Yang Po-keng notes that way back in 1966 Taiwan-made products began to be sold around the world through contract manufacturing thanks to the founding of the export processing zone.
Once, in the product display room of the former Kaohsiung Export Processing Zone, a visitor from Latin America pointed to the historical products section and said, “Hey! I had one of those portable stereos when I was young!” Ting Shih-te, who has worked at the Kaohsiung Branch of the Export Processing Zone Administration of the Ministry of Economic Affairs for over 20 years, replied, “Yes! That was made in Taiwan and shipped from our export processing zone right here.”
Products like Hitachi picture tube TV sets, Sony Walkmans, high-quality fabrics, and baseball gloves were all manufactured in the Kaohsiung Export Processing Zone (Kaohsiung EPZ, now the Cianjhen Technology Industrial Park) back in the day and from there delivered around the globe. The whole world has collective memories of made-in-Taiwan products that were produced there. Moreover, for the past decade and more, sophisticated Taiwan-made chips have been embedded in all kinds of high-tech products, including cars, mobile phones, and game controllers, manifesting the ubiquity of Taiwanese goods.
Cheng Ning-chuan has been working in the Kaohsiung EPZ since her youth, and she has been a witness to the ups and downs of Taiwan’s economic development.
Where the economic miracle got started
“In the 1960s, Taiwan’s domestic economy was short of capital and technology, and as people left rural communities, unemployment began to rise. There was also a dearth of foreign exchange, and this combination of factors alerted the government to the importance and urgency of developing industry and foreign trade,” says Yang Po-keng, director general of the Export Processing Zone Administration (EPZA), describing the background behind the establishment of export processing zones. This was a time when large numbers of manufacturers from the industrialized nations of Europe, Japan, and North America were relocating operations away from their home countries. The then minister of economic affairs, Li Kwoh-ting, proposed the concept of EPZs “within the national territory but outside the customs border.” The world’s first EPZ was established in 1966.
Kaohsiung was selected as its location. The city had the twin advantages of an airport and a large seaport, making both imports of raw materials and exports of finished products quick and convenient. “There were also tax incentives and one-stop administrative services which greatly reduced bureaucracy and facilitated investment,” explains Wu Ta-chuan, director of the Kaohsiung Branch of the EPZA.
The first EPZ was an instant success, attracting US$15 million in investment from foreign entities and overseas compatriots in the first year. The 72-hectare park was completely filled with businesses in the second year, prompting the government to accelerate the establishment of further EPZs at Nanzih in Kaohsiung and Tanzi in Taichung.
The EPZs’ outstanding performance and experiences attracted other countries to follow Taiwan’s example. EPZs were soon set up in South Korea, Vietnam, and the Philippines, and personnel have come to Taiwan from more than 20 nations including Panama, Morocco, Paraguay, and the Czech Republic to gather relevant information. The science-based industrial parks that were first founded in the late 1970s also drew on the EPZ system and carried Taiwan’s economy to a new wave of success.
Many household items and consumer electronic devices were manufactured in the Kaohsiung EPZ in the early days and exported worldwide from the Kaohsiung’s port. The whole world has collective memories of made-in-Taiwan products that were produced there.
Building a national skills base
“The Industrial Development Bureau began promoting the ‘made in Taiwan’ brand in 2010, but in fact through exports of contract-manufactured products after the founding of the first EPZ in 1966, Taiwan-made products were already being sold worldwide,” says Yang Po-keng.
At that time a majority of the foreign firms investing in EPZs came from Japan. Early contract production was labor-intensive, creating job opportunities that drew people not only from the Kaohsiung area but even from Pingtung.
Cheng Ning-chuan, vice general manager at the Japanese-owned firm Taiwan Asia Enterprise, began working in the Kaohsiung EPZ in 1970. She says that back then the parent company had followed Japan’s Nitto Denko Corporation in coming to build a factory in Taiwan. They mainly produced industrial paper tubes for Nitto Denko, making them indirect exporters. Having endured two oil crises and clients pulling out of Taiwan, says Cheng, “To enable the company to survive, we accepted orders of any kind.” Thus for a time they produced parts for electronic products such as Hitachi televisions, and at its peak the company had over 200 employees. In recent years the firm has transformed its operations to focus solely on producing specialized paper tubes, and has only a dozen or so employees. However, this sharp reduction in workforce numbers is mainly due to automation. With 70% of their production process now fully automated, the company is still doing well today.
The foreign investors attracted to Taiwan’s EPZs back in the day brought technology with them. Yang Po-keng notes that companies like the American firm General Instrument Microelectronics (renamed MicrochipTechnology in 1987) and the Dutch company Philips Electronic Building Elements Industries laid the foundations for Taiwan’s integrated-circuit packaging and testing sectors. Meanwhile, in the LCD industry, the Japanese-owned enterprises Kaohsiung Hitachi Electronics and Sharp set up factories in EPZs, training many skilled people for Taiwan’s later display panel industry.
Wu Ta-chuan hopes to contribute his knowledge so that the renamed “technology industrial parks” can soar to new heights of economic success.
