March 4th 2006

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Articles from this issue:

COVER STORY: NATIONAL SECURITY: The sum of all our fears - betrayal

AUSTRALIAN EXPORTS: AWB Iraq wheat sales debacle - whose responsibility now?

CANBERRA OBSERVED: RU-486 vote highlights MPs' moral confusion

EDITORIAL: Drugs: can we prevent more 'Bali Nine' trials?

SOUTH AUSTRALIA: March 18 election - personalities not policies

PUBLIC ISSUES: Reflections on the abortion wars

SCHOOLS: Time to close teacher-training schools?

ECONOMICS: UK report calls for halt to supermarket takeovers

TAIWAN: From plastic keyboards to camera phones

STRAWS IN THE WIND: Sordid message of Leunig's cartoon / The RU-486 debate / Religious beliefs

POLITICAL IDEAS: Alasdair MacIntyre and the bugbear of liberalism

Kevin Rudd for PM? (letter)

Senator Joe McCarthy's 'shameful vendettas' (letter)

Health risks with imported food (letter)

Engineers unfairly stereotyped (letter)

CINEMA: Ignorant critics slam Spielberg's latest, 'Munich'


BOOKS: SADDAM'S SECRETS: How an Iraqi General Defied and Survived Saddam Hussein, by Georges Sada

Books promotion page

From plastic keyboards to camera phones

by Peter Westmore

News Weekly, March 4, 2006
Peter Westmore describes how Taiwan became the world's digital camera capital.

Since the year 2000, Taiwan has emerged as a world leader of high-technology digital camera and camera phone technologies. The way in which Taiwan developed these industries is an example of how a nation, with a well-educated work force and a willingness to invest in technology, can become a world leader.

Just 10 years ago, digital technology was the preserve of a few large companies, principally from Japan. In Taiwan, manufacturers of low-cost computer peripherals, such as keyboards and mouses, began looking at how they could add value to their manufacturing process.

Taiwanese manufacturers were among the first to develop web cams, simple video cameras which plug directly into computers, and make it possible to set up videophone calls over the Internet.

Web cams were inexpensive to produce and, although the image quality was far lower than for video cameras, they made it possible for Taiwanese manufacturers to get experience in digital imaging, and to integrate optics, digital camera chips and image sensors - technologies unknown to conventional camera-makers.

The new technology was then adapted by many other Taiwanese companies so that, within years, there were about 30 Taiwanese manufacturers of digital cameras.

In an effort to cut costs and latch onto the new technology, Japanese camera producers such as Casio, Nikon and Olympus sought out Taiwanese manufacturers.

At about the same time, Taiwanese camera manufacturers such as Asia Optical and Premier Image Technology could see that there was a decisive swing towards digital cameras.

With close connections overseas, they began manufacturing for the Japanese, as well as conducting their own research and development, and purchasing some of the smaller Taiwanese manufacturers.

Premier had been established in 1983 as a manufacturer of pocket-sized 110 and disk cameras. Over subsequent years, it developed manual cameras, then 35mm, then auto-focus cameras.

This single company now has 15 per cent of the world's total digital market.

Asia Optical Co was established 25 years ago, as a manufacturer of lenses for cameras and microscopes, principally for Japanese companies such as Olympus and Nikon. It moved into digital photography in the 1990s with Nikon, and later purchased the Taiwanese subsidiary of Ricoh, another Japanese manufacturer. These manufacturers have come to dominate even the Taiwanese market.

The growth of the digital camera business in Taiwan has been phenomenal. In 2004, it produced 15 million cameras; but, in 2006, this figure is expected to be more than 41 million cameras, valued at about $5 billion.

Taiwan produces around 60 per cent of the world's total production. It has also become the dominant manufacturer of the ubiquitous camera phones.

What are the lessons in this for Australia which, like Taiwan, has a highly skilled workforce and a well-developed technological base?

First, the Taiwanese Government has created a number of organisational arrangements which are designed to encourage business innovation in particular areas.

For example, it provides industry intelligence for the next 25 years, which helps local manufacturers to determine future market opportunities and problems. It also provides incentives to foreign corporations which bring new technologies into Taiwan.

Second, Taiwan has established large technology parks associated with its universities, so that there is cross-fertilisation between universities and industry.

Additionally, the government-sponsored Industrial Technology Research Institute conducts research to benefit industry. Its patents are then sold to Taiwanese companies, ensuring that the benefits of new technology remain in the country.

The existence of these institutional arrangements is, of course, no guarantee that any particular project will succeed. And there have been both successes (computers, optoelectronic) and failures (the car industry, aviation).

Conducive to innovation

But an environment which is highly conductive to industrial innovation and investment in new technologies, such as that in Taiwan, has clearly led to a substantial manufacturing sector, despite the presence of low-cost manufacturers (sometimes even Taiwan-owned) across the Straits in China.

Within Taiwan itself, there is also vigorous competition between firms, which ensures that the local industry is well-equipped to compete even with low-cost producers from abroad.

Firms which cannot withstand fierce competition either up-scale their manufacturing operations, move to low-cost countries such as China and Vietnam, or shut down.

In the past, Australia has unashamedly copied other countries in fields such as sport, medicine and economics; it can learn many lessons by studying the business plan of democracies such as Taiwan.

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