The Small and Medium Enterprise Administration under the Ministry of Economic Affairs released its annual white paper Sept. 5. Based on research conducted by the Chung Hua Institution for Economic Research, the report outlined the current situation and future development of Taiwanese SMEs, the domestic and international challenges encountered by them, and their contributions to Taiwan's economy, while also proposing policy reviews and possible development strategies.
For example, it reported that 17.42 percent of all SME employers in 2005 were women, which represented a slight increase from 17.21 percent in 2004. At 498,000, the total number of SME employers in Taiwan was down around 8,000 from 2004, however.
Analysts said the drop of total number of SME employers was perhaps due to company mergers, while SMEA Deputy Director-General Huang Wen-guu suggested in a telephone interview that the fall might also have resulted from changes in the labor insurance system that went into effect last year, which could have prompted employers to alter their legal status to avoid taxation or make other financial plans.
Other major indices all posted increases in 2005. These included the total number of SMEs: up to 1.23 million from 1.18 million in 2004; the number of SME employees: up 2.94 percent to 5.05 million, representing 68.80 percent of all employees in Taiwan; the total value of SME domestic sales: at US$257 billion, this accounted for 33.51 percent of all domestic sales; and the value of SME exports: US$46 billion or 17.60 percent of all Taiwan's exports. These last two figures combined to account for 29.46 percent of the total value of Taiwanese industries in 2005, posting an increase of 2.81 percentage points over 2004.
Taiwanese SMEs have always been characterized by their speed at sensing and responding to market changes, which were identified as key factors in promoting Taiwan's economic development, the paper claimed. Fierce global competition, trends toward regional economic integration and changes in the cross-strait macroeconomic environment have forced local enterprises to be innovative in marketing, sales, manufacturing and design, however.
The report specifically tracked strategic changes made by Taiwan's textile industry, which once accounted for a significant proportion of the island's exports but whose trade volume has lagged behind those of the electronics and telecommunications sectors more recently. It urged textile manufacturers and other traditional industries to enhance their capacities for establishing strategic alliances, and to comply with international regulations on environmental protection and human rights, such as the Waste Electrical and Electronic Equipment (WEEE) and Restriction of Hazardous Substances (RoHS) directives in Europe.
SMEs' contributions to Taiwan's economy, the paper stated, included the creation of added value, which accounted for more than 40 percent of the nation's GDP, a higher proportion than that created by big businesses.
SMEs were also responsible for about one-fourth of Taiwan's tax revenues and had created about 1.38 million jobs between 1987 and 2005, mainly in the commercial, social service and personal service sectors, and now account for around 78 percent of all jobs in Taiwan. Furthermore, SMEs accounted for 99.74 percent of all newly established enterprises in 2005.
The SMEA has been developing strategies and measures to boost the development of SMEs, seeking to create favorable environments, assisting them in legal affairs and drawing up facilitating legislation. It has also coordinated financial and accounting systems to integrate financial resources for SMEs. For people ambitious to start new enterprises, the SMEA has developed education and incubation programs, established venture capital funds, provided management guidance and helped to enhance IT capabilities.
The survival of SMEs had become increasingly dependent on the development of the knowledge-based economy and transformation of domestic industries. Consequently, the government would continue to help SMEs strengthen their competitive edge through legislation, education, IT, financial management, branding and promotion.