Economic Globalization - Opportunities and Challenges
Dr. Casper Shih, Chairman of Global Chinese Competitiveness Foundation
Nanjing, China - 17 September 2001
Economic globalization is an irresistable trend. Our response to this trend will decide our fate. In other words, the success or failure of Asian economies and the fate of the people will be decided by our response.
Economic Globalization Trends
- Division of production
- Widening of markets
- Greater the size of the market, more specialization if needed
- Integration of consumption
Economic globalization has exceeded the cultural homogenizing function of nation. Jeans are a good example.
McDonald is another example.
Liberalization, internationalization, and networks allow North Americans to enjoy the cheapest goods in the world.
Customer's Demand
- Speed
- Convenience
- Good price
- Selection
- Green pro
- Healthy pro
The US's impression situation 1999 economic growth rate = 4%.
Unemployment rate down from 6% to 4%.
Consumer Price Index only increased by 1.9%, the lowest rate for 34 years.
The advantages of the US come from
1) Liberationization and internationlization
2) moving towards a knowledge economy and building of a high-speed information network infrastructure
US manufacturing shift to Asia; focus on Intellectual Property.
Physical => Virtual => Knowledge Economy
Without internet, the knowledge economy cannot grow so rapidly.
China's Opportunity
China's advantages:
1) Possesses production capability
2) Has become a global manufacturing center
3) Has a large virgin market
Asia's competitive edge:
OEM => ODM/EMS => OBM
Developed countries:
R&D => Design =. Production
Taiwan's Backward Integration:
Production => Design => R&D
ODM OBM (Customer-driven) New Paradigm
OEM (Cost-driven) Prevailing Paradigm
New Paradigm Pioneer (CPC) launched a national Quality Promotion Program in 1988
- Paradigm shift is a necessity
- Revolutionizing the way we think and do business
- In the era of knowledge economy, the invisible things are much more valuable than the visible.
China's Challenges
The challenges faced by the agricultural sector
- Crops like soya, maize and wheat etc. will be unable to compete against the GM crops produced by the industrialized countries; livestock also won't be able to compete against that produced by the advanced countries.
- An even more serious problem is the distribution of agricultural products
- Locally-produced products have to be "fresh" to be competitive
The challenges faced by the financial sector
- Speeding up financial sector's reform
Speed up the opening of the service sector: Speeding up the service sector will create more eonomic vitality, increase job opportunities and stimulate the modernization of the domestic service sector.
American Express
Their revenue in 1996 was US$16.2 billion , of this US$12 billion came from the US market, with revenue from the overseas markets only about US$4.2 billion, or about 25% of the total. However, its overseas employees made up 40% of the total. Of US$16.2 billion in revenues, the percentage contributed by the overseas markets to the parent was only about 3% or US$500 million.
Merrill Lynch
Of their 1996 revenues,76% came from the US market, and 24% from overseas. Like AE, only 3% of this could be contributed to the parent company.
Digital Divide - Knowledge Divide
Overcoming a lack of desire for progress and not knowing the importance of learning are the biggest challenges.
What we do need is "A VERY STRONG AMBITION".
Learning is the most important investment.
Establish Core Competence
- Core competence is "providing customers distinctive values - that others cannot provide".
Reinventing your Business on the WEB is a must
- Today we should watch two worlds, one is Physical world and the other is Virtual world.
- E-Commerce : Physical store + Virtual store
Don't strive for something better, but make something different
Information Infrastructure
Business model & Product concept should come first
Apply knowledge to create Customer Value Chain
The network is the Business!
The core of Networking Economy is knowledge creation and sharing, and its root is creativity (or innovation). -- Casper SHIH
Provices : Product+services
Only an e-enterprise with customers at its centre can become a first-rate one.
E-commerce is definitely the future mainstream in buying and selling and it will be 100% customer-oriented.
The success of an enterprise (organization) is determined by the ability of its employee's learning speed -- Casper Shih
In today's rapid change of business environment, you must develop a set of new rule of the game for competition.
200 years ago the US began to develop the West and the American dream began. Today, the development of the West of China should give the Chinese a "Chinese Dream".
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