The Labor Ministry of Taiwan has told local recruiters to remove all listings for jobs in mainland China, especially those in critical industries such as semiconductors, Nikkei Asia reported on Friday.

Why it matters: The island is a hot destination for Chinese firms to hire chip talent. Taiwan is home to companies like Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker; and smartphone chip designer MediaTek, a major rival to Qualcomm.

• As China’s semiconductor industry races to catch up with international standards, talent is one of its highest hurdles. The China Semiconductor Industry Association (CSIA), an industry body backed by China’s Ministry of Industry and Information Technology, estimated that the industry faces a shortfall of around 220,000 skilled workers as of the end of 2020.

READ MORE: Where firms are looking to fill China’s chip talent gap

Details: The labor ministry banned recruitment platforms and headhunters from helping or representing any company hire individuals for work in mainland China, according to Nikkei, citing a government notice. The regulation is effective as of Wednesday, according to the report, which cited a local recruiter who informed clients of the new rules.

• “Due to geopolitical tension between the US and China, China’s semiconductor development has suffered some setbacks and as a result, China has become more aggressive in poaching and targeting top Taiwanese chip talent to help build a self-sufficient supply chain,” said the ministry in the notice.
• The ministry said headhunters may face fines if they violate the regulation. “If the recruitment involves semiconductors and integrated circuits, the penalty will be even higher,” the notice said.
• Taiwanese workers are still allowed to work on the mainland, including in the semiconductor industry.

Context: On March 9, Taiwanese prosecutors raided two local recruiters who allegedly broke the law by recruiting semiconductor workers from the island to work for a Chinese chipmaker, according to local media reports.

• Previously, there were no government bans on the hires of local workers for Chinese firms. A 1992 local law which forbids Chinese firms from doing business on the island without government approval has been used to restrict recruiting on the island previously.
• In August, Nikkei Asia reported two Chinese government-backed chip firms had together hired more than 100 veteran engineers and managers from TSMC. One of the firms was the now-notorious failure Hongxin Semiconductor Manufacturing Company (HSMC), which also hired former TSMC vice president for research and development vice president Chiang Shang-Yi as its chief executive.

Early start for Singles Day

Singles Day this year, normally a one-day shopping festival held on Nov. 11, will have two sales windows, Alibaba said in statement sent to TechNode on Tuesday. The first will take place Nov. 1 – 3 in addition to the actual day. Pre-sales for its first sales window starts Wednesday, marking the onset of the shopping festival for the year. Pre-sales require users to pay a deposit beforehand in order to enjoy discounted prices when the formal sale begins.

China’s shopping festivals are expanding both in number and duration, especially at a time when the state is investing heavily to drive domestic consumption for post-coronavirus recovery.

Livestreaming, which surged during last year’s event, is expected to take the center stage this year. Li Jiaqi, the “Lipstick King” with 33 million followers on Taobao Live, drew more than 160 million viewers in a seven-hour livestream session on Tuesday evening, mainly hawking cosmetics. 

Ed tech unicorns grab big bucks

Chinese online education unicorn Yuanfudao reportedly raised a $1 billion Series G2 led by DST Global with participation from seven to eight other investment capital firms, Chinese media outlet Late Post reported. The round follows a G round of the same size raised in April. The round reportedly valued the company at $15.5 billion, almost doubling its $7.8 billion valuation from six months ago.

Late Post also reported that Yuanfudao rival Zuoyebang is closing a $700 million to $800 million round, citing people with knowledge of the matter. Investors for the reported round include Fountainvest Partners, Softbank, Sequoia Capital China, and Tiger Global Management. Similarly, the round comes on heels of a hefty $750 million Series E received in June this year.

Investors flocked to China’s online education market, especially the more lucrative K-12 education sector, when the coronavirus pandemic forced to students to study from home during lockdown. (Late Post, in Chinese)

Taobao Taiwan shuts down

Taobao Taiwan, the e-commerce platform run by Claddagh Venture Investment, will be shut down by the end of 2020 after the UK-registered operator refused to re-register as a China-backed entity.

Claddagh said it made the decision due to “multiple uncertainties in the market.” The platform stopped taking orders on Oct. 15, and will gradually wind down support services like payment and delivery. The company pledged to help merchants deliver existing orders to buyers.

The Taiwanese authorities declared that Claddagh was in fact controlled by mainland Chinese tech giant Alibaba and issued an ultimatum to the company in August, requiring it to either re-register as Chinese-backed or leave the island.

Claddagh works with Alibaba, which holds a 28.8% stake in the investment firm, through brand authorization. Alibaba’s share in Claddagh is lower than the 30% criteria for any company operating in Taiwan to be deemed a Chinese investment-backed business. The local authorities still viewd the company as a Chinese investment, saying that the UK firm relies heavily on Alibaba to run Taobao Taiwan.

Chinese tech firms are increasingly feeling the weight of political tensions between the straits and beyond. Sales of video-streaming services operated by Chinese companies like Iqiyi and Tencent were barred in August. (The Paper, in Chinese)

Apple has advised one of its Airpod factories in China to make a major investment in a key supplier as the company moves to create an alternative to its longtime Iphone assembler, Taiwan’s Foxconn, according to a Nikkei Asian Review report.

Why it matters: The deal would bring Luxshare-ICT, a lesser-known Chinese assembler of Apple’s Airpods, closer to producing Iphones, grabbing share from Foxconn.

• Hon Hai Precision Industry, known as Foxconn, is the world’s largest electronics contract manufacturer and a major Iphone assembler. 

Details: Luxshare has been in talks with Taiwan’s Catcher Technology, the world’s second-largest metal casing provider, for more than a year and has recently entered a deeper round of negotiations, according to the Nikkei report, citing a person familiar with the talks.

• The deal in question covers some of Catcher’s facilities in China, its workforce, and its business opportunities with Apple, the report said.
• The report cited anonymous sources as saying that Apple is keen to reduce its heavy reliance on Foxconn, which has accounted for more than 50% of iPhone production since 2007.

Context: Luxshare will help Apple produce 3 million to 4 million Airpod units in Vietnam in the second quarter as the California-based tech giant further diversifies its production out of China, according to another Nikkei report published last week.

• Apple had previously asked suppliers to assess cost implications for shifting 15% to 30% of hardware production out of China at the peak of the trade conflict between the US and China last year.
• Foxconn recently moved some of its Iphone production lines out of China and has started to produce some Iphone XR units in India.

Read more: Apple partner Foxconn struggles to reopen plants

Shenzhen-based Yingzhong Technologies released China’s first x86 computers with a homegrown central processing unit (CPU) on Saturday. But the CPU technology by fabless Zhaoxin Semiconductors is at least three years behind other players’.

Why it matters: The PCs announced are the first to integrate Zhaoxin’s x86 CPUs, which in turn are China’s first homegrown microprocessors based on the x86 architecture.

• Market on a plate: Beijing wants to replace all foreign-made hardware with domestic alternatives in government agencies.
• No gaming: The CPUs’ performance is far behind Intel and AMD models in terms of speed and graphics processing. Zhaoxin is unlikely to compete with them in the gaming and high-performance computing markets.
• Official use only: Zhaoxin’s processors are better suited for government work pertaining to document processing and presentations, an industry insider said.

Details: In their first common product launch, the two companies released more than 50 new products, from desktops to notebooks.

• The computers run on Zhaoxin’s series of 16nanometer KX-6000 processors, their response to Intel’s x86 line, which dominates the market.
• The KX-6000 series includes quad-core and 8-core microprocessors that promise processing speed ranging from 2.6GHz to 3GHz. Released in February 2020, KX-6000 chips include an integrated graphics processing unit (GPU) that supports 4K video decoding.
• Hardware rating site Geekbench gave the KX-6000 a score of 363 for the single core iteration and 2091 for the multi-core. Intel’s 2017 i5-7400 3.5GHz model rakes in 884 and 2793 respectively in the same categories.
• Project 2021: Zhaoxin aims to be on par with industry leaders by 2021, when it reportedly will release a 7nm CPU.

Read more: SILICON | China’s progress on homegrown CPUs

Context: Founded in 2013, Zhaoxin is a joint venture between Taiwanese VIA Technologies and the Shanghai government. VIA Technologies is one of three companies around the world with a license to produce x86 processors, along with US-based AMD and Intel.

• VIA’s involvement in the JV allows Zhaoxin to pump out x86 CPUs without violating licensing agreements.
• AMD has a JV with two Chinese companies, meant to design x86 for the Chinese market.
• Zhaoxin works with Taiwan Semiconductor manufacturing Corporation’s fabs to manufacture the chips, unlike Intel which runs its own production.
• Playing catchup: CPUs are some of the most complicated chips to manufacture—and where China is significantly behind its global competition.
• Huawei’s HiSilicon has had better luck with the Kunpeng 920. Released in January 2019, the 7nm CPU is based off licensed ARM architecture and integrates 64 cores with a maximum speed of 2.6GHz. The microprocessor is intended for big data and cloud applications.

In a milestone for China’s semiconductor industry, Yangtze Memory Technologies (YMTC) announced last week that it has developed a 128-layer NAND flash memory chip (128L) in-house. The company expects mass production to start sometime between the end of 2020 and mid-2021, a spokesperson for YMTC told TechNode. 

The Wuhan-based firm hit this milestone while fighting to continue production during the lockdown of its home city.

Read more: What industry can’t stop? Semiconductors 

As wafers hit surface area limits, space on them is like downtown real estate: it comes at a premium. Layering circuits allows chipmakers to fit more memory into the same space—building up instead of out. 128L puts YMTC on the cutting edge of flash memory, but scaling up to mass production to match its competitors will be challenging.

Flash memory is used in products from “entry-level” USB and memory cards, to more complicated solid-state hard drives. YMTC’s current generation of 64L memory has its foot on the lowest rung of this ladder.

Samsung, Micron and SK Hynix hit the initial production milestone in 2019, and started selling their in-class chips in early 2020. YMTC’s product could compete with them, but comes six months to a year behind the competition. 

It is an important step on China’s path to semiconductor independence, but the fact that YMTC has managed to stack 128 layers of circuits on a wafer won’t necessarily make it a big player in the global semiconductor industry, experts said. There are several hurdles that YMTC needs to jump through in order to compete with incumbents in quality, scale, and price. 

Analysts said that YMTC’s previous NAND chip was hardly a wild success. “Because YMTC has just begun selling 64L NAND products, and because of the impact from COVID-19, the actual sales figure remains low at this point,” Avril Wu, a semiconductor analyst at Taiwanese market research firm TrendForce, told TechNode. 

YMTC has not released any information as to how many units of the 64-layer memory chip it has sold, and did not reply to TechNode’s request for data. TrendForce expects YMTC to account for 8% of the global flash memory market in 2021.

The timing is right for YMTC to launch the 128L chip, as innovation from some competitors is likely to slow. The price of NAND Flash fell by an average of 46% in 2019, leading to losses, conservative capital expenditures, and record-low output growth expectations, TrendForce said.

Manufacturing difficulties

For YMTC to compete with international peers, memory chip production standards will matter as much as design. One measure used in the industry to gauge quality is yield: the proportion of chips on a wafer that work properly. 

In the best case, YMTC will become a big player in the global flash memory chip game. In the worst case, Randall said, its clients won’t evolve past China.

“YMTC lags behind other mainstream memory manufacturers in terms of yield and product stability,” Wu said. She added that “it is actively bridging this competitive gap.” More than a matter of design, yield is affected by the production process. Companies refine the manufacturing process as engineers gain know-how in making a particular design. 

Market analyst Wu said the “primary hurdle” is the procurement of manufacturing equipment. The billion dollar machines that are used to produce chips are made by few companies in the US and Europe, like Dutch ASML and American LAM Research. They take months to produce and have long waiting lists, which is why usually there is a months-long lag between announcing a product and bringing it to market.

“In the future, if the US government prohibits European and US equipment suppliers from shipping to YMTC, it will negatively affect the company’s capacity expansion schedules,” Wu said.

The issue of experience and know-how is important for scaling production as well, James Lewis, Senior Vice President and Director of the Technology Policy Program at US think tank Center for Strategic and International studies, told TechNode. 

“It’s not foreign sources for semiconductor manufacturing equipment that is the obstacle,” he said. 

The 64L’s yield was reportedly “good enough,” said Stewart Randall who heads the electronics and embedded software department at Intralink, a consultancy that provides market entry services to China, told TechNode. This is a positive sign for the 128L’s yield, but its production is harder. “Let’s see how the 128L does,” he said.

With a little help from a friend 

In all likelihood YMTC will manage to scale up capacity and mass produce its 128L flash chip in 2021, analysts said. But the scale at which this production happens is crucial to the economies of scale that allow companies to offer competitive prices. Given the lack of know-how and equipment, it will take time for YMTC to match the offers of incumbents in price and quality. 

But the Wuhan memory chip-maker has a powerful friend holding its hand. It is funded by government-backed conglomerate Tsinghua Unigroup. Beijing’s Big Fund, focused on promoting the development of homegrown semiconductors, raised $29 billion last summer. Tsinghua Unigroup received the most state funding out of all semiconductor players in the world between 2014 and 2018 in a December report published by the Organization for Economic Construction and Development.

As a strategic company that isn’t listed, YMTC and Tsinghua Unigroup don’t need to churn profits the same way that its competitors do. The state-owned company is likely willing to bankroll losses in order to help a Chinese semiconductor company establish itself in the market

“Neither financial nor human resource factors are issues for YMTC,” Wu said. Backed by Tsinghua Unigroup, all it needs is time to make a dent in the flash memory market. TrendForce said that YMTC’s mass production of 128L is likely to drive down prices for the industry overall. 

Beijing has other ways to help YMTC, but it must strike the right balance. “The temptation will be for the Chinese government to press companies to give YMTC preference, but this works only if the chips are competitive in price and performance,” Lewis said. 

Foreign companies could relocate rather than buy an inferior product from YMTC, Lewis said. This policy is “a bit touchy now, as the government doesn’t want to encourage foreign companies in China to leave” during the Covid-19 pandemic, he said. 

YMTC’s clientele is overwhelmingly made up of Chinese companies, but it also works with Phison Electronics, a Taiwanese company that packs flash memory chips into controllers for USBs, memory cards, and SSDs, sources told TechNode.

A big step for YMTC, a small step for China

The development of the 128L flash memory chip is an accomplishment. Founded in 2016, the company has managed to come head-to-head with decades-old players like Samsung on one  crucial aspect of semiconductor design: stacking circuits on a wafer. It is big news for the Wuhan-based firm, but it is only a small step in China’s efforts to achieve self-reliance in semiconductor production and manufacturing. 

The 128L wafer will allow YMTC to up its game, from memory cards and USBs into solid-state drives for computers. The fact that it has developed its own chip architecture, called Xtacking, bodes well for future intellectual property conflicts, Wu said.

But memory chips are some of the easiest integrated circuits to produce, the “low end of semiconductor technology,” Lewis said. Chinese companies have yet to make significant progress in designing more advanced chips, like graphic processing units, and rely on western companies. China’s semiconductor industry might soon be supplying memory components to the globe, but it will continue to import all the other chips that computers are made of from the rest of the world. 

Chinese telecommunications firm Huawei is shifting production of its in-house designed chips away from a major Taiwanese chipmaker.

Details: The Shenzhen-based telecommunications company is moving its chip production towards Shanghai-based Semiconductor Manufacturing International Corp (SMIC) from Taiwan Semiconductor Manufacturing Co Ltd (TSMC), said a report by Reuters, citing sources familiar with the matter.

• HiSilicon, their chip design subsidiary, has already started telling its engineers to design for SMIC instead of TSMC in late 2019, according to one of Reuters’ sources.
• The company said in a statement the shift was “common industry practice” and that the company “considers carefully issues such as capacity, technology and delivery when choosing semiconductor fabrication plants.”

Context: A federal ban by the Trump administration last May barred American companies from exporting components and technology to Huawei without government approvals.

• The Trump administration is considering to expand the ban to more foreign companies that use US technology, including Taiwan’s TSMC.
• Huawei warned last month of retaliation by the Chinese government if the US ban upgrades.
• “The Chinese government will not just stand by and watch Huawei be slaughtered on the chopping board,” Eric Xu, Huawei rotating chairman, said at a press event last month.

Foxconn warned Tuesday that its first quarter revenue may decline 15% as a result of the Covid-19 epidemic as the Taiwanese manufacturer struggles to restore normal production levels in its China factories.

Why it matters: The warning from Foxconn, China’s biggest private-sector employer, highlights the effect that the Covid-19 outbreak has had on the country’s economy, especially in the electronics industry.

• Foxconn, formally known as Hon Hai Precision Industry Co Ltd., has been actively pushing to resume production in China. However, the Covid-19 epidemic has stopped many migrant workers from returning to work after the Spring Festival holiday.

Details: Foxconn said its revenue would drop 15% year on year in businesses including consumer electronics and enterprise products in the first quarter, Reuters reported, citing company Chairman Liu Young-Way.

• The company said its revenue would recover after the first quarter as production returns to normal in China.
• The virus will have a short-term impact on Foxconn’s business as the impact to its supply chain was “not that great,” the company said.
• “Prevention of the outbreak, resumption of work and production are our top priority,” Liu said.

Context: Foxconn booked NTD 1.054 trillion (around $35.2 billion) in revenue in the first quarter of 2019.

• In order to lure workers back to plants, Foxconn’s main iPhone assembly factory in the central Chinese city of Zhengzhou was reportedly offering bonuses of up to RMB 7,000 (around $1,005) to each new recruit.
• Chinese officials have also urged factories to restart operations. Local governments and enterprises have been sending trains, buses, and planes to transport workers back to manufacturing hubs such as Shenzhen and Dongguan in Guangdong province.
• Chinese President Xi Jinping has called for local governments to “continue to make unremitting efforts in various prevention and control work and resume work and production in an orderly manner,” according to state media Xinhua.

A factory of iPhone assembler Foxconn in central China is reportedly offering bonuses of up to RMB 7,000 (around $996) to each new recruit in an effort to lure workers back to plants and restore normal production levels.

Why it matters: The Taiwanese contract manufacturer is struggling to resume production in China after the deadly Covid-19 virus stopped millions of migrant workers from returning to work after the Spring Festival holiday.

• Officials have also urged factories to restart operations. Local governments and enterprises have been sending trains, buses, and planes to help workers travel back to manufacturing hubs such as Shenzhen and Dongguan in Guangdong province.
• Delays in Foxconn’s production, a key manufacturer for Apple, Huawei, Amazon, Google, and many others, are likely to affect supply chains for several major electronics brands.

Details: Foxconn’s main iPhone assembly factory in Zhengzhou in central Henan province is offering RMB 7,000 as an incentive to new workers who meet certain requirements, Chinese business news site Star Market Daily reported on Sunday.

• New workers will have to clock in to work for more than 35 days to receive RMB 3,000 and more than 60 days to receive the remaining RMB 4,000, according to the report, citing an anonymous source working at a recruitment agency for the Foxconn plant.
• The report said that there are currently around 20,000 to 30,000 workers working in the plant. At its peak, the plant’s workforce numbered nearly 450,000 to meet iPhone demand, Chinese media reported.
• Foxconn, formally known as Hon Hai Precision Industry Co Ltd., declined to confirm the hiring bonuses, saying that it “does not comment on operation details of specific plants” when contacted by TechNode on Tuesday, citing a company policy.
• The company said in a statement to TechNode that it is “closely cooperating with local governments’ call to resume operations” and is organizing workers to go back to work.

Context: China is pushing people to get back to work as the “world’s factory” tries to balance containing the Covid-19 outbreak that has killed more than 2,600 people and offsetting the hit to its economy.

• President Xi Jinping has called for local governments to “continue to make unremitting efforts in various prevention and control work and resume work and production in an orderly manner,” according to state media Xinhua.

iPhone assembly plants in China belonging to Foxconn will not return to normal production volumes for at least another week due to the novel coronavirus outbreak, multiple media reports have reported, with some factories remaining closed and delayed returns expected for significant parts of its labor force.

Why it matters: Foxconn, also known as Hon Hai Precision Industry Co., is China’s largest private sector employer and the world’s biggest iPhone assembler. Delays in Foxconn’s production, a key manufacturing contractor for Huawei, Amazon, Google, and many others, are likely to affect supply chains for several major electronics brands.

• The coronavirus outbreak, first reported in Wuhan, the capital of central Hubei province, has infected more than 40,000 worldwide and killed 909, and brought China to a standstill.

Details: Local authorities in Shenzhen have ordered Foxconn to keep its factories closed over the next week due to “violation of epidemic prevention and control” which could result in the death penalty, Nikkei Asian Review reported on Saturday, citing anonymous sources familiar with the matter.

• The local government of Longhua in Shenzhen, where Foxconn’s largest factory is located, denied the report in a WeChat post (in Chinese) on Sunday. It said that on-site inspections to determine whether Foxconn plants are adequately equipped to prevent the virus from spreading were still ongoing.
• The Longhua government added that the company had applied for resumption of work on Feb. 6.
• But labor shortages could continue to crimp Foxconn’s operations even after the plants re-open. As the number of infections rise, travel is limited and people across China remain in quarantine.
• Apple analyst Ming-Chi Kuo said Foxconn’s Shenzhen factories will not open until at least next week, and that 40% to 60% of the workforce will resume normal operations.
• In the northeastern city of Zhengzhou, about 10% of Foxconn’s factory workers or 16,000 people returned to work today, Reuters reported Monday quoting a person with direct knowledge of the matter.
• About 30% to 50% of the workers in the Zhengzhou plant will return to work next week, Ming-Chi Kuo estimated.
• Foxconn responded to reports saying they are working closely with local governments to fulfill requirements for the resumption of work. Factories will re-open in a piecemeal fashion, according to a statement the company sent to TechNode.

Context: Southern Guangdong province, where Shenzhen is located, has reported the second-highest number of coronavirus infections after Hubei. Shenzhen counts 368 confirmed cases, compared with 337 in Beijing and 295 in Shanghai, according to official data.

• Foxconn’s labor and safety practices have been criticized in the past. In 2011, an explosion in a Chengdu factory working on Apple, Microsoft, and Samsung contracts led to three deaths and 15 injuries.
• Up to eight factory workers sleep in the same room in Foxconn’s dormitories, according to a 2017 investigation by the Guardian.
• Apple has closed all its retail stores in China until Feb. 13 or 14, Bloomberg reported on Friday.
• In June, Foxconn announced it will be improving its production capacity outside mainland China to mitigate risks arising from the trade war, as well as rising labor costs.
• South Korean manufacturers Samsung and LG were set to resume operations today, Korean media reported.

News that a Taiwanese supplier for Apple and Samsung with factories in China plans to set up new production facilities in Vietnam following a US-China “phase one” deal is a signal that the trade friction merely hastened the process of electronics manufacturers diversifying from China, according to an analyst.

Why it matters: The so-called phase one trade deal was expected to restore confidence in China’s economy, but Pegatron’s move shows that tech companies are still trying to disentangle their supply chains from “the world’s factory” to mitigate risk.

“The trade war accelerated manufacturers’ moving away from China and it sent a strong message: Do not put all your eggs in one basket.” (our translation)

—Will Wong, smartphone analyst at IDC Singapore

Details: Vietnam lacks the level of infrastructure and skilled labor pool that supports China’s manufacturing capacity, Will Wong, a Singapore-based smartphone analyst at market research firm International Data corporation, told TechNode. But local governments remain hopeful that it will become central to electronics supply chains in the future and are trying to attract investment, he added.

• Pegatron has already leased a production facility in a city in northern Vietnam called Haiphong, Bloomberg reported on Tuesday. In that facility, the Taipei-based company plans to make styluses for South Korean smartphone giant Samsung, the report said.
• The electronics manufacturer is also looking for a site in north Vietnam to build a production facility from scratch, but Pegatron doesn’t plan on shifting iPhone assembly to Vietnam, according to the report.
• The company’s share prices showed no significant fluctuation since the announcement, declining 0.6% by market close on Wednesday.

Context: Increasing labor costs and stricter regulation in China had tech companies looking for  manufacturing facilities elsewhere prior to the trade war, Wong said.

• It is uncertain what the impact of this trend will be on the Chinese economy. Under the “Made in China 2025” strategic plan, Beijing wants China to shift from being the “world’s factory” into a high-tech powerhouse that develops its own auto technology, semiconductors, robots, pharmaceuticals, and more.
• Foxconn, the world’s largest electronics manufacturer, in June assured investors that it had an “agile” plan to move iPhone production out of China in case tariffs rendered US-bound exports too expensive.
• “If Apple needs us to move our supply chain, we can do that with the fastest speed. US-China relations are changing dramatically and we are closely monitoring them, and so does Apple,” Young-Way Liu, a member of Foxconn’s operation committee said at the time.
• Pegatron spun off Taiwanese laptop maker Asus in 2009 to make motherboards.

Includes contributions from Wei Sheng.

Chinese semiconductor companies receive the most government support of any of their global peers proportionately to their revenue, states a report from the Organization for Economic Construction and Development (OECD). The report describes not only the enormous size of the Chinese apparatus supporting the local integrated circuit (IC) industry, but the unique role of government equity and cheap loans in the Chinese IC ecosystem.

Some non-Chinese companies like Samsung and Intel receive similar amounts of state funding, but because of higher revenues, the government funds support a significantly smaller proportion of their operations.

The OECD in collaboration with moorcroft debt recovery looked into public financial records of 21 international chipmakers which represent two-thirds of the global market. They found that Chinese companies receive higher government support relative to their revenues on average than their global peers. This support comes by way of cheap loans, investments at below market price, and direct budgetary support.

Tsinghua Unigroup, a semiconductor developer 51% owned by a leading state university in Beijing, is the largest recipient of government support in the sample. The Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip manufacturer, is the largest recipient of funding as a proportion of revenue, getting government help equal to over 40% of its revenue.

In terms of Chinese semiconductor companies, only privately-held HiSilicon, owned by Huawei, made it into the global top 20 by revenue in 2018, in sixteenth place.

Disproportionate government ownership

Chinese firms received 86% of all below-market-equity investments among the firms surveyed. These take place via the Integrated Circuit Fund, a government company set up in 2014 to invest $23 billion in the industry, as well as through state-owned enterprises and local governments that acquiring stakes in chipmakers.

Semiconductor plants, known as fabs, are subject to a complex ownership structure in China, involving different levels of government in different parts of the company structure. One of these facilities costs around $20 billion to construct, the OECD said.

The government owns 95% of equity in fab Shanghai Huali, the OECD said. It is supported by a $1.8 billion injection from the national IC fund and $316 million from the Shanghai government. In addition, it is owned by the SASAC and Hua Hong Group, a state-owned semiconductor agency. Other examples in the report include 75% government equity in a fab in Wuhan, the provincial capital of central Hubei, and 57% in a Beijing fab.

But these investments have yet to produce significant returns, as profits remain low. Chinese firms’ assets doubled in the period 2014 to 2018, after the national IC fund was set up, but average profit margins were one-fifth of their global peers as of 2018.

Chinese IC firms lack their own chip designs, and usually act as manufacturers for overseas companies, which keeps profit margins low. In September, two Chinese companies announced plans to start making homegrown memory chips, but experts remain skeptical on if they can compete with incumbents.

“New NAND flash and DRAM players like Changxin Memory and Yangtze Memory are entering markets full of incumbents,” Stewart Randall, head of electronics and embedded software at Intralink, a consultancy that provides market entry services to China, told TechNode. “It will be extremely hard to gain market share. selling at a loss to gain market share may be necessary, but government funding can keep them going,” he added.

Better loans, budgetary help

The three largest recipients of below-market loans between 2014 and 2018 were Chinese; Tsinghua Unigroup at $3.14 billion, SMIC at $695 million and JCET at $688 million, the OECD said. State-owned Hua Hong Group also received a $71 million loan in that period, the report states.

These loans typically include better terms than those from commercial lenders, with lower interest rates and longer repayment periods. The loans came from state-owned banks, namely the Bank of China, China Development Bank, and China Construction Bank.

All other firms in the sample received little or no funding. The next largest non-Chinese recipient on the list was Korea’s SK Hynix, which borrowed $34 million from various lenders, including the Korean Development Bank.

Beijing is also helping China’s chip industry through direct cash injections, subsidized inputs and tax deductions. SMIC and Hua Hong were the greatest beneficiaries of such budgetary support, proportionately to their revenue, according to the report. SMIC receives fiscal help from the government equivalent to almost 7% of revenue and Hua Hong’s budget receives assistance equivalent to 5% of revenue.

The US-dominated semiconductor firm acquisitions from 1998 to 2018. But with the creation of the national IC fund, international buyouts from Chinese players boomed. Nearly three-quarters of all IC firm buyers were Chinese in 2016. Activity has since slowed as restrictions on capital outflows intensified.

Around 10% of Taiwan’s semiconductor engineers have moved to China as a result of Beijing’s stepped-up efforts to attract talent in support of its Made in China 2025 initiative, according to a report by Taiwan’s Business Weekly.

Why it matters: Chinese global consumer and industrial electronics powerhouses such as Huawei are dependent on chips made in the US, Japan, and South Korea, leaving the sector vulnerable to geopolitical risks. This became clearer after the US cut off Huawei’s chip supply by adding it to a trade blacklist in May, and Beijing is pouring money toward bolstering its weak chip sector.

• The Taiwan Semiconductor Manufacturing Corporation (TSMC) holds close to half of the the global market share of chip manufacturing, according to Taiwanese market research firm Trendforce.

Details: In the last five years, top executives and engineers from Taiwan have taken jobs in government-affiliated companies in China, including two senior research and development engineers and the co-chief operating executive of TSMC, Asian Nikkei Review reported.

• Chinese companies offer a salary two to three times higher than their Taiwanese counterparts, Business Weekly reported. One engineer told the Nikkei Review that his company in China pays for his daughter’s tuition at a private school.
• Business Weekly said that Taiwan is worried that the trend could cause a brain drain in Taiwan’s semiconductor sector.

Context: China’s State Council set up a fund to bolster investment in chipmaking in 2014. After its second financing round in July, it has raised RMB 338.7 billion (around $48 billion).

• Chip manufacturing requires engineers with a specific skill set, and Taiwan has a 40-year legacy in the industry and 40,000 semiconductor engineers, resources that China lacks.
• The trend of Taiwanese experts moving to China to work on chips is not new. China’s largest semiconductor manufacturer, Semiconductor Manufacturing International Corporation, was founded by Richard Chang in 2000 when his business in Taiwan was acquired by TSMC.
• Ahead of Taiwan’s elections set for Jan. 11, Beijing announced 26 measures designed to draw Taiwanese enterprises to the mainland and extend certain rights to Taiwanese individuals.
• The central government introduced Made in China 2025 in May 2015 as part of an initiative to bolster the country’s homegrown technology industries and reduce reliance on, among other things, foreign semiconductors.

SILICON | Can China make chips?

The Taiwan government announced that it would investigate Chinese artificial intelligence (AI) and biometrics company Megvii after it was blacklisted by the US government last week, Focus Taiwan reported. 

Why it matters: The investigation could put at risk Megvii’s recent contract to install a biometric security system at Taiwan’s Taichung Power Plant, with legislators wondering whether the firm’s technology raises national security concerns. 

• It could also complicate Megvii’s plans for its initial public offering (IPO), which, according to co-founder and CEO Yin Qi, it planned to “firmly carry on” with despite “some disturbance” after being blacklisted along with 27 other Chinese government agencies and companies.
• Yin also said the company has been preparing for possible supply shortages since May in anticipation of being blacklisted and barred from purchasing crucial x86 servers and GPUs subject to US export regulations. 

Details: In response to the Economic Committee’s concerns, Minister Sheng Jong-chin said he would ask the Ministry of Economic Affairs (MOEA)’s State-Owned Enterprise Commission to launch a comprehensive investigation of the blacklisted companies and instruct the ministry’s Information Management Center to conduct a review.  

• Megvii won a bid to install the security system at Taichung Power Plant on Sept. 12, less than a month before being added to the US government’s blacklist. 
• The system uses facial recognition to monitor contractors entering and leaving the facility. 
• According to Shen Jong-chin, it does not include employees of the state-run Taiwan Power Company.  

Context: Megvii joins seven other Chinese companies and 20 of the country’s government agencies on the blacklist, including the police bureau in the Xinjiang Uighur Autonomous Region.

• Beijing has since demanded that the US reverse its decision but hasn’t said whether it will retaliate. 
• Goldman Sachs said in a statement Tuesday it was reviewing its involvement as a joint sponsor of Megvii’s IPO alongside JPMorgan Chase and Citigroup, according to CNBC. 
• The Alibaba-backed AI firm is looking to raise up to $1 billion in a listing on the Stock Exchange of Hong Kong.  

Apple and its manufacturing contractor Foxconn admitted to breaking Chinese labor regulations by the excessive use of temporary staff in the world’s largest iPhone factory, according to Bloomberg. The accusation came in a report by non-profit advocacy group China Labor Watch (CLW), which also said that Apple’s Taiwanese manufacturer subjected staff to other illegal and harsh working conditions.

Why it’s important: This is not the first time Foxconn, China’s largest private sector employer, has broken Chinese labor laws. Last month, Foxconn fired two executives after another CLW report found that temporary staff and underage interns making Amazon Echo speakers exceeded the legal limit in its Hengyang factory in central Hunan Province.

• Apple has sought to mitigate poor labor standards in some of its vendors by pressuring them to change their practices or face losing contracts with the Silicon Valley giant, as well as with an annual responsibility report on its supply chain.

Details: For its report, CLW claims it sent undercover investigators to Foxconn’s Zhengzhou plant in central China, including one who worked there for four years. At the world’s largest iPhone factory, CLW found that around 50% of the workforce in August was made up of temporary staff, including interns who were in high school. Chinese law stipulates that only 10% of a factory’s plant should be temporary.

• The report said that last year, 55% of the workforce were dispatch workers including student interns, compared with 50% this August. The number now is around 30%, as teenage interns are returning to school.
• Apple sent an investigator to the factory to examine findings in August, but did not stop manufacturing activity despite the violation, the CLW said on Sunday.
• On Monday, Apple told Bloomberg that it is “working closely with Foxconn to resolve this issue” and that it will “take immediate corrective action” after finishing an operational review. It added that less than 1% of workers were teenage interns.
• Apple denied other allegations in the report, Bloomberg reported. CLW claimed that during peak production periods, resignations are not approved, some temporary staff have not received promised bonus payments, student interns work overtime—prohibited under Chinese law, workers stay overnight for unpaid meetings, and work injuries are unreported.
• The advocacy group also said that student interns work busy periods, with some working 100 overtime hours per month, far exceeding the legal limit of 36 overtime hours monthly.
• Foxconn found “evidence that the use of dispatch workers and the number of hours of overtime work carried out by employees, which we have confirmed was always voluntary, was not consistent with company guidelines,” Bloomberg reported.

Context: CLW published the report ahead of Apple’s iPhone release which will take place Tuesday morning in the US. Foxconn hires thousands of temporary staff every year during key moments of the year to meet demand.

• Foxconn’s labor standards have been under scrutiny for many years, which then extends to the tech companies that buy from the Taiwanese manufacturer.
• In 2011, an explosion in a Foxconn factory in Chengdu serving Apple, Samsung, and Microsoft led to three deaths and 15 injuries. The next year, pictures of suicide-prevention nets in a Guangdong plant went viral.

MOST Launches “AI Voice Data Set” to Assist Chinese AI Language Technology – CTIMES

What happened: Taiwan’s Ministry of Science and Technology (MOST) released 400 hours of Chinese-language voice data to the public for use as training material for AI-powered voice applications. According to CTimes, the dataset includes self-recordings, as well as “data related to police and educational broadcasts.” It will be uploaded onto the National Center for High Performance Computing’s (NCHC) Data Market Platform, and is the first of multiple planned releases from MOST’s collection of 2,000 to 3,000 hours of voice data. 

Why it’s important: Voice recognition tech is one of the hottest subcategories of China’s rapidly growing AI industry, as evidenced by the country’s voice recognition unicorn and $9 billion-valued iFlyTek’s recent efforts to raise up to $350 million to invest in AI startups worldwide. And while iFlyTek and China’s other tech giants may hold a sizable share of the $55 billion voice recognition market, MOST’s data release can be particularly helpful to smaller players who lack large straining sets and are looking to improve the quality of their machine-learning processes.

Foxconn chairman hands over reins ahead of presidential bid – Reuters

What happened: Terry Gou, founder and chairman of Foxconn, announced today he is handing the reigns of the world’s largest electronics contract manufacturer to a new operations committee.  Gou, 68, was expected to withdraw from the daily operations of Foxconn since he announced his bid for president of Taiwan, where the company is based. He is expected to keep a seat at the board, but the company said at its first investors relations conference today that his presidential candidacy will affect his future role there.

