Proposed Amendment between California Energy Commission and The Regents of the University of California, Davis Title: Amount: Term: Contact: Committee Meeting: Funding FY Program
Electric Electric Realizing Energy Efficient Lighting in California $311,481.months Dustin Davis 1/6/2011

Buildings Buildings

Initiative
Technology Innovations Standards and Policy Coordinations

Budget

$10,900,000 $2,434,200

This Project

$125,000 $186,481

Remaining Balance

$0 $79,242 0% 3%
Recommendation Approve this agreement with UC Davis for $311,481.00. Staff recommends placing this item on the discussion agenda of the Commission Business Meeting. Issue This amendment is to: a) Extend the contract term by 10 months to add two sub-tasks totaling $311,481.00: 1) Develop Smart Corridor Lighting Systems for Commercial and Industrial Applications and 2) Conduct a thorough literature search and define metrics in support of establishing a 2007 California Lighting Energy Use Baseline to address AB1109 goals. b) Eliminate three sub-tasks in the original agreement and re-scope four other subtasks based on feedback from the Program Advisory Committee (PAC). c) Amend the contract to correct the fringe, and general and administrative (G&A) rates. Background This agreement was originally approved in June 2009. Since that time, a few sub-tasks have been recognized as non beneficial and incorrect rates were found in the budget. This amendment will resolve these issues: a) Redistribute part of funds from eliminated sub-tasks to two new sub-tasks and redistribute the remaining balance of the funding to other existing sub-tasks which is a result of the PAC meeting. The following are the descriptions of the two new sub-tasks: 1 of 4 500-08-053-01 UC Davis, CLTC
1) Development and Demonstration of Smart Corridor Lighting Systems for Commercial and Industrial Applications (new sub-task). This sub-task addresses an area that is ripe for significant energy savings potential. CLTC conducted a survey of energy use across the UC Davis campus. Lighting energy demand and consumption data was collected by application, in order to identify major energy consuming areas and opportunities for deep energy savings. Surprisingly, surveys found unassigned spaces such as corridors, stairwells, storage rooms, and maintenance closets to be the largest lighting energy consumer on campus. These results lead to a dramatic paradigm shift in how to deal with demand response. Traditionally, primary occupancy spaces such as personal office spaces, break rooms, and conference rooms were subjected to electric lighting load shed during critical demand response events. To complete this work CLTC must conduct research to develop a demand responsive design for corridors and hallways and demonstrate and evaluate the technical and economic feasibility of the technology while including safety considerations. The demonstration will occur in investor owned utilities (IOUs) service territory facilities and if successful, could be the focus of future utility incentive programs. The total cost of the research is $456,939. Of this amount $51,939 will be from the original sub-tasks with $250,000 being requested in this amendment and the remaining $155,000 from IOUs. 2) 2007 Lighting Energy Baseline Determination (new sub-task). In 2007 California approved Assembly Bill (AB) 1109, requiring the implementation of regulation "structured to reduce average statewide electrical energy consumption by not less than 50% from the 2007 levels for indoor residential lighting and not less than 25% from the 2007 levels for indoor commercial and outdoor lighting by 2018." AB 1109 implementation requires determination of the 2007 lighting energy baseline, using metrics that will facilitate the development of regulations and monitoring of progress for each of the commercial, residential and industrial sector. Research is needed to determine the metrics for the 2007 baseline. The total cost for this research is $61,481 and PIER is providing all of the funding. b) Eliminate three sub-tasks. Due to concerns from the PAC in August 2010, three sub-tasks are proposed to be eliminated. Specifically, sub-tasks dedicated to software development based on the proposed National Electrical Manufacturers Association (NEMA) Digital Lighting Controls standard; longevity testing of LED and induction luminaires; and evaluation of scotopic lighting issues are removed from the agreement. The open NEMA standard was never formally adopted and industry has moved towards private software development based on proprietary control protocols rendering the Digital Lighting Controls project obsolete. LED/Induction Longevity Testing would not provide any new data, and this project is being pursued by industry, in a more rigorous fashion. The evaluation of scotopic light effects is being handled by other research groups and the California Lighting Technology Center (CLTC) work would be duplicative. The elimination of these sub-tasks results in unallocated funds of $349,126. c) Fix typographical errors in attachment B-4 of the budget to reflect the correct fringe and G&A rates. This was only recently brought to the forefront due to limited billing information provided by Universities. Original rate in agreement for General & Administrative is 16% and the correct rate should be 23%. Original rate in agreement for Fringe benefits is 10% and the correct rate should be 29%.

