n007  0634  07 Sep 82
BC-TAIWAN
(BizDay)
By STEVE LOHR
c. 1982 N.Y. Times News Service
    SINCHU, Taiwan - New brick buildings are sprouting up all over one
corner of a 5,200-acre field here, 40 miles southwest of Taipei.
Workmen are marching in every direction through half-finished offices
and apartments. The smell of mortar and plaster is heavy in the air.
The sound of hammers, it seems, can be heard down every hallway.
    These are the sights, sounds and smells of an economy being
restructured. That, at least, is the hope of the government of Taiwan.
    The Sinchu Science-Based Industrial Park is the cutting edge of
Taiwan's effort to shift its economy toward high-technology
industries, such as semiconductors and computers, while reducing its
dependence on labor-intensive fields, notably textiles and mundane
electronics items.
    Taiwan has no choice but to refashion its industrial structure. Its
rapid economic growth over the past two decades has given its
citizens higher wages and a vastly improved standard of living. So
Taiwan can no longer rely on simple industries in which success goes
to whoever pays the stingiest wages.
    ''Sinchu is just the beginning for us,'' said K.H. Yu, governor of
the Central Bank of China and one of the principal architects of
Taiwan's economic development. ''But with this instrument, we hope we
can develop knowledge-intensive industries.''
    Already, the park, which opened two years ago, is the home of the
nation's fledgling semiconductor business and several small computer
companies. So far 37 companies have been approved by the government
to join the park. Of those, 22 are in operation, employing about
1,400 persons. The government's goal is to attract more than 150
companies, providing about 30,000 jobs, by 1990. By the end of this
year the government will have spent more than $100 million on the
project.
    ''Sinchu has all the ingredients of Silicon Valley 20 years ago,''
said Irving Ho, the park's director.
    An electrical engineer with a doctorate from Stanford University, Ho
is familiar with Silicon Valley. He was a consultant there for the
Fairchild semiconductor enterprise, the progenitor of many of
California's high-technology companies, before joining the
International Business Machines Corp., where he worked for 17 years.
    The Sinchu park is near two of Taiwan's best science and engineering
schools - National Tsinghua University and National Chiaotung
University. Also close by is the government-backed Industrial
Technology Research Institute.
    Taiwan has provided an attractive package of incentives for
investors in the park. Companies receive a five-year tax holiday and
pay lower taxes than other concerns in Taiwan thereafter. The
government will supply up to 49 percent of the venture capital for
new companies and will provide loans at below-market rates. Foreign
investors face few restrictions. They may own 100 percent of a
company in Taiwan and repatriate all profits. A handful of American
companies, including Wang Laboratories Inc. and the Control Data
Corporation, have already set up operations in the park.
    Taiwan must tailor its high-technology strategy, governmental and
business leaders agree. K.T. Li, a minister of state, observed, ''We
don't have to produce everything, and it would be a mistake to try.'
    Accordingly, most of the new companies in the Sinchu park are modest
ventures by international standards, with start-up investments of $1
million or so, and they typically focus on narrowly defined product
fields.
    For example, the Multitech International Corporation is a producer
of Chinese-character computer terminals, microcomputers that teach
people how to program computers and other specialized devices for use
with personal computers. Though Multitech was founded as a training
and consulting concern in 1976, it became a manufacturer only last
year. It has 50 employees, and it estimates that its sales will reach
$6 million this year.
    ''We can survive by finding specialized areas in the personal
computer market,'' said Patrick Lin, director of Multitech's
manufacturing division. ''That market is just starting to take off,
so we think we can find openings to be successful as a small
company.''
    Until recently, Taiwan could offer few opportunities to skilled
engineers because of the primitive state of its electronics industry.
Now that is starting to change. Taiwan is still short of electronics
experts, so the government has encouraged Taiwan-born engineers to
return from the United States, where many went to get advanced
degrees and stayed to work. Not many have come back so far. Those who
have returned say they earn only about half as much as they did in
the United States.
    Microtek International Inc. is the best example of Taiwan-born
engineers who came home to set up shop in Sinchu. Of the five who
founded the company in 1980, three had been senior engineers for the
Xerox Corporation.
    Taiwan, in trying to restructure its economy, hopes to do what Japan
has done so well in recent years. The transition will be difficult
for Taiwan, but many people here expect eventual success. ''It will
be a gradual process, but I think it will happen,'' said Carter
Booth, general manager of the Chase Manhattan Bank in Taiwan.
    Along the way, it is generally acknowledged, many of the small
entrepreneurial companies at Sinchu are likely to be lost. ''The cold
fact is that the failure rate in high-technology industries is very
high,'' said Alvin H. Tong, a former IBM senior engineer who is the
park's deputy director. ''And some of these companies are going to
fail.''
    
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