Taiwan Textile Industry Analysis & Investment Opportunities

materialisticgumneckElectronics - Devices

Nov 27, 2013 (3 years and 10 months ago)

300 views




Taiwan

Textile Industry

Analysis

&

Investment Opportunities














Department of Investment Services,

Ministry of Economic Affairs
Table of Content
s

I.

Global Trend
s

of

Textile

Trade

................................
.........

1

(I)

Total Global Exports

................................
................................
....

1

(II)

Rankings o
f the World's Top Ten Exporting

Countries

................

2

II.

The Status Quo of
Taiwan’s
Textile Industry
............

4

(I)

Supply and Dem
and of the Textile Industry

................................

4

(II)

Gap in Industry Supply Chain, Investment Niche and Prospective
Foreign Investor
s

................................
................................
........

8

(III)

Majo
r Supplier
s

in Taiwan

................................
.........................

11

III.

Optimal Choices for Foreign Investors

...................

12

(I)

Investment Nylon 6.6
i
n Taiwan

................................
................

12

(II)

Taiwan’s Future Role in the Nylon 6.6 Textile Filament Fiber

...

13

IV.

Successful Examples of Cross
-
national Strategic
Alliance
s

and Foreign In
vestment
s

in Taiwan

....................

15

(I)

Invista
-
Far Eastern

................................
................................
....

15

(II)

Rhodia

................................
................................
.......................

15

V.

Industrial I
n
vestment Incentives

.............................

16

VI.

Industry
-
Academi
a

Collaboration
s

in Taiwan

.......

20


1

I.

Global
Trend
s

of
Textile

Trade

(I)


Total Global Exports

There has been

quite
a
significant replacement of high
-
income countries
by low
-
income countries in textile and apparel production following the start
of the post
-
quota era in 2005. According to WTO data, exports of global
textiles and apparel were worth US$530 billion

(see Fig. 1) in 2006; this
represented
a
10.74%
growth
compared with 2005, which exceeded the 6%
growth rate in 2005.

A closer observation shows that textile exports were worth US$218.6
billion in 2006,
an increase of 7.68% compared w
ith the previous year; this
growth rate also exceeded the 3.9% growth rate in 2005. Apparel exports
were worth US$311.4 billion in 2006, and the 12.99% growth rate for apparel
exports topped the rate for textiles, also exceeding the 6.4% apparel export
gro
wth rate in 2005.

Figure 1
.

Value of Global Textile and Apparel Exports










Source: WTO, ITIS Project, November 2007



152.3
151.1
157.7
151.3
147.9
154.7
147
154.3
172.5
194.7
203
218.6
158.4
164.1
182.3
186
186.1
198.9
195
203
232.5
258.1
275.6
311.4
0
50
100
150
200
250
300
350
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Unit:US$1 Billion
Textiles
Apparel

2

(II)

Rankings of the World's Top Ten Exporting
Countries

A comparison of the
export

value

from the world's ten leading
textile
and apparel export areas in 2006 and 2005 (see Figures 2 and 3) shows that
textile exports from the European Union, China, Hong Kong, the U.S.,
Taiwan, India, Turkey
,

and Pakistan have grown,
with
China
enjoying
the
most significant

growth. Chinese textile exports grew from US$41.1 billion
in 2005 to US$48.7 billion in 2006
,

a growth rate of 18.49%, which was
lower than the
23%
growth rate
in 2005.
The relatively h
igh
-
income East
Asian countries
particularly
Hong Kong, South Korea, Taiwan
,

and Japan had
lower textile exports in 2005 than in 2004, and this trend continued in 2006.


Figure 2
.

Changes in Textile Exports from the World's Ten Leading Expor
in
g Countries


























Source: WTO, ITIS Project, November 2007.









The Leading Countries in Textile Exports, 2005/2006
69.5
41.1
13.8
12.4
10.4
9.7
8.5
7.1
7.1
6.9
71.2
48.7
13.9
12.7
10.1
9.8
9.3
7.6
7.5
6.9
0
10
20
30
40
50
60
70
80
ASEN
Hong
Kong
Sorth
Korea
India
Pakistan
Unit: US$1
billion
2005
2006

3

Observing

the world's ten leading apparel export
ing countries
, we can
see that all
countries

except Mexico, the U.S.
,

and Romania enjoyed
a

growth
in
export
s
. China captured the leading spot from the EU and became the
world's top apparel exporter. China's apparel exports grew by 28.57% in 2006,
which was even higher than its
growth rate of 19.87%

in 2005
.

Figure 3
.

Changes in Appa
rel Exports from the World's Ten Leading Export
ing Countries


















Source: WTO, ITIS, November 2007

The Leading Countries of Apparel Exports, 2005/2006
74.2
79.1
27.3
11.8
9.2
7.3
5.0
5.0
4.6
4.1
83.4
28.4
11.9
10.2
6.3
5.7
4.9
4.4
4.3
95.4
0
10
20
30
40
50
60
70
80
90
100
China
European
Union
Hong
Kong
Turkey
India
Mexico
Indonesia
U.S.A
Romania
Thailand
Unit:US$1 billion
2005
2006

4

II.

The Status
Quo
of
Taiwan’s
Textile Industry

(I)


Supply and Demand of the Textile Industry


(i)


Current
Development
s


When we
l
ook

back at the development of Taiwan’s textile industry

since it started in
1945
, the preliminary stage of development
was mainly
focused on cotton yarn and woven fabrics.