Why it’s important: The news of Gou’s resignation has been expected since he announced his presidential bid. It comes a week after Foxconn unveiled a leadership overhaul and plans for increased transparency towards investors. The new nine-person committee is comprised of key figures in Foxconn’s various businesses, and speculation is high as to whether one of them will replace him as chairman of the board. As the largest assembler of iPhones, Foxconn is likely to undertake serious changes in its supply chain operations. The US-China tariffs impart a heavy burden on iPhones, which are mainly made in China. The Taiwanese company has said it is ready to shift production out of China.

Google Is Moving More Hardware Production Out of China – Bloomberg

What happened: Google is preparing to move the production of smart thermostats and motherboards away from China to avoid the 25% import tariff on Chinese-made goods and to mitigate the risk of a volatile and often hostile government in Beijing, Bloomberg reported, citing anonymous sources familiar with the issue. The Silicon Valley company has already moved a significant portion of hardware production outside China. Motherboards are being migrated to Taiwan and smart thermostats to Taiwan and Malaysia, the anonymous sources said.

Why it’s important: The report shows the growing impact of the Trump administration’s tariffs on the Chinese economy, as US tech giants are caught in the crossfire and forced to explore alternatives to manufacturing in China. Yesterday, Foxconn, the largest assembler of iPhones in the world, declared it is ready to move iPhone production away from China. Google is reportedly trying to increase its foothold  in China, allegedly developing a search engine that caters to Chinese censors and lobbying in Washington to continue supplying the Android OS to the blacklisted Huawei.

Foxconn, the world’s largest electronics manufacturing contractor and China’s biggest private sector employer, announced significant organizational changes in a conference on Tuesday as its founder, Terry Gou, prepares to run in Taiwan’s 2020 presidential election.

The company also sought to reassure investors that a plan to expand its manufacturing capacity outside China is at the ready should US-China trade tensions affect its supply chain. Chairman of Foxconn’s telecom business Sung-Ching Lu said at the conference that the firm is ready to expand its international factories should tariffs render products made in China too expensive in the US.

In its first investor conference in Taipei, the Taiwan-based conglomerate announced that it is forming a new leadership committee to make major business decisions. It also outlined an “agile” plan to deal with the escalating US-China trade war and the rise of artificial intelligence (AI).

Foxconn revealed the long-awaited news of a nine person “operation committee” which will make decisions on major business matters, overseen by the board of directors. More executives will participate in daily operations under the new structure. Gou announced his candidacy in the upcoming Taiwanese presidential elections in April and has said that he will step down from the board of directors when a new board is elected in June.

Foxconn’s stock price has fallen by more than 7% since Gou, known to be an aggressive businessman, announced his resignation.

The Taiwanese firm also said it will be holding investors conferences twice a year to increase transparency. One of the members of the operation committee could eventually replace Gou on Foxconn’s board of directors. The committee will include executives from many of Foxconn’s units, such as Foxconn CFO Chiu-Liang Huang and Zheng-Hui Ling, head of Foxconn’s giant iPhone-assembling facility in central China.

Its youngest member is Young-Way Liu, 63, who has led Foxconn’s budding semiconductor business and is a board member at Sharp Corp, the Japanese electronics manufacturer Foxconn acquired in 2016, as well as Terry Gou’s former assistant. Due to his personal relationship with Gou and his relative youth, there is speculation that he could replace Gou on the board.

The 5G arm will be led in the committee by Fang-Ming Lu, corporate executive vice president of Foxconn, and Sung-Ching Lu will lead the charge in electric vehicles (EV) manufacturing.

Foxconn manufactures electronics for some of the world’s largest tech firms, such as Acer, Hewlett-Packard, Xiaomi, Sony, Blackberry, Nintendo, and Huawei. It makes popular products such as Amazon’s Kindle and Apple’s iPhone. More than China, it has factories across South and North America, eastern Europe, Australia, and Asia, including in its home of Taiwan.

But the company is facing headwinds. In the last year, Foxconn stock has lost 20%  of its value, and has fallen to the lowest level seen since early 2014.

A big part of Foxconn’s business are iPhones, and Apple’s flagship product has seen its market share in the US shrink in 2018 to 15.8% from 17.9% in 2017, according to research intelligence firm Gartner. The new 25% tariffs on Chinese goods announced by the White House could render iPhones prohibitively expensive in the US, but Foxconn has a plan.

“If Apple needs us to move our supply chain, we can do that with the fastest speed. US-China relations are changing dramatically and we are closely monitoring them, and so does Apple,” (our translation) Liu said at the conference.

“We have been seeing some of the orders [for Apple products] are shifting [from one country to another], but as long as the global consumption level maintains, it won’t affect our business,” Liu added.

In January 2019, Foxconn announced it would be investing  more than $200 million in India and Vietnam, shifting production away from China as rumors of new tariffs began heating up.

The new tariffs have not affected the growth of its network products, Sung-Ching Lu said at the conference.

With additional reporting by Rachel Zhang. 

Huawei reassesses goal to be world’s bestselling smartphone vendor after US blacklist  – South China Morning Post

What happened: A Huawei executive said the company is now closely assessing the effect of a US government trade blacklist. Zhao Ming, president of Honor, a Huawei smartphone brand, said that it was too early to say when the company would achieve the goal of overtaking Samsung and becoming the world’s largest smartphone vendor. Huawei’s CEO of consumer business Richard Yu said in January that the company would achieve that goal by 2020 at the latest. Huawei’s smartphone manufacturer, Taiwan-based Foxconn, has stopped several production lines for Huawei phones in recent days as the company reduced orders for new phones, according to people familiar with the matter.

Why it’s important: Huawei’s share of global smartphone shipments in the first quarter reached 15.7%, up from 10.5% in the same period last year, according to a report by research firm Gartner. The company is currently the second-largest smartphone vendor by shipments, while South Korean electronics giant Samsung is the largest with 19.2% of the market in Q1, declining slightly from 20.5% seen in the same period last year. Huawei is closing the gap with Samsung, but the escalating fallout from the US ban, especially the unavailability of Google apps and services, is taking its toll.

MediaTek aims to take on Qualcomm with new 5G chip – Reuters

What happened: Taiwan-based chipmaker MediaTek on Wednesday released a new chip that contains the company’s 5G modem at the Computex trade show in Taiwan. By building in a high-powered processor and artificial intelligence, the new 5G chip is designed for high-end smartphones, challenging Qualcomm’s market dominance. Market leader Qualcomm released its second-generation 5G chip for smartphones in February. Huawei and Samsung are also developing 5G chips to supply their own phones. Intel said it would exit the 5G modem business after Apple reached a deal with Qualcomm.

Why it’s important: The new 5G chip makes MediaTek one of the few companies in the world that have the ability to supply chips that connect phones to the next generation of wireless networks. But the MediaTek chip can only handle one of the two variants of 5G networks, known as the sub-6 variants. That means it will not work on some 5G networks from carriers such as Verizon and AT&T from the US that use another variant, the millimeter wave. The company said such design would help keep the chip’s costs down and it could be used on networks of major carriers such as T-Mobile in the US and many Chinese networks.

Tencent’s Video-Streaming Service WeTV Comes to Taiwan – Yicai Global

What happened: On Monday, a Taiwanese news outlet reported that Tencent’s video-streaming service, WeTV, had arrived on Taiwanese shores through its subsidiary Image Future Investment HK. Currently, users can sign up for monthly or quarterly content plans priced from NTD 190 to NTD 560 (around $6 to $18). The app, which is available on iOS as well as Android, had been downloaded 500,000 times on the Google Play store as of Monday.

Why it’s important: While Taiwan’s total population of 23 million represents only a small fraction of WeTV’s user base, the territory has a wireless internet penetration rate of 100%, with residents clocking relatively high monthly average rates of online traffic. Tencent’s move came as a surprise, however. In March Nikkei Asian Review reported that Taiwanese officials harbored doubts about allowing the tech titan’s streaming service enter the market due to security concerns. At the time the deputy minister of Taiwan’s Mainland Affairs Council cited the risk of “cultural and political influences” that could “affect Taiwan’s elections.” Baidu’s iQiyi streaming platform was blocked in Taiwan in late 2016, only to later return through local partner OTT Entertainment—a company which was founded by iQiyi’s regional head but claims to have no relationship to the Beijing-based platform.

Foxconn chairman Terry Gou announces his run for president of Taiwan – The Verge

What happened: Terry Gou, founder and chairman of Foxconn Technology Group, will run in Taiwan’s 2020 presidential election, he announced on Wednesday. The 68-year-old billionaire will participate in the pro-reunification Kuomintang (KMT) party’s primaries. Gou said he decided to run after the Buddhist goddess Mazu, who is worshiped by coastal dwellers in China, encouraged him to “do good things for people who are suffering” in his dream.

Why it’s important: The announcement comes after Reuters reported on Monday that Gou was about to resign from Foxconn, a major Apple supplier formally known as Hon Hai Precision Industry. Foxconn initially denied the reports to Chinese media, saying Gou just looked to take a back seat from day-to-day running of the company and focus on strategic planning. Gou’s candidacy prompted concerns over the uncertain impact of the company which has large business ties in mainland China, as well as the political and economic landscape across the Taiwan Straits. Gou seeks to succeed current Taiwanese president of Tsai Ing-wen of the Democratic Progressive Party (DPP), which is in favor of an independent Taiwan.

Taiwan preps China blacklist banning Huawei and ZTE – Nikkei Asian Review

What happened: Taiwan is preparing to bar government agencies and state-controlled companies from using equipment from Chinese tech companies on a new blacklist, which it plans to publish by the end of March. Companies including telecom equipment manufacturers Huawei and ZTE, surveillance camera makers Hikvision Digital Technology and Dahua Technology, and computer manufacturer Lenovo are likely to be put on the list.

Why it’s important: While Taiwan has blocked its wireless carriers and government agencies from using equipment from Huawei and ZTE since 2013, this is the first time the government has created a list targeting a wide range of Chinese tech companies that might pose security risks. Taiwan’s move against Huawei and other Chinese tech giants comes as countries like US, Australia, New Zealand, and the UK become increasingly wary of products from vendors in China. It also comes amid rising political tension between the self-ruled island and China.

Taiwanese Lawmaker Proposes New Business Category for Crypto Companies–CoinDesk

What happened: As the mainland gears up for new restrictions on blockchain companies, Taiwan lawmaker Jason Hsu is calling for cryptocurrency regulations aimed at helping the technology’s development. Among the policy recommendations published last Friday, he asked that Taiwan’s Ministry of Economic Affairs designate a new business category and laws for security tokens. He also urged that the government issue guidelines on initial coin offerings (ICOs) to protect consumers. Hsu’s proposal goes further than plans by Taiwan’s Financial Supervisory Commission chairman to set “national standards” for ICOs by next June. Those standards, which have yet to be outlined clearly, would probably define what tokens may be categorized as securities but wouldn’t cover non-securities-related cryptocurrencies.

Why it’s important: If passed into law, Hsu’s proposals would set in place regulations that are similar in part to existing laws in the US and France. Security tokens and security token offerings (STOs) allow crypto startups to acquire funding more directly from investors, but may also offer risks to consumers. By regulating securities more closely, Taiwan could establish more accountability within its cryptocurrency market and help it grow. Whether or not Hsu’s proposals pass, current government initiatives offers a direct contrast to mainland China, where ICOs and crypto trading have been subject to major crackdowns.

For more than a decade, Wayne Lin, a 42-year-old Taiwanese software engineer living in Taipei, had stayed in the closet at work. It was not until this year that Lin began feeling more comfortable talking about his sexuality with his colleagues.

“I was worried that my sexual orientation may somehow reflect negatively on or interfere with work,” said Lin, who works as a manager at one of Taiwan’s largest telcos, “but I’m now more confident about where I’m at with my career.”

Last Saturday (October 27), around 137,000 people took to the streets of Taipei, waving rainbow flags to the beat of loud music, at the city’s annual Gay Pride parade—the biggest pride celebration in Asia. In 2017, some 110,000 people participated, according to organizers. 

Yet even as Taiwan is seen as more progressive and liberal compared with mainland China and Japan, many companies still struggle to embrace diversity. This is especially true for companies in the country’s tech sector. 

Among tech workers in Taiwan, Lin is among the lucky ones. He has spent most of his career working for operations of large global tech companies such as Microsoft, most of whom typically have established diversity policies designed to treat LGBT employees fairly.

For many who work for local Taiwanese companies, that’s not the case. Some say that if Taiwan wants to maintain its competitive advantage in terms of attracting and keeping tech talent, it will need to make sure that, at the very least, it can offer work environments that are more welcoming to minorities, including sexual minorities.

Uphill battle

An online survey conducted by Taiwan Tongzhi Hotline Association in 2016 found that more than 40% of the 865 respondents believe their sexual orientation could affect their career. (The word tongzhi in Chinese originally meant “comrade,” but is now sometimes applied to refer to gay people.)

Coming out in Taiwan’s largely conservative tech industry is even more daunting, the survey shows. Only one-third of respondents who work in tech-related fields said they had come out at work—which is the lowest of all compared with to other industries and significantly below the overall average of just over 51%.

Since Taiwan made big strides toward marriage equality in May 2017—the highest court ruled that preventing same-sex marriage is unconstitutional—the issue of LGBT rights has garnered international attention. However, while the legalization of same-sex marriage is closer to reality, it’s not a done deal. Earlier this month, three anti-marriage equality referendums were approved by the Central Election Committee, which will go to the vote next month.

LGBT-inclusive workplace environments and policies have shown to be an effective way to attract and retain talent and increase a company’s overall competitiveness. A report by global non-profit think tank Center for Talent Innovation found that 72% of non-LGBT respondents who support and advocate for equal rights said they are more likely to accept a job at a company that’s supportive of LGBT employees.

Taiwan—currently ranked third in the world for talent shortage with 78% of companies in Taiwan reported having difficulties in recruiting—can choose to ignore that trend at its own peril.

Marvin Ma, one of the campaigners at this year’s Gay Pride parade in Taipei, and the public affairs manager of Airbnb, told TechNode that the tech industry is still very male-dominated and his company has been trying to increase diversity with its new hires through bringing in people of different races, genders, and sexual orientations.

“Millennials and creative individuals value diversity and inclusivity in the workplace,” said Ma. “If the work environment can ensure that, then it will give the company a competitive advantage in recruiting young talented people.” 

Another marcher at the parade, Malcolm Rix, says “at the end of the day, if companies promote a positive workplace environment, it’s good for business.” Rix is originally from the UK but has been living in Taiwan for the past 15 years. He now works for HP as a senior program manager.

Rix told TechNode his company has non-discrimination policies that apply to minority groups—women, LGBT, people with disabilities—and it serves as a means to attract them into the workplace. “They can pick the best people from everywhere,” said Rix, “it doesn’t matter if you’re gay or straight or man or woman, the question is whether you can do the job.”

Foreign tech companies are contributing significant fuel to push ahead the LGBT movement in Taiwan, and many representatives from these companies turned up to march alongside LGBT people at the parade.

Taiwanese tech corporates, by comparison, seem to be dragging their feet.

“Whenever I hear about global companies proclaiming their support for the LGBT community, whether it is their inclusive workplace culture or LGBT-inclusive policies, it’s quite conceivable,” Dai You-xun, the coordinator of Taipei Pride Parade, told TechNode. “But in Taiwan, it’s not the same.”

Typically in Taiwan, workplace culture and its views on high-profile issues like same-sex marriage are dictated by “those who sit at the top,” said Dai.

Speaking of his own experience of working with tech companies on the parade, Dai noted that often these partnerships advance at a slow pace with incremental progress. LGBT advocacy efforts or sponsorship are, in many cases, initiated by the employees rather than the those in the leadership position. In Taiwan, where corporate culture is typically rigid and top-down hierarchies are still very much ingrained, such an endeavor is very difficult, he said. 

On top of the broader corporate environment, there is usually a clear separation between work and life where private matters like sexuality are rarely brought up at workplaces, said another member of the Taiwan gay community who declined to be named as he’s not out to his family. 

What’s worrisome for Dai is that dividing issues like same-sex marriage and equal rights are not spoken about often, if at all, in workplaces. If the groups’ needs are not being voiced and communicated to their employers, Dai said, Taiwanese companies would see little value in providing the support and implementing the policies that extend to LGBT groups.

Taiwan’s tech industry is largely dominated by hardware and electronics manufacturing companies. “A lot of the electronics manufacturers and chipmakers are not consumer-facing but rather more business-facing, so they may not feel as much pressure or need to promote their corporate image around issues like LGBT rights,” said Ho Jen-Hsuan, a Taiwanese engineer who now works for Dutch semiconductor company ASML in the Netherlands.

Ho said that this is why companies in finance and consumer goods are generally quicker to take a stance and express their stand on these issues.

LGBT in emerging tech

Even though in Taiwan’s tech industry diversity may be falling short, there are glimmers of hope. Abbygail Wu, an information security engineer and a blockchain specialist living in Taipei told TechNode that in her field, LGBT workers are less discriminated against.

In 2008, Wu came out as a transgender when she was still in high school after almost taking her own life. Over the past 6 years, Wu worked in a number of tech startups in Taipei. There haven’t been many negative experiences at work that really stood out “except for occasional verbal teasing about bathroom use,” Wu said in a casual tone.

Other transgender people who work in the hardware sector encounter much more hurdles, she added. 

Wu also noted that she always makes sure to screen potential employers for red-flags like asking odd questions during the interview or having opinions about on her long hair and gender.

As stereotypes persist, suicide rate for transgender in Taiwan is high and as many as 50% of transgender are unemployed or working temporary jobs. “Just as the saying goes ‘the devil is always hiding in the details,’ discrimination is always under the table,” Wu said.

Wu and her partner founded a non-profit organization five years ago dedicated to provide transgender people with the support and resources they need and help fight for fairer treatment at work.

While foreign companies are the ones taking more prominent roles in promoting inclusive workplace culture and policies, they set the tone for local companies as they slowly come to recognize the importance of diversity in the workplace and recruitment practices.

“LGBT is only part of a wider community of minorities,” said Ho, the R&D engineer. “A company that is LGBT-friendly, means that it embraces diversity.” 

Taiwan Sets To Launch ICO Regulatory Framework By June 2019 —8BTC

What happened: Taiwan will introduce a better-defined regulatory framework for ICOs by June 2019, said Gu Lixiong, Chairman of the Financial Supervision and Management Commission. Gu said the Commission will soon propose a relevant framework for ICOs tokens that fall under the securities category. Due to the lack of clear definition, cases of ICOs that involve illegal fundraising activities or fraud are currently evaluated by the Commission case-by-case.

Why it’s important: In Taiwan, many aspects of ICO and cryptocurrency are still operating in murky waters without a clearly defined regulatory framework. Financial institutions in Taiwan are wary of money laundering among other emerging issues, which makes them hesitant to work with local blockchain companies and exchange services. At this stage, cryptocurrencies and the tokens issued through ICOs are still classified as commodities. However, the Central Bank has signaled that regulating cryptocurrencies under the island’s existing AML (anti-money laundering laws) could soon take into effect. In sharp contrast with China, Taiwan is pushing ahead with plans to regulate cryptocurrencies and ICOs to create a more lenient environment for blockchain companies.

Taiwan has a rich history with hardware and electronics manufacturing. The island is home some of the largest semiconductor companies, chipmakers and consumer tech manufacturers, and, perhaps a lesser-known fact, it is home to a thriving community of entrepreneurs.

This year’s Asia Hardware Battle (AHB) stopped by Taipei in search for entrepreneurs who are true industry innovators. At AHB Taipei’s City Pitching event on Thursday (September 27), six qualified startups focusing on solving problems in different fields including computer vision, smart city, smart living, adult entertainment, and waste management, pitched their ideas to a crowd of hardware experts, enthusiasts and investors.

After a series of evaluation and screening by three prominent judges—Amanda Liu (CEO of Starfab Accelerator), Tony Liu (Investment Representative at Advantech), and Ryan Kuo (president of CDIB Capital Innovation Accelerator)—the winning team was announced and will represent Taiwan at the grand final round of Asia Hardware Battle in Shanghai:

Winner: LUCID

Founded in 2015, LUCID is a computer vision AI startup that aims to help other companies eliminate the need for costly and space-consuming hardware solutions for depth-sensing systems through their self-developed software and AI. The company’s solution leverages dual-camera set-ups on smartphones, drones, laptops, AR/VR and security cameras to generate real-time 3D depth data.  The depth information captured enables devices to “know” size, shape, and texture of different objects, such depth-sensing capabilities are invaluable to depth mapping and object detection. Its technology is capable of running real-time machine and deep learning to enhance the accuracy of depth-sensing,

Here are the other five qualified startups that were selected for Taipei’s City Pitch this year:

TWO IOT

TWO IOT’s solution intends to solve a growing waste management problem that cities all around the world are currently facing using IoT and blockchain. The company has developed a lightweight IoT hardware device “TWO” that measures real-time fill levels of waste bins, which can substantially lower costs and resources used in the waste management process. The device aims to optimize waste management in large buildings like airports and metro stations and also be scaled to city-wide deployments. The company is now collaborating with the Taipei City government to test the solution.

TurnMeOn Technology Inc.

TurnMeOn Technology is a developer of adult smart sex toys that leverage IoT and VR technology. The company’s first product, “Lovenuts”, is an interactive vibrator for women that can be activated and controlled via a mobile app. The vibrator has a flashlight functionality that works as a discreet design.

NESTECH

NESTECH focuses on access control system solutions that can be integrated into smart cities, hotels, homes, and offices. The company’s intelligent access control system, Cellbedell, is an NFC-enabled smart lock for businesses in the hospitality industry. The smart lock does not need an Internet connection to work, however, it can be controlled with a mobile app. For example, their technology enables travelers to use a smartphone with built-in NFC support to gain access into their hotel rooms.

Anchor Tech

Taipei-based Anchor Tech has developed smart control systems for buildings. The company has developed smart lighting control systems in commercial buildings that leverage IoT technologies to improve energy use in hotels, warehouses and parking garages in Taiwan and the US. Anchor Tech’s Logic Controller-AL1 system can link up and integrate home appliances from different manufacturers to talk to each other without the need of internet or public cloud connection.

Allton

Artificial lighting can cause heart disease, sleeplessness, and other health issues. Allton’s “Circadian Light Box” system is designed to control the light source of homes. The system can turn on the lighting in the morning, reduce the blue light at night, and adjust the lighting to the appropriate brightness and color temperature for both our physical and psychological well being.

The concept of home-sharing was popularized by Airbnb and the like nearly a decade ago. Despite the rise of the maturing sharing economy, short-term rental services are still grappling with regulations all over the world.

The controversy is global. Conversations about legalizing Airbnb have sprouted up in the US, Canada, Australia and European countries including Germany, the Netherlands, and Ireland. Most recently, Taiwan’s neighbor Japan passed a new law that made Airbnb legal in the country which ironically has made business harder.  

Lawmakers in Taiwan have been looking into ways to legalize short-term rental services for some time now—but this is hardly good news for Airbnb, who is in the crosshairs of government scrutiny. The legalization of Airbnb elevated into a heated debate in Taiwan earlier this month after an amendment to the Act for the Development of Tourism was proposed to increase fines and penalties for unlicensed lodging services. An official went even further proposing an outright ban on Airbnb and other short-term housing. The proposition received support from the local hospitality industry, as expected. For traditional lodging businesses, Airbnb and short-term housing providers have developed into major competitors and are chipping away their revenue.

The issue of compliance was also brought under a brighter light recently: it is hard to impose safety regulations while many apartments and rooms listed on Airbnb fail to meet the safety requirements that are enforced on a hotel room, for example.

It also snowballed into other broader issues that fueled the debate. Taiwanese legislators were under fire for potentially jeopardizing freedom of speech because under the newly proposed amendment, if hosts fail to comply, the NCC (National Communications Commission) would have the authority block IP address and cut off access to the rental platform.

“The amendment proposed for the Act for the Development of Tourism today clearly does not reflect the travel habits that 21st-century tourists have embraced. It could also cripple the development of Taiwan’s tourism industry,” Airbnb said in a statement (in Chinese).

Uber, another sharing economy unicorn, faced the same woe two years ago. Legislators passed the so-called “Uber Clause” in January 2017, which imposed heavy fines to clampdown on illegal ride-sharing activities. Local businesses feared that the ride-hailing app could potentially undermine the existing taxi industry. After months of deadlock, the ride-hailing startup returned to the Taiwan market and launched its UberTaxi app in collaboration with local taxi companies.

Legalization ≠ Easier rentals

Legalization of short-term housing has been in progress for more than a year. In June 2017,  the Taiwan Tourism Bureau along with major travel agencies kicked off a campaign to improve tourism confidence by ending rental scams and unlicensed rental properties that are unsafe.

One representative from EZTravel, one of Taiwan’s largest travel agencies, urged the travel companies to work with legal lodging services as “consumer disputes arising from the sales of cheap and unlicensed rentals creates a negative impact on the image of the travel agencies.”

In the following month, Taiwanese legislators passed the so-called “Airbnb Clause,” which stipulates that hosts must register their residence with the local government to be listed on rental platforms.  This may be a fix to illegal short-term rental listings, but it creates other issues. While most residences were granted approval, there is currently a 180-day waiting period after registration before it can begin operations.

Japan has implemented a similar policy, which enables hosts to provide accommodation for up to 180 days a year by registering their residence with local authorities. The new law may lower legal hurdles for those with a license, but it reportedly scrapped 80% of listed short-term rental properties from hosts who have yet to obtain permission to operate while local governments remain slow to grant, according to Nikkei Asian Review.

In an under-regulated marketplace like Taiwan, many short-term housing providers benefit from tax loopholes, which give them an unfair advantage. The government could benefit tremendously from closing those loopholes. Currently, occupancy tax is levied on Airbnb hosts in many countries and cities across the world.

No easy way forward

The Taiwanese government may have mixed feelings about short-term rentals, but the people love it. Airbnb has seen tremendous growth in Taiwan over the past 3 years. According to company figures, 1.3 million foreign travelers used Airbnb listings in Taiwan in 2017, which represents 12% of the total number of inbound tourists.

Airbnb conducted a survey which shows over half of the respondents hope legislators can come up with new policies to accommodate the emerging short-term rental services, with only around 12% in opposition.

“People in Taiwan appear to support reasonable and progressive policies to legalize home-sharing, this echoes what happened in the past few months in Japan, Berlin, Vancouver and other countries and cities which are loosening policymaking. This indicates that Taiwan needs new policies to serve the demand rather than prohibiting it and run counter to the market trend,” Gina Tsai, Head of Public Policy of Hong Kong and Taiwan, told a local news outlet.

While many are apt to criticize the government’s move against short-term housing as counterproductive, there are some valid reasons as to why Airbnb is facing a backlash.

In the eyes of incumbent players, short-term rentals are undercutting the existing hospitality industry. The ugly truth is they are squeezing the supply of long-term rentals and thereby driving up housing prices. In popular tourist destinations, leasing out short-term vacation rentals is generally more profitable than leasing them to long-term tenants.

A recent study by MIT, UCLA, and USC  found that Airbnb is having an impact on real estate prices and rental prices. In the US, a 10% increase in Airbnb listings would lead to a 0.39% increase in rents and a 0.64% increase in home prices on average.

The island is calling for a change to the outdated regulatory framework around the hospitality industry, which lacks a clear definition of “home-sharing service.” It is too soon to predict Airbnb’s fate in Taiwan, but businesses are showing a willingness to cooperate with the government. After becoming legalized in Japan, Airbnb voluntarily took down all illegal listings on its platform. And the company said it is willing to comply if the Taiwanese government implements similar regulations.

In a public statement, the company said it believes in having reasonable regulations in place. “Through clear rules that allow those participating in the grassroots economy and sharing economy have some form of regulatory framework to comply with. This would definitely push the development of Taiwan’s tourism industry further than prohibiting it outright.”

SoftBank-backed Appier acquires Indian martech startup – Tech in Asia

What happened: Appier, a leading AI solution provider based in Taiwan, has acquired Indian content marketing startup Qgraph for an undisclosed amount. The two also announced on the same day the launch of AIQUA, a new automated content marketing platform that they jointly built after the acquisition that took place earlier this year. The platform, now available across the Asia Pacific, aims to help companies better engage their users with AI-based messages across channels.

Why it’s important: Founded in 2012, Appier now operates in over 14 markets in Asia and claims to serve over 1000 global brands. The acquisition of Qgraph not only adds capability to Appier’s existing products line but also helps the company consolidate its business in Asia. Appier’s AI technology has attracted some big-name investors including Sequoia, Japan’s Softbank, and Korea’s Line and Naver.

The world witnessed the explosive rise of blockchain last year, the popularity of cryptocurrencies, in particular, has reached a fever pitch. Under current regulatory frameworks, many aspects of cryptocurrency are still operating in murky waters. Yet, when it comes to regulating and policymaking, there seems to be little consensus on what is appropriate and what is not. Countries around the world have come up with their own playbook—Japan and Singapore have pursued a more open-handed approach, while the US and China have taken a more stringent stance.

Last year, the Chinese government’s move against cryptocurrency prompted an exodus of crypto exchange services and related businesses out of the country. China-born crypto exchange Binance recently relocated to Malta, seeking a fresh start in a regulatory environment much favorable for crypto businesses. Furthermore, a flow of capital and talent have diverted to neighboring markets like Japan, Korea, and Taiwan. But unlike the former two, Taiwan has not yet developed a clear framework to regulate cryptocurrency.

Over-regulation could bottleneck innovation. What is seen across the board is heavy-handed and inflexible regulatory actions driving industry players to more lenient markets. Having a more lenient regulatory environment has, in a way, become an appeal for blockchain companies overseas to land in Taiwan; however, lack of clear guidelines has hindered industry growth in that businesses would need to feel their way through as they go.

Recognizing that this is a window of opportunity to attract capital and more global players to set up shop, the government has shown stronger interest and eagerness to start the ball rolling over the past couple of months. On May 22, Taiwan formed a self-regulatory organization (SRO) and a parliamentary group, which aim to build trust and between industry incumbents, legislators, and policymakers and develop industry standards.

The tide is turning

The small island in East Asia made its name as an electronics and hardware manufacturing hub more than a decade ago. Carrying a heritage in manufacturing and traditional industries, the Taiwan market has always been considered as more conservative towards something as uncertain as cryptocurrency. Recently, however, it has emerged as a hotspot for blockchain and cryptocurrency—although still can’t be compared with blockchain hubs like Singapore or Silicon Valley, it is gaining more recognition.

It took sometime before the blockchain industry gained a more solid footing in the hardware-focused Taiwan. Ryan Terribilini, CEO at Formosa Financial, told TechNode the local blockchain ecosystem has been growing and developing rapidly over the past year. Terribilini was an early comer to the Taiwan crypto scene, who worked for currency exchange and remittance platform Ripple prior to Formosa Financial, a financial services provider for blockchain companies.

“I see a consensus forming that there needs to be some form of regulation, but what is not clear is what that will ultimately lead to,” Terribilini said. People participating in the ecosystem are currently policing themselves: they know how the game is played better than the Financial Supervisory Commission (FSC) does, he added.

“We want to make sure that Taiwan’s environment for blockchain industry is regarded as a positive environment, both locally and internationally,” and coming up with some standard guidelines is useful in that it sets the tone for the development.

The Taiwan Crypto Blockchain Self-Regulatory Organization (TBSRO), which formed in May, is led by legislator Jason Hsu, a big proponent of blockchain and crypto. The organization acts as an instrument to bring the industry together to decide on common guidelines. It is also a mechanism to minimize the need for excessive government involvement.

Taiwan is not the first to see self-regulation as a middle path to regulate blockchain and cryptocurrency. In March, after the $500 million Coincheck hack, 16 Japanese cryptocurrency exchanges came together and formed a self-regulatory body, the Virtual Currency Exchange Association (JVCEA). Cryptocurrency exchanges in South Korea are also moving towards self-governance. The Korean Blockchain Association has also developed a self-regulatory framework to assuage worries over money laundering, tax evasion, among other emerging issues.

It is obvious that the overall sentiment in Taiwan is changing. In the past, the government has taken a hands-off approach in regulating new technologies. Even though it is still cautious about cryptocurrency, it is becoming more supportive. Apart from establishing a parliamentary coalition, which aims to unite the island’s lawmakers to build a better-defined regulatory framework, the National Development Council and Financial Supervision Commission both declared long-term support for the development of blockchain technologies.

Needing clarity in crypto regulations

Lack of clear regulations is one of the major roadblocks restricting the growth of the industry. Today, many crypto activities including ICOs are in a grey area in Taiwan because there is no actual regulation on cryptocurrency.

What is happening on the island now is allowing grassroots industry organization to gauge what the best practices and potential regulatory frameworks should be. It then will come down to the legislators’ ability to work with regulators to make sure everything is clarified for financial institutions and businesses.

Taiwan needs regulators to step up on blockchain

Many financial institutions in Taiwan are also concerned about money laundering, Terribilini said. There’s currently no inclusion of cryptocurrency in money laundering laws—which makes banks very hesitant to work with blockchain companies. “Until there is regulatory clarity, the banks won’t support or participate in the ecosystem as much as they can,” he told us.

Even so, large exchanges in Taiwan are already actively working on building better trust mechanisms. “Running an exchange should require AML [anti-money laundering] compliance, so having a trust structure sets the bar for the industry and serves as a reference for regulators on policy making,” Nick Chang, the general manager of Taiwan’s largest digital asset exchange Maicoin, told TechNode.

Maicoin is a digital asset trading platform that matches user orders with partner exchanges outside of Taiwan. This year, the company branched out to MAX, a full-featured exchange service. The company said it has been and will continue to communicate with the government on AML, KYC (Know Your Customer), and ICO related policy making.

Having a clear policy in place will help exchange services better protect customers from financial fraud. On top of establishing a crime-reporting hotline with the law enforcement, Maicoin said it will continue to implement the latest KYC solutions to raise the difficulty for fraudulent activities. “We have seen some success, but we still seek more engagement from the government on this aspect.”

Once regulators have a clearer definition of what cryptocurrency is, then they can figure out how to regulate ICOs and other activities. At this stage, cryptocurrencies and the tokens issued through ICOs are still classified as commodities. However, Taiwan’s Central Bank recently signaled that regulating cryptocurrencies under the existing AML laws could take into effect as early as the end of the year (in Chinese).

ICO is an alternative funding method for businesses. Chang said the SMEs (Small and medium-sized enterprises)–the main contributor to the island’s economic growth–can benefit greatly from ICOs if was formally regulated.

Finding a unique niche

Many are racing to build the next favorite landing spot for blockchain companies. Perhaps for Taiwan, it is not about playing catch-up with established blockchain hubs, but more about filling a unique niche.

Taiwan has many advantages compared with financial hubs like Hong Kong and Singapore “primarily because it is a regional technology power in Asia,” Thomas Hu, founder and CEO of Hong-Kong based venture capital firm Kyber Capital, said in a written response to TechNode.

The island has a rich history in hardware and electronics manufacturing, which serves Taiwan particularly well as it requires a lot of hardware innovations, such as in mining chips, to develop new blockchain technology and applications. Specialization in hardware-software integration also gives Taiwan a leg-up.

Taiwan is home to some of the world’s largest semiconductor companies and chipmakers like TSMC and MediaTek. Its legacy in electronics and hardware has fostered a talent pool, Hu said, “many Taiwanese engineers and scientists are making important contributions to algorithms and system designs underpinning the crypto industry, especially in Ethereum.” Comparing with other markets, Taiwan is a place to hire engineers at a much more reasonable cost.

Founded in 2015, Kyber Capital invests in early-stage ventures that focus on blockchain applications, financial technologies, and new financial services. Kyber Capital is one of the early investors of Maicoin and CoolBitX, a Taiwan-based cryptocurrency hardware wallet company.

Aside from having a relatively lenient regulatory environment, Taiwan’s geographic location also makes it more appealing to overseas blockchain companies. Being in Asia, a multitude of crypto communities, finance, and tech centers are in the vicinity. Hu added that “its geopolitical ‘safe distance’ from Mainland China also creates a ‘safe harbor’ effect, attracting crypto talents and capital globally.”

Hu pointed out that although Hong Kong and Singapore have become known as global financial hubs, such status can hinder the industry’s development as industry incumbents might see little upside in adopting blockchain technology. Besides, what these cities lack is something that Taiwan has plenty: the tech talents that propel blockchain innovations. All in all, they serve a different function as financing platforms for blockchain and crypto companies who are seeking access to capital markets.

Gaining access to capital in Taiwan, in comparison, is more difficult not only because the market lacks the depth and breadth, but also because local VC firms and institutional investors are still very conservative. “These disadvantages are actually blessing in disguise, as successful startups are very lean and mean. We feel these are critical factors in surviving the increasingly fierce competition in the global crypto industry,” Hu said.

Although the crypto and blockchain scene in Taiwan is still nascent compared to its peers in Asia, it is seeing rising interest from crypto exchange services and startups overseas, including Binance who ran into regulatory roadblocks in Hong Kong and Japan.

