- Research tasks: + Systematizing with supplementing and completing scientific arguments on global supply chains, developing concepts, criteria framework for evaluating global supply ch
Trang 1VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL
SCIENCES
LÊ VIỆT DŨNGK
LE VIET DUNG
Participating in global supply chain of information
technology: Experience of Taiwan
Major: International economy
ABSTRACT OF DOCTORAL THESIS
Supervisors:
1 PhD Nguyen Binh Giang
2 Assoc., PhD Nguyen Duy Loi
Hanoi– 2019
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The thesis was completed at:
GRADUATE ACADEMY OF SOCIAL SCIENCES, VIETNAM ACADEMY OF SOCIAL SCIENCES
Supervisors:
Supervisor 1: PhD Nguyen Binh Giang
Supervisor2: Assoc., PhD Nguyen Duy Loi
Reviewer 1: Assoc., PhD Bui Tat Thang
Reviewer 2: Assoc., PhD Tran Cong Sach
Reviewer 3: Assoc., PhD Nguyen Manh Hung
The dissertation will be defended before the thesis review council of the Academy at the Graduate academy of social sciences
The Thesis can be found at:
- National Library of Vietnam
- Library of Graduate academy of social sciences
Trang 3INTRODUCTION
1 The urgency of the topic
Taiwan began a period of rapid economic growth since the 1960s Entering the 1980s, Taiwan quickly shifted its economy to strategic industries, in which information technology (IT) was among important industries invested by the government Since then, Taiwan's IT has made great progress, from the stage of manufacturing and supplying consumer electronics, electronic components, to the world's leading high-tech products with products like semiconductors, optics, laptops, tablets, etc By adopting reasonable support policies in IT development such as establishing technology parks, developing human resources, attracting foreign investment, encouraging IT businesses to develop product brands, Taiwan has increasingly participated in global supply chains, even leading some chains Meanwhile, Vietnam's IT industry is still in a low link, has not developed sustainably for many reasons Some of them can be named as weak and inadequate human resource quality, the system of domestic suppliers is small, backward IT infrastructure, etc Is there any possibility to bring Taiwan's experience apply to other countries like Vietnam? Systematic and focused research is needed to explain Taiwan's success story and explore their applicable experiences This is the motivation for PhD students to carry out the thesis with
the topic "Participating in global supply chain of IT industry: Experience of
Taiwan"
2 The purpose and research question of the thesis
- The purpose of this study is to clarify how Taiwan has taken to successfully participate in global IT supply chains and draw lessons for Vietnam
- Research tasks:
+ Systematizing with supplementing and completing scientific arguments on global supply chains, developing concepts, criteria framework for evaluating global supply chains and factors affecting supply chain participation global of IT industry
+ Analyzing characteristics, policies and tools to join the global supply chain
of the IT industry
+ Analyzing and evaluating the process of joining the global supply chain of Taiwan IT industry; Key measures to help Taiwan's IT industry join global supply chains
+ Studying achievements and limitations of Taiwan IT industry when participating in global supply chain
+ Drawing lessons and policy recommendations for Vietnam
3 Object and scope of the thesis research
- Research objectives: strategies, policies and measures at the Government level to successfully participate in global supply chains
- Scope of research: from the 1980s to the present
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4 Methodology and research methods
As generated from the global supply chain theory and the global supply chain operating mechanism, the topic will show how a global supply chain can be theoretically possible
Applying that analytical framework, the topic will explore the hierarchy that Taiwan has participated in the global supply chain in the IT industry, the improvement in the supply chain through each stage and explain the reasons for its upgrade
From the practice of joining the global supply chain in Taiwan's IT industry, the topic will assess the industry's prospects in the global supply chain in the future
- System analysis method: The thesis will use this method to analyze the formation and development of the global IT supply chain of Taiwan from the 1980s to the present to clarify policies and characteristics development of the chain in each stage, each industry, creating the basis for drawing lessons and policy recommendations for Vietnam
- General analysis method: The thesis collects research works related to the participation of Taiwan IT industry global supply chain for analysis and evaluation, thereby seeing gaps and gaps in previous research projects, from then
on, continue to research to improve
- Comparison method: The thesis uses comparative methods among sectors, fields and stages in the development of supply chain of Taiwan's IT industry At the same time, the thesis also uses comparative methods to compare the effectiveness of participating in the supply chain of Taiwan's IT industry with other countries in the region and the world in order to clarify the role and position
sub-of Taiwan in the chain global IT supply
- Experts method: The thesis will conduct research and get opinions of some Vietnamese experts specializing in trade research, export of IT goods, experts on Taiwan and Chinese economy to Find out what lessons can be learned for Vietnam
5 New scientific contributions of the thesis
The dissertation deeply analyzes and clarifies the status of participating in the global supply chain of Taiwan IT industry, policies and measures of Taiwan so that the IT industry can join the global supply chain; thereby assessing position, rank, success and limitations when participating in global supply chain of Taiwan
IT industry