A
fter
the development of the
overall economic construction plan, Taiwan’s textile industry
adhered to
import substitution policies and started to encourage
the
imports of
machinery and raw material
s

to increase production in order to satisfy the
do
mestic demand
s

of

Taiwan
’s

cotton textiles and to further
boost
foreign
exports.

I
n the export expansion stage
from
1961

to
1970
, the industry started
to produce its own synthetic fiber to satisfy the increased demand for raw
material
s

in

the textile industry. Textile goods also expanded from cotton
products to synthetic fiber products, and
during

the fast development
of
the
1960’s, the foundation for Taiwan’s synthetic fiber industry was firmly
established. In the 1970’s, appare
l and clothing accessories became the main
product
s

exported by Taiwan’s textile industry, giving
the
industry an
indicative export status. To this day, Taiwan’s textile industry has a complete
upstream, midstream, and downstream productio
n and supply chain system
from

raw material
s

to
the final product
ion

(see Figure 4)
. Based on an
excellent synthetic fiber industry, it has developed into a
matured
and
successful
industry with synthetic fiber as its main raw material (see Table
1
).

Table
1
: Taiwan’
s

Textile Industry Development Stages

Industry Development

Textile Industry
Development

Main Textile Industry

Stage
Representative

Economic Rebuilding

(194
5~1950)

Recovery (1945~1950)

Cotton Textiles

Essential Goods Industry
Development

(1951~1960)

Development
(1951~1960)

Cotton Textiles

Light Industry Development

Export Expansion

Synthetic Fibers


5

(1961~1970)

(1961~1970)

Heavy Industry Development

(1971~
1980)

Growth (1971~1980)

Apparel

Strategic Industry Development

(1981~1990)

Maturity (1981~1990)

Apparel

Development of High Tech and
Industry Structure Adjustment
(1991~)

Conversion (1991~)

Synthetic Fiber Textiles and High
Tech Textiles

Source: TTRI,

56.(2006.)


(ii)

Output Value

In accordance with
the
data from the Department of Statistics, MOEA,
Taiwan's textile industry had a total output
of
about
NT$350.6 billion from
January to September 2007,
represent
ing

an increase of 1.5% co
mpared with
the same period in 2006. The
s
ynthetic fiber industry had an output value
of
NT$113.56 billion, or 32.4% of the output of the textile industry as a whole,
which
represented an increase of 0.15% over the same period in 200
6. The
output of the textile industry (yarn and fabric) had a value of NT$207.08
billion, and this accounted for the largest share of the textile industry as a
whole (59.1%)
,

and represented an increase of 3.99% compared with the
same period in 2006. The o
utput of the apparel and accessory industry had a
value of NT$29.97 billion, which was down by 8.55% over the same period
in 2006. (See Table
2
)


Table
2
.

Output Value of Taiwan's Textile Industry

Unit: NT$1 million

Year

Synthetic
fiber industry

Spinning
and
weaving
industry

Apparel and
accessory
industry

Total (% increase in
value)

2001

113,476

318,998

73,040

505,514(
-
)

2002

123,609

307,959

65,830

497,399(35.86)

2003

141,051

290,432

63,123

494,606(32.88)

2004

163,528

305,983

59,241

528,752(32.52)

20
05

153,629

269,838

48,761

472,228(34.09)

2006

151,263

262,939

43,611

457,813(
-
)

2007 (projected)

155,045

266,883

41,259

463,187(35.00)

2008 (projected)

156,500

270,000

40,000

466,500(36.00)


6

Jan.

Sept. 2007

113,560

207,078

29,974

350,611

Comparison of
same periods in
2006/07

0.15%

3.99%

-
8.55%

1.50%


Source: Department of Statistics, MOEA, adapted by
TTRI
ITIS Project, Nov. 2007


From Table
3
, it can be observed that the increased output of Taiwan's
synthetic fiber industry was mainly attributable to g
rowth in domestic sales.
While exports fell by 7.27%
from
Jan
uary to
Sept
ember
2007
,

compared with
the same period in the previous year, domestic sales grew 6.02% during the
same period,
while
inventories

dropped
. The 3.99% increase in
output value
by the mid
-
stream segment of the weaving industry was primarily due to
the
growth
in exports
(
5.41%

increase
). It can be seen that through the more
specialized division of labor by the upstream
s
ynthetic fiber and mid
-
s
tream
spinning and weaving industry segments, Taiwan's textile industry has
maintained strong competitiveness in exports.
Due to

the rise in the output of
the
s
ynthetic fiber industry and growing domestic sales

,
Taiwan’s

s
ynth
etic
fiber market appears to be growing, which is chiefly attributable to
the
exports of textiles and woven products.


