VIETNAM 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

Code:

9 31 01 06

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

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

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
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
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current 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

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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

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

2.1.2.2. Subjects participating in the supply chain
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

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:
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- 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

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

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

processing zone) and optoelectronics (optoelectronics) products (processing
zones) export Taichung). These 3 Nantze, Kaohsiung and Taichung export
processing zones are also the largest FDI attraction in Taiwan. So far, there are
8 processing zones in Taiwan, built in central and southern Taiwan.
3.2.3. Developing small and medium enterprises to effectively participate in
the global IT supply chain
According to the Ministry of Economic Relations, in 2010 Taiwan had about
1.24 million small and medium enterprises, accounting for 97.77% of Taiwan's
total enterprises. To support the development of small and medium enterprises,
the Taiwanese government has established a number of funds such as the Small
and Medium Enterprise Development Fund and the National Development Fund.
In Taiwan today there are about 140 incubators and 81% of them belong to
universities. Taiwan also has two venture capital funds, Angel Fund and National
Development Fund (NDF), to invest in reciprocal investments in the internet
sector with international investment funds.
3.2.4. Developing human resources for IT
Taiwan in the process of IT industrialization and development has been very
successful in investing in developing highly qualified human resources in a
systematic and serious way. In the process of industrialization, Taiwan was soon
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devoting resources to invest in developing human resources to meet the
technology transfer process, thus jumping up the technological ladder higher
than many other developing countries. . The economic development process of
Taiwan in general and the IT industry in particular has a close connection with
education and vocational training in high-tech industries. According to Taiwan
Ministry of Education (2012) data, Taiwan as of 2012 has 155 high-level
vocational schools, 14 low-level universities and 77 research universities. A total
of 246 universities and vocational schools across the country. The boom of the

During this period, Taiwan's production and export of IT goods was mainly
related to intermediate goods such as electronic circuits, packaging and testing
of electronic IC products, liquid crystal displays (LCD ), light-emitting diodes
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(LEDs) ... In general during the 1980s, Taiwanese enterprises focused on global
supply chains in OEM form, becoming order-processing manufacturers .
In the 1990s, the Taiwanese government made an effort to invest in IT,
shifting the development of this industry from a production-oriented stage to an
investment-oriented stage. , leading to the rapid development of the IT industry
since 1992. At this time, Taiwan has become the third largest IT producer in the
world, in which the concentration of IT investment is mainly the type of TFT
screen. -LCD. Since 1996, grasping the huge market demand for tablets
(notebooks) and network monitors, Taiwan has focused on attracting FDI and
Japanese technology transfer to produce. Massively these types of products,
become a major TFT-LCD supplier worldwide. In 1999, Taiwan exceeded Japan
for the first time in notebook production. Along with that, Taiwan also focuses
on investing in hardware IT industry and is always at the leading position in the
world market share in products such as computer keyboards, monitors, scanner,
graphich cards and modems. However, the hardware IT industry in Taiwan
during this period still focused on manufacturing reticent computers, so Taiwan
has slowly upgraded high value-added activities of hardware in the IT industry.
global value chain.
Supplier jobs for major firms around the world have helped Taiwanese
businesses capture diverse technologies and management know-how. During this
period, Taiwan tried to upgrade its IT industry from original equipment
manufacturer (OEM) to original designer (original design manufacturer - ODM)
on order. In the process of participating in ODM, Taiwanese IT firms are trying
to hold the pioneering position in technology, gradually shifting to the stage of

focused on R&D investment, participating in cross-border supply chain
management, logistics services and after-sales services.
Second, Taiwan is deeply involved in ODM and OEM supply chains both in
hardware and software IT products
In the past few years, Taiwan's IT products have always achieved high growth
rates in export turnover. Many products have high export value and occupy an
important position in the world market, especially notebook and netbook
products (NB PC), tablet, motherboard (motherboard - MB), server (server ) and
liquid crystal display (LCD MTR). In 2014, notbook and netbooks accounted for
84.9% of the world market share, motherboards accounted for 85%, servers
accounted for 85.9% and LCD MTR accounted for 66.5% of the world market
share. In the field of software technology, Taiwanese businesses have recently
designed and launched the world of 4G LTE network service equipment, favored
by consumers all over the world. Taiwan has become a provider of affordable
and competitive quality smartphone devices in the ODM and OEM supply
model, and has expanded the brand of 4G LTE products worldwide.
The dominance of Taiwan's hardware and software IT products market share
in the global market has made Taiwan an increasingly important position in the
global IT supply chain.
Thirdly, the linking stages in the global supply chain of Taiwan IT industry
ensure smooth and efficient
To deeply participate in the global supply chain, Taiwan's large information
businesses have expanded their production networks around the world, thus
forming a close relationship between production and consumption. final. For
example, Acer firm currently has subsidiaries in many parts of the world,
typically in the US, Central and Middle East, China and Latin America.
Fourth, the level of cooperation in the supply chain of the IT industry is
relatively effective, products go to the end consumers
Through supply contract relationships with trademark-owned companies and
leading manufacturing networks around the world, Taiwan OEMs and ODMs

