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24.03.21

Fostering the digital transformation of micro, small and medium enterprises in Taiwan

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With low case numbers and zero lockdowns, Taiwan has done exceptionally well during the COVID-19 pandemic. Nonetheless, travel restrictions and fears of the virus have had an impact on micro, small and medium enterprises (MSMEs) in the tourism, hospitality and retail sectors. As a result, many businesses have had to accelerate their digital transformation.

We spoke with Stanley Wang, Deputy Director General, International Division of Taiwan’s Institute for Information Industry (III), about how they are supporting entrepreneurs to go digital, with support from Google.org through our COVID-19 Rapid Response and Recovery programme.

What is the Institute for Information Industry (III) and what does it do?

We do many things – primarily, we are a government research institute and provide a one-stop shop of services for industry and businesses, including professional training for entrepreneurs. As a think tank, we help different government ministries lay out roadmaps for industry developments. And we collect a lot of market intelligence worldwide to support government initiatives and individual companies. Supporting businesses with digital transformation is a main focus of our work. We have more than 1,000 engineers working in different technology spaces, so we are able to transfer or licence those technologies to the private sector and individual companies. On behalf of the government, we also administer some of the incentive programmes that support individual companies to develop new technologies and products or enter a new market.

What’s it like to start and grow a small business in Taiwan?

It's quite simple and straightforward to start a new business in Taiwan. You just go to a registration office or you can even do it online, and you submit all the required documents. Within a few days you will have a business. According to our government statistics, more than 90% of our companies are small and medium-sized enterprises. New companies are formed every day. There aren’t many restrictions on what you can and cannot do.

However, scaling up and growing a business is a different story, because you know, Taiwan is a small country. We are only 23 million people; so the domestic market is relatively small. And during the COVID-19 pandemic, reduced travel around the country has made it more difficult for domestic businesses to reach customers.

How has COVID-19 affected life in Taiwan? What is the situation now?

Taiwan has actually done very well throughout the pandemic. We’ve had less than 1,000 confirmed cases of COVID-19 and have been able to enjoy quite a normal life without any lockdowns. I think the biggest difference is that almost all our citizens wear masks in public, our border controls are much tighter and there is reduced domestic travel. People without a residence permit or Taiwanese passport are not allowed to enter Taiwan. This has caused some challenges for our businesses that primarily target international visitors.

How have MSMEs been affected by the pandemic?

The pandemic has primarily affected the tourism and hospitality industries. Before COVID-19, we had, on average, more than 10 million international visitors come to Taiwan each year between 2016-2019. In 2020, we have only had 1.5 million visitors. Taiwanese citizens are also restricting themselves and going out less, out of fear of the virus. This has affected the hospitality and retail industries. Last year our government gave everyone a US$ 100 coupon to spend freely, which was some help to the retail industry, but did not fully address the needs of these businesses. It remains important that businesses find ways to reach customers and sell products online while domestic travel is reduced so they can sustain themselves and even continue to grow.

What support services do you provide to entrepreneurs as part of the COVID-19 Rapid Response and Recovery Programme with Google.org?

The Rapid Response and Recovery Programme has enabled us to identify the specific needs of entrepreneurs from particularly disadvantaged groups, such as young people under 35, women and minority groups, and provide in-depth support to them. We are providing five different training programmes to more than 1,000 entrepreneurs running a large variety of different businesses. We focus on helping them to accomplish a digital transformation of their business, particularly retail businesses, that are impacted by the lack of domestic travel and difficulty selling goods via their standard approach. For example, our team has supported a bicycle rental company to create a website and use digital marketing tools to reach more customers. We are also currently working with a social enterprise that supports local farmers from central Taiwan to reach a wider customer base. Before the pandemic, they used to travel to meet the farmers and distribute their products. Now that travel is restricted, we are helping them to move their operations online.

In addition, we get support from Google employees who provide one-to-one coaching to entrepreneurs and run webinars. Topics covered by the programme include digital marketing and advertising, small business budgeting, creating a customer-friendly website and staying connected with customers while business operations change. We also offer an in-person workshop and training on how MSMEs can grow with Google tools and solutions, with support from Google employees.

"Knowing how to use a computer or a smartphone doesn’t mean you know how to do business online."

Would you say the biggest challenge for MSMEs in Taiwan now is to make the digital transformation? In general, what level of digital skills do young entrepreneurs have in Taiwan?

Yes, absolutely. Knowing how to use a computer or a smartphone doesn’t mean you know how to do business online. Most of the young generation here in Taiwan have the basic digital skills set growing up. But if they want to successfully utilize the skills for their business, they have to raise the standard and consider different tools, technologies and costs and even transform their business model. This creates a whole new challenge for these young entrepreneurs. But because they already have the basic knowledge it's easier and quicker for them to adapt compared to the older generation, or people who don’t have those basic skills. And we are here to help them. We are even seeing very traditional businesses and sectors go through a real digital transformation right now.

Can you give an example of a traditional Taiwanese business that has gone through a digital transformation?

Yes, there are many examples of businesses in the agriculture, farming, and fishery sectors that have adapted technologies at a very high level that we could not have imagined in the past. A while ago, my colleagues and I visited a traditional fishery company that has adopted new technologies which allow them to determine the exact location of each of their vessels at any time via a computer. They also receive real time data on how much fish have been caught and what kind. This helps to avoid overfishing and allows them to make more profit from less catch. It also creates maximum transparency as they can tell their customers exactly where the fish came from, thereby building trust with their customer base. Also, with remote monitoring of the fishing operation via digital technologies onboard the vessels, “safety first” measures can be executed more effectively. This is an example of a traditional business that has taken on digital technology with many benefits. I think we will see many more examples of this over the next few years.

To find out more about the Institute for Information Industry’s work, visit their website.

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