2021 IEKTopics|International Linkage in the New Global Arena

2022/05/06
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Export plays a crucial role in Taiwans economy. According to the statistics from WTO, in 2020 Taiwan exported products to 213 countries and areas; in other words, Taiwan has trade and economic relationships with over 90% of countries and areas around the world. When the global economy was gravely hit by the COVID-19 pandemic, Taiwans export still managed to grow 4.9% in 2020, reaching USD 345 billion and ranked number 15 in the world.

Judging from these trade numbers, Taiwans industries - especially the manufacturing industry – are already performing very well in terms of international linkage.  Nevertheless, considering the impacts brought forth by the US-China trade war and the pandemic, 2021 marks a divide of an era. In the next 30 years, the global competition arena will be completely different from the one in the past three decades, and the idea of “international linkage” will not be the same, either. Therefore, Taiwan must be involved in the present four major international trends (Digital Transformation, Industry Ecochains Restructuring, Local Economy Revitalization, and Net Zero Carbon Emission) to create new opportunities for Taiwans industries.

Digital Transformation: The expanded application of digital technologies is the most significant transformation in governments, businesses, and individuals during this global pandemic. Manufacturing industries must set up smart production lines and factories to provide fast, agile, and customized services; and the service sector should leverage digital technology to transition from traditional marketing methods to digital ones. The US-China trade war and pandemic also give Taiwans AI startups a better chance at attracting international capital and entering larger regional markets beyond Taiwan.

Industry Ecochains Restructuring:The ICT industry is where we see the biggest manifestation of a globalized economy. In the past three decades, “American brands send orders to Taiwan and products are manufactured in China” was the typical business model. However, the US-China trade war in 2018 changed all of this. Taiwanese businesses returned to Taiwan and redeployed their production schemes. Industries that are relevant to national security and industry competitiveness, such as semiconductor, communication equipment, and key materials, changed their ecochains deployments as well: before the trade war, they used to run on global ecochains, which emphasized the high-efficiency division of labor; but now they are gradually transitioning to regional ecochains that focus on local markets. The demands of different regional markets are supplied by their respective ecochains, and this is where Taiwans industries, which have the advantage of R&D and manufacturing, can create new growth opportunities.

Local Economy Revitalization: After the US-China trade war occurred, Taiwan is not the only nation that rolled out incentive policies to attract domestic businesses back to their country. Developed countries such as the US and Japan are also extending their call for “reindustrialization” and actively encouraging domestic manufacturers to return to their original countries. In the future, businesses will gradually produce and supply goods close to their consumer markets. This change fulfills national requirements for local production and avoids the risk of supply cut-off caused by unexpected situations such as the pandemic. Taiwanese industries, which are long-term collaboration partners of businesses in other countries, will also have more opportunities to expand global deployment and technology development.

Net Zero Carbon Emission: Green recovery will be one of the highlights of economic recovery policies around the world post-pandemic. In 2019, the EU proposed the carbon neutrality goal of reaching net zero emissions for greenhouse gases in 2050. So far, 130 countries, including Taiwan, have joined the mission. As a crucial player in the international supply chain, Taiwans industries have always been one of the leaders in promoting green supply chains. Although the 2050 net zero carbon emission objective raises the bar for the industries, it also offers new opportunities for innovative technologies and emerging industries, as well as the generation of new competitive advantages.

The aforementioned four major international trends will significantly affect the future development of Taiwans industries. For example, the emerging low carbon technology markets will generate new business opportunities. Through closer international collaborations, we hope to make progress in four main directions (Build Resilient Ecochains, Enhance Local Industry Values, Spearhead Innovative Applications, and Realize Environmental Sustainability) and enhance the overall competitiveness of Taiwans industries.

Build Resilient Ecochains: Actions such as diversifying supply chains, expanding global deployment, and building smart factories create resilience which allows manufacturers to maintain uninterrupted operations even when they encounter emergency situations.

Enhance Local Industry Values:Leverage Taiwans advantages in the industry ecochains and attract foreign businesses to invest and establish R&D centers in Taiwan. We can thus cultivate globalized talents and keep on transforming and upgrading our industries.

Spearhead Innovative Applications:Encourage advanced technology collaborations and jointly improve the technologies at major international testing venues to seize related application opportunities and spearhead the development of innovative applications.

Realize Environmental Sustainability: Following the guidance of the 2050 net zero emissions vision, businesses should promote industry transformation and implement net zero emissions production models to realize environmental sustainability and enhance business brand images.

Based on ITRIs interviews and research of eighteen iconic domestic companies, the research team has concluded that industries should implement the following eight major actions to strengthen international linkages: Leverage Mutual Strengths, Enhance International Participation, Attract Foreign Investments, Expand Global Deployment, Establish R&D Collaborations, Provide Testbed Venues, Pioneer for Role Model, and Achieve Common Goals. If we look deeper, the common key of the eight actions is “professional talents”. The COVID-19 pandemic sped up the introduction of digital technology into businesses and expanded the acceptance of remote working, and flexible working locations make it more feasible to hire technology professionals and experts from all over the globe. In addition to more comprehensive regulations and mechanisms, if we can enrich our global talent pool, Taiwan will be able to create new international opportunities for our domestic economy.

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