The thesis provides necessary and sufficient conditions to participate in the global supply chain of the IT industry in Taiwan, compared with Vietnam, analyzing the importance of upgrading the global supply chain of Vietnam's IT industry ; From that, analyzing the impact of these factors on Vietnam in the
Trang 5current period is very different from the previous period of Taiwan's IT development
Analyzing and evaluating practices in Taiwan's global supply chain to help clarify the reasoning of the global supply chain of the IT industry, help better understand and better use reasoning in chain development Global supply of IT industry in Vietnam
6 The theoretical and practical significance of the thesis
The thesis has a profound theoretical meaning because the thesis contributes
to systematizing the theoretical bases of the global supply chain and the participation of the global supply chain of the IT industry through the implementation of unified concepts , categorize supply chains and supply chain participants, provide criteria for assessing factors affecting global supply chains; policies and tools to engage and upgrade global supply chains of industries, including IT
The thesis has high practical meaning because studying the participation and upgrading of global supply chain of Taiwan IT industry will help Vietnam to have more reference lessons and practical policy recommendations and help the industry Vietnam IT effectively participates in global supply chain
Chapter 1 OVERVIEW OF RESEARCHES OF THE GLOBAL SUPPLY CHAIN
OF TAIWAN IT INDUSTRY 1.1 Overview of research projects at home and abroad
- Study theoretical issues about global supply chains and chain characteristics
- Study the status of taiwan's participation in global IT supply chain
- Research related to solutions to help vietnam improve the position of the IT industry in the global supply chain
1.2 The values of domestic and foreign researches, unrevealed gaps and new points of the thesis
1.2.1 The values of domestic and foreign researches
In the theory part, the above-mentioned studies have partly clarified the concept of supply chain, IT industry, global supply chain of IT The basic theories related to the supply chain of goods, the characteristics of the global supply chain in the IT industry were also analyzed and evaluated by many authors These are the research values that the thesis will inherit to build the analytical framework and criteria for evaluating global supply chain of IT industry in Taiwan
In the practical basis, previous research studies have the context of formation and development of global IT supply chain in East Asia region, some case studies
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on supply chain participation This is the region's countries These are important information for the dissertation author to understand the position and ranking of Taiwan in the global supply chain of the IT industry, helping the author to inherit materials and documents to form a practical basis for the topic
Studies on the status of participation in the global supply chain of Taiwan's
IT industry are various in scope These studies provide information, assessments, arguments, and arguments to help the thesis author have a basis for analyzing policies, the status of participating in global supply chain of Taiwan's IT industry, but success and limitations in participating in Taiwan's global IT supply chain Research on Vietnam's global supply chain engagement in IT is presented through various reports, books, and research materials, with different data and approaches These studies mainly research on measures, policies to develop Taiwan's IT industry, the development status of Taiwan's IT industry, the role and position of Taiwan's IT industry in the economy and in the Global rankings Through these studies, the author has the basis to assess the status and position
of Vietnam in participating in global IT supply chain
1.2.2 Unrevealed gaps and new points of the thesis
Firstly, there are many gaps in research on supply chains and characteristics
of supply chains in the IT industry Studies of the above listed theory groups have approached the supply chain in one or several ways As listed above, domestic and foreign research materials are abundant, but these have not yet answered the questions related to global supply chains, global supply chains in the IT industry; characteristics of the global supply chain in the IT industry; operating mechanism
of global IT supply chain; necessary and sufficient conditions to join the global supply chain of IT industry; key policies and measures for countries to join the global supply chain of IT These small questions have not been thoroughly addressed by previous studies, there has not even been a complete study to thoroughly address the theoretical basis of the global supply chain in the IT industry This is the "gap" that needs to be further studied to form an analytical framework and evaluation criteria for the topic
Secondly, the approach and viewpoint of research on the status of participation in the global supply chain of Taiwan's IT industry is still various Data, materials and evaluation are still quite sporadic, multi-point, not logical, systematic and not updated Moreover, no research has answered the questions completely: How has Taiwan participated in the global supply chain in the IT industry and has achieved successes and limitations? This is the "gap" which is further studied in the thesis to clarify the successes and limitations in participating in the global supply chain of Taiwan's IT industry
Thirdly, there are no studies on lessons learned for Vietnam This is the gap that the thesis continues to study Although there have been many studies on the status of Vietnam's IT industry development, policies and influencing factors,
