7 - Taiwan: diffusion and impacts of the Internet and e-commerce in a hybrid economy

Summary

Introduction

Taiwan has a hybrid economy that exhibits characteristics of both developed and developing economies. It has a highly developed and modern manufacturing sector, with linkages to customers throughout the world, and its companies are world leaders in the production of computers and other electronic products. Taiwan's literacy rate is comparable to mature economies, and it has a large base of technically skilled workers. Yet, the legal framework for e-commerce is developing only slowly and the rate of IT spending is relatively low, given the level of development. The result is that the Internet and e-commerce have progressed on two distinct trajectories: one for globally oriented manufacturing firms, and the other for firms selling to local consumers. The former utilize business-to-business e-commerce technologies to coordinate with global trading partners, while the latter have developed business-to-consumer strategies tailored to the preferences and buying habits of Taiwanese consumers.

The most important drivers of e-commerce use for manufacturers in Taiwan appear to be international competitive pressure and the requirements of global customers. In contrast, the retail/wholesale sector has a high density of physical retailers, is not subject to a great deal of pressure from foreign competition, and thus lags behind manufacturing in its use of the Internet and e-commerce. For Taiwanese firms, e-commerce adoption is typically undertaken either to broaden their customer base by exploring new marketing channels or to create competition for traditional channels.