Macro Trends  Smarter Future

2015 marked a year of turbulent changes both politically and economically, with increasing competition in international trade, geopolitical tensions, plunging oil prices and fluctuations in exchange rates.  Although the U.S. economy began to show recovery, China’s growth decelerated, Japan remained sluggish, emerging markets weakened and the Eurozone continued its austerity measures, attributing to lack of growth momentum and economic stagnation. With oil prices slipping to new lows, major oil exporting countries were confronted with dangerous fiscal deficits and currency volatility risks, and the slumping demand for raw materials forced energy and commodity prices into a downward spiral.  Economic growth in the Middle East was stunted by political turmoil and refugees fleeing war-torn countries swarmed into Europe, posing enormous economic and political challenges for the European Union. All this took place against a backdrop of the spread of MERS and the global threat of armed terrorism.

In 2016, the world entered an era characterized by new forms of collaboration and competition.  On the political front, November’s U.S. presidential election has the potential to reshape the world’s political landscape and China’s global presence will continue to expand with President Xi Jinping attending key international summits and meeting world leaders.  The so-called Brexit campaign for the UK to leave the European Union is placing further stress on the unity of an EU already hit hard by economic woes.  In Taiwan, the political environment has been altered with the new administration.  On the economic front, the uncertain future path of the Federal Funds Rate has put the U.S. recovery under pressure, whilst in China businesses are currently facing overcapacity, weakening demand and increasingly adverse conditions for international trade.  Consequently, the Chinese central bank has cut both the reserve-requirement ratio and key interest rates for banks several times in concerted attempts to prevent a hard landing for the “world’s factory”.  Aiming to elevate its manufacturing sector, the country has aggressively promoted the Made in China 2025 initiative and the One Belt One Road strategy, and established the Asian Infrastructure Investment Bank in Beijing.  Moreover, the IMF has agreed to include the RMB in the currency basket of Special Drawing Rights (SDR), thereby boosting the global circulation of the currency and strengthening China’s influence on the world economy.  Last year the global economy was shaken by both plummeting oil prices and a divergence between the monetary policy stances in the United States and other major advanced economies, which is ongoing.  In spite of the political and economic issues, the world is moving toward the development of renewable energy, epitomized by the agreement at Paris Climate Change Conference.  In response to industry 4.0, there have been burgeoning trends in adopting IoT technologies, smart robotics and the use of big data.

Under new challenges, every affiliate of the Far Eastern Group would need to transform aggressively, for instance, FENC has established vertically integrated production networks in Taiwan, China, Southeast Asia and Japan, and expanded our production sites in countries such as Vietnam, that are members of the aforementioned partnerships, in the hope of enhancing our competitiveness and enlarging our future role in the region.  With the aim of expanding into 4G mobile applications and IoT markets, Far EasTone Telecommunications Co., Ltd. (FET) provides the fastest 4G tri-band internet connections in Taiwan, and has seen the number of its 4G service subscribers growing fast. In 2015, the telecom operator ranked top in terms of revenue growth in the industry, generating consistent profits for FENC. In retail, the “City” series of shopping malls run by Far Eastern Department Stores Ltd. (FEDS) achieved remarkable performance. Our network of malls has given us a huge advantage in analyzing consumer behavior and identifying regional competitors to both increase our business scope and reap higher profits. In the cement sector, Asia Cement Corporation (ACC) continues to raise its profile as a green-conscious brand in an effort to boost its value.  Also notable is the tremendous success that Far Eastern Electronic Toll Collection Co. (FETC) has achieved in implementing the world’s first and only distance-based and multi-lane free flow toll collection system, which covers almost 1,000 kilometers of freeways in Taiwan.  Now all road users in Taiwan can enjoy driving on the freeway without having to stop to pay tolls while the system helps conserve energy and reduce carbon emissions, by saving the time and oil that would otherwise be consumed when stopping the car.  With a tolling accuracy rate of up to 99.97%, FETC received an ITS World Congress Hall of Fame - Industry Award in 2015, and attracted delegations from different parts of the world to learn from our experiences. We have signed a consulting agreement with Vietnam to introduce an ETC system that covers 2,400 kilometers of the country’s freeways from north to south, and also memoranda of cooperation with Kazakhstan and Belarus. Many other countries have also expressed interest in working in partnership with us.
　　
As giving back to society is one of our missions, the Far Eastern Group (FEG) has spared no effort in fulfilling our social responsibilities under our Corporate Social Responsibility Principles as the foundation for sustainable development.  In philanthropic initiatives focusing on medical, educational, technological, cultural and environmental programs, we have established three schools, two hospitals and four non-profit foundations. Far Eastern Y. Z. Hsu Science & Technology Memorial Foundation sponsors the “Y. Z. Hsu Scientific Award”, one of the most prominent technological awards in Taiwan in innovative industrial research and development; while the Far Eastern Memorial Foundation was established to reward achievements in architecture, arts and culture. The Far Eastern Architectural Design Award offers the most prestigious prize to winners among all architectural awards in Taiwan. Moreover, the Company is committed to environmental protection and has launched programs in water conservation, which are aligned with the goals of the United Nations’ “Water for Life Decade”. For example, in 2015 we cooperated with central and local government, the media, research institutes and museums to organize a water themed exhibition, “Taiwan Water, Fountain of Life”, that attracted more than 300,000 visitors. On the education front, Yuan Ze University has been listed by the UK’s Times Higher Education among the top 100 universities in BRIC and other emerging economies. In the area of healthcare, approximately NT$10 billion has been invested in the expansion of the Far Eastern Memorial Hospital. The phase II of the hospital began operations last September with a total of 1,650 hospital beds, providing a superior quality of medical services to the community.

With 66 years of experience in the industry, the Far Eastern Group will build on past success and continue to pursue innovation as a bellwether of the new era. As the world is shifting toward digital innovation, smart IoT and industry 4.0, the Company has recognized connectivity changes everything and will adapt new disruptive technologies to our advantage. We will be aggressive, ambitious and accountable on our path to becoming a leader of smart industry and strive to create maximum value for our shareholders, employees and society at large.



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