The sector has been assisted by government seed money and the emergence of e-commerce promotional platforms.
When the government included cultural and creative enterprises among the “emerging industries” announced in 2009 as worthy of promotion, it was the first time many in Taiwan had even thought of the sector as an industry.
But with government assistance, the artistic and design talent in Taiwan has been making strides in demonstrating its economic value. In 2013, the latest year for which figures are available, the industry consisted of about 62,000 business establishments with combined annual revenue of NT$785.6 billion (US$24.2 billion).
A growing number of those enterprises have been raising funds to accelerate their development by listing on the over-the-counter market. Some 20 companies in the field, including Eslite Spectrum and HIM International Music, are now trading their shares on the market. Their average price-earnings (P/E) ratio exceeds 47, more than double the average of 22 for the OTC market as a whole.
Encouraged by the results so far, in September this year the Ministry of Culture launched a second-stage cultural/creative investment plan, backed by an NT$2 billion (US$61.5 million) fund provided by the National Development Fund. In addition to cultural/creative businesses, other enterprises – such as crowdfunding platforms – will be eligible to apply for investment funding if they contribute to developing the cultural/creative industry. “Many cultural/creative businesses are not suitable investment targets, due to their micro scale,” says Chen Shou-yien, the ministry official in charge of the project. “Therefore, we will provide financial support to enterprises that can foster the development of those micro operations.”
Unlike the first-stage plan launched in 2011, which limited government funding to 50% of the total investment in each project, the new plan raises the ceiling to 75%, with participating venture capital firms expected to provide at least 25%.
The first-stage plan, which had total funding of NT$4 billion (US$123 million), invested in 32 cases.
At a press conference unveiling the new plan on September 1, Minister of Culture Hung Meng-chi described Taiwan’s cultural/creative industry as having the potential to become a “fourth-wave” driving force for the nation’s economic development, helping both traditional and hi-tech industries to withstand a downward price cycle by boosting their added value and differentiating their products through innovation and creativity. [The reference to a “fourth wave” alludes to author Alvin Toffler’s thesis that the modern world was built by three waves of development – the agricultural revolution, industrial, and information revolutions].
The Law for Development of the Cultural/Creative Industry promulgated in 2010 defines the industry as one that “originates from creativity or cultural accumulation, with the potential of using intellectual properties to create wealth and job openings, on top of enhancing the aesthetic level of local people and improving their living environment.” The industry is considered to have 15 specific subsectors – visual arts, performing arts, the management of cultural facilities, handicrafts, cinema, broadcast and TV, publishing, popular music, advertising, product design, visual transmission and design, fashion design, architectural design, “innovative life experience,” and digital content – as well as being open to other categories as designated by the government.
In recent years, a number of dedicated marketing firms have sprouted up to help companies in this sector commercialize their products through both online and traditional channels.
A milestone in this development occurred October 1 when Pinkoi, an e-commerce platform for cultural and creative products, announced that it had received a US$9 million investment from California-based Sequoia Capital, a major venture capital firm that over the years has made early-stage investments in such eventually successful ventures as Apple, Cisco, Google, and Yahoo. Pinkoi is the second Taiwanese firm to be invested in by Sequoia, following Appier Technology, a digital marketing firm.
What attracted its interest, Sequoia Capital said, is Pinkoi’s phenomenal growth since its founding in 2011. The platform boasts that it is the largest online marketplace in Asia for designer products, having completed 1.2 million sales to 63 countries so far. Pinkoi enables cultural and creative workers to access consumers directly, lowering costs and therefore prices by bypassing middlemen. Pinkoi collects a 10% cut on the transactions.
Over 25,000 cultural and creative workers are currently exhibiting some 400,000 products on the platform (www.pinkoi.com), in an extensive lineup that encompasses apparel, ornaments, stationery, accessories for 3C products, household items, and snacks. In addition to Chinese in both traditional and simplified characters, the platform’s information is also available in English, Japanese, and Thai.
Besides the Taipei headquarters, the staff of 50 works out of offices in Tokyo, Hong Kong, Thailand, and San Francisco. This year the company began holding a monthly physical marketplace where customers can meet the designers and learn more about the products and the creative process. Yien Chun-ping, chief operating officer, says Pinkoi aims to triple or even quadruple the number of affiliated designers next year, mainly by soliciting participants from other Asian countries.
Another success story in this field is Taiwan ARTCCI Co., a marketer of Taiwanese artworks, which is preparing to list its shares on the over-the-counter market only two years after its establishment. The company recently built two workshops in Kaohsiung and is recruiting 30 young artists to be stationed there. It has also set up a dedicated online marketplace for Taiwanese artworks (artcci.com.tw). Besides Chinese, information on the platform is available in six other languages.
In addition, the company has established a cultural/creative databank to help prospective buyers assess the value of Taiwanese artworks. “Young artists usually have a very difficult life before they become famous,” notes Chairman Lin Fu-nan, who besides being a hotelier is himself an artist. He considers that for an effective marketplace to develop, enabling artists to sustain their livelihood and promote their careers, an objective system needs to be in place to assess the value of artworks.
Taiwan ARTCCI produces picture albums and holds exhibitions to promote its collections, mainly to customers in Taiwan, China, and overseas Chinese communities. “Over the past 10 years, many Taiwanese have collected mainland Chinese artworks, resulting in a trade deficit for such works totaling NT$200 billion (US$6.2 billion),” Lin says. His company aims to bring that trade into greater balance, he says.
