II. Abstract of Census Results
(I) General Situations of Industrial and Commercial Operations:
1. Lowest Growth in Business Firms, Seventy Percent of Enterprises Operating Longer Than Five Years
In the process of economic transformation, some labor-intensive industries have relocated overseas. Industrial and commercial enterprises at the end of 1996 totaled 860 thousand enterprise units, up only 17.3% over five years earlier, the lowest growth recorded by censuses in the past. On the average, the annual growth was 25 thousand units or 3.2%, lower than 3.6% and 3.9% found in the preceding two censuses. The slowdown in industrial and commercial firms reflects that our nation has surpassed the quick expansion period of economic development and moved toward the mature period. Enterprises operating longer than five years accounted for 69.8% of total business firms, higher than 68.9% recorded in the preceding census.
2. Quick Growth in Product of Service Sector, Economic Structure Getting Mature
The economy of our nation shifted from high growth to moderate growth in recent years. Production of industrial and commercial enterprises in 1996 totaled NT$13,435.4 billion, up 63% from the preceding census. The growth was lower than 70% in the preceding census. By economic sector, production of the service sector increased nearly one-fold, mainly resulting from continued liberalization. The one-fold increase was much higher than 0.5-fold in growth of the industrial sector. As a consequence, the industrial sector's share in total production steadily declined from 76.8% in 1986 and 69.4% in 1991 to 63.4% in 1996. This demonstrates that contribution of the service sector to the economy was growing steadily, and that the economic structure was getting mature.
3. Slowdown in Growth of Work Force, with Commerce Creating Largest (400,000) Employment Opportunities
Industrial upgrading, production automation and weak business performance contributed to a slowdown in expansion of the employment market. Workers of industrial and commercial establishment units at the end of 1996 totaled 6,587 thousand persons, up 12.3% from the preceding census. The rise of 12.3% was lower than a growth of13.5% reported by the last census, demonstrating that the pace of expansion in work force slowed. The industrial sector, following a decline of 0.4% posted in 1991, continued to experience a decline of 71 thousand workers or 2.3% in the latest census. The work force of the service sector rose 793 thousand persons or 29.1%. Apparently, the service sector continued its contribution to expansion of employment. By major division,trade and eating-drinking places (simply called commerce) reported the largest increase of 397 thousand workers, mainly resulted from continued expansion of domestic consumption in the past five years. For construction, the work force expanded 87 thousand persons or 19.3% due partially to a sharp increase of 92.0% in construction establishments and partially to continued promotion of major public construction projects. In the past five years, 37 thousand alien workers (In Taiwan) were employed to meet requirement of the major public construction works.
4. Increase of 70 Percent in Assets used by Industrial and Commercial Enterprises, the Lowest Growth Compared to Censuses in the Past
In the process of development, the economy of our nation was getting mature, and the pace of growth in investment slowed. Net value opassets in oferation by industrial and commercial enterprises at the end of 1996 totaled NT$53,666.9 billion, up 66.9% from five years ago. The 66.9% rise, much lower than 1.2-fold growth recorded in the preceding census, was the lowest growth compared to censuses in the past. The industrial sector reported a growth of 69.9%, higher than the service sector's 66.0%. The labor-equipment ratio, i.e., Net value of assets in operation per person engaged, increased 73.4% for the industrial sector, also higher than a growth of 28.4% for the service sector. One main cause was that the pace of increase in fixed assets in operation by large enterprises of the service sector slowed, contributing to a slow expansion in labor-equipment ratio.
(II) Industrial and Commercial Firms and Regional Development
1.Central District Reporting Fastest Growth of 18% in Establishment Units, Efforts Required to Relocate Business Firms Eastward
Industrial and commercial firms tended to concentrate in the north of Taiwan Area where establishment units amounted to 421 thousand units as of the end of 1996, accounting for 47.1% of total establishment units
(895 thousand units). The shares for the southern and central districts were 26.0% and 24.1%, respectively. The eastern district and Kingmen-Matsu together accounted for no more than 3%. In terms of change in establishment units all of the districts of the western Taiwan reported at least 15% growth. The central district posted the highest growth of 18.5%, for the first time higher than the growth reported by the northern district. It was because Taichung City and neighboring Taichung & Changhwa Counties had formed a metropolis where industrial and commercial establishment units grew more than twenty percent. In the northern district, as Taipei City was getting saturated, establishment units increased only 5.6%. Due to expansion of urban areas, industry and commerce developed substantially in Taoyuan County and Taipei County. As a result, during the five-year period, Taoyuan County reported the highest growth of 41.0% in establishment units among counties and cities.
