smes’ innovation policy in taiwanapec-smeic.org/_file/pdf/06forum_rchsue_taiwan...1. running...

STRY OF ECONOMIC AFFAIRS

SMEsSMEs’’ Innovation Policy Innovation Policy in Taiwanin Taiwan

Dr. Dr. RuRu--ChingChing HsuHsu

Director of Policy Making DivisionDirector of Policy Making Division

SMEA, MOEA, Chinese TaipeiSMEA, MOEA, Chinese Taipei

June. 27June. 27--28, 200628, 2006

2006 Expert Forum on APEC SME Innovation2006 Expert Forum on APEC SME Innovation


Content

I. The Status of SMEs’ Innovation in Chinese Taipei

II. Policy Schemes for SMEs’ Innovation

III. The Small Business Innovation Research (SBIR)

Project

IV. Innovation Value V.S. Product process

V. SMEs’ Innovation-driven Successful Business Model

VI. Future Prospects and Recommendations

VII. Case Study of Innovative SMEs


I. The Status of SMEs’ Innovation in

Chinese Taipei


� Current Status of SMEs in Chinese Taipei

18.1118.111,327,8361,327,836

(39,054)(39,054)

7,332,7427,332,742

(215,779)(215,779)

Export Sales (NT$ million)Export Sales (NT$ million)

(US$ million)(US$ million)

36.2836.287,379,,2247,379,,224

(217,036)(217,036)

20,337,86420,337,864

(598,172)(598,172)

Domestic Sales (NT$ million)Domestic Sales (NT$ million)


31.4731.478,707,0608,707,060

(256,090)(256,090)

27,670,60627,670,606

(813,841)(813,841)

Total Sales (NT$ million)Total Sales (NT$ million)


68.92 68.92 4,7544,7546,8986,898No. of employeesNo. of employees

(thousand persons)(thousand persons)

77.5677.567,4257,4259,5739,573Total employments Total employments

(thousand persons)(thousand persons)

97.8397.831,146,3521,146,3521,171,7801,171,780No. of enterprisesNo. of enterprises

% of SMEs% of SMEsSMEsSMEsAll enterprisesAll enterprises

Source: White Paper on Small and Medium Enterprises in Chinese Taipei, 2004


1. High importance towards the development of society.

2. Large in number, high diversity, dynamic structure.

3. High contrast of being transferred in/out

4. Employees face larger challenges and increasing

pressure.

5. Relatively weak in comparison with large enterprises.

� Characteristics of SMEs


�� Why Enterprises Undertake R&DWhy Enterprises Undertake R&D

1. Develop new products

2. Improve product quality or function

3. Develop new technologies

4. Strengthen the enterprises’ position in the market

reduce cost


� R&D Spending of Enterprises in Chinese Taipei

6.974.024.4010% or higher

7.086.327.186% - 10%

9.7611.789.034% - 6%

21.624.1428.242% - 4%

22.6522.9923.611% - 2%

31.9430.7527.55Less than 1%

Small

enterprises

Medium

enterprises

Large

enterprises

Year & Size

Percentage

Source: White Paper on Small and Medium Enterprises in Chinese Taipei, 2003


� R&D in Manufacturing SMEs

1. Size restraints and lack of R&D capability 1. Size restraints and lack of R&D capability –– The major The major

difficulties experienced by enterprises undertaking R&Ddifficulties experienced by enterprises undertaking R&D

–– The The SMEsSMEs require more R&D support from Governmentrequire more R&D support from Government

–– The The SMEsSMEs require better R&D infrastructure for them to conduct the require better R&D infrastructure for them to conduct the

application and integration types of R&Dapplication and integration types of R&D

2. Strong desire for government provision of tax break to stimul2. Strong desire for government provision of tax break to stimulate ate

R&D spendingR&D spending

3. Greater willingness in large enterprise to establish R&D cent3. Greater willingness in large enterprise to establish R&D center er

in Taiwanin Taiwan

–– It can help them to realize their products with better Q. C. D. It can help them to realize their products with better Q. C. D. & CS& CS


� Reasons for Not Undertaking R&D

8.088.087.547.544.514.517.477.47Difference in attitudes between managers Difference in attitudes between managers and researchersnd researchers

