As the ICT industry in Taiwan continues to undergo offshore migration to cut cost, as well as being threatened by competition in China, and with global business trends being shifted by the greenhouse effect, the Taiwan government has designated “Green Energy” as one of the six emerging industries prioritized for development. As such, the Ministry of Economic Affairs (MOEA) has been planning to set up a green-energy and intelligent vehicle innovation park in Taiwan to push ahead such official program.
Automotive telematics system is a new inroad to China for Taiwan’s world-class ICT industry.
The ultimate goal, according to the MOEA, is to eventually raise Taiwan’s automotive telematics industry’s production value to NT$600 billion (US$18.46 billion at US$1: NT$32.5) by 2015. Currently automotive telematics products include emergency warning system, GPS navigation, integrated hands-free cell phones, wireless safety communications and automatic driving assistance systems.
Taiwan’s many innovative automotive technologies are held back by its relatively small car market.
MOEA officials say that the government plans to invest at least NT$1.5 billion (US$46.2 million) to build the innovation park, preliminarily to be in the Changhua Coastal Industry Park in central Taiwan. Besides developing telematics systems, the park would also cluster globally-recognized makers in ICT (information and communication technology) with those in the automotive sector to, ideally, develop homegrown car brands.
To overcome inertia often seen amid operators in Taiwan who are presented with a new challenge, the Taiwan government plans to provide incentives to encourage R&D, among others. Proposals are expected to be presented to the Taiwan Cabinet for detailed discussions, with the works hopefully to be started in 2010.
Huge China Market
Among other advantages working for Taiwan, MOEA officials stress that the island’s globally competitive ICT industries and innovative ability are key to developing automotive telematics and infotainment systems. Such potential, despite unable to be fully exploited in the modestly-sized car market in Taiwan and held back by the relatively immature assembled car sector, has vastly more opportunity for success in China, a view shared by J.H. Chang, deputy director of the Telematics Promotion Office (TPO) under the MOEA, who points out that about 12 million new cars are sold yearly there.
Other officials added that the globally-recognized magnitude of the Chinese market and its highly competitive prices, coupled with Taiwan’s considerable ICT innovation skills, could help to build car brands with Chinese parentage.
Further shedding light on the situation, the officials say that, based on personal experience, most carmakers in China lack specialized knowledge of automotive telematics and infotainment systems, but realize, with the aid of Taiwan’s innovative capability, that they can significantly upgrade their vehicle quality and profit margins.
Many Chinese automakers are willing to cooperate with Taiwanese telematics makers and welcome them to set up plants in China, say the officials, but many makers in Taiwan face a dilemma: the attractiveness of a huge market versus widely-witnessed counterfeiting. “Such is the major reason for the MOEA to build a vehicle innovation park. Forming an integrated automotive system supply-chain in Taiwan to tap the Chinese market offers peace-of-mind; after all the Taiwan Strait acts like a moat that protects Taiwan-developed technologies from being pirated by Chinese rivals,” say the officials.
3-Stage Plan
The MOEA has also mapped out a three-stage cooperative plan for local automotive system developers/makers and potential Chinese automakers and customers. The first-phase products to be developed are automotive functional devices such as parking warning system, the second-phase products include networking systems connecting vehicles to automakers (prototypes of intelligent vehicles), and the third-stage ones intelligent safety systems and intelligent vehicle.
Some sub-projects may also help local automotive system makers partner with Chinese automakers. MOEA officials say that several Chinese automakers have been aggressively contacting potential Taiwan suppliers, and partnership plans are expected to be announced during a Cross-strait automotive forum in November in Taiwan, with initial products to be announced by mid-2010.
Industry insiders say that the Xiamen Municipal Government of Fujian Province has been the most active to coax partnerships between Chinese automakers and Taiwanese automotive system developers. The sources say that the Xiamen Bus Rapid Transit (BRT) formally began running in August 2008 and the city government has been trying to work with Taiwanese telematics companies to create business opportunities, with ranking officials in the Xiamen government having visited Taiwan at least twice to better understand telematics development.
According to TPO deputy director Chang, Xiamen is trying to upgrade its importance among major cities in China through building partnerships with Taiwanese automotive telematics system makers. Also many automakers in Fujian Province, including South East (Fujian) Motor Co., Ltd. (SEM), Fujian Daimler, Xiamen King Long United Automotive Industry (the largest bus maker in China), also plan to set up partnerships in Taiwan to raise competitiveness.
Makers of leading EV battery solutions can expect to access the potentially huge Chinese market.
EVs With Potential
Not directly related to telematics but equally filled with potential is the electric vehicle (EV) business that can see Taiwanese and Chinese automotive players work together for mutual benefit. As part of its 11th five-year national development project, China plans to realize a three-year EV demonstration project across 10 major cities, including Shanghai, Beijing, Hangzhou, Shenzhen and Chongqing, starting in 2010, with each targeted city to see at least 1,000 vehicles run on new-generation fuel.
Still hobbling fully-practical EVs, say MOEA officials, is still the energy density, recharging time, weight, cost etc. of currently available batteries. However, some builders of EVs may disagree: Mitsubishi’s Eclipse EV, built by MMMA in the USA, was tested in August 2001 in Shikoku, Japan over 780km of public roads, with over 400km having been run on a single charge. One of the major roadblocks may be conflict-of-interest that saps political will to seriously invest in EV development, especially in nations, such as Taiwan, where fossil-fueled automotive culture is deeply ingrained. Notwithstanding, some major players in Taiwan have, more or less, the technologies to overcome the existing battery problems, say the officials, and such capability enables them to tap lucrative business opportunities in the potentially huge EV market in China.
(by Quincy Liang)
