Developing the Regional Bridging Scheme between Innovation and Value Creation David S. Hong - June, 2006 President, Taiwan Inst. of Econ. Research.

Developing the Regional Bridging Scheme between Innovation and Value Creation

David S. Hong - June, 2006

President,

Taiwan Inst. of Econ. Research

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Outline

Opportunities in the ICT eraICT’s Potential and Capabilities in South East Asia areaBack to the Basic of Business Model - the keys to value creation in the regionWhat we have done beforeA new approach -- Regional Bridging Scheme

Opportunities in the ICT era

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65 years 55 years 50 years 45 years 30 years ??

Water Power Textiles Iron

Steam Rail Steel

Electricity Chemicals Int. Com. Engine

Petrochem. Electronics Aviation

1770 1835 1890 1940 1985

First Wave Second Wave Third Wave Forth Wave Fifth Wave

2020??

Dig. Networks Software Genetics

Pace

of I

nnov

atio

n

Schumpeter’s Wave:Schumpeter’s Wave:

Source :Adapted from Freeman and Perez (1988); The Economist, Feb 18th, (1999)

The Fifth Wave -- ICT era

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Result from TechCasting

Each dot represents an emerging technology’s application prevailing in the world. The results complied from GW TechCast in 2004.

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Emerging ICT Opportunities…..

Technologies:3G B3G 4G, Ultra WideBand (UWB), WiMaxFiber to the Home (FTTH)Digital TV, Video on Demand (VOD)Web 2.0, Intelligent Interface, Virtual RealityVoIP, IPv6, RFID, GPS….

Many Application Scenarios waiting to cultivateHome entertainment, Transportation, Home care, Education, ….

ICT’s Potential and Capabilities in South –East Asia area

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The Markets are developing • According to the GDPs, purchasing power in SE Asia is no less than India ($668) • The business environment and High-Tech exports in SE Asia are also better than India, some even better than China

China India PhilippinesMalaysiaThailandVietnamIndonesiaTotal GDP* 1,649.39 661.05 85.14 117.78 163.49 43.89 257.87Total population** 1,313.30 1,081.20 81.4 24.9 63.5 82.5 222.6GDP per capita (PPP)*** 5,642 3,029 4,561 10,423 7,901 2,570 3,622School enrollment,secondary %**** 70 52 84 82 72 62School enrollment,tertiary %**** 15 11 29 40 10 16High-tech export % toManufacturing 30 5 64 55 30 6 16Days required to start abusiness 48 89 50 30 33 56 151*2004, in billions of US Dollars

**2004, in millions

***2004, per capita in US dollars

****2003

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Indicators Taiwan China India PhilippinesMalaysiaThailand Vietnam IndonesiaCellular telephone* 114.1 21.5 2.5 27 44.2 39.4 3.4 8.7Internet users** 5194 632 175 440 3441 956 430 376Internet hosts** 1228.6 1.3 0.8 3.5 42.9 16.4 0 2.9Telephone lines* 59.1 20.9 4.0 4.1 18.2 10.5 5.4 3.9Internet access inschools***

6.0 3.8 4.0 3.9 5.2 4.2 3.2 3.5

Governmentprioritzation of ICT***

5.8 4.4 5.6 4.7 5.9 5.1 5.1 3.6

Government success inICT promotion***

5.4 4.1 5.0 4.1 5.5 4.8 4.5 3.4

*2003, per 100 inhabitants** 2003, per 10,000 inhabitants*** score between 1-7

High ICT usage potential • The governments are very active to promote ICT, comparing with China.

