AM Lecture 4

Management > Asian Management > Culture-organisational background > Laoban characteristics > Structure > Effectiveness of structure > Guanxiqiye > Management problems > Problems and solutions > Implications for management > Internationalisation

Internationalisation of Taiwanese firms

Shive (1995) gave a two-fold approach to internationalisation, where SMEs go to China/ASEAN Pacrim and large companies go west/US.

The first official Taiwanese outward investment was in 1959, where investment $100,000 in a Malaysian cement plant took place.

Outward FDI grew enormously after that, from $800,000 in the 1960s, $5.17m in the 1970s to $306m in the 1980s. There was an annual growth of 83.7% between 1981 and 1991.

Reasons

Pre 1980

Secure raw materials
Pursue profits by supplying host country markets. This was a major reason
(Up to 1985, the Taiwan government was highly protectionist)
Facilitate exports - this was the main reason
Access to technology

There was not much competition at home, so Taiwan firms could exploit the domestic market. However, with the increase of competitive pressure they had to change.

Post 1980

Increase in investment in Mainland China, particularly after the Open Door policy of 1978.
Many more investments in China than ASEAN countries
However, there were not bad investments of $1m to $6m in ASEAN
Dominated by SMEs to reduce costs.
Switch from being supplier of non-durables to source of materials
Semi-finished products
Equipment. There was a new market for computer equipment. Taiwan firms were in an ideal position to manufacture these successfully. They were able to bring in the technology and have immediate access to manufacturing facilities and personal networks, which supplied funding.
Also regional centre for IT
two-way flows: ASEAN to/from Taiwan to/from China

Taiwan was originally a manufacturer of goods for other companies, but then they were able to develop high quality goods for themselves only. From this they started to gain a global name, but they saved money on developing their own brand name by using others to sell their products instead.

Superior strategies

Further superiority