Bigger players as well
One of the larger enterprises to have forayed into the sphere of cultural and creative business is Eslite, the well-known bookstore chain. In 2010, it set up a 100%-owned subsidiary, Eslite Spectrum Corp., to specialize in that business, and in 2013 Eslite Spectrum launched a platform called “expo” to promote the products of over 80 local young designers in the fields of household items, stationery, gift items, and cosmetics. The products have received a warm reception from consumers due to their environmental friendliness, intimate handmade touch, and unique designs. Hit products include bags made of recycled materials, rice biscuits, and towels made without bleach, dyes, or chemical agents for brightening. Also in 2013, Eslite Spectrum launched another platform, “AXES,” which has recruited over 20 designers of apparel and footwear.
The subsidiary reported net profits of NT$369 million (US$11.4 million) in 2014, up 22% from the year before, on total sales of NT$3.5 billion (US$108 million). It maintains 44 sales outlets, including two in Hong Kong.
A few of Taiwan’s cultural/creative enterprises have already built international reputations. Among them is Liuli Gongfang, founded in 1987, which produces artistic glassware. In September, the company exhibited at “Revelations,” the prestigious biennial crafts fair in Paris. Loretta Hui-shan Yang, a co-founder and chief designer of Liuli, exhibited her Buddhist glassware at the fair to considerable acclaim.
Liuli now runs 70 galleries around the world, including Taiwan, Shanghai, Beijing, Singapore, Malaysia, San Francisco, and New York. More than 20 of its works have been collected by major museums worldwide. The company reports that at least 32 world leaders have received its glassware as gifts and its products were also selected by organizers of the Academy Awards and Grammy Awards as gifts for VIP guests.
Another Taiwanese brand attending the French fair this year was Franz Collection, which makes artistic ceramics. Founded by Franz Chen in 2001, the company now has a network of over 6,000 sales outlets in 56 countries. The company counts many celebrities worldwide among its customers, including Barbra Streisand and Elton John. Its latest products include a perfume bottle, introduced in October in cooperation with perfume producer Bonnie House of Australia, and a set of three dragon-motif porcelain vases priced at NT$3 million (US$92,300).
“Our goal is to revitalize the traditional Chinese ceramic art by giving it an international touch,” says design superintendent Lee Kuang-yu. “Compared with traditional Chinese ceramic products, our works have a 3D shape, more like a sculpture, and are more colorful. Most of our products are collectibles, rather than for the mass market. Greater China accounts for over half of our sales, with the remainder mainly for the U.S., Europe, and Japan.”
Taipei’s National Palace Museum has also been a major participant in the cultural/creative business by licensing production of commercial items based on art works in its huge collection of Chinese cultural treasures. The activity generates over NT$700 million (US$21.5 million) in annual income for the museum, even more than the revenue from admission tickets.
As far back as 1983, the museum organized a creative team to develop a number of souvenirs, such as silk scarfs and necktie clips, for sale at its gift shop. The products gained a warm reception from visitors.
The effort was expanded in 2009 with the launching of a workshop to train design students in developing products inspired by the museum’s art treasures. Over the past six years, the workshop has trained over 300 students, leading to the formation of 72 cultural/creative teams that have created many popular products. A tissue paper resembling Qin-dynasty silk tapestry, for instance, has been registering an average of NT$2 million (US$61,500) in sales per month. Another hot item is a neck pillow that imitates the “falling-horse bun” hair-style seen in Tang-dynasty art works.
The museum also holds contests for cultural/creative designs based on its treasures, and some of the winning designs have done very well on the market. An example is an adhesive paper bearing the characters for “I know,” which emperors inscribed on reports submitted by courtiers. Since its debut in July 2013, some 200,000 cases have been sold each month.
Attracted by the huge potential in Greater China, a growing number of Taiwanese cultural/creative businesses have been vigorously tapping the China/Hong Kong market. Eslite Spectrum, for instance, has opened one outlet in Suzhou, one in Shanghai, and two in Hong Kong to promote the designs offered under its “expo” and “AXES” brands.
In addition, more than 60 Taiwanese cultural/creative brands have set up shop in a “Cross-Strait Cultural Creative Design Center” established by the Hangzhou city government. The center, which has 5,000 square meters of exhibition space, was inaugurated on October 15, timed to coincide with the opening of a four-day “Cross-Strait Cultural Creative Fair 2015.” Led by the General Chamber of Commerce of the R.O.C., some 100 Taiwanese cultural/creative enterprises displayed 10,000 items at the fair.
In another recent development, the shopping mall at the iconic Taipei 101 has dedicated a 727-square-meter area on the fifth floor to displaying connoisseur-level cultural/creative works. The space currently accommodates 10 domestic designer brands, including Liuli Gongfang, in the fields of ceramics, glassware, gold ornaments, and jewelry. Tai Yin-pen, general manager of the shopping center, says the objective is to “promote Taiwan’s soft power and enable visitors, both domestic and foreign, to experience Taiwan’s cultural strengths.”
Along similar lines, many municipal governments have established cultural/creative parks as outlets for local cultural creativity. In Kaohsiung, for example, the Pier-2 Art Center was established in 2001 by transforming two warehouses in Kaohsiung Harbor. It has since developed into a sprawling 25-building cultural/creative park with displays of artistic works, outlets for digital-industry productions, a cinema that features non-mainstream movies, a small theater, and an Eslite Spectrum store.
In Taipei, a 7.2-hectare site on BaDe Road that used to be a wine factory was converted into the Huashan Creative Park in 2005, providing a venue for the promotion of domestic cultural/creative products, exhibition of design works, and artistic performances. Also in Taipei, a former tobacco factory near the Sun Yat-Sen Memorial Hall was turned into the Songshan Cultural and Creative Park in 2012.
With the mission of inspiring creativity and innovation, as well as nurturing creative talents, the park hosts a wide variety of artistic, cultural, and creative events.