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Taiwan builds a base for high-technology industry

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Michael Pao, chairman of Flow Industries, likes to quote the Chinese philosopher Lao Tzu that ''water droplets can penetrate rock,'' to show that cutting things with water isn't something new under the sun.

Flow Industries took this idea and turned it into a new high-technology industry, becoming the world's leader in the production of water-jet cutting equipment.

The machines use water under very high pressure to cut out everything from automobile dashboards to corrugated cardboard.

Now the company is taking the idea back to the land of the philosopher by becoming one of the first American high-tech firms to locate a plant in the new Hsinchu science-based industrial park in Taiwan.

Located about 45 miles southwest of Taipei, the science park is the cornerstone of the Taiwan government's plan to transform the island's economy from labor-intensive, low-value industries to high-technology production.

Now in its second year, the industrial park so far has attracted about a dozen local and foreign companies with another dozen authorized. Eventually, Taiwan's planners say they hope to attract as many as 200 companies.

To gain admittance, a company must be working on the forefront of new technology. With some 30 PhDs doing research and development on fluid mechanics as well as other emerging technologies such as wind energy, Flow Industries easily fits the criteria.

The Kent, Wash., company was already an experienced exporter when it decided to open its Far East branch in Taiwan. The company claims to have about 80 percent of the world market share for water-jet cutting equipment with sales to some 20 different countries.

The Taiwan plant is designed to be the focus of the company's assault on the entire Pacific Rim area. ''To penetrate the market, you have to have an active presence there,'' Dr. Pao said.

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