THE TOP7 OF 2012
Taichung City, Taiwan
A Mechanical Kingdom leads in the digital age
by ROBERT BELL, CO-FOUNDER, ICF.
The roots of the city of Taichung City go back to 1897, when it was founded as the capital of what was then Taiwan Province. But in another sense, Taichung City was born on Christmas Day in 2010, when the modern city was merged with the surrounding county to create a municipality of 2.65 million people spread across 2,214 square kilometers (850 sq. mi.).
Much happened between those dates. In 1895, China ceded the island of Taiwan to Japan as spoils of the Sino-Japanese War. The Japanese administration created the surrounding Taichung County and invested in roads, dams and levees, and a north-south island railway project. Following the end of the Second World War, the city grew as a center of higher education, commerce and culture, where 70% of employees worked in service industries. The surrounding county developed manufacturing, which employed 48% of the workforce, and focused so successfully on precision machinery, from machine tools to bicycles, that it was nicknamed the “Mechanical Kingdom.” But it also included remote mountain regions known for earthquakes, mud slides, avalanches and flooding, where the standard of living was a far cry from that of city dwellers.


Those disparities – between service and manufacturing, urban and rural – were a challenge to the very idea of the merger, which sought to create a metropolitan area ready for global competition. The new Taichung certainly had the potential. It was the only city on the island at the intersection of four transport systems: seaport, airport, rail and road. Under its dynamic Mayor, Chih-Chiang (Jason) Hu, the city leadership set out to realize the potential they saw in Taichung – a potential that could only be realized if all the eco¬nomic, social and cultural pieces of the jigsaw puzzle fit snugly into place.

Lightpaths and Airwaves
As Taiwan’s third-largest city, Taichung benefits from the presence of two competing broadband carriers: the national incumbent Chungwha Telecom and Vee Telecom Multimedia, an aggressive young company that is deploying 4G WiMAX wireless services in Taichung and nationwide.
Chungwha has a goal, set by the national government’s M Taiwan Project, to provide 100 Mbps service to six million users across Taiwan by 2015. Working in collaboration with city government, Chungwha has grown its optical fiber coverage from 40% of the metro area in 2010 to 94% in 2012. Eighty-five percent of companies in Taichung’s many industrial parks are customers, and nearly 95% of all Chungwha fiber customers have access to a minimum of 10 Mbps, with 50 Mbps available to almost 80%. Taichung’s government expects the city to be the first in Taiwan to offer 100 Mbps fiber service throughout its service area.
Vee Telecom has boosted coverage of its wireless network from 70% before the merger to 91%. With prices as low as US$20 per month, the company has achieved high customer satisfaction rates of more than 90%. Vee Telecom plays a vital role in extending the high-speed network cost-effectively to the more remote, mountainous areas of Taichung, as well as ensuring access to broadband for citizens on the move. The company also collaborates with the city on special projects. It has installed touch-screen mobile Internet terminals in taxis and buses to provide local real-time information to passengers on everything from traffic conditions to cultural and entertainment offerings. It is also pioneering in IPTV over 4G and providing customers across Taichung with a television that can access not only conventional programming but also Facebook, YouTube and online educational offerings using a remote control.
The city is a major customer for both companies, because its leaders view this high-quality connectivity as the key to uniting the vast metropolis. The merger created the opportunity to make once-in-a-generation changes to the way government organizes itself and delivers service to citi-zens, and Taichung is using information and communications technology to drive the change.
As more than 150 city and county agencies were consolidated and reorganized, it became a major challenge to reflect these changes online. But the new consolidated city Web site, launched on Christmas 2010, proved a hit. Site visits exceeded 5 million within a few days and grew four times in the next nine months. Taichung’s government also created a single service platform for public service and consumer inquiries, and introduced a 24/7 hotline that offered counseling services, assistance with inquiries and applications, non-emergency reporting and emergency dispatch.

