments on WiMAX came from President Ma himself who has vowed to develop WiMAX in Taiwan as a way to bridge the digital divide.

However, does anybody remember Wi-Fly, the wireless Wi-Fi network developed in Taipei city when he was Mayor. Yes, Wi-Fly are still struggling along and still advertising aggressively on buses etc. but it seems hardly anyone uses it. The New York Times reported on the difficulty of the Wi-Fly system way back in 2006:

Despite WiFly's ubiquity — with 4,100 hot spot access points reaching 90 percent of the population — just 40,000 of Taipei's 2.6 million residents have agreed to pay for the service since January. Q-Ware, the local Internet provider that built and runs the network, once expected to have 250,000 subscribers by the end of the year, but it has lowered that target to 200,000.

On Tuesday President Ma said:

We did not develop WiMAX infrastructure then because it was only in the making at that time.

So what was the cost of Wi-Fly? According to the New York Times article around US$30 million. Who footed the bill? Apparently it was Q-Ware, the company that runs the 7-11. Of course they have tried to bundle other things together with Wi-Fly but with so many competing technologies it is just very difficult.

OK. Before we bash Wi-Fly too much the New York Times does acknowledge that Wi-Fly has led to some savings:

The brainchild of Taipei's mayor, Ma Ying-jeou, the CyberCity project was first conceived in 1998 as a way to catapult past Seoul, Hong Kong and other Asian capitals that were recasting themselves as cities of the future. Many government agencies now communicate almost exclusively online, saving millions of dollars, and citizens have been given hundreds of thousands of free e-mail accounts and computer lessons.

WiFly plays a role, too, by allowing policemen to submit traffic tickets wirelessly, for instance. But making it appeal to the average citizen is another story.

Getting enthusiastic about technology is great and to be honest it is good to see some governments trying to be progressive. But I do feel sorry for those who invest in systems that become redundant in a few years. WiMAX now is the next big thing and is sure to provide many benefits to Taiwan. However, project managers in more conservative computer industries here are not that excited. For them it is just a bridge to the next wireless standard and they are cautious about investing to much into developing WiMAX compatible systems.

Digitimes: Motorola to set up first global WiMAX IOT in Taiwan
NY Times: What if They Built an Urban Wireless Network and Hardly Anyone Used It?

Low Cost Processors: The Competion Heats Up

On Monday Nvidia launch what they are calling the "world’s first single-chip computer." From their press release:

Today, NVIDIA Corporation (Nasdaq: NVDA) introduced the Tegra family of processors, the world’s first single-chip computer capable of the rich high definition and internet experiences we’ve come to expect from our PCs, but on small pocket type devices. NVIDIA Tegra is a tiny computer-on-a-chip, smaller than a US dime (10-cent piece), designed from the ground up to enable the “visual PC experience” on a new generation of mobile computing devices while consuming the smallest amount of power.

As many commentators have mentioned, this chip is meant to take on Intel's Atom processor. Atom is a fairly new processor launched a few months ago. Both the Tegra and Atom are aimed at Mobile Internet Devices (MID) e.g. smart phones and PDAs. However, Jack Schofield notes on the Guardian some of the problems associated with the Tegra.

The obvious drawback with the Tegra approach is that it runs Windows CE (or Windows Mobile) not Windows XP, which was written for x86-compatible chips. And if you want to run real Windows software, Tegra doesn't do the job.

More than a decade ago, Microsoft wrote Windows CE as a whole new operating system precisely because it thought x86 chips cost too much for casual buyers, and consumed too much power to offer long battery life. It thought there was a market for Mobile Companions, webpads and other devices among people who didn't actually need the laptop/desktop version of Windows, or its vast library of programs.

Microsoft turned out to be wrong, at the time. It will be interesting to see if times have changed enough to make it right.

Intel's Atom takes the opposite approach of trying to reduce the overhead of the x86 code from the past (smaller, cheaper, lower power consumption). And from Computex, it looks as though the Intel Atom is the one that has pulled in the PC manufacturers.

But this might be the first step by NVIDIA to move towards competing more directly with Intel. A few month's ago at the Intel Developer Forum in Shanghai Intel said they were trying to move the graphics core into the processor. This generated an interesting response from the NVIDIA CEO. Eflux Media notes:

NVIDIA CEO and co-founder Jen-Hsun Huang went on an Intel-related rant on Thursday at a meeting with financial analysts. The context is that Intel is trying to move the graphics processing unit (GPU) from the motherboard's chipset into the CPU, merging the two processing units on a single die for increased performance.

