How to Move to a Higher Level? A Report on the Service Sector

Reported BY JANE RICKARDS, AMY PAN, and PETER TZENG

Service Sector: Big Problems, Big Potential

The government is looking to growth in services to help cut unemployment, but the sector is handicapped by a number of weaknesses.

BY JANE RICKARDS

For Taiwan’s economic policymakers, the service sector represents a problem with no easy solutions. Its operations are sluggish, it is minutely fragmented and overly geared towards the domestic market, and no single ministry has the authority to take responsibility for its development. And yet this sector dominates Taiwan’s economic activity and is seen as the best possible cure for the current record unemployment.

The shock of the global financial crisis, which accelerated structural changes in the economy and caused the bottom to fall out of Taiwan’s manufacturing exports to major markets such as the United states, has prompted the government to take the service sector more seriously than ever. Unemployment in August reached a record high of 6.13%, putting the government under immense political pressure to create new jobs and find new economic drivers. “The government is hoping that services will absorb the ranks of the unemployed,” says Chang Chien-yi, an economist with the Taiwan Institute of Economic Research (TIER). It seems like a tough task.

Services last year were valued at NT$9 trillion (US$273 billion), taking up a whopping 73.2% of Taiwan’s overall GDP of NT$12.6 trillion (US$382 billion). But this high figure can be misleading, as it includes public services. The island’s multitude of private service companies account for just a little over half (51.5%) of the island’s economic activity. Still, the sector is a big employer. Last year, the entire services industry provided employment for 6.04 million Taiwanese constituting 58% of the labor force. If the public service sector and military are excluded, 54.7% of the labor force was employed by private service industries.

Retail and wholesale services are the largest employers, employing 17% of the workforce. The second largest category in terms of jobs is “residential, food and beverage services,” which employ 6.6%. Retail and wholesale services is also the segment showing the strongest and most consistent growth, says Chang. Between 2000 and 2008, the service sector added an average of 102,000 jobs each year (manufacturing, in comparison, added 27,000 jobs per year on the average, while agriculture shed around 25,000 jobs annually). While the employment numbers for services seem high, the compound annual employment growth rate in services during this period has been 1.8%. Economists and the government see the need to raise that rate if Taiwan is to solve its unemployment problem.

The torpid performance of Taiwan’s services is partially due to historic factors, experts say. In the past, the government and industry focused on manufacturing and gave little attention to devising policies to promote service development. “The government basically let the service sector develop naturally,” says the TIER’s Chang.

But starting in the 1990s, due to rising labor costs, scarcity of land, and other factors, Taiwan’s manufacturing operations began moving offshore, mostly to China but also to countries in Southeast Asia. As the industrial sector waned, services started to take up a significant share of economic activity. In 1991, for example, services accounted for 58.3% of GDP, while manufacturing stood at 36% and agriculture 3.7%. But a mere decade later, services had risen to 70.5% of GDP, as against 27.6% for manufacturing and 1.9% for agriculture.

While Taiwan had built up a high level of capability in manufacturing, the same degree of enthusiasm was never applied to services and the same level of expertise was never developed, despite the service sector’s increasing importance to the economy. TIER’s Chang attributes this discrepancy largely to the fact that while manufacturing was spurred by export trade, the creation of service businesses has depended on domestic demand. Not only is Taiwan a relatively small market, but it has also been isolated, over-regulated, and overly protectionist. “Taiwan’s service quality has not been so good, but we all got used to this,” Chang explains.

Currently, economists say, Taiwan’s services are overpriced and the sector has failed to meet its potential in terms of both productivity and job creation. “Fundamentally, the sector is not making a good contribution to economic growth,” says Chang.

Small may not be beautiful

One reason for the inadequate productivity is fragmentation. Around 95% of the sector consists of small and medium companies, and even the larger players are not very big by world standards. The absence of economies of scale has impaired productivity. Esther Lee, a researcher with the Sectoral Planning Department at the Council for Economic Planning and Development (CEPD), also cites the sector’s immaturity as a reason for the lagging productivity. “Whether it is branding, understanding service quality or [the availability of] highly specialized service workers, we are lacking,” she says. As a result, salary growth has been sluggish. From 2000 to 2007, the average annual growth in salaries in the sector has been 2.9%, much lower than the 5.6% recorded in manufacturing.

