Taiwanese Brands Could Stand Tall In China

Besides low-cost labor, China also offers lucrative markets. For many years , Taiwanese manufacturers have been obscured by manufacturing products for others. They have been successful, but being an OEM is a hard job. They take the least attractive role in the supply chain and are rewarded with margins as low as 2% to 5%. Why not establish their own brands? The Taiwanese companies have tried but have not been very successful in most parts of the world.

However, China offers Taiwan a unique opportunity. With identical cultural heritage, the Taiwanese will have an advantage over the Western companies in understanding the market trends in China. The mainland Chinese watch Taiwanese movies, listen to Taiwanese singers, and read Taiwanese books. All these will make the Chinese receptive to Taiwanese brands. In fact, some Taiwanese brands are already very prominent in China. Brands such as Yong He Soya Bean and Kang Shi Fu (in the food industry) are household names in China. Therefore, the China market offers a unique opportunity for Taiwanese companies to establish their own brands and earn a higher profit margin.

However, whether such dreams can become reality will very much depend on the development of the cross-strait relationship and the political games in Taiwan.

As you have seen, Taiwan has learned to become a world-leading region by focusing on the strengths and talents of its people and very intelligent government support to initiate leadership in the IC semiconductor industries. Financing both from social networking and Taiwanese corporations have made a critical difference for Taiwanese manufacturers as they continue to service the world as well as expand into China to maintain their cost competitive advantage.

About the Author

This chapter was authored by Li Chun , vice president of OTTO Capital Partners. Mr. Chun has more than nine years of working experience including heading a European private equity investment firm in Asia; management consulting with Gemini Consulting; and project management with Mobil Asia Pacific. He has an MBA from INSEAD, and a BEng (Electrical Engineering, Honors) from the National University of Singapore.