Out of nowhere
Another major transnational corporation, IBM, plans to set up two R&D centers in Taiwan. Approval has already been received for the "Mobile e-Business R&D Center." Over three years, IBM headquarters will transfer technology to assist Taiwanese companies in employing IBM advanced technology to develop and find applications for various critical embedded software.
The Mobile e-Business Center, in line with the strategies adopted by other large transnational corporations, focuses on Taiwan's strengths in the information-technology and communications industries. But the other facility for which IBM has submitted a proposal, the Life Sciences Center of Excellence, has the ambition of making something out of nothing, of filling the vacuum that currently exists in this sector in Taiwan.
"Over the past decade, biotechnology has been the new pampered baby of global industry, but few people think of it in combination with information technology," says Life Sciences Center manager Spencer Wang. Nonetheless, with work on breaking the genetic code moving ahead rapidly, the amount of computer data accumulated about gene sequences worldwide is calculated in the trillions of bytes and is doubling every nine months. Unless there is proper backup in terms of computing, storage, and Internet links, it will be impossible to search, compare, and handle this enormous body of information. This is why "bioinformatics" has taken shape worldwide over the past few years as a glittering new field of knowledge.
"Taiwan still has only the vaguest notions about bioinformatics. But IBM decided to set up its first Asia-Pacific bioinformatics center here because Taiwan has plenty of highly talented people in both the infotech and biotech fields, and offers the possibility of bringing in the Chinese gene pool and traditional Chinese medicine," explains Wang.
Grid computing
Breaking from the mold of other big information multinational, IBM has not opted to import its own supercomputers into Taiwan for the information system at its bioinformatics center. It has instead adopted the "grid computing" approach, aiming to build an information sharing "community" and create a firm foundation for the bioinformatics industry in Taiwan in the future.
Grid computing originated in America's NASA program. To search for signs of life in the limitless universe, NASA linked up 300,000 home computer users, who agreed to "contribute" their computer down time, so that NASA data could be processed and compared, thereby greatly accelerating research speed.
By the same logic, when a researcher discovers a gene fragment that might be implicated in causing disease, he or she can dump this sequence into the network structure and undertake searches and comparisons in a vast bubbling pool of data, to answer questions like: What is the difference from the normal sequence? Is there any connection to other sequences implicated in disease? This should save a great deal of time in the research process.
But many in academia or industry might wonder: Won't throwing private discoveries onto other people's computers expose the secrets you have researched? Might it not expose your data to alteration by malicious hackers? Also, those who lack confidence in their own work may fear that others will find it ridiculous. Precisely for these reasons, Spenser Wang is visiting each researcher one by one to make his case. Fortunately, people are beginning to accept the idea, and it is likely that some research teams at places like the Academia Sinica, National Taiwan University, and Yangming University, as well as private firms such as Agnitio, will join the project.
Bringing together academics and research institutes and assisting in the construction and organization of databases is all well and good, but it doesn't appear that there will be much that is profitable in IBM's bioinformatics center. Not so, says Spencer Wang, declaring straight out that after all "business is business." The main reason IBM is investing so much effort to create a free information superhighway for Taiwan's biotechnology industry is to establish its long-term influence.
"According to the government's Challenge 2008 program, five years from now Taiwan will have 500 biotechnology companies," says Wang. "These biotech companies will all need enormous databases and systems. If IBM can take the lead in establishing a stable community upfront, we aren't afraid there will be no money to be made in the future." IBM's strategy of casting a long line to catch a big fish is attracting a great deal of attention in the marketplace.
Breaking into avionics
Similar to IBM's Life Sciences Center in its ambition to create something from nothing and assist Taiwan in establishing a new industry is the "Avionics Certification Skill and Key Technology Development Center," backed by the German company Becker Avionics.
Established only in March of 2003, and located in the Chungshan Institute of Science and Technology (CIST), it has been called Taiwan's first avionics research center. As early as 1999, Becker began working with CIST to develop a variety of electronic products required for aircraft, such as radar altimeters, transponders, and software radios. Because cooperation between the two sides proved to be so smooth, and because Becker headquarters is currently endeavoring to expand their technology sources and product lines, the result is the establishment of this R&D center.
In terms of name recognition and size, there is a considerable gap between Becker and companies like Hewlett-Packard, IBM, or Sony. But in the field of avionics, Becker, which leads the industry in Europe, is a highly reputable company of genuine importance and capability.