Fragmentation also means that the sector has no strong lobbying force to speak up on its behalf with the executive branch and legislature. Compounding this problem, no single ministry can set policies for the sector as a whole, making it very difficult for the government to control its development. While the Ministry of Economic Affairs (MOEA) is primarily responsible for services, many critical areas are beyond its jurisdiction. For example, the Financial Supervisory Commission is responsible for banking, insurance, and other financial services, the Ministry of Education (MOE) for education, the Ministry of Transportation and Communications for tourism and transport, and the Department of Health for medical and health services.

But most importantly, say Chang and other economists, over-regulation is simply smothering the sector’s growth. “The most important thing to do is deregulation,” Chang emphasizes. He notes that the government is making efforts to cut through the masses of existing red tape; for example, it has simplified various procedures required for setting up a business, including abolishing the minimal capital requirement of up to NT$500,000. But still, various sectors remain mired in a plethora of regulations. The financial services sector is notorious for over-regulation, while experts interviewed also singled out health and education services, saying their growth has been stymied by government policies.

Taiwan’s medical expertise shines over its Asian neighbors, and domestic demand for health services is likely to increase as Taiwan’s society ages and increasing numbers of elderly people need care, Chang says. But, he adds, hospitals and many other health-care facilities are generally required by law to function either as proprietorships or non-profit organizations, rather than as corporations. The idea of commercializing these services is anathema to many bureaucrats, politicians, and some segments of the public. “There will be much demand for health services in future, but it just can’t be developed [under current conditions],” says Chang. “There are just too many regulations.” 

There is similar resistance, especially from the MOE, to the idea of commercializing educational institutions. Tu Tze-chen, Vice President of the Commerce Development Research Institute, a recently established government think tank devoted to the service sector, says Taiwan’s educational services could easily be exported to meet needs in neighboring countries like Vietnam. But so far, Taiwan has not made any moves to do this. Foreign universities also face severe restrictions in operating in Taiwan.

Tu also says that Taiwan could attract more foreign students, but even private Taiwanese universities are strictly regulated. For example, the government puts stiff limits on the number of Chinese students that can attend a Taiwanese institution. “More than 50% of universities are private, and we have the capacity to accommodate 230,000 students per year,” Tu says. “But last year we had less than 208,000, so there is considerable (unused) capacity.”

In addition, experts note that business executives in Taiwan’s service sector often lack the strategic thinking and international outlook needed for success. The “real problem of our service industry,” Tu says, is that companies in the field are too often satisfied with modest scale and modest profits, rather than concentrating on “the fundamentals” to try to grow the business.

TIER’s Chang points to financial services as an example of Taiwanese service companies’ near-total focus on the domestic market. “If Taiwanese companies want to invest overseas, they’ll seek out companies like Goldman Sachs,” he says. “Taiwan’s domestic banks don’t have the ability to provide these kinds of services.” Tu adds that most Taiwanese banks thinking of going into China seem to be looking at setting up two or three branches initially and are not planning beyond that. Instead, he says, banks should be aiming at establishing a network of 1,000 mainland branches in 10 years and 10,000 in 20 years. “People here think too small,” says Tu. “They don’t have the incentive or drive to make their industry global.”

Taiwan also lacks highly qualified service workers and there are insufficient training programs or coordination between industry and the education system to cultivate the talent. As a result, service workers tend to be clustered in low-end, poorly paid occupations, while the most skilled service workers are lured overseas by higher salaries. The island lacks an older generation of high-quality service workers who could act as mentors.

One area where it is thought that Taiwan could flourish is in research and development (R&D) services, but this field is not growing as fast or effectively as it could, experts said. CEPD Deputy Minister San Gee told the Taiwan Business Alliance Conference this month that Taiwan’s ratio of R&D to GDP spending is 2.58%, a figure not far below the 2.62% of the United States. The extent of Taiwan’s innovation and R&D in the manufacturing sector have received international recognition, and its volume of patents registered in the United States ranks fourth in the world, behind the United States, Japan, and Germany, Gee said.