Taipei County posted a growth of 31.4%. In the southern district, establishment units in Kaohsiung Municipality rose 19.9%, contributing to quickly development in Kaohsiung County. Over the past five years, Kaohsiung Municipality and Kaohsiung County jointly contributed 66.2% of growth in establishment units in the southern district. The eastern district and Kingmen-Matsu developed at a pace relatively slow. It is better to develop tourism and recreation industries in order to accelerate development of the districts.
2.Industrial and Commercial Development Closely Related to Prosperity of Locality
Industrial and commercial development could bring tax revenue for local governments, increase employment opportunities, bring about reconstruction and development of the locality. They positively correlate with each other. Among 23 counties and cities of Taiwan Area, Taipei Municipality and Kaohsiung Municipality experienced steady development of industry and commerce. For the remaining 21 counties and cities, development varied in magnitude. As a result, they varied in prosperity.
The top five of counties and cities in terms of development were Taipei County, Taoyuan County, Taichung County, Kaohsiung County, and Tainan County. They respectively ranked the first, second, third, sixth and seventh in terms of employment opportunities. Over the past five years, expansion of manufacturing plants and productive equipment and machinery have made significant contribution to a growth in fixed assets. Consequently, the five counties respectively ranked the first, second, sixth, third, and fifth in such contribution. Among them, Taipei County and Taoyuan County contributed 22.2% and 11.6% to the growth, respectively. At counties and cities where industrial and commercial development was slow, employment opportunities created may not satisfy expectation. Apparently, industrial and commercial development could help create employment opportunities, increase tax revenue for local governments, bring prosperity to the locality, and ultimately raise welfare for the public.
(III) Development Trends of Major Industries
1. Quick Development of Ten Newly Emerging Manufacturing Industries
An observation over sub-divisions of the standard industrial classification showed that 15,415 enterprise units belonged to ten newly emerging manufacturing industries at the end of 1996. They provided 540 thousand jobs. They created NT$2,047.4 billion of production, up 1.8 fold above 1991, a pace faster than a growth of 46.4% for the entire manufacturing sector. This demonstrates that efforts of our nation to transform the economic structure, upgrade technology and develop ten newly emerging industries have produced results. Among the ten newly emerging industries, information, consumer electronics, emiconductors, precision instrument and automation, and pollution control industries all posted an average annual growth in production higher than 19% in the past five years. However, for telecommunications, special chemicals, pharmaceuticals, and medical care industries, annual production growth rates came below 9%, and these industries require assistance of relevant
authorities.
2. Industrial Upgrading Policy Transforming Economy toward Capital and Technology Intensive Industries
Due to industrial relocation overseas, consumer goods manufacturing enterprise units, total value of production, and assets in operatron as percentage shares of respective totals of the entire manufacturing sector dropped 4-5 percentage points from the 1991 census. Although information and electronic enterprises increased by 2,390 units over the five-year period, their production and assets in operation doubled. As a result, the average scale of an enterprise was 2.6 folds and 2.3 folds the averages of the entire manufacturing sector. This demonstrates that the promotion of capital- and technology-intensive industries and the industrial upgrading policy have significantly transformed the industrial structure toward a capital- and technology-intensive pattern.
3. Quick Development of Construction ant Real Estate, Slow in Production Growth
Construction is defined to comprise infrastructure construction, buildings construction and real estate development. The government lowered the qualification requirements for the C-class construction engineer in recent years. Meanwhile, the government continued to implement major construction projects. As a consequence, construction enterprises shot up from 13,705 units at the end of 1991 to 29,797 units at the end of 1996. During the period, assets in operation expanded 2.1 folds. However, recession of the real estate market persisted. Major public construction projects slightly lagged behind the schedule. Consequently, production of the construction sector rose only 89.8% over the five-year period, much slower than a growth of 2.1-folds recorded in the 1991 census.
4. Commercial Modernization Program Prompting Quick Emerge of Distribution Firms
Newly emerging distribution establishment increased 1.3 folds from 2,022 units at the end of 1991 to 4,566 units at the end of 1996. These establishments created nearly 70,000 jobs. Their production and assets used by them also surged 1.8 folds and 1.7 folds, respectively. On the other hand, one-man shops and vending establishment declined 20 thousand units over the five-year period, and the share as a percentage of total commercial establishment units dropped 7 percentage points. This demonstrates that the commercial modernization policy has encouraged newly emerging distribution establishments to move into communities.
