Where Cluture and Business Intersect  

A Report on Cultural and Creative Industries

Public investment, coordination, and promotion are being made available in hopes that cultural enterprises can help spur economic development.

BY COCO SHIAO

From the intricate porcelain vases showcasing painstaking craftsmanship in the Franz Collection to the mesmerizing performances of the Cloud Gate Dance Theater Company, Taiwan has had more than its share of outstanding culture-related enterprises. Now the government is looking at such “Cultural and Creative Industries” as a resource to be actively promoted as part of its effort to revamp and stimulate the economy.

Cultural and creative enterprises have been included as one of six emerging industries that the Ma Ying-jeou government has been paying special attention to since taking office in May 2008 (the others are biotechnology, tourism and leisure, medical care, green energy, and high-end agriculture).  

The idea of targeting cultural/creative industries as a major driver of the economy has been integrated into the planning of many developed countries in the West for more than a decade. But it is only relatively recently, as part of the island’s transformation from an industrial-based to a knowledge-based economy, that “culture” and “economic development” have become linked in Taiwan.

Perhaps the most direct connection is industry’s constant need for creative new designs, often inspired by cultural themes. “Design has potentially the greatest added-value for Taiwan’s future,” says Huang Pi-twan, Minister of the government’s Council for Cultural Affairs (CCA). Huang sees development of design capability as a matter of growing urgency given the increasingly competitive economic landscape, particularly with the rise of China as an industrial powerhouse.

Cultural and creative industries are broadly defined by the CCA as “any industry that sources original works or cultural collections and, through the formation and use of intellectual property rights, has the potential to create wealth and employment opportunities while also promoting the overall quality of the living environment.” The sector encompasses a wide range of activities, including literature, music, cinematography, fashion, digital art, and industrial design.

Cultural innovation benefits a society by helping the economy to develop while also enhancing the quality of life. Income and employment are generated through growth of new enterprises, technical innovation, and the development of related industries. According to a 2006 report by the International Intellectual Property Alliance, the annual production value of copyright industries in the United States in 2005 was estimated at US$1.39 trillion, contributing 23.8% to overall economic growth.

The CCA’s statistics show revenues from Taiwan’s cultural/creative industries as totaling NT$610 billion (US$18.5 billion) in 2007 for a 3.18% share of GDP). The leading categories were Broadcasting and Television, Industrial Arts and Handicrafts, Architectural Design, and Design. A comparison with the United States and Britain, where the sector accounts for 11.12% and 8.10% of GDP respectively, makes it evident that Taiwan still has substantial room to grow in this field. President Ma Ying-jeou, in fact, recently voiced the government’s hopes that the industry's output could rise to 6% of GDP within the next five years.

The strategy of developing the cultural/creative sphere makes economic sense because it builds upon Taiwan’s strengths. According to studies done by the World Economic Forum and other institutions, Taiwan’s competitive edge derives mainly from its outstanding infrastructure, management capability, and labor force in the high-tech sector. Taiwan has emerged as one of the world leaders in the registration of new patents, and in a survey conducted by The Economist in May 2009, Taiwan was ranked sixth out of 88 countries in terms of an innovation index forecast looking at technology prospects for the next five years.

“Taiwan possesses uncountable advantages in this sector,” says Huang. Not only is it a breeding ground for innovation, but its economy is largely composed of small and medium-sized enterprises, whose flexibility and adaptability in adjusting to the needs of the market provide a highly suitable environment for developing creative businesses. Moreover, Taiwan serves as a gateway to Chinese-speaking markets due to its geographic proximity and common language and culture, opening opportunities for exports. And it has the added advantages for fostering creativity of being a liberal, democratic society with an exceptionally well-educated population.

Attention to cultural and creative industries in terms of Taiwan’s economic development first emerged in May 2002 when the Executive Yuan approved a “Challenge 2008 National Development Plan.” Within that overall scheme, a Cultural and Creative Industry Development Plan was one of 10 programs identified as key to achieving a knowledge-based economy and long-term sustainable employment so as to prepare Taiwan to compete effectively in the twenty-first century.

Under the Cultural and Creative Industry Development Plan, the government focused on five objectives: creating job opportunities, generating added value for relevant industries, enhancing the quality of life, promoting Taiwanese culture and inspiring creativity, and developing Taiwan into a regional hub for cultural and creative industries. Thirteen specific industries were identified as worthy of promotion, and the responsibility for guiding them was divided among four government agencies:

• Council of Cultural Affairs (CCA) – Visual Arts, Music and Performing Arts, Cultural Performance Facilities, Industrial Arts and Handicrafts.
• Government Information Office (GIO) – Movies/Film, Broadcasting and Television, Publishing.
• Ministry of Economic Affairs (MOEA) – Advertising, Design, Digital Entertainment, Branding and Fashion Design, Creative Living.
• Ministry of Interior – Architectural Design.

MOEA was also designated to serve as the main coordinating body, and the Ministry of Education was assigned to work with each agency to help develop human resources.