5.135.135.425.424.714.715.115.11OtherOther

8.048.0410.6410.6410.9810.988.868.86nability to secure the collaboration of nability to secure the collaboration of esearch institutes in Taiwanesearch institutes in Taiwan

10.9110.9116.4416.4420.7820.7813.1913.19nadequacy of basic and applied research nadequacy of basic and applied research n Taiwann Taiwan

13.713.714.5114.5111.1811.1813.4513.45Difficulty in securing materials and Difficulty in securing materials and quipmentquipment

13.9913.9922.0522.0526.0826.0816.9716.97High turnover of R&D personnel, High turnover of R&D personnel, esulting in a lack of continuity in R&D esulting in a lack of continuity in R&D

workwork

19.8119.8121.2821.28303021.5321.53The rapid pace of change in technology, The rapid pace of change in technology, ausing R&D achievements to becomeausing R&D achievements to become

25.5125.5123.423.419.6119.6124.3324.33No market for new products due to small No market for new products due to small ize of Taiwanese marketize of Taiwanese market

32.8132.8124.7624.7615.8815.8829.1229.12Shortage of fundsShortage of funds

28.128.140.0440.0439.0239.0231.4931.49Lack of technical talent in TaiwanLack of technical talent in Taiwan

43.1543.1518.9618.967.457.4534.2934.29Lack of a development capability due to Lack of a development capability due to mall size of enterprisemall size of enterprise

9.319.3112.3812.3819.4119.4111.2611.26No ProblemNo Problem

Small Small EnterprisesEnterprises

Medium Medium EnterprisesEnterprises

Large Large EnterprisesEnterprises

All Manufacturing All Manufacturing EnterprisesEnterprises

SizeSizeMotivationMotivation

UnitUnit：：%%

ource: Table 5ource: Table 5--11--1 of 1 of ““White Paper on Small and Medium Enterprise in Taiwan 2003White Paper on Small and Medium Enterprise in Taiwan 2003””


� Challenges in Nurturing Innovation Capabilities in

Chinese Taipei

1. The weakness of the legal system

2. Unsatisfactory communications infrastructure

3. The excessive emphasis on ODM and OEM

Production

4. A tendency to attach insufficient importance to the

value of intangible assets

5. The need for better protection of intellectual

property rights


� Government R&D policy

1. Large Enterprises

– tax breaks

– assistance with R&D funding

2. Small and Medium enterprises

– assistance with R&D funding

– assistance with manpower cultivation

– tax breaks


II. Policy Schemes for SMEs’ Innovation


� Establishment of a SME start-up platform

1. Provision of start-up information and inquire services

(1) Establishment of entrepreneurial and innovation

college

(2) Establishment of Entrepreneurial Lab

(3) Holding of the National New Enterprise Award

Competition

(4) Manpower cultivation for Entrepreneurial Activity


2. Helping SME start-ups to obtain working capital (total

NT$2 billion over a period of 4 years)

3. Attaching due importance to SME HR development &

training

4. Active participation in international SME activities


� Enhancing the Function of Incubation Service

1. Number of Incubators in Chinese Taipei

82

88

95

69

7779

3 3 3

61

49

27

72

65

35

9

6058

46

33

25

57

70

0 0 1 1 1 2

0

10

20

30

40

50

60

70

80

90

100

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Total no. of

incubators

Sponsored

by SMEA

Invested by

SMEA


machinery $ ElectricMachinery

19%

Multimedia & Broadcasting

6%

Biotechnology

10%

IT & electronic

36%

Livelihood Industry

4%

Architecture

3%

Raw Material

3%Tourism & Recreation

1%Distribution and Logistics

1%

Chemical & Petrifaction

2%

Planning & Aerospace

0%

Environmental Protection

Industry

4%

Medical Industry

3%

Education, Culture, Arts

2%

Others

6%

IT & electronic

machinery $ ElectricMachinery

Multimedia & Broadcasting

Biotechnology

Environmental ProtectionIndustryMedical Industry

Planning & Aerospace

Architecture

Chemical & Petrifaction

Livelihood Industry

Raw Material

Distribution and Logistics

Tourism & Recreation

Education, Culture, Arts

Others

2. Incubating Domain in Chinese Taipei


� Function of Incubators

1. To reduce risks and expenses of investment and

increase successful rate of start-up enterprises.