This pattern of sales outlets pay much attention to demand of consumers, contributing to benevolent interaction and integration among manufacturing, wholesale, retail, storage and distribution firms. This could help accelerate merchandise flow and sharpen competitive strength.
5. Prosperous Development of Air Transport Enterprises, Increase in Scale of Water Transport Enterpcises
In recent years, the government opened establishment of airline companies and devoted much efforts to open additional international flight routes. As a result, investment in air transport increased substantially. Assets in operation expanded 2.7 folds over the past ten years. During the period, air passengers shot up 4.1 folds, and air freight surged 1.8 folds. Production of the air transport sector increased two folds. Prosperity of the sector points to a fact that an Asian-Pacific air transport center is on the development. When the second-stage expansion of CKS Airport and construction of relevant facilities are completed, our nation could become an Asian-Pacific air transport hub. On the front of water transport, loading and unloading volume in 1996 grew 30.3% over 1991.
Production of the water transport sector increased 42.9% over the five-year period, lower than the growth in the air transport sector. Nevertheless, the average work force, assets in operation, and aggregate production of each enterprise increased substantially. Apparently, water transport enterpcises were expanding their business scale.
6. Liberalization Policy Accelerating Development of Financial Markets
Finance, insurance & real estate is a relatively large sector carrying forward correlation effect. The sector is a base for development of other industries. Establishment units of this sector increased substantially by 2.9 folds over the past ten years. Its work force rose 1.4 folds.
Its production shot up 4.4 folds. This demonstrates that the government's efforts to make legal and regulatory systems sound for banking, securities and insurance and its liberalization policy in the past several years have played an essential role in economic development. However, the production value of finance, insurance & real estate in 1996 was only 19.5% of GDP, still lower than 29.9% in Singapore and 25.0% in Hong Kong. With economic strength and highly educated manpower of this nation, this sector still has room for further development when we try to turn our nation into an Asian-Pacific financial center.
7. Production of Radio & TV Broadcasting and Amusement Parks Doubling, Quick Development Expected for Recreation Sector
Our government opened private operation of radio broadcasting, cable TV, wireless TV and satellite TV in 1993. Establishment units of this sector in 1996 increased 93% over 1991. Its work force, production and assets in operation doubled. As a result, the saturation rate for cable TV increased from 43% in 1994 to 60% in 1996. As leisure and travel gradually becomes a trend, the average number of domestic leisure trips per person rose from 1.8 trips in 1991 to 2.4 trips in 1996, driving production value of amusement parks to grow 2.6 folds. The government adopted a five-day-work-week twice every month in 1998, creating many trading and employment opportunities. Under the "Domestic demand stimulating program," our government is promoting tourism and recreation projects. In addition, the five-day-work-week will be expanded once every week in the future. The program and plans will bring about quick development of relevant recreation firms.
8. Science-based Industrial Park Prompting Quick Development of Hsinchu District
Development of high technology-oriented industries at the Hsinchu Science-based Industrial Park gradually produced results. For Hsinchu County and City together, total value of production by industrial sector in 1996 accounted for 84% in the area. Production of the information and electronic industry rose to 66 percent of total manufacturing output. Hsinchu County and City are ahead of other counties and cities in terms of industrial upgrading and average income per household.
The Tainan Science-based Industrial Park, Yunlin and Tainan Technology-oriented Industrial Parks, and Miaoli Industrial Park are either under planning or preparation. These industrial parks will help develop industries and commerce and create employment opportunities in neighboring counties and cities.
9. Employment Structure under Transformation, the Gap with Advanced Nations Narrowed
The trends of industrial and commercial development of our nation in the past ten years are generally similar to those of advanced nations. Contribution of the industrial sector to employment dropped to 47% in 1996 mainly due to emigration of conventional industries in the late 1980's. The share declined about 7 percentage points every five years, faster than the pace in the United States and Japan. On the other hand, the share of the service sector rose from 39% in 1986 to 53% in 1996, thanks to liberalization. This demonstrates that the largest two economic sectors have experienced structural adjustment, with the gap with advanced nations narrowing down.
(IV) Scale and Efficiency of Industrial and Commercial Firms
1. Large, Medium and Small Enterprises Undergoing Balance Development, Becoming Base of Steady Economic Development
Top 2000 Manufacturing enterprises and top 500 service enterprises jointly created 1,474 thausand jobs equivalent to 22.4% of total workers of the industrial and service sectors. Combined production of these 2,500 enterprise units amounted to NT$6,661.3 billion equivalent to 49.6% of total production of the two sectors. Assets in operation by the 2,500 enterprises units totaled NT$34,635.5 billion, accounting for 64.5% of total assets in operation by the industrial and service sectors.
