Linking Mexico, the Czech Republic, Slovakia, and the EU to Consolidate Taiwan's Position in the Global Supply Chain

By Liu Chia-yu

In the face of the ever-changing future, the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA) on Dec 18, 2020 held the "2020 TEEMA Global Networking Forum" at the Taipei International Convention Center to provide Taiwanese information and communications technology (ICT), electrical and electronic sectors with an in-depth understanding of the business opportunities in regions with investment potential around the world, such as Mexico, the Czech Republic, Slovakia and the European Union (EU). Alongside a full house, a live stream of the event captured the attention of many who were interested in the situation in Europe and the US.

Linking up with European and American Industries to Create a New Future for Taiwan

Richard Lee, Chairman of TEEMA and Confederation of Industrial Chambers of Mexico (CONCAMIN) Ambassador to Taiwan, pointed out in his speech that, as a result of the trade dispute between the US and China and the COVID-19 outbreak, the global manufacturing supply chain has undergone an accelerated restructuring, which aims at diversifying risks and getting closer to the end markets. Therefore, from 2018 onwards, Taiwanese companies have changed their strategy by shifting their substantial investments away from China, with most of them going back to Taiwan and Southeast Asia, while others have moved to the USMexico border, Central and Eastern European countries and other regions. With Taiwan's enterprises relocating to other regions, TEEMA, as the driving force behind the global deployment of Taiwan's ICT industry, organized the "2020 TEEMA Global Networking Forum," inviting key figures from Mexico, the Czech Republic, Slovakia and the EU to discuss the opportunities and likelihood of linking up with Taiwan's industries.
As the global supply chain is being reorganized,Deputy Minister of Ministry of Economic Affairs Chernchyi Chen said that Taiwan should make decisions in terms of industry, investment and the international economic landscape to actively join a new global supply chain. In this regard, the government is working to sign agreements with the US and deepen industrial ties with the EU. Today's forum could also help Taiwan's industry to maneuver itself into position within the global market, bringing Taiwanese manufacturers closer to the European and American markets and integrating them into the global supply system.
Despite the impact of the pandemic on the global economy, bilateral economic and trade cooperation between Taiwan and Mexico has not been affected too much, specially in the electronics industry along the US-Mexico border, which has benefited from the growth in demand for information products such as computers and servers arising from e-commerce and remote work from home, leading to an increase in exports of electronic components to Mexico, said Armando Cheng, Representative of the Taipei Economic and Cultural Office in Mexico.
Martin Torres, head of the Mexican Trade Services Documentation and Cultural Office in Taipei, said that in 2020, Mexico and Taiwan have forged stronger political and economic ties, that Mexico attaches great importance to cooperation between the two countries as CONCAMIN has signed MOUs with TEEMA and the Chinese National Federation of Industries (CNFI),and that today's forum would allow the two sides to engage in further talks to strengthen a partnership between Mexican and Taiwanese businesses. Taiwan External Trade Development Council (TAITRA) Chairman James Huang said that in the coming years, Taiwanese companies should maintain close ties with their international partners in terms of regionalization and localization so that Taiwan can continue to play the role of a key integrator. CNFI Director Ray Lin stressed that Taiwan should link up more with the US, Canada and Mexico as a means of integrating into the North American supply chain ecosystem.