Currently, says Chang, R&D services make up just 2.5% of overall service sector revenue. Expanding R&D services, he maintains, would not only help develop the service sector, but would also be an enormous boost for manufacturing. Small and medium-sized companies, which constitute the backbone of Taiwan’s economy, often have no means of conducting their own R&D and need to rely on outsourcing, he points out. But, he adds, government regulations currently are unhelpful in this regard. For example, tax benefits are made available if a company conducts in-house R&D or if R&D is contracted out to a university or school. But the same tax benefits are not provided if R&D is contracted out to another service company.

Raising the quality

Economists also stress that Taiwan’s service sector needs to expand its own R&D spending – both to raise service quality and to develop a broader range of offerings.

In 2007, according to a CEPD report, service industries’ expenditures on R&D equaled less than 0.2% of Taiwan’s GDP. Figures from 2006 (the most recent available) also show that spending by service companies on R&D accounted for only 7.5% of overall R&D expenditures by Taiwan’s industries. In addition, such spending had increased by only 13.7% over the previous five years, well behind the rate for OECD countries.

In response to all these challenges, the Cabinet in July this year passed a new “Service Industry Development Plan” to boost the sector. “Our creativity has to be strengthened and we must develop R&D services,” says Chen Pao-jui, Director General of the CEPD’s of Sectoral Planning Department. “Our service industries are clearly falling behind.”

The plan has an announced goal of adding 120,000 jobs in the service sector from 2009 to 2011, so as to bring total service sector output to NT$11 trillion (US$333 billion) by 2012. By the same year, the government aims to boost exports of services to a level equal to 1.2% of the world’s service exports. This should be a challenge. Last year, Taiwan’s service exports came to US$3.38 billion or 0.9% of the world’s service exports. That ranked Taiwan as the world’s 28th largest service exporter, whereas it actually previously ranked much higher – number 18 in 2000. 

The government plan will seek to develop more differentiated and high-level services. Improvements in the service sector will be undertaken in coordination with the development of the six emerging industries identified by the Ma administration as the key to boost economic growth – tourism, high-quality agriculture, health care, creative and cultural industries, biotech, and green energy. The government also hopes to cultivate services related to logistics, telecommunications, and ICT.

Among the various individual programs incorporated in the plan, the government will invite world-famous service providers and brand creators to come to Taiwan to share their expertise. Another aspect is to submit legislation (as part of a bill relating to creative industries) that would provide a legal definition of R&D services, with the result that it would be made easier for R&D service companies to qualify for subsidies from individual ministries.

Strength in electronics

The CEPD’s Chen notes that Taiwan’s strengths in the electronics and ICT industries, and in its high-level of Internet usage and vast broadband coverage, could be leveraged to help develop the information service industry. Tu agrees, pointing in particular to the potential for offering maintenance, logistics, and other business-to-business services (which last year contributed less than 5% to total service-sector value).

The Cabinet plan also calls for reversing the pattern of concentrating on the domestic market, chiefly by taking advantage of opportunities in the vast mainland Chinese market. “The number one opportunity is China,” Tu says. “It is the big cheese.”

In a sign of the importance the government is placing on the China market, Ma announced in mid-October that Taiwan and China will soon begin negotiations on a free trade agreement known as the Economic Cooperation Framework Agreement (ECFA). As part of these talks, Taiwan will be pushing for “early harvest” treatment for certain industries – including some service industries – to help them get an immediate foothold in the mainland. In an assessment of the potential impact of ECFA published by the MOEA in July, the government said it was looking to have retail and wholesale services, along with R&D services, included within the early harvest.

Tu notes that services exported to China do not need to be world-class. Given the population of 1.3 billion, which includes people at various income levels, there are opportunities there for many kinds of services, Tu says, particularly in retail, finance, telecommunications and media, and health care. The common language and similar culture shared across the Taiwan Strait makes doing business easier, he adds, while Taiwan’s 10 to 15 year lead in standard of living over China provides a strategic advantage. Taiwan companies are advanced enough to help raise service quality in China, without being so far ahead (as European, American, and Japanese service providers may be) that the gap is too wide.

Some Taiwanese services are already well-entrenched in the Chinese market, including wedding services (especially bridal photography) and karaoke clubs. Other successful Taiwanese services in China include the c.Straits café, which has hundreds of stores there, the Ruentex Group’s hypermarket chain RT Mart, and the Far Eastern Group’s department store chain. But overall, Tu says, only a small proportion of China’s service businesses are run by Taiwanese companies. “We can definitely do more,” he concludes.