“This is partially due to the relatively lenient regulatory regime in Taiwan and the willingness among local banks to service crypto companies, especially exchanges,” Hu said. The regulatory sandbox regulation is also a significant milestone. Lawmakers passed the Financial Technology Innovation and Experiment Act (more commonly known as the Financial Regulatory Sandbox) last December, which grants tech companies more leeway when experimenting with innovative financial services. Taiwan is the fifth to implement such financial sandboxes after Britain, Singapore, Australia, Thailand, and Hong Kong. The regulatory sandbox will likely attract more international blockchain and cryptocurrency companies to set up shop in Taiwan.

The crypto space is heating up as more capital pours in.  “The technology hurdles such as blockchain scalability and crypto asset security are less worrisome than the issues of governance,” Hu said. The market needs to filter through the fluff and scrutinize the commercialization prospects of many ICO projects. More specifically, the industry needs to invest in infrastructure. The financial industry increasingly views cryptocurrencies as an emerging asset class and is looking for ways to gain more exposure, but existing trading and custody infrastructure adopted by many crypto industry players are still not up to speed to meet the safety requirements of legacy financial institutions.

The world’s population is increasingly urban. Rising along with the urban population are the unpleasant byproducts of living—waste. Solid waste not only poses a threat to our environment but can cost cities millions of dollars each year to collect and manage. Megacities like the New York City spends $1.5 billion annually on collecting residential and public trash.

By 2050, it is expected that world’s urban population will double, and by 2100 the growing urban population will be producing waste at a rate more than triple from today.

TWO IoT, a Taipei-based startup, wants to tackle the less-talked-about waste management problem using two core technologies—IoT and blockchain—to significantly reduce the cost and resources used in large-scale waste management systems.

TWO IoT is developing small and cost-effective sensors that measure the fill levels of waste bins and communicate the waste data to the cloud via wifi or NB-IoT for real-time monitoring and analytics purposes. The hardware device is designed to be integrated into both smaller commercial establishments (such as airports and office buildings) and larger infrastructure that is the entire city. All activity in the waste life cycle from collection to landfill will be stored on IOTA’s decentralized ledger. 

Despite an increasing number of companies developing similar hardware devices—SmartBin from Dublin, Ireland and Ecube Labs from Seoul, South Korea—waste management is still an untapped market. Globally, the market for waste management is projected to be around $562 billion dollars in 2020.

What a waste

The existing waste collection procedures in many cities around the world are costly and time-consuming: garbage trucks drive to designated pickup points (mostly stop-and-go) on a schedule that changes depending on the season and a few other variables. The garbage collector hops-off the vehicle to check whether the bin needs to be emptied, all the while the vehicle is idling. This archaic method of predictive maintenance is still common in waste management.

Hamoun Karami, the founder of TWO IoT, tells TechNode that the company is working on bringing that old-school predictive style maintenance procedure to the 21st century.

Based on real-time data, the analytics can be used to optimize waste collection routes and schedules and thereby reduce congestion and traffic interruption, and consequently, lower carbon emissions. 

Leveraging data in the bins

Understanding waste management through real-time data helps to optimize the process and improve overall efficiency and cost. Karami describes their waste solution as giving garbage bins a “mouth.” Once the waste bins have a mouth, they can speak and they can be heard. Cities can act accordingly to optimize the inefficiencies in their waste management procedures from the waste data that is being communicated in real-time.

“When you visualize the data on the map you can instantly see which bins are getting filled the most, why they are getting filled the most, and is there some kind of optimization that can be done physically,” Karami added that such data, if it does get collected, is not as accurate or reliable as one may think.

TWO IoT has partnered with Taipei-based blockchain startup, Biilabs, to store all this valuable waste management data on IOTA’s Tangle ledger—which lets governments, private companies, or the people managing collection facilities to keep a ledger of their waste data as well as able to manage micropayments.

IOTA is based on a distributed ledger technology (DLT) called Tangle. It is seen as a secure, tamper-proof, and immutable ledger that focuses on solving the scalability issues of IoT devices.

The Taipei city government has officially approved a proof of concept (POC) to integrate the sensors into the first three floors of the Taipei city hall building in August. Earlier this year, Taipei started testing a number of other Tangle-based smart city solutions including digital identification and real-time air pollution monitoring system.

TWO IoT is not the only company that wants to revolutionize the current waste management systems. Ecube Labs is a Korea-based company that has developed a similar smart bin technology. Ecube Labs’ fill-level sensor and cloud-based monitoring and analytics platform have been implemented in the Dublin Airport. According to a report released by the airport, previously 1,200 bins were changed each day, but after implementing the sensors that number has been brought down to just 93 changes per day. According to Taiwan Environmental Information Center (in Chinese), the city of Taipei has around 3000 public waste bins, and neighboring metropolises like Seoul has 4,400, Singapore has 7000, and Hong Kong has 22,000—imagine the resources these cities could save if the smart bin technology were to be implemented city-wide.

Karami said TWO IoT’s smart sensor is priced much lower than Ecube Labs’ sensor. And because TWO IoT’s waste data will be stored on IOTA’s Tangle ledger, which is more optimal for micropayments since it enables feeless transactions, the company can further bring down the cost. Micropayments are a big issue because in many developing countries waste management is privatized by a large number of parties.

The main problems with IoT are the cost, the infrastructure overhaul, fears of deploying a system having it not work out, Karami said. “We’re basically trying to make kind of a plug-and-play installation. We focus on that because we do see it as a problem right now with the market of IoT.”

Karami said the infrastructure overhaul problem is really slowing down adoption, so they try to develop the sensor to be easily installed into existing waste bins—sensors that can be popped up the top of the waste bin or customizable device that can be retrofitted into different types of waste system.

Why Taiwan?

Taiwan has a rich history with hardware manufacturing where IoT is considered a strategic economic area for development. But among people in the know, Taiwan’s waste management is globally recognized. According to Taiwan’s Environmental Protection Administration (EPA), the island’s recycling rate was 55% in 2015, which was significantly higher than the US’s 35%. An article by the Washington Post lauded that the island has emerged from being known as a “Garbage Island” to being an “international poster child for recycling.”

“Taiwan market is very innovative and sustainability-focused,” Karami said if his company could make a difference at a place that’s globally recognized for its waste management system “that just speaks for how much of a difference there’s meant to be made globally.”

Karami revealed that the company now has POCs and talks with clients in other markets and is planning to venture outside of Taiwan by next year.

The open culture of future cities

Among the many promises of future smart cities is to utilize data to not only manage resources more efficiently but also create an environment that promotes transparency and accountability. Data-driven smart infrastructure—from transport to water, energy, and waste—demands an open and transparent culture that empowers the public.

TWO IoT’s vision for smart city waste management systems goes beyond collecting data in the bins and routing trucks, it is planning on extending its services to monitoring trash produced by companies, for example, packaging waste produced by fast food franchises.

“When open data came out there was a tremendous change. Businesses haven’t been the same, we had not been able to be so transparent with business before.” Data transparency is a trend that has been coming forward, Karami said, “for me, there’s no doubt in my mind that’s what the future is going to look like.”

Companies will be compelled to share that data and be held accountable for the waste they produce because smart cities that are now being built around the world aim to create a more transparent environment.

Nvidia has unveiled a line of new products and announced a ten-year collaboration with the Taiwanese government at Computex 2018 pre-show press conference.

“AI is the most powerful technology force of our time,” Jensen Huang, founder and CEO of Nvidia, said. “Its first phase will enable new levels of software automation that boost productivity in many industries. Next, AI, in combination with sensors and actuators, will be the brain of a new generation of autonomous machines.”

Among the most exciting news is the launch of Nvidia ISACC robotics platform, which Huang said will be used to power the new generation of autonomous machines, bringing AI capabilities to manufacturing, logistics, agriculture, construction and other industries.

Nvidia also introduced Jetson Xavier, which is said to be the world’s first intelligent machine processor designed for robotics. With the size not much bigger than the palm, Jetson Xavier will be priced at $1299. A workstation equipped with GPUs that has roughly the same processing power usually cost around $10,000. The Jetson Xavier Devkit will begin early access in this August.

Nvidia also announced today that it is deepening its collaboration with Taiwan’s Ministry of Science and Technology (MOST) to advance Taiwan’s AI capabilities. The company said the ten-year partnership aims is to build up local deep learning and AI-related technologies. The two will collaborate in multiple areas to advance AI application in local industries and accelerate research and development on the island. Huang said the collaboration “starts with building a supercomputing infrastructure in Taiwan,” adding that the two will also be working on self-driving cars as well as intelligent machines.

Last year, Nvidia unveiled the collaboration with the Taiwanese government to accelerate the development of AI in the island’s commercial sector in support of the “AI Grand Plan,” which aims to help foster domestic AI-related industries.

Computex, Asia’s largest tech expo that opens on June 5th in Taipei, is a springboard for some of the year’s most exciting tech launches and announcements. During the five-day expo, global tech leaders will take the opportunity to flaunt their new chips, gaming gear, VR, laptops and more.

The global economic center is gradually shifting eastward and Asian tech hubs are vying to be the region’s top destination for global entrepreneurs. Taiwan—once Asia’s hardware manufacturing hub—is slowly recognizing that it is not only essential to cultivate the local startup ecosystem but also to bring in new ideas and voices.

A growing number of countries and regions are welcoming talented entrepreneurs from overseas, encouraging them to set up shop on their home turf. Entrepreneurs, for their part, see tremendous potential in Asia but lose their nerve once they realize how little they know of the market, the language, or cultural nuances, for example. Many get weak-kneed before even trying.

Taiwan’s startup ecosystem has been maturing and is growing to become more international. From the dot-com boom in the early 2000s to 2010, the startup landscape began to take shape in many developed markets, but not in Taiwan. Entrepreneurship dwindled in the idle startup scene—the regulatory and funding environment did not encourage new startups and many would-be entrepreneurs had gone to Silicon Valley and other locations that offered more resources and opportunities.

But the situation is changing. The government is moving to become more supportive of local and foreign startups to make up for a decade of missed opportunities (in Chinese).

The late bloomer

Several startup related programs, accelerators, co-working spaces have sprung up in the past few years, as well as an increasing number of entrepreneurial initiatives.

“It wasn’t until 2012, 2013 that we started to see more and more activities happening in the local ecosystem,” Elisa Chiu, founder and CEO of startup platform Anchor Taiwan told TechNode. Anchor Taiwan aims to promote collaboration between international entrepreneurs and local communities in Taiwan through a month-long program that focuses on cultural and market immersion as well as industry access.

Fostering entrepreneurship—inbound and out

Sending local entrepreneurs to global tech startup hubs like Silicon Valley is a great way to gain more international visibility, but bringing foreign entrepreneurs helps inject new ideas and stimulation into the local ecosystem. However, Chiu said more resources are devoted helping get startups out instead of getting more in. Garage+, Epoch Foundation’s incubation project, is one of the few organizations working on getting more foreign entrepreneurs into the Taiwan ecosystem.

Read more: Taiwan Turnaround: Going Global

Recognizing the importance of connecting foreign startups with local ecosystem, Anchor Taiwan works to strengthen the ties between foreign and local communities. Foreign entrepreneurs have the opportunity to build-up networks in Asia while bringing in new ideas to the local startup community, tit for tat.

A global mindset

Taiwan has found itself in a tight race against some of the world’s top innovation hubs:

• Hong Kong offers rich opportunities in fintech
• Japan is a hotspot for blockchain technology
• Shenzhen is the Silicon Valley of hardware

“Taiwan doesn’t need to be or probably won’t be your final destination, but along your entrepreneurial journey, there’s probably a phase that Taiwan can offer the most you can get,” Chiu said, adding that startup entrepreneurs of our time need to have the global mindset instead of a single market strategy.

“China market is humongous, but the water is also deeper,” Chiu said. Without a trusted partner or someone to hold your hand, chances are you will be spending a lot of time and resources learning the ropes. Though compared to other markets, Taiwan is smaller—with a population of 23 million it is relatively easy to navigate.

Chiu said Taiwan is still more a mature market than China especially with its well-established IP protection and high-quality manufacturing. Chiu added that for early-stage startups, Taiwan can offer the right resources for prototyping and hardware-software integration. For software startups, Taiwan’s market openness and consumers habits, in general, provides a fitting environment for testing and piloting new services. On top of that, the island has an educated workforce abundant with tech talents.

Improving the ecosystem

Speaking of the most urgent challenges, Chiu said: “The first and foremost is to increase Taiwan’s visibility.” Indeed, Taiwan’s vibrant startup scene is at times overshadowed by its powerful neighbors. Many associate the Mandarin-speaking island only with its prowess in electronics and hardware manufacturing. Chiu’s organization has been working on increasing international visibility through hosting workshops and events abroad.

Second, the overall regulatory approach is still unfavorable for startups even with support from the government in the form of the Entrepreneur Visa and the Employment Gold Card. Hong Kong and Singapore—two of Asia’s best places for doing business—have been luring foreign entrepreneurs with tax-friendly policies and streamlined incorporation procedures, The island has also been trying to overhaul its infamously strict immigration policies to attract international talents.

Lastly, there is a need for a shift in mindset—startups and corporates alike. A common explanation for Taiwan’s startup frustration lies in the reluctance of its tech sector and investors to support younger startups, making it difficult for them to raise funds.

But don’t get the wrong impression, Taiwan’s corporates and investors have the money to spare. However, they remain tied to the legacy in hardware and electronics manufacturing. Venture capitalists also tend to favor later-stage companies in hardware. Chiu’s organization has been working with tech companies, including Foxconn, HTC, and Winstron to promote collaboration between startups with well-established native tech enterprises.

BitoEX, a Taiwanese cryptocurrency platform that launched its ICO (Initial Coin Offering) on May 2, claimed to have raised $10 million in 5 hours and sold-out 175 million tokens (BITO) in 26 hours. The company told TechNode that they have raised approximately ETH 27000 in the ICO, which closed on May 3.

BitoEX, launched 4 years ago, touted to dominate over 80% market share in Taiwan. The company said the funds raised in the token offering will be dedicated to its international digital asset exchange, BitoPro, which was launched in March. BitoPro plans to rollout crypto-to-crypto, fiat-to-crypto, and margin trading services in the future to offer users more ways to manage their digital assets. The company plans to expand their operations across Asia, including in India, Singapore, Malaysia, the Philippines and Japan.

The company said it is working on building up the cryptocurrency ecosystem and connecting local financial services. “Wallets and exchanges are the infrastructures of the token economy. BitoPro is in the midst of building the token economy as we were one of the first companies to create a fiat-to-cryptocurrency trading platform, but it was not easy to fit the regulation,” Titan Cheng, CEO of BitoEX, said in the company press release.

The crypto market in Taiwan is still nascent. Blockchain transaction database Elementus’ data show that Taiwan so far has contributed approximately 0.06% to global ICO fundraising activity. However, signs show that the crypto fever is beginning to catch on. New crypto account openings surged in Taiwan in late 2017 when Bitcoin prices skyrocketed.

BitoEX is one of the two major digital asset exchange platforms in Taiwan. MaiCoin is another exchange platform, which provides Bitcoin, Ethereum, and Litecoin trading and payment services.

The rise of artificial intelligence (AI), Internet of Things (IoT), big data, autonomous driving, and cryptocurrency mining—applications that all require immense processing power—has been fueling a rally in the semiconductor industry.

In 2017, the surge of cryptocurrency prices spurred the cryptomining frenzy worldwide and created explosive demand for cryptomining hardware, like the high-end GPU and ASIC (Application Specific Integrated Circuits) chips used to power the mining machines. This is not only driving growth in foundries and chip manufacturers but also related businesses all the way down the semiconductor industry’s supply chain—design, packaging, assembly, etc.

As the world’s manufacturing backyard, Taiwan’s exports rose by 16.7% to a record US$30 billion in March, which, according to the Ministry of Finance, is “driven by strong demand for high-performance chips, cryptocurrency mining, and artificial intelligence applications.”

Taiwanese companies cashing in on the “crypto gold rush”

TSMC (Taiwan Semiconductor Manufacturing Company) is the world’s largest chip foundry, responsible for over 55% of the world’s chip production and is profiting heftily from the cryptomining boom.

Since the second half of 2017, TSMC has been seeing strong demand from cryptocurrency-related businesses—the company’s fastest-growing segment—which could account for as much as 10% of TSMC’s revenue by the end of 2018.

C. C. Wei, co-chief executive of TSMC, said at the company’s Q1 2018 earnings call that the first quarter revenue of $8.46 billion was “mainly driven by a strong demand from high-performance computing such as cryptocurrency mining and increases from both automotive and IoT.” The company also noted that cryptomining gave a timely boost that offset weaker demand for smartphone sales. In April, the company cut its sales target due to the lackluster performance of Apple’s iPhones.

“TSMC is generating about 6-7% of its sales from the ASICs from customers like Bitmain and also some of the GPUs being used from AMD and NVIDIA,” Randy Abrams, head of Taiwan research and regional semiconductors at Credit Suisse, told TechNode.

Bitmain—the Chinese startup dominating the mining industry—may have made as much as chipmaker Nvidia did last year, according to Bernstein, an investment research firm, estimates.

The foundries are not the only ones reaping profits. The entire semiconductor supply chain—from chip design services to OSAT companies (third-party assembly and test services) to equipment and materials comapanies—have also profited from the rising demand for processing power. Taiwan’s ASE (日月光), the world’s largest OSAT company that handles the back-end packaging and testing orders, has seen strong demand, particularly in high-end GPU and ASIC chips. Abrams says that some of the early chip design companies, despite being China suppliers, still need to do most of their advanced assembly and testing in Taiwan.

Other Taiwanese hardware makers like Gigabyte, MSI, and Asustek—all of which sell graphics boards used in mining machines—have also seen revenue growth. In 2017, Gigabyte sold 4.5 million graphics cards, up one million units on the previous year.

Uncertainties loom over the volatile crypto market

Despite cryptomining-led growth in the semiconductor industry, not many have full faith in it. Crypto is still a nascent market with fluctuating prices and new currencies popping up every week. There is still a lot of speculation about whether the momentum will remain sustainable.

Bitcoin, for example, shows just how much crypto-prices can fluctuate—the price rallied more than 1,400% in 2017 but fell by almost half in early 2018. Collapsing prices could lead to a sudden plunge in graphics cards sales and other collateral damage.

The fluctuating prices of cryptocurrencies are the biggest uncertainties, but other factors could contribute to even more volatility. For example, the demand of mining cards from miners reportedly took a huge plunge in early April because many were waiting for the Ethereum mining machines by Bitmain to come out in the third quarter.

The change in mining technique, reward system (proof of stake) and other speculative demands are all factors that could potentially impact the entire market. Abrams said some companies see the growth continuing, but “we take a discount in our forecasts due to the uncertainty and model it flat, but it could very much swing either way.”

In the first quarter earnings report, TSMC announced that they have modified the forecast for 2018 overall revenue growth from the previously indicated 10% to 15% down to the more conservative 10% in part due to the uncertainty in cryptocurrency mining demand.

“TSMC does not want to invest in much capacity that is unable to be converted to other uses,” Abrams explains. “The market still needs to mature and have more certainty before more suppliers dedicate or invest in specific capacity for mining.”

The shift from GPU to ASICs is another factor that will likely impact the entire crypto market. Unlike the general-purpose GPU chips capable of handling graphics on computers as well as for mining, ASICs are designed to carry out a single task more efficiently: mining cryptocurrency.

Clark Tseng, senior manager for market analysis at the global industry association SEMI, told TechNode that with an array of new cryptocurrencies emerging, the demand will likely shift from GPU to specialized ASIC chips. Tseng said it is hard to tell how quick this transition is going to be, but it is definitely a trend he is seeing. In early 2018, Samsung decided to move into mass production of ASIC chips and claims to have already begun to yield dividends.

The future is larger than crypto

While the impact of cryptomining cannot be underestimated, it would be an overstatement to say that mining is the sole driving force of future semiconductor industry. Applications in AI, IoT, autonomous driving continue to be key drivers of semiconductor revenue. Tseng says that high-performance computing like AI, autonomous driving, and cryptomining will continue to be the key drivers for TSMC and other chip manufacturers for the next 3 to 5 years and companies like Bitmain are likely to foray into other areas other than just cryptomining but AI applications. Bitmain, for example, is moving onto a new trajectory making specialized chips for deep learning and AI applications.

While the crypto market may still be in its infancy, it has already made waves in the global economy. For now, the semiconductor industry is enjoying, perhaps most of all, the soaring profits from the mining craze.

This week, John is joined by Nicole and Masha to talk about how Taiwan is adapting to blockchain.

Links

• Taiwan’s largest social media platform is fighting for data justice
• Taiwan needs regulators to step up on blockchain
• Blockchain entering ‘government-led mode’ with Shenzhen blockchain fund launch
• China’s lesser-known tech hub Fujian Province joins blockchain craze
• $1 Billion Blockchain Fund Launches with Chinese Government Backing
• Virtual identities and governance: Danny Deng on China’s blockchain future

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• Music: “Taking the Day Off” by Lee Rosevere, Hold Music

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The Facebook data privacy scandal flooding the news for the past couple of weeks is part of a broader movement against big corporations and their monopoly-like control over data—the most valuable resources in the modern-day economy. The message is clear: now is the time for data openness and transparency; centralized data control is a thing of the past.

Last week, Taiwan AI Labs, a Taipei-based AI research organization founded by Ethan Tu—Microsoft alum and the famed creator of Taiwan’s Reddit-like platform PTT—launched “ptt.ai” (in Chinese). Ptt.ai aims to facilitate data openness, avoid the misuse of user data, and realize what they call data justice on the social media platform.

PTT is a bulletin board system (BBS) founded 23 years ago with the mission to liberalize social media through an open platform. Its main site ptt.cc now sees over ten million daily active users. Even after Facebook and other platforms have become mainstream, it has retained its title as one of the largest social media platforms in Taiwan.

In collaboration with the Taiwanese blockchain startup Biilabs, who will provide the necessary technical support, Taiwan AI Labs will implement the new generation distributed ledger technology (DLT) called Directed Acyclic Graph (DAG), or Tangle, to upgrade the PTT open-source platform into a decentralized distributed social media platform. Tangle is the innovation behind IOTA, sometimes called blockchain 3.0. The project’s core technology will combine TangleID, a distributed identification system, and TangleMedia, a distributed ledger documentation system.

In collaboration with the IOTA Foundation, Biilabs is currently working with the Taipei city government to test Tangle technology on smart city projects.

In a press statement shared with Technode, Biilabs said the project is expected to give the data ownership back to the users. “In the future, new media and social media platforms will no longer be the deciding party of user account systems. Through this project, we will empower users to restructure and protect own personal information.”

Read more: Taipei is using a blockchain alternative to transform into a smart city

One step closer to true decentralization

Although the PTT platform is decentralized comparing to other platforms of the likes,

“The management system [PTT] has always been inhibited by its centralized technology [even though the platform is still decentralized]… Currently, the host computer is still physically located in a central server, and so the existing open-source system practically cannot be truly decentralized,” Biilabs said in the press statement.

On top of implementing DLT, the team will also launch the “new PTT Coin” – a revamp of the existing “P Coin”, which has been in use for the past 23 years. Tokenization will be integrated into the new platform as a mechanism to encourage sharing and reward content creators for their contributions, and essentially reinvent the data economy into one that is autonomous and self-sustainable.

Fighting big tech and monopoly-like control over data

Data is becoming the “new oil”.  Big corporations have taken advantage of the oceans of data they hold to secure their dominant positions in various industries.

In the US, tech giants such as the FANG (Facebook, Amazon, Netflix, Google) have monopoly-like control over user data. In February, Apple is reported to have garnered over 50% of the global smartphone market share for the first time. Sites and services owned and operated by Facebook and Google including WhatsApp, YouTube and Instagram now account for over 70% of all internet traffic.

In China, there’s the BAT (Baidu, Alibaba, Tencent) and the monopoly is even more apparent. Search engine giant Baidu has a larger market share in China than Google in the US. Alibaba’s Alipay and Tencent’s WeChat Pay combined account for over 90% of mobile payment market.

Users entrust their data and personal information to big corporations and social media platforms even when data collection seems unfair. But emerging applications of DLT are changing the way people think about data ownership and how data should be collected, managed, and stored. One of DLT’s many promises is to facilitate a decentralized system where there are openness and transparency and has become a promising solution for the privacy, trust and ownership conundrums associated with centralized systems.

Taiwan, the front runner of the open data movement

There is something particular about Taiwan that might make it ideal to launch a project like ptt.ai—its open data and open-source culture. For two consecutive years in 2016 and 2017, Taiwan has been ranked the most data open government by Global Open Data Index.

A blog post by Taiwan AI Labs notes that Taiwan has a mature internet community that has long been campaigning for data openness and transparency.

Many mainstream social media platforms from other countries operate on a business model wherein a big chunk of revenue comes from advertising, for example, Facebook. But the Taiwan-born PTT is not-for-profit and has preserved the spirit of user autonomy and democracy. Administrators in-charge of PTT’s management are elected by the users. PTT may be swimming against the current, but this kind of non-profit model is actually quite popular in Taiwan. G0v.tw is another non-profit organization that promotes freedom of speech and open data, which focuses on developing information platforms and tools that encourage everyone—web developers, hackers, educators, activists, and students—to contribute.

Kdan Mobile Software Ltd, a leading SaaS provider headquartered in Taiwan has raised $5 million in Series A funding, the company announced today in a press release. The investment was joined by WI Harper Group, Darwin Venture Management, and Accord Ventures. The company said the new investment will be used expand their businesses in the US and China markets and develop new features for enterprises and educational institutions.

Started as a mobile app developer, Kdan Mobile now offers content creation tools for designers to work across mobile devices and desktops. The company’s products were touted as an alternative to Adobe products and Evernote. The company said its product line now has over 120 million downloads and its cloud services, Kdan Cloud, has accumulated over 3.5 million members.

Last November, the company announced a partnership with LKKER, a leading online design sharing platform in China. The partnership allows their users to directly share their work on LKKER’s pitching platform with businesses who are seeking talented designers.

The company said they are expanding their services into other markets and is open to new partnerships. “We have been actively cooperating with many international partners such as GMobi, Adonit, and LKKER. These partners help us reach a larger audience and provide resources to help our users make even more efficient use of our products and services,” said Kenny Su, CEO of Kdan Mobile.

Blockchain, one of the emerging disruptive forces alongside AI and big data, is revolutionizing our financial systems, industries, and cities to their core. As global players rush to tap into the potential of distributed ledger technology (DLT) and blockchain, in Taiwan, the blockchain craze is still simmering quietly.

Over the weekend (31 Mar—01 Apr), Taipei hosted its first major blockchain event, BlockCity, co-organized by blockchain accelerator Blockcamp.io and local blockchain media BlockTempo. The event welcomed entrepreneurs, industry leaders, and a group of avid blockchain advocates from high schoolers to tech veterans to share their thoughts on the current state of the technology in Taiwan and how to help promote the technology. The event, which was themed around smart cities and fintech, featured panel discussions, workshops, exhibitions, and a hackathon.

Taiwan’s techies have been waiting for an event like this for a long time—although a self-proclaimed “high-tech island,” Taiwan’s blockchain industry is still nascent and there haven’t been many events to promote conversations and engage local communities. The Taiwanese government has a track record of taking the wait-and-see approach when it comes to emerging technologies. And so during the two-day event, the conversations that stood out circled around educating legislators, establishing a regulatory framework, and other preliminary issues.

Not another missed opportunity

Blockchain has created disruptions and opportunities across the world, many players in Asia like China, Singapore, Hong Kong, and Japan are all eager to explore the potential of the technology.

There is also a window of opportunity for Taiwan… but, it’s small.

“On the financial side, Taiwan has an opportunity to influence these new systems—payment systems and inter-country systems—that are being built right now… and it’s a shame that Taiwan is still not stepping up like other countries,” Carl Wegner, the head of Asia for the distributed ledger technology (DLT) company R3, told Technode in an interview following his keynote speech. R3 is working with over 110 banks, financial institutions, regulators, trade associations, and technology companies to develop a DLT explicitly designed for financial services.

Wegner explained that a DLT-based cross-border system is being created, and players who are “in the game now” get to influence the standards that will benefit their markets. However, he noted an unusual characteristic that is favorable for developing DLT technology in Taiwan’s financial sector:  the presence of large banking conglomerates that have different businesses such as commercial banks, securities companies, insurance companies all under one umbrella; whereas in many countries those businesses are separate entities. “There is huge potential for them to be able to manage information a lot more efficiently in the future if they were to use distributed ledger technology,” said Wegner.

Better understanding and better regulatory framework

One of the key takeaways from the event is that Taiwan needs to find a way to regulate DLT and blockchain.

Speaking on the panel on blockchain regulations, Jason Hsu (许毓仁), congressman and blockchain advocate, said that the community plays a key role in helping the government better understand blockchain and the best practices. He explained that in Taiwan many legislators still don’t know enough about DLT and blockchain to care. Hsu added that the government has maintained an ambiguous attitude toward cryptocurrency in that they don’t encourage or discourage it.

Wegner also said regulators’ lack of understanding is one major roadblock. “The regulators have to start learning and doing projects,” Wegner said, “Learning about something doesn’t mean that you’re going to make a decision, but if you don’t learn you don’t know how to make the decision.” 

To establish an enabling environment for blockchain companies and the industry to grow, the panel recommended the government learn from other countries’ best practices and their frameworks. The recommendation of emulating what Japan has done after the $500 million cryptocurrency theft—establishing self-regulatory organizations (SRO)—was popular among panelists and the audience. 

Taiwan doesn’t have a big enough market, and companies are leaving the island for better opportunities. Huang Kunjia, CEO of inno4G says that Taiwan cannot afford to take a hands-off approach and miss the window of opportunity. Huang said countries like Singapore and Switzerland have advanced regulations on DLT and blockchain, and they are attracting talent and capital. With China’s current ban on ICOs, capital control issues as well as the US SEC tightening crypto regulation, Taiwan has a tremendous opportunity to attract talent and capital. Huang added that even though Japan has an established crypto regulatory framework, it is still regarded as more closed-minded towards foreign investments.

Taiwan’s blockchain startup community is vibrant, and foreign entrepreneurs are curious and interested to explore the market. Opportunities are emerging, and the businesses are calling on the government to establish a regulatory framework.

During the discussion on blockchain in businesses, Bitmark CEO Sean Moss-Pultz said, “There are all these regulatory bodies that could regulate a token… it could be the tax authority, it could be the central bank, it could be the FSC [Financial Supervisory Commission]… what is needed is for Congress to pass a law that says clearly what you could do with this.” Moss-Pultz said, “Taiwan has a great opportunity and fantastic people, and if they can put the regulatory framework in place then they can flourish.”

As China makes headway to becoming the world’s first cashless economy—and other markets follow its footsteps—Taiwan is dragging its heels. For an average person who lives in Taiwan, paper money and plastic bank cards are still an indispensable part of daily routine.

Currently, only 13% of the population in Taiwan uses mobile payment, lagging significantly behind its Asian peers. A recent eMarketer report shows that mainland China is leading in mobile payment adoption, accounting for 61.2% of worldwide user base in 2018. And India, which saw a 75.5% increase in the number of users the past two years, has become the world’s fastest growing mobile payment market.

Taiwan’s faith in cash

Taiwan’s slow adoption is a bit surprising considering that its economy took off decades ahead of mainland China and many of its neighbors in Southeast Asia. On top of that,  Taiwan’s smartphone penetration is one of the highest in the world and is expected to reach 93% this year. The National Development Council data show that over 80% of the population have access to mobile internet.

The general public is also knowledgeable and keen to try out the new payment methods. According to research by Mastercard, 61% of consumers in Taiwan are aware of NFC (near-field communication)—the underlying technology of behind many popular mobile payment services including Apple Pay and Samsung Pay—and with more than 80% of consumers willing to try or continue using contactless payments.

Taiwan has the technology, the infrastructure, and the means necessary to press ahead with mobile payment, the government’s reserved attitude towards digital payment is largely due to security concerns that persist over mobile and e-payment systems for years. The government had been taking a conservative approach with digital payment methods even when mobile payment became mainstream in mainland China back in 2016.

Read more: The rise of China’s cashless society: Mobile payment trends in 2017

After the government relaxed regulation on third-party payment in 2015 (in Chinese), the mobile payment market started showing signs of life with more service providers entering the scene, but consumer habit was still deeply rooted in cash and card.

No need to upgrade

Largely speaking, mobile payment has remained niche in many developed economies — Taiwan and Japan are prime examples. Emerging economies, on the other hand, are much quicker to embrace the new payment methods.

Fintech solutions like mobile banking and mobile payment offer answers to many of the challenges developing countries have long battled, such as the proliferation of counterfeit money, limited access to bank services (particularly in rural areas), and the absence of a well-established financial system. In a way, these barriers have driven the adoption of mobile money in developing countries. That explains why China and India are two of the fastest growing markets for mobile payment methods.

In Taiwan, traditional payment methods have worked well for a long time, payment cards usage and penetration is quite high, and mobile wallets seem more like an alternative rather than a necessary upgrade.  For many in Taiwan, traditional payment methods are generally considered to be more secure and trustworthy than digital payment—even though many have argued it is the other way around. This plays a part in why mobile payment usage remained lackluster in spite of the wide variety and availability of non-cash payment options.

According to Nielsen’s Mobile Shopping, Banking, and Payment report, over half of Taiwan respondents said they are unlikely to use mobile payments in outlets like bars, restaurants or retail stores, which is a higher than the global average of 40%. Close to 73% said they have security concerns about mobile payment methods.

Winning the hearts of the small and unregistered

For mobile payment to be ubiquitous, local and small businesses need to also be on board. These businesses, however, aren’t keeping up with the government’s cashless ambition, which aims to reach 90% of smartphone users using mobile payments by 2025, a huge leap from the current 13%.

For small businesses, integrating the payment technology such as NFC-enabled terminals are costly, especially when consumer demand for such services is still tepid. And, of course, there’s also the issue of taxes.

Taiwan has over 400,000 registered small businesses with sales of under NT$200,000 (~ $6850) a month—that’s one-third of all registered businesses. They have shown low interest to cooperate because many of those businesses have expanded into larger operations and they fear they would be subjected to higher tax rate if they go digital.

Unregistered businesses, accounting for over 3% of Taiwan’s GDP, are also hesitant to cooperate with the government for similar reasons: integrating into the formal economy means they would have to start paying taxes.

In January, the Ministry of Finance rolled out tax incentives targeting small businesses, which allows them to continue paying the 1% business tax for three years until the end of 2020 even if they have expanded their operations, as long as they provide mobile payment options to customers. South Korea also had a similar tax incentive to boost mobile payment adoption.

All sorts of confusion

There are many barriers to mobile payment becoming ubiquitous in Taiwan, but the lack of availability of payment services is not one of them. Back in early 2017 when Taiwan opened its arms to the three global mobile wallet providers—Apple Pay, Android Pay, and Samsung Pay—it was already a crowded market.

But even with more than 20 mobile wallet providers currently operating in Taiwan, only a few are popular. A survey conducted by Market Intelligence & Consulting Institute shows that 25.2% of respondents who use mobile payment systems preferred messaging app LINE’s payment feature LINE Pay — ahead of Apple Pay (17.9%) and the Taiwan-based JKo Pay (街口支付 10.9%), and the Google-operated Android Pay (9.9%).

There is not one service provider that can be used widely enough across different sales channels. Larger convenient store sand hypermarket chains like Family Mart and 7-11 can support as many as seven different payment apps, whereas smaller businesses that do support mobile payment usually accept only one or two apps as payment options.

“I use Apple Pay, but it is quite frustrating sometimes because other than convenience stores and some large department stores, a lot of places that are still cash-only,” a mobile wallet user told Technode. Unlike China where there are unified platforms like Alipay and WeChat Pay that allow most banks to expand their services on, service providers in Taiwan partner with only a selected few banks. LINE Pay, the most used mobile payment system, is tied to just one local financial service.

Read more: Alipay vs WeChat: Challenges and strategies of two payment giants going global

There are many other non-cash payment options to fall back on, which gives consumers one less reason to use mobile payment. For example, some smartphone users favor banking apps with e-wallet features. There’s also the popular EasyCard (悠游卡), a contactless smart card that can be used across all public transport and convenience store chains. “I used to use LINE Pay, but EasyCard is still what I use more frequently to pay for day-to-day expenses,” another user told us.

Last September, the government launched its own mobile payment app, Taiwan Pay, which supports both NFC and QR code functionality. It’s still too early to tell whether it can stand its ground, but at least it is doing something different. The payment app has teamed up with more than ten local banks and is looking to expand their partnership (in Chinese) to support international financial service providers such as VISA, Mastercard, and JCB. The e-wallet also features “t-wallet” which can be linked to both debit and credit cards. Most mobile wallet apps in the market can only be linked to credit cards. This is could help boost mobile payment usage in Taiwan since debit cards are a payment option that young people and students have easier access to and express the strongest interest in using mobile payments among all age groups. Whether Taiwan Pay can boost mobile payments will depend on whether it can address consumer pain points and streamline the payment experience.