Table
3

.
Textile Exports and Domestic Sales for Taiwan

Unit:

NT$1 million

Period

Synthetic fiber industry

Spinning and weaving
industry

Apparel and accessory
industry

Domestic
sales

Exports

Domestic
sales

Exports

Domestic
sales

Exports

Jan



pe灴

2MM㘠

㐶ISPU

㐴ITUP

ㄲ〬Pㄷ

㜳ITU2

ㄶINUP

㈳IN2N

gan



pe灴

2MM㜠

㐹I44T

㐱I529

ㄲ㈬P㔴

㜷ITTT

ㄴI9NT

㈱I9TU

Amou湴 潦
i湣reas支摥cre
ase

㈬UM9

-
P㈵4

㈬MPT

㌬995

-
ㄬ㈶S

-
ㄬㄴP

% c桡n来

㘮M2%

-
㜮㈷%

ㄮS9%

㔮4N%

-
㜮㠲%

-
㐮㤴%


po畲ceW ae灡rtme湴 潦 pt慴is瑩csI MlbAI a摡灴e搠by

qqof

fqfp mr潪e捴I kov. ㈰MT


k潴攺 Beca畳e t桥 ae灡rtme湴 潦 pt慴is瑩csI MlbA cond畣ts
楴s
s畲癥祳 畳in

q略s瑩o湮aires an搠
a渠es瑩ma瑩o渠matri砠
as 潰pose搠t漠
w桡t t桥
C畳toms
n潲ma汬礠
畳es
E
摥c污re搠癡l略 of g潯摳
摵ri湧 c畳toms cleara湣eFI t桥

exp潲t 癡l略s i渠n桩s ta扬e 摩ffer from th潳e re灯rte搠b礠C畳toms.



7

Industry ,
22%
Home
Textiles, 11%
Clothing ,
67%
(
iii
)

Domestic Demand

The 2007 survey results showed that the proportion of apparel, home,
and industrial textiles of Taiwan’s textile industry structure changed from
69:13:18 in 2004
to 67:11:22 in 2006 (see Figure
5
). In other words, apparel
and home textiles each dropped
by
2%

while

industrial textiles rose by 4%.
The
meaning behind this data
shows

that while the government’s guiding
policies have had a
considerable effect, companies
themselves
are
willing to
invest
their
resources in developing towards industrial textiles.

I
n terms of
exports, in 2006, the export value and quantity for industrial textiles
were
clearly higher than in
2004, indicating that Taiwan’s industrial textiles
definitely have
a competitive edge
in the international market.


Figure
4
.

Structural
An
alysis of Synthetic Fiber Use in 2006






Source: Compiled by TTRI ITIS Project, Nov. 2007


If

we define domestic demand by adding imports and subtracting
exports from production, Table 5 shows that
the
domestic demand peaked in
2004 at NT$200.2 billion and has been decreasing since
then
. It is estimated
that
the
domestic demand increased
slightly in 2007. In addition, exports
accounted for 82.6% of output value, which was a slightly lower percentage
than in 2006.


8

Polyeste
r
Far Easter,
Sinkong
,
Hong
Chou,Tung
Ho
Apparel
Carnival,
Tainan
,
Hoong
ho,
Hoong
Lung,Nien
Hsing
,
Roo
Hsing
,
TEXRAY,
Makalot
Synthetic Fibers
Up
Up
-
-
Stream
Stream
Middle
Middle
-
-
Stream
Stream
Down
Down
-
-
Stream
Stream
spinning
Dyeing &
Finishing
Xinfang
, I
-
Hwa
,
TEXRAY,Tah
Tong,Nien
Hsing
,
Hoong
Ho, ECLAT,
Universal,
Chia
Her,
Di
-
Licacy
Chyang
Sheng
,
Nan
-
Yang,
TaDong,Ta
roko
Tu
-
Ta,
Tloong
,
Melatech
,
Lily,Li
Hwa
,
Chuhngho
, I
-
hwa
Weaving
Nylon Fiber
Formosa
Chmeicals
&
Fiber,
Zig
Sheng,Li
Peng
,
Formosa
Taffeta, Fu
-
Ta
Table
4
.

Size of Taiwan’s Textile Industry Market


Unit: NT$100 million

Year

Output value

Import Value

Export
V
alue


Domestic
market demand

Exports as portion of
output (%)

2000

5,775

903

4,730

1,948

81.9

2001

5,050

796

4,256

1,589

84.3

2002

4,966

855

4,191

1,630

84.4

2003

4,952

1031

4,152

1,831

83.8

2004

5,294

902

4,193

2,002

79.2

2005

4,680

840

3,787

1,73
3

80.9

2006

4,578

890

3,828

1,640

83.6

2007

4,632

891

3,828

1,695

82.6



Source: Department of Statistics, MOEA; Office of Statistics, Directorate General of Customs, MOF; Textile Industry

Research Institute ITIS Project, November 2007


(II)


Gap in Indus
try Supply Chain,
Investment Niche and
Prospective Foreign Investor
s

In the 1970’s, apparel and clothing accessories became the main
product
s

exported by Taiwan’s textile industry, giving Taiwan’s

textile
industry an indicative export status. To
this day, Taiwan’s textile industry has
a complete upstream, midstream, and downstream production and supply
chain system from
raw material
s

to
final
product
ion

(see Figure 4
)
. Based on
an excellent synthetic fiber industry, it has developed into a
matured and
successful
textile industry with synthetic fiber as its main raw material.

Figure 5
.

The Supply Chain of Textiles










9

In addition, the USA
will
also
focus on
the
production of nylon short
fibers and carpet filament fibers, and reduce

the

production of
textile
filament
fibers. Statistics show that the USA’s textile
filament

fiber output was 72,000
tons in 2001,
but
it
reduced to 36,000 tons in 2006
.

