In its World Competitiveness Yearbook 2008, Switzerland’s International Institute for Management Development (IMD) ranks the operating performance of Taiwan’s small and medium enterprises 4th in the world (up 10 places from 2007) and 2nd in Asia. This showing, Taiwan’s best since 2005, reflects international recognition of the innovative and operating capabilities of the island’s SMEs.
The Council for Economic Planning and Development (CEPD) points out that SMEs are the pillar of the Taiwan economy. According to the Economic Ministry’s 2008 Small and Medium Enterprise White Paper, Taiwan had 1,237,000 SMEs in 2007, accounting for 97.63% of all enterprises in Taiwan; they employed 7,939,000 people, making up 77.12% of the island’s overall employment, and their exports reached NT$1.6 trillion.
The IMD’s Yearbook, which was issued in May, puts Taiwan’s SME performance second in Asia, behind only Hong Kong. In another index with a broader scope, business performance, Taiwan came in 10th, an improvement of seven places over last year.
The CEPD notes that the global competitiveness of Taiwan’s SMEs is rising year by year thanks to a number of strong advantages, including outstanding asset utilization efficiency, the industrial clustering effect, and accelerated growth of R&D spending, among others. In addition, according to the “2006 Industry, Commerce, and Service Census” carried out by the Directorate General of Budget, Accounting and Statistics, SMEs used only 19% of Taiwan’s industrial and commercial assets but provided 62.8% of all jobs in industry and commerce while generating a total of nearly NT$10 trillion in production value.
The CEPD stresses that the capital productivity of Taiwan’s SMEs in 2006 was 20% greater than in 2001, and their labor productivity was up 29.5%. Both of these percentages were higher than those for large enterprises, reflecting the outstanding asset utilization efficiency of the SMEs.
In the field of R&D spending, the CEPD says that in 2006 the island’s SMEs spent 13.78% more than in 2005, compared with an increase of just 9.31% for large enterprises. Obviously, the SMEs are devoting tremendous resources to innovation.
The government is striving to boost the competitiveness of SMEs even more by encouraging them to invest even more in R&D and actively promoting the Small Business Innovation Research (SBIR) project, Industrial Technology Development Program (ITDP), and Innovative Technology Applications Program (ITAP).