2 of 4

500-08-053-01 UC Davis, CLTC
Proposed Work 1) Development and Demonstration of Smart Corridor Lighting Systems for Commercial and Industrial Applications. CLTC proposes to initiate an adaptive, demand responsive design for target areas with no occupant ownership (e.g. - corridors, bathrooms, storage areas). By shifting load shed priorities to these spaces, CLTC expects an increase in energy savings and user acceptance of demand load reductions. CLTC will accomplish this research through laboratory development and evaluation activities and field demonstrations in each of the major IOU service territories. Initial investigations will identify system solutions that offer the most cost-effective, energy saving alternative. Multiple solutions may be developed based on the application. For example, a solution for the hospitality industry may be different than one designed for an industrial application. Following system design, prototype systems will be developed at CLTC, and tested for electrical and photometric performance. This work is expected to be conducted in collaboration with industry partners, such as Philips and other lighting and controls manufacturers, so that following successful development and demonstration, the technology can be commercialized and yield immediate energy savings benefits for California. 2) 2007 Lighting Energy Baseline Determination (new sub-task). The CLTC will create a framework for characterizing commercial, residential, and outdoor lighting for California. This framework will be used to identify opportunities in the state for building code improvements, appliance regulations, compliance, outreach, and future PIER studies. This framework will be developed through a literature search and interactions with Energy Commission staff, lighting design experts, utilities, and lighting manufacturers which will result in defining the metrics to support establishment of the 2007 California lighting baseline. The research will consolidate numerous lighting studies and evaluate the potential for a comprehensive lighting road-map that will be used to meet the goals of AB 1109. This research is supported by the Efficiency and Renewable Energy Division, and the Appliances and Process Energy Office. The results will be used by that division to determine the need for future standards to meet the goals of AB 1109. 3) Adjustments to the budget and/or scope of work of other sub-tasks are due to recommendations from the PAC. Justification and Goals This project "[will develop, and help bring to market] increased energy efficiency in buildings, appliances, lighting, and other applications beyond applicable standards, and that benefit electric utility customers" (Public Resources Code 25620.1.(b)(2)), (Chapter 512, Statues of 2006)). These projects are also consistent with the Integrated Energy Policy Report and the CPUC's Energy Efficiency Strategic Plan which specifically identifies the need for lighting research to meet the state's policy goals for energy efficiency. This will be accomplished by: Developing and demonstrating an adaptive lighting system for use in commercial and industrial building corridors that result in energy savings while maintaining occupant satisfaction. 3 of 4 500-08-053-01 UC Davis, CLTC

Establishing the metrics for determining the 2007 lighting energy baseline. This will lead to a potential lighting road-map not funded by this project which will identify the need for future regulations (Title 20 and Title 24) and monitoring of progress for the residential, commercial and industrial sector to reduce average statewide electrical energy consumption to levels stated in AB 1109.

4 of 4

Investment Climate in Taiwan

2010 / 12 / 31

Client:

Contractor:

1. The Investment Environment in Taiwan 2. Post-ECFA Foreign Investment Trends in Taiwan 3. Industrial Development and Investment Opportunities in Taiwan 4. Strategies and Models for Foreign Investment in Taiwan 5. Conclusion

Copyright 2010 ITRI

1. The Investment Environment in Taiwan

Inheritance and Gift Tax

Under Bracket 410,000 Tax Rate 6% Over 410,000 Less than 1,090,000 13% Over 1,090,000 Less than 2,180,000 21%
General Income Tax Business Income Tax

