1. May 27, 2015 SME Development Experience in Taiwan The 14th Joint Meeting between CIECA and MNCCI Johnny Yeh, Director General SMEA, MOEA, ROC (Taiwan)

2. Johnny Yun-Lung YEH Director General Small & Medium Enterprise Administration, Ministry of Economic Affairs (MOEA) Director General, Department of Commerce, MOEA M. A. degree in Political Economy, University of Essex, UK M. A. degree in Public administration, National Chengchi University, Taiwan

3. I. Introduction of Taiwan SMEs II. Taiwan's economic growth trajectory III. Policy Measures for SMEs Contents 1 IV. Strategic Thinking V. Conclusion – Case Study

4. I. Introduction of Taiwan SMEs About Taiwan Area: 36,000 sq. km Population: 23.44 million GDP per Capita: US$22,632* Foreign Trade （ goods ） : World’s 18 th largest trading nation* Number of Enterprises: 1.36 million* Number of SMEs: 1.33 million* Ratio of SMEs to All Enterprises: 97.64%* － Source : White Paper on SMEs in Taiwan, 2014 Department of Statistics, Ministry of Economic Affairs, 2014 2

5. Criteria for Identifying SMEs Criteria for Identifying SMEs SECTORSSMEs Micro Business Manufacturing, Construction, Mining, Quarrying Paid-in Capital < NT$ 80 million (US$2.6 Million) or Employees < 200 persons Employees < 5 persons Service, Commerce Preceding year revenue < NT$ 100 million (US$3.3 million) or Employees < 100 persons I. Introduction of Taiwan SMEs 3

6. The Current Status of Taiwan SMEs The Current Status of Taiwan SMEs All enterprisesSMEs % of SMEs No. of enterprises1,363,3931,331,182 97.64 Total employments (thousand persons) 10,9678,588 78.30 No. of employees (thousand persons) 8,6156,237 72.40 Total Sales (NT$ million) (US$ million) 38,460,894 (1,282,030) 11,321,842 (377,395) 29.44 Domestic Sales (NT$ million) (US$ million) 28,624,527 (954,151) 9,897,617 (329,921) 34.58 Direct Export Sales * (NT$ million) (US$ * * million) 9,836,367 (327,879) 1,424,225 (47,474) 14.48 *Indirect Export Around 50% / ** 1 USD = 30 NTD Source: White Paper on SMEs in Taiwan, 2014. I. Introduction of Taiwan SMEs 4

7. The 1 st Import Substitution Period (1945-1958) 7 II. Taiwan's economic growth trajectory 5

8. 8 Export Expanding Period (1958-1969) Bonded factory system Multiple exchange rates Export Processing Zones. 6 II. Taiwan's economic growth trajectory

9. The 2 nd Import Substitution Period (1969-1980) 7 II. Taiwan's economic growth trajectory

10. Strategic Industries Period After1980 8 II. Taiwan's economic growth trajectory

11. Liberalization, internationalization 11 9 II. Taiwan's economic growth trajectory

12. 65~70% Foundation of SMEs Middle Layer of SMEs, Ltd. Co., 27~34% Award Strategy Guidance Strategy Top SMEs, Ltd. Co., 1~3% Grouping Strategy 1. National Award 2. Rising Star Award 3. R&D Award 4. Business Start-up Award 11 Guidance Systems 1. Mutual Cooperation 2. Industry Cluster 3. Local Cultural Industry 4. Financing Programs Biz Startups mechanism for supporting entrepreneurial activity & innovation Conceptual Structure Conceptual Structure III. Policy Measures for SMEs 10

13. Management Capability Management Capability Cluster Innovation Cluster Innovation R&D and Innovation Grant R&D and Innovation Grant IPR Services IPR Services Mobile Application Mobile Application Sustainable Development Sustainable Development Capital Access Capital Access Active Caring Active Caring Think Tank Study Think Tank Study Regulatory Adjustment Regulatory Adjustment Legal Consultation Legal Consultation Special Case Assistance Special Case Assistance Marketing Capability Marketing Capability Local Commercial District Local Commercial District Supply Chain Cooperation & Overseas Marketing Supply Chain Cooperation & Overseas Marketing IOT Experience and Value Creation IOT Experience and Value Creation III. Policy Measures for SMEs Vision 、 Strategy 、 Assistance Measures 11 Lean Start-up Incubation Lean Start-up Incubation R&D Innovation R&D Innovation Regulatory Advocacy Regulatory Advocacy Local Culture Industries Local Culture Industries Incubation Services Incubation Services Accelerator Program Accelerator Program Creating a healthy environment beneficial to the development and growth of SMEs Online to Offline Integration Online to Offline Integration One-Stop Learning One-Stop Learning Policy Loan Policy Loan Credit Guarantee Credit Guarantee Equity Financing Equity Financing and Investment Financing and Investment