Last week at the Intel Developer Forum in Shanghai, Intel representatives boldly stated that discrete graphics cards will eventually become "unnecessary" for the regular consumer in the future."

Claim after claim after claim. They're just false. They cross the line of fair play," Huang said. "Here's another one. nVIDIA's gonna be dead. Because we're (Intel) sticking the graphics in the CPU and (nVIDIA) will have no place to stick it," nVIDIA's CEO said.

It certainly seems battle lines are being drawn between these companies. According to Computer World:

"There's a battle emerging here," said Nathan Brookwood, an analyst at research firm Insight 64. "This is going to be a very exciting area. It's perceived to be one with huge growth over the next few years. Everyone is going to want an in if they can pull it off."

Both NVIDIA and Intel make great products. No doubt! However, NVIDIA would be wise to think twice before enaging in a war with Intel. AMD did it over the past three years and although Intel's margins suffered significantly, they were the ones left standing. AMD are now doubting their future and are looking at becoming fabless.

However, with all the current noise being made surrounding NVIDIA and Intel, spare a thought for VIA. VIA were the first ones as I recall to see the potential for low cost processors and have had them in their catalog for quite some time. It just seems people are preferring the Intel Atom processors. To better establish their competitive position VIA have recently launched their own VIA Nano processor which many observers says will also compete with the Atom as well as some of Intel's other low power processors.

This market is heating up and competition seems to be growing. I guess we will know within a year or two who the real winners and losers are. But always remember the words of the VIA CEO who said a few years ago:

The Internet will be the biggest driving force. For Internet applications, the processor is not the main requirement -- the pipe is more important than the engine. It's like the auto industry: It used to be that people build bigger and bigger engines. But the road was only so wide, and car drivers were more limited by the road than by the engine. So people started looking at efficiency of the engine and went to smaller engines.

NVIDIA Press Release: NVIDIA Tegra: Tiny Computer Packs Massive Punch!
Guardian Article: Tegra's ARM-based chip to take on Intel for mobile market
Eflux Media: nVIDIA Boss Goes on Intel Rant
Computer World: Nvidia takes swing at Intel with new Tegra chips
VIA Press Release: VIA Nano™ Processor
Interview: Wen-chi Chen: Taiwan's Answer to Andy Grove? [PDF File]

Computex 2008: The Show Starts

Today Computex 2008 opened its doors. Computex is running parallel to a WiMAX show in the new World Trade Center exhibition center. Digitimes reports the Taipei Computer Association (TCA) predicts this years show will generate US$20 billion in business from overseas buyers.

We will be visiting the show on Thursday afternoon and between all the show girls we hope to see a few interesting products. We will take a peek at the WiMAX products but mostly focuse on computer products and the like.

Yesterday Taiwan's president spoke about a wireless Taiwan. This also deserves a separate blog but here is what President Ma Ying Jeou said at the opening ceremony:

"Let's together build a home of beauty imbued with the wireless broadband service of WiMAX."

He continued saying:

"We can especially help rural areas and the children there by donating advanced computers with broader, better Internet access."

Yes. He is hoping this technology will be able to bridge the so called digital-divide between rural Taiwan and urban Taiwan. We will see.

Yesterday we also read Nvidia launched a low cost processor dubbed the Tegra to compete against Intel's Atom processor. Intel apparently also released a low power Atom chip that will compete with low power VIA and AMD processors for positioning in low cost notebooks. Once again this deserves a separate blog.

I expect Computex will be a roaring success. Our company is certainly pulling out all the stops with two fairly large stands. I look forward to seeing what they have done. I also look forward to seeing and playing with some of the new computer products on the market.

Article 1: Computex likely to draw in up to US$20 billion in overseas business

Funny Comment in Taiwan News

Sometimes when non-technologists write carelessly about technology the results can be amusing. I generally don't nitpick knowing that I too have probably made many comical errors in my writing career. However, this one was particularly funny. From the Taiwan news:

"WiMAX is a relatively new telecommunications technology that can transit wireless data over long distances for computers or mobile phone users traveling at high speed."

What about stationary or slow moving computers and mobile phone users? Also, good luck keeping up with your high speed computer. Typing when the computer travels at high speeds is always a pain.

Article: President vows to develop WiMAX technology