This demonstrates how significant the effect of large enterprises is on the entire economy. Although medium and small enterprises used only 30.3% of total assets, they created 40.9% of total production and employed 68.6% of jobs. This demonstrates that both large enterprises and medium/small ones have undergone balance development. They cooperate and benefit with each other. This pattern of development is very different from South Korea which emphasizes development of large enterprises only. (Top ten business groups in South Korea accounted for 89.2% of total GDP in 1996. Medium and small enterprises almost find no room to develop.) This is one main cause that the economy of our nation still could grow steadily.
2. Quick Industrial Transformation for Large Enterprises, with Information
Growing the Quickest in Manufacturing Sector and Financial Institutions Expanding the Quickest in Service Sector For top 2000 manufacturing enterprises, information and electronic firms increased quicker than other industries. Their production accounted for 22.5% of total production of the 2000 enterprises in 1991, the smallest among four major industrial divisions. The share rose to 33.1% in 1996, the highest among the four major industrial divisions. In contrast, the share for the consumer good industries dropped from 24.2% in 1991 to 19.3% in 1996. The chemical industry was the backbone of large manufacturing enterprises in 1991 when it accounted for 30.0% of assets in operation by the top 2000 manufacturing enterprises. However, investment was shifting to the information and electronic industry over the past five years. As a result, the share of assets in operation by the information and electronic industry increased from 19.7% to 27.6% over the five-year period, while the share for the chemical industry declined to 28.3%. Apparently, large manufacturing enterprises were upgrading quickly, with production and investment shifting toward high technology-intensive industries.
For top 500 service enterprises, finance, insurance & real estate firms developed the quickest in the service sector over the past five years. Their production increased from 51.6% of total production of the top 500 in 1991 to 56.8% in 1996. This demonstrates that the government's financial liberalization policy has set a solid base for sound development of the financial sector.
3. Slowdown in Growth in Unit Output Labor Cost of Industrial and Commercial Firms, Helpful to Upgrading Competitive Strength
Labor productivity, defined as total value of production per person engaged, increased at an annual rate of 7.7% from 1991 to 1996. Average annual labor compensation for each worker of industrial and commercial firms amounted to NT$436,357 in 1996, showing an annual growth of 8.6% in the five-year period, lower than 11.4% in the five-year period ending 1991. As the growth in labor productivity was slower than the rise in average annual labor compensation for a worker, the unit output labor cost increased slightly at an annual rate of 0.9%, the lowest recorded by censuses in the past, helpful to upgrading competitive strength.
4. Non-wage Compensation as a Share of Total Compensation for Labor Smaller Than in Europe, America, and Such Nations as Japan and South Korea
The inauguration of the national health insurance program added insurance premium burden on enterprises. Consequently, annual non-wage compensation (i.e., social welfare and allowances) for each worker amounted to NT$41 thousand, equivalent to 9.4% of total labor compensation for a worker, up 1.7 percentage points from 1991. The greater the work force was, the higher the share in non-wage compensation and the faster the growth would be. This demonstrates that the greater the business scale is, the better the employees' welfare benefits would be. Nevertheless, the non-wage compensation ratio remained lower than 32.9% in the United States, 17.0% in Japan, 24.5% in South Korea, 14.0% in the United Kingdom, 23.0% in Germany, and 31.0% in France.
5. Profit Rate for Industrial and Commercial Firms Being 7.1%, Small Enterprises Posting Better Profitability
Profitability varies for enterprises of different scale. The rate of profits (profits/total revenue) for industrial and commercial enterprise units averaged 7.1%. Medium and small enterprises could be defined by the size of work force of an enterprise in accordance with the Small and Medium Enterprise Development Statute. According to this definition, the small-sized enterprise has better profitability, with the rate of profit being 9.2% in the industrial sector and 9.4% in the service sector. Small and medium enterprises are mostly engaged in low level of processing. The value added by them is relatively small. In addition, they are encountered with a de facto free market. As a result, the average rate of profits was only 6.8%, still lower than the rate for large enterprises of the Industrial sector.
6. Corporation Organization Getting Healthier, Helpful to Modernization of Industrial and Commercial Firms
By organization, some 330 thousand enterprises were organized in the form of a company at the end of 1996, up 52.6% from the end of 1991. The share was 9 percentage points higher than the share recorded in the 1991 census. For non-companies and others growth rates over the past five years was only 2.5%. This demonstrates that organization of industrial and commercial firms is getting healthier, helpful to modernization of the industrial and commercial sector.