In this period of globalization, small and medium enterprises (SMEs) in Taiwan face challenges, but none is as thorny as seasoned entrepreneurs being faced with requirements not only to apply their abundant experience in traditional business but also to have no other choice than to enter the Internet era and do the business in the virtual visual world.
Many of them, over 50 years of age are still mired in the traditional business model. These days, they must be prepared to offer an immediate quotation and be ready to fill orders online-and that is the minimum requirement in the international business world.
There is government assistance available, though. The Small and Medium Enterprise Association (SMEA), Ministry of Economic Affairs, R.O.C aims to lend a hand to companies as they struggle to get digitalized. On August 15 the 2007 SME e-Business Management and Prospect International Forum was held. Domestic and foreign experts were invited to give their suggestions to domestic entrepreneurs and discuss network business trends.
"For a small business which doesn't have any back-up consortium, its survival strategy in the global market is to remain flexible-a flea versus the elephant scenario," said Binshan Lin, professor of the Operations and Information Management at Louisiana State University in Shreveport.
He suggested the SMEs take advantage of the on-line information to maximize their influence but not forget to focus on "service" rather than the software technology when making purchases, because it is easy to be easily overtaken when focusing on the latter.
"Another survival strategy for the SMEs is innovation," said Michael Boyden, managing director of the Taiwan Asia Strategy Consulting.
Michael took used the Uni-President Enterprises Corporation in Taiwan as a case study. He said Uni-President has successfully transformed its role from a food producer to a potent retailer.
"However, innovation can't just be an idea," said Michael." The SMEs must carry out their plans systematically. Take notes and insist on process consistently."
One theme that came through in the conference was that SMEs should put much thought into methods for achieving innovation. One thing that occurred is that there should be four levels to successful innovation planning: First, senior managers need to bring up their ideas and leave them to their subordinates to execute. Secondly, the whole company has to reach a consensus on the new idea. The third step is to let the people have business relations other companies so they may better understand the products and services and to gain new ideas. The final thing is to share the idea with partnered companies.
As technology rapidly changes, enterprises rely much on unceasingly implementing innovations to succeed. The company's senior managers or directors have to transform the new ideas into valuable concepts and the company should see innovation as a core value.
Take Nokia, for example. Nokia is the biggest mobile phone supplier in the world, which, in fact, was a producer of agricultural products and tools thirty years ago. This is proof positive that there is value in constant innovation, said Michael.
The resources for the SMEs to expand the market are too scant to reach a big sell. So far, Internet should not be considered a draw back for SMEs. It may be a useful tool to upgrade services or boots sales.
By taking advantage of the network resources, enterprises can better know the needs of their customers. In the business model of the past, producers sold the commodities after designed, manufactured and marketed them alone, but now the e-business model gives more weight to customers.
Customers can post their opinions about the products they've used or seen online. This has begun to serve as a new index in consideration of future product design. For example, consumers wanting to buy a digital camera go to the web and search for evaluations on various models from other users, instead of going directly to the website of camera makers like Sony or Nikon.
A few years ago the OECD mentioned the "social capital" concept in which people interacted with each other more. This led to an overall boost in productivity.
We might better understand the concept in this way: making friends on the network enlarge our circle and expand our horizons, and this is the same case with enterprises.
But is more better? Shouldn't we remain with our tried and trusted friends, who've proven to be good for us and not tried to manipulate or harm? That is when execution becomes important. SMEs that do not have a definite plan or goal when building a network will likely meet with pitfalls too often.
There are other obstacles when small and medium enterprises attempt to digitalize. First, as indicated above, the heads of the SMEs typically have little knowledge about information technology. Many business owners are over 50 and never touch a computer while in school. Some have some computer skills they learned to enhance business efficiency, but few really know what kind of technology they truly need. Some small and medium-sized technologies incorrectly have focused too much on developing advanced techniques that do not bring a buck back.
Still, some SMEs successfully used the Internet interface as a platform to generate more revenues. The Yung-ching Company, a long-standing real-estate agent in Taiwan, established a network platform in 1990s for customers to provide a visual tool for house buyers. In fact, Yung-ching Company's original plan wasn't to build a network platform at all, but to form a web company during the initial Internet boom. However, the following Internet bubble was the impetus that led to the more realistic plan to build a visual store which precisely fit consumers' taste.
By and large, OEM and ODM account for the lion's share of Taiwanese enterprises. Undoubtedly, combining these businesses with the Internet has enabled enterprises to make closer ties with customers to increase productivity.
Enterprises can respond immediately to foreign customers' complaint or suggestions online and keep the messages in their records for future problem shooting problems.
Aling Lai, chairman of Thunder Tiger Company, said he has received some useful suggestions online from Siemens Company engineers that later contributed to improvements of Thunder Tiger's product quality. The improvements cost almost nothing. Lai has a clear understanding that digitalization will be the marrow for future companies-and consumers' preference will replace manufacturers' decision-making in creating product looks and functions.
With a subsidy of over NT$10 million from the government, the Thunder Tiger Company is going to build the first wireless network platform in the Chinese community. The platform will cost NT$40 million and serve to allow all the business units to know the needs of customers.
However, building a large-scale information system is beyond the ability of most domestic SMEs. As their upstream and downstream companies get digitalized one after another, the SMEs will lose a great deal of orders and be driven out of the market if they cannot get digitalized in time.
"To minimize the e-shock to the SMEs," said Huang Wen-gu, vice director of the SME, Ministry of Economic Affairs, R.O.C," the SME started the SMEs' Digitalization Programs in 2002, having helped 3500 SMEs finish the basic network infrastructures such as building an on-line shop over the past five years."
The e-SMEs Service Group, which is on of the SMEs' digitalization programs, is comprised of business experts and technicians from the software companies. It takes charge of diagnosing SMEs' problems and providing suggestions or assistance of a more substantial sort.
Lan, Hsin-chang organizer of the Allproducts.com group, suggested that SMEs keep an eye on the latest Internet trends. He is of the opinion that online promotion trends fall into three respects: the net market, priority ranking, and e-advertisement.
Those who own the web markets take charge of attracting potential buyers and the registered members are usually small and medium-sized exporters. Most of the web markets emerge in countries whose manufacturing sector is prosperous.
Priority ranking means acquiring a better ranking among the searching results by means of optimizing websites, setting up key words and recommendations from other websites.
E-advertisements allow people to find what they need by using key words. In the early days, many suppliers advertised themselves by posting their brands on commercial websites as flash banners, but the sales results were poor until Google made a breakthrough with advertisements tied to keyword searches.
The SMEs in Taiwan have created an economic miracle in Taiwan throughout past decades. If they can smartly and flexibly use the Internet, it will help advance and define Taiwan's economic positions in the dog-eat-dog world market. Can they create another economic miracle? We are not sure, but at least we know Taiwan peoples' wits sharp enough to meet the challenge.