Trang 7previous studies have not clearly identified the level of participation of Vietnamese IT in Global supply chain, in-depth analysis of the factors affecting the participation of Vietnamese IT in the global supply chain This is an extremely necessary task, need to be further studied in the thesis to be able to give lessons and propose specific and most feasible solutions to improve the efficiency of the IT industry Vietnam in the global supply chain in the near future This is also the expected result of practical contributions of the thesis Fourthly, im terms of technique, domestic and foreign research projects provide the basis of discrete, un systematic, not updated data, from different sources with different approaches Therefore, the task of the thesis is to continue
to update data, systematization and logic of data and data according to the research tasks of the thesis
1.2.3 Analytical framework of the topic
Based on the results inherited from domestic and foreign research works, gaps and research tasks, the thesis will proceed according to the analytical framework
as follows:
Chapter 2 THEORETICAL BASIS AND PRACTICE RELATED TO THE PARTICIPATION OF THE GLOBAL SUPPLY CHAIN OF THE IT
INDUSTRY 2.1 Overview of the global supply chain
2.1.1 The basic concepts
- Supply chain:
Supply chain includes all activities related to the supply, production and distribution of a complete product or service, starting from the first supplier to
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the final consumer customer In other words, a single supply chain is a process that begins with raw materials until the final product is created and delivered to the end consumer
- Global supply chain:
Global supply chain is understood as a worldwide supply network when a company buys or uses goods and services from abroad The global supply chain involves connecting all partners, resources and businesses involved in the production, processing and distribution of raw materials, finished products or providing services to consumers final
- Distinguish global supply chains and global value chains:
Global supply chains and global value chains are conceptually different Global supply chains imply all activities related to the connection of procurement, production and logistics activities of products on a global scale; meanwhile, the value chain involves a series of production activities, creating added value for the product through consumers The supply chain involves managing the operations of the business, so that the product is moved from one place to another, while the value chain is related to the business administration
of the enterprise
- International production network and global supply chain:
Global production networks are production and service enterprises in many different countries around the world closely linked, interdependent, involved in the production, distribution, and provision of services maintenance service, warranty during use of a product
2.1.2 Global supply chain structure and global supply chain actors
2.1.2.1 Supply chain structure
The supply chain links many independent businesses, each with its own internal structure and organization corresponding to its own characteristics and objectives
A supply chain consists of vertical structure and horizontal structure The vertical structure of the chain is calculated by the number of levels / classes along the length of the chain, the vertical distance is calculated as the distance from the central enterprise to the final customer In the longitudinal structure, its previous activities (from a business moving to suppliers of materials) are called upstream structures; and the activities behind it (from a business moving products out to customers are called downstream structures
The horizontal structure of the chain is calculated by the number of enterprises at each level / tier The arrangement of tier / tier enterprises allows identification of central businesses of the chain In many chains, customers are aware of the central business through the product brand that the chain brings, even if the business does not perform the production function and does not have large fixed assets
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A supply chain consists of many stakeholders The term supply chain shows that a link provides products that move from suppliers to manufacturers, distributors, retailers and ultimately customers along the supply chain
2.1.3 Factors that influence supply chain development
There are five key factors that govern the development of a global supply chain: production, storage, location, transport and information
2.1.4 Policies and measures to join the global supply chain
Firstly, developing infrastructure to improve trade operations, facilitating cost reduction in global supply chains The role of logistics infrastructure for global supply chains relates to weaknesses Element: (a) Warehouse, (b) Ship goods from one location to another in the country, (c) Ship from one country to another, (d) Transportation (road, rail, air, ship), (e) IT infrastructure and communications, (f) Outsourcing, (g) Innovation-innovation, (h) Government policy (how to facilitate logistics, giving how innovation, trade policy)
Second, policies related to trade liberalization and economic opening
Third, improve internal resources of domestic enterprises to effectively participate in global supply chains
Fourth, develop human resources to help businesses effectively participate in global supply chains
2.2 Join the global supply chain of the IT industry
2.2.1 Global supply chain of IT industry
- IT supply chain: IT supply chain includes all activities related to the supply, production and distribution of an IT product or a complete IT service, starting from the first supplier to final consumer customers
The main feature of IT products is the scale, complexity and fragmented manufacturing processes in the global supply chain The IT industry consists of many different sectors and products (from computers and peripherals, to components in automotive and aviation products), so it has a very large market segmentation consumer, business and industrial equipment IT products also have similar characteristics, modularized and easily exchanged in the market
2.2.2 Subjects participating in the IT supply chain
