2024 Far Eastern Group Affiliated Enterprise Far Eastern Group Annual Strategy Meeting Chairman's Speech - Mastering Changes and Winning the Future

        The annual Chairman's Message is the highlight of Far Eastern Group's Annual Strategy Meeting, Douglas Hsu reminds everyone that changes in the global political and economic situation will affect the business layout of enterprises, and hopes that everyone can keep an eye on it at all times; In addition, we also hope to take this opportunity to convey the following eight important messages, in order to facilitate integration, build consensus, and work together towards a sustainable and intelligent new future.

                1、 Dealing with a complex and rapidly changing world

        The complex and rapid changes in today's world are full of uncertainty and becoming increasingly elusive, especially geopolitical conflicts and climate change, which are the biggest risks to global economic development. Recently, the martial law storm in South Korea, the overthrow of the Assad regime in Syria, and the re entry of Trumpler into the White House after his re-election defeat in 2020... These events are not only political unrest, but also will affect the industrial supply chain, thus exacerbating market volatility.

        Looking ahead to 2025, the global economy is expected to grow moderately, mainly due to the slowdown in economic growth in developed economies, and inflation is expected to gradually fall, providing space for central banks to loosen monetary policies.

        As for Chinese Mainland, it is affected by real estate, consumption, investment and other factors at home, and faces the situation of tension between China and the United States externally. Economic growth will slow down. In terms of technology investment, artificial intelligence remains the core driving force behind technological development, and the application scope of AI technology in various industries will continue to expand.

        In summary, the global economy is full of variables by 2025, Far Eastern Group companies should always be aware of changes, manage risks effectively, and respond prudently in order to seize development opportunities and win the future.

        2、 Pay attention to the two major challenges of carbon fees and energy in Taiwan

                Taiwan has demonstrated its determination to move towards net zero emissions. Firstly, carbon emissions will be accounted for starting from 2025, and carbon fees will be levied in 2026. Initially, taxes will be imposed on high carbon emitting manufacturing industries, and in the future, they will gradually expand to the service industry, with carbon fees to be raised in stages.

        Secondly, the Executive Yuan has revealed an energy transition plan that aims to increase the proportion of green energy to 30% and gas to 50% by 2030, in order to reduce reliance on coal. The government also requires major electricity users to install green electricity, purchase green electricity, or install energy storage systems. It is expected that the demand for green electricity from enterprises will increase, and the cost of electricity will continue to rise.

        Taiwan's policy towards low-carbon economic development is clear, Far Eastern Group should have contingency plans in place for both manufacturing and service industries.

        3、 Moving towards internationalization, strengthening predictive power, adaptability, and resilience

        Far Eastern Group is based in Taiwan and has accelerated its global expansion in recent years, expanding production bases in Southeast Asia, Japan, and the United States. The top five markets of the Group's revenue distribution in 2023 are Taiwan, Chinese Mainland, Vietnam, Singapore and the United States. As for the Japanese market, after the expansion of rPET production capacity in 2024, the Group will expand its revenue and become one of the key markets for development. In the future, Far Eastern Group will continue to develop towards internationalization and further expand its global presence.

        Far Eastern Group, which is moving towards internationalization, needs to strengthen three core competencies in the face of the complex and ever-changing business environment in Taiwan and globally: predictive ability, adaptability, and resilience. Among them, predictive power helps predict industry trends and grasp competitive advantages; Adaptability can help companies quickly adjust and surpass their competitors; Resilience enhances a company's responsiveness, and resilient companies are better able to withstand shocks than their competitors. Only by combining these three abilities can we overcome the fog and move forward steadily.

        4、 Implement the application of technological innovation

        The technology projects that will have a significant impact on various industries of the group in the coming years are mainly in the two categories of "green technology" and "digital technology". The main companies of the group have all set a goal of achieving net zero emissions by 2025, and carbon reduction relies on green technology, with a focus on carbon capture and storage technology, circular technology, energy-saving technology, and clean energy. Digital technology will have an impact on various industries, with important digital technologies including artificial intelligence (AI), cloud computing Internet of thingsIoT 、 Robots, 5G/6G communication, AR/VR, etc., among which AI has the greatest influence. When companies promote AI, they should not only focus on technical aspects, but also invest in process improvement and enhancing colleagues' AI skills in order to effectively demonstrate innovative achievements.

