Seizing Opportunities in the Restructuring of Reliable Supply Chains in Europe and the U.S.!
On December 27, 2024, the "Innovative Taiwan & Regional Connectivity" Economic and Trade Forum was successfully held at the National Taiwan University Hospital International Conference Center. The event was co-organized by the Chinese National Federation of Industries, the Taiwan Electrical and Electronic Manufacturers’ Association, the Taiwan Institute of Economic Research, and the Taiwan Eastbound Alliance - Landing America (TeaLa), with the Bureau of Foreign Trade, Ministry of Economic Affairs (MOEA), providing guidance.
In the rapidly changing international landscape, traditional international trade theories, such as Ricardo's comparative advantage theory, have emphasized international division of labor and free trade. However, with increasing geopolitical risks, this model faces immense challenges. In contrast, List's trade protectionism has become the main theme of economic policies in major global economies. This shift significantly impacts Taiwan's economic model, which thrives on technology manufacturing and export trade for surplus gains. Taiwanese businesses are increasingly aware that the old approach of chasing cost advantages has led to numerous pressures and changes in today's geopolitically fragmented era.
Therefore, for Taiwan's economic and trade development, the necessity and feasibility of promoting bilateral trade agreements, digital trade pacts, and regional economic cooperation have now surpassed the traditional model of large-scale multilateral trade agreements!
As President Lai Ching-te recently remarked during the enactment of the initial agreements under the Taiwan-U.S. "21st Century Trade Initiative": the long-term bilateral cooperation between Taiwan and the U.S., encompassing five key topics such as trade facilitation and anti-corruption, has laid a legal foundation for bilateral economic and trade ties. This enhances supply chain efficiency and resilience, effectively promoting capital and technology flow, achieving regional prosperity, and creating a mutually beneficial model. This is a keen insight into the global situation.
This situation has also posed significant challenges to Taiwan’s renowned semiconductor and technology industries, as well as the broader development of its industrial sectors. Minister J.W. Kuo of the Ministry of Economic Affairs, a recognized expert in the field, emphasized during his address at the "2024 EU Investment Forum" that TSMC’s establishment of overseas facilities in Europe, the U.S., and Japan underscores the necessity for Taiwanese businesses in the supply chain to tackle international logistics and cross-regional investment challenges. With strong industrial policies, advancements in AI technology, and the entrepreneurial spirit of Taiwanese companies, Minister Kuo expressed confidence in Taiwan’s ability to showcase its industrial resilience and forward-thinking leadership on the global stage.
Building on this foundation, the forum brought together leading experts from industry, government, academia, and research to delve into critical issues surrounding the restructuring of international trade and industrial supply chains, driven by rising geopolitical risks and the resurgence of trade barriers. The discussions aimed to generate actionable insights and valuable recommendations. In this rapidly evolving landscape, the goal is to ensure Taiwan's economic and industrial policies respond effectively and swiftly to emerging challenges.
The forum, therefore, focused on the trend of regionalized, short-chain restructuring within the global supply chain and emerging economic opportunities in major regions. It introduced a dual-track development approach: "Strengthening Taiwan through Localized Technological Advancements" and "Building Regional Partnerships for Seamless Business Integration." These strategies provide essential guidance for Taiwan to adapt and thrive in a world where globalization is diminishing, and regional economies are gaining prominence.
Global Supply Chain Restructuring: A Balance of Challenges and Opportunities
Director-General Cynthia Kiang of the Bureau of Foreign Trade, Secretary-General Jang-Hwa Leu of the Chinese National Federation of Industries, and Secretary-General Allen Zheng of TeaLa all highlighted in their speeches the significant changes in the global economy brought about by events such as the pandemic, the U.S.-China trade war, and shifts in U.S. policies. These developments have made "global supply chain restructuring" and "regional economic realignment" inevitable trends. Taiwan's enterprises, known for their exceptional technical expertise, flexibility, and resilience, are increasingly valued in this landscape. The speakers expressed hope for collaborative efforts among industry, government, academia, and research to forge a unique path forward for Taiwan.
The first speaker, Dr. Lien, Ko-Hsiung, Director of the Eighth Research Division at the Taiwan Institute of Economic Research, emphasized that Taiwan should seize the opportunities presented by global supply chain shifts and changes in U.S. policy. He suggested transitioning from a manufacturing-driven model to a value-driven approach, focusing on AI automation, sustainable green initiatives, and value positioning. This strategy would align with the economic security needs of Europe, the U.S., and Japan, enabling Taiwan to integrate into the new global supply chain structure.
Strengthening Regional Economic Integration: Taiwan's Role as a Key Global Player
The forum placed special emphasis on the importance of regional economic integration. Wang Zhi-Xiang, Director of the International Cooperation Center at the Institute for Information Industry’s Digital Transformation Research Institute, stated that although various regional economies are increasingly calling for local manufacturing, Taiwanese businesses should proactively play a key role in the global supply chains of Europe and the U.S. He further emphasized that Taiwan's competitive industries should be more active in this regard, leveraging AI capabilities to quickly establish a value chain model that integrates overseas production, R&D in Taiwan, and global logistics.
The third speaker, Chen-Yen Wei, Director of USI, Universal Scientific Industrial Manufacturing Global drew from his company's global expansion experience to discuss how Taiwanese businesses can stay competitive within regional economic integration. He suggested that Taiwanese companies should focus on deepening collaboration with end customers and enhancing their technical expertise. By utilizing local talent to build international business and management capabilities, Taiwanese businesses can establish themselves as trusted partners in their customers' value chains.
Amy Chen, Executive Director of the Nasdaq entrepreneurial center, Asia Innovation Hub, discussed the economic opportunities arising post-pandemic. She emphasized leveraging Taiwan's capital and technology to seize opportunities in Southeast Asia's emerging economy, including its demographic dividend and digital transformation needs. Digital infrastructure and smart city development were identified as key application scenarios for Taiwanese innovation and industrial capabilities.
Collaboration for Taiwan’s Future During the closing discussions, Edison Chen, Executive Director of TeaLa, exchanged practical insights with other speakers. The forum underscored the need for close collaboration between the government and private sector to drive Taiwan’s technological and economic growth.
Participants agreed that Taiwan's future economic strategy should center on technological innovation and regional economic connectivity. High-value-added industries like AI, drones, robotics, healthcare, and sustainable energy should be prioritized. Integrating into the international democratic alliance system with a strategy of loyalty and trust can help Taiwan seize supply chain restructuring opportunities. In this pivotal moment of global supply chain restructuring, Taiwan must not only leverage its existing advantages in technology and manufacturing but also take proactive steps to become a driving force for value enhancement in the global supply chain. With supportive government policies and resources, Taiwan's businesses can successfully expand internationally, solidifying their role as a trusted partner in regional economic cooperation.
As Secretary-General Allen Zheng aptly noted: "If the mountain doesn’t move, the road must." Through continuous innovation, value integration, and a trustworthy national brand, Taiwan can secure its place on the global economic stage.
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