Some say a much bigger problem is that Taiwan lacks a culture of catering to consumers, because of its long history of making products that are marketed under the brand names of companies based elsewhere. As a result its businesses are not used to gauging consumers’ tastes or testing products on them.
“They’re doing a lot of innovations, but they doing it for themselves, not customers,” says Jamie Lin, founder of appWorks, an incubator for start-ups in Taipei. “They start with the technology and package it in a way that the market might like it. It’s different from Silicon Valley, where they are putting more emphasis on starting from the market backwards.”
But perhaps the problem has even deeper roots. The culture of most companies, and many would say society as a whole, seem to work against innovation. Many parents put pressure on their children to seek stability after education, rather than exploring and pursuing their interests. The government’s largely hands-off approach means many companies are family-owned. They can often be hierarchical and led by older generations with a tendency to favour long hours over creativity.
“The management culture has been the same since the 1980s,” says Chiang. “It has depended largely on the mentality of the person at the top. And the top managers in the hi-tech sector have been mainly the same group of people.”
The cultural constraints make it all the harder for those who want to do things differently to break out of the mould. One man who has succeeded in doing so is George Chao. Until 2009 he was earning around double the average wage of a tech engineer at a company that designs integrated circuits. But the long hours – 14 a day nearly every day – was hurting his health and family life, so he quit.
“It’s impossible to be innovative in that atmosphere,” he says. “To be creative, people have to be relaxed. When you’re tired, you can only carry out the instructions from the top.”
Turning 40 spurred Chao to move on to “do something that he could call his own.” Being the one in his family who had to clean the many windows in their four-storey home inspired him to design a window cleaning robot called the Hobot. He has sold 20,000 of the devices in various countries, and now earns more than he did in his old job, while working fewer hours.
While the societal and corporate pressures do act against innovation, it’s not a straightforward picture. Last year Taiwan’s companies and individuals obtained 11,628 patents from the US Patent and Trade Office, compared to 14,196 for South Korea, despite Taiwan’s much smaller population.
Chao says there is creativity but often of a limited type. “Taiwan should do more innovation,” he says. “Right now, it’s mainly doing research and development, for instance finding ways to make integrated circuits based on specifications created by overseas companies. They’re not really inventing something new.”
Others complain that Taiwan does not make things easy for start-ups. The government taxes them on paper value of their company. This means investments from venture capitalists are taxed even if companies have yet to make a profit. Red tape and protectionism also make it difficult for tech companies to hire foreign talent, which they need to tap markets in the US, China and or Southeast Asia.
In its favour, the island has a population that is keen to buy the latest products, making it a good testing ground of consumer acceptance of new gadgets such as netbooks and phablets. E-commerce, mobile internet, such as apps and games, and internet advertising are all growing rapidly.