Global Production Chain Could Prioritize Safety Over Profits

The current global supply chain trends would move towards safety-orientation over profits, National Taiwan University Honorary Professor Chen Po-chih said.

Chen's remarks come before the "Economic Investment Outlook Seminar" on Dec. 17, hosted by the Economic Daily News, where he is slated as among the keynote speakers. The forum will invite domestic and foreign academics and speakers to analyze the future economic forecast, and financial organizations offer insight into potential markets to invest in.

Enterprises and governments will prioritize searching for reliable partners for global labor division, which Taiwan can take advantage of negotiating more partnerships, Chen said.

Chen said enterprises with the ability to plan out their global production chain would likely move away from the traditional method of spreading assembly across many countries to lessen risks. He also pointed out that production chains cannot heavily rely on one, ambitious country either.

The number of companies in a production chain would decrease, though their duration in the chain could increase, instead, he added.

In the post-pandemic era, gaining an advantage in a specific portion of a production chain will rely on firms obtaining key technologies or countries maintaining a stable industry hub for a particular segment in the production chain. Chen said Taiwan's advantage is that it houses multiple industry clusters and maintains reasonable prices and safety measures.

China's fast economic growth has prompted rising labor wages; together with technological advances, the need for human labor has decreased significantly. The previous globalization introduced automation, leading to unemployment, and with the pandemic outbreak continuing, Chen said it was inevitable that the global division of labor would change as well.

Countries have renewed importance in maintaining domestic production of key products and materials for national security. Chen pointed out that while not all countries can self-sustain, global labor division would not necessarily disappear overnight.