I
t is expected to continue
to
decrease
to 26,000 tons in 2011,
while the
production capacity is expected
to
decline
by 31%
.

Table
5
.

Global Main Production Area of Synthetic Fiber in 2006

Unit

1,000 ton
s

Area

Polyeste
r

Filament

Fiber

Polyester
Staple
Fiber

Nylon

Fiber

Acrylic

Fiber

Synthetic

Fiber

Cellulose
Fiber

Chemical

Fiber

Share%

Japan

270

213

123

243

925

66

991

2.6

-
4.2

-
0.2

-
0.7

-
7.1

-
3.1

-
0.9

-
3.0

South

Korea

735

515

165

48

1,51
3

6

1,519

4.1

-
15.1

-
1.4

-
5.7

-
49.2

-
11.4

0.2

-
114.4

Taiwan

1,185

613

415

149

2,383

132

2,516

6.7

-
7.1

-
16.3

-
0.3

6.9

-
7.8

15.6

-
6.8

China

9,913

6,133

852

839

17,882

1,435

19,317

51.6

11.3

11.4

18.3

7.1

11.3

20.3

12.0

ASEAN

1,256

906

129

81

2,3
82

330

2,712

7.2

-
1.3

-
5.0

6.2

4.2

-
2.2

2.2

-
1.7

India

1,175

745

90

104

2,114

307

2,421

6.5

13.0

21.2

7.5

-
6.3

14.3

3.9

12.9

U.S.A
.

407

835

1,056

4

2,416

27

2,443

6.5

-
10.0

-
8.9

-
2.4

-
93.8

-
8.1

-
42.3

-
8.7

West

European

617

538

544

735

2,487

449

2,937

7.8

-
9.5

-
0.6

-
1.3

-
0.2

-
3.0

5.7

-
1.7

Global

Total

16,194

11,483

3,928

2,507

34,581

2,872

37,454

100.
0

4.9

3.9

1.7

-
5.1

3.3

10.4

3.8

Source

JCFA
,
Japan

Chemical

Fibers

Association
,
2007


N
ylon 6.6 textile filament fibers are suita
ble
for
products with greater
ductility functions,
which are usually
represented by athletic wear. With the
constant expansion of the global
market scale

in athletic wear
, it is estimated
that the demand for nylon 6.6 textile

fi
lament
fiber will not show a reduction
trend in the future. It is expected that in the next few years, supply will not be

10

Intermediates
Polymer
Fiber
AND

HMDA

AA
European:
European:
BASF
BASF
,
,
Rhodia
Rhodia
U.S.A
U.S.A


DuPont,
DuPont,
Solutia
Solutia
Japan
Japan


Asahi
Asahi
European:
European:
BASF
BASF
,
,
Rhodia
Rhodia
,
,
Radici
Radici
U.S.A
U.S.A


DuPont,
DuPont,
Solutia
Solutia
Japan
Japan


Asahi
Asahi
Nylon 6.6 Chip
Nylon6.6 Fiber
European:Rhodia
European:Rhodia


U.S.A:Investia
U.S.A:Investia
,
,
Solutia
Solutia
Japan:Asahi
Japan:Asahi
Taiwan:Investia
Taiwan:Investia
-
-
Far
Far
Eastern
Eastern


JUN WAI
JUN WAI
Industrial Co., Ltd., Formosa
Industrial Co., Ltd., Formosa
Chemicals & Fibers Corp.
Chemicals & Fibers Corp.
Gap in the supply
chain of Nylon 6.6
able to meet

the

demand. Statistics show that the 2006 global excess of
demand was 65,000 tons, and it is predicted that in 2011, the
excess demand
will reach 87,000 tons (see Figure
6
).

Figure

6
.

Global
Supply and Demand of Textile Filament Fiber of
Nylon

6.6






Source: CMAI (2007); Compiled by TTRI ITIS Project, Nov. 2007

CMAI data shows that the main production region for nylon

6.6 is
Western Europe, and this product’s output reached 141,000 tons in 2001.
However, by 2006, it had already decreased to 103,000 tons, and it is
estimated that by 2011, the output will continue to

plunge
to 95,000 tons, and
at the same time, p
roduction capacity will also
decline
by 7.7%. This is
because Western European companies are keen on the opportunity of safety
airbags and have proactively increased
the
production of industria
l

filament
fibers,
while re
ducing
the
production of textile filament fibers.

Figure 7
.

The Supply Chain of Nylon 6.6







0
50
100
150
200
250
300
350
400
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1,000
tons
需求量
供給量
Q
uantity of
Demand
Quantity of
Supply

11

(III)

Major Supplier
s

in Taiwan

Although Taiwan is
a major producer
of
t
extile
f
ilament
f
ibers,
most
domestic companies

produce

Nylon 6
. There are
several Taiwan
ese

companies

that
produce Nylon 6.6, including Inv
ist
a
-
Far Eastern Co., JUN
WAI Industrial Co., Ltd., and Formosa Chemicals & Fiber C
or
p.

due

to the
key materials
in the
up
-
stream

supply chain
led

by DuPont, Solutia, Rhodia,
BASF
,

and Asahi

(see Figure 7)
.
However, in the future,

insufficient output

is
foreseen
mainly because Taiwan is a major global provider
of functional
fabrics. Currently, 70% of the suppliers of the world famous athletic brands
come from Taiwan, so in the nylon 6.6 value chain, Taiwan mainly produces
the final fabric.
However,
for
the fiber end, the
domestic
output
of Nylon 6.6
is very limited, staying at 20,000 tons in the last few years (see Figure
8
),

As
a result, the output of Nylon
6.6
does

not meet

the
domestic demand.