25% 17%

Under Bracket 500,000 Tax Rate 5% Over 500,000 Less than 1,130,000 12%
Over 1,130,000 Less than 2,260,000 20%
Took effect on January 23, 2009. Highest marginal rate reduced from 50% to 10%, inheritance tax credit increased to 12,000,000 NTD and gift tax credit increased to 2,200,000 NTD.
Took effect in 2010. The 3 lowest general income tax brackets were each reduced by 1%. The minimum tax bracket increased to 500,000 NTD.
Income Tax Act passed on May 28, 2010. Company tax burden reduced with business income tax reduced from 25% to 17%. The reduced rate is more favorable than China (25%) and Korea (22%). 3
Source: MOEA Department of Investment Services
Taiwan Has Well-Developed Industry Clusters
Hsinchu Science-based Industrial Park(Hsinchu, Jhunan, Hsinchu Biomedical Science Park) IC manufacturing cluster Photonics cluster Biotechnology cluster
Central Taiwan Science-based Industrial Park, Taichung Precision Machinery Technological Park
Nangang Software Park IC design cluster Digital content cluster Biotechnology cluster Up to 30% in foreign investments (IBM, Siemens, Philips etc.) Tainan, Liouying and Yongkang Technology Industrial Parks
Semiconductor & Photonics clusters Biotechnology cluster Precision machinery cluster
Changhua Binhai Industrial Zone Metal products, metal surfaces Processing cluster Recycling and green energy clusters Glass special zone planned
Photonics industry cluster, environmental technology Automotive parts & precision machinery clusters Tenants include Toppan Taiwan, Taiwan NH Techno Glass and TYC Kaohsiung Linghai & Da Industrial/ Software Park Petrochemical and steel industry clusters Yacht building cluster Metal processing and precision machinery clusters IC, photonics, communications and environmental technology clusters
Source: MOEA Department of Investment Services, compiled by ITRI IEK (2010/10)
Taiwan Has Extensive Infrastructure
High quality human resources
Lower labor wages than Hong
Kong, Macau, Japan, Korea and Singapore. Workers are highly motivated and productive.
Comprehensive industrial land zoning

There are currently 181

industrial zones, 3 science parks, 10 export processing zones and 5 free trade port zones.
Convenient freight and logistics
International logistics companies
based out of key Taiwanese and foreign cities effectively reduce import/export/transshipment times for cargo enabling rapid flow of goods and information.
Highly-developed sea, air, and land transportation
Fully integrated transportation High-speed rail enables same-day
travel between Taipei and Kaohsiung Over 10,000 domestic/overseas sea/air/land freight and warehousing companies form a comprehensive and efficient transportation network network

Extensive Infrastructure

Plentiful and low-cost water/electricity supply

Water

Water prices are relatively cheap compared to many other countries Electricity Taiwan's electricity prices are still relatively low compared to the rest of the world
Well-developed ICT facilities
Taiwan has a well-developed ICT
infrastructure with 97.56% penetration for fixed line, 76% penetration for household Internet use and 92.5% penetration for mobile phones.
Comprehensive legal system and IP protection
Taiwan has a comprehensive legal
system and IP protection legislation is backed by a IP court.
Taiwan Has Excellent Talent and Intellectual Property

Talent

Intellectual Property
42.9% of the work force are college/university educated. 320,000 college/university graduates produced every year. SCI publication rate growing at an average 9.4% per year. 31 Taiwanese schools included in the top 1% of the world's universities by ESI publications and citations.
Two Keys to Investment Promotion
"Intellectual Property Court Organic Act" and "Intellectual Property Case Adjudication Act" passed by the government. Intellectual Property Court began operating in July, 2008. Intellectual Property Rights Police Team formed. Mature trademark, patent and copyright laws.
Source: ITRI IEK (2010/12)
Taiwan's Investment Environment and International Competitiveness
Global Investment Environment Rankings (US) (2nd BERI report for 2010)
Investment Environment Rating Taiwan China Korea 19 Operating Risk 18 Political Risk 24 Exchange Risk 8
2010 IMD World Competitiveness Ranking
Overall Comparison Taiwan Korea China 18 Economic Performance 3 Government Efficiency 25 Business Efficiency 28 Infrastructure 31
2010 WEF Global Competitiveness Report
Singapore 2010 Rankings 3 Hong Kong 11 Taiwan 13 Korea 22 China 27
Source: ITRI IEK (2010/10)
Incentives for Foreign Investment in Taiwan
Industrial Land Industrial Land Concession Concession and Renewal and Renewal Financial Financial Assistance Assistance Provided Provided Strengthen Strengthen Innovation Innovation R&D R&D Industry Industry Assistance Assistance 006688 Land Rental Discount Plan Industrial Land Market Pricing Discount Plan Renew and strengthen industry-supporting infrastructure Provide loans and financing (Automated loans, R&D loans,

