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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
STRY OF ECONOMIC AFFAIRS
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
STRY OF ECONOMIC AFFAIRS
I. The Status of SMEs’ Innovation in
Chinese Taipei
STRY OF ECONOMIC AFFAIRS
� 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)
(US$ million)(US$ 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)
(US$ million)(US$ 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
STRY OF ECONOMIC AFFAIRS
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
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�� 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
STRY OF ECONOMIC AFFAIRS
� 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
STRY OF ECONOMIC AFFAIRS
� 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
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� 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””
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� 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
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� 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
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II. Policy Schemes for SMEs’ Innovation
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� 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
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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
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� 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
STRY OF ECONOMIC AFFAIRS
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
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� 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.
STRY OF ECONOMIC AFFAIRS
� 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
STRY OF ECONOMIC AFFAIRS
� 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)
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� 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
STRY OF ECONOMIC AFFAIRS
� 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
STRY OF ECONOMIC AFFAIRS
�� 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….)
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III. The Small Business Innovation Research
(SBIR) Project
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�� 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%
STRY OF ECONOMIC AFFAIRS
SBIRSBIR
InnovativeInnovativeTechnologyTechnology
InnovativeInnovative
ServiceService
Earlier Earlier ResearchResearch
Research &Research &
DevelopmentDevelopment
EarlierEarlierPlanningPlanning
DetailDetail
ProgramProgram
Specific ApplicationSpecific Application
R&D AllianceR&D Alliance
Specific ApplicationSpecific Application
R&D AllianceR&D Alliance
Specific ApplicationSpecific Application
R&D AllianceR&D Alliance
Specific ApplicationSpecific Application
R&D AllianceR&D Alliance
TypeType StageStage TargetTarget
Phase IPhase I
Phase IIPhase II
Phase IPhase I
Phase IIPhase II
STRY OF ECONOMIC AFFAIRS
��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
STRY OF ECONOMIC AFFAIRS
�� 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
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�� 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
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�� 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)
STRY OF ECONOMIC AFFAIRS
IV. Innovation Value Vs. Product Process
STRY OF ECONOMIC AFFAIRS
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
STRY OF ECONOMIC AFFAIRS
V. SMEs Innovation-driven Successful
Business Model
STRY OF ECONOMIC AFFAIRS
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
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VI. Future Prospects and Recommendations
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� Constructing a sound developing
environment of R&D
� Developing the R&D Service Industry
� Strengthening the incubation system
STRY OF ECONOMIC AFFAIRS
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
STRY OF ECONOMIC AFFAIRS
VII. Case Study of Innovative SME’s
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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)
STRY OF ECONOMIC AFFAIRS
�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
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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
STRY OF ECONOMIC AFFAIRS
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
STRY OF ECONOMIC AFFAIRS
Thank you for your attention!Thank you for your attention!