Building Sustainable Competitiveness in a Turbulent World

Due to the increasing risk of economic downturn, global enterprise leaders have become more vigilant on cost control. Therefore, Chairman Douglas Hsu reminds each company to prepare well. In addition, we should also have comprehensive talent cultivation plan, strengthen cooperation with the Group’s educational institutions, foster the needed talents, and focus on innovation and sustainability so as to respond to new changes.

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Preparing for Turbulence

Since the outbreak of COVID-19 in 2020, the world has accumulated over 600 million coronavirus cases, which is one of the major pandemics in human history. After nearly three years, as reported cases have dropped significantly, many nations began to adopt policies to coexist with the epidemic. Life has gradually returned to normal.

Despite that, current economic environment remains quite fragile, coupled with a series of turbulences in 2022, including: Ukraine-Russia War in early year which seriously disrupted global stability, causing energy crisis in Europe; surging energy and food prices leading into soaring inflation and increasing living costs; to fight against inflation, U. S. continued to rise interest rates, triggering world financial risk; China’s Zero-COVID policy, property market slump impacting growth momentum, whilst the China-U.S. competitions in trade, technology, finance, and military, further complicating the world outlook.

IMF even warns that worst is yet to come in economic outcome. More than one third of the nations will suffer recession in 2023. World Bank also thinks that the advanced economies fight against inflation with rising interest rates may cause financial crisis in the emerging market and push the world toward recession and stagnation.  United Nations also alarms that global slowdown may be worse than the 2008 financial crisis. According to KPMG survey on 1,300 plus CEO in the world, 86% of global CEOs anticipate recession to hit in the following 12 months, among which 71% predicting it will impact company earnings by up to 10%. However, three fourths of CEOs also expressed that they had already taken precautionary steps ahead of a looming recession.

Major global enterprises have begun to cut costs to prepare for downturn: Foreseeing declined shipping orders, logistic giant FedEx reduced flights, closed operating posts, and cut capital expenditures. The world’s second largest fashion retailer H&M launched a US$170 million streamlined cost project which includes streamline organizational structure, reduce business travel, etc. E-commerce leader Amazon closed its call centers and warehouses, halted new construction to cope with sales slowdown.

 

 Innovation and Sustainability

The one-century-old Harvard Business Review interviewed many world’s top CEOs and summarized two major ideas: 1. The need for constant innovation and thinking out-of-the box to forecast future scenario and retrospect to plan projects as markets become more dynamic. and 2. The importance of purpose and a vision that encompasses all stakeholders to focus on ESG related issues. In short, it refers to “Innovation” and “Sustainability.”

1.“Innovation” Must Think Out of the Box

At a fashion show held in Paris in 2022, scientists applied spray-on fabric technology to spray a white dress on a model.  This is a technology developed by Fabrican Company, using a liquid compound of polymer solvent added with cotton fiber, after spraying on body and mixing with air will solidify into non-woven fabric, with comfort and fitness of a spandex, can be washed and reused, breaking people’s general thinking about clothing, and also prove that the application of science and technology can think out of the box to inspire the innovative model.

In addition, Metaverse is also an important future direction for developments in digital innovation. The first generation of Internet of Things (IoT) mainly focused on information exchanges between computers. The second generation of IoT created a centralized platform to share contents via smartphones. Metaverse will become the future model of IoT, seamlessly connecting the physical and virtual world, creating immersive experience. By just wearing VR helmet, one may enter virtual office to convoke meetings and interact with colleagues around the world.

Prosperous growth of digital technologies has changed global shopping behavior, in particular COVID-19 has pushed more consumers to shift into online activities and expedite the growth of e-commerce. In 2022, global e-commerce sales volume will reach US$5.7 trillion, accounting for 19.7% of total revenues, which is expected to grow steadily in the next 5 years. Furthermore, e-commerce is gradually moving toward social platforms and social commerce, while the convenience of online shopping combined with the network effect of social media to formulate a powerful growth engine.