Benefits

Encourages continued industry investment in Encourages continued industry investment in Taiwan Taiwan Encourages Taiwan businesses in China to boost Encourages Taiwan businesses in China to boost Taiwan purchasing and product competitiveness Taiwan purchasing and product competitiveness Helps to stimulate the domestic economy and Helps to stimulate the domestic economy and create jobs create jobs
Encourages foreign investment in Taiwan
Setting up R&D, high value-adding production units, and operations HQs in Taiwan prime it to become the "Global Innovation Hub" and "AsiaPacific Trade Hub".
Foreign Investment Confidence in Taiwan After Signing of ECFA
Latest survey of foreign companies by CommonWealth Magazine 87.5% felt that signing the ECFA will make Taiwan more competitive 78.6% of foreign companies believe that ECFA will open way to FTA with other countries After the signing of the ECFA 83.9% of foreign companies were optimistic about Taiwan's economy 39.3% believed that Taiwan can serve as an integrated marketing and service platform 33.9% of foreign companies plan to increase investment in Taiwan

Economic Benefits

Industry Benefits

Investment Benefits

30.4% of foreign companies plan to increase Employment staff in Taiwan Benefits
Source: CommonWealth Magazine, June 2010 issue; Compiled by ITRI IEK (2010/08)
ECFA Early Harvest List and Attracting Direct Foreign Investment
Reasoning behind early harvest list -Reasoning behind early harvest list Trade balance --Taiwan industries Trade balance Taiwan industries that export heavily to China that export heavily to China Tariff reductions urgently required -Tariff reductions urgently required e.g. e.g. industries affected by ASEAN Plus industries affected by ASEAN Plus One One Industry experienced collected Industry experienced collected through public hearings through public hearings China proposed aatotal of 539 tariff China proposed total of 539 tariff reduction items (Early Harvest List) reduction items (Early Harvest List) including 18 agricultural products, including 18 agricultural products, 88 petrochemical products, petrochemical products, 107 mechanical products, 136 textile mechanical products, 136 textile products, 50 transportation tools products, 50 transportation tools and 140 other products and 140 other products
Factors that Attract Direct Foreign Investment in Taiwan
Tariff discounts for exporting to China Taiwan offers more comprehensive IP protection Opening of cross-strait Three Links Government offers subsidies and incentives for businesses setting up R&D centers in Taiwan
Will encourage Western/Japanese enterprises to make Taiwan their springboard into the China market Give preference to Taiwanese companies in R&D and production. Regional R&D, manufacturing or operations HQs can be set up in Taiwan to turn Taiwan into the first choice for "Global Innovation Centers" and "Asia-Pacific Trade Hubs" for multinationals.

Foreign/Compatriot Investment Trends in Taiwan
Local companies began investing in the telecommunications through overseas companies after fixed network communications were deregulated in 2000; Between 2006 and 2008 FDI amounts reached a new peak due to international private venture funds' acquisition of Taiwanese banks and cable TV operators.
Financial industry: 5.065 Billion USD Media Industry: 2.85 Billion USD Investment Investment Financial & Insurance Industry: 2.182 Billion USD Telecommunications Industry: 1.216 Billion USD Investment Amount: 100 Million USD
2,267 139.69 153.61 1,845

Investment Proposals

2,000 1,711 1,293 1,500
1,410 1,140 1,089 1,178 76.08 51.29 32.72 1,142 1,078 1,131 1,149