        5、 Promote transformation and change, accumulate growth momentum

        GE had a market value of only USD 65 billion in 2018, about 10% of its peak period, due to incorrect business strategies. After the new CEO Larry Culp took office, he resolutely sold non core assets, reduced dividends to alleviate the company's financial burden, and introduced lean management to improve factory efficiency and reduce costs. At the same time, the company will be split into three core businesses: aerospace, healthcare, and energy, with a focus on enhancing competitiveness. This will enable the company's market value to recover to USD 237 billion by 2023, making it one of the best performing industrial companies in the United States in terms of stock price.

        From this, it can be seen that before pursuing growth, enterprises must first promote transformation and change. Our transformation and change should be centered around the Far Eastern Group spirit, encompassing three major dimensions: strategy, organization, and talent.

        1. Rethink strategy: including planning the scope of products, services, and markets, horizontal cooperation between companies, showcasing synergies, accelerating digital transformation, and promoting the integration of ESG and strategy.

        2. Reshaping the organization: Based on strategic goals, adjust the organizational structure, optimize the design of operational processes, construct development oriented performance management, enhance collaboration within the organization, and create a high-performance organization.

        3. Re evaluate talent: Establish a talent cultivation system to enable leadership talents to cope with changes, management talents to tackle complex challenges, and especially human resources must meet the long-term development needs of Far Eastern Group.

                6、 Constructing a talent management model and cultivating future human capital

        According to a survey, the average preparation time for leadership succession in Taiwanese companies is 3.7 years, with 69% of surveyed companies already having clear succession plans. The main missions of the successor, ranked in the top three, are:

        1. Ensure that the enterprise can operate sustainably and achieve long-term stable growth

        2. Maintain the existing corporate culture and organizational strengths, and consolidate the foundation of competitiveness

        3. Lead the enterprise towards internationalization and expand the global market

        Far Eastern Group aims to establish a systematic talent management model that combines quality and quantity, in order to prepare for transformation and growth. At the leadership level, by promoting potential internal cadres and introducing outstanding external talents, select leaders who meet the needs of the company's future development. At the management level, it is important to cultivate versatile individuals with diverse abilities, including strategic thinking, organizational management, and human resource development. In the working class, we are committed to cultivating personal professional abilities and improving the overall quality of employees.

        There are three key tasks covering all levels, the first of which is to strengthen English or a second language and enhance international communication skills; Secondly, incorporating AI digital skills to enhance technological soft power; The most important thing is to combine the experience of senior employees with the drive of the new generation of colleagues to jointly create new value for Far Eastern Group.

        7、 Set 3-5 year goals and actively pursue growth

                Far Eastern Group's revenue has been somewhat stagnant in the past decade, and it is necessary to consider how to ensure advantages and continuous progress in highly competitive environments. After setting goals, each company should first take stock of the gap between the current situation and the goals, conduct financial planning and resource allocation, and plan a growth path from the current situation to the goals.

        There are three directions for growth, one is to expand the scale of core businesses in order to seek growth; The second is to expand the scope of business and enter emerging businesses that are adjacent to products and services; To enter a brand new future career and diversify. In the process of pursuing growth, it is necessary to balance revenue growth and maintaining profitability, and create a dual engine of effective growth through complementary internal growth and external mergers and acquisitions.

        8 The future of Far Eastern Group requires everyone to work together and collaborate

        The Dow Jones Global Index (DJGI) constant stock has recently made adjustments, with Huida replacing Intel and Xuanwei Coatings replacing Dow Chemical. Prior to this, Intel was a leading global chip company, while Dow Chemical led the global chemical industry for many years. Due to their failure to transform in a timely manner and keep up with changes in the business environment, the two companies were ultimately replaced by new competitors. Therefore, everyone should have a sense of crisis, and if the business does not advance, it will fall behind.

        This year marks the 75th anniversary of the group. Looking back at its past history, in 1949, Far Eastern Group started its first business from Banqiao Knitting Factory; In 1979, on the occasion of the 30th anniversary of the establishment of the group, Far Eastern Textile 、 Asia Cement Corporation 、 Far Eastern Department Stores All three companies have gone public, and Far Eastern Textile ranked first in Taiwan in terms of export contribution rate that year, and won the special prize for export performance exceeding USD 100 million; In 2024, the group will celebrate its 75th anniversary, covering ten major industries with ten publicly owned entities and 243 affiliated enterprises. Its total assets will exceed NTD 3 trillion, and its annual revenue will exceed NTD 720 billion.

        Honor 75 is the result of the joint efforts of all colleagues; Moving towards 80 requires all Far Easterners to work together and achieve the goal of breaking through NTD 1 trillion in revenue!

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