What would it take for Taiwan to be the next Silicon Valley?

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What would it take for Taiwan to be the next Silicon Valley?

Postby PapaAzucar » 28 Apr 2012, 09:30

Hello all, I am posting this here instead of the Biz forum because I am interested about the technology and the tech environment here in Taiwan.

I've seen some of the appWorks, Startup Labs, and the Hsinchu area postings about Taiwan startups.
But compared to Y-combinator or the government-backed incubators like InnoSpring, there is something missing here, namely large number of venture capitalists willing to throw their money at startups in Taiwan like they do for startups in Silicon Valley.

The tech workers I met here all seem very competent, and no less than Silicon Valley folks that I met when I was in San Fran last year.
But the tech workers in Taiwan seem to lack the startup personality, or maybe they prefer the stability of a bigger company?

Maybe it is a lack of independent initiative? Or lack of creativity (for example, following innovation instead of creating innovation)?

I don't know what is missing, but I like to hear from everyone what you think is missing?

Or as the subject line reads, what would it take for Taiwan to be up there with Silicon Valley in terms of technology startup reputation?
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby finley » 28 Apr 2012, 12:05

A vastly improved education system, a culture transplant, and (as you just said) more VCs.

There are plenty of small technology startups around, but they're invariably making inferior, (slightly) cheaper copies of western products. And as far as it goes, that's fine. I think it takes a big country to sustain the sort of 1-in-100 gambles that results in a Silicon Valley. Taiwan is not the right place for that sort of thing.
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What would it take for Taiwan to be the next Silicon Valley?

Postby headhonchoII » 28 Apr 2012, 12:47

Taiwan does what it does well which is act as a manufacturing partner to silicon valley. Disappointingly it's found it hard to move beyond that. You don't necessarily need a silicon valley setup to be successful, look at Singapore, Japan , Korea or Japan.
Silicon valley now seems to be mostly about software, that seems to be trickier to get right than bolting something together.
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby PapaAzucar » 29 Apr 2012, 10:18

So in order for Taiwan to be the next Silicon Valley (that is to attract more VCs for tech startups, improve tech reputation, etc), here are the suggestions:

1) Improve education system
2) Culture transplant
3) Overcome the cheaper copycat branding stigma
4) More resources to sustain startups 1-in-100 gambles
5) Overcome the manufacturing niche for software

Did I capture all that has been suggested so far?
Please suggest more if you can think of them.

As for the successes like Singapore, Japan, and Korea, I'm not suggesting that only Silicon Valley is successful. I respect the success and the niche that Taiwan has built for itself. If I was to find technical work in Taiwan and someday return to the US, I just don't think the US companies respect the Taiwan tech industry aside from a few companies like Acer, Asus or HTC.

I am hoping that this discussion will get people thinking about how to better build Taiwan's tech reputation. So when we move to other places, having a Taiwanese company on our resume will be equivalent to a Silicon Valley tech company.

If you have other ideas, I like to hear them because I hope we can all address the suggestions.
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby finley » 29 Apr 2012, 10:37

I am hoping that this discussion will get people thinking about how to better build Taiwan's tech reputation. So when we move to other places, having a Taiwanese company on our resume will be equivalent to a Silicon Valley tech company.
If you have other ideas, I like to hear them because I hope we can all address the suggestions.


How are you going to "address the suggestions" though? You can't really change Taiwan's entire industrial culture just to make your CV look better. For instance, this:

Overcome the cheaper copycat branding stigma


is not stigma. It's a deliberate management choice. A company I work with is forever showing me little Japanese odds and ends - LED lights, for example, or CDI ignition systems - and asking me if I'm interested in helping to develop a "cheaper" version. My usual response is "why on earth would you want to do that?". When you open the (Japanese) product up, it's usually incredibly well-made. They've skinned the manufacturing cost to the bone while still maintaining top quality. The reason the product is expensive in the marketplace is its perceived value, not a high manufacturing cost, but Taiwanese companies either don't understand this or don't care. They have no interest in making desirable products and would prefer instead to make undesirable ones with a low - but highly predictable - markup. I'm guessing this ties in with a low tolerance for risk generally (um, except when driving) ... hence the lack of large VCs. There are VCs - I've met a couple of them - but handing out only very modest amounts of money to very pedestrian enterprises, not taking high-stakes gambles.

Besides, if hiring companies are not impressed by your stint in Taiwan because it isn't Singapore, you probably don't want to work for that company.
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby Deuce Dropper » 29 Apr 2012, 11:23

With respect to hardware, Taiwan is already one of the if not THE most important places in the tech world.
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby PapaAzucar » 29 Apr 2012, 11:53

finley wrote:
I am hoping that this discussion will get people thinking about how to better build Taiwan's tech reputation. So when we move to other places, having a Taiwanese company on our resume will be equivalent to a Silicon Valley tech company.
If you have other ideas, I like to hear them because I hope we can all address the suggestions.


How are you going to "address the suggestions" though? You can't really change Taiwan's entire industrial culture just to make your CV look better.

