La gestión por procesos en el turismo Procesos en la hotelería

The BDCCs have contributed to Northeast Asian industrialization, especially in the cases of Taiwan and South Korea, as well as China since the late 1990s.Most importantly, the BDCCs have also led to the establishment of interdependent production networks between these economies.79 According to Chunji Yun, the definition of BDCCs is:

“IPNs organised by merchandisers including trading companies, large retailers, and brand-name firms, which have competitive advantages in

76 _{For more details concerning Japanese model of flying geese, please refer to Andrew Staples,}

“Responses to Regionalism: Cooperate Strategy in East Asia” in The Evolution of Regionalism in Asia,

ed. Heribert Dieter (New York: Routledge, 2007): 109-11; Yun, “International Production Networks and the Role of the State”, 175-77; Gereffi, “The Organization of Buyer-Driven Global Commodity Chains”, 96-97.

77 _{Hobday, “Latecomer Catch-up Strategy in Electronics”, 51-53.}

78 _{Yun, “International Production Networks and the Role of the State”, 177-81.} 79 _{Gereffi, “The Organization of Buyer-Driven Global Commodity Chains”, 97-100.}

distribution and marketing end; core competences of the organisers lie in

branding and marketing power”.80

Taiwan’s connection with the US-driven BDCCs in East Asia can be traced back to the 1960s when the Taiwanese government still focused on the development of labor-intensive manufacturing industries at the startup stage of industrialization. 81 The low-cost labor force in Taiwan was the core factor that impelled US electronic manufacturers to reallocate their labor-intensive production lines to the island so as to maintain their competiveness in the home market.82 Simultaneously, Taiwan also established export-processing zones (EPZ) in Kaohsiung City where MNCs could enjoy the privileges of lower tariffs, and these preferential trade policies had equipped it with further incentives to lure US electronic industries.83

Notably, after US enterprises stationing their production lines in EPZs, Taiwan endeavored to create connections between their manufacturers and US electronic manufacturing industries in the 1970s.84 From thereon, there has been a proliferation of small and medium-sized local manufacturers (or small and medium-sized enterprises, SMEs) producing electronic components for US manufacturers in EPZs.85 These SMEs laid the substantial foundations of the development of Taiwanese and South Korean information and communication technology (ICT) industries in the 1980s,86 and Taiwan’s electronic components manufacturer

80 _{Yun, “International Production Networks and the Role of the State”, 177.} 81 _{Hobday, “Latecomer Catch-up Strategy in Electronics”, 48-51.}

82 _{Yun, “International Production Networks and the Role of the State”, 177-78.} 83 _{Dent, “Taiwan and the New East Asian Regionalism”, 120.}

84 _{Dieter Ernst, “Inter-Organizational Knowledge Outsourcing: What Permits Small Taiwanese Firms}

to Compete in the Computer Industry?”, Asia Pacific journal of Management 17, no. 2 (2000):231-33.

85 _{Hobday, “Latecomer Catch-up Strategy in Electronics”, 51-56.} 86 _Ibid.

Yageo is a case in point.

Today, Yageo is an MNC that has business operation centers and factories in Taiwan, China, the US and Europe, and it is also the largest passive components manufacturer in the world.87 The major component product of Yageo is multi-layer ceramic capacitors (MLCCs) that are widely used in ICT products, consumption electronics (e.g. televisions, radios and so on) and automobile electronics.88 _{In 2013,} its annual revenue reached US$830 million of which MLCC products occupied more than 80%.89 This company manufactured about 160 billion units of MLCC per month on average.90 However, in the early stage after its establishment in 1977, Yageo was still an SME, and its revenue relied on the orders from foreign electronic industries in the EPZ in Kaohsiung City.91 _{Meanwhile, by comparing Yageo’s annual} revenue with its productivity, it is not difficult to see how low the price of a single MLCC unit is. In this case, to increase business revenue, Yageo’s strategy was similar to most well-developed Taiwanese components manufacturers, namely it invested in research and development (R&D) to fulfill the strategy of ‘low-margin, high volume’.92

In terms of assisting Taiwanese component manufacturers in upgrading manufacturing technology, the US electronic industries played an important role in the 1970s.93 Solid strategic partnerships with US electronic industries allowed

87 _{Dora W. Chang, interviewed by author, December 16, 2014; Jacky B. Chen, interviewed by author,}

December 16, 2014.

