Although Taiwan is one of the world's leading producers of information products, it lags behind advanced countries in the application of information technologies. The strength of Taiwan's industry lies in its low-cost manufacturing capabilities, which in recent years, have been undermined by rising wages. Faced with a massive relocation of production activities to China, the Taiwanese government is trying to prevent the hollowing out of domestic industry by encouraging local firms to embrace new information technologies to strengthen their ties to multinational firms. The initiative aims at enhancing the flexibility of production and speeding up responses to the market through concerted actions by brand marketers, parts suppliers and assemblers. New technologies underscore new working methods that erect entry barriers to protect existing network relationships.
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