The “red supply chain” has seriously impacted Taiwan’s current export performances and heightening cross-strait competition, according to a Legislative Yuan report released on Sunday.
The report implored the affected government sectors to set up precautionary strategies to address the growing threat that the red chain supply -- the fast-growing clustre of high-tech components cultivated by the Chinese government – poses for the Cabinet’s “Productivity 4.0” programme.
Despite the Cabinet’s plans, which will see an injection of NT$36 billion (US$1.09 billion) in investments and lead transitions in related industries, the report cited how the red chain supply is not only gradually stabilising, creating higher friction in cross-strait competition, but that mainland China’s import substitution policies have also made dents in investment effectiveness in Taiwan’s exports.
The report also pointed out that the red supply chain will see another bout of transition with Chinese mainland’s growing domestic brands.
Exports to China for panel, mobile devices and chemical-related products have already seen a “severe decline,” as stated in the report, underlining how the Cabinet’s will need to strengthen the effectiveness of the industry upgrade plan in face of the red supply chain.
Smartphone manufacturers, such as HTC. Corp. and Asustek, companies with vital manufacturing technology like MediaTek Inc., and touch panel suppliers such as TPK Holding Co. should join together to domesticize the industry supply chain and develop domestic companies’ technology in order to improve its competiveness in the international market, according to the suggestions outlined in the report.
Taiwan’s industry is also concentrated in the electronics industry, with deep connections with Chinese mainland’s trade as well, which increases the red supply chain impact on Taiwan compared with other countries.
Other suggestions as outlined in the report include concentrating on high-end products and technology with the red supply chain, in order to create diversifying value, instead of following traditional methods such as competition in supply numbers and scale, and low-cost production.
Medium-scaled enterprises should also invest in developing vital technology in new developing fields, in order to “mold a diversified, distinct Taiwanese industry” and to create an “irreplaceable role” in the world’s supply chain, the report stated.