ICT for Safety and Security
Rapid population growth in the city and county had led over the years to an uncomfortably high crime rate. The New Taichung City Police Bureau began planning in 2007 to use information and communications technology to secure the much larger area that would soon be its responsibility. The Bureau expanded its network of surveillance cameras to more than 11,000 and created a Web-based digital recording system for data capture. It launched a central mission command system and a GPS-based license plate recognition system able to capture and match 90% of license plates. These systems contributed to resolving nearly 7,000 cases through February 2012.
Taichung’s government also developed an intelligent traffic management system that uses almost 100 surveillance cameras and nearly 500 GPRS-controlled traffic signals to monitor and manage traffic flow, improving safety and reducing travel time and pollution. The fixed network is supplemented by a vehicle-based set of cameras to target trouble spots. Data from the system is available to residents through a GIS application that enables smartphone users to both view and contribute traffic information.
To increase the use of mass transit, the city worked with local bus companies to install hundreds of “smart bus stops” with LED displays showing the estimated arrival time of the next bus. Buses are equipped with GPS tracking systems that feed the network as well their own onboard display and announcement system that identifies the next step and estimated time of arrival in multiple languages. The major bus line, Taichung Transit Jet, began offering an 8-km free ride promotion in 2011 to encourage use of public transportation, and saw passenger rides triple to 4.6 million from 2007 to 2011, saving an estimated one million tons of greenhouse gases.

The University-Business Connection
Taichung is home to 13 universities, many of them located in science parks where research institutes and leading-edge businesses congregate. The largest is Feng Chia University with 21,000 students, followed by Tunghai University with 17,000 and Chung Hsing University with 16,000. Feng Chai alone has launched more than 40 research institutes, which it seeks to fund entirely through private-sector projects and government contracts. Its 15-year-old GIS Institute has over 150 full-time staff as well as interns and students involved in developing digital mapping, remote sensors, robot vehicles and flying drones to monitor severe weather and changes to the Earth.
Altogether, Taichung’s universities house 13 incubation centers focusing on everything from digital technology and biotechnology to plastics, footwear and recreation services. Connecting them is the Taichung Incubators Business Alliance, which aims to nurture the growth of the more than 400 businesses that operate from the incubators. The city also facilitated the development of Taiwan’s only Academia-Industry Training Alliance, which aims to sharpen the skills of both established and new businesses. The Alliance offers training courses in precision machinery, machine tools, mechanical and electrical control and photovoltaic systems. More than 120 manufacturers have sent 800 employees to Alliance Courses since 2006.
Taichung’s industrial parks play a key role in economic growth. The Central Taiwan Science Park opened in 2003 and has attracted companies in solar energy, touch-panel displays, optoelectronics, precision chemicals, semiconductors equipment, aerospace and ICT. In 2011, those companies had combined revenues exceeding US$8 billion. Nine other parks at various phases of development, including the Precision Machinery Technology Park, are expected to generate 60,000 new jobs.
Major success stories include Taiwan Semiconductor Manufacturing Company, which broke ground in 2010 for its 15th silicon wafer “fab” at the Central Taiwan Science Park. With the ability to produce nanometer-scale components on 12-inch silicon wafers, it represents a US$10 billion investment and total employment of 8,000 workers. Hon Hai Technology Group has invested US$3.3 billion in developing R&D and manufacturing facilities for precision machinery. AU Optronics Corporation manufactures large LCD displays and solar panels. The US$12.7 billion company has 43,000 employees around the world. But not everything in Taichung is high-tech. The Giant Manufacturing Company was founded in 1972 by eight people with a passion for bicycle design and manufacturing. Over the past 40 years, it has become a global icon of excellence that is the first choice of international cycling teams. Forbes magazine named it one of the world’s “200 Best Small Companies” for four consecutive years.

