Adaptability and Breakthrough over the New Norm

　　Amid the pandemic that brought tremendous challenges to the world, along with unpreceded impact for business operations last year, Chairman Douglas Hsu reminds us diligently that more upcoming changes to encounter in 2021.  The enterprises must respond proactively in order to maintain continuous growth.

　　Marching into 2021, the world is still facing unsolved challenges.  As indicated by the chart in “Global Economic Policy Uncertainty Index”, since 1997, 2020 is marked as a period with the most turbulent year geopolitically.  Especially under the impact of COVID-19, the post-U. S. election developments, and the Sino-American trade war, the world has come to an extremely imbalanced state.

　　Moreover, with the pandemic spreading globally, each nation is fighting it by injecting the largest scale of economic relief measures and thus greatly expanding its debt levels.  International Monetary Fund (IMF) forecasts that the ratio of the global fiscal deficit and public debts to GDP will push to new historical highs.  Among which, U. S. A. is the most heavily indebted country, reaching US$22.9978 trillion; in addition, with stagnant economies across major nations, fiscal incomes and expenditures have deteriorated simultaneously, and the ratio of fiscal deficit to GDP across governments has been escalating significantly.  The challenges remains for every government to stabilize its state finance in order to prevent the sluggish economy in the new fiscal year.

　　Aside from debt concerns, the restructuring of global cross-border supply chain is also a major issue for industries.  This pandemic is forcing changes in the supply chain, allowing global supply chain to shift direction and restructure which are derived from two factors: the Sino-American trade war and the rising production costs in China.  Particularly during the past 20 years, multi-national companies have benefited from cheap labor costs in China.  Over-reliance on Chinese supply chain was deemed risky after the outbreak of pandemic in 2020.  Each nation is rethinking how to avoid key production chain from being affected by the pandemic.

　　Furthermore, in recent years many enterprises have become proxy battlefield of geopolitical conflicts, such as Huawei and the Chinese short video platform “TikTok” and its operator ByteDance, coupled with the Sino-American competition, technology is the new epicenter of geopolitical tensions.  In which, Taiwan plays a key role in the global technology supply chain, in particular with the declining production of Intel chips, TSMC’s position has pivoted significantly, and the world will have more concerns for the developments in East Asia and Taiwan.

Respond to swift changes externally, enterprises must seek a new path to move forward proactively

　　This pandemic has completely altered the operation models of enterprises, and caused disruptive changes at the consumer end.  In particular, 5G will bring comprehensive transformation in business opportunities, and divert into wireless, cloud, and edge computing, thus impact the whole world through the use of “cloud” computing.  “Virtual enterprises”, “digital operations”, and “digital transformations” are all inevitable trends.  In the past, manufacturing industries based mostly on economy of scale and large production, after going through technological advancement of Industry 4.0, the customized consumer market, the Sino-American trade and the regional tariff protections, and the major impact of the pandemic, “approaching the market and shortening the supply chain” and “unscaling” have become unavoidable.  As future competition will become more intense, industries will restructure and replace the weak for the strong while facing these challenges.

　　Facing the arrival of the New Norm, the enterprises must reset their operating mindset, their business model must incorporate with sustainable strategies to bring a promising future.  Firstly, reimagine how to develop business while being environmental-friendly with contribution to the society.  Secondly, repurposing the business operation, not only to create maximum value for the shareholders, but also for the stakeholders.  Lastly to reinvent the businesses, research and develop and enhance the application of green materials, create new green supply chains and production processes, and elevate industrial differentiation and competitiveness.  As each company is dealing with different industrial cycle, each would need to look for its own proper development goal so as to achieve sustainable growth.

　　After setting the operating goals, most importantly is to hire the right talent to execute properly.  Facing with the AI era, with its vast amount of database and platforms, the Group should strive to look for the right talents so that the Group businesses can march toward a new horizon.

　　Lastly, I would like to encourage all of you that after the COVID-19 pandemic, we will enter into a new world.  Old methods in the past may not be fit, we must use new mindset to deal with new changes amid the New Norm; let us continue to exert ourselves for the Group’s next 70 years.  (From Chairman Douglas Hsu’s 2021 Chinese New Year address to Far EasTone Telecommunications)

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