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01.2019 Leader's Remarks

Chairman Speech at Far Eastern Group Affirmed Enterprise Far Eastern Group Annual Strategy Meeting 2018—— Accelerating transformation and opening up innovative economy Transformation in Dynamic Era to Embrace New Economy

Far Eastern Group Chairman / Douglas Hsu

        As Far Eastern Group is approaching its 70th anniversary, in addition to leading you back to the track of group growth, it will further focus on the three key points of Far Eastern Group Annual Strategy Meeting: transformation, new economy and the future direction of Far Eastern Group development.


        I. Hard Power - Far Eastern Group 70 Successful
         In the 70 years since the founding of the Group, various institutions have accumulated fruitful results. In 2018, both the Group's revenue and pre-tax net profit reached an all-time high. However, if we look back on the past performance, it is not difficult to find that in the past decade, although the profit has increased, the pre-tax net interest rate has remained flat, and the momentum of revenue growth is still insufficient.
        
         Analyzing the achievements of major enterprises, the polyester spinning industry has successfully expanded into a global enterprise, producing and selling all over the world, including rPET in Japan and the Philippines, Vietnam's consistent factories, and polyester factories acquired in the United States. It is also a leader in the development of green polyester materials, and continues to improve product differentiation.
        
         Through self-construction and mergers and acquisitions, the cement industry continues to expand its scale. After years of efforts, the landscape cement investment project has made progress. After Asia Cement (China) Holdings and landscape, the cement production capacity has surpassed 100 million tons at one stroke, and the management territory has extended from the central China market to the northern market.
        
         In the retail part of department stores, City series of new shopping malls bring new experiences to consumers, and also boost the proportion of group Department stores. With the rapid development of the Internet, the group has also expanded online shopping into a new retail era.
        
         Far EasTone Telecommunication is moving from 4G to 5G, from telecom services to digital services, and from price competition to value competition by increasing the proportion of value-added services.
        
         The U-Ming Marine Transport fleet continued to replace the old with the new, expanding its capacity to 48 vessels with a total load of 6.66 million tons, and the proportion of efficient and energy-saving vessels reached 70%, with the average age of the fleet falling to five years. At present, we are cooperating with other countries in developing natural gas fuel-powered bulk carriers to enhance the competitiveness of future fleets.
        
         Far Eastern International Bank actively develops digital banking, achieves good results in Mobil-Banking, and launches "Far Eastern Group Happy Credit Card", which integrates group resources and develops towards digital payment platform.
        
         The Group has more than 1 million flats in Taiwan and has high-quality development potential. Among them, Banqiao Baiyang Building and Shanghai Far Eastern Group Headquarters are both indicative cross-strait projects. In addition, with Ericsson and AWS stationed in Far Eastern Group Communication Park in Taipei, Tpark, the international visibility of the park has been greatly improved, and the development of land resources will continue in the future.
        
         In terms of public welfare, after the launch of the second phase of Far Eastern Memorial Hospital, the hardware services have been improved; the foundations of the Group have also invested resources in building, science and technology, art, sports and other activities to give back to the community and spare no effort; Yuan Ze University, Oriental Institute of Technology have also launched a Collaboration between industry and school and think tank project with the group enterprises, plus In the future, we hope that teachers and students will continue to work hard to link up the strength of alumni in teaching, research and innovation, international exchanges and Collaboration between industry and school.

        2. New Economy: Reshaping Supply Chain and Business Model
         Your efforts have laid a good foundation for Far Eastern Group's first 70 years. However, with the rising cost of global capital, doubling inflationary pressures, and the suspicion of Global trade war caused by protectionism in the United States, the boom has shown signs of reversal. On the other hand, China's corporate debt continues to climb, the financial crisis warms up, and it also meets the double of insufficient domestic demand momentum and increased trade friction. Once again, the risk of asset bubbles is imminent. As for Taiwan, it is also facing many challenges such as social antagonism, declining export competitiveness and so on. Facing the ever-changing environment, only by making good use of new technology and innovative thinking and introducing advanced technologies such as Artificial Intelligence, Blockchain, Cloud Computing, Big Data, Mobile Technology and Internet of Things (IOT) into supply chain and business model can we accelerate the transformation and successfully open up. Innovative economy.
        
         1. Supply Chain of New Economy
         A. Demand-driven:For example, when market demand changes dramatically, the response time of traditional supply chain is 10 to 18 days, but the response time of demand-driven supply chain is only 4 to 8 days. Because the instant transmission of information enables supply chain partners to grasp market changes and respond quickly.
        