Taiwan could also act as a bridge to China for Western and Japanese service companies, serving as their test market, Tu suggests. “People here could give advice to foreign companies about how to improve services in China.” Giving an example, Tu points out that Taiwan’s Uni-President Group, which has joint-ventured with Starbucks to operate the famed coffee shops in Taiwan, as since extended that cooperation to China. “The President Group helped [Starbucks] to refine their products and the way they do service to suit Asian consumers,” Tu says.

Taiwan can also improve its domestic services to suit mainland visitors, Tu adds. For example, he notes, Taiwanese pop figures such as Jolin Tsai, who are very popular in China, could contract with the Taiwan government to perform regularly in Taiwan with the aim of attracting more Chinese tourists. “There are lots of things we can do, so that tourists have more choice than just going to the National Palace Museum,” Tu says.

The main threat to the idea of exporting services to China, says Tu, is political uncertainty. If domestic political winds were to change again, progress could be blocked on cross-Strait liberalization measures, leaving a bad psychological impact on investors. “Businesses make plans, not just for the next year, but for the next 20 to 30 years,” Tu notes. “You have to look at the mid-term risk, especially the political risk, which you cannot control at all.”

Given the challenges involved in targeting the China market, the fragmentation of the services sector, and the need for deregulation as well as greater inter-ministry co-ordination, the government will have its work cut out for it as it moves forward in seeking to deepen and broaden Taiwan’s service industries.

The Wide, Wide World of Services

To demonstrate the breadth of the service industry, TOPICS introduces eight companies from sub-sectors other than those (such as financial services, retail, and tourism) that are frequently reported on in the magazine.

Hill & Associates – Security and Risk Management

—By Amy Pan

Hill & Associates (H&A) is an independent security and risk management consultancy firm founded in Hong Kong. While the company began primarily in the executive and asset protection business in 1992, H&A’s business mix has changed considerably over the past two decades. With 14 offices worldwide, the scope of H&A’s services has expanded from executive protection and venue security, corporate intelligence, and fraud investigations to securing business intelligence such as the protection of propriety information and the assurance of data integrity and regulatory compliance.

H&A’s business mix varies from office to office. In Korea, Japan, and China, it has recently spent more time advising clients on managing plant closures and layoffs in the region in the wake of the financial crisis. Offices located in countries where physical security is a concern continue to emphasize executive protection and asset security services.

Consistent with Taiwan’s strength in information technology, a large share of the business mix in the Taiwan office is information security. Examples include assessing or advising clients on data security issues for Payment Card Industry Data Security Standard (PCI DSS) compliance; providing computer forensics and electronic information discovery for international legal proceedings; and conducting intelligence analysis to protect companies with trademark infringement concerns. 

H&A has been servicing clients’ needs with the PCI DSS standard for over five years. With over 300 million credit card transactions processed annually in Taiwan and with greater awareness of credit card fraud globally, banks have been pushing more merchants and processors to adhere to the PCI DSS standard. “This is a growing business for us,” says Kevin Hartman, Vice President of Business Intelligence & Integrity Risk at H&A.   

The risk management business is not immune to the impact of global recession. While business has picked up recently, says Hartman, the financial crisis brought a slowdown in activity across H&A offices. Economic recovery in the region, as well as regulatory and industry pressures demanding a higher level of intellectual property protection and data integrity, are expected to lead to renewed opportunities.

Lado Management – Language Learning

Founded in 1993, Lado Management Consultants offers customized English and communications courses to corporate clients. It tailors the teaching materials and delivery style to each client’s needs, thus differentiating itself from the off-the-shelf courses offered by most mainstream cram schools. 

Lado has served over 500 companies in Taiwan, ranging from multinationals to local companies looking to expand abroad. “Our clients come from different industries, so their business needs, culture, and human development objectives are all unique,” says Andy Ing, Lado’s Managing Director. The company’s consultants have an average of 15 years of training experience.

As communications media and Taiwan’s needs for business English has evolved, so has Lado’s services. In addition to English-language evaluation, benchmarking, curriculum design, and training, the company has been putting greater emphasis on combining traditional language programs with the coaching of such non-language communication skills as giving presentations and participating in meetings and teleconferences. 