Figure
8
.

Supply and Demand of
Nylon 6.6

Textile Filament Fiber

in Taiwan











Source: CMAI
(2007); Compiled by TTRI ITIS Project, Nov. 2007

80

0

201
1


Unit

1,000 tons

2001

2003

2004

2005

2006

2007

2008

2009

2010

2002

Supply

D
emand

10

20

30

40

50

60

70


12


III.

Optimal Choices for Foreign Investors

Taiwan’s nylon textile industry production and value chain structure
development
are

complete, from the upstream petrochemical raw material to
the downstream yarn,
woven fabric (knitted and loomed), dyeing and
finishing, and apparel. Compared to the development

in

other countries,
because of
its

strategic
geographical

location
, Taiwan has
an
advantage
in its
industry clus
ter
and can
therefore
fully apply convenient resources.


(I)


Investment Nylon 6.6
i
n Taiwan


1.
Taiwan’s
n
ylon
i
ndustry
with complete
s
upply
c
hain

Taiwan’s nylon textile industry production and value chain structure
development
are

complete,

from the upstream petrochemical raw material to
the downstream yarn, woven fabric (knitted and loomed), dyeing and
finishing, and apparel. Compared to the development
in
other countries,
because of
its
strategic
geographical

location
, Taiwan has
an advantage in its
industry cluster
and can
therefore
fully apply convenient resources.
(repeated
above paragraph???)

2.
Taiwan with

experienced production technology and skills in
Nylon
6.6

Of the four major chemica
l fibers of rayon, acrylic, polyester, and nylon,
three of them have begun to decline in Taiwan, and Taiwan now only has a
piece of the international market in nylon, with a continually growing output.
In recent years, mainland China
started

to catch up, taking the leading global
position in polyester, and their next step will

take over the nylon market.
Currently, mainland China is actively developing nylon 6.6 products, but

13

cannot acquire the key technology and experience. However, Ta
iwan already
has the advantage of nylon 6.6 textile

filament

fiber production technology.

3.

Taiwan’s
t
extile
i
ndustry
with
excellent human resources

Taiwan is a major supplier of nylon 6 particles and fiber, with
exports of
particles to mainland China that make up 58% of their nylon 6 particle
imports and 60% for fiber. Taiwan has
a
mature nylon 6 polymer and
spinning technology, such as the Formosa Plastic Group’s upstream
petrochemical business, which has been de
veloped over a long time and has
strong vertical integration ability. As early as in the 1970’s, it has complete
nylon 6 particle production technology. Although the nylon 6 spinning
equipment has been converted to nylon 6.6,
the
investment

on mo
re
equipment
must be increased, including
manifolds and hot godet rollers. But
regardless of

the spinning speed, crimping and temperature control, Taiwan’s
technology is
more
advanced than that of mainland China. This is why
main
land Chinese nylon businesses have been
striving
to lure Taiwan’s
high
tech
talent
s.

T
his

reveals that
the quality of Taiwanese personnel is superior
to that of
the
Chinese
. In addition
, Taiwan’s textile industry also has
excellent
management
and technolog
ical

abilities

with

superior quality
workforce
. This
is a great advantage in the development towards high value added
textiles
.



(II)

Taiwan’s Future Role in
the
Nylon 6.6

Textile Filament Fiber

With Taiwan’s nylon 6 foundation, its quality of nylon 6.6 spinning
technology and textile
-
use long fiber is superior to that of mainland China,
especially the
domestic producer of nylon 6.6 textile

filament fiber
, Suntex,
which has a wrapping technology that is first in the world. Because of limited
product quality, mainland China’s nylon 6.6 textile

filament
fiber mostly
relies on imports, and currently, 41% of

mainland China’s imported nylon 6.6

14

textile

filament
fiber comes from Taiwan

which
plays an important role in
exporting nylon 6.6 textile

filament fiber

to mainland China.

In addition,
Taiwan’s
current
proportion of nylon
6.6 textile
-
use long
fiber fabric production is 20% that of nylon 6, with about 268,000 tons of
nylon 6.6 textile
-
use long fiber fabric produced in 2006. With a global
athletic and leisure textile market scale that is growing at
a rate of

20%

annually, in 2010, it can be expected that production will be expanded for
nylon 6.6 textile

filament
fiber, driven by the demand from downstream
fabric businesses. At that time, the nylon 6.6 industry value chain will be
distributed as shown
in Figure
9
.

Figure 9
.

2010 Nylon 6.6 Industry Value Chain Prediction






Europe
U.S.A.
Japan
Europe
U.S.A.
Japan
Taiwan
Europe
U.S.A.
Japan
China
Taiwan
South Korea
Europe
U.S.A.
China
Taiwan
and leisure brands
like Nike, Adidas,
Reebok, Puma)
(Major sports
When fabric business demand
reaches a certain scale, it is
expected to push investments in
textile
-
use long fiber.
Intermediates
Polymers
Textile
Filaments
Fabrics
Apparels
When fiber demand reaches a certain
scale, it is expected to release upstream
intermediate patents and increase
Taiwan

s opportunity to invest in
polymers.
Source: Compiled by TTRI ITIS Project, Nov. 2007




15

IV.