Inside the i-Park
Taiwan’s national government has an “i-Park” strategy for the country’s vast number of science and industrial parks, backed by substantial financial incentives for research and development. It encourages the parks to use information and communications technology to create applications that improve quality of life, to master key technologies and to scale their operations for global markets.
Taichung has applied the i-Park concept to its precision manufacturing cluster. At the Taichung Precision Machinery Technology Park, Taichung Industrial Park and other facilities, more than 400 manufacturers use a shared Engineering Data Bank Service developed by Taichung’s Industrial Technology Research Institute. The Data Bank aims to overcome a challenge faced by small-to-midsize manufacturers: the stratospheric cost of IT systems to manage product design, enterprise resource planning and customer service. A secure cloud-based platform, the Data Bank offers these capabilities on a cost-effective, shared-use basis, and companies using it have seen a 16% reduction in R&D time-to-market and gains of 18% in process efficiency.
Under the i-Park banner, the Research Institute has also launched a collaborative program to reduce the energy consumption of manufacturers by deploying advanced hardware and software and implementing process improvements. The resulting gains in efficiency contribute to the companies’ bottom lines as well as Taichung’s environmental goals.
Taichung Harbor has massive container truck traffic in and out of the port, which requires secure handling and verification. Until 2011, that meant unloading and physically checking cargo, creating a bottleneck that hurt the port’s competitiveness and added to air pollution. In 2011, Taichung Harbor launched an automatic gate checkpoint system that electronically reads and matches the truck driver’s identification, license plate numbers and container numbers using RFID technology. The entire process now takes 2-3 minutes, and the automatic verification has proven almost 99% accurate.

Competitive Advantage
Perhaps because they live in a port city, Taichung residents have long been open to other cultures and willing to experiment with what they have to offer. The city was the first in Taiwan to develop Western-style restaurants and the British tradition of afternoon tea. This taste for culture has accelerated in the age of globalization. In 2009, residents took part in an average of 35 arts and cultural events per person, compared with 4 events per person in 2001. In that same year, Taichung opened the Taichung Cultural & Creative Industries Park, built on the foundations of an old winery, to the public.
Since 1996, Taichung has held the Da Dun Fine Art Competition, which has attracted 12,500 artists from around the world – including Pavarotti, Jose Carreras, Yo-Yo Ma and Lady Gaga – to present their works at its grand festival. Art galleries and a science museum, botanical gardens and a string of parks, dot the urban landscape.
Arts, culture and overall quality of life are important contributors to Taichung’s success in the broadband economy. They create the environment that attracts and retains innovative individuals and companies. So do Taichung’s “Fair Digital Opportunities” programs, which connect elderly and low-income residents, as well as those living in remote areas, to digital skills. Three Digital Opportunity Training Centers offer more than 100 courses in digital literacy and life and work skills, as well as projects that seek to promote local culture online. Taichung also taps national government funding to provide low-income children with free computers and subsidized connection to the city’s high-speed broadband. Free Internet access is available at over 300 locations in the city, from libraries to cultural centers and government offices.
In 2007 Taichung introduced an online reading certification program for elementary and middle school children. The system allows teachers to establish an online book database and assessment library. Students read books at varying levels, both in school and at home, and take an online comprehension test. A passing grade gets them a printable certificate. Dedicated teachers have posted nearly 10,000 books to the system, and students have received 5.5 million certificates. The system helps students build strong reading habits while incorporating digital literacy into the curriculum.
Under Taiwan’s President Ying-Jeou Ma, the nation has committed itself to become an Intelligent Island – an idea he developed while serving as Mayor of Taipei, ICF’s 2006 Intelligent Community of the Year. President Ma is also responsible for significantly improving ties with mainland China and deepening a trade relationship that is already worth US$110 billion per year. A cross-Strait trade signed in 2010 is expected to boost Taiwan’s annual GDP by a further 4-5%. With its world-class industrial parks, high-tech transportation, innovative companies and globally-connected citizens, the Mechanical Kingdom is clearly ready to play its part and reap the gains..