• The ICT markets in South Asia still exist some further developing opportunities and flexibility in integrating different technologies

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Technological Capability

TaiwanChina India Philippines Malaysia Thailand Vietnam IndonesiaTechnological readiness* 5.4 3.4 4.7 3 5.4 4.1 2.8 3.4Firm-level technologyabsorption*

6.1 5.0 5.5 4.4 5.5 5 5.3 4.1

Company spending onR&D*

5.0 3.6 3.8 2.9 4.6 3.4 3.1 3.3

University/industryresearch collaboration*

4.9 3.9 3.3 2.7 4.7 3.6 2.7 3.4

US Uitlity patents** 263.9 0.3 0.3 0.3 3.2 0.3 0 0Tertiary enrollment*** 72.4 15.8 11.9 30 29.3 37.7 10 16.4* Score between 1-7** 2004, per million population***2003, %

• Relatively, Taiwan has some advantages in Technological Capability

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Chances and Questions to solve

What are the potential application scenarios in this area? how to find out?How to develop the solutions to fulfill the application scenarios, with acceptable cost and function?What are the ways of co-laboratory from the view point of value chain?Is it possible to promote the solutions to other regions?

Back to the Basic of Business Model

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R&D Design Engineer Mfg. Logistics Marketing Sales Services

Intel : ( 14.5%,*,24%)Microsoft: (14.5%,*, 40%)

Nokia:( 13.5%, *, 17%)IBM:(5.7%, *, 10.7%)

Honda Motor: (5.5, *, 7.7)Samsung: (5.5,*, 9.8)

TSMC ： (6.3%,36%,26%)UMC ： (6.7%, 23%,12%)

Mediatek:(10.4%,52%,40%)

Dell: (0.8%, *,8.5%)Hon Hai:(0.84%,6%,2.9%)Quanta:(0.86%, 6%,3.6%)Compal:(1.30%, 8%,5.3%)

Note: (A,B,C)=(R ＆ D/sale, gross profit, operating profit)

Different business operation modes will affect R&D direction and intensity as well as operation efficiency.

Data source: DTI, R&D Scoreboard 2004, UK; Taiwan Stock Exchange, Open Information Observation Post

Business Model drives decisions

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The Components of Business ModelAfter identify an existing opportunities, need to

integrate the following as a Business Model:Motivation, Incentive

needs users’ willing to pay

CapabilityTechnologies, design, ways to providing solution, human resources

ResourcesInvestment, manufacturing capacities

What we have done before

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Transforming Digital Divides Into Digital Opportunities

In 2002, Taiwan initiated “transforming divide into opportunities” in APEC. Because, “Digital divide between economies is serious and there is no

hope for a quick turn-around.” Then,

“Bridging the divide calls for concrete actions by the government as well as the private sector.”

However, the actions only tried to narrow down the gap in capabilities, for developing investment strategies for value creation in the region,

We need to go further….

A new approach --Developing a Regional Bridging Scheme between Innovation and Value Creation

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Regional ICT Foresight

Status Quo

Undesired Future

DesirableFuture, better life

趨勢、潮流、Without any further intervene

Try to develop something to intervene the path

Actively identify what need to change in the

region via ICT

Opportunity analysis Capabilities analysis

Scenarios to focus

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Business Model Co-laboratory

1. Figuring out the possible business models in each scenario;

2. Then, SWOT analysis for each country roles of each country, for example,

3. Can we come out something different from West countries? New Standard? New Intellectual property?

R&D Design Manufacture Channels for service

TW,MY TW,TH PH, MY ALL countries

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Co-laboratory at where

Science Parks in AsiaHsinchu Science Park: semiconductor and telecommunications industries;

Central Taiwan Science Park: nanotechnology-based optoelectronics, aerospace technology, and precision machinery;

Southern Taiwan Science Park: optoelectronic industry.

Multimedia Super Corridor in Malaysia

T-Park (Taipei County): A new science park will with telecom testing environment

…..

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ForNext Generation

Communication Manufactures, Communication Software/Services Development Companies, and

Digital Content Providers

ForNext Generation

Communication Manufactures, Communication Software/Services Development Companies, and

Digital Content Providers

Leveraging Networking Infrastructures fromFar Eastone (Mobile Operator) & sparq* (Broadband Operator)

Provide Advanced Research & Testing Platform

http://www.tpark.com.tw

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Vision for the Bridging Scheme

We are

South East Asia’s Tech. Innovation Partners

Thanks for your attention!