How Taiwan plans to leap from shoes into software

Taiwan is hoping to ride on the coattails of giant international companies like IBM into a technology-intensive industrial era.

The bait is the Hsinchu Science-Based Industrial Park, some 60 miles south of Taipei. The emphasis here is on the research and development of new products to change the country's industrial image completely.

Taiwain is to be transformed from a supplier of textiles and shoes to a supplier of computer software and a leader in sciences like biotechnology. This is the island's third stage of postwar economic development.

Alvin H. Tong, Hsinchu's deputy director general, explains: ''We started labor-intensive export processing zones about 17 years ago, and they were very successful in promoting our industrialization, so we could develop capital-intensive industries like steel and petrochemicals in the 1970s.

''But now our wages have gone up so high that we are no longer competitive in labor-intensive industries. The only way is to move into high technology.''

Hsinchu is patterned after the Stanford Industrial Park and North Carolina's Research Triangle Park. Four years in the planning, it finally opened in December 1980. So far, 39 companies have been accepted. Nineteen have moved in.

''But they are really small fry,'' admits Wang Chi-wu, the energetic and voluble director of the National Science Council, sponsor of the park. ''I'm now negotiating to try and lure some big fish from the United States like IBM, Hewlett-Packard, Burroughs, etc.''

The main attraction he feels these companies would find at Hsinchu is a large pool of highly trained but cheap engineering manpower. The park is designed to fill one of Taiwan's most pressing needs: challenging work for the 25,000-plus engineers and scientists emerging annually from schools.

''We need to find jobs for these top-class people, who otherwise, in desperation, are going to go overseas,'' Mr. Wang says. ''We have at least 60, 000 highly trained overseas Chinese living in the US at present and another 20, 000 elsewhere.''

Universities are turning out graduates for the top priority industries: electronics, information, precision instruments and machinery, and material sciences. But the government has begun a project to train several thousand more people. It is intended to help lure well-known biotechnology companies to the island within five years.

The 5,000-acre Hsinchu site is served by two nearby universities with engineering programs, as well as a number of government industrial and scientific research institutions. The eventual aim is a large self-contained community with attractive residential areas set in a large green belt, with bilingual schools and shops.

Says Alvin Tong: ''Although this is a government project, we are trying to present an image of a private product. This means we have to sell the park aggressively and make continual improvements, like a better investment climate, tax incentives, and good living conditions to lure the best people.''

The government allows total foreign ownership of companies in the park, and such concerns are able to sell their products freely on the local market or export it. Equipment can be brought into the country duty free, and the government will also offer up to 49 percent of the start-up capital. Tax breaks are also given, and Hsinchu-based companies can borrow money at cheap rates. Within 10 years, park administrators hope to see at least 150 firms here.

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