PwC Taiwan's latest unveiling of the "Taiwan CEO Survey 2024" underscores the prevailing concerns among global and Taiwanese business magnates.
Amidst the ever-looming specters of economic volatility and inflation, the landscape is further exacerbated by escalating external threats—from technological disruptions to climate change and geopolitical tensions. Notably, these concerns have intensified compared to previous years, casting a shadow over the business environment.
Diving into sector-specific vulnerabilities, industries like industrial manufacturing and automotive sectors find themselves particularly exposed to the upheavals of geopolitical conflicts. Concurrently, the technology and energy sectors bear the brunt of economic instability, further complicating their operational landscapes.
CEOs feel exposed to these major threats:
Source: PwC's 27th Annual Global CEO Survey
In response, Kung Ming-hsin, Minister of the National Development Council, delves into the nuanced evolution of supply chain dynamics. He delineates two pivotal phases: initially marked by decentralized layouts aimed at mitigating reliance on singular hubs and bolstering supply chain resilience.
This phase witnesses the consolidation of alliances between democratic and authoritarian nations, shaping the dichotomy of "non-red supply chains" and "red supply chains." Subsequently, the narrative shifts towards securing roles vital to the supply chain, amplifying international connectivity to navigate the emergent paradigm, and fostering diversified dependencies—a crucial stride towards catalyzing new avenues for growth.
Against this backdrop of seismic shifts, Tung Tzu-Hsien, founder and chairman of Pegatron Group, paints a picture of a dynamic global industrial terrain. Beyond the US-China friction, Tung highlights the compounding impact of China's economic deceleration and demographic aging. These factors propel manufacturing migration from China to burgeoning locales such as Mexico, Vietnam, India, and Indonesia—an imperative move to align with evolving market dynamics.
CEOs' views on the global economy are divergent
Source: PwC's 27th Annual Global CEO Survey
In parallel, Tung underscores the imperative for Taiwanese enterprises to recalibrate their strategic positioning within the value chain. While Taiwan basks in the limelight of semiconductor prowess, a broader aperture encompassing sectors like healthcare, telecommunications, and education beckons. Diversifying beyond the realm of chip manufacturing becomes not just prudent but imperative for sustaining competitive relevance in the global arena.
Tung cautioned that Taiwan's economy is excessively reliant on specific high-tech products, including semiconductors, posing risks due to this dependence. Thus, diversifying development paths is imperative.
Additionally, Taiwan's economic future should prioritize the growth of the service sector. Despite contributing 60% to Taiwan's economy, the service sector's exports lag behind industrial manufacturing, which relies heavily on high-tech product exports. Whether this economic structure is sustainable requires further examination.
Moreover, the advancement of new energy technologies will significantly impact the global industrial landscape. Currently, the energy sector surpasses the semiconductor industry in value, and possessing new energy technology will enhance future competitiveness.
Electricity's role in national competitiveness
"Computing power is national power, and electricity is national power," he asserts, foretelling the centrality of electricity across myriad domains—from commercial enterprises to military endeavors. The burgeoning appetite for electricity, propelled by EVs, AI, and chip manufacturing, underscores its burgeoning significance as a linchpin of national power—a facet not to be overlooked in Taiwan's strategic calculus.
Therefore, prudent energy planning and investment are essential, and Taiwan must ensure a stable and resilient electricity supply. Tung highlighted that the current high-tech industry is a collaborative effort of the global community, and any disruption within the supply chain could lead to systemic collapse.
While Taiwan may lead in chip making, it represents only one segment of the broader industry chain. The advantage lies in integration and efficiency enhancements. However, any disruption to the supply chain, be it equipment or material shortages, could hamper effectiveness despite advanced processes.
Indeed, in this kaleidoscope of global shifts, Taiwan finds itself at the crossroads of transformation, where adaptability and foresight emerge as potent tools for navigating the labyrinthine corridors of uncertainty. As stakeholders brace for the tumultuous journey ahead, the imperatives of resilience and innovation take center stage, shaping the trajectory of Taiwan's industrial landscape in the years to come.