1,846 82.32

1,000 47.98 31.0

37.39 42.31

42.28 35.76 39.52

2010Year

Source: Investment Commission
3. Industrial Development and Investment Opportunities in Taiwan
Global Industry and Development Trends
Core Global Trends and Market Opportunities
Change in Population Makeup Aging Senior business opportunity Urbanization Infrastructure development Rise of emerging countries (By 2030 the four BRIC countries will account for 47% of global consumption) Rise of the middle class Affordable luxury Climate change and energy shortage

Major Industry Trends

Healthcare + Tourism Cosmetic surgery, beauty and health Consulting-type service industries Fast-evolving technology applications (mobile phones.) New demand for conventional industries Food, textiles, chemical engineering. High quality affordable products Investment in green energy industries Electric vehicles, batteries, LED, power. Green and agricultural biotechnology Investment in water resources
(Global population to reach 8.2 Billion in 2030)
Low energy-consumption industry structure Increased demand for food and water
Technology convergence and integration Fusion of IT, biotech, nano and new materials technologies Inter-disciplinary technology integration

Tri-network fusion (Fixed/Wireless/Mobile) Cloud computing Increased application of biotech + nano + photonics in healthcare, food and beauty 14
Potential Investment Opportunities and Markets for the Six Emerging Industries in Taiwan
Industry Biotechnology Investment Opportunity Projected Output (NTD) New drug development, pharmaceutical biotech, medical devices, reagents, agricultural biotech, health food, biotech $260 Billion (2012) services Themed tours, development of recreational facilities, international chain hotels, tourist hotels, MICE industry, $550 Billion (2012) cultural performances and exhibitions Medical care, long-term senior care, healthcare, Increased by international medical services, national health safety $346.4 Billion (2012) management Solar power, LED lighting, wind power, bio-fuels, water $1.580 Trillion resources & hydro-power, fuel cells, energy ICT, electric (2015) vehicles Organic agriculture, agricultural biotech, orchids, grouper, $158.9 Billion ornamental fish, seedlings, livestock & poultry breeding, in(2012) depth agricultural tourism, boutique agricultural products TV, film, pop music, digital content, design, crafts $1 Trillion (2013)

Tourism

Healthcare

Green Energy

Boutique Agriculture Cultural and Creative
Development and Market for the Four Emerging Intelligent Industries in Taiwan
Industry Promotion Policy and Projected Market Size The "Cloud Computing Industry Development Program" was approved by the Executive Yuan in 2010 and 24 Billion NTD will be injected over 5 years to generate 12.7 Billion NTD in business R&D spending, 100 Billion NTD in investments into manufacturing and services, create 50,000 jobs and deliver 10 million sessions of cloud computing services. The cloud market in Taiwan is expected to grow to 6.21 Billion NTD in 2010 and will has the potential to become a trillion-dollar industry in the future.

Cloud computing

In 2010 The Executive Yuan issued the "Smart Electric Vehicle Development Strategy and Action Plan". Demonstration projects between 2010 ~ 2013 will aim to achieve 3,000 in total sales, stimulate 13 Billion NTD in private investment and lead to the creation of 3 electric vehicle makers. Smart Electric Vehicles Between 2014 ~ 2016 the target is total sales of 60,000 vehicles to domestic and emerging markets as well as participate in the development of the world's top 10 smart electric vehicles. Between 2017 ~ 2020 engage in cross-strait cooperation to sell 1.2 million vehicles in the global market and become one of the top 5 electric vehicle exporting nations in the world. Green Architecture The Executive Yuan is currently promoting the "Smart Green Building Promotion Plan" Set up the "Patent Value-Adding Consultation Center" and consultant inspection mechanism. The target is to complete 350 consulting projects in 2010. Patent brokering through the commercialization of patent value-added products has a target of 210 patent value-adding projects for 2010. Provide assistance through the "SME Immediate Technical Assistance Program" and other government resources. The 2010 target is to complete 80 business proposals or certification services. Strengthen the technology market's brokering and marketing services. The 2010 target is to successfully broker, develop new products, or start 100 new business (companies). Create 1,000 new jobs, stimulate 1 Billion NTD in private investment, and 3 Billion NTD in derivative economic benefits.