Mobile payment will play a vital role in ushering in the era of cashless society, but Taiwan needs more than just a nudge. For mobile payment to become ubiquitous, there should be mobile payment platforms that are supported across different outlets and are able to provide services that allow consumers to use from shopping and dining to taking taxi rides and paying for daily expenses with no hassle! The government will need to win the cooperation of industries, financial services, and businesses — large and small.

But there are reasons to be optimistic. The government has been proactively promoting mobile payment and implementing policies to encourage mobile payment usage the past three years. Whether or not cash and cards can truly be replaced by mobile wallets, the verdict, however, is in the hands of consumers.

We are living in the age of the Internet of Things (IoT) where resources, data, and services are increasingly being traded between machines. As connected devices continue to proliferate, the interoperability and sharing of resources—everything from information, storage to electricity and sensor data—are a vital part of the machine-to-machine economy.

While many look to blockchain hoping it will be the technology to provide the underlying support for the machine economy, it is not very scalable. That is what the creators of IOTA wanted to solve. Although better known as a cryptocurrency, IOTA was intended to be something much more ambitious—to be the backbone of IoT.

Instead of using a blockchain, IOTA is based on a distributed ledger technology called a Directed Acyclic Graph (DAG), or Tangle, that enables data and money to be transferred via its network. Unlike blockchain, for every transaction that is added to the Tangle, two others are validated, which means the Tangle network doesn’t slow down with high transaction volume. The technique makes IOTA capable of handling large volumes of transactions per second.

“You want to ensure the data is completely tamper-proof and that is what any distributed ledger can bring. But IOTA can bring it in a unique way in the sense that it doesn’t get inhibited by fees and scaling limitations like regular blockchains,” said David Sonstebo, the co-founder of IOTA.

These characteristics make IOTA much more future-proof than blockchain, they claim. And because IOTA works particularly well in payments and storing information, there are already a number of known applications including micro-payments, voting, as well as information and data transfer. IOTA is already being tested on industries including automobile, manufacturing, and healthcare.

Just recently, Bosch—German electronics giant and leading IoT patent holder—became one of the first multinational firms to invest heavily in IOTA. Volkswagen announced in January that the Chief Digital Officer, Johann Jungwirth, is joining the Foundation’s Supervisory Board, a hint that further collaboration with IOTA on decentralized platforms and smart cars will take place in the near future.

The city of Taipei is testing Tangle on smart city solutions

In January, Taipei signed a partnership agreement with the Germany-based IOTA Foundation to explore smart city solutions based on Tangle. The city has already launched a number of projects including digital identification and air quality monitoring systems. Taipei has become one of the first cities in the world to test out IOTA.

“A lot of people probably have the notion that blockchain technology is universal, but it’s not,” said Lman Chu, the co-founder of Biilabs, a startup looking for a better smart city solution than blockchain. The Taiwan startup is collaborating with the Taipei City government and working with the IOTA Foundation to provide the core technology for the smart city projects.

“IoT devices are expected to reach 50 billion by 2020, with an estimated 50 trillion interactions per day,” said Lman. “The existing blockchain technology that we have now can’t possibly deal with a transaction volume this large,” he said, adding that they are not the only ones who noticed the scalability problem.

The initial project is to put in place a digital identification system based on IOTA’s TangleID technology. As Taipei’s Smart City Living Lab initiative enters its proof-of-concept phase, the city will soon roll out a new identification system—the Digital Citizen Card—that is designed to safeguard citizens from identity theft and voter fraud. The identification system could eventually be used in other public service domains such as tracking medical history.

The TangleID system solves a common conundrum relating to digital identification—linking digital identity with the non-digital identity of a real person. Mainland China is a rare exception to this type. It has been enforcing the controversial real-name registration laws, which mandate internet companies and service providers to request and verify real names from users when they register.

Outside of China, this is still a very big problem.

Lman said the process of verifying whether online information corresponds to the actual person is necessary but very difficult. That is why, as a preventative measure against money laundering, financial service providers still need something like the KYC (Know Your Customer) forms to identify and verify its clients’ identities, Lman explained. When the technology is implemented, citizens will have the option of linking their Digital Citizen Card with different forms of digital assets such as medical records and household registration records.

In a joint effort to better control air quality, Asus, Academia Sinica, Edimax, Realtek, LASS (Location Aware Sensing System), and the Taipei City government are using Airbox‘s palm-sized air sensors that collect air quality and pollution data. They will be installed in schools and homes to enable real-time air pollution monitoring. In collaboration with Biilabs, Airbox will integrate incentivized payment in IOTA and the data will be stored in the Tangle.

Lman told TechNode they are testing Tangle in other areas he cannot disclose just yet.

First time to adopt Tangle at scale

Taipei is not the first city to adopt IOTA-based smart city solutions. In fact, the city of Haarlem in the Netherlands is the first to implement Tangle for smart city solutions using the technology to verify legal documents within public registers.

But why is the Asian capital under a bigger spotlight?

“The attention didn’t come as unexpected,” Lman recalling a conversation he had with the founding team of IOTA, “We knew this would be something significant because this is the first time the technology is being tested on a big city and this is critical to the adoption IOTA technology this time around.”

The Asian city is ranked the 40th most populous urban region in the world. Taipei City and the Greater Taipei region (Keelung and New Taipei) combined have an estimated population of over 7.4 million.

With Taiwan’s rich history in hardware manufacturing and electronics, IoT is considered is a strategic economic area for the island. In the next decade, government policy and budget surely will favor the IoT sector, Lman said. This is a favorable position to be in, “because the government is the biggest spenders on IoT, and this is true in across the world.”

Taiwan has rolled out initiatives to promote the development of IoT. For example, the Asia Silicon Valley Plan launched in December 2016 aims to promote the IoT industry innovation. These factors created a fortuitous opportunity to push forward IOTA adoption.

Laying the groundwork

Despite it playing a pivotal role in the smart city evolution, it is still a relatively new technology that many are unfamiliar with. Blockchain and distributed ledgers are difficult concepts to understand. To push IOTA forward, Lman said communication is key. “The biggest challenge is in communicating with the general public and promoting the concept. The technology is not really the knotty problem here.” Now, Biilabs is focusing on developing and bolstering their core technology. Lman revealed that they have seen interest coming from other cities in Taiwan, and cities in Europe and the US.

“IOTA and blockchain, to be honest, are trying to solve the same old problems as the technologies that came before them,” Lman said. “Can IOTA solve real-world problems? Can it help our industries cut costs and function more efficiently?”

These are the fundamental questions that are driving the innovations of smart cities, smart health, smart-everything—and IOTA is no exception.

Updated 26 Jan 2017: Animoca Brands announced that it has signed a one-year renewable exclusive license and distribution agreement with Axiom Zen to publish CryptoKitties in mainland China, Hong Kong, Macau, and Taiwan. The Hong Kong-based mobile game developer did not disclose any further details about the launch in the press release.

Axiom Zen, a Vancouver-based innovation studio, is launching its flagship Ethereum-based game CryptoKitties in mainland China, Hong Kong, Macau, and Taiwan. The company has signed a one-year renewable exclusive license and distribution agreement with Animoca Brands, a Hong Kong-based mobile game developer, to publish the blockchain game.

Benny Giang, one of the co-founders of CryptoKitties told TechNode in an interview that the team plans to first roll out the mobile version of the game for iOS in the Greater China region, then the rest of Asia. However, there “are a lot regulations in play… This means we cannot guarantee the launch of CryptoKitties.”

Some of you might have heard of CryptoKitties but have little knowledge of what it is or why people are so obsessed with it. So let’s back up a minute.

Blockchain, a distributed and decentralized ledger technology, has been booming in recent years. Cryptocurrencies and smart contracts like Bitcoin and Ethereum networks are only a few of the applications that run on blockchain. CryptoKitties is the first and one of the biggest blockchain-based games. It is also the most popular smart contract system on the Ethereum network.

Much like Pokemon and baseball cards from back in the good old days, CryptoKitties are collectible pieces of art. What is so special about the game is, well, players can collect, buy and sell virtual breedable cats instead of playing cards (almost like that other classic, the Tamagotchi).

The game was launched only a few months ago, but within weeks the game went viral and became so popular that at one point it completely overloaded the Ethereum network.

Many crypto enthusiasts in Asia have been left out of the CryptoKitties fever, but not for much longer.

The team is still working on the Chinese translation for the name “CryptoKitties,” but it is certain that the mobile app will be in the Chinese language. There will also be Spring Festival-themed Fancy Cats–kittens with distinct visual attributes that are harder to collect and more valuable.

Launchpad to China and the rest of Asia

While blockchain-based technologies and applications are evolving fast, many countries’ crypto regulatory measures are slow to catch on.

Mainland China’s recent crackdowns on cryptocurrency thwarted Axiom Zen’s original plan to launch CryptoKitties in the country. “We are in the middle of negotiating partnerships with game publishing companies in mainland China, but with the recent crackdowns it may take much longer to get to the mainland.”

With so many uncertainties, the team feels they have to navigate through the changing regulatory climate as they go. “So far we’ve been in conversations with quite a lot of people who are located in Greater China. We are working with lawyers from both sides—from our end in Canada and in Greater China to figure out what’s the best way to proceed.”

Despite the challenges, the team is set to take their first step into the Asia market. “Hong Kong has a lot of involvement of blockchain products that have connections to Korea and Japan, and it’s a global hub for a lot of these new projects.”

Tapping Asia’s potential

It is not without reason the startup is so certain about the untapped potential in Asia—even though the game is not yet optimized for Asia, a large percentage of CryptoKitties players are from the region—a close second only behind North America—and specifically, China. “We already have players in these countries, we just need to support and build the community there to make the game more accessible.”

The startup sees the Spring Festival as the golden opportunity. The team has been building a lot of features and functions that are specific to the Greater China market.

A scalable solution

The game currently has more than 320,000 players and it is still growing fast. For mobile app games in China, having millions of users is not uncommon, but “for a blockchain game that is really big,” Giang explained, “If we’re talking about the blockchain, Ethereum can’t handle millions of users at this point nor can any blockchains available now that are in full production.” In a way, the scale of blockchain games really rests on the development of the blockchain technology.

So this begs the question, can Ethereum handle the kind of volume that Chinese market entails? “We are now working with a lot of experts in scaling… They are working actively to build these solutions.” And there will be increasingly more blockchain-based games coming out. “Since we launched CryptoKitties we’ve created a team at Axiom Zen who are specifically focused on exploring long-term scaling solutions. That is something that we take very seriously.”

Future of gaming

Crypto-collectibles are unique because via smart contracts on the Ethereum blockchain, the ownership of these items or gaming content is tracked and will dwell forever on the digital ledger. “The way we see it is that these are pieces of art where in a hundred years or five hundred years, these kitties will be like the Mona Lisa…” Five hundred years into the future, “somewhere around the world people will have these kitties—art pieces that they bought a long long time ago,” Giang explained.

Although many people see CryptoKitties as an investment vehicle, that is not why the game was created. “The main thing for us is that it is a game that is educational. We want more people to learn about blockchain and that’s kind of our overarching goal… [CryptoKitties] should be a learning vehicle, and that is what we’ve always said since the beginning.” But at the end of the day, some people see the value in profitability, others see in it the sheer enjoyment of collecting unique art pieces, it’s really up to the market to decide what it is.

Amazon’s cloud computing arm AWS is launching their first flagship joint innovation center in Taiwan, where they will provide assistance to tech professionals and supports to high-tech startups in the fields of cloud computing, big data, IoT, and AI.

Located in Banqiao District, New Taipei City, the center will be jointly operated by New Taipei City government and FCC Partners, a middle-market cross-border M&A financial advisory services provider.

The partnership is set to create a comprehensive ecosystem of startup innovation, which will help pioneer the shift from traditional industries into digital markets in Taiwan, FCC Partner Chairman Huang Chi-yuan said to local media.

The move is in line with Amazon’s greater push to capitalize on the rise of tech innovations from the Greater China region. AWS just rolled out its first global joint innovation center in Qingdao, Shandong Province in March 2017.

On the other hand, the local government considers investment in the innovation center as a strategic decision, which will contribute to the government’s Asia Silicon Valley Development Plan. Taiwan, once an indispensable part of the world high-tech supply chain, has been suffering from a growth slowdown in recent years. The plan is among a series of governmental efforts to revive the local tech industry.

Before Amazon went forward with this allocation in Taiwan, Microsoft and IBM had both established application innovation centers in Taiwan, including a development center for the IoT industry and a cloud innovation alliance in order to strengthen their ecosystems.

We are entering the era of intelligent things where smart devices seep into every aspect of our lives. As AI continues to evolve and IoT devices proliferate, the two transformative technologies converge, forming something called AIoT (the artificial intelligence of things) or some may refer to it as the next generation of IoT.

Sounds a bit far-fetched? Not at all.

Home appliances, factories, healthcare equipment, surveillance cameras, smartphones, drones and autonomous vehicles are all starting to adapt to AIoT technologies.

For example, Sharp recently released an AIoT augmented kitchen that allows customers to talk and consult with it about preferred cooking time and calories setting. It is capable of giving suggestions based on information like previous cooking records, seasons and weather, and educate itself by learning the family’s food preference and eating habits.

According to Gartner’s predictions, 1 million new IoT devices will be sold every hour by 2021, and, as one would expect, they will be augmented with artificial intelligence and become a network of learning and thinking objects, each with a brain of its own. This shift from stand-alone smart devices to an intricate network of collaborative intelligent things is what the future of AI entails.

Big players gearing up for big opportunities

Though AIoT is still at a budding stage, its applications are already boasting enormous business potentials. Many global players including China’s tech giants, Baidu, Alibaba, and Tencent (BAT) are all making big moves to ensure their place in the forthcoming expansion of AIoT technologies.

Last November, Xiaomi and Baidu announced their collaboration to tap into the AIoT market at the AIoT Summit in Beijing, which affirmed their commitments to accelerate deployments in the AIoT sector.

The rise of edge computing

In the age of AI, increasingly more data is being generated and gathered from different sources—whether it be a smartphone, drone, sensor, robot, or autonomous vehicle—and cloud computing is under the strain of meeting massive data computing demands of these devices and applications. This gave rise to a new paradigm called edge computing in which information is processed closer to its source instead of sending it to data centers or clouds. Bringing computing to the edge of the network and allowing more important data to be processed and analyzed in real-time is crucial for the development of many applications including VR, IoT, automated vehicles.

This decentralized and distributed way of data processing is not new, but it’s only recently come into more demand as latency becomes more important.

A Taiwanese startup making headway

Back in 2015 when deep-learning—a core technology behind AI—started to be widely applied in various areas, a group of researchers from Taiwan National University saw a problem behind the excitement. “Coming from an engineering background, the privacy aspect of machine learning is a top concern for us. Deep-learning requires an immense amount of computational power and data. The data, visual and non-visual, are all being uploaded to the cloud,” Tammy Yang,  the co-founder of a Taiwan-based deep-learning startup DT42 told TechNode. Indeed, cloud computing entails the transfer of data over a network to the cloud, which can have serious privacy and security ramifications. But because of the difficulty and complexity associated with edge computing, “most AI applications at the time resorted to cloud computing for data processing and analytics, but we knew this needed to be changed.”

Seeing the unfilled gap, DT42 decided to simplify the process of applying and deploying AI technology to local devices and equipment, making it accessible to more businesses. How? You guessed it, through edge computing. Essentially, they are squeezing deep-learning models into edge devices, making AI lighter and cheaper. By doing so, cloud and edge computing can work together to share the load—thereby reducing network latency, lower data management cost, and minimize potential security risks.  The startup has already gained recognition from Zeroth.AI, Asia’s first AI accelerator, in 2016.

Asia’s competitive edge

Over the past two years, AIoT has been a hot topic, especially in Taiwan. There’s a reason for it: situated in Asia, the world’s hardware manufacturing hub, gives the island the right environment to push forward AIoT.

In fact, Asia’s prowess in hardware manufacturing is a unique competitive edge in the AI revolution. DT42 chose to build their team in Taiwan because a large part of edge computing, an important thread of future AI, has to do with the integration of AI’s hardware and software.

“Asia—China and Taiwan in particular—are specialized in hardware and software integration,” said Yang. A lot of hardware manufacturing factories are located in China and Taiwan region and “naturally, headquartering in Taiwan gives us an advantage not only because there is a rising demand in the region, but it would also be easier in terms of finding the right talent and the right hardware partners.”

The Taiwan-based startup is entering other markets such as China, Hong Kong and Japan where they see similar opportunities.

First to hit the wave

AIoT applications are starting to emerge in different industry verticals, but some are undergoing the disruption earlier than others. DT42 is seeing demand coming from two industry verticals: surveillance and manufacturing—the two industries that are generating an immense amount of data.

A swarm of new AI startups are focusing on surveillance because AI has great potential in enhancing surveillance systems, face-recognition technology, and data-analyzing capacities through data gathered from security cameras and motion sensors.

The manufacturing industries, where cameras and sensors are widely deployed, are looking to AIoT for factory automation. Most recently, Andrew Ng’s Landing.ai announced a partnership with Foxconn to bring AI to manufacturers.

When exactly is the wave going to hit?

The era of AIoT has been looming on the horizon for some time now, but why hasn’t it arrived already? Yang mentioned three key factors that have stunted the development of AIoT.

First, data collection needs time. Take, for example, IoT technologies and sensors used in the agriculture industry need at least a year to have four seasons of data, and even more years of data is necessary to extract meaningful information. The time for collecting big volumes of data is impossible to cut short. Second, data collected from AIoT is immense. There needs to be a technology that can read, analyze, and understand the data. A lot of applications are beginning to emerge, cloud computing is one of them. But currently, there are limitations to what cloud technologies can accomplish.  Third, data-analyzing tools currently available are not advanced enough just yet to push forward AIoT in full thrust.

Though IoT is an important driver for the development of edge computing, it is also true that edge computing is indispensable to AIoT deployment. “From a technical point of view, this will be a huge leap forward for AI development,” Yang said, “We are quite optimistic. In 3 to 5 years AIoT industry applications will be at a mature phase where there will be significantly more applications emerging.”

Embracing the change

Although it might seem that AIoT and edge computing technologies are still in their early days, that is starting to change.

“It was challenging at first especially in communicating the idea of edge AI. The concept and its importance weren’t widely understood at the time.” Recognizing today’s cloud computing technology has its limitations and it simply can’t meet the needs of emerging AI applications, industries are slowly waking up to the emerging tech trend. “Fortunately we are past the hard part. Big tech companies like Nvidia, Intel, Qualcomm have all been promoting the concept. There was an apparent change in attitude toward edge AI near the second half of 2017. It then became much easier in terms of communication with the government, clients, and investors.”

AIoT is important to industry structure of Taiwan, China, and other manufacturing hubs in Asia in that it will create a huge demand in hardware sensor, a processing unit, and more. It will most certainly create new demand and become a force driving both the growth of manufacturing industry as well as a swarm of hardware-based SMEs in Taiwan.

Artificial intelligence (AI) is transforming our businesses, industries and the global economy at large. As other countries swarm to seize emerging opportunities brought by AI, Taiwan, the island situated amongst two AI front-runners—China and Japan—seems to have trouble rising above the clamor.

The high-tech island is home to some of the world’s leading hardware and electronics companies, including TSMC, Foxconn, Quanta, and Asus. But despite its tech prowess, Taiwan’s AI development is still at a nascent stage.

Tech talent exodus

As with the rest of the world, much buzz has been generated in Taiwan by the AI boom. However, this has been accompanied—some may say inevitably—by rising concerns over the brain drain in Taiwan’s tech industry.

But it wouldn’t be fair to say that Taiwan is unable to foster talents. In fact, Taiwan has a highly educated workforce abundant with tech talents. Students from Taiwan demonstrate high performance in mathematics and science, the 4th highest in the world according to OECD, and over 25% of all its university degrees are in engineering. Kai-Fu Lee, AI expert and founder of Sinovation Ventures, and Aja Huang, AlphaGo’s lead programmer, are among the many Taiwanese who are highly respected in the field.

Taiwan’s tech industry has long been dominated by big semiconductor and IT manufacturing companies that have the resources and money to offer higher salaries and better opportunities to attract talents than software companies. Fresh graduates in Taiwan often have to face the dilemma of choosing between the less lucrative positions in the software industry and the higher-paid jobs in the traditional hardware industry. The established hardware industry inadvertently undermines the development and innovation of software.

Much for the same reason, Taiwan hasn’t been able to stop the ongoing exodus of top AI engineers and technical talents from leaving for large international enterprises overseas. In Taiwan, the starting salary for fresh out of college software engineers is around $15K, and $16.8K for those with a master’s degree according to 1111 Job Bank, a local website for human resources—meager considering software engineers in the US on average earn around $100K a year.

“Currently, options are limited for the many outstanding Taiwanese graduates that are interested in AI. Most of them have to go abroad to join Facebook or Google for a proper career. If they join Taiwanese corporations such as TSMC or MediaTek, they won’t have enough opportunities to work in the field of AI,” Ethan Tu, the famed creator of Taiwan’s popular online bulletin board system PTT, said in April when he announced the launch of Taiwan AI Lab.

Most recently, Tu was made Regional Director of Microsoft Asia-Pacific Research and Development for AI but decided to return to his roots to help build an AI ecosystem in Taiwan. The Lab, aiming to push forward new ideas and product innovation in AI, reportedly offers the highest salary a software engineer can make in Taiwan.

Waking up to the AI revolution

Holding on to its legacy in the hardware industry, Taiwan seems to have sat quietly on the sidelines through the significant changes happening in software, the internet, and social networking in the early 2000s. Still boxed in the old PC-era way of thinking, Taiwan still lags behind other developed countries in providing an enabling financial and regulatory environment to cultivate the development of AI and deep-learning.

So, what is the island doing counter these setbacks?

In August, the Ministry of Science and Technology (MOST) laid out a $534.5 million development plan for AI over the course of the next four to five years. One of the initiatives, Project Moon Shot, is a $132 million project to assist Taiwan’s semiconductor industry in developing cutting-edge AI technologies and edge products, and cultivating a talent pool specializing in AI. Resourceful tech companies including Microsoft Taiwan and NVIDIA are offering support to the government in carrying out the development plan.

In November, the national academy, Academia Sinica, announced the opening of Taiwan’s first AI research school—Taiwan AI Academy—which is set to begin its first program in January 2018.

Looking for an edge in AI

Taiwan doesn’t have a billion people to generate the amount of data needed to train AI systems, nor does it have the size of talent pool comparable to that of China and US, but does it really need to depend on those conditions to get a foothold in AI?

In an interview with Manager Today, Kai-Fu Lee implied that the area of opportunity for Taiwan is not necessarily in AI’s core technologies—namely machine learning and deep learning—but the bigger opportunities lie in hardware and industrial AI applications.

1.      AI boom presents vast opportunities for the semiconductor industry

The semiconductor industry is at the heart of the development of AI applications. AI chips are used in data centers to train systems to analyze and find patterns in volumes of data that are compiled. That is why semiconductor companies are racing to develop AI chips that could boost deep-earning training times.

Home to two of the world’s largest semiconductor companies—Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC)—Taiwan holds the world-leading status in the supply chain of semiconductors. The industry is accounted for 28% of the Taiwan’s exports in 2016, which means the AI chip boom is a golden opportunity.

2.      Edge AI

Many experts believe the best opportunity that matches Taiwan’s strength lies on the edge, not cloud.

Smart home appliances, smart surveillance, smartphone, robotics, drones, and IoT devices, there are many uses cases where it is essential to run deep-learning algorithms at the edge to avoid latency in receiving and processing data.

Since the endpoint devices take very specific AI-chips and low-power technologies, tech companies are still exploring concepts and developing technologies that will bring AI closer to the edge—this is where Taiwan’s competitive advantage lies.

3.      Surveillance cameras and sensors

Video surveillance cameras and sensors are used in factories and retail environments to gather data that can be analyzed to extract valuable insights. Taiwan already has many outstanding optical lens companies like Largan Precision, which is a supplier of camera lens modules for smartphones, tablet computers, and digital cameras, among other devices that can benefit from the growing demand.

4.      Industrial AI applications—unmanned transportation and robotics

Hardware manufacturing will still play an important role in the AI era. The demand for components and parts for robotics and unmanned vehicles are sure to arise in the future. Smart manufacturing system and equipment is also an area Taiwan could tap into. For example, Foxconn, Apple’s supplier and the world’s largest contract electronics manufacturer, is already bringing AI to its factories. Industrial robots, built almost entirely in-house, are already deployed in the company’s smartphone assembly lines.

When AI and automation become prevalent, “the robotics hardware sector [in Taiwan] can benefit the most,” said Albert Chang, managing partner of McKinsey’s Taiwan office.

Developing a software mentality

While leveraging its competitive edge is essential, it doesn’t mean that Taiwan can overlook the development in software industry. If Taiwan persists in being the manufacturing yard for other technology advanced countries and sits out on yet another major software revolution, it will eventually fall behind in the AI race. After all, AI’s core technology is software such as big data, deep-leaning, and algorithms.

Ultimately the challenges will be in creating an environment that enables a thriving software culture and a burgeoning talent pool.

Taiwan AI startups pushing the new frontiers and bringing new innovations

There is an increasing number of AI startups surfacing in Taiwan. Here are a few that have caught our eye:

Appier aims to provide AI platforms to help enterprises solve their challenging business problems. This year, the company has been named in CB Insights’ “100 Companies 2018” for the second time.

Umbo, one of the rising stars in Taiwan’s AI community, are using AI to get a more precise read from security cameras. Their AI-powered technology is capable of detecting risks and abnormalities by scanning images from multiple security cameras.

DT42 is a deep-learning startup that aims to make AI easier and more affordable for businesses to deploy to edge devices.

AI is taking the world by storm, transforming all industries and sectors. Taiwan maybe standing on a shifting ground now, but there are reasons to be optimistic: the society’s passion around mathematics and science, the quality of its workforce, and its legacy in IT manufacturing and semiconductor. If Taiwan knows how to leverage its edge, it might have what it takes to rise to the AI forefront.

Xiaohun, a gay KOL (key opinion leader) from China, runs a successful WeChat official account dedicated to the LGBT community in China. Starting in June 2015, he now has over 20,000 followers on WeChat. He mostly writes about same-sex marriage, equality, and sometimes he shares his life in a rural island in Fujian Province, where he lives together with his boyfriend.

If you can’t see anything, try iQiyi instead.

Once Xiaohun learned that  Gay Pride would take place at the end of October, he knew that he had to go—with his boyfriend.

“We’ve never been to a gay pride parade before, so I asked around on my WeChat official account,” Xiaohun told TechNode. “I received lots of comments. Some said we could meet up here at the parade, so I created a group and chatted on and off.”

For Xiaohun, the WeChat official account isn’t just a place to post personal photos and diaries but serves as a platform for the underserved LGBT community in China.

“In the past, gay people didn’t have their own platform,” he said. “Now that we have WeChat official accounts, we can report on our own stories by ourselves. I’m the reporter who reports on myself.”

As a KOL, Xiaohun has to put himself in the spotlight and often times shares his personal stories as a gay man. “I’ve come out to my colleagues and parents when I started to write,” he said. “I had no concerns, and could just write whatever I want.”

“I got thousands of followers in the first month—way faster than I expected,” said Xiaohun, adding that WeChat, as a platform, is a good place for the LGBT community to exchange information.

In part 4 and the finale of the Taiwan Turnaround series looking at how Taiwan’s internet tech scene is catching up, TechNode looks at the effects that regulations have had on the startup economy and how the government plans to be more accommodating. Read Part 1, Part 2 and Part 3.

In February 2017, Uber was forced to suspend its operations in Taiwan after the government deemed the ride offering app as breaching transportation laws and passed penalties of as high as TWD 25 million per infraction  (around $827,000) against unregistered drivers. While Uber is no stranger to run-ins with regulators, this fine was the highest the ride-hailing company had faced anywhere in the world.

“These developments directly threaten the interest of over a million Taiwanese citizens [who offer rides through Uber],” Uber Asia Pacific’s regional general manager Mike Brown wrote in an open letter to the authority. “They also send a clear message to would-be startups to steer clear of Taiwan, deterring both local entrepreneur and foreign investment.”

Taiwan is not alone. Governments all over the world are grappling with how best to regulate the internet sector. However, entrepreneurs and commentators in Taiwan are echoing Uber’s sentiments: the regulations need to encourage innovation, not kill it.

No go

Ivan Lin returned to Taiwan to start lifestyle e-commerce company Add Ons after working on the mainland for more than 15 years. When he was filling forms for a business operation license, Lin couldn’t find a right product category that described what his business was selling.

“Because e-commerce covers such a wide range of products, [the government staff] asked us: ‘why are you applying for so many product categories?’ ” Lin told TechNode in a phone interview. “[There is no] category for e-commerce, that’s why I have to apply for so many. In case you find out [I don’t have the right license].”

From the moment of being incorporated, internet startups in Taiwan have to navigate within commercial regulations that are not prepared for digital business models. More often than not, the government takes a heavy-handed approach instead of a laissez-faire attitude or amending the rules to be more friendly.

Another sharing economy concept, the bike rental, has also taken a hit in Taiwan. oBike, a Singaporean company, was the first to provide the Taiwan market with dockless rental bikes. However, oBike had not anticipated Taiwan’s strict parking rules. The company had tried to liaise with local governments about releasing the bikes into circulation but in July 2017, Xinbei city government outlawed the bikes from parking in 17 zones in the city.

“The Xinbei city government distributed a public notice that has portrayed the legal release of oBikes into circulation as illegal, creating a false impression that [oBike] has breached the rules. [oBike] will seek legal action,” a representative from the company said in a statement (in Chinese), as reported by Liberty Times Net.

Another obstacle oBike faces in the Taiwan market is the petrol-fuelled scooters that a large percentage of the population prefers using as their mode of transport. Some oBikes were towed away by local governments after people complained that the bikes were taking up the parking for scooters.

For fintech, regulation was relaxed slightly in 2015 with the passing of an electronics payments bill. However, third-party payments companies are required to have TWD 500 million in capital or roughly $16.5 million. With such a high obstacle to entry, the fintech industry has yet to take off on the island.

Attracting talent

Taiwan’s foreign workers visa program has also been criticized as restrictive. As mentioned previously in this series, Taiwan is facing a severe talent loss. Against this background, it is even more important that Taiwan is able to attract foreign talent and ensure a smooth process of being able to work in Taiwan legally.

Portions of Taiwan’s foreign worker visa regulation are a legacy from the 1980s when fast economic growth created a labor shortage. Laws were devised to attract foreign blue-collar workers. Provisions for employing foreign white-collar workers were also drafted but confined the work available to 11 categories such as professional or technical services, teaching, and creative arts. Work falling outside of these categories needs to be approved by the central authority. The laws also provided protection for local workers, stipulating that foreign workers must not be hired over locals.

In recent years, the government has streamlined the visa application process for some foreign workers and created a program called the Employment PASS, which is a four-in-one visa. However, it only applies to foreign professionals who are dispatched to Taiwan by foreign companies. Other workers will have to go through acquiring four different documents each with its own application process to be able to work legally in Taiwan: a work permit, an alien resident certificate, a multiple entry permit and a residence visa.

In a 2015 forum held by think tank Formosan Enterprise Institute, speakers described the difficulty of attracting foreign talent as a factor hindering Taiwan startup economy’s growth and criticized the work permit and visa application process as outdated and ineffectual.

Changing mindsets

Add Ons’ Ivan Lin thinks that the government is still operating with a mindset geared towards the original equipment manufacturing (or OEM) industry, which made significant contributions to Taiwan’s economic growth. However, this doesn’t work for the internet sector.

“I find that the government focuses on quantity. The semiconductor industry has been around for nearly 30 years and the government promoted it to drive GDP growth,” Lin told TechNode. “This industry is capital intensive. To build just one new factory would require dozens of billions [in TWD] of investments and it can deliver products numbering in the billions. Internet companies do not operate on that kind of scale and provide intangible services.”

He went on to say that the leadership ranks in the government are now older and are inured to the traditional way of doing things. They are more familiar with factories than apps. Lin thinks that this is a large reason why the innovation economy has not changed much for the past 20 years.

Then perhaps it is natural that the government’s current big plan for invigorating the innovation economy, the Asian Silicon Valley Development Plan (or ASVD), is still hardware focused as it aims to build an IoT industry in Taiwan. The other primary objective for the ASVD plan is to optimize Taiwan’s startup and entrepreneurship ecosystem. And adjusting laws and regulations is one of the tactics devised to achieve that goal.

As seen in the above slide from the ASVD Plan presentation, deregulation of overseas recruitment and retention is one action and deregulation of starting companies in universities is another. Whether these plans will be implemented remains to be seen.

Open for business

Uber Taiwan resumed operation in April 2017 after a two-month suspension. Following talks with transportation authorities, Uber has decided to partner with licensed rental car companies to offer rides in the newly launched UberTAXI app. The Taiwan market may have its challenges, but companies like Uber are determined to stay and are optimistic about its future, as Uber’s Asia Pacific regional general manager Mike Brown had written in the original open letter:

“We believe it’s time to turn the conversation away from innovation-blocking actions and towards smart regulations that unlock economic opportunities and consumer choice for all. It’s time to show the citizens of Taiwan and the innovators of the world that Asia’s Silicon Valley is open for business.”

In part 3 of the Taiwan Turnaround series looking at how Taiwan’s internet tech scene is catching up, TechNode checks in with some star players about how Taiwan’s brain drain is affecting them and how they are addressing the issue. Next, in the finale of the series, we look at the effects that government regulations have had on the startup economy and how the government plans to be more accommodating. Read Part 1, Part 2 and Part 4.

When Ivan Lin returned to Taiwan in 2014 after working for more than 15 years on the mainland, he was surprised that the landing page for the island’s largest e-commerce platform PChome hadn’t changed much.

“PChome looked like this 10 years ago. Now, it still looks the same,” the former e-commerce executive turned entrepreneur told TechNode. Lin now runs his own lifestyle e-commerce startup called Add Ons in Tainan, a small city in southern Taiwan.

PChome’s website isn’t the only thing to have seen little change in Taiwan. Wages for university graduates have stagnated in the past 20 years. In 1999, the average monthly salary for a university graduate was $900. In 2016, it was $925—0.03% growth in 17 years. This has led many young Taiwanese to seek job opportunities in the mainland and elsewhere. The trend is set to continue, with a 2012 report by Oxford Economics predicting that Taiwan will face the largest talent loss in the world by 2021.

Against this background of a slow-moving internet industry and disappointing macroeconomic conditions, a ray of hope could be found in Taiwan’s startup economy. A group of Taiwanese and international entrepreneurs are bucking the trend by making Taiwan their base and fighting the brain drain in the process.

Add Ons – Exporting Tainan’s small-town charm

Tainan is Taiwan’s oldest city, originally created by the Dutch East India Company as a trading base in the 17^th century. The port city is famed for its local cuisine and agricultural products such as tea, orchids, and fruit. At the Add Ons office on the outskirts of Tainan, we were greeted by the smells of brewing organic jasmine tea and berry-infused coffee.

Add Ons is a lifestyle e-commerce startup working with local suppliers such as tea farmers, utensil manufacturers, and designers to brand and package their products, then market and distribute to other retailers or sell directly to customers through their app and website. Founded in late 2014, the startup has built a customer base in mainland China, Malaysia, and Japan, and continues to expand.

Lin had been working for 15 years in China in various roles at startups and multinational companies. When he was deciding where to set up his new company, Beijing and Shanghai didn’t make the cut because of the high costs. Lin settled on Tainan for the specialty products and the low costs of operating a business. But more importantly, Tainan is also Lin’s hometown.

“[Tainan] is like Dali in Yunnan, once you’ve lived here for a long time, you realize it’s a place with a slow tempo, suitable for retirement and to not do anything at all,” Lin told TechNode. “But we are focusing on products that take time to refine, catering to lifestyles that have specific needs.”

These conditions also create challenges for the Add Ons team when they are trying to expand. Lin said that recruiting good talent is harder in Tainan. However, Add Ons has come up with solutions to tackling this challenge.

“We prefer to train our talent, helping them to develop problem-solving skills. Working in startups is a constant training exercise anyway,” Lin explained. “In this day and age, it’s all about user experience, whether it’s for your customers or our own staff. We aim to create a better user experience for everyone.”

Appier – Happier through Artificial Intelligence

Changing to a faster pace in Taipei, we checked out Appier’s new office which is just a 10-minute walk from Taipei 101, a famous landmark. It was the world’s tallest skyscraper until the Burj Khalifa was completed in 2004. Appier was the name that popped up again and again as the one to watch whenever we talked to entrepreneurs and investors in Taiwan.