“Non-Taiwanese counterparts do not always have the training or appreciation to communicate effectively with non-native [English] speakers,” says Ing. “Imagine a situation where local engineers have bi-weekly teleconferences with colleagues sitting in California. Their ability to communicate and participate actively and effectively will have a direct correlation with the employees’ productivity.” So as to effectively enhance students’ communication skills, more than half of Lado’s programs involve students applying their learning in simulations tailored to company’s particular business context. 

As market competition in most industries has intensified over the last few years, customers have been demanding better service at a lower price. In response to this trend, Lado has been increasing its emphasis on the development of online services, offering a flexible suite of blended learning services that balances effectiveness and cost. In what Ing says is an increasingly common strategy among service firms in order to remain competitive in today’s more challenging economic environment, Lado also engages in strategic partnerships with other companies as a means of continuously introducing innovations in its service.

— By Amy Pan

Orient Commercial Enquiries – Investigation Services

How can you know whether your new US$1,300 monogram Louis Vuitton handbag is a fake? “Louis Vuitton will never place stitching through the LV logo,” says investigator Jeffrey Harris, managing director of Orient Commercial Enquiries. “And they will never cover the LV logo – they will always leave the LV logo fully in view even if it wastes material.”

Harris’ skill in detecting counterfeit goods has made his company one of Taiwan’s better-known investigative firms. Harris and his 14-member staff work only with corporate clients, and specialize in a broad range of services including due diligence, corporate fraud, intellectual property infringement, litigation support, and competitor research, as well as employee screening and security support. “We’re a jack of all trades,” he says.

The 30-year-resident of Taiwan, who has been in this line of work in the Pacific Rim since 1980, says the bulk of his work is investigating counterfeit goods. The company’s hundreds of clients are mainly foreign companies, including major law firms, Fortune 500 corporations, and various luxury designer brands. These firms hire Orient Commercial Enquiries to verify whether suspect goods are fake and if so to alert the authorities.

Harris explains clients generally outsource these tasks to his company because they prefer to use their own staff to focus on sales and marketing. In addition, without specialized training, even salespeople often have trouble detecting the intricate and minute variations that distinguish a counterfeit from the real thing – and company employees typically do not want the stress of making statements to the police.

Orient Commercial Enquiries tries to keep a low profile and give credit to the police when counterfeiting rings are busted. Although Taiwan is a safe place, some of the work, for instance with regard to contraband cigarettes, is worrisome as serious criminal gangs are often involved, Harris says.

Among the company’s credits are assisting with the coordination of the first raids by American companies on pirated software in Taiwan and the Philippines, the first raids on pirated video tapes by American companies in Taiwan and Thailand, and the first raids by foreign companies on illegal parallel-import pharmaceuticals.

Besides counterfeit detection, around a fifth of the company’s work is in due diligence, Harris says. This involves conducting background checks – including using staff members to pose as buyers or suppliers – on companies that foreign clients are considering doing business with.

Harris says that there are many private investigators in Taiwan specializing in personal problems for individual companies, but not many that work with corporations.

But this may change, Harris notes, as competition in the domestic service sector is becoming increasingly intense. Around a decade ago, he explains, foreign firms had a strong competitive edge in the services industry because they could better establish trust and view business from a long-term perspective. “The major problem I have noticed in the service industry here is short-sightedness,” says Harris, giving as an example a tendency to over-charge clients, which increases profits in the short-term, but reduces chances for building a long-term relationship.

Now, however, more and more Taiwanese have received a university education, often including some study abroad, and have grown more sophisticated. “There has been a big change in mentality,” he says. “This means it is harder and harder for foreigners to compete against locals.”

In addition, he says, service companies have been confronted with increased personnel costs in recent years, due to rising salaries and legally imposed payments for pensions, labor insurance, and healthcare. While good for employees, this has become a burden for management, particularly given the unpredictable nature of the service business, he says. Harris notes that frequently he does not know how many clients he will have from year to year. “I am downsizing, not expanding, now because of all these increases in costs,” he says. 

By Jane Rickards

Pacific GeoPRO – Geographic Information

From its two offices in Shanghai and Taipei, this niche service company offers geographic market information to its clients – primarily retail and consumer goods companies in the Asia Pacific region. Using advanced Geographic Information System (GIS) software while integrating data inputs from government sources, third parties, and its own research, the company assesses the profitability of setting up a business in a specific location.