times that Taiwan's IT enterprises have chosen China as Taiwan's overseas
production base, strengthening FDI into China in the IT fields, bringing China
back. become the location for IT products processing for Taiwan to take
advantage of labor and land in China.
Second, the Bullwhip effect in the Taiwan IT industry supply chain: The
Bullwhip effect (the whip effect) suggests that inaccurate demand information
conveys from one supply chain component to another. can lead to huge waste:
excessive reserve levels, bad customer service, loss of sales, incorrect production
plans, inefficient transportation. In Taiwan, due to the many achievements in IT
development and high rankings in the global supply chain for this product for a
long time, the demand for IT product forecasts in the world market becomes
inaccurate. In recent years, Taiwan's hardware IT products production has
continuously decreased due to reduced exports and larger inventories, affecting
Taiwan's competitiveness in the global supply chain. In particular, the rise of
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China with Korea's low-cost technology products and higher-quality goods is
making it difficult for Taiwanese IT businesses to join the supply chain.
Thirdly, weakness in branding and product quality improvement: When
participating in OBM chain, most Taiwanese IT enterprises depend on ODM and
OEM to develop their brand. demand and they have to rely on B2B business, ie
e-commerce transactions directly between businesses and businesses. Although
Taiwan has tried to build a brand and bring products to end-users in flexible form
B2B2C, but compared to other competitors in the market such as US and
Japanese IT corporations Korean and Korean, the competitiveness of IT products
in quality still faces many problems.
* Causes of limitations
Firstly, in the global supply chain of IT industry, Taiwanese enterprises focus
heavily on technology innovation and product branding, there is no link and

Hoa, Dong Da, Tan Binh and Hanel are practical evidence for this development.
In recent years, Vietnam's electronics industry occupies an important position
in the regional and world markets. In the early 1990s, there were only about 50
electronic enterprises in the whole industry, now there are about 500 enterprises,
attracting about 250,000 employees and meeting the domestic demand for
electronic products, IT - telecommunications. common with a speed of 20-25%
/ year. From 2005 up to now, the industry has consistently ranked top 10 among
the highest value export sectors of Vietnam. However, Vietnam's electronic
information products are still mainly components and accessories. lawsuit,
located in a low position in the global supply chain.
4.1.2. The position of Vietnam's IT industry in the global supply chain
In the global supply chain, Vietnam's IT industry is at an early stage of
development compared to other countries in the region such as Malaysia,
Thailand and the Philippines, before that, South Korea and Taiwan. In the supply
chain, Vietnamese enterprises are located on the floor / layer of processing,
assembling products, manufacturing components of complex electronic
products. Compared to other industries in Vietnam, Vietnam's participation in
the global supply chain seems to be at lower levels, mainly EMS (electronic
production service) and OEM (spiritual production). Under these manufacturers
are the manufacturers and suppliers of basic materials used in the production of
components and equipment The industry is dominated by FDI enterprises,
including Samsung, Canon, Microsoft, LG, Intel ... The FDI factories in the IT
industry invest in Vietnam to reduce production costs by channel: FDI
enterprises import most of the necessary components for production, after that
has gradually shifted to using local input sources to simplify input logistics
activities.
However, because domestic enterprises in Vietnam's IT industry are weak,
FDI enterprises in this sector account for 90-95% of export value and 60% of
domestic consumption demand. Domestic small and medium enterprises have
low added value. FDI companies do not use domestic supply but mainly import