Invention Patents

Development and Market of the Top 10 Service Industries in Taiwan
Industry Food internationalization Agency in Charge Ministry of Economic Affairs Promotion Policy and Projected Market Size Create 10,000 jobs in 2013 and 3,500 new stores in Taiwan and overseas Add 50 new international food brands and realize 2 Billion NTD in private investment Use strategies such as international marketing, medical service quality, dissimilar industry alliances and industry environment building. Anticipates generating 4.08 Billion NTD in private investment by 2014 with 45,558 international medical service deliveries, 1.099 Billion in international medical industry output and crate 3,860 new jobs. For digital content, the 2013 target is an industry output of 780 Billion NTD, 8,000 people trained, 14 Billion NTD in international cooperation and 100 Billion NTD in new investments. Methods include software/hardware integration, international and cross-strait market development, creative diversity and university-research collaboration. Use selected Made in Taiwan products with the Affordable Quality Plan and Local Industry OTOP Program to set up Taiwan specialty product e-commerce platform. Improve customs clearance efficiency and infrastructure to enhance logistics services and international cooperation. The 2012 target is to create 48,000 jobs, generate 4.4 Billion NTD in private investments and create 95.9 Billion NTD in direct and peripheral benefits. Increase the construction sector's share of the GDP from its current 2.31% to 4.25% as well as create 40,000 jobs. By 2013 WiMAX broadband subscription are expected to reach 2.2 million users and generate 27 Billion NTD in WiMAX application business opportunities; WiMAX equipment output to grow to 130 Billion NTD and account for 1/6 of the global market. Use strategies such as Elite All-English Teaching Environment, development of Southeast Asia, international language education and friendly enrollment for overseas students. Increase the value of the Taiwanese stock exchange as a proportion of the global market from 1.37% to 1.5% and create 1,864 jobs between 2010 ~ 2013.

International medicine

Department of health
Music and Digital Content
Government Information Office, Ministry of Economic Affairs

Chinese Language e-Commerce International Logistics Conventions and Exhibition Urban Renewal
Ministry of Economic Affairs Ministry of Transportation and Communications, Ministry of Economic Affairs Ministry of Economic Affairs Ministry of the Interior Ministry of Transportation and Communications, Ministry of Economic Affairs
Tertiary Education Export High Technology and Innovation Industry Capital Raising Platform

Ministry of Education

Financial Supervisory Commission
Development Vision for Emerging Industries in Taiwan
3. Allocate R&D resources into pure basic research, directed basic research, applied research, experimental developments and the development of selected products in a precise and reasonable manner. 6. Introduce methods, processes, and systems based on industrialized IP management; introduce more effective IP marketing methods and create more diverse business models. 9. More professional handling of IP applications, administrative disputes and lawsuits is needed to encourage foreign businesses to file IP applications and infringement claims in Taiwan.
1. Follow global industry and technology developments on a macro-level in order to foster appropriate development of Taiwan's core competencies and international competitiveness 4. A more disciplined approach to R&D management, R&D processes and the development of more groundbreaking innovation models. 7. Put supporting measures in place for R&D resources and related industries, businesses and certification services as well as the commercialization/ industrialization of technology transfers and IP output.
2. Closely study the gaps and needs in Taiwan industry and technology development to provide comprehensive response to strategies and developments in the industry value and supply chains
5. R&D results should be converted into high quality IP for the industry and value chains.
8. Lift regulatory restrictions that hamper the international flow of technology, talent and IP as quickly as possible.

Development Strategy for Smart Electric Vehicles in Taiwan
Development Strategy for Electric 2-Wheel Vehicle