2. To foster new products, new business-model and new

technology.

3. To provide guidance in commercializing R&D

achievements.

4. To provide a location for cooperation of academics and

industries.

5. To provide testing services and speed up the

development of products.

6. To provide training courses, information and

consultation.


� Performance of Incubation Services

NT$5,600 million

( US$175 million)Total Investment Amount

413No. of Patent

144No. of Technology Transfer

NT$169 million

(US$5.3 million)

Amount of Cooperation of

academic and industries

179No. of Cooperation of academic

and industries

Performance in 2005


� Strengthening the function of SME Incubation

1. Running Assistance for public & private

incubation centers serving SMEs

2. Developing of SME incubator in Tainan Science

Park (20 incubatees till 2006)

3. Developing the Nankang Software Industry

Incubator (45 incubatees till 2006)

4. Developing the Nankang Biotech Incubation

Center (17 incubatees till 2006)


� Upgrading SMEs Technology & IT capabilities

1. Strengthening the information management capabilities

of SMEs establish industry-specific on-line databases &

e-commerce system, on-line library, etc.

2. Strengthening the provision of SME information

management guidance service and SMEs’ quality

management capability

3. Assisting the buildup of R&D Alliances, and launching

SBIR Program, and Giving the Innovation Award on

SMEs


� Building an environment for SME development

1. Ensuring that SMEs’ legal rights are protected

2. Helping SMEs to secure government procurement

opportunities

� Implementation of SME Guidance and Service

Mechanism

1. Expanding the operation of the SME troubleshooting

center

2. Effective utilization of SME service resources at the local

level


�� Upgrading the industrial InfrastructureUpgrading the industrial Infrastructure

1. SMEs by nature transfer to large size and even

competitive company in global market

2. Increasing the product added-value

3. Traditional industry transfer to Hi-tech or technology

intensive SMEs

4. Building new and emergent industry (e.g. IC-

design/Nano-tech/Biotech….)


III. The Small Business Innovation Research

(SBIR) Project


�� SBIR GoalsSBIR Goals

–– Enhance the private sectorsEnhance the private sectors’’ R&D competitiveness R&D competitiveness

through the mechanism of promoting technological through the mechanism of promoting technological

innovation and utilizing Information Technologyinnovation and utilizing Information Technology

�� By 2010, SBIR promoting program may assist in By 2010, SBIR promoting program may assist in

achieving the nationwide goalsachieving the nationwide goals

–– TaiwanTaiwan’’s R&D rises to 3% of GDPs R&D rises to 3% of GDP

–– SMEsSMEs sectorssectors’’ R&D increases up to 60%R&D increases up to 60%


SBIRSBIR

InnovativeInnovativeTechnologyTechnology

InnovativeInnovative

ServiceService

Earlier Earlier ResearchResearch

Research &Research &

DevelopmentDevelopment

EarlierEarlierPlanningPlanning

DetailDetail

ProgramProgram

Specific ApplicationSpecific Application

R&D AllianceR&D Alliance







TypeType StageStage TargetTarget

Phase IPhase I

Phase IIPhase II

Phase IPhase I

Phase IIPhase II


��up to NT$ 50 up to NT$ 50

millions millions government government

subsidysubsidy

��Up to NT$ 10 Up to NT$ 10 millions millions

government government subsidy subsidy

��with companywith company’’s s

selfself--funds, no funds, no less than 50%less than 50%

��up to NT$ 5 up to NT$ 5

million million government government subsidysubsidy

��Up to NT$ Up to NT$ 1million 1million government government

subsidysubsidy��with with

companycompany’’s s self funds, no self funds, no

less than 50%less than 50%

SubsidySubsidyLimitLimit

Up to 2 yearsUp to 2 years(Bio(Bio--tech & tech &

Medicine Medicine allowed to 3 allowed to 3

years)years)

Up to 2 yearsUp to 2 years(Bio(Bio--tech & tech &

Medicine allowed Medicine allowed to 3 years)to 3 years)

Up to 9 monthsUp to 9 monthsUp to 6 monthsUp to 6 monthsDurationDuration

AllianceAllianceSpecificSpecificAllianceAllianceSpecificSpecificTargetTarget

Phase II. Phase II. (R&D/Detail Program)(R&D/Detail Program)

Phase I.Phase I.(Earlier Research/Planning)(Earlier Research/Planning)

StageStage

Innovative R&D / R&D ServiceInnovative R&D / R&D ServiceTypeType


�� SBIR project review focal pointsSBIR project review focal points

InnovationInnovation

Core Core CompetencesCompetences

TechnicalTechnical

ContentsContents

IndustryIndustryImpactsImpacts

�� New material, formula, facility, and new way of doing business New material, formula, facility, and new way of doing business

on engineering, manufacturing, or services.on engineering, manufacturing, or services.

