“It’s positive that Taiwanese are accessing global markets, because it gives them a platform,” said Acer founder Stan Shih. However, Shih also chides the ASVDA strategy for not thinking of the big picture. “The [current government] strategy is short-sighted, and will lead the country nowhere”.

“Taiwan needs to a develop a new competence,” adds Shih, and the country must find a new niche area to reclaim its competitive edge in the international market, especially with formidable competition from China in both scale and speed.

With the announcement of China’s “31 Incentives” — a set of preferential policies meant to irrevocably lock Taiwan and China’s respective economies together — Democratic Progressive Party (DPP) legislators raised the prospect of Beijing poaching their best and brightest talent.

But industry insiders and government figures we spoke with said a direct response to China was not necessary; the majority of Taiwanese workers who move to Shanghai and Shenzhen for higher wages usually return within five years, citing quality of life as a major factor. Taiwan’s vibrant democracy, progressive society, and laissez-faire lifestyle is a boon for the country.

Building a Competitive Edge

So what do members of industry and government believe Taiwan should focus on to get its innovation lead back on track?

Since its inception, a central tension of the Asia Silicon Valley Plan is whether Taiwan can replicate California’s Silicon Valley model, an innovation hub that arose from a confluence of very unique factors.

Instead, many industry professionals we spoke with believe Taiwan should be positioning itself as distinct from other ecosystems. Taiwan can use its small start-up community and market to its advantage by pinpointing, strengthening, and leading in specific areas. Taiwan needs to move past its legacy of semiconductors and find a new niche, or a few different ones, with a global market.

Industry professionals suggest Taiwan could become a global leader in areas like blockchain, cryptocurrency, or artificial intelligence, but it first needs a clear strategy to achieve this leadership. “Taiwan is sitting on a pile of gold,” said Legislator Hsu, but the country is trying to catch up with other economies instead of forging its own path.

One way of investing in new niches is re-focusing the Plan to focus on short-term benefits for entrepreneurs and startups, but there’s a need for deregulation and removing the hurdles to starting a company in Taiwan. Forbes reports foreign direct investment in Taiwan fell 46.3 percent in the first 10 months of 2017, which could mean that multinational firms are skipping Taiwan as a place to invest.

The Taiwan government also needs to encourage students to choose university majors in the arts and humanities. Taiwan’s education system favours engineering skills, and does not place equal value on training in business, social sciences, and other majors. That’s led to a labour gap of interdisciplinary talent. The missing piece for many start-ups is business and marketing talent to support superior technical talent.