When the Portuguese first landed on Taiwan, they called it Ilha Formosa or “Beautiful Island.” However, Taiwan’s route to success has been far more prosaic it rapidly industrialized by mass producing a wide range of consumer goods, including textiles and footwear, toys, bicycles, appliances and computer chips. It famously grew its economy via an export-driven model, making the “Made in Taiwan” label ubiquitous. However, the vast majority of its manufacturing business has been as an original equipment manufacturer (OEM), meaning Taiwanese firms largely produce parts or finished goods to the specifications of designs from international firms. Even today, Taiwan can claim few of its own global brands.

But increasingly, Taiwan's stronger emphasis on artistic endeavors may be encouraging a shift away from its default OEM status, fostering more creative pursuits, improved branding and aesthetics.

Last year, in a coup for the southern port city of Kaohsiung perhaps Taiwan’s best-known industrial hub Academy Award-winning Taiwanese filmmaker Ang Lee announced the opening of a state-of-the-art digital production facility. The center, built by the global visual effects and animation company credited for Lee’s critically acclaimed film “Life of Pi,” expects to eventually employ about 200 digital artists to work directly on Hollywood movies.

Kaohsiung has also been captivated recently by a dose of artistic whimsy in the form of a giant, yellow rubber duckie floating in its harbor. Young and old alike have arrived by the thousands to take in the sight of the nearly 60-foot-tall sculpture by Dutch artist Florentijn Hofman, whose ducks have been making their way around the world with stops including Pittsburgh, Sao Paulo, Sydney and Hong Kong.

I was able to check out this duck craze myself while visiting Kaohsiung last month. School children arrived by the busloads, donning duck bill noise makers, and couples strolled among street vendors in matching duck T-shirts. Among the seemingly endless array of duck-related memorabilia for sale were stuffed ducks, duck keychains, duck face masks, duck towels, duck pastries, duck balloons and even duck smartphone cases. The exhibition, which has garnered tremendous enthusiasm in Taiwan, is estimated to draw more than 3 million visitors during its month on display.

Besides evoking a sense of childhood joyfulness, the duck’s presence and popularity is a nod to the rise in support for public art projects throughout the island. Now a well-funded and well-sponsored focus of official government cultural policy, public art works in Taiwan have reached record levels in recent years. Even the river that flows into the harbor playing bathtub to Hofman’s duck has been revitalized and beautified in just the past decade or so. A massive restoration program began in 1999 to correct decades of industrial waste pollution flowing into the once-rancid river. Now its banks and bridges feature several light sculptures, and the grassy parks lining the Love River, as it is has been rebranded, boast romantic nooks, outdoor cafes with live music, a night market and bicycle paths.

Home to Taiwan’s largest harbor and a major container port, Kaohsiung has also used public art to embrace and showcase its maritime and urban industrial history. Events include the biennial Steel and Iron Sculpture Festival and an International Container Arts Festival, in which contemporary artists from around the world transform 20-foot shipping containers into avant-garde art installations.

Even more encouraging, Taiwan appointed its first culture minister, Lung Ying-Tai, just last year. A former essayist and renowned cultural critic, Lung is tasked with forming cultural policies and has set “international recognition” of Taiwan’s arts high on her agenda. Just this summer, her ministry announced it would begin offering more than US$440,000 in annual grants to support the island’s emerging artists. This push to put Taiwanese art on the map mirrors the ambitions of its business community.

Taiwanese firms as a whole may still have a long way to go to achieve universal branding appeal. But hopefully, as Taiwan’s platforms for artistic exchange and intercultural dialogue continue to flourish, we will see a new breed of Taiwanese firms emerge with global prominence and brand awareness.

For the time being, at least, Taiwan can still revel in duck-mania.

You should consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds carefully before making an investment decision. This and other information about the Funds is contained in the prospectus or summary prospectus which may also be obtained by calling 800.789.ASIA (2742). Please read the prospectus carefully before you invest or send money as it explains the risks associated with investing in international and emerging markets. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. In addition, single-country and sector funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific industry, sector or geographic location. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies .

The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews does not accept any liability for losses either direct or consequential caused by the use of this information.

Matthews Asia Funds are distributed in the United States by Foreside Funds Distributors LLC

Matthews Asia Funds are distributed in Latin America by HMC Partners

© 2013 Matthews International Capital Management, LLC

Matthews International Capital Management, LLC

Four Embarcadero Center, Suite 550

San Francisco, CA 94111

USA

www.matthewsasia.com

© Matthews Asia

Read more commentaries by Matthews Asia