Strategy for Global Logistics Management –

Based on the Study of Bicycle Manufacturing by

Fiege Goth Logistics Services Ltd.
Dr. Tsai Chen Li, Department of Marketing Logistics Management,
Chihlee Institute of Technology, Taipei, Taiwan
Dr. Chang-Hsing Chang, Department of International Trade, The Overseas Chinese Institute of
Technology, Taipei, Taiwan

ABSTRACT

This study was based on the strategic viewpoint of global logistics management and the case study
of Fiege Goth Logistics Services Ltd. to investigate how Taiwan can speed up the development of
becoming the Global Logistics Center and strive for the market space in the international arena, after its
accession into the World Trade Organization (WTO).
For that purpose, I used the method of literature review to divide my research into four parts. In
the first place, I made a systematic analysis on the global industry with emphasis on the status of bicycle
and global sea freight development in comparison with that of Taiwan for understanding the background
of global logistic management. Next, I analyzed the trends of global supply network and the factors of
global bicycle logistics management. Thirdly, I conducted a case research study with stress on the
history of Fiege Goth Logistics Services and its current strategy in logistics management. Finally, I
researched the strategy for logistics management of Taiwan in sea freight after its entry into the WTO for
the reference of government in developing Taiwan as the global logistics management center.

INTRODUCTION

Background and Motivation of the Study

Manufacturing has always been the power for the economic development in Taiwan. Some of its
products, such as monitors, personal computers, bicycles and synthetic fiber, have ranked in the third
place of the world market based on the calculation of product values or export values. In recent years,
the companies of Taiwan have made more than twenty thousand cases of investment in Southeast Asian
countries and China. All of the materials, parts, dice, mechanical equipment, manufacturing equipment,
manufacturing technique and management are supplied from Taiwan. In fact, Taiwan has become the
pivot of international manufacturing and supply, and its industry has the tendency of becoming the center
of Global Logistics (GL), after being upgraded from Original Equipment Manufacture (OEM) to Original
Design Manufacture (ODM) to ODL.
The traditional transportation can provide, with limitation, the simple service of sea freight (exports
or imports), airfreight, railway or highway to the customers. After entering the 21 st century, it has
developed to be an Electronic Era (E-era) with the fast service of the Internet, E-Commerce and
E-Banking. Without the electronic service, a company can hardly exist, but the service of electronics is
not the panacea for occupying the market share. The starting of E-era has not only changed the
management models of enterprises, but also improved the company’s relationships with suppliers and
customers by:

136 The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008
1. Raising the management efficiency and working efficiency
a. The function of mass handling, storage, analysis and filing of data.
b. The function of speedy collection, search, broadcasting and delivery of information.
2. Lowering the demand of manpower. The E-service has the function of automation, accuracy and
continued mass production, the dependency on manpower has been greatly reduced.
3. Providing better service to customers. With the function of speedy and complete service, the
company can provide better service to the customers. The definitions of customers include the
suppliers, up stream factories, down stream factories and all related departments within enterprises.
At present, there are hundreds of companies in Taipei that engage in the service business. If we
expand to the whole Taiwan or the world, the numbers will be much higher.
Under the drastic changes in management, the rise in standards and the multiplication of products,
the demands of customers for higher quality of products have increased day by day. The development
of the global logistics management is in compliance with that trend. Through the Internet, the customers
can get information instantly. This trend has made a great impact to the enterprises in emphasizing the
relationships with customers.

Purpose of the Study

The industrial development of Taiwan has changed from a manufacturing-directed to a
service-directed economy. The government will play a very important role in establishing advantageous
environments for the continued growth in economy. The School of Laussane in Switzerland expressed
that the economy of Taiwan cannot continue to depend on the price competition, especially after joining
the WTO, it cannot confine itself to the old method or traditional way, but to raise the value-added
products or transform to be the transportation center or service center. By raising the globalization, can
Taiwan continue to keep the competitive power? I would like to look into the relations between the
global industry and global transportation in ocean freight and air cargo and the relations between the
industry and transportation in Taiwan for the analysis of the supply chains and logistics management.
By analyzing the main seaports for ocean freight in cargo management and the supply and demand of the
cargo, I can provide the government with a blueprint for the development of global logistics center.
Therefore, the purpose of my study will include:
1. Analyzing the global development in ocean freight and air cargo and comparing it with the status of
Taiwan to find out if there is any positive correlation.
2. Analyzing the factors for the supply chains and the global logistics operation center as well as the
choice of establishing the global logistics center in Asia -Pacific area through the understanding of
internationalization of seaports in Asia-Pacific area and the advantages in taxation and transportation,
the development of the surrounding areas and public facilities, and the level of laborer and cost. This
is my second purpose in the study.

