INTERVIEW/Minister envisions Taiwanese SMEs going global with government's help

By Alison Hsiao, CNA staff reporter

The government should play an active role in Taiwanese small-and-medium enterprises' (SME) international expansion, possibly through "overseas special zones," Minister of Economic Affairs Kuo Jyh-huei (郭智輝) has said.

"Taiwanese companies used to look for overseas customers on their own, as we used to say that Taiwanese SME bosses would go abroad with just a briefcase in hand [and bring back orders]," Kuo, the former chairman of semiconductor raw material and equipment supplier Topco Group, told CNA in a recent interview.

Now, however, SMEs need the government as an intermediary and integrating force, Kuo said.

The government's policy plan is to evolve from supporting Taiwan's supply chain companies in the semiconductor industry, many are SMEs, to go overseas with Taiwan Semiconductor Manufacturing Co. (TSMC) or other giants, to covering the country's SMEs in a wide range of Taiwanese industries, the minister envisioned.

'Overseas special zones'

To remedy this, Kuo said he envisions a special arrangement designed by the government to help Taiwanese SMEs that do not have the same kind of resources and bargaining power of industry giants such as TSMC and GlobalWafers Co., gain a foothold overseas.

The science park model is one possible approach for what Kuo called "overseas special zones (境外關內)," where Taiwanese companies would be given preferential treatment.

The underlying concept, he said, is to have a management unit, which can be virtual as opposed to a physical park, to take care of all the logistics and negotiate with local governments.

Another way the government could help is through lobbying foreign governments on behalf of smaller firms that lack the capacity to do so themselves, Kuo said.

"Taiwan as a whole -- along with its major companies -- has too few lobbyists in Washington," Kuo said, noting that Samsung Electronics alone has about 300 lobbyists stationed inside the Beltway.

According to Kuo, if Taiwan had a larger lobbying presence, pitching the country's advantages would be an easy sell.

"[Taiwanese companies] can come to your country and help increase your gross domestic product. Take the future market of electric vehicles (EV) as an example, information and communication technology and automotive parts and components are our strengths," so Taiwan can provide the knockdown kit to be assembled in other countries.

Sogo shosha

Kuo also suggested setting up general trading companies similar to the "sogo shosha" model in Japan.

"Eventually the goal is to set up an overarching general trading company -- the capital of which can be 75 percent private and 25 percent public -- to integrate Taiwanese SMEs and sort them into four subsidiary general trading companies of different industry sectors," Kuo said.

Such companies would have the financial power to engage in extensive business-supporting activities such as logistics and information collection as well as explore international opportunities, Kuo added.

Taiwanese food products, for instance, could also be produced locally, with central kitchens, in other countries, the minister said. "With Taiwan as a brand, a 'Taiwan corner' can be set up in supermarkets."

Electric avenues

Another facet of the country's economic life that requires government assistance is electricity, as artificial intelligence computing and applications are set to be more prevalent.

According to Kuo, even with the scheduled decommissioning of Taiwan's last operating Third Nuclear Power Plant, power shortages will not be an issue by 2030 thanks to the government's energy roadmap.

However, although the two reactors of the Third Nuclear Power Plant are slated to stop operating on July 27 and next May, Kuo said his ministry would "follow whatever decision the Legislature passes on whether to continue using nuclear power by extending [the license of the third plant]."

July 11: No plans to extend life of 3rd Nuclear Power Plant's No. 1 reactor: Cabinet

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Regardless, Kuo said his ministry's main focus was preventing power shortages.

"The Energy Service Company (ESCO) project we're now pushing will be able to save around 1-1.2 gigawatt by the end of next year, which is precisely the power provided by the Third Nuclear Power Plant," the minister said, referring to the government's planned financial mechanism to help SMEs implement energy efficiency retrofitting and management.

Kuo said that another goal was to ensure energy independence.

Coal, natural gas, and even nuclear power rely on imports, Kuo noted, adding that the ministry is also targeting geothermal and hydrogen development.

The generation costs for both are currently quite high, with geothermal costing about a dozen New Taiwan dollars per kilowatt hour and hydrogen close to 20, "but the trend according to research papers is that they would drop considerably starting 2035," the minister said.

On wind power, he noted that the localization policy for building wind farms is winding down.

"We have had the protection policy for some time," he said. "We should protect an industry that has the potential to grow stronger and acquire a global competitive edge or protect it against Chinese competition."

Since neither scenarios apply to Taiwan's wind power industry, the market mechanism will be followed, Kuo added.

Enditem/ASG

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