Meanwhile, the demand for tech talent continues to rise. Entrepreneur James Dyson, taking note of the engineering talent shortage in U. K., built its own university and specialized engineering courses to ensure graduates have the skills the industry needs. With academic resources of Yuan Ze University, Asia Eastern University of Science and Technology, and Yu Chang Technical Commercial Vocational High School, the Far Eastern Group should enhance industry-academic partnership, cultivate talents for FEG talent pool, develop alumni network, extend impact into the industry and increase the benefits of industry-academic cooperation.

2.Act Now to Combat Climate Change

Since this year, extreme weather has been causing catastrophes across the world. Such as: Heat wave in Europe, floods in Pakistan, hurricane in Florida, and drought in southern China. According to a world survey report, 68% of people interviewed are concerned about the impacts of climate change, and agree that combating climate change is a shared responsibilities among governments, businesses, and individuals. In other words, facing with issues of climate change, if the enterprise has no concrete action plans, its customers, employees, and the general public will be disappointed.

To stop aggravating climate change, 137 nations have committed to Net-Zero emissions target, among which 90% of the nations have set carbon neutral target by 2050. Taiwan also announced in 2021 its net-zero emission roadmap and strategy by 2050. Responding to the net-zero emission issue, Far Eastern Group companies have proclaimed to reach net-zero emission target in 2050, and taken actions to meet the emission reduction target in 2030.

Each company commits to Environmental Protection, Social Responsibilities, and Corporate Governance to build effective ESG and create value, focusing on: Establish ESG strategy in accordance with company’s sustainable development and vision, become ESG leader in the industry; meet regulatory and stakeholders’ requirements, fully disclose ESG related information; investors use ESG ratings to decide on investment or financing policies, company should understand influential rating systems and improve ratings; strengthen internal and external communications to enhance corporate image.

Each business segment of the Far Eastern Group has long been dedicated to ESG endeavors, and set benchmarks in economic growth, environment sustainability, and social wellbeing. It is well recognized by CommonWealth CSR, Best Companies to Work for in Asia by HR Asia, Taiwan/Global Corporate Sustainability Awards, and Asia Pacific Sustainability Action Award, etc. The Group will continue to uphold its ESG philosophy, implement the business model of sustainable operations, and demonstrate as a role model of world-class conglomerate.

 

Build for Tomorrow

Current macro environment is filled with uncertainties and financial challenges including soaring inflation, rising interest rates, supply chain bottlenecks, geopolitical tension, consumer behavior shifts, as well as the long-term trend of extreme weather and technological innovations. Each enterprise must face on the new changes, because denial of risk and peril consequently lead to the turning point of downfall.

In order to reach as an outstanding enterprise, the company has to register remarkable performance, contribute significantly to the society, and maintain long standing competitiveness. Despite encountering with risk or peril, should also be able to turn into opportunities and exhibit resilience. This will rely on disciplined staff, disciplined thought, and disciplined action, establish long-term growth momentum, expand or extend existing result. That’s why the Far Eastern Group is regularly convoking the Annual Strategy Meeting.

A great company should have a precise vision, which includes the purpose of why your business exist, and the short-, mid-, and long-germ goals just like the Northern Star which guides your direction. It is the core of the business and cannot be easily changed. Operating business is like climbing mountain, hilltop is your goal. During the process of climbing, one should respond to the quick changing environment, timely adjust strategies, design goals, and look for the best path.

The key strategy for the Far Eastern Group is to build “Digital” & “Sustainable” competitiveness, and there are already many successful cases. With regards to “Digital Competitiveness,” Far EasTone Telecom has been promoting Big Data, Artificial Intelligence, and IoT related businesses. New economy revenue will grow to 25% within the next three years. U-Ming Marine Transport through digital management of its fleet, has been elevating management efficiency. Far Eastern International Bank promotes digital finance, and searches for the new growth momentum. As to “Sustainable Competitiveness,” Far Eastern New Century leads the world in eco-friendly green products, will increase to 30% of the polyester revenues. Asia Cement assists to turn waste into substitute fuel for manufacturing, creating win-win for business and society. Moreover, the Group is also expediting the development of green energy, plans to expand power generation by natural gas, and encourages each company to establish solar energy generation.

The founder of Starbucks said: “Great opportunities can be and have been created during tough economic times.” Thank you all for your efforts by allowing the Group to achieve steady growth. Hope that you will continue to enhance innovation and sustainability, and lead Far Eastern to overcome current challenges!

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