�� Competitive edge on product function, performance, quality, costCompetitive edge on product function, performance, quality, cost, ,

safety, environmental friendly, better service model.safety, environmental friendly, better service model.

�� Owned IP, hiOwned IP, hi--efficient intelligent resources, and facilities to carry efficient intelligent resources, and facilities to carry

out the state of arts technology through IT and KM platform out the state of arts technology through IT and KM platform

process.process.

�� Good return ratio, gain market share, higher customer satisfactiGood return ratio, gain market share, higher customer satisfaction, on,

and continuous internal investment.and continuous internal investment.

ConceptConceptInnovationInnovation→→

Concept VerifiedConcept Verified

DesignDesignDesignDesign→→

Prototype VerifiedPrototype Verified

DevelopmentDevelopmentPrototypePrototype→→

Product ValidatedProduct Validated

ProductionProductionPilotPilot→→

Job 1Job 1

SalesSalesIntroductionIntroduction→→

Customer SatisfactionCustomer Satisfaction


�� Government SubsidyGovernment Subsidy

19991999 20002000 20012001 20022002 20032003 20042004 20052005 20062006

100100

200200

300300

400400

500500

600600

700700

NT$ MillionNT$ Million

150150

294294

360360

550550590590

620620

560560600600


�� SBIR Score CardSBIR Score Card

–– 1,741 out of 2,944 companies apply for government subsidy1,741 out of 2,944 companies apply for government subsidy

–– Accumulated government subsidy NT$ 3.75 billions vs. companiesAccumulated government subsidy NT$ 3.75 billions vs. companies’’ selfself--

funds NT$ 7.9 billionsfunds NT$ 7.9 billions

–– Accumulated direct R&D manpower more than 18,000 persons, Accumulated direct R&D manpower more than 18,000 persons,

excluding outsourcing R&D resourceexcluding outsourcing R&D resource

�� Indirect benefitIndirect benefit

–– SBIR companiesSBIR companies’’ business scope and R&D action increasedbusiness scope and R&D action increased

–– 34% companies bring new project or technology34% companies bring new project or technology

–– 43% companies bring new products43% companies bring new products

–– Per 1 million government subsidy bring 0.409 R&D jobPer 1 million government subsidy bring 0.409 R&D job

(data referred as of April, 2006)(data referred as of April, 2006)