The name “Appier” comes from happier and apps, inspired by the founders’ mission to make people’s lives better and happier through artificial intelligence apps. It provides business analytics solutions based on artificial intelligence and was the first Taiwan-based company to have received investments from Sequoia Capital, a well-known US venture capital firm. Appier’s founders, Chih-Han Yu, Winnie Lee, and Joe Su all met while studying in the US. They actually started what was to become Appier there before deciding to relocate back to Taiwan.

“As Taiwanese natives, we know we have a lot of great talents here,” Appier co-founder and COO Winnie Lee told TechNode. “That’s the first reason [why we came back]. The second reason is that we wanted to provide AI solutions to all these Asian countries, where there is a higher demand and has been underserved. Taiwan is probably one of the best launch pads for Asia.”

Since returning to Taiwan in 2012, Appier has grown fast by fully embracing the motto “going global”. The company has over 200 employees spread across 14 offices in Asia, almost one in every major city. Appier has gone through four rounds of funding, receiving $82 million from big-name investors such as Sequoia Capital, Alibaba Taiwan Entrepreneurs Fund, Naver, and SoftBank.

As the case with other companies in Taiwan and especially in the artificial intelligence sector, talent is hard to come by. Appier is constantly on the lookout for AI talent and has set up a scholarship for students of AI (in Chinese) with multiple Taiwanese universities in hopes of nurturing future AI engineers and specialists. Other than domestic talent, Lee has also observed other positive signs in the Taiwan startup ecosystem.

“We do see a clear growth in terms of the startup activities and startup companies emerging in [Taiwan],” Lee told TechNode. “There are more international founders coming into Taiwan. I’d definitely say it’s a good environment now compared to a few years ago.”

Bitmark – Transforming ownership through blockchain

Bitmark’s founders are an example of international founders choosing Taiwan as the base for their startups. Co-founder Sean Moss-Pultz came to Taiwan by chance, after a Taiwanese friend told him to come check out the island when Moss-Pultz was looking to travel after he graduated from college.

“So I came out here and actually thought it was pretty cool,” Moss-Pultz said in an interview with the Linux Journal. Since then, Moss-Pultz married and started a family in Taiwan. He’s even gained an affectionate nickname as a “son-in-a-law of Taiwan”.

Moss-Pultz worked in software engineering for a few years then became involved in launching Project Openmoko, which made open source mobile devices. This was around the same time that Android was also being launched.

In 2014, Moss-Pultz and three other co-founders started Bitmark to provide a decentralized reputation platform where users and services can manage and transact digital assets. Users can “bitmark” and keep track of various digital assets such as Instagram photos or blog posts.

“We would like to be the world’s largest digital asset records system,” Moss-Pultz said in an interview with local media (in Chinese). And it seems that Bitmark is steadily tracking progress towards that goal. In March this year, Bitmark was selected as the first Taiwan-based company to join the Linux foundation’s Hyperledger initiative. This is an open source collaborative project involving 122 banks, institutions and companies to advance cross-industry blockchain technologies.

Bitmark is also one of the first batch of startups to have received funding from Alibaba’s Taiwan Entrepreneurs Fund. Now that Bitmark has just completed their API, the startup and Alibaba are starting to explore whether the internet giant’s ecosystem could make use of Bitmark’s blockchain technology.

The next steps on Bitmark’s expansion plan: North America, Taiwan, and the mainland market, then Southeast Asia.

Follow the opportunities

Many young Taiwanese have moved overseas because of the lack of opportunities. As more and more founders choose to start their companies in Taiwan, they are creating opportunities for themselves and for others. If the trend continues, then not all hope is lost with Taiwan’s brain drain crisis.

In part 2 of the Taiwan Turnaround series looking at how Taiwan’s internet tech scene is catching up, TechNode talks to VCs, accelerators, and entrepreneurs about how they are helping Taiwan startups to go global. Next, in the series, we check in with some star players about the talent issue in Taiwan. Read Part 1, Part 3 and Part 4.

In a keynote speech in 2013, Dr. Kai Fu Lee, one of the most prominent figures in the internet sector to have come out of Taiwan, remarked that the island’s innovation industry was sick (in Chinese). He pointed to Taiwanese entrepreneurs’ lack of global mindset and said that tough medicine was needed.

Four years on, Taiwan is following the prescription. Private investments together with government initiatives and funding have been growing, and helping Taiwanese internet startups to go global is their top priority.

The mainland market

Although sharing the same language, the scale and complexity of the mainland market are drastically different from the local market in Taiwan. Mainland China’s B2C e-commerce sales are projected to surpass $1.1 trillion in 2017 and will account for half of the world’s e-commerce market. Its internet industry is dominated by major players such as the BAT and from whom a rich internet ecosystem has flourished.

While Taiwan enjoys a high mobile penetration rate and the portion of its residents who shop online is the third highest in the world (after the US and the UK), the market size is small (e-commerce sales reached $34 billion in 2016). Its startup ecosystem is fragmented with many small players. For startups there to scale up, they must expand beyond Taiwan.

And Alibaba would like to help.

In 2015, Alibaba committed TWD 10 billion or roughly $332 million to set up its Taiwan Entrepreneurs Fund (TEF) to help Taiwanese startups to crack the mainland market, and for a more important goal.

“Perhaps youth in Taiwan haven’t taken to entrepreneurship as those in the US or the mainland have,” Alibaba Taiwan Entrepreneurs Fund director Andrew Lee told TechNode. “We hope to encourage young people in Taiwan to start new enterprises by investing in them.”

Other than funding, Alibaba TEF offers access to services and tools in its vast ecosystem, such as e-commerce and logistics platforms, cloud computing, and big data. Of the 11 companies that have received funding so far, Jolly Wiz, a company providing e-commerce services such as branding and promotion to clients, is already operating comfortably on Alibaba’s TMall.

Alibaba has a strong Taiwan connection in the form of its vice chairman, Joe Tsai. Born in Taiwan, Tsai was educated in the US and worked as an investment firm executive before joining Alibaba in 1999. He went on to help incorporate the company. Tsai is considered Jack Ma’s right-hand man and no. 2 in the company. A digital magazine has even taken to calling him the Jeff Bezos of Taiwan.

At the recent Alibaba TEF Forum, Tsai praised the strong potential of Taiwan as a base and a market for entrepreneurs and pledged that Alibaba will not only provide its platforms but also its technology to help the startups from Taiwan to thrive.

The Southeast Asian Market

The hottest market in the internet sector now is Southeast Asia, with the potential for a $200 billion internet economy. Which is why the Mobile Only Accelerator (MOX) is dedicated to helping mobile applications startups that have their sights on Southeast Asia, but also other growth markets such as South America and Eastern Europe—where the next “four billion”, or the number of yet unconnected but future internet users, reside.

Nestled in the spacious Center for Innovation Taipei, MOX shares its office with other startups and entrepreneurs in the busy hub. The accelerator was started in 2016 by the American SOSV venture capital fund, which is also known for its other accelerator programs such as Food-X, HAX, and Chinaccelerator.

“MOX is more than a VC, [we’re] not just doing the investment but also helping the startups,” MOX campaign manager Jessie Hsu told TechNode. “[We’d like to] maintain the relationship with them for a long time.”

That relationship refers to the business model of MOX. Their deal offers partnering startups $30k convertible note for 6% common stock and the chance to attend the MOX accelerator program in Taipei. Partnering startups can also take advantage of MOX’s SDK payment platform which provides a mass distribution network in exchange for 40% of the revenue earned.

“We have the product, the business model but not the clients in Southeast Asia,” Tomoto product manager Jakko Lai told TechNode. Tomoto is part of MOX’s batch three and builds tailored social media apps for clients such as influencers and celebrities. They are currently expanding into Southeast Asia. “This is the reason we joined MOX, [they] have great resources in Southeast Asia and can help us set up testing in Southeast Asia very fast.”

The world is your oyster

When we visited Taiwan Startup Stadium’s (or TSS) office, it was empty as most of the team was away at the RISE conference in Hong Kong with a delegate of Taiwanese startups. However, VP of Operations and Startup Development Jeffrey Ling was there to hold the fort down.

“For us, it’s one single directive—global. Our [mentorship] program is how we help our startups,” Ling told TechNode. “For example, going to overseas conferences. We brought 12 teams to Tech Crunch’s Disrupt NY as well as meeting investors and partners in San Francisco.”

Ling was talking about the Taiwan Rocks USA tour designed especially to gain Taiwanese startups exposure to investors, media and partners in the US. It’s part of the free mentorship program that TSS runs to help startups expand beyond Taiwan and equip them with the skills to do so.

TSS was set up by the government in 2015 after hearing feedback from the startup community that more support and resources were needed to help Taiwan startups to globalize. Since then, TSS has been active in the community and playing an important role in the startup ecosystem there. The initiative was commended by the American Chamber of Commerce in its 2017 Taiwan Whitepaper for its efforts to “plug Taiwan into the world startup ecosystem”.

Recreate the magic

Dr. Kai Fu Lee was tough in his criticisms of the Taiwan internet industry. However, it was probably because he knew from his hometown’s history that the potential of its people could lead to something greater. The former Google executive turned venture capitalist said the hunger and drive of entrepreneurs in the mainland now reminded him of what Taiwan was like 30 or 40 years ago, when its successful hardware industry was beginning to develop and globalize.

“If Taiwanese entrepreneurs want to forge a path in the internet industry, they must find big markets!” said Dr. Kai Fu Lee.

The Taiwan Turnaround series explores how Taiwan’s internet tech scene is playing catch-up after being left in the dust compared to others in Asia. In part 1 TechNode visits the island to see how the Asian Tiger plans to stimulate its startup ecosystem.  Next, in the series, we talk to more accelerators, VC funds, and entrepreneurs about how they are changing mindsets and helping Taiwan startups to go global. Read Part 2, Part 3 and Part 4.

Taiwan has had a head start in its economic transformation and building a strong hardware sector over the mainland, gaining the moniker “Asian Tiger” in the process. So it is surprising that it hasn’t caught onto the internet sector boom as some of its neighbors in Asia have. It’s got all the right ingredients: a strong technical foundation, a highly educated workforce and a penchant for creativity as seen in some of the top entrepreneurs the island has helped nurture, Dr. Kai Fu Lee and Steven Chen of Youtube. So what’s missing and how can the Asian Tiger catch up?

Crouching tiger, hidden dragon

Along with the three other “Asian Tigers”—Hong Kong, Singapore, and South Korea—Taiwan saw accelerated economic growth from the late 60s until the early 2000s. Its investment in manufacturing helped to create a world-leading semiconductor and hardware industry. TSMC, which is the world’s largest dedicated semiconductor foundry, Foxconn, Acer, Asus, and HTC are some successful enterprises to have been born out of the boom.

With this strong technical foundation, a highly educated workforce and successful entrepreneurs such as Dr. Kai Fu Lee and Youtube’s Steven Chen, it is surprising to see that Taiwan’s startup ecosystem still lags behind its neighbors in the region.

“I’m not saying unicorns are the most important thing, but looking at some of the other countries, [despite] Singapore being tiny in terms of population and geography, they managed to produce three unicorns [Garena, Lazada, and GrabTaxi],” Taiwan Startup Stadium VP of Operations and Startup Development Jeffrey Ling told TechNode. Taiwan Startup Stadium or TSS is a government-funded initiative that coaches Taiwanese startups on going global.

“Taiwan has one [unicorn]. It’s called Tutor ABC which was 13 years in the making,” Jeffrey told TechNode. Launched in 2004, Tutor ABC is an online English learning service from TutorGroup.

Early success stories

Tutor ABC was part of the wave of early internet successes in Taiwan to come after the dot com bubble crash, though mostly in the e-commerce vertical.

Serial entrepreneur Steven Ho founded e-commerce platforms Bid.com.tw, which was sold to eBay in 2002 and Monday Tech, which was acquired by Yahoo in 2008. Ho, a serial entrepreneur and investor, also founded 91app, a service that helps vendors to set up online e-commerce stores, and NineYi Capital to invest in other e-commerce startups.

The Kuo brothers are another pair of entrepreneurs who have made it big in e-commerce. Their first company was bought by Groupon in 2010 and became the now defunct Groupon Taiwan. The brothers have since gone on to found nine more e-commerce platforms. Four of which are doing particularly well, including Fresh Market (formerly Haoyu Net).

However, insufficient seed funding and venture capital in Taiwan mean that startups rarely moved beyond series A and this hindered many from scaling up and maturing.

Show me the money

In the 2016 Taiwan Startup Ecosystem survey compiled by BusinessNext, fund raising was cited as the most significant challenge faced by nearly half of all entrepreneurs surveyed while only 13.8% had received venture capital funding.

“After the dot com bubble crash in 2000, [it was] low key in Taiwan from the VC investment perspective. There were very few VCs focused on investing in internet-related startups,” AppWorks Ventures Associate Jessica Liu told TechNode. AppWorks VC funds and its accelerator program was one of the earliest established in Taiwan and has now grown into the largest accelerator network in Asia with more than 320 startups and 720 founders amongst its current members and alumni.

Looking to help Taiwanese startups to gain funding and grow, Jamie Lin, a National Taiwan University and NYU Stern-educated entrepreneur returned to Taiwan to start AppWorks in 2009.

According to Taiwan Venture Capital Association (in Chinese), 2002 to 2005 saw a peak in investments in startups and new businesses. Following the global financial crisis in 2008, investments only started to grow again from 2011. In 2015, investments received by new businesses and startups were around $421 million as reported by the National Development Council. A small amount, but still a big jump from 2014’s $130 million.

Adding to the growing pool of investment is government funding, the Taiwan Silicon Valley Tech Fund looks to fundraise and invest $300 million into local startups between 2015 and 2017, of which $180 million is expected to have been raised from the private sector. The more recently announced Asia Silicon Valley Development Plan aims to promote innovation specifically in the IoT sector and stimulate the local startup ecosystem.

What’s next

Apart from the relatively small amount of venture capital available to entrepreneurs in Taiwan, other factors that have slowed the growth of the internet industry are the small-market mentality of entrepreneurs, the difficulty of attracting talent, and strict government regulations.

“The biggest problem we see among entrepreneurs here in Taiwan is the lack of this global mindset,” Jeffrey Ling from TSS told TechNode. “A lot of startups, they don’t draw the bigger picture so investors won’t be able to know if you can go bigger or not.” He went on to explain that TSS helps startups to understand investor’s perspective and what they are looking for.

“‘If you don’t even dare to want it bad enough, I’m not sure if I want to put my money in you,’ ” Jeffrey explained.

Editor’s note: This originally appeared on Analyse Asia, a weekly podcast hosted by Bernard Leong, dedicated to dissecting the pulse of business, technology, and media in Asia. The podcast features guests from Asia’s vibrant tech community.

Tina Cheng from Cherubic Ventures joined us in a conversation about the firm’s investments across the region from Greater China to the US. We discussed the mission, vision and management team behind Cherubic Ventures and discuss how they looked at founders & startups as an early stage investor. Last but not least, she also shared her perspectives on the Taiwan startup ecosystem from an investor’s perspective.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

• Tina Cheng (@tinacheng, Linkedin), Partner, Cherubic Ventures [0:38]
  • How did you start your career? [1:02]
  • What is the transition in shifting from entrepreneur to venture capitalist? [3:47]
  • Throughout your career journey, what are the interesting career lessons you can share with my audience? [4:57]
  • What is the daily routine of a venture capitalist for someone like yourself? [7:30]
• Cherubic Ventures & Venture Capital Ecosystem in Taiwan [9:12]
  • What is the mission and vision of Cherubic Ventures? [9:20]
  • What is your current role and coverage in Cherubic Ventures? [10:15]
  • Who are the key partners in the management team of Cherubic Ventures? [10:44]
  • Do you have an investment thesis? If so, can you share with us? [11:22]
    • Flexport 
  • How do you identify founders of startups to invest in? What are the key traits you look in them? [12:45]
  • What are the common issues that the venture capital firm typically help founders to do? [14:10]
  • How do you help founders when their startups are in trouble? What are the “do-nots” that you tell them? [15:43]
  • What are the interesting companies on the Cherubic Ventures portfolio? [18:11]
    • Liulishuo – Edutech
    • Calm
  • How do you see the Taiwan startup ecosystem from your viewpoint? [20:56]
  • What are the challenges of the Taiwan startup ecosystem from your perspective? [26:30]

TechNode does not necessarily endorse the commentary made in this program.

Editor’s note: This originally appeared on Analyse Asia, a weekly podcast hosted by Bernard Leong, dedicated to dissecting the pulse of business, technology, and media in Asia. The podcast features guests from Asia’s vibrant tech community.

Holly Harrington, general manager of Taiwan Startup Stadium joined us on a conversation about the Taiwan startup stadium & ecosystem. We discussed the mission and role of Taiwan Startup Stadium with entrepreneurial ecosystem in Taiwan, the up and coming startups & the nascent investor ecosystem in Taiwan. Last but not least, she discussed the interesting verticals and major challenges of the emerging Taiwan startup scene.

Listen to the episode here or subscribe.

Here are the interesting show notes and links to the discussion (with timestamps included):

• Holly Harrington (@taispy , LinkedIn), General Manager, Taiwan Startup Stadium [0:38]
  • How do you start your career? [1:08]
  • In your career journey, what are the interesting lessons learned? [2:10]
  • What are the cultural differences given your experience coming from the US to Taiwan? [3:33]
• Taiwan Startup Stadium (@startup_stadium , Facebook) and Ecosystem [5:20]
  • Can you describe the mission and vision of Taiwan Startup Stadium? [5:34]
  • What is the role of Taiwan Startup Stadium within the Taiwanese startup ecosystem? [6:52]
  • Coming outside in, can overseas entrepreneurs join the Taiwan startup stadium & ecosystem? [9:08]
  • How does one navigate the Taiwan startup ecosystem, for example, any important geographical spaces or events for entrepreneurs to go to? [11:21]
  • Relationship of Taiwan startup ecosystem with Silicon Valley: Taiwan has notable alumni from Silicon Valley to China: Jerry Yang of Yahoo!, Steve Chen from Youtube, Charles Wang of Guitar Hero fame & Li Kai Fu. [13:55]
  • What are the interesting startups in Taiwan ecosystem? [14:53]
    • GliaCloud
    • Trip+
    • Vectr
    • Alchema
    • Gogoro
  • What are the verticals that the Taiwan startup ecosystem are unique for (for e.g. hardware)? [17:55]
  • When there are entrepreneurs, there are investors, who are the key angel investors & venture capital firms involved in the Taiwan startup ecosystem? [22:07]
    • Infinity Venture Partners
    • Cherubic Ventures
    • WI Harper
  • Do the successful Taiwan companies such as Foxconn, TSMC, HTC, MSL, Acer work with the ecosystem? [24:21]
  • What are the key challenges you see in the Taiwan Startup ecosystem? [26:56]

TechNode does not necessarily endorse the commentary made in this program.

Chinese outbound travelers totaled 122 million trips, up 4.3% YoY according to China Internet Watch. As Chinese people are very tech-savvy and highly mobile-centric, targeting them on their mobile became an important mission for advertising companies, following the digital footsteps of Chinese tourists to overseas travel destinations.

“Cross-border mobile marketing is predicted to have a strong growth in the coming decades as marketers are desperate to broaden their customer base and revenue streams, rather than solely maintain local markets,” said Victor Wu, CEO at Vpon Big Data Group.

Here are four things you should know about Chinese outbound travelers when conducting cross-border marketing, according to Vpon’s 2016 APAC Mobile Programmatic Advertising Statistics and Trends Report released on March 1st, 2017. This report had divided Chinese people into three groups: Greater China, Taiwan, and Hong Kong.

1. Japan is the most popular destination and Thailand is next

According to Japan National Tourism Organization, 52% of tourists in Japan were from China (25%), Taiwan (19%) and Hong Kong (8%). Half of Taiwan and Hong Kong tourists visited Japan for more than 3 times and 35% of China tourists visited Japan more than once, according to Vpon Big Data Group’s survey.

Vpon’s report said that the next destination for Chinese tourists will be Thailand. The strongest digital footprint of Chinese tourists in Thailand is Bangkok, Chiang Mai, and Chiang Rai.

2. The best times to send travel information is early morning and late evening

Morning time (5 a.m. – 9 a.m.) and night time (8 p.m. – 11 p.m.) have shown the highest traffic, hence companies can send out ads at this time. On the other hand, it is wise to not disturb Chinese tourists during the daytime as they may ignore their phones while sightseeing.

3. Greater China travelers spend the most and are the most connected 

According to 2016 Q3 spending in Japan per person, mainland tourists spent JPY 685,000, Hong Kong tourists spent JPY 169,000 and tourists from Taiwan spent JPY 133,000. When traveling to  Japan, Chinese travelers purchased cosmetics/perfume, followed by medicine/ health goods/ toiletries, and confectioneries.

Chinese tourists were highly connected to mobile throughout the day and they had a higher acceptance toward mobile ads during the trip, such as mobile ads showing discount or special promotion with clear call-to-action, leading to a high click-through-rate (CTR) which is 25% higher than in Japan than in home origins. CTR of Greater China tourists increased 59% percent during the trip compared before the trip, while tourists from Taiwan increased 20% and tourists from Hong Kong increased 7% higher CTR.

4. Mobile advertising inventory has been dominated by India, Japan, and China

The top 3 mobile ad markets are India, Japan, and China, taking up to 60% of the total biddable inventory. As for effective cost per mille (eCPM), the Greater China region and Indonesia have shown the lower cost for mobile ads. With the limits in the biddable inventory, New Zealand, Singapore, and Australia’s eCPM ranked top.

Health & beauty (22%), finance (17%), food & beverage (11%) are the categories that showed bigger share in mobile advertising.

Taiwan-based virtual and augmented reality company iStaging has sealed a $5 million USD pre-A funding round led by WI Harper with participation from Taya Venture Capital, one of a consortium of venture capital firms working with the Taiwan National Development Fund.

The company is a promising addition to a number of startups that cater to real estate agents and furniture makers by using virtual reality to let prospective buyers spatially experience living spaces remotely.

Releasing their debut app in January, iStaging is certainly not the first company to pioneer the use of VR in real estate, thought their position in Taiwan gives them access to a growing number of Chinese citizens seeking to invest in foreign real estate.

iStaging will leverage the latest funding round to fuel an expansion into western markets, building on operations in France and the U.S.

“Real estate agents have everything they need to capture, create, and allow their clients to visualize hundreds of properties virtually before selecting the ones to visit in person,” said Kevin Basset, iStaging’s Head of Marketing, on the capabilities of iStaging’s technology.

“It’s something we’re excited to promote in the U.S., Europe and China.”

Chinese investors have spent $300 billion on property in the U.S. market alone, according to a report from Rosen Consulting Group and the Asia Society released in May. Virtual and augmented reality services like iStaging could play a large role in streamlining future international property sales, allowing buyers to view and furnish properties remotely.

Other startups tapping the Chinese VR real estate market include Hong Kong-based VResidence, which oversees a number of virtual reality services, including a platform specifically for ‘second hand’ apartments in China.

Having received a joint investment of over $1 million USD, Papi Jiang is considered one of China’s most successful internet celebrities, or ‘wang hong’. Globally, she still has a long way to go.

Outside of China, internet celebrities like Swedish Youtube star ‘PewDiePie’ are making as much as $12 million USD in one year.

“How is it that Youtubers in the [West] can be both influential and make a profit?” says Ivy Wong, the CEO of VS Media, a multi-channel network (MCN) for video content producers in Hong Kong, Taiwan, and mainland China.

“The most important thing is that they have a lot of MCNs […] between brands and internet celebrities to help them create better content and monetize it.”

On Tuesday, VS Media and Discovery Communications, the company behind the Discovery Channel, jointly announced a strategic partnership, which includes an undisclosed amount of funding from Discovery Communications and a new 26 million RMB (about $3.9 million USD) fund for VS Media’s media entrepreneurs. VS Media will leverage the new partnership to bring Chinese internet celebrities overseas and foreign stars into China.

“We want to make China’s internet celebrity economy more professional, more standard, and more international,” says Ms. Wong. “We actually have a lot of internet celebrities with great content but don’t know how to improve their video quality.”

“By giving them more resources and money, they can change their content from UGC [user generated content] to PGC [professional generated content] to IP [intellectual property],” she says.

VS Media calls itself the “voice of young Chinese.” According to Ms. Wong, the average video content creator on VS Media is in their 20’s, though the platform has creators as young as four years old. Video clips are short, just a few minutes long, and are distributed to other content platforms such as Meipai, a Chinese video editing app.

In addition to marketing and distribution services, VS Media also provides film equipment, training, and production support. The company is also working on several IP projects, including a virtual reality travel series, a feature on eSports in China, and a show about Chinese millennial fashion.

“Around the world there are young Chinese people, so we’ve never thought about changing our content to fit Western tastes,” says Ms. Wong. The main barrier to globalizing Chinese video content is access to international platforms like Youtube, not the actual content itself, she says.

It’s not clear whether or not Chinese internet celebrities can appeal to non-Chinese audiences, but that might not even matter. The Chinese diaspora was estimated to be about 50 million people in 2010, according to a report by investment firm Greater Pacific Capital. It’s a sizable market that Chinese internet celebrities could tap into in addition to the domestic market. Besides VS Media, Vice also features wang hong. However, for the most part, Chinese internet celebrities will hire local agents or work with local companies to find and seal deals with brands inside China.

According to VS Media, the platform currently has over 500 video content creators. Founded in 2013, the Hong Kong-based company set up its first office in mainland China last summer and received an undisclosed amount of funding from China Media Capital in June.

Correction (8/4/2016 15:48): This post was updated to correct a mistake about Papi Jiang’s valuation.

Taiwanese manufacturer Foxconn is synonymous with the Apple as a primary assembler of their products. Which is why it’s somewhat surprising that the country doesn’t host a flagship Apple store – until now.

Apple’s Taiwanese job site posted a series of listings on Friday, including customer support, sales and leadership positions for an upcoming Apple store.

It follows the company’s listing of a 30-year bond on the Taipei Exchange last month, which raised $1.38 billion USD.

While Asia’s appetite for Apple products has given the company a major boost over the past five years, the region has hosted relatively few flagship stores.

Japan was the first country to open a series of stores, followed by China in 2008, the same year as the Beijing Olympics. Before Taiwan, the most recent territory to gain a store was Macau, where the first Apple store opened its doors on June 25th.

Apple saw their first ever decline in iPhone sales in Q2 2016, as they struggle to come to grips with an increasingly stagnant smartphone market.

The company faced a 26 percent decline in smartphone sales for Greater China, which includes Taiwan and Hong Kong. Apple claims that the drop was largely attributable to poor sales in Hong Kong, where many Chinese mainlanders purchase their devices.

Patrick Rona, the Chief Digital Officer in Asia Pacific from the McCann World Group, joined us in an interesting conversation about connecting with youth in Asia. Drawing from the McCann World Group’s recent study “Your Toughest Audience? Connecting with Youth”, we discussed how the youth market is defined, their habits and characteristics, and the behavior and aspirations of youth in Asia as well as around the world. In this episode, we also reviewed social platforms that are dominating Asia’s youth market, such as QQ and Snapchat, and discussed the best practices for brands to engage with this customer group.

Download MP3 here (31.9 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

Notes:

• Patrick Rona, Chief Digital Officer – Asia Pacific, McCann World Group
  • How did you start your career in marketing? How did it lead to your current role? [1:22]
  • Rona’s role in the McCann World Group [3:10]
  • What are some interesting career lessons that you have learned? [3:55]
• “Your Toughest Audience? Connecting with Youth” [6:37]
  • How is the research report put together? [7:06]
    • Based on global research sample: 33,000+ interviews, 32 markets, 120+ focus groups. The research is specifically for markets in APAC and includes Japan, Korea, China, India, Hong Kong, Philippines, Australia, and Thailand. The study covers people ages 16-30 but today we’re going to focus on 16-20, or “Generation Z.”
  • When we talk about youth, who are we talking about? [8:41]
  • What are some characteristics of youth today? [10:04]
    • 25% of youth has sent out a “sext” message
  • What are some of interesting observations on the youth market as a whole? [13:55]
    • Characterization of today’s youth as “super-species” in the evolutionary biology context [14:18]
  • How does today’s youth use mobile smartphones? [16:09]
    • Making voice calls
    • Sending Texts
    • Sense of smell vs having a smartphone
  • How do older and younger millennial define their real persona vs their social persona? [18:25]
  • Are youth habits similar across US, Europe and Asia, barring certain cultural nuances? [20:15]
  • What are the rules for youth on social media, specifically youth in Asia where messaging apps include QQ, WeChat, and LINE?  [21:22]
    • Unwritten rules on how to behave in social media [21:45]
      • Don’t look like you are trying too hard
      • Look like you are having fun
      • Don’t over-edit your pictures
    • The Instagram / Finstagram (Fake Instagram) phenomenon – kids today setting up 2 accounts [24:20]
  • What are some best practices for brands to engage with youths? [28:50]

Headlines on artificial intelligence typically belong to globally renowned tech giants, such as Google, Facebook, and Apple. Asia’s AI and machine learning startups, on the other hand, rarely make it onto the world stage.

“I want a world-competitive AI company coming from Asia,” says Tak Lo, the Managing Director of Zeroth, a funding program for early-stage AI and machine learning startups in Asia. “[Part] of that is taking Asian startups and being able to support them from a global network of entrepreneurs.”

Zeroth, which launched on July 1st, is a three month funding program that offers mentorship and $20,000 USD in capital to early-stage startups. The team is still working out its application process but plans to launch its first batch this winter. Though Zeroth will accept startups from any AI vertical – “Surprise me,” says Mr.Lo – the program is stricter in its focus on Asia. Relevant startups outside of the region are welcome to apply, but for the most part, Zeroth’s emphasis is on Asia.

Part of that is personal. “[I wanted] to kickstart the Hong Kong tech community,” says Mr. Lo, who is a Hong Kong native. “Hong Kong is a blank space because it’s so behind [in tech], [but] by being a blank space you can draw whatever you want on the whiteboard.”

“I’m very, very serious [about] trying to bring everything that I’ve learned to Asia,” he adds.

Mr. Lo, who was previously Director of Techstars, a global startup accelerator, is also eyeing the city’s angel investors. Currently, Zeroth is still raising funds from investors in the U.S, the U.K, and Hong Kong.

In China, tech giants such as Baidu and Alibaba are seen as the leaders of artificial intelligence and machine learning. Baidu, for example, has its own artificial intelligence research lab, which is headed by renowned machine learning expert Andrew Ng, previously an associate professor at Stanford University. Ant Financial, the financial arm of Alibaba, is partnering with Beijing-based startup Face++ to incorporate facial recognition technology into its mobile payment system, Alipay.

However, Zeroth is betting on Asia’s local startups. The program hasn’t explored any partnerships with Asian tech giants, though it’s open to them. For now, Zeroth’s main focus is on recruiting companies and mentoring them. Tech expertise is also a top priority, which is unsurprising given Zeroth’s focus on AI and machine learning. The program has filled its team roster with seasoned AI tech entrepreneurs, such as Jaan Tallinn, the co-founder of Skype. Even Zeroth’s name is tech-related – “zeroth” refers to zero-based numbering, which is used in computer programming.

Other startup programs, such as TechCode, a Beijing-based startup incubator, are also digging into a growing AI and machine learning industry. According to estimates by Bank of America Merrill Lynch, the global market for robotics and artificial intelligence systems is expected to be worth around $153 billion USD by 2020.

Image credit: Shutterstock

Raghav Kapoor, CEO and co-founder of Smartkarma, joined us for a conversation on his company and a broader conversation on fintech in Asia. Drawing from his experience and background in finance, Raghav talked about the origins of  Smartkarma and his vision to build it towards a premium collaborative research marketplace. We also discussed the emerging fintech industry and the important observations and trends that distinguish Asia from the rest of the world.

Download MP3 here (31.5 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

TechNode does not endorse any commentary made in the program.

Notes:

• Raghav Kapoor, CEO and co-founder of Smartkarma
  • How did you get started in your career?
  • From your career in the equities research business until now, what are the interesting career lessons you can share?
• Smartkarma
  • What is the mission and vision for Smartkarma?
  • What is the problem that you are trying to solve as a premier collaborative research marketplace?
  • Who are Smartkarma’s customers?
  • As a multi sided marketplace, how does insight providers and partners operate within your platform?
  • Which are the institutions who has signed on as contributors?
  • What is the revenue model for the platform? Is it similar to Spotify, as the platform is known to be the spotify of Asian research?
  • You have recently raised a total of US$7.5M, who are the investors and how did you pull it off and what will you be doing with the investment?
• The Fintech Industry across Asia Pacific
  • How does someone define fintech in Asia now?
  • What are the ongoing trends in the fintech industry?
  • Everyone talked about the banks being disrupted, what is the underlying problem from your view?
  • In the research insights business, a lot of people talked about the softening economy in 2016 from the recent China equities crash to some countries entering into technical recessions, instead of asking you how bad it is going to get, I like to ask what are the interesting opportunities you see coming up?

Alan Soon from the Splice Newsroom and Rockstart Accelerator joined us in a conversation about the media business in Asia. Drawing from his experience in media businesses such as Bloomberg, CNBC, and Yahoo!, Alan offered his perspectives on how the media business has changed across Asia over the past two decades. We discussed business models and how the industry is segmented in Asia, and discussed trends that are emerging in China and India. Last but not least, through our observation of new media businesses such as Vox, Buzzfeed and TheInformation from the US, we analysed whether these new models would work in Asia.

Download MP3 here (39.3 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

TechNode does not endorse any commentary made in the program.

Notes:

• Career of Alan Soon, Founder & CEO of The Splice Newsroom, Managing Director of Rockstart Accelerator Singapore and former Yahoo Managing Editor for India + Southeast Asia & Country Manager, Singapore
  • How did you get started in the media business?  [1:05]
  • From an illustrious career in traditional, mainstream media to digital media, spanning across Channel News Asia, Bloomberg, CNBC and Yahoo!, what are some interesting career lessons you can share? [2:06]
  • How did you manage to pivot from printed and broadcast media to digital media? [3:20]
  • Why did you eventually decide to set up the Splice Newsroom? What is the motivation behind the company and what does it do? [5:20]
• Media in Asia Pacific [6:40]
  • How has the media business changed in Asia Pacific in the past decade, transitioning from mainstream or printed media to digital media with search engine and social media in the past decade? [6:59]
  • How is the media industry segmented in Asia? [8:08]
  • The challenge of talent in the media industry. [8:50]
  • The interesting trends with media in Asia [9:40]
    • TVF Viral in India – satirical videos with India celebrities and recently received VC money.
    • Zhibo – Video livestreaming phenomenon in China with added e-commerce transactions.
    • Papi Jiang funded by Zhenfund. In the U.S., social media celebrities do not get any VC money.
  • What are the business models in media that work in the Asia media scene and how do content makers interface with business owners? [12:40]
  • Will digital paid TV advertising work in Asia with e-commerce transactions as the new model? [14:10]
  • Wirecutter as an example for content site making reviews with affiliate advertising. [14:50]
  • Mogujie’s WeChat account in China, with fashion articles driving e-commerce transactions.  [15:32]
  • Do ad blockers or downstream advertising make the media business less viable in Asia? [16:20]
  • Where are the core drivers for media business in Asia? [17:38]
  • How does the localisation of the media factor into the media business specifically in Southeast Asia and India? [19:26]
  • One of the major challenges for media in Asia is regulation of media by governments. In your experience with Yahoo!, what is your advice on how digital media outlets to navigate the government when it comes to controversial content? [20:21]
  • Very few startup media outlets have been successful in reaching scale in audience distribution, why is that so? [23:38]
  • Does the media business focus on discovery or curation? [24:50]
  • Which form of media are successful in Asia – rich text, audio or video? [26:29]
  • Are the costs of production for media going down given the rise of platforms such as YouTube, Periscope? [27:53]
  • Can investigative journalism work in Asia given the production costs are not going down? [29:10]
• Emerging Trends & Mapping new media business models to from US to Asia [30:00]
  • Recently, the more successful media brands such as Vox, Buzzfeed and subscription-based media such as TheInformation, Techpinions and Stratechery by Ben Thompson, which target niche audiences, are becoming popular. Can these concepts be mapped to the Asia market? [30:13]
  • Are there challenges in the business models of these media? For example, Asian consumers prefer not to pay for content. [35:44]
  • With the rise of walled gardens such as Facebook and Medium and rise of ad blockers rendering advertising insignificant as a revenue stream, how does media outlets navigate these constraints to be successful? [37:00]
• What’s next?
  • Alan has stared his new gig with Rockstart Accelerator soon. What is his role for the accelerator? [40:55]

China’s mental health record is tarred by social stigma and a lack of resources. While public initiatives are now seeking to rectify the issue, the country’s active startup ecosystem is also competing to fill the gaps.

According to a study published in 2011, a staggering 91.8% of Chinese people with a mental health diagnosis never seek help. Part of that has to do with the shortage of trained mental health professionals in China, as well as the country’s psychiatrist-to-patient ratio, which is as low as 1.24 per 100,000 patients, compared to the global average of 4.15 per 100,000.