88 _{Jacky B. Chen, interviewed by author, December 16, 2014.} 89 _Ibid.

90 _Ibid. 91 _Ibid.

92 _{Yun, “International Production Networks and the Role of the State”, 180.} 93 _Ibid.

Taiwan to acquire advanced production technology through business exchanges or direct technology transfer (especially semiconductor technology transfer from Radio Corporation of America).94 _{Besides, the increasing orders from US MNCs allowed} Taiwan’s SMEs to increase their investment in R&D.95 By this reasoning, the US electronic industries enhanced both the quality and productivity of Taiwanese components manufacturers, and also assisted Taiwan’s SMEs in achieving the strategy of “low-margin, high volume”.96

Following the rapid progress of Taiwan’s manufacturing skills in the 1980s, US

enterprises the electronic and ICT industries in particular decided to

outsource all of their products to Taiwan’s manufacturing industries in order to further reduce their operating costs. 97 _{Subsequently, Taiwan’s ICT industries have} taken the form of original equipment manufacturers (OEM) on the world stage.98 According to Mike Hobday, the OEM and its business model can be understood as “the [manufacturer] produces a good to the exact specification of a foreign buyer or [MNC], which then markets the product under its own brand name using its own distribution [or marketing] channels”.99 _{Generally speaking, the OEM business} model could benefit NIEs’ economic development in two ways by allowing faster progress towards industrialization and industry upgrading.100 The case of ASUS clearly illustrates not only the development of Taiwan’s OEM but also the OEM business model’s contribution to the progress of Taiwan’s industrialization.

94 _{Hobday, “Latecomer Catch-up Strategy in Electronics”, 51-56.} 95 _Ibid.

96 _{Yun, “International Production Networks and the Role of the State”, 178-180.} 97 _Ibid.

98 _Ibid.

99 _{Hobday, “Latecomer Catch-up Strategy in Electronics”, 55.}

ASUS is an original brand manufacturer (OBM) in Taiwan, and one of the top five largest brands of laptops and personal computers (PCs) in the world. In 2013, ASUS’ annual revenue was about US$15 billion of which about 65% came from the sales of PCs and laptops.101 Before 2006, ASUS was the largest OEM in Taiwan, and its main business was producing components of mobiles, laptops and PCs (especially motherboards) for US and Japan’s ICT industries, such as Apple and Dell, which contributed to 60% of ASUS annual revenue.102 Notably, ASUS was also responsible for assembling ICT products for customers, as several components of ASUS costumers’ products were from Taiwanese SMEs.103 This business operation model has generated “horizontal integration” between OEMs and component manufacturers in Taiwan.104 Subsequently, it has catalyzed the establishment of complete supply chains of ICT products in Taiwan, which allowed Taiwanese OEMs like ASUS to commence the project of building their own brands.105 _{The pattern of industrial} transformation will be illustrated with the case of ASUS in the context of Taiwan’s “go south” strategy in chapter 4.

Following the progress of industrialization in Taiwan, as well as in South Korea, similar to the Japanese model of “flying geese”, both economies’ ICT industries have also reallocated their supply chains to ASEAN developing economies due to the rising cost of production factors in their home countries in the 1990s.106 The distribution of BDCCs could be seen by reviewing intra-regional parts and components trade of Taiwan’s and South Korean ICT industries, as listed in Tables

101 _{Kent S. Chien, interviewed by author, December 26, 2014.} 102 _Ibid.

103 _Ibid.