Success
ful Examples of Cross
-
national Strategic

Alliance
s

and
Foreign
Investment
s

in Taiwan

(I)


Invista
-
Far Eastern

INVISTA,
he
adquarter
ed

in the United States
,
has

one
of
the world’s
largest integrated fiber

and polymer

businesses with a
strong
global presence
.
It

developed
a
joint venture with Taiwan Far Eastern Textile company
to
establish

Invista
-
Far Eastern
c
omp
any

in 1998
to produce
Nylon 6
.6.
Because

this company produces differential products
,

it is
the
main supplier of
fibers
for
functional sportswear and high quality
fashion

clothing

in Taiwan
. On the
other hand, Invista
-
Far Eastern also transfer
s

its
marketing ex
periences and
technical services to its customers
in order to
assist

its customers
in
promoting
their products
. In the
meantime
, it
could
also
expand the Taiwan

s
market of Nylon 6.6.



(II)

Rhodia

Rhodia,

the

s
econd
leading
producer
of
Nylon 6.6 fiber

in the world,

established a branch office in Taiwan in 1976
.

I
n 1991
,

Rhodia established a
production plant in Miaoli which produces engineering plastics for
automotive, electrical, electronic, consumer and industrial app
lications.



16

V.

In
dustrial I
n
vestment Incentives


1.
Tax Incentives

The Taiwan government offers tax incentives for industrial development
in accordance with government policies aimed at encouraging corporate
investment
s

and increasing R&D, personnel training,

and new equipment and
technology among Taiwan companies.
The
incentives
below
have
facilitated
in the growth of many newly emerging industries while assisting with the
transformation of Taiwan's traditional industries, and their

contribution to the
upgrading of Taiwan's industries and technologies cannot be ignored.

Items of Incentive

Contents of Incentive

Incentives for Company

1.
Incentive for Research & Development (R&D)

A company set up in accordance with the Company Law of
ROC can have a tax credit of
up to 30% of the amount invested in R&D against its business income tax payable. It may
amortize the credit over five years starting from the year the expenditure is made. R&D
expenses should be those for the company's research

on new products or technologies,
improvement of their production or service providing technology, and improvement of
manufacturing processes. All such expenses should be incurred by the R&D department of
the company. If R&D is conducted by outside researc
hers (i.e., foreign university, college
or research institute), the researchers should apply for approval from the related
government institutions.

2.
Incentive for Personnel Training

A company set up in accordance with the Company Law of ROC can have a t
ax credit of
up to 30% of the amount invested in personnel trainings against its business income tax
payable. It may amortize the credit over five years starting from the year the expenditure is
made. The expenses should be for the development of company e
mployees or relevant
training activities relating to its business, conducted either in
-
house or by outside training
agents.

Incentives for Company

3.Incentive for New Equipment or Technology

A company set up in accordance with the Company Law of ROC can h
ave a tax credit
of up to 30% of the amount invested in personnel trainings against its business income
tax payable. It may amortize the credit over five years starting from the year the
expenditure is made. The expenses should be for the development of co
mpany
employees or relevant training activities relating to its business, conducted either
in
-
house or by outside training agents.

Emerging, Important, and
Strategic Industries

The government provides Five
-
Year Exemption or Investment Tax Credit to invest
ors
in specific industries defined as "emerging, important, and strategic." By a majority
vote of the shareholders those companies can choose to apply the Five
-
Year
Exemption and forfeit the Investment Tax Credit in 2 years from the first day that the
firs
t shareholder makes payment for the shares. Once selected, the choice can not be
reversed by any means

Investment in Scanty
Natural Resources Areas

If a company invests up to a specific amount of its capital or employs a specific
number of employees in a
specific industry of a county or township area with scanty
natural resources or with slow development, it may credit up to 20% of the total
investment against the profit
-
seeking enterprise income tax payable. This is effective
in each year within a period
of five years from the year of investment.


17

Items of Incentive

Contents of Incentive

Establishment of Logistics
and Distribution Centers

The revenue received by a logistics and distribution center for providing warehousing
and simple processing of goods for delivery to domestic customers shall b
e exempted
from business income tax. The center shall be either commissioned domestically or
established by a foreign company, or by the branch office of a foreign company.

Establishment of
Operational Headquarters

For a company that establishes its opera
tion as headquarters in Taiwan reaching a
certain scale with significant economic effect, its income derived from providing
management or research and development services to related foreign companies that
they have acquired (i.e., royalties income, profit

from investment, and gain from the
disposition of properties), is exempt from business income tax. In addition, the
company may procure publicly owned land at preferential prices.

Preference for Overseas
Chinese' Investment

The Statutes for Investment by

Overseas Chinese has been enacted to encourage
Overseas Chinese investments in Taiwan. The preferential measures regarding the
imposition of inheritance tax on the amount of the investor's investment as examined
by the Investment Commission stipulates Ove
rseas Chinese who are authorized to
invest in Taiwan based on the Statutes for Overseas Chinese Investment are entitled to
a 50% reduction in inheritance tax based on the appraised value of inheritance as
assessed according to the Inheritance and Gift Law.