deeply participate in the global supply chain.
4.2. Lessons learned from Taiwan
Lesson 1: The Government has reasonable support policies in IT
development.
One point to note is that Taiwanese companies are not protected against
foreign corporations because the Government has a strategy to create a healthy
competitive environment between domestic and foreign companies. Moreover,
IT research institutes in Taiwan are not State organizations, but only receive state
support in terms of mechanisms, policies, infrastructure and finance. The state is
also not fully subsidized, annually supporting a part of regular funding (based on
performance results) and providing research funding through research tasks
(financing under competition mechanisms) . At the same time, research institutes
must also find other sources of income from the industrial sector, from their
patent rights ... Lessons learned from Taiwan are when the government actively
supports research institutes and IT development technology parks, talent is an
invaluable asset.
Lesson 2: Employee's ability to learn and a good education system has helped
Taiwan's IT industry absorb good technology transfer and master the
technological know-how of transnational companies.
Lesson 3: Quality, cost and service are the main pillars for Taiwan IT products
to successfully participate in the global supply chain. Quality is a prerequisite.
Taiwanese IT enterprises had to conduct a series of rigorous quality tests. In
terms of investment, the advantage with a wide range of products in the demand21


supply IT supply chain, Taiwan IT enterprises have provided products with the
most reasonable prices.
Lesson 4: Encourage Taiwanese IT businesses to develop product brands. In
order to build a successful global brand, some Taiwanese IT businesses have to
go through people who are able to create consumer trends to promote their

- Identify typical supporting industry products of the IT industry, to focus on
investment in order to improve the content of gray matter, science - technology
into the fields, product groups with edge advantages paintings and high added
value. The State needs to invest strongly in the portfolio of products to support
IT industry, etc.
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- Identify appropriate product, market and customer segments to effectively
participate in the global supply chain of Vietnamese businesses.
Secondly, focus on developing human resources for the IT industry.
- Need to think from the perspective of both comprehensive and labororiented sequences in the chain of production and supply in accordance with the
development trend of the world's advanced science and technology. It is
necessary to build and improve advanced policies and standards for high quality
human resources in each segment of the IT supply chain; Check and evaluate the
quality of human resources.
- Building a reasonable industry structure in the IT industry, thereby
identifying priorities in human resource development. In each segment, there will
be methodical and specific measures to develop human resources.
- Arrange, segment, supplement and perfect training institutions at all levels
in training IT human resources (vocational training, college, university and
postgraduate). Associating theoretical training with practice, scientific research,
especially passion for scientific research.
- It is necessary to review and select qualified and appropriate institutes and
universities to organize the training program with practical use of IT enterprises;
effectively applying and exploiting the assistance of trade promotion
organizations, scientific and technical research and development organizations
of foreign countries such as JETRO, JICA (Japan), KATECH (Korea), INSA
LYON (France), etc.
- Build research institutes, applications and organizations in the IT field.

focusing on building and promoting corporate image to enhance the level of trust
in transactions with suppliers.
- Encourage and have preferential policies for small and medium enterprises
to invest in innovation of modern technology and equipment, not polluting the
environment.
- Actively improve the production process and perfect the standards in
supplying products and components for FDI factories such as Samsung, Itel, LG,
etc.
- Support to build and improve the capacity of small and medium enterprises
to participate in the supply chain.
- Develop active strategies on the supply of raw materials, equipment,
components and other products for small and medium enterprises, helping small
and medium enterprises effectively utilize domestic raw materials, term import
processing, gradually self-sufficient domestic materials, and limiting and
minimizing inventory and product defects when participating in the supply chain.
Sixth, developing infrastructure for IT industry
- Development of airports in the region, IT industry cluster should be
concerned.
- Stable power supply system is also essential for IT industry.
CONCLUSION
First, participating in the global supply chain is a necessary task for each
country to be able to upgrade the position and rank of its economy and the key
products of each country. international markets. To join the global supply chain,
countries use a variety of different measures and policies, depending on the
industry/ product) because participating in global supply chains is not easy. first
of all in the internal forces of domestic enterprises, the competitiveness of
enterprises, government support policies, to minimize the risks and faults that are
always present in the supply chain. Especially in the context of global supply
chain IT industry has a very high level of product outsourcing and outsourcing.
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groups of policy recommendations and some solutions to implement those
recommendations. Derived from Vietnamese practices and practices to join the
global supply chain of Taiwan's IT industry, policy recommendations and
solutions that hope to have practical value to help Vietnam improve its industry
production capacity. IT, more deeply involved in the global supply chain.

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