Supply chain disruption redefines value creation



After the subprime mortgage crisis, most people cut back on their spending. The gap between supply and demand was small in a decade, largely maintaining a balance. It’s fair to say that the last two or three decades have been the most successful era of supply chain globalization. To maintain profitability, European and American branded companies placed large orders with Taiwanese companies and other manufacturers in the Asia-Pacific region. They took advantage of China’s cheap labor and social costs, spawning the world’s factories, as well as an unprecedented supply chain production system. The concentrated resources of labor, energy and capital have facilitated the process of mass production which brings commercial success for the technology invented in advanced countries. Taiwanese companies have taken advantage of the opportunities to strengthen their industrial strength. China has capitalized on the upward trends. It is the heart of the changes in the global industrial ICT system that the world has undergone since 2000.

But since the start of 2019, COVID-19 has created global chaos. To mitigate the impact of the epidemic, governments have invested money to increase consumption. It is estimated that all countries combined have injected more than US $ 10 trillion, which is equivalent to the amount of China’s GDP.

During the subprime mortgage crisis in 2008, the unemployment rate in the United States rose from 4.7% to over 14%. It took about seven years for the United States to stabilize the rate below 5%. But the latest relief packages failed to get people back to work. More and more people prefer to get grants first and watch. Restaurants in the United States and Canada are understaffed. British drivers quit their jobs. Supply chain disruptions are seen everywhere, from day-to-day service to multinational logistics sectors.

In Europe, energy prices are soaring due to energy saving and decarbonization policies. Aviation fuels fell from US $ 26 per barrel in April 2020 to US $ 84 in September 2021. The major European powers which have raised moral concerns in recent years about climate change have put carbon neutrality on the agenda ESG as a remedy for the greenhouse effect. But such measures present a formidable challenge for supply chains that are sensitive to transport costs and for countries desperate for winter heating. Labor shortages associated with declining foreign direct investment and the impacts of immigration control on population mobility are issues we will face over the next 10 to 20 years.

Above all, China has protected its domestic industries and markets in the name of protecting national assets, privileges of laggards, etc. China has certainly seized the opportunity to harness the country’s potential over the past decade in the mobile and smart communications sectors. applications. China’s remarkable success has become a benchmark model for many emerging countries today.

To sell ‘Made in India’ computers in India, Acer and HP are working with supply chains to manufacture computers in India. Even earlier, Apple had done the same by supporting Taiwanese and Chinese supply chains.

In February 2021, semiconductors, car batteries, rare earths and pharmaceuticals took center stage in the Biden administration’s vow to regain control of the global supply chain. It is a clear message delivered by a superpower. India, Vietnam, the Philippines, Thailand, Malaysia, Indonesia are also inspired by global trends. We have recognized the rise of technological nationalism to protect physical supply chains and intangible data assets. For Taiwanese manufacturers, the challenges seem to be manifold. However, it is difficult for a country to establish independent industries in the short term. With their harmless and reciprocal mode of operation, Taiwanese companies are welcomed by many countries as their partners. Taiwan will work with Japan, ASEAN and countries in South Asia to forge the new supply system for the Asia-Pacific region in the long term.

Taiwanese companies can strengthen the supply chains of countries in the Asia-Pacific region and mitigate the operational risks of local manufacturers to achieve economies of scale quickly. For upstream suppliers and Taiwanese companies, a decentralized production base would allow them to move away from the awkward position that relies entirely on branded companies.

(Editor’s note: This is part of a series of analyzes of Taiwan’s role in the global ICT industry.)



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