Science Park/Economic
Processing Zone/Bonded
Factory or Warehouse

A company may claim some indirect tax incentives if it is incorporated within a
Science
-
Based Industrial Park or an Economic Processing Zone, or if it sets up a
bonded factory or bonded wa
rehouse according to the regulations issued by the
Ministry of Finance. The main indirect tax incentives are:

1.
Import of raw materials, fuel, supplies, semi
-
finished material from foreign

country

2.Import of machinery

3.Export of its product/service to
foreign country

4.Purchase of raw materials, fuel, supplies, semi
-
finished material, machinery from

ROC tax area


2.
Non
-
Tax Incentives


Items of Incentive

Contents of Incentive

Measures for Encouraging
the Development of
Leading New Products

In order to
encourage new product development by private manufacturers with R&D
potential, the government may provide a subsidy of up to half of the cost of
development and matching funds for the other half. The Scope of eligible products as
bellowing:


Measures for
Encouraging
the Development of
Leading New Products



Products of emerging, important, and strategic industries



Products employing key technologies that surpass current standards of industrial

technology in Taiwan.



Products that have a strong linking effe
ct and good market potential, and that can

stimulate the development of related industries



Intellectual property rights revert to the developing company


18


Items of Incentive

Contents of Incentive

Corporate Participation in
the Development of
Technolog
y



The Department of Industrial Technology, Mi
nistry of Economic Affairs, sets up
Technology Development Programs for purpose of encouraging enterprises to carry
out R&D. An enterprise which has R&D capability and carries it out for
technological products can apply for subsidies under the Industrial T
echnology
Development Program. The related programs are as follows:



Companies that have an R&D team, R&D experience, and basic R&D management
capability may apply under the Industrial Technology Development Program



If two or more companies cooperate in th
e joint development of industrial
technology, or carry out technological innovation for the service industry, system
innovation, or the development of integrated solutions for emerging service systems,
or if R&D is carried out in the form of technological
development and service R&D
by multiple companies, to clarify the rights and obligations involved

in the cooperation and to institute a feasibility study for the establishment of a
strategic alliance, application can be made under the Pilot Research Promot
ion
Program for R&D Alliances



If the project utilizes innovative technology, promotes an innovative business


m o d e l, o r i n v o l v e s r e s e a r c h i n t h e R & D s u p p o r t o r R & D p e r i p h e r a l s i n d u s t r y,
a p p l i c a t i o n c a n b e m a d e u n d e r t h e S t r a t e g i c S e r v i c e O r i e n t e d R e s e a r
c h &
D e v e l o p m e n t P r o g r a m


C o r p o r a t e P a r t i c i p a t i o n i n
t h e D e v e l o p me n t o f
T e c h n o l o g y



F o r t h e e s t a b l i s h m e n t o f R & D c e n t e r s w i t h i n t h e t e r r i t o r y o f t h e R e p u b l i c o f C h i n a
b y d o m e s t i c e n t e r p r i s e s, a p p l i c a t i o n m a y b e m a d e u n d e r t h e P r o g r a m f o r
E n c o u r a g e m e n t o f
t h e E s t a b l i s h m e n t o f I n d u s t r i a l T e c h n o l o g y I n n o v a t i o n C e n t e r s i n
T a i w a n b y D o m e s t i c E n t e r p r i s e s



F o r R & D c e n t e r s e s t a b l i s h e d w i t h i n t h e t e r r i t o r y o f t h e R e p u b l i c o f C h i n a b y f o r e i g n
c o m p a n i e s, a p p l i c a t i o n m a y b e m a d e u n d e r t h e P r o g r a m f o r E n c o u r a g e m e n t o f
t h e
E s t a b l i s h m e n t o f I n d u s t r i a l T e c h n o l o g y I n n o v a t i o n C e n t e r s i n T a i w a n b y F o r e i g n
E n t e r p r i s e s



S m a l l a n d m e d i u m e n t e r p r i s e s t h a t a r e m a k i n g a n i n i t i a l m o v e i n t o R & D i n t e c h n i c a l
p r o d u c t s m a y a p p l y u n d e r t h e S m a l l B u s i n e s s I n n o v a t i o n R e s e a r c h P r o g r a m



I f t
h e t a r g e t o f a c o m p a n y's d e v e l o p m e n t o f t e c h n o l o g y i s w i t h i n t h e s c o p e o f
i n n o v a t i v e o r d e m o n s t r a t i o n i n f o r m a t i o n a p p l i c a t i o n s, a p p l i c a t i o n m a y b e m a d e
u n d e r t h e I T A p p l i c a t i o n s P r o m o t i o n P r o j e c t.