The supply chain of the IT industry is often characterized by very high levels
of outsourcing and outsourcing The natural starting point of the IT supply chain also starts with materials, raw materials, then goes to the processing stages (Contract manufacturer-CM) and original design manufacturers (Original design manufacturer - ODM), followed by the original equipment manufacturer (OEM), followed by the branded companies, then to the distribution channel through level 1, 2, 3 customers, n, then to the final consumer Each industry can have many different global supply chains Each global chain consists of many member
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companies participating in each other A company can simultaneously participate
in many global supply chains Participation in the global supply chain means that the business becomes a member of the chain, a country with a domestic enterprise or a foreign direct investment enterprise participates in the chain
2.2.3 Conditions for participating in the global supply chain of IT industry
- Human conditions: Supply chain activities of IT industry require low labor costs in the first stage of the supply chain because most of the assembly activities use a lot of labor, and spend Cheap labor costs can minimize the overall costs of businesses entering the supply chain
- Capital conditions: to participate deeply in the IT supply chain, requiring businesses to raise their capital potential The more deeply involved in the supply chain, the greater the level of automation and modern technological processes This creates difficulties for small businesses, with little capital because it creates higher risks and cannot bring big, valuable contracts to small businesses that are financially scarce Because of this condition, the IT industry is often the industry attracting more FDI because FDI often comes with abundant capital, modern technology, can create spillover effects and increase efficiency in using resources force in IT businesses
- Conditions on the policy environment: The Government needs to create a friendly business environment for the activities of the IT supply chain as incentives for import tax, tax credit, infrastructure Normally, IT industry businesses often seek local producers in places with attractive investment environment and favorable infrastructure Signing free trade agreements, building technology parks, export processing zones, technology parks with advanced infrastructure, and geographic proximity will help businesses save money types of costs (including transportation costs) when participating in the supply chain
- Technological conditions: IT products all have a short product life cycle, so businesses that want to participate deeply in the global supply chain must constantly innovate technology in a very short time At the same time, it also requires goods to be delivered to the final market in a very short time The life cycle of IT products is gradually shrinking along with the development of technology 4.0 is a great challenge for businesses that want to deeply participate
in the supply chain The short product life cycle also causes enterprises to focus more on geographical advantages, because the remote location makes the challenges of the IT product life cycle even bigger because the products must be transported to the localities Away from the main supplier
With the above conditions when participating in the global supply chain of IT industry, governments often make policies suitable to each stage of development
of the industry to help businesses deeply participate in the supply chain The detail as below:
Trang 11- At the first stage when participating in the supply chain: this is the main stage of enterprises focusing on the supply of low value-added assembly products and components At this stage, governments often focus on mobilizing large human resources, low cost, favorable infrastructure, a favorable investment environment to attract FDI enterprises in the IT industry However, in the early stages, governments had to implement next support policies for businesses to be ready to participate in the next stage of the supply chain, namely: increasing R&D spending for enterprises and IT investment projects, encouraging the construction of laboratories and research centers for IT products; create a favorable financial environment to develop intellectual property protection rights; improve scientific research environment; Financial support and advice for
IT businesses
- In the next stage: enterprises focus on participating in the supply of IT products and components which are assembled and produced with low and medium value added At this stage, workers' skills and R&D activities are very important for businesses that want to join the industry's supply chain Countries often focus on developing human resources, building schools / research institutes
to train talents for the IT industry, developing long-term strategies to prioritize technology transfer and scientific and technological development for IT industry
- At the final stage: enterprises focus on participating in the supply of products that are produced and designed with high added value and brand To join the supply chain in this period, businesses have reached high levels of technology and human resources Businesses tend to look for market channels, suppliers abroad to transfer technology, gradually shifting lower supply stages abroad to save costs
2.3 Background of the formation and development of global supply chain
of IT industry in East Asia and opportunities for participation of countries in the region
- The formation and development of the East Asia IT industry supply chain
The development of global production networks in the IT industry began to take place in the 1960s In the first phase, the IT industry has globalized production, moved from North America to Europe and then to Japan for NIE and ASEAN-4 countries (Singapore, Malaysia, Thailand and the Philippines) In the second half of the 1980s, the competitiveness of East Asian countries particularly