Besides assisting in cultivating talent, the government’s main role was viewed as fostering research and development, coordinating academic-business collaboration projects, supporting marketing and promotion, and providing land leases and tax incentives.

Into the second stage

The Challenge 2008 National Plan created a framework for the development of Taiwan’s cultural and creative industries and helped spur their progress. From 2002 to 2007, revenues produced by these industries jumped from NT$435 billion to NT$610 billion, a growth of 40%. Employment in the sector grew from 162,436 in 2002 to 203,975 in 2007, a 26% increase. Over this period, the greatest growth was achieved in the Design, Broadcasting and Television, and Music and Performing Arts segments.

To encourage further growth, on May 14 this year the Executive Yuan approved a Cultural Innovation Plan drafted by the CCA to guide the second stage of development through 2012. The new plan calls for pooling government resources across different disciplines to actively develop six flagship industries selected for their high growth potential. The six industries are television, film, pop music, digital content, design, and industrial arts and handicrafts.

Emphasizing the significance of the new plan, Minister Huang notes that “interdisciplinary cooperation is essential in a sector which has traditionally seen disjointed and scattered government resources.” To facilitate coordination, a cross-agency “CCI Promotion Group” was established, composed of leaders from the relevant ministries as well as scholars specializing in the targeted fields. Premier Liu Chao-shiuan heads the group as chairman, with CCA Minister Huang and Minister without Portfolio Ovid Tzeng as vice chairmen.

Speaking in June, Premier Liu said the “rich diversity of cultural elements with which Taiwan is blessed can be incorporated into marketing and strategy-making mechanisms” that will inject new vitality into Taiwan’s society and economy. Taiwan’s cultural make-up includes contributions from such varied sources as the aboriginal population, traditional formal Chinese culture and regional variations from many parts of China, plus Japanese and Western influences. 

Specific targets in the Cultural Innovation Plan to be achieved by 2012 include reaching NT$1 trillion (US$30.3 billion) in the annual production value of creative goods and services, creating 200,000 new jobs, achieving at least 20% annual growth in production value, and generating international business volume of at least NT$6 billion (US$182 million). 

To provide the necessary financial resources, the government committed to invest NT$27.5 billion (US$833 million) in the sector over the next four years. Of that amount, the National Development Fund will provide NT$20 billion to establish a venture capital fund to help nurture promising companies in the field. Funding will be allocated through an application process by a foundation set up for this purpose, with priority given to projects belonging to the six flagship industries.

The Cultural Innovation Plan seeks to build upon initiatives set out in the Challenge 2008 National Plan. One project is the continued development of creative/cultural industrial parks in Taipei, Taichung, Chiayi, Tainan, and Hualien to serve as the core of industry clusters. Preparatory work, such as putting in the infrastructure and landscaping, has already been completed.

The government is also doing its part to cultivate talent by sponsoring training classes in industrial arts and other subjects, either for individual participation or in cooperation with companies. It also plans to hold trade shows and design competitions to help identify up-and-coming artists and designers. For example, the annual “Art Taipei” fair incorporates such events as the “Artist of the Year” contest and “Taiwan Young Designers Exhibition” to showcase emerging designers and bring them to international attention. The government is planning to hold an even larger scale world design contest and exposition in Taiwan in 2011.

Besides the limited size of the domestic market, one of main the challenges cited by Minister Huang as affecting the development of creative/cultural industries in Taiwan is the lack of a comprehensive legal framework for the industry. To address the problem and provide more consistency in regulation, legislation known as the Cultural and Creative Industries Development Bill is currently being drafted. The bill will include provisions that could contribute to a healthier business environment, such as the establishment of a market pricing system for artwork and cultural products, and tax incentives for individuals and enterprises.

Another set of concerns has to do with intellectual property rights (IPR) protection, although these have more to do with conditions in the China market than in Taiwan. “Although we may hold someone accountable for copyright infringement in Taiwan, enforcement is very difficult in China,” Huang notes. The two governments are currently in dialogue about ways of strengthening IPR protection across the Strait.

To expand the market size for Taiwanese products, designers are actively participating in international design competitions and have fared impressively well. In 2007, Taiwan picked up awards for 286 pieces at internationally renowned award competitions, thereby promoting Taiwan’s artists and expanding the buyer base. The government aims to increase this number to more than 800 pieces by 2012. One of the most prominent examples of successfully spreading a Taiwanese brand overseas is the Franz Collection, a maker of intricate porcelain gifts founded by Francis Chen. Franz Collection took best in show at the New York International Gift Fair in 2002 and now sells its products worldwide.

Trade shows held in Taiwan have also attracted significant international interest. In 2008, Art Taipei brought a record US$24 million worth of transactions in five days and attracted 72,000 artists, collectors, and visitors from around the globe. In addition, with nearby China representing a huge market for Taiwan’s products, the government is also working towards capitalizing on this opportunity as the two sides engage in closer economic cooperation.

In this emerging knowledge-based era, cultural and creative industries are seen as becoming an important pillar of Taiwan’s economic transformation, serving as a link that brings creativity and culture together with economics and technology.