Respond to Changes，Optimize Action Plan

　　Despite external economic situation, enterprise may continue to register profits by seizing accurate market needs and prompting action.  Sharing with you below the latest observation on world economic trend and the Group’s future action plan:

Ⅰ、World Economy Not Optimistic
1.  Re-emergence of European Financial Crisis: European Central Bank adopted negative interest rate in 2015, coupled with strict monetary supervisory measures, have stressed banking operations in Europe.  Deutsche Bank announced 15,000 jobs cut and is expected to shed 20,000 in the following 2 years.  In addition, Standard Chartered, BNP Paribas and Barclays also announced their plans of cutting jobs.

2.  The Collapse of Stock and Exchange Markets in China: From second half of 2015, stock and exchange indexes continued to drop in China reflecting investors’ concern over the economic situation.  Now China is facing capital outflow, rising bad debts, declining exports, decreases in housing demand and overcapacity.  George Soros predicted that China economy is facing serious restructuring issue which may result in world financial crisis.  Many experts even pointed out the scale may even exceed that of the financial tsunami in 2008.

3.  Gloomy Economic Forecast in Japan: With sluggish consumer consumption and export, GDP for Japan decreased 1.4% in 4Q 2015, the fourth decline during the past 7 quarters illustrating the gradual weakening of Abe’s economic reform and its impact throughout the South East Asian region.

4.  Oil Price Plunge Leading to Global Deflation: The fluctuation of oil price has a major impact on operating costs.  The oversupply of oil, along with geopolitical and international struggles has contributed to oil price dive and led to global deflation.

5.  The Slowdown of U. S. Rate Hike: Global economic slowdown, plus volatile financial market, and low inflation expectation resulted from dropping oil and raw material prices have not only brought threats to the U. S. economy, but also lowered the possibility of multiple rate hikes in the States.

Ⅱ、Far Eastern Group Action Year
Recession has put impact on the Group’s overall performance in 2015.  We should further think through, if gloomy economic climate continues, how shall each Company respond?  Is Far Eastern capable of moving toward the next 60 years?

To maintain the growth momentum, I will mark 2016 as the Far Eastern Group Action Year, following are the major projects.

1. External Action：
a.  Political Relation: After the general elections held in end 2015, Taiwan is having a new political landscape.  Facing with the new cabinet and parliament members, we should strengthen communications, improve public’s understanding and trust in our Group, and closely monitor policy, adapt and adjust accordingly.

b.  Public Relation: Our neighboring Singapore can prosper due to its world vision despite its small size.  In contrast, the rise of national populism has neglected the contribution made by industrial growth to the socio economic development in Taiwan.  While dealing with such sentiment, still hope everybody could focus on communications and enhance cooperation with private professional associations to expand social participation and improve leading power.  We should also enhance international cooperation and exert influence through joint ventures to assist in Taiwan’s continuous economic developments.

c.  Building Brand Image: We should deepen branding management to elevate branding power.  Furthermore, in this highly connected era, corporate image should also be closely associated with the Group to set up positive image and utilize various conventional and non-conventional media to increase exposure and publicity.

2. Internal Action：
a.  Strategy Adjustment: Each company should re-establish its growth model, will it be from organic growth, or via M&A? adopting OEM? or building our own brand?  In addition, we should also think whether to operate by centralized headquarters, or diverse headquarters?  Meantime also to seize market dynamics and innovative technologies, have precise market target and competitive edges.

b.  Exploring Revenues and Saving Costs: We must carefully review the existing operating model, initiate improvement or exit projects.  Audit Department should also follow through by each industry, implement strict oversight over continuously losing business entities.  In addition, each business should set specific cost saving targets, strengthen inventory and idle material cost control.  As to increasing revenues, we should explore new niche markets in Middle East, South America, and etc. so as to make effective allotment of resources and open new business opportunity.

c.  Manpower Development and Cultivation Plan: Each business should implement manpower check and balance enabling optimal human resource in accordance with business growth, also to draw mid- and long-term career development paths for the potential fundamental talents.  Furthermore, choose future leaders, execute focused training so as to establish top-tier management team as a top priority.

In future, we will also conduct review, strategy adjustment and supervise the Group’s nine listed companies together with follow through adjustment to promote transient upgrade, enhance the consolidation of finance, telecom, retail, e-commerce, hypermarket, hotel and information to build a shared platform comprising money, logistics, commerce and data for the Far Eastern Group to achieve maximum synergy.

（Chairman Douglas Hsu’s address at “2016 Response to Changes Top Management Seminar”）



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