Globalization might seem to be crumbling due to the COVID-19 pandemic as borders close and travel is restricted, but it would be premature to declare the “death of globalization” in light of temporary seal-offs while ignoring the unprecedented growth and benefits it has brought over the past three decades.
The scaling-down of globalization is clear. One example is the manufacturing sector, a key pillar of many economies, which has been hit hard by the effects of COVID-19. Manufacturers are rethinking how to cope with the pandemic and potential future outbreaks as they face acute challenges to restore production amid supply chain disruptions. They are adjusting operating models and re-evaluating the feasibility of building production sites in new areas.
At a minimum, the long-standing model of “taking orders in Taiwan and manufacturing elsewhere” is no longer applicable.
Reducing reliance on China is the first step, which would prevent businesses from halting entirely due to disease-induced lockdowns, as happened in Wuhan, China, where COVID-19 emerged. Over the past 30 years, Taiwanese manufacturers have been moving factories out of Taiwan, mostly to China, and using cheap labor and land to slash manufacturing costs and support affordable electronics. The strategy proved successful, but corporate executives are at a crossroads — keep operations going, or increase costs by moving production out of the comfort zone.
With constrained component supplies, a labor shortage and logistics problems due to lockdowns in China, Taiwanese manufacturers redirected production back home. They reduced overseas production last month by 8 percentage points from a year earlier to 40.7 percent of orders received, the lowest in 15 years, Ministry of Economic Affairs data showed.
Flat-panel maker AU Optronics Corp (AUO), which has LCD module assembly lines in China, said that it is pondering a fundamental shift in its supply chain by diversifying production sites, given that the impact of the pandemic is expected to be broader and longer-lasting than the SARS outbreak in 2003.
Such changes would reverse the long-term slide in consumer electronics prices, as production efficiency would no longer be as good, AUO said, adding that it would cooperate with customers to decide on manufacturing locations.
Before the COVID-19 outbreak, manufacturers benefited from globalization and passed on the savings to vendors, which led to lower shelf prices. They leveraged large-scale production and industrial clustering. This production mode might be broken, as the clustering effect is fading along with a rising diversity in production locations to smaller developing countries, rather than concentrating on China.
Building or raising inventory should be the second step to minimize operating risks as supply chains become relatively vulnerable and not completely reliable amid the pandemic.
Some manufacturers, automakers especially, have been keeping optimal fund allocations and their operations as agile as possible since the 1980s. With many countries shutting their borders to contain the spread of COVID-19, firms are facing acute challenges to manage the supply of components. Inventory building is the simplest solution.
No matter how the pandemic upends the world, it looks like the globalization trend is here to stay. It is impossible for any country or company to shut the world out.
Agility is becoming the norm for companies to get along in a changing world.
Since COVID-19 broke out in Taiwan, there has been a fair amount of news regarding discrimination and “witch hunts” against medical personnel, people under self-quarantine and other targets, such as the students of a school where an infection was discovered. Quarantine breakers are almost certainly on the loose and it is only natural for people to be vigilant. One in Chiayi was found by accident at a traffic stop because his helmet was not fastened. However, those who follow the rules by quarantining themselves should be encouraged to keep up the good work in a difficult situation, instead of being
Chinese Nationalist Party (KMT) Legislator-at-large Wu Sz-huai (吳斯懷) has said that there is a huge difference between Chinese military aircraft circling Taiwan along the edges of its airspace and invading Taiwan’s airspace. He also said that whether it is US or Chinese aircraft flying along or encircling Taiwan’s airspace, there is no legal basis to say that such actions imply a clear provocation of Taiwan, and asked the Ministry of National Defense not to mislead the public. People who hear this might think that it is not a very Taiwanese thing to say. US military activity in the vicinity of Taiwan
As the nation welcomes home Taiwanese who had been stranded in China’s Hubei Province — arguably one of the most dangerous places on Earth since the novel coronavirus outbreak began in its capital, Wuhan, late last year — problems surrounding the “quasi-charter flights” that brought them back have been largely overlooked. The media used the term to describe the two flights dispatched by Taiwan’s state-run China Airlines because they do not count as charter flights. Taiwanese wanting to board those flights had to travel — most likely by train — more than 1,000km from Hubei to Shanghai Pudong International Airport
As the COVID-19 pandemic spins out of control, many parts of the world are experiencing shortages of medical masks and other protective equipment. I am studying in Washington state, which at the time of writing is the US state that has suffered the largest number of deaths from the novel coronavirus. The week before last, UW Medicine — an organization that includes the University of Washington School of Medicine and associated medical centers and clinics — sent its volunteers an e-mail asking the public to make masks and donate them to hospitals. Attached to the message was a mask donation
RSS