In the 18th and 19th centuries, much of Taiwan’s economy was driven by sugar, tea, and rice. During most of the 50 years as a Japanese colony (1895–1945), Taiwan remained an agricultural economy whose primary goal was increasing productivity to satisfy demand within Japan. Although Japan greatly helped modernize Taiwan during this time, the colonial policy was still “Industry for Japan, Agriculture for Taiwan” — until the 1930s, when Japan started promoting industrialization in Taiwan to support wartime needs. But industrialization was short-lived, as Allied bombing reduced agricultural output by half and industrial output by a third. Coal and electricity production dropped by 90% and during this time 200,000 productive Taiwanese workers were drafted into the Japanese army.

Taiwan emerged from the second world war under the governance of the Republic of China and the Kuomintang (KMT). After spending a decade getting back to pre-war production levels, it implemented an import substitution policy, in which surpluses from agricultural exports were used to develop domestic industry while high tariffs and import restrictions were imposed. In the 1960s the government issued new regulations in which they heavily taxed both imported cars and car parts (foreign auto manufacturers could set up joint ventures if they engaged in technology transfer, but no one thought the Taiwanese car market was big enough to justify sharing their technology). Domestic car makers lacked technological expertise, had a high cost of capital, and had insufficient economies of scale, so their cars were very expensive. Car use lagged.

Meanwhile, in post-war Japan, wartime aircraft manufacturers were no longer permitted to research or produce aircraft. The top two aircraft manufacturers Nakajima Aircraft Company (present-day Subaru) and Mitsubishi pivoted to the auto industry, and each created commercially successful scooters for Japanese consumers.

Nakajima’s Fuji Rabbit was an overnight success and brought a form of cheap transportation to post-war Japan. Other Japanese companies like Honda then also started to design and produce scooters.

In the 1960s, during Japan’s export boom, local wages were increasing and Japanese companies were increasingly looking abroad for cheaper labor to perform manufacturing processes that they had mastered. Taiwan was a natural partner. Many Taiwanese over 35 could speak Japanese and understood the culture, a relic from Japanese efforts to assimilate the Taiwanese colony by strongly encouraging them to learn Japanese and act Japanese. So the Japanese created joint ventures in Taiwan, built factories, trained the Taiwanese, and taught them how to participate in the global economy as a supplier. Taiwan was the largest recipient of Japanese foreign investment during this time.

KYMCO got its scooter start through a technology transfer from Honda. Photo from KYMCO’s website.

One such joint venture during this time was KYMCO, the biggest Taiwanese scooter company today, which was initially a parts supplier for Honda. They eventually started manufacturing scooters using Honda technology and are now the fifth largest scooter manufacturer worldwide. SYM Motors, the second largest Taiwanese scooter company, also got its start from a 1960s joint venture and today does $1 billion in revenue a year. So the availability of local, tariff-free, high-quality scooters during a time of car import substitution policies contributed toward widespread scooter use.

Adding to the reluctance to buy a car was that the KMT and the Nationalists had thought up to and through the 1970s that they could take back mainland China from the Communists, and that Taiwan was just a temporary home. A car would have been too big of a commitment for those who were expecting to return home and a scooter was a good compromise.

Today, the impact of simultaneously being a scooter country and a developed country can be seen in that Taiwan is leading the way in new scooter technology. Taiwan-based Gogoro has raised $480M for their electric scooter and network of battery exchange stations and aims to go global. WeMo Scooter has their sights on electric scooter sharing and has unicorn ambitions as well.

I don’t think scooters in Taiwan are going anywhere, even as per capita GDP continues to increase. Future electric versions should continue to be the most cost-effective and convenient mode of transport for many Taiwanese people, especially when combined with sharing and public transportation options. And when shared autonomous electric cars take over and car ridership increases, streets will clog up and many people will still turn to their trusty scooters. Their beloved, perfectly good, distinctly Taiwanese scooters.