Limitations in the Study

1. Limitation in the research data
In regard to the data for the bicycle, only the years of 1999 and 2000 could be obtained. As for the
year 2001, it was quite difficult to have the complete one for the following reasons:
a. With the rapid changes in international trade, production, and investment environment, the bicycle
industry of Taiwan changes. Especially, for seeking the cheaper labor and natural resources, most of
the companies have moved their plants to China or Southeast Asian countries. Therefore, it is quite
difficult to get the accurate figures.

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b. For large-scale companies, such as Giants, Chienta, Youchun, Changshin, Mingtien, etc., they have
headquarters in Taiwan, and the plants in China or foreign countries. The finance of each plant is
independent, and therefore it is not easy to get the detailed data.

GLOBAL LOGISTICS MANAGEMENT

The Meaning of Logistics

The concept of logistics.
Logistics is the flow of goods. Today, the meaning of goods must be defined from a wider angle
for a systematic establishment of entrepreneurial logistics management. What are goods? They
include the general merchandise, such as the products of agriculture, husbandry, fishing, raw materials,
semi-products, parts, finished products, parcels and rubbish. It also includes some characteristics, which
are not recognized in the traditional ways, such as electricity, electronic files, credit cards, check or paper
money, and the professional services, such as the office supplies, packing materials, logistic service, and
janitor service. The flow of goods will be accomplished by trading, sales, logistic service through the
coordination of person, location and information.
The definition of logistics.
The Business Logistics of the world is based on the definition of Council of Logistics Management,
USA in 1998. It defines logistics as ―that part of the supply chain process that plans, implements, and
controls the efficient, effective flow and storage of goods, services and related information from the point
of origin to the point of consumption in order to meet customers’ requirements.‖

Supply of materials Production Sales

Supply of (Manufacturer) Logistics Consumption

Materials Plant Center location

Logistics supply Logistic sales

Logistics

Figure 1: The Meaning of Logistics

Scope of logistics.
The management of entrepreneurial logistics is the design and management of the control system to
supply goods that include raw materials, semi-products, finished products, and rubbish for the
accomplishment of the entrepreneurial strategy.
Generally speaking, the cost of logistics occupies 5-35% of the sales amount that constitutes an
important item in cost of business. Therefore, the logistics has always played an important role in the
business. With today’s development of supply chains, the logistics management has become the main
target of an enterprise.

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 The following table shows a comparison of logistic costs with GDP in different countries.

Table 1: Logistics Costs and GDP

Country GDP Cost of logistics % of GDP
(Unit: $ billion) (Unit: $ billion)
Taiwan 308 40 13.1
China 4,250 718 16.9
Singapore 85 12 13.9
Hong Kong 175 24 13.7
Japan 3,080 351 11.4
US 8,083 849 10.5
Great Britain 1,242 125 10.1
Source: International Financial Statistics, Washington D.C., IMF, 1997

The Meaning of Global Logistics Management

Concept of global logistics management.
The global logistics management is the concept of developed management. For a better
understanding, we have to understand the meaning of logistics management and the supply chains
management.