in areas such as semiconductors, consumer electronics and personal computers improved significantly and East Asian countries began to occupy greater proportion of the total world trade turnover in the IT sector
Since the late 1980s, East Asia has become the focus of most of the electronic manufacturing processes by outsourcing and processing for companies in the US The development of global production networks in the industry electronics have been carried out in stages, primarily due to the transition of labor-intensive
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manufacturing operations of US, European and Japanese producers to the next NIE and ASEAN-4 countries that is expanded to all ASEAN countries and China When electronics manufacturers in NIE countries gain expertise and when labor costs increase, the second wave of outsourcing and outsourcing in the global supply chain of IT has occurred to countries Asia has lower wages
In the early 1990s, China began to participate in the global IT supply chain In early 2004, 70% of Taiwanese laptops were manufactured in China Also, in the mid-1990s, Vietnam started to participate in the global supply chain of East Asia
IT sector when Japanese consumer electronics enterprises such as Matsushita, Sony, JVC, Toshiba moved their production sites to Vietnam From 2005 onwards, Vietnam started to become a supplier of electronic components and other IT products to the US, Japan, Europe and many other regions of the world The participation of East Asian countries in the global supply chain of IT is quite different For nearly 30 years, East Asia in general and China in particular have become increasingly important in the global IT supply chain The participation of East Asia in the global supply chain IT industry is tested by many standards: In the first phase of the development process, the East Asian electronic enterprises produced many types of goods Quality consumer electronics, signing contracts with foreign customers assembling electronic chips, making integrated circuits, moving forward to become ODMs, producing laptops with trade private label In the next phase, suppliers in Asia have moved to technology development activities, developing design capabilities, providing global support services and using effective digital information systems fruit Each country has its own way
of participating in the supply chain and in East Asia it forms two types of suppliers, which are high-level suppliers and low-end suppliers
- Opportunities to join the global supply chain of IT for countries: The 4.0
revolution is strongly impacting the global supply chain of IT 4 impacts of the 4.0 revolution on global supply chains, which are: (1) Smart factory; (2) Internet
of Services; (3) Big data; (4) High quality of human resources
And to cope with these changes, supply chain managers need to focus: Supplier management; Implementing transparent supply chain; Planning needs; Design supply network
Chapter 3 PRACTICE PARTICIPATING IN THE CHAIN OF GLOBAL IT
INDUSTRY OF TAIWAN 3.1 Domestic and international context when Taiwan participates in global IT supply chain
3.1.1 Domestic context
Taiwan's economic development history underwent 5 major development stages:
Trang 13Stage 1: Land reform in the 1950s to form a small and medium-scale
agricultural economy;
Stage 2: Developing labor-intensive export industries in the 1960s such as
textiles and light industry;
Stage 3: Due to the impact of the Middle East oil crisis (1970s), Taiwan
shifted its focus to developing chemical industries;
Stage 4: from the early 1980s began to shift to processing and exporting
electronics and semiconductors;
Stage 5: In the early 2000s, deep integration into the global economy, taking
IT and digital technology as the basic foundation for economic development Corresponding to these periods of economic development, Taiwan joined the global IT supply chain starting very early, in the 1960s when the country started from the assembly of electronic devices such as machines recording (radio) transistors, cassette recorders, etc In the 1970s, Taiwan began to develop enterprises producing electronic components such as CRT electronic discharge tubes, microchips, electronic clocks, drums words for the beginning of the video
In the 1980s, Taiwan began to participate in the field of computer manufacturing with semiconductor equipment products, personal computers, color screen computers In the 1990s, Taiwan started implementing microelectronics production, quickly became the world's leading supplier of motherboard products, monitors, scanners and computer mice In the first two decades of the 21st century, Taiwan has been one of the most deeply involved countries in the global IT chain, especially in the areas of IC packaging, microchip testing, IC design, processing create DRAM
3.1.2 International context
Taiwan is deeply involved in the global IT supply chain in the context of the world entering the era of regionalization and globalization The basic characteristics of globalization and regionalization have placed Taiwan in new opportunities and challenges The biggest opportunity is to make it easy for Taiwan to participate in the global economy, because the country has made remarkable progress in capital-intensive and labor-intensive industries and human resources High quality and skilled However, the challenge posed to Taiwan from globalization is not much Taiwan is forced to join global organizations, such as the WTO, liberalize domestic industries and finance, loosen foreign exchange controls, quickly implement export-oriented industrialization strategies to adapt with the flow of science and technology in the world and adapting to the value chain, global supply chain
Since the IT revolution broke out, overseas production has grown very fast in this area The leaders of OEM branches have established a new system of production and sales points in foreign countries and in some cases, they have established their strong position in the network global production The rapid