How Exposed Is Taiwan to Globalization?

 How Exposed Is My Country, Taiwan, to Globalization?

To answer this question and also to succeed in business, it is critical to understand what is globalization first. It is not as simple as open your browsers and link to a foreign website. It is an external environment to operate. And like any other things, views of globalization are not always positive or negative. There are some benefits and there also some unavoidable harms. 

So, what is globalization? Purchasing something from another country means globalization? Why does the Fed decide to increase reserve and interest can influence the world's economy? Globalization cannot be described by only one dimension or aspect, it has many dimensions such as economic, cultures, technologies, businesses, environment, and geography. From a business and economic point of view, globalization can mean the increase of economic activities in the world. Simply to say, trades of goods and services, and financial flow internationally, are increasing around the world. Not only financial flows and trade but also information and people are moving more and more frequently around the globe.

Now, Taiwan is the crucial semiconductor manufacturing country, providing more than 50% of IC(Integrated Circuit) worldwide. So, from the economic point of view, Taiwan engaged in many trade and exchanges internationally. According to the sales data of vehicles in 2020, the market share of domestic-made is around 52%, the other 48% is foreign-made cars. However, these are not enough to tell that how exposed is Taiwan to globalization. Based on the five elements of economic globalization which are international trade, foreign direct investment, capital market flows, migration, and diffusion of technology, and each one represents 1 mark, then we can measure how exposed is Taiwan to globalization.

i. International Trade

As I mentioned above, the market share of domestic-made is around 52%, the other 48% is foreign-made cars. These cars are international trade. Foreign brands such as BMW, Volvo, KIA, Lamborghini, and Porsche, sign agreements with local retail companies and trade their cars with these companies. (+1 point)

ii. Foreign Direct Investment

Instead of just import their cars, some automobile companies such as Toyota, Nissan, and Mitsubishi Motors choose to invest money in production facilities in Taiwan so they can produce and sell their cars in Taiwan. It is an example of foreign direct investment. (+1 point)

iii. Capital Market Flows

Taiwan Stock Exchange provides services for individual and institutional investors such as ETF, domestic and foreign stocks, bonds, and Futures. In Taiwan, investors can buy and sell shares of Taiwanese companies and some shares of foreign companies. However, its value is just about 1.27% of the total value in the world. (+0.127 points)

iv. Migration

In Taiwan, some jobs like fishermen or caregivers in nursing homes are the most common jobs that hire foreign workers. Most of them are from Myanmar, the Philippines, Indonesia, and Vietnam. These four countries divided by 233 countries worldwide is around 0.017. (+0.017)

v. Diffusion of Technology

Now, Taiwan is the crucial semiconductor manufacturing country, providing more than 50% of IC(Integrated Circuit) worldwide. Therefore, I think the diffusion of technology is not too hard to get. However, Taiwan is still a developing country, so a full mark is not the case. According to the Human Development Index in 2020, Taiwan is graded at 0.91. So, I will use that data as the point of Diffusion of Technology in Taiwan. (+0.91)

To summarize, Taiwan gets 3.054 points on the five elements of globalization. Although it does not precisely describe the whole map of how exposed is Taiwan to globalization, it provides me a direction to evaluate it. If we do the math, 3.054 divided by 5, the result is approximately 61%. I know it is not totally correct, but I think my ability to evaluate economic globalization will be improved after learning this course.

The Political, Economic, Technological, Social, Environmental, or Other Impacts of The Globalization Trend on Taiwan? 

Obviously, the most popular trends recently are electric vehicles, AI, self-driving vehicles. Politically, the government of Taiwan has announced the "Electric Motor Vehicle Industry Development Promotion Plan" in August 2009 and the "Smart Electric Vehicle Development Strategy and Action Plan" in April 2010. In order to encourage and support the development of domestic electric vehicle-related industries, the "License License Tax Law Amendment" Extends the exemption period of electric vehicle license plate tax. The "Air Pollution Prevention and Control Action Plan" was launched at the end of 2017. One of its key tasks is the "ban on the sale of fuel oil vehicles." To electrification, In 2030, urban buses will be fully electric and Taiwan will enter the age of fully electric vehicles in 2040. 