Chou Kuang-chung, who moved to the Becker R&D unit after leaving CIST, says that the center will not only initiate mass production of the products jointly developed with CIST, but will also independently do research in advanced technology of Becker's own in the cutting-edge areas of aircraft displays and communications modules. Even more importantly, it is hoped that the R&D center will be able to draw on the resources and contacts of the German parent company to establish a set of certification standards and systems on behalf of Taiwan companies for manufacture of avionics products.
"Internationally," says Chou, "the avionics industry uses a membership system, and is an oligopolistic market." Given Taiwan's sound foundation in the electronics and information industries, the level of difficulty involved in producing such products is not out of reach. The problem is that Taiwan firms do not understand the rules of the international market, product specifications, or the verification procedures for inspection of the production environment and production process. This is particularly a problem given that Taiwan has no standing to participate as a member in international meetings, which means it naturally loses opportunities to compete. If, with the help provided by personnel sent from German headquarters, the R&D center can smoothly establish a verification system, this will be equivalent to opening up a new road for Taiwanese companies to get into the avionics industry.
Learning to fly
The electronic instruments used in flight are very differently designed from consumer electronics. "For ordinary products you can try to find ways to reduce labor and materials, but the level of precision and stability of avionics is a matter of life and death, so you absolutely cannot cut corners, and the design is extraordinarily important."
Moreover, even when aircraft can use "ordinary products," there are hard and fast differences in the way they are applied in the air from on the ground. Take for example displays. During the daytime the sunlight in a cockpit can be blinding, so it must be possible for the monitor to be adjusted to extreme brightness, otherwise the screen will just be a sheet of white. Indeed, whether it is the black of night or the middle of a lightning storm, all kinds of weather conditions and topography are variables in the use of instruments in flight, and must be carefully considered.
The avionics industry in Taiwan is still just cutting its teeth, and must be built up from scratch, so this is no cakewalk we are talking about here. However, Chou Kuang-chung points out that avionics products are sold at low volumes with high profit, and that they have long life expectancies: A company can earn money off of one model for ten years; they needn't continually rack their brains to come up with hip innovations and new looks, as do companies in the information or consumer appliance industries.
A new approach to R&D
The foreign R&D centers that have already taken shape are naturally a varied group. Not only are US, Japanese, and European firms represented, but they differ significantly in terms of scale, industry category, and operational model.
"An R&D center is not just about the development and dissemination of technology; there are many other benefits," says Hwang Jung-chiou of the Ministry of Economic Affairs. Taiwan can use this opportunity to observe up-close the global strategic thinking of large transnational corporations, and even their market instincts and cultural creativity. This can be very helpful to broadening perspective.
Lin Ferng-ching, president/CEO of the Institute for Information Industry (III), which maintains very close relations with the major enterprises in that field, opines that these TNCs have only become as big as they are by using many tricks of the trade that outsiders cannot fathom. Once the III sent a female engineer to Germany for training. In the course of her work she traveled throughout Europe and cooperated with a team composed of persons from 31 different countries. The degree of internationalization of both the management and the division of labor made an impression on her she has never forgotten.
As the director of an R&D institution, Lin Ferng-ching emphasizes that Taiwan has never devoted enough attention to investment in R&D, and the core of the problem is that people do not have a correct understanding of what R&D really means.
"Research and development is not like manufacturing, where you can sell something for a profit immediately after producing it. R&D is high-risk," says Lin earnestly. In R&D, there is a higher rate of money burned than money earned, and often projects come up against dead ends halfway through, in which case all you can do is start again. Therefore, you have to leave yourself some room for maneuver. The establishment of R&D centers by foreign enterprises perhaps will be helpful to changing the typical mindset in Taiwan of seeking rapid profits from R&D.
Coming up with innovations
Looking at the long-term picture, as a growing number of R&D centers from various industries gather in Taiwan, because Taiwan is small and transportation and communications are rapid, there is great potential here for the development of an Asia-Pacific technology exchange hub, because Taiwan is small and transportation and communications are rapid. Once this critical mass takes shape, even more R&D centers will de drawn in. Nothing could be more helpful to upgrading Taiwan's global status and industrial competitiveness than such a virtuous cycle.
In fact, technological stews and creative turbulence are key trends for the future.
"When you make a call you will want to see your counterpart, when you're on a plane you will want to use the Internet, at home you'll want to enjoy a selection of classic films from around the globe, and you'll even want to be able to carry your personal health history around wherever you go," says Hwang Jung-chiou. It can be predicted that in the future we will see confluences among a variety of industries-consumer electronics, mobile communications, information, optics, avionics, and even bioinformatics. Whoever can find the most appropriate technology in the shortest time to create a new product that meets market needs will be the winner. Given the diversification of industries and R&D fields here, there is a good chance Taiwan will come out ahead.