IV. Innovation Value Vs. Product Process


ProcessProcess

ValueValue

New Product Design New Product Design

and manufacturingand manufacturingTotal Solution ProviderTotal Solution Provider

InnovationInnovation--driven Alliancedriven Alliance

ManufacturingManufacturing

��Domain knowledgeDomain knowledge

��Innovative manpowerInnovative manpower

��Best Biz practiceBest Biz practice

��Solid allSolid all--around networkaround network

Biz InnovationBiz Innovation��Domain knowledgeDomain knowledge

��Innovative manpowerInnovative manpower

��Best PD practiceBest PD practice

��Solid vertical networkSolid vertical network

Technology Technology InnovationInnovation


V. SMEs Innovation-driven Successful

Business Model


Improve customer satisfaction, Improve customer satisfaction,

Accumulate successful biz Accumulate successful biz

experiences, Enhance company experiences, Enhance company

core competencescore competences

Continuous Continuous internal processinternal process

and and core competencycore competency

improvement plan, improvement plan, New productNew product

development plandevelopment plan

TechnologyTechnology and and Biz ModelBiz Model

InnovationInnovation

New hiNew hi--value and competitive value and competitive

products and services, products and services, WinWin--win win

biz modelbiz model

Create new revenue, increase Create new revenue, increase

profitprofit, , market sharemarket share, and , and

brandnamebrandname visibilityvisibility


VI. Future Prospects and Recommendations


� Constructing a sound developing

environment of R&D

� Developing the R&D Service Industry

� Strengthening the incubation system


Observations

� Shorten the learning curve with the help of

government supported R&D programs

� R&D expenditure is higher

� National Defense Service plays important role for

hi-tech HR recruitment

� Technology substitution is the primary activity for

SMEs innovation in Chinese Taipei

� It takes almost 5-10 years for SMEs to be innovated

and built up the core competence


VII. Case Study of Innovative SME’s


1. Founded in 1997

2. Capital: USD 7 M

3. Employee: 54 persons

4. R&D Investment: 21.254% of revenue in 2003

5. Main products

– 300 dpi/600 dpi/1200 dpi Nozzle plate for Inkjet printer

head

– Acoustic filter for network microphone

– Biochip array injector plate

– Micro-probe head for wafer tester

– Biomedical micro spray plate

– Other MEMS products

� MicroBase Technology Corporation (µBase)


�X-ray and laser-LIGA tech.

related products (microprobe

head, sprayer, polyimide rotor)

�Biochip array injector

development )with phalanx

corp.)

�Micro spray plate (ITRI)

�Microinject modeling

development (Tech. develop.

Program for Enterprise

MOEA)

•ITRI

•SRLC (X-ray LIGA)

•National Taipei Univ. of Tech.

•Downstream local companies

�ISO 9001 certification approved

�600 dpi qualified

�Biochip development project

�Tech. development prepare for

enterprise (MOEA)

(5 staff from Defense service quota)

(11 patents till 2005.3)

•Chang-Gung Univ.

•National Taipei Univ. of Tech.

•Micro jet Corp.

�Production line design

and testing pilot product

(300 dpi)

�300 dpi Nozzle plate

manufacturing tech.

development project

•CSIST/V Institute

•Micro parts

GmbH.(Germany)

Innovation Phase

(2003.11 ~

Invention)

Imitation Phase

(2001.1 ~ 2003.10)

Planning Phase

(1995.5 ~ 2001.1)

MainMain

IssueIssue

ProjectsProjects

ActorsActors

6. Technology Network of MicroBase Technology Corp.6. Technology Network of MicroBase Technology Corp.

technology substitution technology substitution �� product substitutionproduct substitution


1993.6 established

1995.3 Cell Library for ASIC (NSC)

1995.7 Memory Complier for Sub-micron

ASICs (HSIP project)

1996.9 Accomplished 0.35µm standard

cell library

1997.7 Cell Library for 0.35µm ASIC

(NSC)

1997.8 ISO 9001 approved 0.25µm

standard cell Library

1998.1 Data path complier for submicron

0.35µm ASICs (NSC)

1998.6 “32-bit-embedded RIJC cpu instruction

jet (NSC); 5 patents by USPTO; 1

patent by TWPTO

2001.3 low-power & high performance 16-bit

DSP core worldwide

2001.9 ARM-based SoC common

development platform solution

2001.11 ARM based SoC penetrated Korea’s

market

2003.1 next generation configurable DSP IP

2003.10 A320, a SoC reference design based on

its “innovation appliance platform”

IMITATIONIMITATION INNOVATIONINNOVATION

� FaraDay Technology Corporation


2003.12 Si-proven 3G series ATA technology

2004.2 Set the stage for structured ASIC

technology benchmarking

2004.3 Si-proven TFT-LCD TCON platform

FT-300 Ultra high speed SRAM

2004.4 500 MHz RISC CPU Core “FA626”

2004.6 High resolution MPEG-4 solution for

multimedia application

2004.8 the world’s first multimedia card TM

4.0 chip produced

2004.12 Launching smallest preparnmable

PLL-miniPLLTM

2005.1 low power dissipation platform

solution-power slayer

2005.2 Supply ASICs for isoclinic

semiconductor’s SoCs for home

storage gateway/outer System

2005.3 the smallest USB 2.0 PHY IP

INVENTIONINVENTION INVENTIONINVENTION

� FaraDay Technology Corporation


Thank you for your attention!Thank you for your attention!

smes’ innovation policy in taiwanapec-smeic.org/_file/pdf/06forum_rchsue_taiwan...1. running...

Documents