Economically, brands of other countries and products from foreign producers will become more and more common in Taiwan since the government keeps trying to sign FTA(Free Trade Agreement) with multiple countries. In addition, foreign direct investment such as Amazon, Facebook, and data centers, Intel developing centers, even Tesla Giga Factory in the possible future, is changing Taiwan dramatically.

Environmentally, since the 311 event in 2011 known as The 2011 earthquake off the Pacific coast of Tōhoku on 11 March. The earthquake triggered powerful tsunami waves that may have reached heights of up to 133 ft in Miyako and traveled at 700 km/h inland. Residents of Sendai had only about 10 minutes to evacuate. The tsunami hit Japan hardly and the Japanese National Police Agency report confirms 15,899 deaths. The tsunami also caused nuclear accidents, the Fukushima Daiichi Nuclear Power Plant was damaged by the tsunami. After the news, the president of Taiwan Tsai Ing-Wen declared that we are leaving nuclear plants. Now, Offshore wind power and other green power plants are the future plans of Taiwanese electric trends. Disasters bring death but also bring rebirth. 

Socially, step by step, Taiwan keeps trying to join as many international organizations as possible to gain its positions. Also, more and more Taiwanese people choose to study university abroad. Due to the lower cost of international travel and the use of Facebook, Instagram, and other social media, Taiwanese are making friends or even getting married to people from any other countries.

Technologically, as mentioned above, automobile companies such as Toyota, Nissan, and Mitsubishi Motors choose to invest money in production facilities in Taiwan, so the local automobile companies and their workers can learn from them. In the future, the local companies can learn more knowledge and technologies from direct investment.

The Negative and Positive Impacts

Positive Impacts

i. Although, In Taiwan, some jobs are replaced by AI, robots, and foreign laborers. But more jobs and opportunities are created by foreign direct investment. Self-driving buses need more related engineers to maintain and monitor them. 

ii. Since The 2011 earthquake off the Pacific coast of Tōhoku on 11 March, Taiwan speeds up its investment in green energy plans. 

iii. Many traditional cultures in Taiwan such as sexual inequality has ameliorated and changing due to more and more international information exchange and education.

iv. More international companies operate in Taiwan means they have to pay the government taxes and hire laborers in Taiwan.

v. Many companies such as Taiwan Semiconductor Manufacturing Corporation and Foxconn Technology Group now gain their profits through operating internationally. The local financial institutions also take advantage of globalization to expand their businesses.

Negative Impacts

i. Many jobs like bus drivers may disappear in the future. For instance, self-driving buses are now operating in a few areas have replaced more and more drivers. 

ii. Some protectionist policies such as tariffs, may cause inequality in trading goods and services. 

iii. International big brands such as Starbucks, McDonald's, and KFC, compete with small local companies, make them harder to operate. Moreover, if those companies purchase raw materials and real estate, the prices will go up.

Reference

Malamud, V., & Rotenberg, Y. (2010). Globalization: Opportunities and threats to developing country business. Retrieved from https://my.uopeople.edu/pluginfile.php/1183211/mod_book/chapter/272333/BU1307_Unit_1_/UNIT_1_-_Globalization-_opportunities_and_threats_to_developing_country_business_-_CNX.pdf

A Case Review, Nike's Globalization

Introduction

Globalization is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and culture exchange. It has been taking place hundreds of years and has speeded up enormously over the recent half-century. Globalization has resulted in increased international trade, more companies are now operating in more than one country, greater dependence on the global economy, freer movement of capital goods and services, and greater recognization of international brands. Improved international transport, containerization, and improved information technology all contributed to the speed of globalization.