E n t e r p r i s e s i n t e n d i n g t o e n g a g e i n R & D c a n a s s e s s t h e i r c u
r r e n t o p e r a t i n g s c a l e a n d
R & D c o n d i t i o n s, a n d t h e n a p p l y t o t h e Mi n i s t r y o f F o r e i g n A f f a i r s f o r a s u b s i d y. F o r
d e t a i l s o f t h e d i f f e r e n t s u b s i d y p r o g r a m s, p l e a s e c h e c k t h e f o l l o w i n g w e b s i t e s:



I n d u s t r i a l T e c h n o l o
g y D e v e l o p m e n t P r o g r a m ( I T D P )



I n d u s t r i a l T e c h n o l o g y D e v e l o p m e n t A l l i a n c e P r o g r a m ( I T D A P )



S t r a t e g i c S e r v i c e O r i e n t e d R e s e a r c h & D e v e l o p m e n t P r o g r a m ( S R D )



I n d u s t r i a l T e c h n o l o g y I n n o v a t i o n C e n t e r P r o g r a m ( MN C D )



Mu l t i n a t i o n a l I n n o v a t i v e R & D C e n t e r s i n T a i w a n ( MN C F )



S m a l l B u s i n e s s I n n o v a t i o n R e s e a r c h P r o g r a m ( S B I R )



I T A p p l i c a t i o n s P r o m o t i o n P r o j e c t ( I T A P )

R & D C e n t e r

T h e Mu l t i n a t i o n a l I n n o v a t i v e R & D C e n t e r s i n Ta i w a n P r o g r a m i s a
n i m p o r t a n t
e l e m e n t i n t h e I n t e r n a t i o n a l I n n o v a t i o n a n d R & D B a s e P l a n, w h i c h f o r m s p a r t o f t h e
E x e c u t i v e Yu a n ’ s C h a l l e n g e 2 0 0 8 N a t i o n a l D e v e l o p m e n t P l a n. S e v e r a l l e a d i n g
i n t e r n a t i o n a l c o r p o r a t i o n s i n c l u d i n g I n t e l, H e w l e t t P a c k a r d, D e l l, S o n y, Mi c r o s o f t,
IB
M and Ericsson have established 15 R&D centers in Taiwan. The Ministry of
Economic Affairs (MOEA) estimates that within 5 years 30 multinational corporations
will have set up innovative R&D centers in Taiwan.

R&D Center

The R&D
companies incorpora
ted according to the Company Law may apply for
five
-
year tax holiday according to the Statute for Upgrading Industries. The R&D
companies may also obtain other incentive schemes such as
support for
human
resources
, funding, etc.


19

3.

Low
-
Interest
Loans

To accelerate
the
industrial development and economic growth, a special
fund has been set aside by the

Development Fund of the Executive Yuan for
cooperation

with banks in providing various kinds of special low interest

loans. These include preferent
ial loans for small and medium
-
sized
enterprises (SMEs) to upgrade and purchase automation equipment, and
loans to private enterprises for purchasing pollution control and pollution
treatment equipment. In addition, the government has allocated NT$100
bill
ion from new postal deposit funds for the "Medium

and Long
-
term
Capital Loan Plan." Private investors whose projects have a value of NT$
100
billion or more may apply for loans under this plan.

4.

Government Participation in Investment
s

Inve
stors can ask
the government to participate in their investment
projects

(
m
aximum of 49% of total capitalization
)
. The following
government agencies represent the government in providing capital:

Sci
-
Tech
Development Fund and other development funds
,
Chiao Tung Bank
,
Management Committee of the Executive Yuan Development Fun
d
.

Investment Priority
:

I
nvestment
s

focused on industries such as
petrochemicals and semiconductors to promote Taiwan economic
development plans.

Recent i
nvestment
s

focused

on the 10 Emerging
Industries such as information, telecommunications, aerospace, digital
content
,

biotechnology
, among others
.


20

5.
Incentives for Investment Locations

(
i
)

Science Parks

(
ii
)

Export Processing Zones

(
iii
)

Industrial Parks

(
iv
)

M
ixed Industrial/Commercial Zones

(
v
)

Environmental Technology Parks


VI.

Industry
-
Academi
c Collaboration
s

in Taiwan

With
joint
promotion by the government, industry, academia, and
research organizations, Taiwan’s t
extile industry, with the exception of
apparel textiles, is also enthusiastically developing home and industrial
textiles, which is
one of
its

priorit
ies

in technolog
ical

innovation, product
R&D, and marketing. It is expected that in
2008, the ration of apparel, home,
and industrial textiles will be 6:2:2, and in 2015 it will be 5:2:3. In order to
understand
Taiwan’s
current
textile industry structure, the Taiwan Textile
Research Institute (TTRI)
conducted
a survey
in 2005

and
regularly updates
its
results every two years.

Taiwan’s textile industry has specialized research organizations, tertiary
institutions, and industry associations
. It therefore

has sufficient support
in
research and development, production, and marketing. Therefore,
the
industry,
government, academi
c
, and research are
all
integrated in the promotion of
Taiwan’s textile industry.



21

Taiwan Textile Research Institution,
Material and Chemical Research
Laboratories of the Technology
Research Institute, Footwear &
Research Technology Research Institute
Research Institutions
Government Institutions
Industrial Association
Universities
MOEA, Industrial Development
Bureau, Department of Industrial
Technology, Department of
Investment Services, Bureau of
Foreign Trade
Industry Association: Man
-
Made Fiber
Knitting, Silk & Filament Weaving,
Printing Dyeing & Finishing, Garment,
Taiwan Technical Textiles
Association , Textile Research &
Devt
Association International
National Taiwan University of Science and
Technology
-
National Taipei University of
Technology
-
Department, Department of
Polymer Engineering ,
Feng
Chia
University
-
Department of Materials Science
and Engineering, Chinese Culture
University
-
The Department of Textile
Engineering
Figure 8
.


Taiwan

s
Government
,
Industry
,
Acade
mic
,

and Research

Cooperative
Institutions
















Source:

Compiled by TTRI ITIS Project,
Jan
. 200
8