Speaker illuminates how industries evolve, migrate

The fate of nations was revealed in the charts and graphs of Steven Chang.

Chang, managing partner and CEO of CID Group, a venture capital firm based in Taiwan and China, spoke Wednesday to local leaders at the Hyatt Regency Wichita.

He was there as part of Business Week at Wichita State University's Barton School of Business.

Chang's talk showed how and why industries evolve and migrate to other countries — and why the U.S. must continue to innovate and create new industries.

As industries mature, profits shrink and companies look overseas for new cost savings, he said.

Companies start to outsource when a country's average income rises to $10,000 a year, he said.

Some American industries moved first to countries such as Taiwan in the '70s and '80s, and then to China.

As incomes in those countries pass $3,000 a year — as China now has — they become important consumer markets in their own right, feeding their own industries and even becoming large markets for U.S. goods. China is a huge export market for U.S.-made semiconductors.

Countries compete first based on labor costs, then using capital machinery, then on technology, and eventually on innovation.

China has moved past the first stage to the second. Taiwan has moved past the second to the third. The U.S. is on the fourth.

Once this process is understood, Chang said, it becomes possible to predict what kind of facilities and technology will migrate and where. CID invests in new companies and new ventures from cosmetics to semiconductors.

It will take decades for competitors to catch up with the U.S. and compete head on with high-value innovations, Chang said.

It's one thing to build a factory, he said. But building new industries requires much deeper and broader support, such as a flexible education system and high quality of life.

As China and Taiwan continue to develop, American companies will collaborate more and in more ways — just as companies in those countries become more sophisticated, he said.

America must continue to develop new industries in order to stay competitive with the developing countries.

"We better stay on top of science and innovation," said Doug Hensler, dean of the Barton School. "That's very, very important."