SECTION [D]. FUTURE PROSPECTS AND CONCLUSION

Going Forward
The prospects for Taiwanese auto assemblers are very bleak. The rising labour cost coupled with the difficulty in achieving economies of scale have forced Taiwanese auto firms to begin searching for new survival strategies in recent years. One obvious strategy for Taiwanese assemblers is to expand to China. However, the highly competitive Chinese market also makes such ventures risky. In addition, Taiwanese auto assemblers are also constrained by their dependence on Japanese mother firms. Without the support of Japanese technology, the chances of success for their investment in China are very slim.

In contrast, the aftermarket parts industry looks more promising. As the technology required is less complex, Taiwanese parts suppliers are able to be internationally competitive by improving their technical standards without the help of foreign carmakers. In addition, due to the strong foundation in the electronics sector, Taiwanese auto suppliers have the advantage of developing niche expertise in automotive electronics products. The increasing demand for features such as multimedia appliances, LCD panels, GPS navigation systems and performance monitoring systems to enhance the automotive performance presents tremendous opportunities for the collaborations between Taiwanese auto suppliers and IT firms.

Conclusion
To conclude, due to the weak and inconsistent automotive policies in the past, the Taiwanese government has failed to transform the domestic automotive assemblers and original equipment manufacturers into globally competitive players. Without control of core technologies and with no capabilities to keep pace with the rapid technological development in the automotive industry, it would be extremely difficult for them to compete with the multinational carmakers. As Taiwan is committed to liberalising its markets under multilateral free-trade agreements, to pursue strong industrial policies would now be impossible under these agreements. Instead, the government should build on the success of the motorcycle industry and aftermarket parts industry and concentrate resources to push them up the value chains. The government can also assist the parts producers to constantly upgrade their technology so that they can become the leading firms in their chosen niches and defend their comparative advantage. This can be done by implementing policies that would help to develop and disseminate new technologies and production techniques quickly and efficiently within and between sectors.