2015 Targets

Become the leading brand in the global high-end lithium battery electric 2-wheel vehicle market No.2 in global market share (20%) Establish presence in the international high-end market by actively forming strategic alliances Achieve 50% penetration rate for electric scooters in Taiwan Active construction of recharging infrastructure by the government Develop service industry for electric scooters
Development Strategy for Electric 4-Wheel Vehicle
Become a global supplier for key components and power modules in electric 4-wheel vehicles. Achieve top 3 in market share (10%) Establish BEV whole-vehicle brand
Industry development strategy
Enter the initial EV applications market on a regional basis and become the pioneer for EV-based low-carbon transportation in the Asia-Pacific Actively roll-out critical recharging facilities Develop Taiwan into a key supplier for batteries and power-related components
Technology development strategy
Define modular power and recharging standards as well as use mobile service industry to boost added value
Develop an independent capacity for highpower, high-efficiency motor and servomotor technologies as well as smart recharging technology.
Development Strategy for the Telemedicine Industry in Taiwan
Leverage the successful experience in Taiwan as well as connections Leverage the successful experience in Taiwan as well as connections with major international companies to enter the China market. with major international companies to enter the China market. The medical devices and ICT industries in Taiwan are relatively well-developed. The industry, government, universities and research sector should partner together to promote telemedicine trials. The local ICT advantage can be combined with homegrown telecare systems and products to develop a suitable telecare business model. Encourage major international vendors to trial business models suitable for the telecare industry in Chinese communities.
Use cloud computing services to stimulate industry development in Taiwan
Connect use of cloud services with the six key emerging industries Connect use of cloud services with the six key emerging industries

Boutique agriculture

Safe food and lifestyle information service Recreational agriculture service Agricultural production and sales service system Cultural and Creative Digital video service Creative design service system e-Book market service Games and animated media trading services Biotechnology Biotechnology patent service Biometric monitoring service Pre-clinical pharmaceutical biotech testing service

Medical IT application service Health management service Healthcare service Health & quarantine service

Use Cloud Services

Medical tourism service Tourism information and guidance service All-aspect tourism information service LOHAS business district service system
Residential and industrial energy management service Electrical system optimization and management service Energy-consumption management network service
4. Strategies and Models for Foreign Investment in Taiwan
Cultural barriers still exist between Western and Mainland Chinese businesses. This makes Taiwan a perfect springboard for Western companies looking to enter the China market The weakness of Western companies lies in their incomplete parts supply. Taiwan has the advantage in this area as it not only has access to cross-strait supply chains but also meets quality standards of foreign companies. As the industry supply chain in China is still currently incomplete, Taiwan can provide Western companies with valuable assistance. Taiwan is familiar with Western business management methods and approaches to business. In recent years, Taiwan has paid attention to intellectual property rights and knows how to win orders through legal means in order to earn the trust of foreign companies. Taiwanese companies can help Western companies seeking to introduce their technology to China with regards to technology transfer or training of local technicians. This will speed up introduction and greatly reduce the time required for development.
Gateway Bridge Living Lab Value Chain

Lighting Hub

Strategies and Models for Western Investment in Industries with Potential in Taiwan

Industry for Investment

Medical service industry (EXMedical devices, telecare) Communications equipment manufacturing industry (EXCloud computing)

Investment Strategy

Acquire Taiwan's dental implant and knee joint technologies, telecare equipment components and medical device components Become the testing ground for entering the China market Learn the equipment manufacturing technology required fro consumer-premise equipment in Taiwan such as fiber-optics, next-generation network (NGN), IC design and system integration. For cloud computing, the development of software and hardware for containerized data centers can be used to set up data centers in Taiwan. Purchase Taiwanese semiconductor, LED, solar power, and LCD parts. Taiwanese module makers can partner with Japanese key parts suppliers to develop the China market Purchase the manufacturing technology and marketing methods for Taiwanese automotive parts Use the China market and experience with whole vehicles to spur investment in key Taiwanese EV parts industry and increase its size.

Recommended Model

Sole venture Joint venture Shareholding Acquisition R&D center Operations centers
Electronics parts industry (EXSmart handheld device MEMS, smart handheld device panels)
Automobile and parts manufacturing industry (EXAutomotive electronics, lithium batteries, automotive semiconductor)
Taiwanese-Western Cooperation for Success in China Market
The strength of the Western multinationals is in their core technology, international brand as well as their system integration capacity, product planning capacity, market acquisition capacity and ICT network. The advantage for Taiwanese companies is from being tier-1 suppliers with strong R&D capacity in some sub-systems as well. If Western and Taiwanese strengths in technology, management and market can be combined, this will help them develop the China market together.
Advantages of Western Multinationals, Taiwan and China
Business nationality Western Multinational Enterprise

