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iKala Future Talks

International Business Plan under Globalization – Part 1

Many people say that there is not only a "protective sacred mountain" of semiconductors in Taiwan, but startups are showing an endless stream of energy to form a range of protective mountains today. The energy is not only blooming everywhere in Taiwan, but actively expanding overseas. The topic we are going to discuss today is international business planning under globalization, and we are glad to have Minister of the National Development Council, Kung Ming-Hsin, and iKala's Co-Founder and CEO Sega Cheng with us.

Here are some highlights from their conversations.

What are the driving factors of innovation and entrepreneurship in Taiwan?

Kung: Taiwan has paid great attention to innovation and R&D in the industry, so that is why WEF and IMD both speak highly of our innovation ability. We have great innovation clusters, the supply chain, the research and development system, and the industry. The ecosystem is quite complete when it comes to the production side. In terms of talents, a lot of foreign investors give high opinions of our technical capabilities, especially that of engineers. What's also important is that Taiwanese people are very loyal to work, bringing us more positive feedback. Thirdly, the vitality of the people. You can see that there are some startup communities that are very active in Taiwan recently. Moreover, Taiwan Government launched the Asia Silicon Valley Development Plan in 2016, forging connections with Silicon Valley. That's why we can see more connections between innovation and entrepreneurship in Silicon Valley and Taiwan, and this further helps startups in Taiwan understand the trend internationally. Also, the government has been reviewing its policies of providing early-stage funding for startups, putting in place incentives for angel investors, match funding, and founding a venture capital firm, Taiwania Capital. The Financial Supervisory Commission even established Taiwan Innovation Board and Pioneer Stock Board to facilitate startups in raising funds on the capital market, which I believe do good to startups.

What is the role of startups in Taiwan's economic development? What are the key industries when we are talking about startups?

Kung: We have a very unique definition of a startup. Not all new companies can be treated as a startup. A startup means new ideas, innovations, or it is formed in a startup community, an accelerator, etc. I think it plays a more active role than in the past. A quick example is that we have been promoting the Asia Silicon Valley Development Plan, to shape a smart city, and boost the innovation for the internet of things, we now have a complete ecosystem. From sensors, gateways and servers, and user applications, we used to be a good original equipment manufacturer, but we failed to provide comprehensive solutions. Traditionally, whether it is a SME or an enterprise, they are less accustomed to doing such things, but startups are different. Startups have fewer limitations, and they are eager to try, and to understand the pain points of consumers and users. Although they are relatively small, they will try to leverage other resources. In that way, for Taiwan, startups play a key role in upgrading or transformation of the industry.This aligned to my own observations. In the past, from PC, mobile, to the IoT era, some considered that we didn't have too many competitive advantages in the mobile era, and blamed it on the limited space in Taiwan, saying that it is difficult to develop a platform. However, after the development of the past few years, facts have proved that this is not the case. A lot of startups in Taiwan, including iKala, are developing their own platforms. Another example, KKday, is a well-developed platform in tourism that started from Taiwan, to Japan, to Southeast Asia, that is the case for iKala and some other startups as well. So I would say, as long as there is such an environment or opportunity, I believe that these startups have the ability to grow and demonstrate their innovations.

What is the key to success for startups?

Cheng: I think the most important thing about a startup is resilience, which can also be used to describe Taiwan. Taiwan is surrounded by the sea, and we have limited resources, but we can have a "protective sacred mountain" of semiconductors, and then we can now develop another startup economy. iKala has come to its tenth anniversary, and we've kept the same spirit throughout the past ten years. We have gone through several transformations. Undergoing transformation is a big deal for a company, both internally and externally, so the foundation and the culture of the company would be very important. One great role model is Acer. Acer is adapting to this digital age with constant transformation, and it remains to be an internationally renowned Taiwanese brand today. 

I often ask myself, if I could turn back the clock, what should I do first? My answer is finding a good business model. There are so many innovation and entrepreneurship activities in Taiwan in recent years. Everyone considers that with the advancement of technology, there would be many interesting topics to come. With mere enthusiasm, people start their own businesses, forming a team, raising funds, but failing to think clearly about the business model. Taiwanese have always been very good professionals. We are very good at solving problems, but we sometimes fail to raise questions, define business models and new markets. If this could happen again, I will look more carefully at my business model, and take the reference of both at home and abroad, especially looking at the more advanced European and American markets. Don't just do it as you like, and not figure out a feasible business model. This would be a waste of time.

How do you look at the international business planning of Taiwanese startups? What are the advantages of Taiwan?

Kung: Different companies may have different business models, but I can simply list some categories here. The first category includes platforms like iKala, Pinkoi and KKday. After a success in the Taiwan market, they continue to expand to Northeast Asia and Southeast Asia. An online platform is not limited to physical distance, and can reach people everywhere, through the Internet. Another category is the integration of software and hardware. It should be a team battle, or say "Team Taiwan". We used to call for proposals for smart cities in the Asia Silicon Valley Development Plan and participate in the smart city exhibition. Some participants from Southeast Asia want to introduce the solution after seeing it in the exhibition. In the past few years, more than 40 of them have been delivered all over the world. We really hope that everyone can gather greater strength and bring this smart city total solution to other countries in the world. 

Cheng: What the Minister said reminds me of Israel, the country in the desert. It is a country in a difficult situation, but it can become a big exporter of agricultural products to Europe—by using intelligent technology. People often say that Taiwan has a small population and a small market. I think that it becomes your limitation when you only look at Taiwan, so we should be like Israel, start by looking at the international market. In the digital age, there is no more physical boundary, especially under the pandemic, everyone is paying attention to digital products. This turned out to be a good opportunity for Taiwan, because even those who did not focus on digital transformation and digitization started to look for good digital solutions. Taiwan has always been a country with a solid foundation, from the textile industry, electronics, to semiconductors, we have a very strong hardware industry. In the past ten years, to us startups, we sometimes feel far away from those traditional enterprises. True, because the distance between hardware and software was a bit far from the beginning, but now companies as traditional hardware and semiconductors are actually undergoing digital transformation. Leaders or business owners in these traditional industries in Taiwan can regard startups as an external innovation team. We even noticed recently that Taiwan's large companies seem to be willing to invest in some startups in the past few years, and then go overseas with them. Startups as an external innovation team of big enterprise, this is where synergy comes from. 

Taiwanese actually do business all over the world in the very beginning, the so-called "going all over the world with just one suitcase". And we just come to another turning point of the digital era. This time, we don't even need to carry a suitcase. We just need to contact the media in Eastern Europe, build up connections with the Japanese market, and we can deliver our products. I think this is a very good opportunity for Taiwan. Taiwanese are very conservative and honest, sometimes we deserve to have 80 or 90 points, but we are too modest to speak it out. I think Taiwanese people are relatively introverted in brand management. We are taking important roles in the supply chain, but we never say that we are vital to the world. When we are building digital brands in the future, I think the concept of branding should be highlighted and now is a turning point for Taiwan to move from behind the scenes to the stage.

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