Suggestions for Taiwan to Invest in Mexico in the Post-Pandemic Era

The theme of "Advice for Taiwanese Companies Investing in Mexico in the Post-Pandemic Era after the US Presidential Election," in which a number of representatives from the Mexican side presented suggestions for Taiwanese businesses to invest in Mexico, focusing on the country's industrial and trade advantages. In his opening remarks, CONCAMIN President Francisco Cervantes Diaz said that the forum would strengthen the relationship between Mexico and Taiwan, moving beyond the dialogue phase and towards concrete and substantial projects.
Alejandra de la Vega, Secretary of Innovation and Economic Development in Chihuahua, Mexico said that Taiwan has been a steadfast partner throughout Mexico's economic development, especially in Chihuahua, the largest state in the country, where hightech companies, such as Inventec Corporation, have a strong presence. With the technology industry having a profound impact on every aspect of people's lives in recent years, the demand for related components and products has grown significantly. It is suggested that Taiwanese companies can step up the development of the digital technology and medical industries in Mexico,leveraging the research and development capabilities and technological strengths of Taiwan's manufacturing sector, as well as the State of Chihuahua's abundant human resources in technology, science, engineering and data, to enhance mutual cooperation and create a win-win situation.
Mexico is the seventh largest exporters in the world, and has entered into free trade agreements (FTAs) with nearly 50 countries worldwide, including Australia, Brunei and Malaysia, and plays a vital role in global economic and trade activities, a crucial link in the global digital trade system, said Carlos Funes Garay,Chairman of the Mexican Chamber of Electronics, Telecommunications and Information Technologies (CANIETI). In less than a decade, Mexico's IT services exports have soared from US$200 million to over US$6 billion, a 30-fold increase, making the country one of the best bets for Taiwan's high-tech industry to tap into the global market, he added.
Speaking on the theme "Why Invest in Mexico in the Post-Pandemic Era," Hugo Alberto Gomez Sierra, Chairman of the National Chamber of Electric Manufactures (CANAME), noted that as a result of the United States–Mexico–Canada Agreement (USMCA),Mexico has become an important production base for global companies to access the US market, and with the Mexican government making efforts to boost investment by reducing taxes, Mexico is now one of the most competitive countries in the world with respect to production, and Taiwanese companies should capitalize on such opportunities.
Mexico has geographical advantages, and its performance from 2016 to 2020 is getting stronger. The overall manufacturing industry is well established, and automotive components and ICT industries are crucial pillars that support Mexican economy, offering ample opportunities for Taiwanese companies to enter the market at this point in time, said Alessandro Perrotta,Ambassador of CONCAMIN in Singapore.

How to Help Taiwan's Electronics Industry Expand into the US and Mexico Markets

Brian Lee, Deputy Director of the Market Development Department of TAITRA, and Peter Chao, General Manager of Wistron Mexico, presented their views on the topic of "How to Help Taiwan's Electronics Industry Enter the US-Mexico Market,"Brian Lee, in his speech on the theme of " TAITRA Marketing Services in Mexico," noted that there are seven major markets in the process of global supply chain restructuring, of which the US is the primary one, while Mexico is an important production base for Taiwan's ICT, green energy and automotive industries to break into the US market. The trade war and the pandemic have significantly increased the importance of the Mexican industry in the global supply chain, driving business opportunities in panels,semiconductors, passive components, software,electricity, metal parts, electronic assemblies and other related components, Brian Lee stressed. In addition, the Biden dministration's future energysaving policies in the US are likely to boost demand for electric vehicles. Currently, 95% of the world's tier 1 auto parts suppliers are investing in plants in Mexico,highlighting the vital role that Mexico plays in the global electric vehicle supply chain.
Peter Chao, speaking on the topic of "Opportunities and Challenges for Taiwan's Supply Chain in Mexico,"pointed out that in the past, Taiwan's ICT industry has mostly relied on the maquiladora program to set up factories along the US-Mexico border, including such Taiwanese heavyweights as Inventec, Foxconn,Pegatron, YFY, Wistron, and Wiwynn, all of which are concentrated in the city of Juarez, Chihuahua, as only a river separates the border between the city in Mexico and El Paso, Texas, USA. Nowadays in the midst of the US-China trade war and the pandemic, localization of the industrial chain has become a priority, reinforcing the need for Taiwanese powerhouses to set up factories in Chihuahua, Mexico, including those in the metal stamping industry, printed circuit board industry, wire and power supply industry, as well as automation equipment, production line equipment and test fixtures.
However, the time difference between Mexico and Taiwan is as long as 15 hours, and the language and culture are completely different, so the industry associations of both sides are actively building up a platform for exchange. Through the platform, various expositions, technical exchange seminars, and annual visits by professional associations can be organized for member companies in different cities of Taiwan and Mexico so that enterprises from both sides can have more opportunities to showcase their products and exchange ideas. In addition, further strategic alliances between professional associations of the two countries can be forged to promote industrial collaboration.
When it comes to business cooperation models,Taiwanese companies do not necessarily have to work alone, they can work with their Mexican partners on an upstream and downstream basis, for example,Taiwan companies for design and manufacturing, and Mexican partners for local services; or Taiwan for design and Mexico for manufacturing, or even joint ventures,to create a cooperation model that complements each other's strengths and enhances competitiveness.
It goes without saying that in response to the trend towards localization of supply chains, Taiwan must be more integrated with the world, and Mexico,with its booming economy, is undoubtedly one of Taiwan's most important global partners.
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