In this week’s episode of Looking South, Eric Gau speaks with Jack Chang, the deputy director-general of the Industrial Economics & Knowledge Center of the Industrial Technology Research Institute about the Industrial Supply Chain and the New Southbound Policy.
Transcription:
Eric Gau: Good morning everyone, I’m Eric Gau, and you’re listening to Looking South, here on ICRT. Today, we are joined by Mr. Jack Chang, the deputy director-general of the IEK of the Industrial Technology Research Institute, to tell us about the New Southbound Policy and one of its flagship projects: Taiwan’s industrial supply chain. Mr. Chang, good morning, and welcome to the program.
Jack Chang: Good morning Eric, thank you for the invitation.
Eric: Mr. Chang, for our listeners who may be unfamiliar with the term, can you please describe for us what exactly the industrial supply chain is, and what it means for Taiwan’s economy?
Jack: I think the supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from the supplier to customers.
Eric: Alright, and why is that so important for Taiwan’s economy?
Jack: Taiwan is very famous for our industrial manufacturing capabilities, which was supported by the division of labor among various industrial supply chains. For example, where I’m located in Hsinchu, is very famous for the semiconductor supply chain. In central Taiwan, it’s famous for machine tools. In southern parts of Taiwan like Kaohsiung, it’s famous for supply chain for metal and petrochemical products. So that’s the idea of supply chains and clusters.
Eric: So this helps get products from the raw materials stage, to fabrication, and from there to distribution and things like that?
Jack: Yes.
Eric: So now that we know what the industrial supply chain is, why do you think the Tsai administration is placing such great importance on the industrial supply chain as part of their New Southbound Policy?
Jack: I think the new southbound policy proposed by President Tsai is trying to form strategic partnerships for regional socio-economic cooperation with 18 so-called ‘New Southbound’ countries, they are all located in South Asia and Southeast Asia, plus New Zealand and Australia. And most of those target countries are in different stages of economic and industrial development, compared to what we have in Taiwan right now. For most of those countries, if they want to further develop their industries, it is vital for them to create new jobs, and wealth creation for their people. Taiwan is very lucky for the last 60 years we have transformed from an agriculture-dominated industry to a so-called innovation-driven economy. We have accumulated a lot of experience along the way, especially in the area of promoting industrial growth through innovation. I think we are ready to share our hard-earned experience with the New Southbound countries.
Eric: The New Southbound Policy has been in place for about a year now already. What measures have been put in place as part of that policy to enhance relations with target countries when it comes to the industrial supply chain?
Jack: We try to promote the idea of a supply-chain link strategy, to try to establish long-term relationships with the target countries. And we tried to offer industrial solutions based on the local demand and tried to create mutually-beneficial, win-win cooperation models with those target countries. The first measure we have been doing is…each different country has different local demands, so we tried to select different industries for cooperation for different countries. In order to do that in a more systematic way, in March of this year, the Chinese National Federation of Industries already established the Asia Pacific Industrial Collaboration Committee. This committee is led by top executives from Taiwan’s leading companies, and most of them have profound experience with investments in those target countries. This platform will serve as a communication platform between Taiwan industries and the target countries’ industries. This committee, its initial action is we plan to include hosting a bilateral industrial collaboration summit with, in this year, we tried to start with six countries in the first wave, that’s including Indonesia, Malaysia, Thailand, Vietnam, India and the Philippines. Aside from the summit, we tried to organize special Taiwan Expo events in these countries, and hosting a series of investment seminars or workshops featuring those countries to try to attract new investment from those countries as well as to encourage Taiwan businessmen to invest in those countries.
Eric: What effects have these new measures had on Taiwan’s economy and its connections with those 18 target nations, or at least the ones that you’ve mentioned that we have already targeted in its first year?
Jack: For the last year or so, we first of all tried to figure out more clearly the industrial demands from those different countries, and through the bilateral communication platforms I described above. From the information we gathered, we tried to find out if there is a more suitable business model for us to work with in different segments of the supply chain, for example from the upstream to the middlestream to the downstream. I think we tried to seek further cooperation opportunities that will be mutually beneficial to the development of industry in Taiwan and in those partner countries. From those efforts, we hope that we can join hands with target countries to enjoy further industrial and economic development and bring a brighter future to both sides.
Eric: Before we go, in your view, what is in store in the future when it comes to the industrial supply chain, and how is that going to further benefit Taiwan ties.
Jack: I think industrial conditions vary from country to country, so there are a lot of different potential collaboration models available for further consideration. I will try to give some examples. For example, Taiwan and those target countries, we can collaborate to formulate industrial standards to accommodate local requirements. Or for specific products, we can form a marketing alliance, for example to create a joint brand or platform to market special products to meet the specific regional market demand. We can also do patent licensing, technology transfer, joint ventures, or even technical personnel training. All these different models exist, but I think we need to figure what is going to be the best one for us to work with different countries. And maybe in different countries, we can use different models to work with them.
Eric: We’ve been chatting today with Mr. Jack Chang, the deputy director-general of the IEK at the ITRI. Mr. Chang, thank you for taking the time to share your expertise with us today.
Jack: Thank you, Eric.
Eric: And that’s it for Looking South this week on ICRT. For this and past episodes, you can find them on the ICRT Website in the Podcasts section, or on the Looking South Blog. I’m Eric Gau, and thank you for listening.