Recently, Pacific GeoPRO has been paying special attention to Taiwanese companies setting up on the mainland. But the service is not limited to particular geographical area – the company has done work from Malaysia all the way to the Middle East.

To demonstrate the value of Pacific GeoPRO’s service, Vice President James Grigsby points to the success in China of two Taiwanese food retailers – Master Kong and Charmate – both of which have used GeoPRO’s mapping services in selecting locations for its stores in China.

Though Pacific GeoPRO is a Taiwanese company, its president and vice president are both Americans. Why choose Taipei as a base? Grigsby credits Taiwan’s skilled workforce, saying “we get very qualified GIS engineers and sales people who are committed and loyal.” And Taipei, he notes, is centrally located in the Pacific region, appropriate for Pacific GeoPRO’s “strong regional focus.”

But that is not to suggest that Taiwan is perfect. Grigsby says the government’s economic policy is overly focused on high-tech manufacturing. He also urges the government to do more to promote Taipei as a good place to live for expatriates, as he considers that the city has actually taken a “step backward” in terms of being a cosmopolitan metropolis.

— By Peter Tzeng

Taiwan Valuation Group – Asset Appraisal

What is the value of an idea?

Chen Su-chen of the Taiwan Valuation Group says answering this question is the most exciting part of her work. A senior valuer who studied economics and intellectual property rights in the United States and who is certified by the industry’s international association, the International Association of Consultants, Valuators and Analysts, Chen specializes in the highly-complex task of determining the financial worth of intangible assets such as technology patents, trademarks, brand names, good will, and a company’s human resources.

The Group consists of the Wau Yuan Property Appraisal Co. and the Chun Yi Appraisal and Consulting Co., which deal with intangible and tangible assets respectively.

Chen says she finds the work most stimulating when she is called upon to determine the potential value of new technology and helps the inventor understand its market value. She and her team of technology and financial experts take on a wide variety of projects, including acting on behalf of venture capitalists wishing to know the potential of a new product before backing it or helping the Ministry of Justice determine the fine that should be awarded in a patent infringement case.

Besides valuing intangible assets, the company – which has offices in Taipei, Taichung, and Kaoshiung – also values tangible assets such as buildings, land, and machinery and equipment. Its more than 1,000 clients include many well-known names such as Chunghwa Picture Tubes, Sony BMG Music Entertainment (Taiwan), China Steel, and the Industrial Technology Research Institute.

Chen notes that in recent years the government has worked hard to promote valuation services. “But still, compared to the U.S., we are many years behind,” she says. She notes that the first official evaluation standard in Taiwan was established only in 2007. 

She stresses that safeguarding intellectual property will be crucial for technology-oriented Taiwan in the 21st century. The government has enacted many new laws to protect intellectual property and has set up a specialized IPR Court, she says, but more still needs to be done. “We need to promote intellectual property and part of this is intellectual property valuations.”

— By Jane Rickards

Recall Taiwan – Information Management

It is easy to be slightly disorganized – but that can cause a business calamity. A critical legal document sloppily stored a few years ago can later cause employees to waste time and energy searching for it. If not found, the company’s financial health could be at risk. Or confidential information that should have been destroyed falls into the wrong hands – crooks or competitors – if thoughtlessly discarded in a dumpster.

Recall Taiwan is part of a sophisticated information management company that seeks to help customers avoid those pitfalls. Part of the worldwide Brambles group of business-support service companies, it is headquartered in Atlanta, Georgia and serves more than 78,000 clients across 23 countries. General Manager Astrand Salazar describes his company’s role as helping clients to save time and eliminate stress. 

“We treat all documents as very sensitive and confidential things,” he says.

Recall’s services include the storage of paper documents by means of an advanced bar coding, tracking, and retrieval system. Documents are kept in a secure, air-conditioned vault, which is protected by highly sophisticated technology that can detect a fire even before any smoke is visible. Recall also offers secure document destruction services and various electronic data protection services. Another service is to convert paper documents to digital format through scanning and imaging. Digitalized documents are then indexed and linked with other applications so a company’s employees can work with them online.

Although Recall already serves 65 Taiwanese financial institutions, Salazar says that many local companies still do not recognize the benefits, preferring to use less-sophisticated but cheaper storage services offered by logistics companies. “If it’s a multinational company in Taiwan, the benefits are easier to explain,” Salazar says. “The number one priority for local companies is cost-saving. They only think: if I use your service, how much will I save?”

