Taiwan's Twin Pillars of Success; Island Remains Asian Economic Model Despite Diplomatic Isolation.

Business Editors/Technology Writers

TAIPEI, Taiwan--(BUSINESS WIRE)--March 22, 2000

In the wake of last week's presidential election, there are two things that most residents of Taiwan know and credit for their tiny nation's flourishing economy: a multi-party democracy with open elections and the island's mushrooming information technology industry.

They also know that neither can survive without the other.

"Less than 20 years ago, our exports essentially consisted of cheap, mass-produced plastic goods," said Ricky Kao, president and CEO of the China External Trade Development Council (CETRA), Taiwan's leading trade-promotion agency. "Today, we are the world's third leading IT producer, with a 10-percent jump in 1999 exports, an overall economy that grew by 5.67 percent last year and projections of a 6.5 percent growth this year."

Taiwan stands firm as the world's third largest manufacturer of computer-related hardware, behind only frontrunner United States and second-place Japan. The island's IT industry supplies 10 percent of the world's computer chips, half of all laptops, 64 percent of the world's motherboards and 91 percent of all scanners.

These numbers, already spectacular by themselves, are made even more so when juxtaposed with a magnitude-7.6 earthquake on September 21, 1999, that killed 2,321 people, left more than 82,000 homes uninhabitable and caused more than US$9.2 billion in damages on an island similar in size to West Virginia.

However, the disaster proved but a minor speed bump as Taiwan quickly recovered and forged ahead, posting an increase in exports for September of almost 1 percent. The IT industry itself grew more than 18 percent, surpassing its own predictions by almost a full point.

Such flexibility and adaptability are direct effects of a fully democratized society, implemented in 1987 by President Chiang Ching-kuo and heavily promoted by his successor, President Lee Teng-hui.

Last week, in defiance of open threats by Beijing, Taiwan voters elected Chen Shui-bian as the island's first president from a political party other than the ruling Nationalist Party. Chen won with 39 percent of the vote in a tightly fought three-way race. Populist James Soong finished second with 37 percent, and Lee's proposed successor Lien Chan finished a distant third with a 23 percent showing.

Since democratization began, the political and economic freedoms have created countless opportunities for Taiwan's 23 million residents, resulting in an explosion of economic creativity, technological innovation and unprecedented financial stability.

"Our labor pool's natural entrepreneurial tendencies, once unhampered by antiquated regulations, quickly took the economy to new heights," said Kao. "Guided by an attentive government's liberalized policies, we focused our attention away from Cold War politics and onto expanding and strengthening our industrial and commercial bases."

As banking reforms took root along with streamlined business practices and extensive marketplace and media reforms, Taiwan's currency strengthened from a rate of about NT$40 to as high as NT$30 to one US dollar.

Taiwan has the world's largest foreign exchange reserve valued in February 2000 at more than US$113 billion. Even amidst the recent Asian financial crisis that toppled long-standing institutions from Seoul to Tokyo to Jakarta, Taiwan's economy grew by an average 5 percent per year, with almost full employment and low inflation.

The number of media outlets has also exploded. The island's television market went from three mainly government-owned stations to dozens of broadcast and cable stations, with competition as fierce as in any western industrialized nation. Radio stations, magazines and newspapers seem countless.

Multiple political parties were allowed, a ban on criticism of the government was lifted and in March 1996, Taiwan's voters chose Lee as their first-ever directly elected president. Just before that election, China's communist leaders tried to influence voters by holding military exercises and testing ballistic missiles in the 100-mile-wide Taiwan Strait.

However, almost hidden behind the economic and democratic achievements of the past 13 years is another success story few know, but from which many benefit.

In terms of women's rights, women political leaders and women entrepreneurs, Taiwan is perhaps the most liberated place in Asia, not just East Asia, but the entire Asian continent, especially in light of the election of feminist Annette Lu as the new vice president.

"It's not just that we have women in the military and women in other traditionally male roles," said Kao. "We as a people truly believe in equal rights and equal treatment of both genders. Most of the younger generation, better educated and with increased exposure to other cultures, no longer subscribes to any traditionally male or female roles. We are all just residents of Taiwan."

Using the traditionally male-dominated IT industry as a model, a number of Taiwan firms are headed by women executives

As founder and president of Plustek, Inc., Karen Ku runs the fifth largest global manufacturer of scanning and imaging equipment. Under Ku's leadership, the company in 1991 introduced the world's first grayscale, sheet-fed scanner. Plustek quickly followed with the world's first color sheet-fed scanner and the first intelligent machine that combined color scanning, faxing and copying capabilities.

Eva Chiang is an executive vice president and the chief technology officer at Trend Micro, Inc., which makes anti-virus software, such as InterScan, VirusWall, PC-Cillin and ScanMail. Over the past decade, Chiang has positioned the company as a world leader in virus protection, growing her team from one person to include more than 150 computer virus experts from around the world.

After founding CyberLink Corp. in 1996, CEO Alice Chang runs the multimedia software firm in a style that does not stifle the creativity of her young and innovative engineers specializing in digital video and audio applications. She allows them their odd hours, shabby clothing, long and multi-colored hairdos and aversion to shoes - as long as they meet their deadlines.

"Our success as a people is rooted in our philosophy that failure is not shameful," said CETRA's Kao. "Failure is merely a valuable lesson. We dust ourselves off, identify the errors and move onto the next project. We succeed because we work hard and find ways to keep going until we reach our goals."