“The problem is huge,” says Jin Hsueh, the co-founder and CEO of KaJin Health, a Taiwanese startup that provides an online counseling service to people in Chinese-speaking communities. “There are [90] million [people with] depression in China, and very, very [few] that ever seek for help, talking to a doctor or therapist.”

China’s mental health problem isn’t just an issue of resources. Social stigma continues to deter patients from seeking help, and severe mental health cases, including schizophrenia and psychosis, are treated as family issues, sometimes with disastrous consequences.

“In China… there’s always a huge stigma when you go to a physical clinic to seek [mental health] help,” Mr. Hsueh told TechNode. “That’s why we’re doing this business, because it allows you to talk to a…therapist at home, without any[one] knowing.”

While evidence shows the government is taking steps to acknowledge the problem, private enterprise, including startups, are also beginning to shoulder some of the load. KaJin Health is an early-stage company targeting Chinese-speaking users, such as those in Taiwan and mainland China. Through the company’s official WeChat account and website, users can book appointments and chat with Chinese-speaking therapists.

The app also aims to rectify another glaring issue: mental health resources in China are heavily skewed towards the country’s urban centers.

“[Our local Taiwanese and Chinese users] don’t know much about therapy, but by [providing] online access to therapy, it kind of lowers the barrier a little bit,” says Mr. Hsueh. “You don’t have to visit a physical clinic so they would like to give it a try. Seventy percent of [our] customers…are first-time therapy users.”

Different Approaches To Therapy In Mainland China

According to Mr. Hsueh, China requires a special approach when it comes to mental health therapy, believing that cultural differences play a role in designing effective therapy.

“The type of therapies in Taiwan [are] usually more long term…[guiding] you through the downturns and the stress,” he says.

Customers in China prefer more “straightforward” answers, where therapists provide instant solutions and instructions on how to get over their stress, he says. “In China, we position [our product] more…like coaching rather than [therapy].”

Currently, KaJin Health is partnering with brick-and-mortar clinics in Taiwan, where they refer customers to a certified medical facility if needed. To avoid any legal headaches, the startup has wisely chosen to outsource drug prescriptions and medical procedures to partner clinics. However, KaJin Health is struggling to find local partners in China.

“We haven’t found any trusted local clinics to partner with,” says Mr. Hsueh. “It’s hard for us to [identify] if they are qualified or not.”

Over the past decade, policies around mental health in China have slowly improved. In 2004, the country created local brigades of community-focused mental health clinicians, an initiative dubbed the “686 Program” that was meant to ease the disparity between cities and the countryside.

In 2012, the Chinese government enacted its first mental health law, which defined basic guidelines around the diagnosis, treatment, and rehabilitation of mental disorders, and promoted psychological well-being. Still, China’s mental health services have a long way to go.

In addition to online counseling services, the company also runs offline and online mental health awareness campaigns. According to Mr. Hsueh, KaJin Health is also in talks with Chinese insurance companies to create a new type of coverage just for “psychology treatments,” in order to increase the accessibility of its services, which currently cost around 60 USD per hour.

Currently, KaJin Health has offices in both Taipei and Shanghai, and was part of local incubator program Chinaccelerator’s ninth batch of companies. Though roughly half of the KaJin Health’s users are Chinese-language users living overseas, the company has its eyes set on the local Chinese market, where the company believes there’s a greater need and more potential to grow its business.

Similar services have also begun to crop up on the mainland. “Simple Psychology” (简单心里网, our translation), is a Beijing-based startup that also offers online counseling services as well. China also has a number of non-profit organizations that raise awareness around mental health, such as CandleX, one of KaJin Health’s non-profit partners that focuses on depression.

Image credit: Shutterstock

Update (6/13/2016 16:21): This article was updated to include a corrected figure from KaJin Health. Mr. Hsueh meant 90 million, not 900 million, when talking about the number of people suffering from depression in China.

Arnaud Bonzom from 500 Startups continued our conversation on his two interesting reports (prior to the 500 Corporations report which we discussed earlier) that focus on the Singapore startup ecosystem and funding trends across Asia Pacific. We discussed the key observations and funding dynamics of the Singapore startup ecosystem with the recent focus on fintech and the who’s who from entrepreneurs, investors, major corporations to government agencies. Last but not least, we discussed how funding trends are changing in Asia.

Download MP3 (33.9 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

TechNode does not endorse any commentary made in the program.

Notes:

• Arnaud Bonzom, Director of Corporate Innovation @ 500 Startups
• Singapore Startup Ecosystem & Entrepreneur Toolbox Report [1:12]
  • What is the motivation behind building this report? [1:16]
  • Who are the intended audience? [2:12]
  • What are the key observations about the Singapore startup ecosystem? [2:57]
  • What are the funding dynamics and trends in the Singapore startup ecosystem from accelerators to fintech?  [4:00]
  • What are the key observations on the Singapore startups (Sparks, Rising Stars, Stars, Unicorns)? What are the exits? [6:09]
  • Who are the key people you should know in the ecosystem?
  • What are the key events and groups that one should connect to in the Singapore startup ecosystem?
  • What are the incubators and accelerators in Singapore ecosystem? Where do they work out from, for example, co-working spaces?
  • The Singapore government is definitely one of the main stakeholders in the ecosystem. Can you give a comprehensive overview of the ministries, agencies and foundations that they have?
  • How does an entrepreneur within Singapore recruit talent? What are the challenges faced?
  • What are the work permits and passes to allow the individual operate in Singapore?
• StartintX Index on Asia Pacific Funding Trends
  • What is the motivation behind StartintX?
  • What are the key findings in your first report on Asia Venture Capital?
  • What are the interesting comparisons across China, India and Southeast Asia ecosystem?

Sameer Singh from Tech-thoughts.net joined us to reflect on major themes that have been ongoing in the technology space from messaging apps to self-driving cars. In the first part, we discussed Facebook’s recent F8 announcements on their new chatbots platform and video livestreaming. From there, we analyzed the implications of Facebook’s announcements and examined how it will impact Asia from video advertising to messaging apps, thus foreshadowing an upcoming showdown between Asian messaging apps, such as WeChat and LINE. Finally, we dissected the different business models behind artificial intelligence companies and how they will play a role in the technology space from the US to Asia.

Download MP3 (25.2 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

TechNode does not endorse any commentary made in the program.

Notes:

• Sameer Singh from Tech-thoughts.net [1:10]
• Facebook F8 Announcements and its impact to Asia [1:31]
  • What are the major themes from recent Facebook F8 announcements? [1:41]
    • Video Livestreaming
    • Chatbots
  • Does the F8 announcements impact the company from the near term, middle term or far in the future? [3:07]
  • What are chat bots and how do they work? [3:29]
  • Conversational UI vs Asia Messaging Apps in Asia: WeChat, LINE and Kakao Talk. [4:25]
    • How are they distinguished from apps on mobile? [4:30]
    • Wechat Official Accounts and how it distinguish from Facebook’s conversation UI [6:10]
    • Why did Facebook adopt conversational UI instead of adopting Wechat’s platform approach? [7:15]
    • Watson from IBM as an example of chatbot on banking sites in Asia [7:50]
  • What’s the path to victory for chat bots and apps? [10:30]
  • Why do Facebook use chatbots where the UI is not working in the emerging markets? [12:00]
  • Messaging app as a platform vs conversational B2C communication. [13:50]
  • The weakness of Asia messaging apps with artificial intelligence. [16:22]
  • What is Facebook is doing in video and live streaming? [16:45]
    • Facebook Videos: Live Fast, Die Young (Source: TheInformation)
    • Implications to Facebook livestreaming to video advertising and virtual reality. [21:50]
• Artificial Intelligence [22:52]
  • Artificial intelligence are entering into devices and products, for example, iPhone – Siri, Echo – Alexa, Google – Google Now, Baidu.
  • How does business leverage AI as part of their business model? [23:32]

Countries across Asia are vying to boost their homegrown service economies, as a drop off in resources demand and a slowing Chinese economy are taking their toll. China has pumped over a billion into kickstarting their local innovation economy, while countries including Australia and India have launched their own costly campaigns.

“What I don’t think is good is when governments organize a very expensive [and] large one-time just to deliver a message,” said Martin Talvari, the CSO of startup conference organized SLUSH. “I think it was the Prime Minister [of Finland] who said, ‘Yup, we do a lot by not doing much.’ There’s a certain truth in there.”

Governments like the Chinese government have had a more heavy-handed approach. The Chinese government has offered generous support to both startups and investors in China, including the construction of high-tech parks, startup funds, tax benefits, and even “risk compensation” for venture capital firms. This year in Premier Li’s annual work report, “innovation-driven development” was reemphasized again and again as a priority for the Chinese government. However, China is not alone in its top-down push for tech and innovation. Almost every country in Asia has jumped on the bandwagon, each touting itself as a “startup hub.”

“Somehow every city has their own ranking system that puts them in first place,” Mr. Talvari told TechNode in an interview after the panel. “For example, I just came from Australia and learned that they spent $28 million AUD [about $21.3 million USD] for campaign advertising. They put all these advertisements on platforms just to show that Australia is all about ideas [and] about technology.

Mr. Talvari ran a panel at this year’s Asia Beat conference, where representatives from different cities, including Seoul, Fukuoka, Hong Kong, and Taipei, compared and discussed the merits and flaws of their respective ecosystems. The panel was inspired by Mr. Talvari’s side project, where 120 countries around the world, 80 of which he has visited, are ranked in Excel by a number of metrics including: internet speed, government access, opportunities, and more. For “startup hubs” around the world, attracting the best and brightest entrepreneurs will depend on not just hard capital, but healthcare, access to airports, relative cost of living, and even things like good coffee, according to Mr. Talvari.

“Once you are not depending anymore on the location – your business is online, everything you do is online –  you start caring a lot about lifestyle. We see [this] from [digital] nomadism, [which is] increasing in popularity. So it’s all about finding a balance,” he said.

In addition to organizing SLUSH events, Mr. Talvari has started a new project called Leaders, a marketplace for conference keynote speakers. He is partnering with Loïc Le Meur, the founder of LeWeb, a well-known tech conference in Europe. The two started Leaders a few months ago, according to Mr. Talvari, and have already raised an undisclosed amount of funding.

This article is part of Technode’s coverage of Asia Beat, where Technode was a media and organizational partner. 

Here in Asia, we’re the first to see the sun rise. We’re the continent with the most people and some of the oldest civilizations in human history.

We’re also home to some of the most innovative hardware startups in the world. From “Startup Nation” Israel to high-tech Japan, Asia is a hotspot for exciting hardware, and it’s about time we had our own hardware competition.

At TechNode, we’re delighted to invite you to this year’s Asia Hardware Battle in Chengdu, where the top 15 hardware startups in Asia will present their products.

Most people know Silicon Valley as the heart of technological innovation, but what most don’t know is how more and more Valley tech giants are buying up technology from Asia. For example, in 2015, Apple acquired Israeli imaging company LinX and their 3D scanning technology, PrimeSense. The year before that, Google acquired an information security company called SlickLogin, also from the “Startup Nation.”

China is starting to see innovative hardware across all verticals: wearables, virtual reality, smart transportation, artificial intelligence, and more. And despite headlines of a winter in the Chinese economy, various tech industries in China are continuing to receive generous financing.

In the virtual reality industry, Noitom Ltd., a motion capture solution provider, and ANTVR, a VR hardware company, received $20 million USD and $300 million RMB in rounds of Series B funding, respectively.

China’s artificial intelligence industry got a nod from Google last October when the tech giant invested $75 million USD in Mobvoi, a speech recognition and natural language processing startup based in Beijing.

China’s UAV industry was especially well endowed with financing in 2015, as DJI, YUNEEC, and EHang all received millions of dollars in funding. Guangzhou-based startup Ehang also wowed everyone at this year’s CES in Las Vegas with their autonomous helicopter drone. Of course, investment money is just the start – what hardware startups do with it will determine their future.

If you’re an early stage, pre-Series A funded startup with an exciting product, we’d love to have you at this year’s Asia Hardware Battle. Not only will you meet hardware startups from all over Asia, you’ll also have the chance to meet investors from top-tier VC firms, like Sequoia Capital, Silicon Valley Bank, GGV Capital, and others.

Online applications are open until the end of February. We look forward to seeing you in Chengdu!

Asia Hardware Battle Timeline

1. Applications accepted: January 11th – End of February
2. Application screening period: March 1st – 5th
3. Finalist preparation period: March 6th – 30th
4. Final Presentation in Chengdu: March 31st

(Note: Due to visa processing, the timelines for Chinese startups and overseas startups are different)

Qualifications

1. Must be a hardware startup in Asia (see accepted regions below)
2. Must be early stage, pre-Series A funding
3. Must have released a prototype already

Regions

• Mainland China
• Japan
• South Korea
• Singapore
• India
• Israel
• Taiwan
• Hong Kong

What We’re Looking For

• Disruptive companies with innovative technology
• Companies that haven’t had a lot of media exposure yet

Rewards and Perks

• Tickets for our “VC Meetup” (50 top tier VC firms )
• A chance to attend 2016 ChinaBang Awards
• 15 Finalists have a chance to present on the main stage
• 15 Finalists will receive tickets to the 2016 ChinaBang Awards
• 15 Finalists will receive a roundtrip plane ticket to Chengdu and
  hotel lodging for 3 days
• 15 Finalists will receive feedback from a distinguished panel of judges
• Media coverage
• ….and more!

Click HERE to apply!

As the consumer market expands, China is a country capable of both under-serving and over-saturating its tech hungry markets. While eastern city hubs see a slowdown in smartphones and laptops, third tier cities are fast consumers of new services and products. At the same time, China’s regional neighbors Japan and South Korea boast high-speed connections, but smaller populations.

So how do we go about approaching such a complex market? Despite having common ground as global tech hubs, the Chinese ecosystem and Silicon Valley are like night and day.  How should investors approach China? How can East Asia learn from Silicon Valley and what does the future of the Asian market look like?

We put these questions to our panelists at our Technode Demoday on September 25th in San Francisco Gary Gong, Executive Vice President of the Institute for Information Industry, Chen Zhao, head of Plug & Play China, and James Jung, CEO of Besuccess shared their ideas on the current status of Asian startups.

Plug and Play China, jointly founded by Sias International University and Amidi Group, helps global companies enter into China expand their businesses in the market. Besuccess is a Korean techblog, helping Korean startups reach out to the global market. Based in Taipei, the Institute for Information Industry is an NGO that promotes industrial applications, R&D, IT professional development as well as market research. 

Why should global companies invest in the Asian market?

Chen Zhao: China household’s disposable income and demand for mobile devices is increasing. China’s strong point is in the quick and easy adaptation of social media and e-commerce to the market, which can be observed in from the popular usage of QR code scanning in mobile consumption. 

James Jung: Korea is fast in customer service. Thanks to the sophisticated internet infrastructure, Korean customers are accustomed to fast internet speeds. Huge data consuming applications like live streaming music apps or game apps works seamlessly even in the subway. Another characteristic of Korean users is that they are willing to pay online. Korea’s in-app purchase rate is one of the highest in the world. However, as they have very high standards for products or services, it is crucial to set detailed strategies for product, customer service and marketing in order to survive. 

What aspects of the Silicon Valley ecosystem do you want to adapt to your countries? 

Chen Zhao: In China, conglomerates and government are supporting startups, and angel investors are increasing. However, the problem of China’s ecosystem is that big companies try to copy startup’s ideas, adapt it with their technology and know-how. Silicon Valley is different, however, when they see a new and innovate service and product, they are willing to acquire the product and the team. 

James Jung: Korea has Chaebols, or the country’s family-run conglomerates. Big corporates like Samsung, LG and the Korean government are now launching a number of accelerator programs to support startups, but still we’re lack of big success stories. It’s because Korean startups tend to heavily depend on the Korean government or a conglomerate’s grants, rather than creating a new ecosystem by themselves. Silicon Valley tries to build a business that stands by itself. The Korean startup ecosystem needs Silicon Valley’s independence.

What does a Silicon Valley startup need to prepare when entering into Asian market? 

Chen Zhao: There are two ways to enter China market. First, cooperate with big companies. As a startup and a big company establish a joint venture company, the startup can work with the big corporate’s local team, which can eliminate potential risk factors in cultural differences. Second, hire a country manager to run the subsidiary in China. Currently, Uber and Airbnb are running their business that way in China. It’s important to give the authority to a subsidiary in China so that it can run the company independently. 

James Jung: Strategies vary with the size of the company. If it’s a small sized company, it’s important to find a person who understands Korean culture and services, since it involves promotion, events and online marketing strategies. If it’s a big company, you’d better find an influential partner. Uber had to partly withdraw business in South Korea, because there had been strong opposition from taxi driver’s union and government. So companies should find a partner who can respond adequately to these restrictions and talk to decision makers in government, for those restrictions and laws hugely depend on the government official decisions.

What are the emerging trends in Asian startups these days? 

Gary Gong: In Taiwan, many young students jumped into startups, and now we see more and more R&D centers and task forces running. The entrepreneurial visa was implemented in Taiwan in July, to let foreign entrepreneurs stay in Taiwan for their business. Now about 60 million USD sized government funds are supporting tech startups, and there are now many startup hubs to help founders make their prototypes.  

James Jung: 60% of Korean startups are now offering on-demand and O2O services. Examples include food ordering service Baedal Minjok, real estate information service Jigbang and more. Along with this,  Virtual Reality is showing high growth in the area. The industry trend in Korea is not so different from that of Silicon Valley’s. I believe there will be more and more concierge services that are based on Artificial Intelligence. 

Chen Zhao: Chinese startups distinguish themselves in IoT, distribution, logistics, fintech, travel, healthcare and media. Chinese startup show the differences in trends in different locations. Beijing is strong in O2O, as you can see from on-demand massage, healthcare and car washing services. Shanghai is highly developed in finance, and there is a lot of business-related software. Now famous for being manufacturing hub for hardware startups all over the world, Shenzhen is an IoT hub for connected-homes and the connected-car industry.

Image Credit: TechNode

Xiaomi launched its first phone entirely assembled in India yesterday, the Redmi 2 Prime. The company has paired up with manufacturer Foxconn, who recently announced a $5 billion USD investment in new manufacturing facilities in western India. The phones were assembled in a current Foxconn factory, and retail at just over $100 USD, (6,999 INR).

Xiaomi recently regained their top spot as the number one smartphone company in China by shipments last quarter, with an estimated market share of 15%, beating out Huawei and Apple. The company posted lower-than-expected revenue figures last month, apparently affected by a general slowdown in Chinese smartphone sales, though they have managed to maintain steady growth, surpassing 20 billion downloads through their customized Android app store last week.

The Chinese smartphone maker has made strong moves in the Indian market, already amassing a loyal following. In an interview with Bloomberg Business last year, Vice President Hugo Barra said “It is the biggest market for us beyond China, it will someday be as big as China.” CEO Lei Jun echoed this sentiment days after the India launch of the Mi 4, saying he is “fairly confident” Xiaomi will be the number one smartphone seller within three to five years.

India’s ‘Make in India’ program initiated by Prime Minister Modi has made it more attractive for tech companies looking to start assembly in India as labour costs in China rise, though it is unlikely to draw core manufacturing away from the mainland for years to come. Huawei has also invested heavily in assembly and R&D in India after receiving its manufacturing license earlier this year.

Xiaomi had a rocky start in India when it was hit with a lawsuit from Swedish Telecoms giant Ericsson.  The Chinese company forced to return a shipment of 100,000 Redmi Note 3G handsets back to their port of origin in Hong Kong, and was banned from selling any device featuring the contentious Mediatek processor.

Like other Chinese smartphone makers, Xiaomi has kept a firm focus on developing markets. They marked a milestone this July when they launched in Brazil, selling phones outside of Asia for the first time. They wasted no time launching their own assembly plants in the county, which has high import taxes on electronics.

Xiaomi has yet to sell their flagship phones in Europe of America, though they launched a store for the western markets in May, featuring MI brand items including headphones, power banks and a fit band.

@catecadell

Image Credit: Xiaomi

Alfred

Alfred is an immediate parking reservation service. When a user designates a destination on the phone 15 minutes before arrival, the service reserves parking spot. With a subscription based model, the company reaches out to high-end restaurants. With 2,000 parking lots in Taipei, the company starts beta testing in May and looks to expand the service to Singapore and Hong Kong.

Docceo

Founded in 2012, Docceo made DigiJames, which allows guests to control room’s lighting, temperature, curtains as well as request room service or make reservations. It also accesses tourist information to explore the local shopping. Previously selected as Gartner Cool Vendor 2014, DigiJames recently launched in partnership with Microsoft.

Hilight

Hilight make a social community platform for social media to highlight valuable information from larger content. By downloading the app or plug-in on Chrome, users can mark up important points on website, collect favorite articles, recommend good content to friends and share it publicly. 

Omni star

Omni Star’s flagship product, Triton, is outdoor, submersible wearable that acts as a diving computer. Like a regular dive computer, the watch shows information such as depth, water temperature, dive time and non-decompressional timeline to let the user dive safely. With mobile app and cloud services it also collates a private collection of your dives digitally. Pictures and videos are integrated into a user’s dive log, which becomes a timeline, detailing the depth and location of each image.

Paper Shoot

Paper Shoot offers paper-made digital cameras with over 400 different designs. Paper Shoot is lightweight and thin, which makes it easy to use and carry around. The users can download paper shoots templates and make their own design of Paper Shoot cover sticker. Paper Shoot is made from the recycled paper pulp material, non-toxic soy pigments and Coreopsis seeds.

Triskel (Brazil)

It is estimated that people sit more than 12 hours a day, and more than half of people suffer from lower back pain. By providing a wearable device, Triskel tells the user when they are not sitting in the correct right posture and can help you to correct it in daily life. 

Zenidea 

It is said that 76% of social job seekers find their current position through Facebook. PEOPLE X aims to be a virtual assistant to help these job seekers on social networks. By integrating PEOPLE X into the social network, user’s friends can view each other’s job profile and help find a job opportunity.

Update (3/21/2016 19:09): This post was updated to correct a factual error. Paper Shoot uses non-toxic soy pigments.

Update (3/21/2016 19:11): This post was updated to correct Paper Shoot’s name.

Home to the world’s leading electronics contract makers, Taiwan has the ingredients to foster a thriving startup ecosystem. But the island has yet to produce a tech startup that’s a household name, and industry insiders have cited many reasons for the situation, such as small market size, insufficient government support, and entrepreneurs’ small-market mentality. The innovation environment of Taiwan was even once lambasted by Kai-fu Lee, ex-Google China chief and current CEO of Innovation Works, as diseased. “Some tough medicine should be taken to cure it”, added Lee.

However, the scene is gradually improving, with Taiwan’s startup ecosystem witnessing changes in the mindset among the entrepreneurial community and venture capitalists, as well as in government attitude and policies. For instance, the government has announced a US$400 million fund to invest in tech startups, Foxconn Technology has expanded beyond its beachhead to invest in local mobile authentication startup AirSig, and a raft of local startups like e-commerce site iFit and fashion curation service Re.Mu also secured capital injections from VCs to expand their businesses overseas. Taiwan’s Tech Minister is poised to increase access to 3D printing for high school students.

Despite having a small population of 23 million people, Taiwan is a thriving tech market ranked #5 on Google Play for worldwide sales while Taiwanese people rank #1 in the world for average daily smartphone use, at nearly 200 minutes (ahead of a 32 nation average of 142 minutes), according to a report released by Tokyo-based app monetization service Metaps.

Manageable market size with active users makes Taiwan a perfect place for foreign companies to test the regional market before going all in on Japan or the Asian markets in general, the report noted.

Want to target Japan? Target Taiwan first

Japan is in many ways the holy grail of app marketing, as Japanese users are accustomed to paying for mobile content and have extremely high average revenue per user (ARPU) in comparison to the rest of the world. However, due to an increase in competition and heavy ad spending by local app developers and publishers, the barrier to entry for the Japanese market is extremely high for most Western developers. Without burst advertising in Japan it is extremely difficult to chart high enough to attain any significant level of organic users, and the minimum spend to do this will easily run into a six digit dollar sum.

Taiwan represents an opportunity for western developers to enter into Asia with a lower budget to test the waters before making end roads into larger regional markets like Japan and South Korea.

A look at the Taiwan Google Play Top Grossing charts from September reveals the strong similarity between Taiwan and Japan, with RPGs the top selling category in both markets, and also sharing nine of the top ten  Google Play categories.

Categories that are particularly strong in both markets are Action (Taiwan #3/Japan #5) and Casual (Taiwan #4/Japan #2).  Categories with a large disparity in popularity are Strategy (Taiwan #2/Japan #9) and Entertainment (Taiwan #25/Japan #10).

Western and Chinese developers succeeding in Taiwan

Metaps analyzed which apps had the sharpest “ranking incline rate” (rate of increase in rank over the course of the month) in the Taiwan Google Play Top Grossing charts for September, revealing that popular communication app LINE had a total of seven titles in the top 40. There are over 17 million LINE users in Taiwan as of Sept 2014, the report added.

A number of games by Western developers are quite popular in Taiwan, including Candy Crush Saga by KING and Clash Of Clans by Supercell.

In September, the Top Grossing chart was dominated by mainland Chinese and Taiwanese games, like DotA Legends by Taiwanese branch of mainland Chinese developer LemonGame, and Castle Clash by IGG. IGG is one of many mainland Chinese developers that have taken an aggressive approach in Taiwan, particularly because there is no Google Play in China so they must look cross-border in order to establish a user base.

RPG is the top genre in Taiwan

The Role Playing category has the strongest presence on the Taiwan Top Grossing charts. For the Top Grossing charts, a total of 86.5% of the apps charting come from one of the top 10 categories. Of the total 44 Google Play app categories, the remaining 34 make up just 13.5% of all apps charting on Top Grossing in Taiwan, indicating that apps which monetize well come from only a select few categories.

On the Google Play Top Free chart, the Tools category came out on top with a category frequency rate (percentage of a chart that is made up by apps of a given category over a specified period of time) of 8.8%.

The Card category ranks high on the Top Grossing chart at #6, and ranks low on Top Free at #21, indicating that there are a smaller number of total users but they have a considerably higher than average ARPU. The Tools category ranks at the top of Top Free at #1, and ranks low on Top Grossing at #21, indicating that there are a larger number of users but they have a considerably lower than average ARPU.

On the Google Play Top New Free chart, the Casual category came out on top with a category frequency rate of 12.9%. Once again we compared these results to the Top Grossing charts results.

The Casino category ranks high on Top Grossing at #5, and ranks low on Top New Free at #14, indicating that fewer developers are targeting casino game users than previously.

The Personalization category ranks at the top of Top Free at #6, and ranks low on Top Grossing at #32, indicating that there are a lot of new apps being released but they have a much lower than average ARPU.

Please join our four-day tour (December 1-4) to Taiwan to take a closer look at its startup scene.

The concept of collective memory, which was firstly introduced by the French philosopher and sociologist Maurice Halbwachs, refers to the shared pool of information held in the memories of two or more members of a certain group, big or small. Based on this concept, the Taiwan startup DIITU Inc. created a brand of collective memory, a service that is designed to bring people a simple experience to link and share their touching moments.

DIITU believes that people are merely instruments in the forming of collectively memory, the sharing and grouping of a certain collection of events, locations and images should be systematically linked to create a different social network that is not based on individual experience but rather on a group experience. In order to realize this, DIITU has developed a collective memory engine to detect, calculate and classify what and how users record and share their experiences of a certain event, and then subsequently link all associated information to create a “time wall” of the said event. DIITU also takes into consideration of privacy and data security, which means that only pre-approved information will be shared or stored in the Cloud. To ensure a better user experience, DIITU can also be linked up with other popular social networks like Facebook or Instagram etc. for an easier sharing function.

When asked about the inspiration of the idea, Jeremy, co-founder of DIITU said “We are all parents and we often gather with our friends for family events. With times we realised how difficult it is to get access to all of our friends’ photos or comments of our gatherings, they are all scattered around in different social networks and accounts. We wanted to create a network where it is easy to see everyone’s experience of the same thing.”

When explaining how the name “DIITU” came about, Jeremy said, “The company and product name “DIITU” has close connections with events. Each event memory contains at least a place on a map, time, and information. While double “i” in DIITU refers “time” and “information” and the pronunciation is similar to the word “map” in Chinese [`ditü], DIITU precisely declares company objective.”

DIITU is also a B2B service targeting businesses with its “DIITU for Business” service. DIITU has been in talks with event organisations and PR companies for potential cooperation. DIITU for Business offers business users a central platform to collect information of the events and also provides real-time feeback, making it much easier for the organisers to analyze the performance and result of their events.

DIITU Inc was founded in 2013 and DIITU app was officially launched in May 2014, which is now available on iOS and Android OS. So far DIITU has offices in Taiwan and Mainland China with five team members, including three full-time developers and one part-time designer. DIITU co-founders each has more than ten years experience in mobile Internet service
 development, brand marketing, and market communication.

In the digital age, push notifications are the first thing many people look at when they wake up. It makes sense, then, for some people to make friends and find love ones through apps. The Facebook-based online dating app “pairs” from Tokyo (available in iOS and Android) just announced that it has hit 740,000 registered users in Japan and more than 300,000 from Taiwan, despite the fact that online dating is controversial in Japan (Japan Times).

pairs has a number of tools to get around the stigma attached to online dating in Japan. Only users with “Single” relationship status on Facebook can join. The app also has an age restriction and outsourced web monitoring vendor to ensure safety. Perhaps most intriguingly, it has a female-dominated team to “give a sense of security for female users” and to create a “pure” image of online dating, according to Takeru Kawashita from pairs. To help find the right partner, “pairs” has a “community” feature that allows users to meet based on interests.

Given Japan’s demographic crisis, dating is okay as long as it leads to marriage. According to pairs, it has 3.2 million matches and 6,500 users reported that they have moved onto serious dating and marriage, although many cases might go unreported. It’s unsurprising that online dating is gradually becoming acceptable to Japanese. As “pairs” discloses to Technode, it will “devote to spread the concept of ‘online dating’, a much easier way to find and meet compatible partner.”

Some Japanese municipal governments have also taken the unusual step to support online dating in the hope of encouraging marriage and eventually birthrates. For instance, in Itoigawa city, Niigata Prefecture, the local government partners with matchmakers Zwei to help singles find their love ones online (Source: Japan Pulse, J-Cast). 

A subsidiary of the Tokyo startup eureka, “pairs” charges a monthly subscription fee from male users and points from both genders. Similar social Facebook dating services in Japan include Omiai and DMM Koikatsu, but pairs told Technode that it has outperformed the competitors in terms of number of users and Facebook likes. pairs is currently planning a major expansion in other Asian countries, among which Indonesia and Malaysia are the its most attractive markets.

It remains interesting to see what role online dating will play in Japan’s demographic crisis, and whether pairs can replicate its success model in its Asian neighbors. 

Taiwan based Alice Chen started a Facebook fanpage in 2012 to share tips from her personal experience losing weight and staying fit. It has since grown to a sizable community on Facebook. Owing to the growing community, Alice launched a content and e-commerce site iFit. The company received its first round funding of about $900K USD from Cherubic Ventures. “This is the opportunity of a lifetime, we will use this chance to go big and global,” says iFit founder Alice Chen. 

Initially iFit e-commerce venture using the group-buy model, where most of the products were made by other companies. As their members grow , they started to develop their own products. Currently almost half of the products you see on their website are developed by iFit. And their plan is to continue to develop their own products so the percentage of iFit-brand products in their overall offering will continue to rise.

The recent funding will be used to develop new products and expand into international markets starting with Malaysia. More resources will be allocated to developing new fitness products, including healthy snacks / drinks, and smart fitness devices that can record users’ health stats such as calorie intake, body fat percentage etc.

iFit offerings

iFit has two offerings : content and fitness products. iFit has a team of 10 editors, designers and illustrators who create content related to fitness and healthy ways to lose weight on a daily basis. Their Facebook fanpage is the key marketing channel. iFit develops its own brand of health snacks and fitness devices. All product ideas / designs are based on its members’ suggestions. Sales revenue of fitness products for 2013 was about 2 million USD, and estimated revenue for 2014 is 3.3 millions USD.

Foray into Wearable Devices 

iFit plans to work with hardware manufactures to develop smart fitness devices that can track users’ health stats such as calorie intake, weight, body fat percentage, heart rate. iFit also plans to develop software that can store and analyze these user data, helping users track their fitness progress overtime.

Plans for Mainland China

iFit doesn’t have a big following in mainland China as the company’s key marketing channel is Facebook. For now the company’s expansion strategy is to expand to South East Asia. The team will not expand to mainland China immediately. However when they do, they would explore leveraging WeChat or other popular social media platforms, shared the team.

International Expansion: Chinese speaking community in Malaysia 

iFit plans to expand to Malaysia by end of 2014. The company sees South East Asia as a good starting point as they already have 20000+ members from Malaysia. After researching the local Malaysian market, iFit believes that its home exercises products will be popular in the Malaysian market. There is also a demand for healthy, low-calorie snacks for women, which means a huge market opportunity for iFit’s own brand of low-calories healthy drinks and snacks.

Initially iFit will target the Chinese speaking community in Malaysia. Indonesia is the next market they plan to expand to after Malaysia. They also have plans to target the Malay speaking market in South East Asia.

One of the reasons iFit has been able to build a highly engaged community is through the power of “social fitness”. Women enjoy exercising ‘together’, physically and virtually. iFit will continue to grow its community through not just online but offline events that enable members to interact with one another. iFit will also incorporate the element of gamification to encourage members to compete against each other to achieve their fitness goals and increase the ‘stickiness’ of the iFit community.

United Daily News and Economic Daily New report that in a cabinet meeting, new Minister of Science and Technology Chang San-Cheng proposes to increase access to 3D printing for high school students. Premier Jiang Yi-Huah identifies with the idea and assigns officials to draft projects and funding.

It sounds like a progressive policy at first glance, especially since maker culture is popular around the world. In the last few years, quite a few dynamic communities, such as hackerspace, maker space and Fablab, appear in Taiwan. Educational system is also eager to reinvent itself to include more hands-on occasions in curriculum. Mechanical and electric industry chains are anxious to find their own path. 3D printing, in some ways, seems to be the solution for all.

Based on government records in the past, however, projects implemented in a rush often end up miserable. I’ve compiled several official common mistakes:

1. Focus on Hardware Procurement

According to media coverage, this one already happens. 3D printing grows in popularity because designs proliferate after patents expire. People can even use 3D printers to produce new ones (Google “RapRep“). Relevant components and software are useful in other inventions and innovations as well. How to build your own 3D printer, therefore, is a great first step, in which students learn maker culture and inspire creativity with limited costs (or create Air Hockey robots by accident). Our officials, however, plan to procure readymade printers with 6-digit price tags as soon as possible. It’s not helpful to future development.

2. Ignore Innovation and Design Capabilities

Even with hardware, can students create and design? 3D printers are merely an output tool. Without great original designs, you can only print out online downloads. To equip students with these capabilities, we need to revamp curriculum and revolutionize aesthetics education, which won’t happen overnight, before buying expensive hardware. Also, if we only aim to drive down costs as OEMs in Taiwan, without innovation and creativity, it simply won’t work.

3. Think Inside the Box

As mentioned before, online and offline maker communities are emerging in Taiwan and in social networks. Members share and gluttonize knowledge from each other. Several startups are exploring software/hardware integration. They can be the most valuable inputs for formal educational systems in this international race. Rather than offering 3D print facilities to every high school, it’s better to start by matching maker communities with local schools. After understanding the essence, culture and core values, teacher and students can experiment with existing facilities. If learning activities are limited on campus, the whole idea remains the same as traditional handicraft courses.

Officials should really visit fablabs around Taiwan before deciding a new policy, otherwise it will only profit a few companies in the end.

Editor’s Note: This post originally appeared on PunNode, TechNode’s partner in Taiwan.

Editor’s Note: This post originally appeared on PunNode, TechNode’s partner in Taiwan.

We (PunNode) recently attend InstALL S event by PunApp and FETnet, and here’s what developers behind Taipei Food app share with us.

As founders of the well-acknowledged mobile app Taipei Food, Eric and Sean believe it’s easier to download and experience directly, than listen to their introduction. It’s an app that help users find tasty food nearby. This popular app actually comes from a group of engineers and their desire to eat.

Many apps are inspired by inconveniences encountered in life. The team behind Taipei Food is a group of engineers in the same company. As they are bored by the daily question about where to eat, they decide to build an app as solution. After reading thousands of blog posts online about food, they notice:

• Reputation matters when people look for dinner options online.
• Bloggers control a lot of online resources with their comments on food and restaurants. Bloggers in Taiwan produce some of the best and most helpful contents.
• Since we are looking for restaurants nearby, it’s reasonable to compare smartphone and restaurant locations.

Taipei Food v 1.0 was born after combining all data mentioned above. Our friends as initial users responded positively.