LOGISTICS (in a broad sense)

Material logistics Production logistics Sales logistics Rubbish

(in a narrow sense)

Figure 2: Global Logistics Management

The aim of the enterprises in establishing the logics center can be: (1) increasing the market
efficiency, (2) lowering the cost, and (3) raising the quality of service. Among them, raising the quality
of service to satisfy the customers has become the trend of the global development.
In our modern society, the consumers are less loyal to the brand name products, because the quality
of the different products is similar. In case of shortage in a certain brand, consumers will switch to the
other brands. To cope with the tastes of consumers, stores will try to sell the popular items with fewer
inventories. But in order to prevent the shortage of products, the increase in number of delivery with
fast service is required. To solve such problems, the establishment of logistics center is the solution.
The advantages of logistics center are: (1) reducing the delivery time, (2) increasing the delivery times,
(3) lowering the shortage of products, (4) making speedy delivery or even deliver on holidays, and (5)
improving the service quality.
The function of logistics is different from the traditional warehousing or transportation. The
regular warehousing pays attention to the storage only. As for the general transportation, it provides the
shipping of goods. In logistics, the functions include: (a) storage of goods (refrigeration, frozen or
regular temperature), (b) adjustment of the goods, (c) flow and sales of the goods, (d) providing
information; and (e) delivering of goods.
A comparison of traditional shipping and logistics can be explained in the following figure.

The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008 139
M x N=25

Number of suppliers M 1 2 3 4 5

Number of retailers N 1 2 3 4 5
Delivery under modern logistics
M x N= 10
Number of suppliers M 1 2 3 4 5

Logistics center

Number of retailers N 1 2 3 4 5

Figure 3: Comparison of Traditional Shipping and Logistics

Table 2: Losistics Center Improvement

Item Without Logistics Center With Logistics Center Improvement
Frequency/day Time/day Frequency/day Time/day Frequency/day Time/day
Order 150 450 1 20 -149 -330
Delivery 105,000 850 104,150
Receiving 150 750 1 30 -149 -720
Notes: 150 means 150 times; 450 means 450 minutes.

Table 3: The Benefits for the Establishment of a Logistics Center

Item Business center Logistics center Benefits
Station 24 3
Director 24 12 -12
Accountant 24 9 -15
Inventory 24 9 -15
Computer 24 15 -9
Truck 96 75 -11
Note: Based on the assumption of business status in Taiwan

The logistics system consists of the characteristics of logistics, technique of logistics and facility of
logistics.
The service quality of logistics—S. The difference between the logistics center and the traditional
business center is in the quality of service. In the past, the retailers had to pick up the goods, and took
3-5 days for placing the order. But now everything has changed. Here we have to pay attention to the

140 The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008
fact that the quality of logistics service will be in proportion to the cost. From the viewpoint of the
customers, they would like to get the best service with lowest cost. Therefore, the standard of logistics
service will have a reasonable cost.
Delivery time of logistics –T. Under the logistics service, the time of delivery is very important.
The delay or inaccuracy in delivery time will seriously affect the business of the retailers. The time of
delivery starts with placing the order, inventory checking, loading and ends with delivery to the customers.
To meet the demands of customers and the rule of economic transportation, the shipment can be divided
into different classifications. For example, Class A with large order will deliver ever day; Class B with
medium order will deliver every other day; Class C with smaller order will deliver in three days or four
days. But there is the exception, if the order of customers reached the point of economic delivery, then
it can have a flexible delivery time to meet their demands.

Table 4: Global Logistics

Classification of goods Export Import Transferring
Current status Export only Import only Transferring only
Expectation Export Import Transerring
Global logistics center Asian supply center Asian processing center
Global supply center Asian service center
Global service center
Source: Su Yi-hsiung, Perspective of Global Logistics Center

MEASURES FOR TAIWAN’S BICYCLE MANUFACTURING BUSINESS

IN GLOBAL LOGISTICS MANAGEMENT

Current Status of Taiwan’s Bicycle Imports/Exports

To continue the leadership in bicycles, Taiwan is aggressively doing research. In terms of the
current industry status, according to the Industry Association, there are 410 listed bicycle manufacturing
companies (including parts manufacturing) in Taiwan, with more than 60% of them located in Taichung
City and Changhua County. As far as the scale of companies are concerned, there are nine companies
ranked in the 1,000 largest manufacturing companies. Among the nine companies, six of them have
issued stock and traded publicly. They are Giant, Melita, Chuanfei, Lichi, Tsenshing and Zupeng. The
Giant, with business revenue of NT $6.8 billion (1998) is the largest, followed by Melita and Lichi.
Based on the statistics of the Bicycle Company Handbook, in 1998, Taiwan manufactured 10.57
million bicycles, with a value of NT $39 billion. In 1999, the production increased to 11 million with
value of 42 billion.
The business of the parts is following the booming of the bicycle. In 1991, Taiwan made a record
of NT $29.68 billion, but following the increases of inventory and the price competition, the amount
fluctuates. For the past few years, the average amount was kept between NT $26 billion to 35 billion.

