Chairman Douglas Hsu’s Speech at Yearend Dinner

　While approaching end of the year, aside from giving thanks to colleagues for their efforts in the past year, Chairman Douglas Hsu also talked about global economic dynamics, and again reminded everyone to expedite on transformation and upgrading to promote sustainable growth.

　　Before the Lunar Chinese New Year, I always try to arrange to spend time with local and overseas colleagues of the Group affiliated companies, not only to appreciate them for their efforts, but also take this opportunity to share my observation on the macro environment and communicate on the future direction.

　　While traveling abroad earlier, due to airplane’s repair to change parts with unique specification. The aviation company needed to transport from other nation through its global logistic system, and completed the repair in the shortest time so that I may be able to attend tonight’s yearend dinner. During the process, from material management, logistic distribution, to plane repair and maintenance, each section required efficient connections. In fact, operations of the Far Eastern Group companies should also work like this, production, marketing, sales, management, and supply chain all closely connected, relying on a systematic network, management regulations and process to ensure smooth operations.

　　Entering era of the new economy, “the big always gets bigger” is an increasingly vivid trend. With its scale, the Far Eastern Group may now enjoy relative advantage; however, as the organization grows bigger and bigger, we should think further. Is the current management system well-rounded? How to continue future growth? Upon entering 2024, we must face three major challenges and must stay ahead.

　　The world is changing rapidly, the first challenge is “Economy” including China’s property crisis, volatile global commodity prices, geopolitical fragmentation, and inflation effect economic outlook.

　　The next challenge is “Net-zero”, dealing with climate issue, each nation has set up the target of “Reaching net-zero emissions by 2050”. In addition to promote energy transition, also will accelerate the implementation of carbon pricing, leading to largely increased operating costs for the corporations.

　　The third challenge is “AI”. Several decades ago, the appearance of computers and internet launched a wave of industrial revolution. Now, the leaping advancement of AI technologies will again initiate a knockout competition. According to McKinsey’s research, AI’s economic potential could reach US$25.6 trillion, exceeding one quarter of the world’s GDP. In other words, all industries are expected to be impacted. If not able to accelerate AI transition, will ultimately be wiped out in the age of disruption.

　　Facing these challenges, each company must get ready. Economy-wise, being in a center of the of Sino-U. S. conflict, enterprises can only quickly respond and adjust. In particular Taiwan is export-oriented economy, in terms of geopolitical trade, we cannot afford to ignore mainland China market. By keeping a peaceful and friendly atmosphere, engaging in global deployment, we can continue to maintain economic and trade developments, and seek for mutual benefits and prosperity. As to net-zero emission, each company should enhance recycling, commit to achieving zero waste, and more importantly should thoroughly review its own energy structure, accelerate the transition to green energy to reshape future competitiveness. Moreover, in response to the rapid growth of AI applications, each Far Eastern company should also embrace digital mindset, make good use of AI and digital technologies to elevate competitive advantage.

　　Furthermore, there are five major forces interactively working in a complex way to affect the developments of global enterprises. They are: An aging population, skyrocketing debt levels, widening income inequality, accelerating technological advancement, and climate change transition. Along with the advancement of health care technologies and longer life expectancy also bring forth the needs for caring and resource allocation, simultaneously aggravating the financial burden of families and government, and escalating private and public debts as well as more severe income inequality, coupled with disaster and impact brought by climate change, all lead to a more volatile and unpredictable future.

　　Global CEO survey shows that 3 out of 4 leaders state their companies are facing disruption, 75% worry that their companies are adapting too slow, moreover 98% of CEO expect to change their business models in next 3 years. Up until now, Far Eastern Group have delivered outstanding performances. Facing with a disruptive future, both enterprise and talent must transform and upgrade, accelerate globalization. Just as former Chairman and CEO of GE, Jack Welch’s saying: “Change before you have to.” Hope all Far Easterners will accelerate changes, and promote FEG’s sustainable growth.

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