104 _{Yun, “International Production Networks and the Role of the State”, 178-80.} 105 _{Kent S. Chien, interviewed by author, December 26, 2014.}

3.3.4 and 3.3.5. Accordingly, Malaysia, Thailand, the Philippines and Singapore, were major investment targets of Taiwan’s and South Korean ICT industries. In this regard, concerning Taiwan’s contribution to Southeast Asian economies’ projects of industrialization, it is not surprising that these developing economies supported Taiwan’s participation in APEC in the 1990s despite the lack of formal diplomatic relations with Taiwan as mentioned in the previous section. Nonetheless, the BDCCs did not benefit ASEAN developing economies in the long term. As shown in Table 3.3.4 and 3.3.5, both Taiwanese and South Korean production chains of ICT industries have been converged toward the Chinese market since 2005. This then influenced the effectiveness of Taiwan’s commercial diplomacy for participating in the new wave of East Asian regionalism as will be detailed in the next section.

Table 3.3.4 East Asian Economies’ Share of Taiwan’s Intra-regional Trade in Electronic Components (HS85+HS90) Year _{1995 2000 2005 2010 2014} Brunei 0.00% 0.00% 0.00% 0.00% 0.00% China 1.87% 5.75% 27.32% 38.53% 38.60% Hong Kong 19.51% 20.05% 18.23% 15.81% 18.22% Indonesia 0.85% 0.52% 0.47% 0.34% 0.28% Japan 43.42% 34.13% 22.79% 17.12% 12.05% Cambodia 0.00% 0.00% 0.00% 0.00% 0.01% South Korea, 8.76% 9.86% 12.15% 10.33% 9.34% Laos 0.00% 0.00% 0.00% 0.00% 0.00% Malaysia 7.70% 8.50% 4.89% 3.99% 4.36% Myanmar 0.00% 0.00% 0.01% 0.01% 0.01% The Philippines 1.62% 6.51% 4.16% 2.70% 2.36% Singapore 12.10% 11.50% 7.48% 8.72% 11.76% Thailand 3.99% 2.94% 2.28% 2.11% 1.78% Vietnam 0.18% 0.24% 0.19% 0.34% 1.23% Subtotal 100.00% 100.00% 100.00% 100.00% 100.00%

Source: Calculated by the author based on the data compiled from the Database of Trade Statistics, Bureau of Foreign Trade, Ministry of Economic Affairs (R.O.C.)107

107 _{Bureau of Foreign Trade, MOEA, ROC, “Trade Statistics”.}

Table 3.3.5 East Asian Economies’ Share of South Korea’s Intra-regional Trade in Electronic Components (HS85+HS90) Year _{1990 1995 2000 2005 2010 2014} Brunei 0.00% 0.01% 0.01% 0.00% 0.00% 0.01% Cambodia 0.00% 0.00% 0.00% 0.00% 0.01% 0.06% China 5.81% 5.32% 15.57% 39.56% 56.28% 58.80% Hong Kong 11.25% 11.19% 10.76% 10.90% 10.85% 10.53% Indonesia 0.76% 1.38% 1.37% 1.05% 1.06% 0.76% Japan 67.00% 54.43% 41.73% 28.65% 15.21% 10.65% Laos 0.00% 0.00% 0.00% 0.00% 0.01% 0.00% Malaysia 3.84% 6.74% 8.86% 4.18% 3.35% 2.35% Myanmar 0.02% 0.09% 0.04% 0.00% 0.01% 0.04% Philippines 1.15% 1.91% 6.57% 3.71% 2.88% 3.03% Singapore 8.16% 15.84% 11.43% 9.13% 7.24% 6.28% Thailand 2.02% 2.51% 3.29% 2.31% 1.85% 1.47% Vietnam 0.00% 0.57% 0.37% 0.51% 1.25% 6.03% Subtotal 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Source: Calculated by the author based on data compiled from the UN Comtrade Database108