A Case Review, Nike's Globalization

Nike was founded in 1964. Now, it has become a sportswear multinational corporation worth over $100 billion. So, how that magic happens? The story started from just a small distribution that imports Japanese shoes to the US. After operating a store and kept trying to improve the products, Nike could not keep up with the increasing demand. Every new shipment received sold out quickly. Nike's founder has to deal with the issue if he wants to expand his business. So, Nike started to make their own products and branding. Instead of locking itself into an exclusive distributor, Nike can now control all the production and grows its revenues rapidly. 

An Incorrect Expansion Strategy

However, Nike's growth wasn't always smooth. In the 1990s Nike came under scrutiny for various unethical practices. Its expansion strategy was facing a lot of challenges. As Nike gains more and more eyes on its success, unethical news was follow up. The most famous one was the incredibly low wages for their workers in developing countries such as Vietnam, Thailand, Indonesia, Malaysia, China, and South Africa, although it looks like Nike has paid enough living wages. Obviously, Nike took the advantages of globalization to lower its cost of production by outsourcing those jobs to low-wage countries and keeping the high prices of its products to gain tremendous profits. 

How Does It Happen?

So, how does Nike came to that situation through its expansion strategy? Society always wants companies to create high-paying jobs and protect the environment. But on the other hand, these companies want to reduce costs incurred to comply with environmental regulations in the production and improve labor productivity. Lower cost and higher prices of their products are all companies trying to do. But, modern information technologies and changing culture hit the old school concept seriously with negative brand images. What do think if a liar tries to sell you a product compare with a friendly honest person? At some point, trade is built on trust. But information asymmetry makes us hard to trust sellers we unfamiliar with. So, we consider the brands we trust. However, it may not a part of Nike's expansion strategy. During that period, Nike was focusing on its cost of production rather than the possible damage to its reputation.

Positive and Negative Impacts

However, it was not always bad and evil. There are still positive and negative impacts with its strategy. Although Nike's reputation was damaged by those negative news, some positive effects are indubitable. Creating more jobs is one of them. Due to the direct investment to the production infrastructures, these governments also benefit from taxing those workers and Nike. The skills of these countries are also been improved. Furthermore, other companies are also learned from the event, start to rethink their strategies, and improving sustainable development. Negative impacts such as child labor, cutting jobs when the wages are no longer cheap, and environmental pollution while producing are also serious issues that Nike has to put its effort into.

Nike's Response

How did Nike respond to these situations? In order to keep its successful business, Nike learned from its past. Some actions must be taken when the dilemmas occur since this dilemma has direct impacts on not only the quality of products but also the reputation of Nike. To handle these issues, Nike adjusted its strategies for the internal and external environment. For issues like working conditions, Nike established a code of conduct to force its contracting factory to follow and requires its suppliers to pay workers at least the local minimum wage, to make sure the workers get their benefits and improves working conditions. With these approaches, Nike successfully improves the image of the company. When the working condition was improved, workers became to think the company positively. Nike now has abundant resources in persuading the media to get rid of negative thoughts about it. Nike also has a grading system for all its suppliers to reflect the actual situation of working conditions and to prevent unethical issues.

Share of Opinion

In my opinion, Nike's responses are an excellent way to reverse its negative reputation in the past. However, I think some other alternative responses are also great for the same purpose. For instance, Nike can establish a subsidiary in its suppliers' located countries to manage all the supply of its products under its control and also offer some cheaper products to these countries. Or, as a sportswear company, Nike can also promote the atmosphere of physical activity to those countries. It is a win-win strategy since Nike improves the health of the people in suppliers' countries. Moreover, as the income increased and the atmosphere is created, these countries are also contributing to Nike's sales.

What Are The Consequences?

What would the consequences have been then? Another Nike’s reaction was to announce a video of its contracted supplier in Vietnam and Indonesia, Thailand, and China to convey the message, “Nike is a responsible company with a safe working environment, happy and satisfied workers.” However, trust is hard to build but easy to lose. Consumers need more time to reaccept it.

Reference

Nike solution for the ethical dilemmas marketing essay. (n.d.). Retrieved April 13, 2021, from https://www.ukessays.com/essays/marketing/nike-solution-for-the-ethical-dilemmas-marketing-essay.php