Among the alliances now being promoted by the government are the Technology Research and Development Alliance, led by the Industrial Technology Research Association; the Upstream, Midstream and Downstream Industry Vertical Alliance, which is promoted by Central and Satellite Development Center, which was originally attached to the Industrial Development Bureau; and a multinational alliance promoted by the Enterprise Alliance Group of the China External Trade Development Council (CETRA).
"Vertical integration of central and satellite factories" is another weapon in the Japanese arsenal besides the horizontal cooperative associations within given industries. In Taiwan, the IDB set up a "center-satellite committee" ten years ago to bring this concept here. But there are still some places where it is impossible to make breakthroughs.
Hard to make head or tail out of the center-satellite system: First, the large enterprises which serve as the "heads" of the center-satellite networks in Japan, are mainly responsible for covering the large expenses for R&D for key parts, product planning and R&D, and control of the sales network. The affiliated factories are responsible for general manufacturing and assembly, with large and small factories separated in layers and a clear division of labor. Once they become alliance partners, in order to cultivate the small factories, not only will the large factories endeavor to maintain stable orders, they will also often provide technology and/or training in quality control, or even use quality competitions to grade products and encourage the small escorts under their flagship to truly achieve the ideal of "small but meticulous."
"The Japanese center-satellite system is very close-knit," says Johnson Cheng, the man behind the lighting industry alliance. As soon as any little shop lets it be known that it has become a member of the Matsushitu or Sony group, other people have to give it more respect. The sense of honor and of attraction to the center mean that it is extremely rare to see the situation of "one factory having two masters."
Looking back at Taiwan, except for Formosa Plastics and a small number of other companies, there are few firms capable of serving as the head and doing independent research and development. On the other hand, many large companies do their own manufacturing and assembly themselves, with no clear division of labor, so they sometimes have conflicts of interest with smaller factories. Since the big factories are not willing to cultivate or strengthen the smaller ones, and smaller shops are not willing to belong to a single larger firm, the center-satellite system is very loose and fluid. Everyone still has their eyes on short-term profits, so they link up or go their separate ways helter-skelter, and there is no way to bring the power of unity into play.
Transnational alliances look to the long run: Although Made in Taiwan products sell all over the world, they are often the "faceless heroes" behind foreign labels. In order to give major corporations in the U.S. and Europe a greater under standing of Taiwan, and to allow Taiwan to import more advanced technology and management know- how, CETRA's business alliance group formulated Plan TOP a year and a half ago to serve as a matchmaker for transnational alliances.
In the last year and a half, already 12 cases have been successfully concluded (cooperative agreements have been signed). All of these follow the alliance model of one domestic manufacturer paired with one European or American manufacturer.
"Local enterprises are still not very enthused about international strategic alliances, and they don't understand them very well," says Huang Hsiao- kuan, executive director of the business alliance group. Most American strategic alliances are games between large corporations, and transnational matchups require that "both families are of comparable standing." Not only do both sides have to have suitable manpower, technology, and capital to be mutually attractive, they need comparable international perspectives and internationalization experience before they can really communicate.
Under these kinds of conditions, there are even very few large domestic manufacturers who could pull off a transnational alliance--let alone small enterprises. Thus for the moment they can only start small and make plans for the long run.
Broadening international field of vision: Taking the alliance between Taiwan Automation Company and Adept Technology, Inc., the well-known American manufacturer of small scale robots, at the first stage Taiwan Automation merely served as the Taiwan sales agent for Adept's products. They built up trust in themselves through the Adept name, and their own business climbed greatly as a result. They hope that if cooperation goes smoothly in the initial period, this will help in technology transfer in the future.
Of course, given the current technological level of domestic manufacturing, it is still difficult to undertake joint R&D or sales exchanges with major American or European corporations. In order to transfer some of the more advanced technologies, it is necessary that they first be digested by ITRI before they can be given over to local operations. But, aside from tangible benefits, pushing local industry onto the global stage and developing an international field of vision is what's really important.
Palmtop computers made their debut at an American computer exhibition in November. The photo shows the sales conference held by alliance manufacturers. （photo by Vincent Chang）