A microcosm of Taiwan’s economic history
We visited with former EPZA director general Huang Wen-guu, who was the longest serving person in that post. As soon as we sat down, he said with a laugh that this was “simply chatting,” but in fact as he talked he related a history of economic development in Taiwan.
Huang says that in the late 1990s, when he first took office, many labor-intensive industries had already left Taiwan, and half the factory buildings in the Kaohsiung EPZ were empty. Moreover, as the zone had been in existence for more than 30 years, many of the buildings were old and dilapidated. “Those companies that were going to leave had already left, so the ones that remained were those that wanted to continue to develop and take up the challenge of industrial transformation.”
The departure of manufacturing companies left entire industries “torn up by the roots,” as Huang describes the situation. The whole supply chain was disrupted, and the original cluster effects were eradicated. However, seen from another perspective, “being torn up by the roots was also an opportunity, and although it was really tough going it became possible for transformation to begin,” says Huang earnestly.
Two of the main purposes behind founding the EPZs were to attract foreign investment and bring in new technology. Over the years, Taiwan’s technological level has risen greatly, and factory operations have progressed from automation to computerization to digitization. “Over the past 20 to 30 years, we had gradually restructured and reached a high standard, but it was only when the recent US–China trade war arose that the final stage of transformation was successfully completed,” says Huang.
The trade disputes caused many Taiwanese-owned firms in China to decide to relocate. At that point, government policy incentives attracted many such firms to come back and reinvest in Taiwan and rebuild their supply chains here.
Given the demand for factory and office space for returning Taiwanese firms, construction of the “Innovation Building” in the Kaohsiung EPZ was quickly put in hand and was completed in early 2022. As Wu Ta-chuan leads us on a tour of the newly completed factory floors, he explains that firms like Radiant Opto-Electronics Corporation and JET Optoelectronics Company are already preparing to move in and begin operations in the structure.
For Huang Wen-guu, another highly significant event is the recent renaming of the EPZs. In response to indusrial transformation and upgrading, EPZs have been renamed “technology industrial parks” (TIPs). This rechristening “has consigned the name ‘export processing zone’ to history, but the spirit continues and the TIPs will move forward into the next 50 years.” This is a fitting postscript to Huang’s career as a civil servant.
EPZs laid the foundations of Taiwan’s integrated circuit packaging and testing industry, which today has evolved into a major high-tech industrial clusters.
Carrying the memories of an era
From the roof of the Innovation Building, Wu Ta-chuan shows us the majesty of Taiwan’s largest port, Kaohsiung Harbor, and points out a number of historic landmarks inside the TIP. For example, the statue of a man pushing forward a great wheel is simple and straightforward in its imagery, recalling to mind the early days when everyone was working together to promote economic development. There is also the administration building, the last structure built with aid money from the US, which was designed by Chen Chi-kwan (who worked with I.M. Pei to create the Luce Memorial Chapel on the campus of Tunghai University) and Yu Yueh-chen (who was part of the architectural team for National Taiwan University’s second and third “Dongdong Halls”). The cement tile decorations on the exterior walls and in the stairwells highlight the beauty of changing geometric patterns.
In the Nanzih EPZ, founded a few years after the pioneering Kaohsiung EPZ, the administration building and the auditorium were designed by Haigo T.H. Shen. The clean lines of the inverted-umbrella roof canopy over the administration building’s portico and the cable-supported elliptical roof of the auditorium are both straightforward and novel ideas, and are still thought-provoking today.
Buildings like these, more than a half century old, are a testimony to the past. “In those days we emphasized economic development, and devoted less attention to the environment or cultural concerns. Looking back at this period of history today, we want to preserve the memories associated with Taiwan’s economic growth, for that’s the only way to get a real feel for the hardships of the past,” explains Wu Ta-chuan.
In 2021 the Kaohsiung EPZ formally shed its old name and hung out its new shingle, “Cianjhen Technology Industrial Park,” signifying the dawn of a new era. Wu tells us the story of his relationship with the old EPZ. Born and raised in Kaohsiung, Wu was born in the year when the Kaohsiung EPZ was founded, so he was too young to be involved in its heyday. Three years ago he became director of the Kaohsiung Branch of the EPZA, placing him in the forefront of the EPZ’s landmark transformation into a TIP and the completion of the Innovation Building. Looking forward with confidence, he says, “I couldn’t participate in the EPZ’s past, but now I hope I can contribute my expertise so that today’s ‘technology industrial park’ can soar to new heights.”
Looking back to the past and ahead into the future, Yang Po-keng says: “EPZs were responsible for many milestones in Taiwan’s economic development as our nation took its first steps on the path of deepening the economy and reaching out to the world. Now that the EPZs have become TIPs, they will continue to strive toward industrial upgrading, smart manufacturing, and high-quality sustainability, leading the way into a new era of innovation-driven progress.”
For more pictures, please click《Building Taiwan’s Global Brand: The Past and Future of Export Processing Zones》