Ownership advantage

Core technologies International brand
Internalization advantage
System integration capacity Product planning capacity Market acquisition capacity ICT network NA NA

Location advantage

Taiwan China
Tier-1 supplier R&D and manufacturing capacity in some of the sub-systems Strength in production-related R&D Large low-cost labor force Technology R&D system with tradition of basic research Huge domestic market
Source: R&D internationalization and host country advantage: Comparison of flagship-level multinational enterprises in cross-strait R&D", Taiwan Academy of Management Journal, compiled by ITRI IEK (2010/10)
Use Taiwan's advantages to build strategic alliances with Western companies
Taiwan is strong in R&D If Western enterprises have their products processed in Taiwan, they can take advantage of Taiwan's R&D and manufacturing capacity to make their products more suitable for the Asian region, generating added value and adjustments. Taiwan has plenty of manpower The technical, management and marketing personnel in Western enterprises can use Taiwan as a base and draw on Taiwanese talents to carry out product R&D in Asia, provide production management, market development and services. This will help generate resource synergies. Taiwan's geographic advantage Due to a convenient geographic location, Taiwan can serve as a purchasing and distribution base for Western companies in Asia. In this role as provider of logistics support Taiwan can help reduce business inventories, provide just-intime service and boost competitiveness.
Strategies and Opportunities for Western Investment in the Taiwanese Manufacturing Industry (EXSix Emerging Industries, Four Intelligent Industries)
Test bed for Foreign Companies Entering the China Market e.g. telecare

Use Taiwanese R&D resources (especially private and public research organizations) to set up an innovative network. This will boost R&D performance and allow R&D results to be used for expanding the China market.
Chinese markets'Test bed for Chinese DNA and telecare
Invest in industries or databases with Chinese experience or basic information to build a testing platform.
Gaps in industry chains and clusters e.g. automotive electronics, lithium batteries etc.
Invest in Taiwans industry chain gaps and use core technologies to give a further boost to product value. Six key emerging industries and four intelligent service industries, introduction to gaps in the current industry chain, quick entry into emerging industries such as cloud computing, lithium batteries, MEMS, OLED panels, automotive semiconductors, medical devices, automotive electronics Use international and Taiwanese industry clusters' requirements in cluster consolidation Taiwan's industry clusters are rated 3rd in the world by the WEF. Industry clusters such as Yingge ceramics, Lugang hardware (Changhua), Tainan orchids, Kaohsiung's yacht and screw industries can be integrated with international industry clusters.
Strategies and Opportunities for Western Investment in the Taiwanese Service Industry (EXTen Key Service Industries)
Introduction of International management model by private venture fund e.g. service industry, top 100 companies with growth potential
Use investment incentives to introduce large amounts of capital and long-term management. to realize corporate governance, international operations and public listing. Potential industries include finance, distribution, manufacturing, real estate and broadcast media. E.g. US Carlyle Group's investment in the ET Media Group and New bridge Capital's investment in the Taishin Bank.
Design center for China/Chinese/Global Market e.g., creative industries, design centers
Have well-known Western design companies take advantage of Taiwanese elements and market the ideas to the world and support the development of Taiwan's unique cultural and creative industries Invest in Taiwan and set up a "Designer Database" to build a Taipei design cluster.

Increase international exposure and investment in Taiwan: e.g., trade markets and exhibitions
Invest in tourism through events such as the Taipei International Floral Expo. Through Taiwanese product markets and investing in Taiwanese products through the Shanghai World Expo.
5. Conclusion: Further develop Taiwan through the Taiwanese international investment platform
- Value chain integration, platform service, industry cluster Function Transaction Industry

Manufacturing R&D

Production integration platform services

Design

Marketing
Interface integration platform Information services

Logistics flow

Business flow People flow
Biotech Green energy Agriculture
Six Key Emerging Industries

Cash flow

Medicine Cultural & creative

Operations

Taiwanese global investment platform (Joint global investment promotion service center)

Thank you.