Since everyone enjoyed the help, we decided to go bigger. With feedback from friends, we included more categories, analyzed user behaviors, and got approvals from app stores to serve more consumers.

The team also shares their promotion approaches on social networks.

After launched on App Store, Taipei Food was well-received with about 1,000 downloads per day for its functionality and sleek design. The speed won’t last forever, so the team explores ads opportunities on other platforms.

Facebook: New downloads from Facebook ads increase along with investments. It’s the most direct and effective channel.

Comparison between App Store and Google: With same amount of investment, iOS lasts longer in effect than Google Play.

Facebook page: It’s brutal on Facebook. Even if the team recommends lots of great information and posts, hot girl selfies still attract more likes.

Tools such as Crashlytics and Google Analytics are utilized to evaluate performances.

Taipei Food is still on the popularity list. If you translate it into numbers:

• DAU: 5,000 people per day
• Simultaneously online: 60-80 people
• Total users: 80,000
• Bloggers: 40 people
• Articles: over 7,000 posts

Engineer team works smoothly for initial development, but copyright issue becomes thorny in the process. It forces the team to spend significant time communicating with bloggers, sometimes more than coding.

The experience also teaches them how app development is human-centered. These efforts will be meaningless if irrelevant to users and their needs.

Success doesn’t come by coincidence. Designers enhance the touch and feel, and location-based services also distinguish Taipei Food from other gourmet apps.

Their future objectives include:

• Add more social to attract gourmet aficionado.
• Instead of heads-on competition with other apps, Taipei Food offers different contents that are selected, recommended and helpful.
• Expand the range to every part of Taiwan.

Why are TV programs in Taiwan so terrible? Like Brokeback Mountain, everyone has an answer in mind. You can blame rating algorithm, rigid regulations for discouraging competition (or loose regulations for corporate profits), and even consumers for bad tastes. In the end, however, it’s useless to blame everyone. I always believe we live with results, and pointing others doesn’t change anything. Changes only start from ourselves. miiiCasa founder Jolios Lin (林志強) hopes to take back power with miiiTVservice and hardware.

Different from smart TVs or Android Box, miiiTV is a cloud TV platform completely developed in Taiwan. Based on online experiences, it aims to create a user-centered TV ecosystem, with services include mobile applications, TV set-top box and TV subsequently released. The application has topped the entertainment list in Google Play store, and TV Box and Smart TV joined promotional campaign with PCHome magazine in January.

As a theorist, I ask Jolios the entrepreneur about how he imagines media reform.

—–

Contents on miiiTV are mainly sourced from YouTube and other online video websites. Are there any exclusive contents?

We do this for a reason. miiiTV doesn’t want to follow the path of several video apps in China as unauthorized content broadcaster. We develop miiiTV with more diverse and global contents. Copyright is a major issue in this industry. Most developed countries do not agree with Chinese-style development model. We pay extra attention on content, as we plan to expand internationally.

Are you planning to offer exclusive contents?

Yes. OTT platform will be added to our system with subscription services for unique contents. We are also negotiating with multiple copyright owners.

Quite a few set-top boxes from China are introduced to Taiwan. How do you think about it?

miiiTV already collaborates with TCL in China on system technology. All issues related to these Chinese STB go back to copyrights. Chinese government currently issues seven online video content licenses. All others are unauthorized. Based on comments and feedbacks on Google Play and iTunes, many users outside China are unable to access contents anymore, and quality is inconsistent.

This is the best time for miiiTV to me. This market is not fully explored in Taiwan, and video contents have regional preferences. That’s why we are confident in market competition.

miiitv looks similar to Flipboard with videos. What will you do to increase community curation?

Currently we encourage users to be managers to compile contents in multiple approaches. In the next stage, we’ll focus on sharing and user-generated videos.

On the development side, platform compatibility is prioritized. We have reached quite a few agreements with SmartTV, smartphone, tablet, IPTV, operation system platform and gaming device manufacturers. They will be pre-loaded with our services in the future. We expect to reach one million users by the end of this year.

Where does your funding come from?

miiiTV is a product of miiiCasa. Our US$8 million capital mainly come from executives, three listed companies (D-Link, Ali and Zero One Tech) and two venture capitals.

We don’t regard miiiTV as STB or online video provider, but aim to change TV with internet. I have mentioned in a post,

“Imagine one day TV without violent contents, boring politicians or dumb journalists, but dramas and films you prefer, cartoons and contents kids enjoy, online viral videos, technology updates and latest game information. You can play whatever you like. TV channels do not have to be the same.

When we revolutionize TV channels, we can change the industry. Programs will no longer be marginalized due to low ratings, political inclination or limited profit margins, because we own these channels. In an open and free internet system, we retain ownership, and create new systems and culture without invisible hands.”

—–

It’s by no means easy to transform public awareness. Deep-rooted habits stop people from changes, and complicated steps are not helpful. As more people are comfortable with “the second screen”, it’s gradually acceptable to control TV via smartphone and tablet applications. miiiTV need to offer competitive contents and pricing to persuade users in Taiwan, and as soon as possible, especially since vendors in China, Apple TV and Google Chromecast are moving fast. I admire their attempt to change, but their next steps are pivotal as well.

Translated from: 台灣：要靠社群策展掀起電視革命的miiiTV

Editor’s Note: This post first appeared on PunNode, TechNode’s partner in Taiwan.

Sixnology is one of the top application and software/hardware integrated developers in Taiwan, producing commissioned works and own products, such as Timely.tv. It has over 260,000 downloads and 1,154 five-star ratings so far, the best among second screen apps. Each week, over 60,000 users look for their TV show preferences with this app, generating more than 15,000 reminders. It also releases 25 pieces of TV guides per week for recommendations.

In the long-time stagnant TV industry in Taiwan, Timely.tv is a unique case. In the United States, however, innovations and extensions in this areas are abundant. Viggle (collect points by check-ins for rewards), for example, recently acquires Dijit (schedule recommendations across platforms), and TiVO (just announce TiVO Roamio for recording) just merges with Digitalsmith (video recommendations across platforms). Follow Lost Remote for more information.

After subscribing TV programs, users will receive notices from the app before shows start. During Chinese New Year, local movie Zone Pro Site, premiered on TV on CNY Eve, accumulates the most subscriptions, and consequently reaches the highest rating for the channel. If you look closely, subscription ranking on Timely.tv is similar to rating list in the end. It happens several times already, such as The Avengerspremiered on TV last July.

On the other hand, Timely.tv collaborated with popular variety show Kangxi Coming before. By scanning QR code on TV screen and collecting points in games, users can receive prizes or enter lucky draws. It’s an approach to attract more audience or increase stickiness. Rating analysis shows that sections with QR code jump significantly. On average, Sixnology claims, the event increases 10% to 25% of rating for the specific episode.

Recent development shows:

1. Data on Timely.tv is representative enough to replace traditional rating mechanism, especially its capability to forecast beforehand. It’s collective voting by users.

2. With second screen applications, active viewing experiences are highlighted. How to influence active behaviors (subscribe via Timely.tv and receive reminders) in advance becomes key variable to rating.

3. Some programs may increase ratings via interactions between first and second screens, but more case studies are needed.

Translated from:台灣：Timely.tv 能否成為預測收視率的水晶球？

Editor’s Note: This post first appeared on PunNode, TechNode’s partner in Taiwan.

You must have heard complaints like “Online ads are useless!”, even if you don’t necessarily agree with. When ads platforms do not deliver results as promised, there seems to be nothing much customers can do. That’s why most emerging marketing systems now charge based on cost per action (CPA).Offerme2 (or Offerme Square), for example, is expanding fast in Taiwan. Its Android app is ranked high recently. I ask co-founder Sam Lee to share their objectives and experiences so far.

—–

What’s your business model?

Offerme2 is a CPA ads systems, embedding ads in partner websites, mobile apps and our own platforms for attention. Users are given rewards and points for perform tasks advertisers require. Our revenues completely come from advertisers. We only charge them when tasks are completed, and share our profits with partners and users.

How is it different from point systems?

Offerme2 works with gaming and other major websites in Taiwan from the very beginning for a founded user base. Users have a huge variety of reward options, and they can stay in accustomed systems to get rewards.

What’s the expectation you’ve received from customers?

They expect to achieve targets with users in large numbers and high quality.

Do you evaluate tasks customers propose?

Definitely. Contents will follow regulations set by our partners, and they are evaluated beforehand to ensure user experiences.

How do you avoids issues in incentive marketing, such as loyalty?

With our extensive user base since beginning, Offerme2 can find the most suitable target audience via our mechanism and data mining results. We ensure users get rewards by viewing contents that suit their needs.

What’s the response so far?

Over the past two years, our company grows from 3 people to nearly 40, connecting with major gaming and content websites, including Softworld, Wasabii, Wayi and Fashionguide. More than 800 advertisers in Taiwan and Hong Kong receive over 400,000 ads actions each month.

What’s your target this year?

We are officially going mobile in 2014. Besides responding to what mobile advertisers need, our incentives and rewards should be deeply connected to daily lives with more and more mobile devices at hand.

—–

Although CPA is a trending topic, and incentive (or even cash) systems like Offerme2 are already proven on the market, the efficacy is inherently limited. Users who trade privacy or online reputation for points are not really interested in advertised products or services, but other incentives. Under these circumstances, it’s very difficult to transform users into real or long-term consumers.

Brands should have diverse marketing approaches, so ads, exposure and community reputation can complement each other. As Sam has mentioned, customers can verify their products and marketing methods with mechanisms like Offerme2. It’s not wise, however, only to achieve some illusionary numbers.

Translated from: 台灣：Offerme2 要擊碎廣告無用論

Editor’s Note: This post originally appeared on PunNode, TechNode’s partner in Taiwan.

Re.Mu is a fashion curation startup based in Taiwan. Re.Mu lets users upload pictures of their clothes and accessories by different categories, also offering a way for people to organize and keep track of their clothes, bags, shoes etc. It has recently received an undisclosed amount of seed round funding from TMI and KAMIA ventures. The startup plans to use the funding to hire people and expand to South East Asia and the US market.

Re.Mu was founded in late 2012 by Alvin Woon and Emily Yang. It is available as an app on iOS (released in late September 2013) and Android (released in mid November 2013) and as a web-based version.

The startup claims to have 30,000+ users in Taiwan and close to 400,000 page views a month. The company shared that they have seen initial traction from the US, Japan and Chile. Currently there are more than 50,000 pictures uploaded and more than 200,000 votes/comments generated on the site.  They’ve also collaborated with fashion retailers and media such as she.com.tw on marketing campaigns.

Re.Mu is planning to expand to South East Asia, given the geographic proximity to Taiwan. Thailand will be the first stop due to the country’s high engagement in social media and fashion-conscious consumers. The company has already formed local partnerships and has managed to break into the top 50 iPhone apps in the social networking category in the country.

The fashion startup is exploring multiple monetization models in the future, like affiliate marketing, providing marketing services to fashion brands, becoming a platform where fashion designers can promote and sell to a targeted group of international users, or community-based market places, where users promote and sell directly to other users.

The company is currently considering adding community-driven features such as forums to offer more value to and increase interaction among the users. They released a new feature last week which helps calculate how much money a user spend on shopping a year.

“(Mainland) China is definitely on our radar and some of our most active users are actually from China. However the Chinese market has become ultra competitive in the last couple years and will require a lot more investment in terms of technology, capital, local connections, and time. It is something we will consider perhaps in the next phase of expansion,” added the Re.Mu team on plans for Mainland China.

Re.Mu founder, Alvin Woon who previously sold his consulting company and founded Plurk.com, believes fashion commerce has been littered with so many products that shoppers are having a hard time just knowing what to click. “As a new generation of social media-savvy shoppers come of age, retailers and e-commerce sites need to think about how they’re adapting to new standards. People want to be told what to buy, what kind of shirts go well with what kind of pant, what’s the color of the season, how to mix and match your high school sweater, etc etc. This is why curation services are gaining a lot of traction and why e-commerce stores are launching their own fashion blogs. People go there to look at beautiful things and learn about how to look good. These sites tend to have a chief tastemaker, usually the founder. Now what if everyone can be a tastemaker and you get to choose who to follow? Real people sharing their awesome closets. That’s RE.MU,” he shares.

Loyal Sun Holdings (LSH), the operator of online job portal Job178.com.tw, secured seed financing from INSPiRE Investment and ICP.

Different from traditional job sites that require up-front fees for placing vacancies and ads, Job178.com.tw does not charge for their services unless their clients hire the jobseekers.

Another unique feature is the site shares 10% to 15% of the success fee to the jobseeker. This means the jobseeker who successfully changed his/her job receive a monetary gift upon the request to the site. Launched in June 2013, the Taiwan-based service plans to expand its business to Pan-Asia.

This business model benefits all the three parties in the transaction. Business clients can save their initial posting fees. The site may attract more clients, and therefore, more jobseekers. The jobseekers can access more positions and a bonus if they can get a job.

TMI Holding Corporation announced today investments in three Taiwan-based startups, Citiesocial, Driving Curve Inc. and Peeridea Inc.

TMI was founded in 2012 by the US venture capital firm WI Harper Group, ITRI and Kaifu Lee, head of Innovation Works. TMI makes early stage investments in and also incubates entrepreneurs who focus on the Mobile, Internet, e-commerce and hardware acceleration spaces.

Citiesocial.com is an online curated mall focused on “Discovery Through Food & Design”. In addition to presenting many exclusive gourmet and design goods for purchase, Citiesocial engages users through exclusive content related to gourmet and design culture. Launched in October 2011, Citiesocial currently has more than 100 thousand members, over 100 brand partners, and many corporate partners and celebrity users. TMI believes that Citiesocial is the category leader in Taiwan.

Driving Curve, an iOS app, uses GPS to capture an user’s speed and fuel efficiency, information that will enable a user to drive more safely and fuel efficiently. The APP has reached 20 thousand downloads a month after launch and gained traction in Taiwan and France.

Peeridea Inc is founded by Weiting Liu, a serial entrepreneur and two-time Y Combinator alum. His first startup is SocialPicks, a social finance service, backed by Silicon Valley VCs and acquired in 2009. He is also one of the early app developers to gain traction on the Facebook platform. It’s unknown what Peeridea will develop for now.

Startup Weekend, the inspiring 54-hour-long event holding on Friday nights with innovative-thinking entrepreneurs pitching startup ideas announced new winners from its latest event held over last weekend in Google Taiwan’s office on the 77th floor of the Taipei 101 building.

It’s 60 participants ranged from developers, designers, product managers, students, business executives and speakers, panelists, mentors as well as judges coming from all over the world with various backgrounds such as venture capitalists, angels investors and serial entrepreneurs.

As the 3^rd Startup Weekend held in Taiwan and the 2^nd for Taipei, Startup Weekend Taiwan has caught many’s attention with many neat ideas and excellent teams emerging during the event, here’re the winners from the latest event.

1st place: Advintage (http://advintage.us/presale.html)

Advintage aims to put the right wines in the hands of the right customers, by sending sample boxes that narrow your tastes over time by using a clever algorithm.  The judges all believed that if they can pull this off it’s a massive market, and being in Taiwan is perfect as we are the world’s third largest importer of vino.

2nd place: Drimmit (http://www.drimmit.com/)

By using Drimmit, you can set tangible mile stones and am thus more likely to achieve my objectives. You want to save the whales? Sure! Band together with your friends or others to sink a harpoon ship and help each other be a part of the change you want to see. Again, the judges felt that Drimmit was a scale-able solution for dreams both small and large.

3rd place: Unomy (http://unomy.kickofflabs.com/)

Sometimes it can be hard finding people with the same interests, and often you want to go to an event but have nobody to go with. What Unomy does is connect these people beforehand and let them make plans together. In this way, people can make connections easily and effortlessly.

To incubate startups from the ideas to fast-growing companies, you should understand what they really need at different stages. Incubation is definitely not a one-time offer: you feed the startups some money, then leave them to do whatever they want to. We need a pipeline for the incubation process.

Startup Weekend, a two-days program to help startup founders set up the team, approve the idea, work out a simple demo and receive feedback from experienced people or VCs is a good starting point. We’ve reported about the Startup Weekend Taiwan. Then the team should have more time and a small amount of funding to implement and enrich the core ideas, then have a good working product which can clearly showcase the value of the idea. This stage is where the Startup Labs fits. The Startup Labs Taiwan gives every startups 22 days to get their idea out. This so-called acceleration program awards teams 1,000,000 NTD (~US$30,000) in exchange for 8% of company equity (read our coverage on 5 startups in this program). Then for the startups, what would be the problems to solve next: user acquisition, angel or serial A funding, HR, or globalisation strategy etc. They may still need help.

Josh Fu of Yushan Ventures pinged us with a good news, they are launching the so-called YSeed program which is designed to help early stage startups GROW. Read from its official site,

YSeed supports your start-up and helps you in defining a valid business model by applying effective user acquisition strategies to move on to the next stage, get funding and internationalize.

So far, the pipeline of this incubation process seems working quite well. Startup Labs held a demo day recently at Google Taiwan office. As Josh said, two startups have attracted lots of attention, Lucent Sky has sold their products to 5 different clients; Gumhoo has increased its user base to over 2,500 active users and has made commission based sales on products through their users.

The startup ecosystem is getting more healthy, good news for Taiwan startups, and we see the happy faces.

This post originally comes from TechOrange, a tech blog based in Taipei and was written by James Hill of iii.org.tw. Thank you James!

Leading figures from the entrepreneurial communities in Silicon Valley, Europe, and Taiwan descended on Microsoft’s Taipei offices last Friday to find out which five teams had made it through to the inaugural batch of Startup Labs, the new global initiative spearheaded by Clint Nelsen, co-founder of Startup Weekend and Arkady Moreynis, a prominent Internet entrepreneur and investor from Russia.

The 22-day acceleration program awards teams 1,000,000 NTD (~US$30,000) in exchange for 8% of company equity. Here’s what you need to know about the teams who stood out during the rigorous selection process:

Flirq

Flirq puts the women in charge of the dating process, offering users a safe and fun place for people to meet. The team is a graduate of Philadelphia’s DreamIt Ventures incubator, and has honed their product on the university campuses in the same city. The draw for the guys is that once a woman is interested she will contact you, raising the chances of a successful match, avoiding awkward exchanges and painful rejection.

Foodjing

Based in Taichung, Foodjing is probably already a team you’ve heard of, having won Startup Weekend Taipei last August. Foodjing aims to bring the food information you want directly to you via searchable menus uploaded to their platform. Of course there’s a social aspect to it, with shared photos, comments and recommendations from other Foodjingers added into the mix to help users find the food they want nearby. The team will be relocating to Taipei for the next three weeks and launching their service in Taiwan’s largest food market.

Gumhoo

Gumhoo is a social shopping service where users create wish lists of things they like, have already bought or plan to buy. Following and commenting on others’ purchase decisions is a big part of the service, which launched last year. Gumhoo have had some pretty good feedback from the community and have made a few changes to their service, as their end-of-2011 blog post details.

InsureMe

Anyone with any experience of buying insurance will know that it is a mind boggling myriad of service providers, brokers and somewhat shady salespeople. InsureMe aims to cut through all the BS and serve customers impartial, comprehensive and accurate information on insurance packages. The site will be populated by insurance salespeople, who will be evaluated by the community on their trustworthiness and previous performance. I’ve heard that the team has some kickass coders on board, so I’m eager to see what they can achieve in three short weeks.

TheTrueSense

Backed by Microsoft’s Bizspark program, TheTrueSense provides a suite of information security solutions to institutions, businesses and those running websites. Their products include SkyAnalyzer, an application security early warning system and SkyScreen, a malicious URL analyzer. With Internet security of prime concern after some high profile security breaches (Sony, Anonymous etc), there is an obvious market there for products that successfully tackle these issues.

It’s going to be a crazy three weeks for these teams as they work on achieving the goals set by themselves and the legion of mentors and advisors on hand to help them. Demo day falls on March 2, but if you’re interested in meeting the teams and checking out their first week of progress, come along to an open house event at III’s Living Lab on Friday February 17 from 6pm.

Today saw the official announcement of Startup Labs, a brand new seed investment fund based in the USA, which is aiming to disrupt the startup scene by reinventing the traditional incubation process. The first program of its kind in the world, Startup Labs Taiwan will begin at Microsoft Taiwan’s Taipei headquarters on February 10, 2012, and run through early March.

Startup Labs is run by Clint Nelsen, Arkady Moreynis, Tugce Ergul and is partnering up with local giants in every country where they host their programs. Startup Labs aims to get teams running at a very fast pace, get them validating their products in only 3 weeks and defining revenue and user targets. In each city, a local partner will help support the program preferably investing half of the funds required. Startup Labs managing director Clint Nelsen, who is also the co-founder of Startup Weekend, sees the Taiwan market as the perfect launch pad to take the program to over 100 cities worldwide in its first two years. By leveraging the Startup Weekend network, a network that currently runs across 67 countries, Startup Labs aims to shake up the traditional, 3-month incubation concept that has grown in popularity after the model was defined by Y Combinator. The program is heavily backed by famed Russian entrepreneur and investor Arkady Moreynis, who has been behind some of Russia’s most innovative web companies, including price.ru and Moscow incubator Glavstart.

Startup Labs Taiwan is co-organized by Yushan Ventures, an early-stage Taiwan-based angel investment firm which also brought Startup Weekend to Taiwan, and Microsoft BizSpark Taiwan, a startup incubation program which focuses on software innovation and supporting startups’ success by providing software, cloud bandwidth and linking them with potential investors.

As an investor, Yushan Ventures is keen to bring more success to Taiwan’s fledgling industry. “We believe Taiwan’s competitive advantage lies in its technological prowess, as well as its location between the East and West and mainland China. There is a wealth of untapped talent found here. Startup Labs will attempt to unlock some of that talent,” Yushan Ventures Managing Director Volker Heistermann states.

Heistermann has begun building the team of mentors and advisors that will guide the five chosen teams through their 22-day journey, Notable members of the advisory board already confirmed include Matthew Costello, COO at HTC Corporation, Richard Wimmer, Legal Counsel at IBM and Charles Kuai, CSO at Ubee Interactive. Teams will be given office space, mentoring, guidance and technical support, as well as NT$1 million (approx. US$30,000) each in funding. Half the funds will come from Startup Labs, the other half from Yushan Ventures, for an approximate 8% stake.

“The Startup Labs initiative is a catalyst to enable all stakeholders with interest in Taiwan’s startup ecosystem to collaborate and shine at the global level and that startups in Taiwan need more resources along their entrepreneurial journey.” states David Kuo, founder of Taiwan Professional Group.

Startup Labs aims to put the teams on the right track, showing the community and investors that teams have proven customer acquisition and revenue models. On the last day of the program, an investor day will be held, closing the program, where teams will be able to raise further capital. Capital that Startup Labs will then match by 20%. Teams can apply to the program by visiting http://startuplabs.org/get-started/

Startup Labs Taiwan’s sponsors include Yushan Ventures (http://www.yushanventures.com), Microsoft BizSpark (www.microsoft.com.tw),Taiwan’s largest B2B service company Enspyre (www.enspyre.com), Taiwan Professional Group (http://www.twnpro.com/), Business Next (www.bnext.com.tw/), Startup Digest (http://startupdigest.com), and BlackCamp (http://blackcamp.co).

Taipei, Taiwan – August 13, 2011, Last night over 120 participants gathered for the opening night of the inaugural Startup Weekend Taipei, the first such event to be held in Taiwan.

Opening with a keynote from Charles Kuai of Ubee Interactive, the participants were given several important insights into his 20-odd year experience in the telecoms and Internet industries. Charles’ speech was themed on disruption, noting that several traditional industries (telecoms, electronics) have experienced disruption at ever increasing speeds, from AT&T to Skype, and from Sony’s Walkman to the iPod.

The evening continued with a panel discussion moderated by Jeremy Brand Yuan of TechOrange Global, and included input from Rai Ma of Raine Venture Capital, Roger Chen of FarEasTone, Alvin Woon of Plurk and Charles Kuai, again of Ubee Interactive. The theme of the panel was “Launching a Startup in Taiwan: Think Global. Start Smart.” The panelists surmised that while Taiwan has proved its expertise in hardware, it still has potential for growing its Internet economy. In particular, the panelists were impressed that such an event could and did attract over 100 businesspeople, web developers, designers and mobile application developers. Taiwan has the resources, the funding and the strategic position between mainland China and the rest of the world in offering products and services to all. Charles Kuai also stated that Taiwan is uniquely positioned to take advantage of the Chinese diaspora, as it is universally regarded as the center of the Chinese pop industry.

After the panel, participants were invited to get up on stage and pitch their ideas. At first there was a line of 20 or so, but by the end of the pitching period 40 ideas had been presented to the audience. Once the ideas had been written down, participants were invited to cast their vote – which idea did they think was the best. Everyone had three votes, and once the tickets had been counted, there were 12 ideas selected to begin forming teams.

The teams will be working on a range of products including;

1. A food search application
2. A platform for coupons of socially responsible products
3. An aggregator of local restaurant menus
4. A ‘gamification’ of location based services
5. A real time chat service called ‘Talk to me’
6. A mobile, interactive RPG
7. A courtship introduction service
8. A social TV/e-commerce platform
9. An affordable idea-management system
10. A psychology-oriented music DJ service

There will be more details to follow as the teams validate their ideas and build minimal viable products before presenting to the audience and judges on Sunday evening.

Startup Weekend is a global startup event that began in the United States in 2007. Over 300 events have been held throughout the world, and several well known companies including Zaarly, Foodspotting and GetSmartGrid were formed initially at one of these events.

If you would like to attend Sunday’s presentation in your capacity as a media outlet, please contact James Hill on 0933 941723 or james@startupweekend.tw

This post was contributed by Jeremy Yuan of TechOrange in Taiwan, where this article was originally published.

Mobile advertising network Vpon announced that they have accepted $7 million in investment from China-based EZCapital, the group that previously invested in Qihoo (奇虎) 360, Douban 豆瓣, and 大眾點評. Vpon specializes in location-based delivery of mobile ads, and was Asia’s first dedicated mobile ad delivery platform when it was founded in 2008 with the help of iii, the Taiwanese government-funded incubator.

Vpon partners with mobile applications to serve an advertisement within the app. Vpon then delivers ads to users depending on their specific location. So, say I am nearing a corner with a Starbucks – the phone’s GPS can send Vpon my location, and they’ll deliver me an ad or perhaps a promotion to be used at that Starbucks location.The company currently partners with over 1,000 different apps, representing a user base of more than 6 million.

Vpon is active not only in Taiwan, but also across China, with a presence in over 500 cities including Beijing, Shanghai, Hong Kong and Guangzhou. They match their breadth of coverage with a heavy-hitting blue chip client list that includes American Express, Starbucks, Coca-Cola, Citibank, and McDonalds.

According to EZCapital’s press release, the funding is to be structured in two rounds, with $5 million to be released in the first round. This international investment represents the second international million+ dollar investment that a Taiwanese tech company has received recently, with iPeen also receiving money from Japanese VC CyberAgent earlier last month.

Vpon’s cross-strait presence was no-doubt a major factor in the investment. This is true not just because its ability to jump to the mainland increased its market considerably, but because it was able to acquire face time and the attention of larger Chinese VC firms. Their move could serve as a case study for future startups in Taiwan’s growing software industry. We’ll keep you updated with any developments!

TAIPEI, Taiwan – Leading web and mobile services demo event IDEAS Show will be held at the Taipei International Convention Center (TICC) on July 27, 2011. Guided by the Ministry of Economic Affairs (ROC), Institute for Information Industry (III)’s IDEAS Show is the web sector’s ‘Computex’, bringing together entrepreneurs, venture capital investors, internet professionals and telecoms companies to discover new opportunities for growth and the next stars of the Internet.

This year, IDEAS Show will open with a keynote by leading social gaming entrepreneur and venture capitalist, current General Manager at Zynga Japan, Shintaro Yamada, in his first trip to Taiwan. Mr. Yamada will draw on his wealth of experience as a developer of eCommerce and social games, giving the audience an insight into how money-making applications can be made.

Mr Yamada’s speech will also cover his experiences of venture capital investments. Rounding out the session will be a panel discussion on “The Next Web, New Trends”, featuring a panel of esteemed entrepreneurs working here in Taiwan and abroad, giving the session an international feel. And to talk financials, IDEAS Show will also feature a chance for entrepreneurs to get one-on-one with venture capitalists, in a side event themed specifically to discuss business.

But of course, the highlight of each annual event is the 6-minute demos by the startup teams. This year, aside from the usual honor that accompanies winning the judges favor, prizes awarded by Asus WebStorage and Intel will also be given to those teams which can stand the pressure and prove their worth. For the full event program, please refer to the website at: http://ideashow.web20.org.tw/

Foreign & Domestic Angels, Venture Capitalists Pay Attention!
Continuing on the successes of 2010 IDEAS Show, this year’s event has attracted the attention of both Taiwan-based and foreign-based investors, proving Taiwan’s web and mobile sectors are gaining ground on the island’s hardware core competency. This year, the likes of CyberAgent, Qualcomm, Zynga Japan, AppWorks Ventures, 18 Capital and more will be on site to see what the IDEAS Show teams have been working on.

20 Teams, 6 Minutes

After moving through a selection process that included preliminary and semi-final stages, 20 teams will be featuring on the IDEAS Show stage. Each team will have just 6 minutes to make their final presentations to the panel of esteemed judges from academic, professional, financial and media disciplines. Featured teams include mobile applications, social network applications, cloud technology, and services which integrate physical objects with the Android mobile platform. In terms of awards, generous donations have been made by our corporate partners:

• Asus WebStorage Innovation Award (x1)：The winning team will receive NT$100,000 (US$3,400), mentoring from the Asus team plus the chance to work with Asus sharing open source resources.
• Intel Business Award (x1)：The winning team (2 team members) will be given an all expenses paid trip to participate in the Intel Challenge, held in California, USA.
• Expo Area, 60 Startups

This year’s IDEAS Expo event will feature close to 60 of Taiwan’s most innovative and exciting internet startups. IDEAS Expo maintains the atmosphere of an exposition, allowing for more interaction with the teams, product demonstrations and opportunities to discuss collaboration. Those teams looking for new members can actively advertise new positions by appealing to the crowd on the event’s secondary stage. IDEAS Expo is free admission throughout the day.

2011 IDEAS Show will be held on July 27, 2011 between 9.00am and 4.00pm,at the Taipei International Conference Center (TICC). Concessionary tickets are on sale now, with a chance to win a year’s free online movie rental service from Sonet, if bought before July 7. Other discounted tickets are available for students, academics and III incubated teams. To purchase tickets please visit: http://ideashow.web20.org.tw/

With everything converging towards being social, social-commerce is the new hot thing. Now that Chinese are savvy internet shoppers with cash to serve their lifestyle, social commerce is a great business to be in.

Originally incubated in Taiwanese Government organization, III, Pinkoi.com is a social e-commerce platform for designers and artists to sell their unique products.  While walking around a night market in Taipei sipping my bubble tea, I stumbled across small market stalls selling hand-made designer t-shirts, jewellery and lamp shades. It is these independent artists that Pinkoi aims to support in getting their products out to the world. This week, I talked with one of the co-founders, Peter Yen, to get the story behind Pinkoi.

Starting Pinkoi

Peter started Pinkoi when he was in his 4^th year at Yahoo as a software developer based in the Bay Area of San Franciso. In his spare time he would explore the Bay Area and other cities markets with his wife to scout out great designers. When he discovered Etsy.com, he found that it was the collection of quality designers he was looking for. As a native of Taiwan, Peter thought “there are so many designers in Taiwan, but no website focused on design.”

Launched in October 2010, Pinkoi focuses on two channels to sell designer goods; 1) B2C – designers sell directly to buyers where Pinkoi will take 10% on the sale price and 2) B2B – bigger design brands can sell their own inventory, where Pinkoi will manage the postage and take 35-45% on the sale price

The three pillars to Pinkoi: design, social and ecommerce.

• Design: 90% of the products are sourced locally from Taiwan, with the remaining coming from Taiwanese people based in the UK, US and Japan. Designers like to sell on Pinkoi where quality and uniqueness are the focus, compared to mass market platforms like Yahoo, Taobao compete on price.
• Social: “We are more social (with Facebook integration), which helps people make better decisions by following designers or what their friends are buying.” said Peter. Designers can use Facebook as a viral marketing tool, by embedding a link on Facebook to their Pinkoi storefront with one click; 45-50% traffic referred from Facebook.
• E-Commerce: Pinkoi has a standard procedure to review designers based on their engagement and activity on their fan page. “When we do accept a seller, they can go to the management panel and upload items in bulk, which only takes 25 seconds to upload.” To cater to a global audience, Pinkoi uses Paypal.

Art of the start: getting the first stores onto Pinkoi

“It was very challenging to get the first seed designers to join. But we personally went to meet every single designer and called every major design brands in Taiwan. We tried to sell them the story of Pinkoi, that is, supporting Taiwan’s local design talent to reach the world.” Said Peter.

To improve on visibility of the site, Pinkoi launched a design magazine in March to feature Taiwanese designers and get insight from opinion leaders and influential bloggers.

400k page views a month and growing, 95% from women

Pinkoi has seen impressive growth with over 300 designers and aiming for 700 by the end of the year, 3,100 unique products for sale, 400k page views per month. This is amazing, considering the small team and only launching in beta in October last year.

Women account for 95% and mainly consume shoes, bags, accessories and home décor. However, Peter mentioned that in the future they will steer Pinkoi to become more neutral and male friendly.

The vision to be the Asian market leader. Next stop – China

By the end of Q3 this year, they will release their mobile app which can be used to browse products and interact with the Pinkoi community. By end of Q4 this year, they will launch an English version to be more international.

Currently they are doing due diligence on the opportunity to enter the China market.

Currently closing an angel round of funding

As the growth trajectory of Pinkoi is promising, they have already received two offers for investment in January, but rejected it because it was deemed too early. Now they are at a stage ready to scale, so are now closing an angel round of investment and pursuing another institutional investment in Q3 or Q4.

Pinkoi now has a team of 6, consisting of engineers, designers and marketing and sales.

In formers posts about the start-up environment in Hong Kong and Taiwan, a common complaint of start-ups is the lack of government support. But after a bit of digging, it seems there are decent government organizations really trying to reach out and help start-ups. When I was in Taiwan, I met with James Hill www.twitter.com/jameshilltaiwan, who is part of a team that supports start ups at NEW Studio, part of III.

What is the main role of III?

III‘s main role is as a think tank working alongside the ICT industry and providing government with the necessary research work to drive policy. III also runs several business incubation programs, some centred on software such as the one at the Nangang Software Park, and others such as NEW Studio (the one I work at) which concentrates on web 2.0 and internet start ups. In my project, roughly 60% of our time is devoted to start ups, and the remaining 40% is research based reporting. The research we carry out can be about the trends we see coming out of the US and China and how to best use this information for the benefit of start ups here. We also produce e-books and other literature for purchase and hold conferences where entrepreneurs and experts from the US, Japan and China can share their thoughts on the future of the web economy with local start ups.

How does the program work?

At III we want to build a relationship with our start ups that is both mutually beneficial and mutually respectful. These are private companies and we treat them as equals rather than as ‘children.’ Some of the teams we work with need more assistance than others and are therefore more direct in asking for help. We try to accommodate any requests start ups may have and work with our partners (ISPs, VCs, media) to achieve the desired goals. When our teams are selected to join the incubation program they are assigned an ISP who will provide bandwidth and server capacity for a set period of time, usually a year, kind of like a ‘buddy’ program.

What is the application procedure to get in to III?

Start ups interested in joining III’s program apply first by submitting a short introduction to their service, usually including bios of the team, business plan, market size, competitors, etc. These are assessed by a panel comprising our ISP, VC and other partners and judged on potential, service innovation, monetization plans and other criteria. Successful teams are invited for a short 10 minute face-to-face presentation and if they are successful, teams are then enrolled in our program. Typically, those teams taken in at the beginning of the year will feature at July’s IDEAS Show. We take in new teams twice a year.

What can start-ups expect from III?

While we don’t invest directly in our start ups, we do have strong links to venture capitalists and angels both here in Taiwan and abroad. This year iPeen received $1 million from CyberAgent, a Japanese VC firm that has invested in several Taiwanese start ups and sees enough promise in the market that it is opening a branch office in June. Last year, III incubated firms received roughly $17 million in investment, so while III does not personally invest in start ups, we’re pretty good at getting others to sign checks! III offers a comprehensive program of mentoring, workshops, investment, events and conferences to our teams. We offer classes for business planning, legal information, intellectual property rights, investment law and a host of other start up-specific topics. We take start ups to international demo events in the US and China, and have been pretty successful at winning prizes there, which in turn raises the profile of our start ups and Taiwan as an innovation hub.

What other government initiatives are there to help start-ups?