         B. Mass customization:Take Haier, a large Chinese appliance factory, for example, whose COSMOPlat can connect customers, smart manufacturing plants and supplier partners. Customers ordered refrigerators from Haier on the platform website and designed their own style. Haier began customized production after receiving customer orders.
        
         C. Automation:In 2008, Rio Tinto, a mining company, proposed a digital transformation project to automate the supply chain, realize truck driving and train driving, and manage mining and transportation operations in 16 mining areas remotely by a control center. It has successfully increased production efficiency, reduced costs, improved safety and reduced personnel demand.
        

        
        

        2. Business Model of New Economy
         A. Whole pathway:Full Channel Business Model is to provide physical and digital channels, allowing customers to choose freely, and through multiple products and services, understand customer needs, and embrace customer relationships. For example, traditional banks sell mortgages. In addition to mortgages, all-way banks increase services related to housing purchases so that customers can get one-stop service on the banking platform.
        
         B. Module business:Module companies have the ability to provide easy-to-import products or services, such as: traditional credit card switching machines used in stores, complex charging methods, and innovative payment platform can provide smart mobile card switching services, simple charging methods, breaking through the limitations of credit cards in the past.
        
         C. Ecosystem drivers:Ecosystem promoters focus on building platforms, providing adequate goods and services, and creating the best customer experience. For example, Japan's Lotte started with e-commerce services, based on points, linking up tourism, digital content, finance... Various services have been provided to continuously expand the scale of the business ecosphere.
        3. Great Future-Towards Centennial Enterprises
         Digital technology is rapidly changing the way businesses operate and accelerating competition and elimination. Sears, founded in 1886, developed into the largest department store in the United States in the 1960s, but failed to keep up with the wave of e-commerce and formally filed for bankruptcy protection in October 2018. In the past, American manufacturing benchmark company GE and General Motors, also faced prosperity. The dilemma of decline. It can be seen that even the leading enterprises in the past 100 years will be eliminated by the general environment if they fail to transform in time, which is also the biggest worry in my heart. It is not easy for Far Eastern Group to have today's scale. How to successfully transform and cultivate the third generation of leaders will be the key for the group to move towards the next 70 years. It is also the responsibility of me and every leader. I hope that all of you will be able to integrate the new blueprint of supply chain and business model into the new economic elements with a strong ambition, starting from the hard strength accumulated in the past 70 years, and create a framework. Platform, linked all-round system, to accelerate the transformation of the group, towards a new vision of a hundred years of enterprise! ___________
        
         Microsoft and Disney are the leading industries because of their successful transformation. Alibaba has also successfully constructed the industrial ecosphere by seizing the opportunity of network development and transforming with data power. To speed up the transformation of Far Eastern Group, six key issues must be considered first, including: how serious is the threat of digitization to the current business model? What is the best business model for future development? What is the competitive advantage in the new economy? How to make good use of mobile technology to connect with the Internet? Do you have the ability of organizational transformation? Do managers at all levels have transformational leadership? In addition, with the expansion of enterprise globalization, the foreign language ability of training colleagues should also be strengthened so that talents and enterprises can be promoted simultaneously. This year, two books "Navigation to the Blue Sea" and "Renewing the Future" are presented to the participants. We hope that you will know more about the competitive situation of the industry, lead the organization to break away from the fierce competition in the Red Sea, create a new blue sea market, and absorb the transformation experience of successful enterprises to create competitive advantages.
        
         Far Eastern Group is a high-quality enterprise group in the part of prestige. It should continue to strengthen the corporate image, accumulate the reputation of the group, make customers and the public become the supporters of Far Eastern Group, and make positive contributions to Far Eastern Group. Face volume. To strengthen the corporate image, we can start from six aspects: Far Eastern Group's external performance (e.g. behavior and service attitude), external communication (e.g. network communication, media publicity), website design, logo/slogan visual presentation, CSR/environmental protection and other positive perceptions, building/factory environment.
        
         Jim Collins Jerry Porras, in his book "Foundation Industry Evergreen", argues that innovation is bound to change if it is to become a foundation industry evergreen, so as to encourage all Far Eastern Groups, hoping that like the protagonists of the 007 series movies, everyone can still gracefully face the powerful enemies who are waiting around and win their lives!
        
        
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