I'm just trying to attach a context so that this question is relevant to many people here.
I think a lot of the suggestions are "perceived" as issues, when it really isn't or can be changed. For example,

1) Improve education system
Taiwanese K-12 education system is no less than US public education based on some standardized studies. Taiwanese students certainly value education more than the US students with the majority probably learning English in buxibans. What percentage of American students learn Chinese in school and then go to after school Chinese tutorials?
BTW, English and Chinese are the 2 dominant languages on the web.
http://www.internetworldstats.com/stats7.htm
Also, Taiwanese students attend Western universities and graduate programs. Sure the Taiwanese students probably need more creativity or motivation in their learning instead of their exam-based education. But those are easier issues to "fix" than the US trying to keep its students from dropping out of high school. especially in California.
So in this case, I don't think the Taiwanese education system is much of an issue to keeping Taiwan from becoming a Silicon Valley.

finley wrote:For instance, this:

Overcome the cheaper copycat branding stigma


is not stigma. It's a deliberate management choice. A company I work with is forever showing me little Japanese odds and ends - LED lights, for example, or CDI ignition systems - and asking me if I'm interested in helping to develop a "cheaper" version. My usual response is "why on earth would you want to do that?". When you open the (Japanese) product up, it's usually incredibly well-made. They've skinned the manufacturing cost to the bone while still maintaining top quality. The reason the product is expensive in the marketplace is its perceived value, not a high manufacturing cost, but Taiwanese companies either don't understand this or don't care. They have no interest in making desirable products and would prefer instead to make undesirable ones with a low - but highly predictable - markup. I'm guessing this ties in with a low tolerance for risk generally (um, except when driving) ... hence the lack of large VCs.

Well according to this, Taiwan has been making top brands for a long time (as I suspected). Taiwan is the source or component maker for all the major brands.
https://forumosa.com/taiwan/viewtopic.php?f=7&t=109020&start=10#p1419828
So it is not like Taiwan does not know how to make good products. But this sounds more like a branding/marketing issue, than just "Taiwan can only make cheaper copycats", although the "cheaper copycats" does have a niche market. The branding/marketing issue can be "fix'ed" by companies valuing and hiring more MBAs, which culturally is valued below the technical skills. Maybe someone can refute my limited understanding here?

Deuce Dropper wrote:With respect to hardware, Taiwan is already one of the if not THE most important places in the tech world.

I agree. And I don't see why software would be any different?
The top hackers are mostly Chinese.
http://www.zdnet.com/blog/china/chinese-hackers-top-world-leading-programmers-site/343

If any Silicon Valley tech guy can startup in their Mom's basement with a website and an idea, and get VCs to throw money at him,
what is keeping the Taiwan tech guy from doing the same?
Why are the ideas and websites from Taiwan any less value?
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What would it take for Taiwan to be the next Silicon Valley?

Postby headhonchoII » 29 Apr 2012, 11:59

Taiwanese companies make good products at good prices. That's their niche. But ask them to be first in the market and they crap themselves. Ask them to do 5 years of research without guaranteed product at the end and they laugh in your face.

The money here in Asia isn't VCs but extremely wealthy families that invest directly or use their conglomerates to invest. It's just a completely different environment. These wealthy families are quite conservative and not first generation entrepreneurs. The guys in the 50s and 60s here who started the big conglomerates were great at what they did which is manufacturing good quality and good prices.

SMEs here again are family owned, they are happy to keep cranking out mostly the same stuff decade after decade as as they can make decent profits and maintain control of their business. Maintaining control and keeping business secrets is something engrained here for very good reasons.

There are Taiwanese companies that were successful software startups, Plurk and some others. They don't have the huge home market, media support and language advantage to go global. They pretty much all sold out for a few million USD which is good enough for most of them.

There are some fairly successful game companies like gamania too although they seem to stick to the same old multiplayer fantasy stuff. They grew at a huge pace ar start of 2000s with network games but then failed to jump to international status. So I guess it's not that Taiwanese cannot do software but they are fairly conservative and limited in their market here. Some focus on the China market instead of trying to do something unique globally.

Generally they are not interested in taking the risk to try something totally new or untested.

So there you have it Silicon Valley is there and Taiwan is here.
I worked in the biotechnology business here, the government has done lots of good long term research especially wit plant breeding that has helped grow lots of successful business here, you could call it the green valley.
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby PapaAzucar » 29 Apr 2012, 12:12

headhonchoII wrote:But ask them to be first in the market and they crap themselves.

Why would they crap themselves?

headhonchoII wrote:Ask them to do 5 years of research without guaranteed product at the end and they laugh in your face.

US companies and VCs will laugh in your face as well. Silicon Valley or any startups usually have a 2-year or less window to prove a beta product.

headhonchoII wrote:The money here in Asia isn't VCs but extremely wealthy families that invest directly or use their conglomerates to invest. It's just a completely different environment.

Why aren't the extremely wealthy families into VC'ing?
What is the different environment?

I'm not asking these questions out of sarcasm. I am asking because I don't know.
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Re: What would it take for Taiwan to be the next Silicon Valley?

Postby PapaAzucar » 29 Apr 2012, 12:16

headhonchoII wrote:So I guess it's not that Taiwanese cannot do software but they are fairly conservative and limited in their market here.

This makes some sense. But I would think that the web would eliminate the local market restriction.
Also, shouldn't all these English buxibans be paying off for the Taiwanese as far as their English goes and marketing to the English-speaking consumers?
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