Hsinchu Science Park

Brief: 

Built to combat brain drain, the Hsinchu Science Park (nicknamed Taiwan’s “Silicon Valley”) has emerged as the major base of high-tech development in Taiwan and was the first government planned industrial park focused on IT.

The problem addressed by the campaign: 
  • The Hsinchu Science Park was created to mitigate the brain drain associated with the exodus of recent graduates of Taiwanese universities.
  • Before the project, as many as 80% of Taiwanese students who studied abroad did not return after graduation.
Solution: 
  • Kwoh-Ting Li, former Finance Minister of Chinese Taipei, founded Hsinchu Science and Industrial Park. Inspired by Silicon Valley in the United States, he convinced expats to build companies in Taiwan just as had been done in Silicon Valley. He introduced the concept of venture capital to the country in an effort to attract funds to finance these start-ups.
  • The government devised a number of policies to attract firms into the Park. These included a five-year tax holiday; a maximum income tax rate of 22%; duty-free imports of machinery, equipment, raw material and semi-finished products; and capitalization of investors’ patents and know-how as equity shares. The government also directly entered into industrial production, establishing joint venture companies with private capital.
  • The solution was underpinned by building bridges among R&D institutes, academic institutions and park clients (the companies).
Impact: 
  • Although most of the returning migrants were not the group of recent graduates that had left, many nationals with 10 to15 years of work experience outside of Taiwan returned.
  • More than 70% of global IT industry products are initiated from companies at the Hsinchu Science Park.
  • Many high-tech products created in the Park rank first in world production and have won at awards at international competitions.
Why has it worked?: 
  • Many prestigious academic institutions are near the park, such as the Industrial Technology Research Institute, National Tsinghua University, and National Chiao Tung University. All provide high-quality human capital for the science park and valuable on-the-job learning opportunities for employees.
  • Concentration of activity for similar types of talent and expertise allows for clearer understanding of opportunities, potential for synergies across businesses and people, and greater innova­tion. The park also serves as a magnet for talented people who are able to interact with each other more easily.
  • Putting in place an internationally competitive environment for Taiwan’s high-tech industry has helped induce an across-the-board upgrade of domestic industry and foster expansion of the national economy. In addition to stimulating R&D on the science and technology front, benefits are enjoyed in many other respects – creating clusters of industrial ventures, cultivating talent, bringing prosperity to local communities and enhancing the nation’s overall cultural awareness.
Conclusions and Recommendations: 

Government-sponsored efforts to increase the focus on innovation can help attract and retain the type of talent required to drive innovation, and in the process combat brain drain.

Foundational Issues: 
Public and private constraints on mobility
Level of Collaboration: 
Level 3: Collaboration on an industry or regional level
Region: 
Asia
Economic and political context: 
  • For the last five years, the Hsinchu Science Park (HSP) has generated annual revenue of US$ 40 billion.
  • The average R&D investment inside the HSP is three times that of all Taiwan manufacturing companies.
  • HSP’s annual per capita output is close to TWD 9.5 million (2.5 times the average of the country’s overall manufacturing sector).
  • Companies in the HSP generate one-tenth of the revenue of Taiwan’s entire manufacturing sector.
About the Author(s): 
  • Established by the government of the Repub­lic of China (Taiwan) on December 15, 1980 with investment from the Kuomintang. It straddles Hsinchu City and Hsinchu County on the island of Taiwan.
  • Kwoh-Ting Li, former Finance Minister of Republic of China, founded Hsinchu Science and Industrial Park. Inspired by Silicon Valley in the United States, Li con­sulted Frederick Terman, on how Taiwan could follow its example.
  • The park is now run by the Government of Taiwan in association with their National Sci­ence Council and the Hsinchu Science Park Administration