We'll figure it out later
Despite such promise, it is only natural that some grumbling has been heard in the Taiwanese business community over how the R&D center program has been going so far. Generally speaking, the parent companies of the centers are not small, but in virtually every case the amount of money invested has been, well, not large. Moreover, most of the centers are only doing R&D into product applications. Is this an expression of disdain for Taiwan?
"First we get them here, then we figure it out later." This is how Hwang Jung-chiou always responds to this kind of skepticism. After all, many nations are competing to attract foreign investment, while foreign companies don't have unlimited resources, and cannot disperse their R&D bases too widely. If they don't come to Taiwan, they will end up in Korea or mainland China. But if they just come, and can work well with local businesses and R&D institutions, it will be perfectly logical for them to expand and upgrade their future work here.
Barry Lin, chairman of Quanta Computer, the leader in notebook computers in Taiwan, has made a much celebrated remark: "It doesn't matter if it's high-tech or low-tech, if you can make money it's good tech." In contrast to cutting-edge technology, with high risk and enormous capital investment, mid-range technology fits right in with the practical reality of Taiwan's industrial environment, so that Taiwanese companies can absorb this technology in a very short time span. This also allows foreign firms to effectively utilize Taiwan's edge in manufacturing, so this is a win-win situation.
Another complaint being heard among domestic enterprises is that TNCs have a great deal money, but still the ROC government is subsidizing them. Yet it should already be in the interests of the TNCs, who treat Taiwan as their in-house low-cost factory and warehouse, to help Taiwanese businesses, so isn't it only right and fair that they do so without extra incentives?
In the face of such protests, III director Lin Ferng-ching says Taiwan companies should not necessarily assume that they will always be the preferred suppliers to TNCs; after all, rapid change is the norm in international industrial competition. In fact, the production partner is often decided early in the product development process. It is only with the establishment of R&D centers, allowing both sides to develop closer relations and communicate more rapidly, that Taiwanese firms can be guaranteed high status among TNCs.
The most important thing, emphasizes Lin, is: "You don't want to create an adversarial atmosphere between foreign and Taiwanese enterprises." In the era of globalization, TNCs and Taiwanese companies have long been making alliances, and their interests are intimately connected. It is necessary to cooperate for mutual benefit in order to keep such relations going for the long haul.
Off to a good start
The establishment of foreign R&D Innovation Centers one after another has set off a wave of follow-the-leader, both at home and abroad. Domestic companies are especially proactive. Major electronics firms such as Foxcomm, Asustek, and TSMC have all announced they will establish their own R&D academies. It's just that in comparison with the enormously powerful TNCs, domestic companies are still the runts of the litter, and only venture into relatively mature directions in their R&D. Because it is impossible to alter this "hand-me-down-ism" in the short run, it is in Taiwan's interest that foreign R&D pace-setters are here, because future international industrial trends will be clearer, and local R&D centers can avoid unnecessary detours.
Of course, in the end foreign companies are only guests who are just passing through. In the long run, if Taiwan wants to become a global leader in design and development, the critical factor will be that Taiwan companies have their own research and development capabilities.
"The fact that foreign companies are here is only the first step on the road to success," points out Lin Ferng-ching. Next comes figuring out how to keep the foreign R&D centers here for the long term while at the same time allowing domestic companies to take advantage of the opportunity to learn from them and grow as quickly as possible. That will be an even bigger challenge.
|
Foreign R&D Centers in Taiwan
Projects already being implemented Hewlett Packard (US): Product Development Center Becker Avionics (Germany): Avionics Certification Skill & Key Technology Development Center Aixtron (Germany): Manufacturing Oriented Research Lab SONY (Japan): Design & Engineering Center Taiwan SONY (Japan): System in Module Center Taiwan
Projects which have been approved but not yet formalized IBM (US): Mobile e-Business R&D Center Dell (US): Dell Taiwan Design Center Pericom (US): Advanced Mixed-Mode Signal IC Development Center Microsoft (US): Microsoft Technical Center
Projects currently in the review stage IBM (US): Excellence in Life Sciences Center Nokia (Finland): Applications and Services Development Center
More than ten companies are in the stage of preliminary discussions.
Source: Department of Industrial Technology, Ministry of Economic Affairs |