Salazar recommends to the government that it change regulations to permit the storage of store invoices, insurance policies, and other commercial documents in digital form rather than keeping the original paper. He notes that companies such as 7-Eleven chain stores are not allowed to destroy invoices at all. “Some companies must keep documents for five or 15 years, or perhaps even forever,” he says. That must take up a lot of space.

By Jane Rickards

Veda International – Communications

Veda International Corp. is a full-service communications company headquartered in Taipei. Since its founding in 1993, Veda has worked with international brands that include Hewlett Packard, Microsoft, Adobe, Acer, and Nike. It has also served as the project owner and communication coordinator for various conferences and milestone events in Taiwan, notably the 12th biannual World Congress on Information Technology (WCIT) held in Taipei in 2000. It also assisted Taipei City in its successful bid to win the “Intelligent Community of 2006” award from the Intelligent Community Forum.

Veda “specializes in helping international companies communicate locally, and assisting local companies and organizations to market themselves internationally,” says Gennie Yen, the company CEO. As a Taiwanese company, Veda’s homefield advantage enables the firm to create successful media management strategies to help international firms to communicate their marketing messages in Taiwan. At the same time, its experience working with multinational brands gives Veda an edge in packaging Taiwanese companies for the international stage.

Yen attributes Veda’s success to its ability to stay attuned to social and media trends. Veda, which began as a public relations agency with a focus on sports marketing, quickly expanded its client base to the rapidly growing field of information technology starting in the mid-1990s, and enlarged it further to include automobiles and consumer goods over the past decade. With the advent of social media communications, such as chat rooms, Facebook, and Twitter, Veda has also created a dedicated department focusing on media strategy for these new channels. More recently, the company began to place greater emphasis on PR that relates to corporate social responsibility (CSR) activities for its clients.

Even though Taiwan has begun to develop an appetite for marketing strategies over the past two decades, many organizations have yet to fully recognize the value of an integrated communications strategy, notes Yen. “A greater appreciation by local firms and organizations for the networks and media-messaging capabilities PR firms provide could move the industry forward,” she says. Brand-building, after all, is never achieved overnight.

— By Amy Pan

World Courier – Specialized Logistics

World Courier specializes in door-to-door, time-sensitive transport and logistics, especially for the medical and pharmaceutical industries, treating each shipment on an individual and priority basis. In 1984, the company transported the first human heart tissue for transplant. And this April, the company became the only courier authorized by the World Health Organization to transport specimens of the H1N1 virus. “The main focus of our business in Taiwan is the biotech and pharmaceutical industries,” says general manager Alex Chen.

The U.S. company, founded in 1969, was a pioneer in transportation techniques for drugs, biological specimens, blood samples, virus specimens, and the like. Currently, the company maintains 50 branches and over 140 offices worldwide. It is highly specialized in handling and packing temperature-sensitive specimens and drugs, and in transporting them to meet urgent deadlines.

Chen says drugs are often transported at a finely-calibrated 2 to 8 degrees Celsius, with the company’s professional transporters following rigid standard operating procedures, while biological specimens can be transported at temperatures as low as negative 80 degrees Celsius. The company’s availability 24 hours a day, seven days a week, including weekends and holidays, and its fast global delivery by NFO (next-flight-out) service, has also been attractive for Taiwan’s automotive and high-tech industries when they need urgent shipments. Chen says this is one of the company’s competitive advantages when compared with mainstream courier companies.

The company also provides training courses and services in Taiwan and elsewhere for existing or potential customers. For example, it offers a practical one-day program for individuals who need to be trained in handling dangerous goods, such as the transportation of infectious substances or samples shipped on dry ice, as well as CCM (Cold Chain Management) awareness courses on the maintenance of appropriate temperature for cold chain shipments in different climatic conditions and the techniques for maintaining tight temperature controls. 

Chen says that Taiwan is among the company’s largest markets in the region. He notes that future prospects in Taiwan will be closely linked to the development of Taiwan’s biotech and pharmaceutical industries, which the government is promoting. “Any new regulations for the biotech and pharmaceutical industries will indirectly impact our business,” he says.

— By Jane Rickards