14. Benchmarking Middle Class Revival: more job opportunities Wage Increase Crowd funding Platform :JOB Act America Stabilize Currency Strong Financial Supporting for SMEs Stabilize JOB market German Nurture small-scale but very powerful and international SMEs Focus on start-ups and youth digital Micro-enterpriseKorea New small Green Enterprise: new economic strength Social Enterprise: High revenue and high innovationEngland 12

15. IV.Strategic Thinking Succession Planning Social Enterprises Deregulation 13 Academics Industry (SMEs and VCs) Government

16. Deregulate to Encourage Startups 16 Limited Liability Partnership(LLP) 1. Easier to raise Funds 2. Enhance investments in start-up period 3. Improve enterprises’ competiveness by choosing multiple organizations of management 4. Assist our enterprise to built international networking to bring together talent, capital markets and create more business opportunities Suspended taxation on contribution of IP Right as Equity 1. Person or SMEs get contribution of Intellectual Property Right as Equity. 2. They will get suspended taxation at the case of equity disposal. Flexible par- value stock 1. Either Par -Value stock or non-par-value stock works. 2. Diminish the restriction of share par value NTD$10 3. Start-ups to raise funds more easily UniversitySpin-off 1. University professors can build start-ups 2. School Funds can invest in start-ups. 14

17. Over-the Counter Emerging Stock Public Offering GoFunding Zone Private Offering Micro-Enterprise s Accelerated Incubation before Emerging Stock GoFunding Zone for Creativity 15 World’s first GoFunding Zone for Creativity  SMEA has created a world’s first GoFunding Zone for Creativity to assist Micro- Enterprises to raise funds more easily.  It is a Equity Financing platform. GoFunding Zone Characteristics  Equity Financing with low costs.  free Bank Financing interest  Attracts a lot of investors, venture capitals and Angel fund to look for potential investment target  big companies can seek for technical and innovative cooperation here.

18. More 280 thousand 20-year-old enterprises in Taiwan Over than half of family businesses plan to pass the business fully (ownership and management) to the next generation Family Business Heritage 16 Increase of Business Succession and Continuity Only 3% family business continue to the 4th generation in USA Top 30 Enterprises shows that more than 60% of CEOs who are over 60 years old have no plan to inherit family business

19. SMEs last more than 10 years: 47.8% ; more than 20 years: 23.0% Business owner over 65 years old: 3.5%; 50-64 years old: 42.6% More than 50 years old: 46.1% 。 19 Business Continuity Demands Succession Plan Background Based on statics above, SME owners gradually step into retirement phase in the following 5 to 10 years. Business continuity becomes a major challenge. Not only start-ups but also family business need innovation and creativity. First Generation Concept inspire innovation And transformation Infuse with Silicon Valley experiences and mechanism: Café du Monde & Master Workshop 17

20. Social Enterprises for Better Future Definitions:  Creating and nurturing micro-, small-and medium-sized businesses  Aim for positive social or environmental outcomes while generating financial returns. 18 The importance of social enterprises:  Solving specific social problems, such as weak employment, seniors’ long-term care, environmental protection…  Promote economic development and make growth inclusive. Promotion policy:  Providing social enterprise development environment  Strengthening the operating structure of social enterprises constitution  Construction of social enterprise network platform

21. High-Growth SMEs, the New Driver 19 Annual Compound Growth Rate (in employment or in turnover) over 3 years > 20%, with 10 or more employees in the starting year 1 Inject economic dynamics and vitality 2 Introduce innovation and increase productivity 3 Paradigm for other enterprises 4 Create jobs and raise GDP 1988–1992 HGE 2005-2008 HGE 2006-2010 HGE 4 ％  60% 6 ％  54% 8 ％  58%

22. V. Conclusion – Case Study Taiwan, Your Best Business Partner! Taiwan has the world-class entrepreneurship and industrial cluster environment. We look forward to further cooperation with the other countries around the world. 20

23. Case Study 21

24. 22

25. 23

26. 24

27. 25

28. 26

29. 27

30. 28

31. 29

32. 30

33. 1 Thank you for your attention! For more information, please visit http://www.moeasmea.gov.tw 31