The Taiwanese government has quite a few initiatives that are aimed at promoting growth in the internet economy. Aside from the various incubators at III, there are incubators at ITRI another industry think tank. Many leading national universities also have incubation centres that offer co-working space and mentoring for students and others to work on projects together. A new co-working space is being set up by National Chengchi University (NCCU) for example, a contributor to the upcoming Startup Weekend Taipei in August. ITRI is also partly behind the new TMI (Taiwan Mobile Internet) Labs incubator, together with Innovation Works.

How will Kai Fu Lee’s fund entering Taiwan shake things up?

Yes, this is going to be interesting! TMI Labs will be a partnership between ITRI’s Industrial Technology Investment Corp, Innovation Works, and investment firm WI Harper Group. The reported funding is $7 million and they plan to take in 3-5 teams each year. While I don’t think Kaifu Lee will be shuttling back and forth between China and Taiwan, there will be a good team on the ground managing the program. The founders of Wretch (Taiwan’s leading blogging site & #3 website in the country), and Sina will be on hand to give support to incubated teams. Investment has also been given by local tech heavyweights such as Terry Gou, head of FoxConn, Liu Chuangzhi, chair of Lenovo and Steven Chen, one of the founders of YouTube. According to the piece in the Taipei Times, they’ve already dropped a ton of money in Dianxin, an operating system that runs on Android. The investment came from China’s GSR Ventures.

How can start-ups find out more info about government resources they can tap into?

The best place to find out about assistance is, of course, on the internet! The Ministry of Economic Affairs has several departments that provide resources for start ups as well as those that III and others run. There are subsidies available for qualifying companies and other resources available. Of course all incubators such as appWorks have their own websites and for investment, you can check out the TVCA (Taiwan Venture Capital Association) website which has the names and contact details for all the VC firms operating in Taiwan. I am unaware of a centralized portal for all information so perhaps someone could hack that together!

What do you think the tipping point for more people in Taiwan to get into start-ups will be?

I think we’re pretty much there. Success stories such as Groupon’s acquisition of AtlasPost have helped show that start ups can provide an alternative to graduates, who before would have gone into more traditional employment. There are investors such as Jamie Lin and Yushan Ventures pumping money into the ecosystem and a wealth of blogging and news sites like TechOrange that inform the rest of the public about what’s going on here. We also have foreign startups such as Jiepang, Plurk and Toro moving into Taiwan and setting up offices here which shows that Taiwan can be an attractive base of operations for foreign internet companies. While there may be cultural concerns to overcome, Taiwan is certainly more westernized that its Asian neighbours, an advantage that start ups here can utilize. I’m optimistic about the future of Taiwan’s start up ecosystem; we are ideally placed to become a bridge between the mainland and the West. We offer a soft landing for foreign start ups that are unfamiliar with Chinese cultural customs without the restrictions and risks associated with moving into China.

Are there any new outstanding start-ups?

Definitely! There were quite a few interesting teams that featured at appWorks’ 2^nd Demo Day which you can read about here and we have had quite a few neat services that have applied for IDEAS Show. I’m not going to say too much about those because we want people to show up on the day but they run the full gamut of web and mobile, quite a few consumer services all with a pretty clear revenue model. While not strictly a Taiwanese start up, Toro is pushing the use of NFC here as Taiwanese are already familiar with using Visa Paywave and stored value cards for the MRT system. Air Camel is disrupting the ecommerce market here and there are cool app developers like www.nexdoor.cc

In the start-up world, Silicon Valley based Y Combinator is most respected incubator in the world. Its success has resulted in a number of incubator clones around the world (it’s not just start-ups that get copied). A while ago, I interviewed Jamie Lin, the founding partner of appWorks Ventures to get his insight into establishing such an incubator in Taiwan. Just last Friday, I attended their second Demo Day in Taipei.

Set in the National Taiwan University Hospital Conference Centre, the room was filled with investors, students and start-up junkies, eager to see how the second class of 10 start-ups have progressed. Taiwan must really be  sprouting start-ups because appWorks has already accepted 28 start-ups into its next batch.

1. Luxjoy.com

Led by AJ Chen the team of five focuses on online luxury discount shopping. In Taiwan, about 25% of online purchases are for women’s luxury goods and with brands used as a status symbol, the market makes sense.  The business is inspired by the super successful American company Gilt.com and has China counterparts in Wooha.com and ihaveu.com. In contrast to Gilt.com, you don’t need to be a member to shop with Luxjoy. Offering everything from clothing, shoes, bags, accessories, watches, furniture, and home and boutique hotel offers a lot at affordable prices. With a proven business model and an energetic team, Luxjoy should believe ‘life is joyful’.

2. Petnii.com

What do you get when you cross Facebook with pets? ‘Petbook’? Not really, but close. Petnii is an online community to satisfy all your needs with your furry friends. From pet product recommendation information, to pet grooming instructional videos, to offline pet meetups to being pet friends on their online community, Petnii aims to be the go-to online pet service. During the presentation, Nancy tried to woo people by asking her cute little puppy to prance around.

3. VideOhya.com

Ever wanted to learn how to play the drums or do makeup? Ohya in its very early seed stage, aims to create online instructional video content. Founder David Liu believes that video sites like Youtube have so much content that it’s difficult to find exactly what you’re looking for. His idea is to record videos of people or schools that teach you something and turn it into a product. He then categorizes the content into something like music or fashion, so people can find what they want instantly and intuitively. The business model is a free ad version and paid no-ad version. He showed one example of a girl who teaches girls how to put on make-up and has integrated Ohya into her iPhone app.

4. Mamibuy.com.tw

With a team of 3 and capital of NT$3 million, Mamibuy aims to help parents find the best products for their baby. Especially for new parents, who don’t know which brand or type of product to use, Mamibuy, provides a useful crowd-sourced information platform that shows product reviews and ratings to ensure they are not alone in making important product choices. Besides baby product recommendations, the site also tries to build a community of parents who want to discuss issues and problems.

5. Justaple.com

Like Pinterest or readitlaterlist.com, Justaple is a way for people to bookmark cool things they have found online for later review. George, the presenting founder used the example of what Taiwanese people love most – food! People can pin a picture of the best ramen noodles in town, share it with someone by email or Facebook, add the location and time as well as ask people to comment on it. They intend to make money from analysing what people bookmark most, then give them targeted advertising.

6. Touchingworks.com

Eddie Lin, the founder of Touchingworks believes he can save you more time to relax and enjoy your life by making an app called Neospeak that converts your Google Reader rss feeds from text to voice. It is aimed at people that commute on public transport or drive. Currently the Android app has about 2,424 installs and an average of 4 stars. He aims to make money by selling ads within the app.

7. Bounty Hunter

Is an online and offline integrated marketing company. They offer services such as social marketing on networks like Facebook and Plurk, website ads and magazine advertising. They also do website building and promotion, event organization, product naming creation and finding creative talent through competitions.

8. Weather.com.tw

A location based service focusing on providing users with the latest and most accurate weather forecast based on their location. Its main revenue will come from targeted LBS ads and other value added services.

9. Gameape.tw

With hundreds of thousands of iOS game apps, one of the biggest struggles for developers is how to get recognised amongst the crowd. To help both developers and users, search through the clutter of games apps, Gameape helps market apps for developers through ratings and reviews. They are the first website to focus on Taiwan game users. Later on they plan to move into the Android market. The business model is to generate money from advertising, CPA and an affiliate program.

10. Robospark.com

Aaron Lee believes that children’ education is a huge market. Robospark is an online iPad bookstore for children. Revenue will come from a monthly subscription fee, which gives users unlimited access to all the books. The bookstore has recommendations, book rankings and allows users to record their reading history. Their biggest competitor is kids.magv.com.

This post was contributed by our friend’s at TechOrange Global and written by Jeremy Brand Yuan. Original post here.

TechOrange Global is a tech-based blog based in Taipei that aims to deliver the latest in the tech industry in Asia, offer insight through in-depth interviews with entrepreneurs and investors, and cover any major tech conferences or events occurring in Taipei. They hope to reach the English-speaking audience who are interested in the development of Asia’s Internet and technology landscape.

Early in December of 2010, Google offered US $6 billion to acquire Groupon, the celebrated group-buying website. Pundits criticized Google for extending such a massive bid – nearly $3 billion more than its largest acquisition to date, Doubleclick – and expected Groupon to welcome the deal with open arms.

Instead, Groupon rejected the offer.

That very same week, Groupon announced its acquisition of three Asian group-buying websites in four countries. In one fell swoop, Groupon gained a strong Asian foothold in the form of Groupon Hong Kong, Singapore, Taiwan and Philippines. The gauntlet was thrown and tech observers were stunned: not only was Groupon refusing to sell, it had serious expansion ambitions of its own.

Those few days were similarly monumental for brothers Andy and Jerry Kuo, whose location-based social network, Atlaspost (地圖日記), was beginning the transformation into Groupon Taiwan. Founded in 2007, the social networking site that boasted millions of registered users had entered into the group buying market only five months before its acquisition. Impeccably timed, their introduction of group buying to Taiwan attracted the attention of Groupon CEO Andrew Mason who purchased the Taipei-based company for an undisclosed amount.

Earlier this week, Andy Kuo was gracious enough to sit down with us and tell us the Atlaspost story – a journey beginning in the start-up phase and continuing to Groupon and beyond. Below is an inside look at the company’s genesis, the challenges faced, and the outlooks on Taiwan’s startup climate.

THE BEGINNING: ATLASPOST’S STARTUP AND DEVELOPMENT

We were invited to Groupon Taiwan’s recently expanded office and were greeted on a newly added sales floor. The environment seemed new; new staff at new desks, new target markets scrawled on new whiteboards. The strikingly large, open office seemed to have been constructed with haste, as if in the bustle of post-acquistion, decorative touches took a back seat to the new Groupon directive: to grow, grow, grow.

Groupon Taiwan’s COO Andy Kuo, a slender, bespectacled man with a friendly smile, emerged from an office room and shook our hands. While on the elevator to the older upstairs offices, we made small talk as he explained the layout. “We just left sales, up here we have engineering, customer care, marketing, and finance.” When asked the ratio of people working on Atlaspost and Groupon, he replied, “very few still work on Atlaspost anymore.” We sat down in a nondescript meeting room and our interview began.

TO: How did Atlaspost start?

AG: It started in April 2007. At the time, we didn’t start a company, it was just my hobby. I was as a software engineer in Yahoo and when I came back to Taiwan I felt I couldn’t find a good job. So I studied for the GMAT and went to back to the US . In my spare time, I did some programming because I felt that if I didn’t, I wouldn’t be able to keep pace, so it was a side project.

TO: What was the site originally like?

AG: It took three weeks to build the website. At the time in Taiwan, blogging services were popular. We already had blogging functionality, but very few sites at the time used maps in their webpage. At the time, there was no such thing as a Google API, very few people had ever seen anything utilizing geolocation. I thought these two could be combined together, if you could see a blog post on a map, you could share content with people around your location. We thought this could be a business, so my brother joined me shortly after. The idea was very rough. We didn’t know how to make money, there was no profit model or anything. At the time though, a lot of people were thinking about web 2.0, so we attracted a lot of attention.

TO: At what point did you and Jerry decide to incorporate group buying?

AG: After about three years, in the middle of 2010, we felt that we had a pretty well-established user base and thought it would be cool to help them make purchasing decisions. We actually tried to do group buying as a separate VC, but we failed at that because there was no incentive for people. In Taiwan, when people shop, they go to Yahoo or PCHome and the interest from VC’s just wasn’t there. So, for the first three years our income was very limited, coming only from advertising and premium membership. Because of this, we decided to introduce the Groupon model to our site. On the very first day, we had an offer for Movenpick ice cream that went really well. We saw that we could successfully drive traffic from the social network to group buying. It really worked.

At the time we already faced a lot of competition. I think our advantage was we had the user base. Other companies spent a lot of advertising on Yahoo or Google to attract users, but for us attracting traffic was almost no-cost.

NEW TRAJECTORIES: GROUPON’S ACQUISITION

TO: How important is the social component in the group buying model? Do you think this was a primary factor in attracting Groupon to Atlaspost?

AG: In the very beginning, 100% of our traffic was from our social network. It really helped because there were a lot of opportunities to use the social elements to encourage users to spread the word, so it was very powerful. Additionally, we didn’t put much effort into developing the user base, but the traffic kept growing anyway. It was a big advantage.
I don’t know if it was a big selling point for Groupon, but it certainly was a selling point for the merchants.

TO: Were any adjustments to the business model required in Taiwan?

AG: The model itself worked very well, the only thing we had to change was the makeup of the deals we offered. The Taiwanese like to eat and spend a lot of money on restaurants, so we tailored most of our deals towards dining and the next most popular category, spas.

The merchants were very receptive as well. In the past, many restaurants might have liked to run internet campaigns, but didn’t know how or were hesitant to do so. If they ran a search engine marketing campaign, it wouldn’t have made sense considering how local their businesses were. Their concern with internet marketing was the uncertainty of how many new customers the money spent would get them.

I think now, the [group-buying] model has become a widely accepted form of local marketing, so the merchants are very well educated with what we can offer them. More than half know our brand. It’s also good because so many of the competition simply clone Groupon, they feel safer dealing with the original brand. Sometimes, a merchant contacted by the competition will call us to compare packages.

TO: How much flexibility did Groupon give Atlaspost in terms of vision? How has the culture changed?

AG: There is still a high degree of flexibility. We’ve kept our product team and engineering team, so we are still running our own platform. At the same time, we are able to leverage the Groupon resources as well while still maintaining our local team. The Groupon acquisition made us more powerful overall.

In terms of culture, the company has grown a lot. We used to be a much smaller company. In the past, the personnel focus used to center on product engineering and creative people to think up new features. Now, with Groupon it’s all about efficiency and how to make your customers satisfied. It’s a very different business – one year ago we didn’t have any customer service, because that’s not very important for social networking. But now we treat our merchants very well, because a happy merchant will deal with us again. So, we had to bring in a lot of people to do customer care, which doesn’t even deal with the website, to ensure that our merchants will like to be featured again.

TO: Other than capital, what was the biggest benefit of the acquisition?

AG: Branding has been key. A year ago, nobody knew what we were doing. We used to have to explain the idea, explain that Groupon was having great success with it in the US. Today, we don’t have to as much, especially now that it’s here in Taiwan. It’s a very strong brand.

TO: After the acquisition, what unexpected difficulties did you experience? Did you have to pivot your focus at all?

AG: We were already doing most of what Groupon was doing before they acquired us, so it was a really smooth transition.

The main issues didn’t come from the acquisition itself, but from Taiwan-specific conditions. There are a lot of legal limitations: because we lack the licenses, we can’t sell any medical services or travel deals. Everytime we want to feature something, we have to ask our lawyers. More and more often, they say no, no, no.

Another difficulty: in the beginning consumers were not willing to pay over the internet, especially when we were not that big. Students tend not to have credit cards, which was true then too. So we needed to improvise and develop an ATM payment method. Once we set that up things were a lot smoother.

TO: There are other players in the groupbuying space here in Taiwan like gomaji.com and 17life.com. After teaming up with Groupon, did the competitive landscape change at all?

AG: For sure. The number of competitors continues to grow, but our market share after the acquisition has been increasing every month. This market has always been very competitive, and the number of entrants continues to increase. But now, our branding is so much stronger now than when we first started, we feel less threatened than we did last year.

TO: Do you think the new entrants to the Taiwan market were more attracted by the headlines of a major acquisition, or was it a realization that the group buying market is viable?

AG: I think it’s more of the latter. Many new competitors are big companies who have thought very carefully and have come to the conclusion that the model works.

TO: Speaking of bigger companies, after Google’s failed bid, they have begun to roll out Google Offers in the US. Is the largest threat homegrown or from a large established major player like Google?

AG: [laughs] Actually, we prefer not to talk about Google. We should probably focus on the local competitors.

TO: Is the threat of the homegrown competitors very large?

AG: I think last year I felt that it was very large, but less so recently because of our growth.

LOOKING AHEAD: NEXT YEAR AND BEYOND

TO: Going forward, what are your main growth goals and targets for this year?

AG: Initially, we were only in Taipei. The nature of the business is so local, it’s unlikely that someone from Kaohsiung will come to Taipei to buy services, so our main focus is to expand to all the cities in Taiwan, of which there are many. Right now, we are in six cities and we will continue to grow and try to increase more purchases per day in these cities.

TO: What about Groupon as a whole? Have there been any mandates set for the newly acquired businesses to align to, especially with regard to Asia as a whole?

AG: I think for sure they have some goals, but I cannot disclose them! [laughs]

TO: Are you optimistic about your chances in Asia?

AG: As Groupon Taiwan, we would prefer to talk only about Taiwan. The model works well in Taiwan, group buying has existed for a while, just not online. Now we have a platform for young people to try it and they are crazy about it, it’s worked very well.

TO: If Groupon were to go public, how would that affect Groupon Taiwan?

AG: [with a purposeful, polite smile] I don’t know.

TO: Browsing the internet, I notice a lot more Chinese banner ads for Groupon. Is there a specific demographic you are targeting? Have some advertising methods been more successful than others?

AG: More than 50% of our users our female. But we aren’t specifically targeting one group more than another. Young or old, no matter what, everyone likes the products. As for advertising media, we’ve tried many different methods. We still use our social network to drive traffic and we’ve tried Google, Facebook, and Yahoo and they have worked very well. If you are seeing it now, it means it’s been working.

A NEW SUCCESS STORY FOR AN OVERLOOKED START-UP INDUSTRY

TO: One of TechOrange Global’s main focuses is on the start-up industry, especially here in Taiwan. One of the reasons we were attracted to your company was that you started small. What does the future hold for Taiwan’s startup industry?

AG: I think one challenge is that it’s so difficult to get funding here. So many young, talented people start companies with their friends or family, but the VC’s view Taiwan as too small of a market. So companies generally rely on angels, but even angels have a hardware focus.

When we started Atlaspost and looked at the industry in Taiwan, the market did seem small. There are 23 million people here, of which 15 million are internet users. If 0.1% of people are willing to pay for premium membership, it certainly looks small. But, the total dollar value of their e-commerce is very big. When evaluating group buying and other possibilities, it was evident that e-commerce companies could do very well. You don’t see the resistance to buying online and using credit cards that you did three years ago – the Taiwanese are willing to buy online.

TO: There’s been a proliferation of startup incubators, like Appworks, I.I.I., and TMI-Labs for example, that are an addition to the already established research and technology parks. Will these make any difference in fostering Taiwan’s software start-ups?

AG: We actually started under I.I.I.’s incubator! The environment is certainly better than it was three or four years ago, but I don’t know in reality how much money people are allocating to software projects. It’s challenging for software startups because Taiwanese hardware companies do global business. Therefore, the top talent is immediately attracted to the hardware companies. There are too many successful hardware cases and too few successful software cases.

TO: Maybe you can be that success story!

AG: We were very lucky that in the beginning our core team was so talented, but we got them to join us because they were young. College grads are patient. We couldn’t attract senior talent. But the young, smart people allowed us to have a very good start. In Taiwan, there are so many excellent teams and excellent resources, but we need more investment.

James Hill works for III, a startup incubator in Taipei, Taiwan. You can follow him on Twitter at @jameshilltaiwan He submitted this article to Technode.

So, the whole world has heard of Taiwanese tech firms, right? Our iPhones may be made in China, but they’re manufactured by a Taiwanese OEM. HTC, Acer, Asus and MediaTek are now household names, thanks in part to the rise of Android as the operating system of choice. When people think of Taiwan, computer hardware and IT peripherals are usually at the top of the list, before the hot springs, street food and traditional Chinese culture which feature so prominently in tourist literature.

Further down that list are the scores of innovative web services and mobile application developers that call Taiwan home. High levels of education and a developed economy mean that Taiwanese are avid users of smart phones, social media and other Web 2.0 tools. Taiwan is 5^th in Asia for Facebook members at around 9 million, out of a population of only 23 million. Smart phone sales are expected to double in 2011, accounting for 40% of total mobile sales. As someone who works for an incubation program here in Taipei, I come across many innovative startups, both web and mobile based, who are disrupting markets here and further afield. For Technode readers, I wanted to point out a few interesting cases and share how new technologies are being implemented on this side of the Taiwan Strait.

iPeen – Lifestyle Recommender

iPeen is Taiwan’s leading recommendation and lifestyle information portal, serving up restaurant, bar, hotel and leisure suggestions for Taiwan’s growing number of well-travelled, well-heeled 20-somethings. iPeen started in 2006 and has grown to become one of Taiwan’s 100 most visited sites, offering not only tips on where to eat and what to do, but also collated newspaper reviews and articles, ecommerce and themed mapping (including by Taipei Metro or Taiwan High Speed Rail stations). Recent additions to the site include discount coupons for restaurants and stores. At the beginning of April, iPeen announced an investment by the Japanese VC firm CyberAgent for a reported $1 million. iPeen’s management say that the new funds will be put towards expansion in the south and central regions of Taiwan, with offices in the cities of Kaohsiung and Taichung. While there are no current plans for wider regional expansion, iPeen’s distinctly Asian approach to user-contributed ‘meishi’ (美食) info would be easily transferable to Hong Kong and the mainland.

5945 Master Call – Find the best workmen

Ever had a leaking pipe but weren’t sure who to call? Stories of dodgy workmen or unreliable plumbers are two-a-penny, and often good, honest workmen are hard to find, especially when 95% of those polled in Taiwan didn’t know how to market themselves on the internet. ‘5945 Master Call’ aims to fix that. Tradesmen who are registered with the site can reach an even greater number of customers by completing a profile that is searchable by district, work type or keyword. Customers can read about their work history, the type of work they do and where in the city they are located. Profiles also feature photos of previous jobs and contact information, creating new business for the mostly self-employed craftsmen. 5945 began operations in September last year and already has over 4,200 tradesmen and companies listed on their site. The service is currently only available in Taipei City and limited to four professions (electricians, painters, carpenters & flooring specialists), so there is definitely room for growth across Taiwan’s other cities and counties, as well as other professions such as kitchen installation and interior design. The site also welcomes discussion of ‘cowboys’ to be avoided, something that could help to weed out rogue workmen.

Gamelet – Flash and Facebook Games

Anyone who has spent any time in East Asia will know that the youth over here are among the world’s most avid gamers, and Taiwan is no different. Gamelet makes around 15 flash games for Facebook and boasts over 800,000 monthly users. While this pales in comparison to the likes of Zynga or Playfish, Gamelet has positioned itself to cater to hardcore gamers, rather than the casual gaming market. Popular titles include Twilight Wars (released last month), Pizza World, and one of their latest RPG offerings, Heir to the Glory. While many games have become popular through Facebook, Gamelet also allows gamers to play on their own site, opening up their games to mainland users and those not on Facebook. The company already receives a sizeable amount of traffic from Hong Kong, which like Taiwan, still uses traditional Chinese characters. Gamelet has been able to leverage the growing virtual goods market as well as take advantage of 7-11’s in-store ibon payment service to drive revenue. For those whose Chinese isn’t so great, Gamelet offers English language versions of Twilight Wars, Pet Crossing, and Pizza World. Check out their English Facebook page for the links: www.facebook.com/gamelet Gamelet’s management say they expect to release other English titles in the next few months, so look out for those.

Saja – Single, Lowest Bid Wins

Who wants an iPhone 4 for only 20 US¢? Or how about a Louis Vuitton or Coach handbag for a fraction of the retail price? Saja www.saja.com.tw means ‘barter’ in Chinese, and that’s exactly what users on the site do. Saja’s motto is “single, lowest price”, which is how someone walked away with a brand new iPhone for practically nothing. People place a bet using Saja’s virtual currency and whoever places the lowest, single bid wins the prize when the time runs out. Saja’s CEO calls Saja a ‘backwards eBay’, and like eBay the site has become massively popular among all sectors of society. While the initial focus was on consumer electronics and computer equipment, Saja is increasingly turning to designer brands, cosmetics, household appliances and even cars to attract a wider audience. The products are provided by the companies themselves and paid for by sales of the virtual currency. But don’t expect any Chinese clone sites any time soon. The team were smart enough to obtain all the US patents for the idea and technology before they launched. Their hard work has brought them significant recognition by local media, and earned them an innovation award from Taiwan’s Ministry of Economic Affairs.

Pinkoi – Designer eCommerce Store

Sometimes it’s hard to find real artisan crafts among the tat and plastic on offer at gift shops and department stores. The popularity of Etsy in the US and the lack of a comparable service in Taiwan, spurred Peter Yen, Mike Lee and Maibelle Lin to publicly launch Pinkoi in September 2010. Pinkoi’s limited edition, design-driven ecommerce platform puts the craftsmen and women in Taiwan in direct contact with their customers. Ecommerce is popular in Taiwan, but it was hard for some of the smaller workshops and designers to compete with more established companies on shopping sites like Yahoo!, PCHome or Rakuten. Listing on Pinkoi is free, though the site does take 10% of any items sold. Currently over 100 designers are listed, with plans to add a further 400 by the end of the year. Speaking to the Taipei Times in March, Peter said, “Pinkoi has a lot of opportunities in the Asian market. Etsy is focused on Western countries and they haven’t really entered Asia yet.” To better serve this market, Pinkoi plans to launch in both simplified Chinese and English in the latter half of this year.

Nextdoor – Easily Find the Best iPhone and iPad apps

For iPhone or iPad users, the ever increasing number of apps available is both a blessing and a curse. Finding well designed, useful apps among the crowd can often be a challenge. And for companies and organizations, building an app is often just as hard. iFans by Nextdoor takes care of designing, building and launching apps for public and private companies. Having built apps for TGI Fridays, Business Next magazine, China Times and IDEAS Show, Nexdoor turned their attention to Taiwanese celebrities, actors and singers, producing integrated apps for their legions of fans. The company sees its market rooted firmly in the Greater China region, having offices in both Taipei and Shanghai. The firm has earned notice on the mainland, winning a coveted DEMO Star award at DEMO China in 2010. Many of the emerging tech firms are offering B2B services as a way to quickly grow revenue, and Nexdoor is certainly at the forefront of this trend.

Xiao Min Zhan Chu Lai – Fix those daily city gripes

Coming from the UK, I am well versed in the British custom of complaining about things most normal people either ignore or don’t notice. Poorly signposted destinations, tardy buses, potholes, gum on the floor, graffiti, miserable public buildings, litter and faded road markings are common problems almost everywhere, and Taiwan is no exception. Xiao Min Zhan Chu Lai (小民站出來) loosely translated as ‘Small Citizen Stand Out!’ and aims to draw people’s attention to these daily irritants. Using the iPhone app, users can take photos of offending articles, leave comments and discuss issues as they move about the city. The service utilizes GPS technology to place the user on a map, where posted offences are also shown. A typical message might alert users to a faulty traffic light at so-and-so junction, or a general comment about the state of the international airport. Issues are listed in categories such as public safety and transport for ease of use. Users can also follow the more prolific users and get updates on any changes made. It would be extremely worthwhile if local governments here in Taiwan got involved and used the app to solve some of the issues raised, though I am not entirely confident that this would happen.

The seven services here are just the tip of a very large iceberg of talent among web and mobile services in Taiwan. It would be impossible to cover them all, so I won’t even try! But if you have any suggestions of other services I should watch out for, please leave me a note in the comments section.

I wrote a post not too long ago posing the question if ‘Taiwan was too small for start-ups?’. It was in response to observations of friends that said Taiwan is very strong in OEM and device manufacturing but lacks an energetic internet start-up atmosphere. But after doing a bit of searching, it turns out there are a few people in Taiwan trying to change that.

I recently interviewed Jamie Lin, Founding Partner of AppWorks Ventures, a Y-Combinator like start-up incubator founded in 2009 based in Taipei and focused on the Chinese Internet and mobile phone applications. They are early stage investors and offer support in the form of coaching, networking, assistance and resources. The in-take is 10-15 teams every 6 months. I think it is a great model that really benefits the entrepreneurs, the country and the economy.

Jamie’s Background

In junior college, with some friends, Jamie tried working on a Dell like start-up which eventually failed. However, the failed e-commerce site transformed into an enterprise knowledge management software company called Intumit. The hard work paid off and Intumit started to work with top 100 corporate companies in Taiwan. In 2002, they opened a Shanghai office and in 2003 it started to make real money.

After learning business by doing it, Jamie undertook his MBA at NYU Stern in 2004. After graduating in 2006, he started a travel social network called sosauce.com based in New York which did alright but of course Facebook dominated. He then moved onto a social browser based 3D game company called Musegames which is now in positive cash flow. After seeing the allure of Asia as the next generation of hot entrepreneurs, Jamie returned to Taiwan and started blogging about it as Mr. Jamie (mrjamie.cc).

The birth of AppWorks

Jamie was inspired by Y-Combinator, a tech start-up incubator in the Silicon Valley that re-ignited the dot com era after the crash in 2000. “After the dot com crash in 2000, people stopped investing in start-ups, but when Y-Combinator started in 2005, they really changed that. I also wanted to do the same for the Taiwan entrepreneurship field.” Says Jamie.

Why the name AppWorks?

“App is a word the public associates with cool things such Apple iPhone and iPad. Apps are also something that users want and solve a problem. It is an attitude against software, which is looking at it from a hardware perspective. Mobile apps, Mac apps, web apps, TV apps come from the view of consumers rather than suppliers and deliver what they want – Apps that just work.” Says Jamie. He also seriously joked that if you sponsor something your name will be on top if it starts with ‘A’.

Jamie’s thoughts on Taiwan entrepreneurship

“After the 2000 dot com crash people got stuck in the web 1.0 stage. They were left-over start-ups trying to do everything in-house like Yahoo and the industry hasn’t moved on from that way of thinking. New start-ups must focus on doing one thing very well.

There is also no real eco-system in Taiwan; no one is really talking to anyone. I wanted to foster networking and communication amongst entrepreneurs and build a platform to foster co-operation within the internet industry.

Taiwan has such a strong OEM economy, with companies like HTC, Asus and MTK that pay well and offer aggressive stock options, therefore suck talent away. Actually Taiwanese are risk-takers, going back 20-30 years ago when big industrial companies were born. But now it is more sensible for people to go into these big companies which are safer and can be built to spec. But with internet companies, there are no specs – you have to pivot quickly and innovate. The mindset and DNA is different. For OEMs the barrier entry is patents but for internet start-ups, speed is the barrier entry.”

What Jamie looks for in start-ups

“I firstly look at what the problem they are trying to solve and what is the market size opportunity? I secondly look at the team. Do they have insights into the market with relevant experience? I prefer co-founding teams because I don’t want one person making all the decisions. It’s good to have different perspectives and feedback. I also look at their ability to execute and quickly iterate.”

Richi – an AppWorks incubated start-up

Richi is an online payment system that also converts different kinds of virtual currency into Richi money. It acts like a foreign exchange that provides liquidity to the market. Many websites and companies have different types of virtual currency from Facebook credits to credit card frequent flyer points. Many times, this virtual currency is unused but still valuable to someone. By converting different virtual currencies into Richi currency, people can easily make use of it. One example is using Richi money to buy things on Ebay.

Currently the Richi team is building the groundwork for partnerships and currency providers like banks, airlines, payment gateways.

How much does AppWorks invest and for how much equity?

“We typically invest between USD$20-$200k but usually USD$100k for no more than 20%. We actually shoot for less because it gives the founders more incentive to succeed. Our motto is to ‘not take a board seat’.”

The hot areas for Taiwan start-ups

“Generally anything that has been a proven model in the US. Taiwan is more similar to the US in the sense that people here have a relatively high disposable income and a similar culture. I also think if start-ups can add value to Taiwanese OEMs like HTC that would be an advantage.”

Advice for start-ups applying to AppWorks

1. Do your homework – valuable entrepreneurs with insight, know what you’re talking about to convince us
2. Be brave and give it a shot – try to change the world in this lifetime, think big, build something that makes people’s lives better
3. Don’t be too caught up with the business model, it can change; people will pay if it solves a problem whether it be advertisers, customers or investors.

If you are a start-up based in Taiwan and believe AppWorks can you help you succeed, apply!

Applications for the next round close 28th March.

Although only a few hours flight from Beijing, Taiwan has a very different start-up environment.  With a population of 23 million, Taiwan has often been labelled too small to have a start-up business that makes an impact on the world stage. Interestingly though, is the fact that there are many Taiwanese entrepreneurs who have been educated outside Taiwan and made it hugely successful. Some key examples are Dr. Kai Fu Lee, CEO of Innovation Works, Steven Chen Co-Founder of Youtube and Tony Hsieh, CEO of Zappos. This suggests that if you want to make it big, get out of Taiwan – the market is too small.

My friend in Taiwan (who is from America) made some interesting observations about the Taiwanese start-up market and its trends. Taiwan has a long history of being a big electronics OEM manufacturer to the world. Brands such as Asus, Acer, HTC and BenQ all originate from Taiwan. The dominance of these established technology companies in Taiwan has lead to roughly 75% of the population working in the technology industry. Young people graduating from college usually take the safe path and join these large companies. Often large technology companies in Taiwan have small divisions dedicated to start-up like projects, where employees can test their ideas. If these divisions do well, the people who worked on the project can expect big cash out bonus, equivalent of exiting a start-up company. I heard of one case where one division was given a bonus equivalent to 10 years pay, for making successful tablets.  So why wouldn’t you take the safe option? It makes sense right? People can be entrepreneurial within a big company and still earn a steady pay check from a secure job in a big company. Another possible reason for younger people to steer away from the more risky entrepreneurial path is Taiwan’s National Service policy whereby all men who are 18 must join the army for 2 years. This means that many men by the time they are 23-24 years old, don’t have professional work experience, leading them to play it safer and get a normal job.

But it seems there are signs of life in the start-up and tech scene in Taiwan. Wretch.cc, a Taiwanese blog community was acquired by Yahoo! in 2007. KKBox, a music streaming site is hugely popular and Facebook is quickly gaining traction. This has given rise to social media marketing services in Taiwan such as Mr.6 (previously covered). Atlastpost, founded by the Kuo brothers in 2007, originally a LBS blog service later transformed into a group buying site and consequentially acquired by Groupon for a rumoured US$1.5m to become Groupon Taiwan.

The investment environment is also picking up. appWorks Ventures, founded in 2009 is a internet and mobile application VC fund. Its business model is similar to Y-Combinator in the US and Innovation Works in China. Their purpose is to invest in Chinese Internet industry, to enhance Taiwan’s competitiveness internationally. Good on them! Entrepreneurs, especially in Taiwan so it seems, need this support and activity.

So despite the obvious challenges Taiwan faces in the start-up environment, namely the small market, it is developing. With more young people willing to experiment with ideas and investors willing to back the, Taiwan with its strong experience in technology will be an interesting country to watch over the next few years.

Please comment if you have any experience or opinions on being an entrepreneur or investor in Taiwan or have any insights into new exciting start-ups in Taiwan.

Atlaspost was founded by two brothers, Jerry Kuo and Andy Kuo in 2007. It started as a location based blog service on which you can the share contents (diary, picture, point of interest) with people around you. In 2008, the service became more like a social network service and the number of users keeps growing. In July 2010, the team decided to launch its group buying business. One month later, the service is launched. Thanks to its large user base (it said that it had over 1millions users by then), Atlaspost is able to convert traffic from its SNS to group buying business. Only four months later, Atlaspost was acquired by Groupon to become Groupon Taiwan.

I had a great pleasure to interview Andy Kuo, the co-founder of Atlaspost.

1. The group buying market in Taiwan

The group buying market is also hot in Taiwan, but not that crazy as Chinese market. “There are about 15 popular group buying sites in Taiwan, besides Atlaspost, Gomaji and 17life are probably the top popular ones right now. ” said Andy, “the competition is strong still.” So what make Atlaspost outstanding, I asked. Andy think they are great because of its SNS which is also the key reason they can enter the market relatively easier.

1. From Atlaspost group buying service to Groupon Taiwan

Atlaspost mainly focus on four cities in Taiwan including Taipei, Taichung, Tainan and Kaohsiung. As per the service the site offers, Andy said the restaurants are always the best. 80% of deals we have been offered are restaurants. “The most exciting thing I think is everyone love to buy good service for half price, people have the need for this kind of service which make group buying so popular.” Andy told me, “with Groupon Taiwan, we will very soon expand to other cities and be leader in every market in Taiwan.”

1. How to deal with some issues comes with Group buying, such as quality of service

Andy said they have many ways to control the quality of service. “For example, we only work with merchants that we want to go to. Many restaurants and merchants are wating for being feautred. So we only feature the ones we think our users will like. ” he said. “We need to have merchants happy and customers happy to make sure this is a good business.”

1. Taiwan startup environment

It seems for me most the sort of web2.0 sectors are dominated by foreign service in Taiwan, such as Facebook, and Twitter is hot there too. “For local internet business, it’s difficult to get funding. Atlaspost was self-funded at beginning,” Andy commented, “Many of internet startups are looking at China market but few are successful.”

When I asked Andy for his opinion about Chinese market, especially the group buying market, Andy said it’s beyond his knowledge, and they focus and would focus on Taiwan only.