South Korea can, but not Taiwan?
陳清池

Basing on the survey of Interbrand Corp, Business Week has produced a list of the world’s top 100 brands. (August 1, 2005, pp. 90-94.) US firms dominate the top 10 and make up slightly more than half of those listed. In addition, only 10 of the 100 best brands come from outside of the US and Europe; seven out of the ten are Japanese (including Toyota, Honda and Sony) while the remaining three are South Korean (Samsung, Hyundai and LG). Why Japan and S. Korea can, but not Taiwan?

The size of a country should not have mattered much on account of the fact that 5 of the top ranked are from little Switzerland. Netherlands has 3 while Finland and Sweden each has one. All these European countries are smaller than Taiwan. Why then not Taiwan?

To answer the question, we have to take a look at the development of companies in Taiwan as well as those in South Korea.

Like Taiwan, Korea was a Japanese colony until 1945. Economists, such as Samuel Ho and Frank Hsiao, have proved that Japanese rule had made significant contribution to lay a sound foundation for economic development in Taiwan and Korea. In terms of infrastructure, such as education and public transportation, Taiwan and Korea were far ahead of China (excluding of course Manchuria which the Japanese also had laid an industrial foundation) by the early 1930’s.

By the late 1980s’s, South Korea, like Taiwan, was widely known as one of East Asia’s 4 Little Tigers (or Newly Industrialized Economies). To eventually achieve the status of a newly industrialized country, S. Korea, again not unlike Taiwan, has learned, borrowed and imitated from the success of Japan’s post-WWII economic development. No one should blame the South Koreans for hating the harsh Japanese colonial rule and, by extension, the Japanese. The Koreans, however, are intelligent enough to realize that the Japanese model of economic development is the best for them if S. Korea is to be competitive in the industrial world. Among many things the S. Koreans have emulated, the institution of zaibatsu conglomerates is probably one of the most important. Consequently, South Korea has developed a number of chaebol (the same two Hanji). The 3 chaebol that have been ranked among the world’s top 100 are: Samsung, Hyundai and LG. Not unlike the pre-War Japanese zaibatsu, virtually all chaebol are family-owned and –controlled. Many of them had their start by obtaining assets of the Japanese firms in Korea after Japan’s surrender in 1945. Then, the S. Korean government favored them with special treatment. The government-chaebol cooperation has been essential to the subsequent economic growth of S. Korea.

In the West, Samsung electronics and Hyundai cars are now household brand names. The rise of Samsung is particularly impressive. In the late 1990’s, Samsung was still seen as a low-quality brand in a tough consumer electronic industry. However, we have seen the spectacular rise of Samsung after the turn of the new century; Samsung was ranked 42 in 2001, 34 in 2002, 25 in 2003, 21 in 2004 and 20 in the most recent survey. It has even surged ahead of the well-established Sony, which is now ranked 28. In fact, the only Japanese companies to be ranked ahead of Samsung are Toyota (#9) and Honda (#19).

Taiwan’s largest electronics company Acer has claimed that it is ranked as Europe’s largest and Asian-Pacific’s third vendor of notebook computers in the first quarter of 2005. Acer’s products are of high quality. However, Acer is not among the world’s top 100 brand names. Neither is Wang Yung-ching’s Formosa Plastic Company. Why can’t Taiwan even have one ranked in the top 100?

After Japan’s surrender, the Japanese assets in Taiwan were taken over by the Chinese Nationalist Party (KMT) government. No Taiwanese families benefited the way a small number of South Korean families did. In addition, no Taiwanese businessmen or families have been favored by the KMT government the way chaebol have been favored by the South Korean government. As a matter of fact, in its early years of exile on Taiwan the KMT government worked to prevent the expansion of Taiwanese-owned companies. It suffice for us to take a look at the way KMT government treated Tangjung and Tatun, the two largest iron works of Taiwan in the 1950’s. In 1954 the KMT Navy brought a lawsuit against Tatung charging it for the theft of naval property. The automatic guilty verdict nearly crippled Tatung. Tangjung fared even worse when it was eventually taken over in 1962 by the KMT government on the pretense of the company’s having a heavy debt problem. The KMT authorities clearly would not allow the defense-related heavy industry to be in the hands of Taiwanese. For their own protection under the alien KMT rule, many Taiwanese businessmen, including the chairmen of both Tangjung and Tatung, were compelled to join the KMT. It evidently did not do much good for the two Taiwanese iron works.

From the early 1960’s on, Taiwan’s economic growth has depended greatly on hundreds and thousands of small and medium businesses and a much smaller number of large companies. Under less favorable conditions than their counterparts in South Korea, no Taiwanese businesses could have grown to the size and worldwide fame that their South Korean counterparts have.

What’s worse, the KMT government seized Japanese assets not for the good of Taiwan and its people, but rather for the benefit and survival of the KMT government. It is no wonder that the Chinese Nationalist Party is the richest political party in the world.

Shouldn’t the DPP-led government of Taiwan develop a policy to help some quality Taiwanese brands become world famous? After all, if and when there is a Taiwanese company ranked among the world’s top brands, Taiwan’s international visibility will be considerably enhanced

In the final analysis, it is up to the people of Taiwan, the entrepreneurs and others alike, to strive to build up and improve on Taiwan’s brands to the highest level possible. National pride is the key. South Koreans have demonstrated to the world that they are as good as the Japanese. If and when the Taiwanese are proud of their being Taiwanese the way South Koreans are proud of their being South Koreans then Taiwan’s brands should soon be among the top ranked in the world.