Sought after exports

While Chang doesn’t expect Taiwan to give birth to the next Google, Microsoft or Facebook, Taiwan can remain competitive by focusing on niche services that play to its strengths. One novel export, Chang said, could be health care management services. Taiwan’s health care system, developed in the late 1990s as Taiwan was in the middle of an economic boom, is considered to be one of world’s most efficient (though as a state non-grata to the UN Taiwan is not in the WHO) with very low administration costs.

Package this with two other fields that Taiwan industry has strength in, big data and the Internet of Things, and Taiwan has a competitive export to emerging economies looking to develop their own highly efficient technologically advanced healthcare system.

A competitive future as China looms in the distance

In Taiwan, no conversation about the economy and politics is complete without discussing the China question. While political parties around the world usually align themselves on questions of economics and social issues, Taiwan’s two major political parties, the Kuomintang and Democratic Progressive Party, simply align themselves around the issue of China and under what terms Taiwan should engage it.

Chang, despite his party’s traditional position of the more pro-China of the two, had harsh words for the country and its business practices.

“I’m really concerned about the future of our semiconductor industry,” he said on the topic of the subsidies that China gives its businesses. While the solar panel industry in China is the most notorious for being heavily subsidized by the government, Chang pointed to a recent announcement out of China that it planned to invest $32 billion (200 billion RMB) in domestic semiconductor companies as cause for concern.

“I guess they are really aiming at our TSMC,” Chang said.

Chang also mentioned that he had a problem with the ethics that China’s Huawei (SHE: 002502) employs when it conducts business in Taiwan. Huawei, not a state-owned enterprise but subsidized and protected in China by its government, scoops up Taiwanese engineers, according to Chang, by offering them a salary well above market rates — which Taiwanese firms simply are unable to pay.

“I heard that they will even provide you with a pretty girlfriend if you are willing to remain locked in a lab in Beijing,” he mused on stage.

But this should not be counted as opposition to global companies setting up shop in Taiwan. ARM (LON: ARM), which recently opened a research facility in the Taipei exurb of Hsinchu, is more than welcome to do business in Taiwan.

“I’m not saying that we don’t want our good talents to be recruited by international companies. Think ARM for instance,” he said. “It’s an ethical problem. ARM is a legitimate ethical company and we welcome them to Taiwan and we’re very happy to supply our talents to companies like ARM.”

Huawei, on the other hand, might not earn the same description.

The solution to the China problem is closer alignment with the United States and Japan.

“The US and Japan are much more ethical in terms of doing business compared to China,” Chang said.

“I don’t think China’s state-capitalism is sustainable.”

Photo credit: Chang San-cheng in his first interview with Reuters.