The main policy directions in the sphere of small and medium-sized enterprises' development in Taiwan in 2010-2016

Abstract

Small and medium-sized enterprises (SMEs) amount to 97,6\% of the total number of enterprises in Taiwan and provide 78\% of the total employment in the island. Substantial changes in regional and global economic environment imply new challenges for SMEs and make it more difficult for the Taiwanese government to develop SMEs. Therefore, the purpose of this research is to study the experience of Taiwan in the sphere of SMEs development stimulation under conditions which evolved after the world financial crisis of 2008-2009. Unfavorable conditions for the SMEs development mainly include 1) the increase of science and technology level of Mainland China economy and its active export-facilitating policy as well as the world economy and world trade growth rate decrease, what tends to be a considerable threat for the Taiwanese export-oriented economy. Besides, wide spread of e-commerce which basically eliminate the borders between economies together with fast reduction of technologies' life-cycle makes global competition as strong as never before. Nevertheless, both Ma Ying-jeou and Tsai Ing-wen administrations defined small and medium-sized enterprises as one of the major sources of future economic development. In 2016, Tsai Ing-wen administration officially recognized that the OEM model of contract manufacturing which was widely used by Taiwanese enterprises become outdated and can no longer be an economic driver for Taiwan. According to the Taiwanese government's view, the future sources of economic development will include innovations, servitization and products' specificity enhancement. Another important policy implies creation of favorable conditions (so-called ``ecosystem{''}) for start-ups which embody innovation ideas and often have goods prospects in terms of commercialization. The government of Taiwan carries out several SMEs support programs including research and development subsidizing, it facilitates new information technologies and e-commerce instruments implementation, supports the leading enterprises and their products which have great potential. It's worth noting that in recent years the instruments of supporting SMEs applied by the government have transformed: the measures of direct subsidizing have been diminishing, and, simultaneously, the measures of providing favorable environment for establishing new enterprises and effective operation of the existing SMEs and non-financial support (technical assistance and consultation) have expanded. The Economic Cooperation Framework Agreement signed by the two sides of the Taiwan Strait in 2010 led to controversial consequences for the Taiwanese SMEs. On the one hand, it expanded the access of Taiwanese SMEs to the mainland market and reduced customs expenditures of Taiwanese exporting companies. On the other hand, the Agreement allowed mainland business to foster its penetration into the island's market and further reduced competitiveness of Taiwanese traditional industries.