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Taiwan:MOEA provides a shot in the arm for e-business |
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2004-9-6
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It is a story out of a leaf of a success book. And theres no denying to it that Taiwan''s global leadership in information-technology (IT) hardware manufacturing is based on more than manufacturing prowess.
It is more so on electronic business-management systems, using automation software to enhance the coordination and efficiency of all phases of business operations, both internal and external.
While companies in Taiwan have long used management software to integrate in-house operations such as inventory control, general accounting and sales forecasting, they are widely perceived to have fallen behind when it comes to connecting with the outside world via the Internet. Until only a few years ago, if a manufacturer had a Web site, it offered only static displays with few if any interactive functions tailor-made to give clients and business partners access to critical information and carry out business transactions in a timely manner.
"Seeing many other countries actively building up an e-commerce infrastructure, the Executive Yuan resolved in 1999 to forcefully promote wider use of electronic business communications in local industry," said Hwang Jung-chiou, director general of the Department of Industrial Technology under the Ministry of Economic Affairs (MOEA).
IT manufacturing, Hwang explained, was the first sector to be targeted for assistance in upgrading e-business capabilities, as it was the one most obviously willing to cooperate, being under great pressure to coordinate closely with upstream and downstream business partners both locally and abroad in order to remain competitive.
"The pilot plan, completed in two years, at first targeted 42 major suppliers of three buyers, namely IBM, Compaq and HP, with a total sales value of around US$18 billion annually.
Ultimately, it involved 15 supply chains of 4,000 local small and medium-sized enterprises," Hwang remarked.
MiTAC International Corp., a local personal computer and server maker, was one of the companies involved in the pilot project. "Before we joined the program, our company had used only EDI for online business transactions with our upstream and downstream suppliers," said MiTAC''s General Manager Lin Jen-zen. EDI--electronic data interchange--is a mode of exchanging data via electronic messaging services, also known as application service providers (ASPs), with a relatively limited standard menu of functions for all users. As a result of the company''s participation in the MOEA-sponsored program, it purchased more advanced equipment and specially configured business software to revamp both its in-house operations and its online transactions.
Lin said that installation of the new electronic management system and closer coordination with MiTAC business partners was instrumental in reducing inventory turnover time from 28 to 15 days and thereby greatly increasing the company''s competitiveness. This, he said, contributed significantly to the company''s nearly 40-percent increase in revenues from US$940 million to US$1.3 billion between 2001 and 2003.
Subsequently, Lin served as coordinator for the 15 IT-industry supply chains in implementing the adoption of the open e-business process standard known as RosettaNet, to ensure optimally trouble-free B2B and B2C--business-to-business and business-to-customer--Internet communications both domestically and internationally.
"Based on the success of the pilot project, which connects the foreign buyers, core IT companies and their suppliers through online business transactions, the government started in 2001 to encourage closer interaction between the IT industry, banking and transportation industries through e-commerce," noted the MOEA''s Hwang.
All this led to speeding up of banking sector''s online business operations, such as payments and issuance of letters of credit and accommodation, saving them a huge amount of time and money.
Hwang enthused that a cumulative US$680 million in online accommodations have been provided by the eight participating banks up to the first quarter of this year, involving more than 200 companies, including those in the fields of machinery, textiles, plastics and steel.
"It is really fast," said Hsieh Lee-chu, financial manager of Solomon Technology Corp., referring to the banks'' online accommodation services. She said that in the past, it would take half a day for her to prepare application documents and up to three days to secure loans, whereas today the application can be completed in 10 minutes without paper and her company can usually receive the applied-for bank credit the same day.
Presently, nine core IT companies and one ASP company are implementing this program, with an average of 70 percent of the total process being done via electronic systems.
Hwang said that in light of the success of the e-commerce promotion program in the IT industry, the government has undertaken plans to further promote e-business among SMEs in other industries.
"Economic globalization has had a heavy impact on Taiwan''s SMEs and made them aware of the need to speed up the transformation of their management through application of automation software," said Lai Sun-quae, director of the MOEA''s Small and Medium Enterprise Administration.
According to statistics released by the MOEA, there are over one million SMEs in Taiwan, more than 80 percent of which have their own Web sites and use e-mail as a means of communication.
The MOEA has been proactive in promoting the Internet-based business model to the SMEs since 2002 by implementing a series of programs to be funded through 2007. Among other things, it has commissioned the Taipei Computer Association to establish programs to offer guidance on e-commerce to SMEs in nine categories other than the IT industry--the plastics, footwear, machinery and electronics, toy, hand tool, garment, sporting goods, paper and metal casting and forging industries. Companies whose applications have been reviewed and approved by the MOEA receive comprehensive assistance in understanding, evaluating and adopting appropriate e-business models.
Additionally, the MOEA has instituted programs to help SMEs in the practical steps of setting up and running new e-commerce operations, including training personnel, setting up industry-wide Internet databanks, providing online learning opportunities, and assisting in the establishment of electronic marketing systems.
As economic globalization proceeds, this will be a practical reality that all companies large and small will have to face in order to remain competitive--particularly for those which cannot function except as part of a network of interdependent business partners and must routinely conduct external transactions. |
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