iKala Future Talks

International Business Plan under Globalization – Part 2

Many people say that there is not only a "protective sacred mountain" of semiconductors in Taiwan, but startups are showing an endless stream of energy to form a range of protective mountains today. The energy is not only blooming everywhere in Taiwan, but actively expanding overseas. The topic we are going to discuss today is international business planning under globalization, and we are glad to have Minister of the National Development Council, Kung Ming-Hsin, and iKala's Co-Founder and CEO Sega Cheng with us.

Here are some highlights from their conversations.

When it comes to entering overseas markets, what are the key practices and mindsets of iKala?

Cheng: I think the key point is that we should realize the complexity of each market. It is not just about geopolitics, but in the digital age, customers are putting more focus on the quality of products and services, and there is a growing demand for customized service. When we are entering a new market, we should look at each of them separately, to analyze its status quo and evaluate its local internet speed. Whether it is suitable for our digital products? The first thing is that we have to make sure the business model in Taiwan can be duplicated to that market. The second is that we have to do some localization. Thirdly, we will consider the way to attract local talents. This is especially important because the evolution of digital products goes very fast. In other words, we must have a local product manager to tell us about the local users, so that we can optimize our product as quickly as possible. Otherwise, local competitors may surpass us because they understand the habits of local users better. Even in our Taiwan headquarters, we must have talents who are familiar with different markets and different countries. In particular, we welcome Taiwanese new immigrants and foreign talents to join us, because they know the international market and they can bring new ideas to us. I think this is something that is very important for startups in the process of globalization, and we must pay attention to it.

The National Development Council has launched the Asia Silicon Valley Development Plan since 2016, and there is a Taiwan national startup brand, Startup Island TAIWAN. What are the future prospects of these policies? What are the results so far?

Kung: We started the Asia Silicon Valley Development Plan in 2016, hoping to build up connections with Silicon Valley, and introduce the business model and innovation ideas of their startups. There is a great foundation of Taiwan's industries. If we can further make some connections with Silicon Valley, I think it would be beneficial to our local industry. 

Since funding is one of the most important parts for startups, we have implemented some measures on it. From angel funding, match funds for venture capital, to a national venture capital firm, we provide assistance of funding in different stages. Take angel funding for example, starting from 2018, we have invested in more than two hundred cases, and the amount we have invested has exceeded two billion. We have even allocated more than 3 billion recently, and will allocate up to 10 billion in the future. We hope to increase the amount of startup investment, so that the ecosystem can be big enough. Secondly, we help those we have invested to scale up. Scale up, in other words, is to promote them to the international market. Also, there are two new boards proposed by TWSE and TPEx for innovative enterprises, Taiwan Innovation Board and Pioneer Stock Board, one for listing and the other for OTC listing. This is also a revolutionary initiative. In the past, the criteria for listing and OTC listing were very strict. Only if you can make a profit for a few consecutive years can you be listed, but you know that business models of many startups are not like this. They are still in the stage of investing money. And we must allow business models like this to have the opportunity to grow. 

As for the cultivation of talents, we passed a revision to the Act for the Recruitment and Employment of Foreign Professionals, offering more incentives and relaxing the restrictions to attract more international talents to work in Taiwan. We've issued more than 3,000 Employment Gold Cards. As long as one obtains the Employment Gold Card, he can come to Taiwan before finding a job. Our connection with Silicon Valley is continuously expanding from stage to stage. The first stage is the older generation. Those who went to Silicon Valley in the very beginning may be in their 50s or 60s, and they had a sense of mission to give back to their hometown. Then they came back to Taiwan. The second generation is like Steve Chen, who is in his 40s. He had a successful career in the United States, then came back to Taiwan with an Employment Gold Card. He also started to do venture capital here, and link resources between Taiwan and Silicon Valley. I hope we can build up more connections in the next generation. This way, we can keep pace with Silicon Valley when it comes to business innovation. 

The National Development Council is also promoting the policy of developing Taiwan into a Bilingual Nation. Whether you want to recommend your product or your solution to the world, being bilingual is very important. We actually asked the British Council  to deliver tests on junior high and senior high third graders to evaluate their English skills. The result finds that on average, our high school third graders are fairing in English proficiency compared to European countries, but we score low in speaking and writing. This is why in other countries, maybe the product is not as good as imagined, it can sometimes be exaggerated. We are just the opposite: having perfect skills, but failing to speak it all out. The policy of developing Taiwan into a Bilingual Nation is definitely of great help to us in expanding to the international market. 

Finally, the NEXT BIG representative nomination, and the effort we put in Startup Island TAIWAN, is all about pushing outstanding startups in Taiwan to go overseas in the past few years. This is what we are doing now.

How can startups team up with the government to face international competition?

Cheng: Being selected for Startup Island TAIWAN's NEXT BIG has already helped us a lot. Especially when facing a country like Japan, which puts so much emphasis on honesty, goodwill, connection and endorsement, startups really need the help from the government. In terms of internationalization, the foreign language proficiency of our talents are actually not bad, but there is a lack of story-telling ability. I think that Taiwanese people should be more brave to tell stories, and promote their own products and services. The Bilingual Nation policy will have a great impact on Taiwan in the next few decades. Whether a language is strong depends on how many people in the world speak the same language as you. English and Spanish are still the largest, but perhaps in the future, when Southeast Asia rises, we will have new languages to learn, such as Indonesian. Our next generation and the generation after that will become more and more internationalized. I think this is what we have been talking about: the hope to stay at home and look at the world. I think this is very critical.

What are the future prospects of both organizations?

Kung: In addition to the previous version 2.0 of 5+2 Innovative Industries Program, we now have Six Core Strategic Industries. I would like to invite all startups to join and make some efforts together. In the post-epidemic world, the first and most important thing is digital transformation, so digital transformation is included in both the 5+2 Innovative Industries Program and Six Core Strategic Industries. In the longer term, we also value environmental sustainability. Many countries have begun to set a goal for net-zero greenhouse gas emissions by 2050. This is also a disruptive innovation, which startups are good at, and this is what I think we can work on together.

Cheng: Digital transformation happens to be what we are expert in. This year, both internally and externally, we are more active. Externally, we follow the national team to bring our good solutions to Japan and Southeast Asia. While in our hometown, we are putting in more resources because we have found more opportunities. Especially under the pandemic, the integration of software and hardware begins. People start to think about the way to go digital and undergo digital transformation. Notwithstanding the worldwide pandemic, the world economy has not stopped, or even has accelerated. There is no better place than Taiwan to discuss digital transformation, because we have both hardware and software industries. Therefore, we have recently strengthened our efforts, firstly to hire more people to assist the traditional manufacturing industry and retail industry  to seek digital transformation opportunities. Secondly, we started to carry out CSR projects this year, aiming at local retailers affected by the pandemic. We started to introduce some solutions that can help them undergo digital transformation right away. In sum, iKala is now paying more attention to our hometown while maintaining international operations. I think this is a very good timing for Taiwanese startups.

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