Table 5: Statistics on the Bicycle Production of Taiwan

Bicycle Industry Total
Parts
Production Value values
Year Average (Unit of
(Unit of (Unit of (Unit of
(Dollar/unit) million)
thousand) million) Million)
1990 7,795 27,143 3,482 25,845 52,988
1991 8,362 31,240 3,558 29,860 60,920
1992 8,074 27,142 3,362 28,503 55,645

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 1993 8,260 31,580 3,823 31,557 63,137
1994 7,914 29,286 3,700 33,263 62,548
1995 8,039 30,785 3,829 33,678 64,464
1996 7,824 28,592 3,654 33,157 61,749
1997 7,672 27,934 3,641 31,794 59,757
1998 9,043 36,153 3,998 34,701 70,855
1999 7,228 29,237 4,045 31,018 60,255
The combined growth rate
-2.6 -1.3 1.4 -2.0 -1.7
from 1995-1999
The combined growth rate
-0.8 0.8 1.7 2.0 1.4
from 1990-1999
Source: Statistics Department, Ministry of Economic Affairs and Data Center of Industrial Research Institute IT IS Plan

Analysis on the bicycle and parts import/export.

In Taiwan, the bicycle manufacturing is an export-directed industry. Each year, it shows a
favorable balance of trade. The average export of bicycle and parts is about six folds of import, and
make a great contribution to foreign exchange reserve. In 1995, the exports made a record of 40 billion
with a favorable balance of 33.6 billion. In 1997, as the move of industry to China and the economic
recession, the favorable balance was down to 30.2 billion. It was down about 10%, in comparison with
that of 1995. In the future, the bicycle industry in Taiwan will produce the high value-added products
and to be internationalized to continue the competitive power. As Taiwan’s high value parts of bicycle
cannot compete with the Japanese products, it has to depend on import. In addition, there is a strong
price competition from China and Southeast Asian countries. For the part of speed change, Nozima of
Japan is the leader of the world. As for the brake, with improvement in technology, the product of Lichi
is catching up the products of Japan.

Table 6: Analysis on the Recent Export/Import of Bicycles in Taiwan Unit: NT$ 100 thousand
1995 1996 1997 1998 1999
Export 281,837 269,063 245,191 299,254 245,285
Growth 8% -5% -9% 22% -18%
Bicycle Import 13 8 22 30 3
Growth 333% -38% 175% 36% -90%
Balance 281,824 269,055 245,169 299,244 245,232
Export 120,233 114,498 118,825 123,528 129,286
Growth 0% -5% 4% 4% 5%
Parts Import 65,826 57,092 61,553 82,717 70,624
Growth 5% -13% 8% 34% -15%
Balance 54,407 57,406 57,272 40,811 58,662
Export 402,070 383,561 364,016 422,782 374,521
Growth 5% -5% -5% 16% -2%
Industry Import 65,839 57,100 61,575 82,747 70,627
Growth 5% -13% 8% 34% -15%
Balance 336,231 326,461 402,441 340,035 303,894
Notes: Balance indicates a favorable balance.
Source: Computer files of Customs and Industrial Research Institute IT IS Plan, 2000

In 1998, owing to the strong demands of the world market, Taiwan exported NT $29.9 values of
bicycle, but the following year with weak market demands, the export value was down to 24.5 billion.

142 The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008
 Judging from the records of imports, regardless to imports from which country, the number reached
2,297 bicycles in 1998. As for the rest of the years, the imported number was less than three digits, with
values of about a couple of hundred thousand dollars. For details, please refer to Tables 8 and 9.
According to the reports from Tiensha Magazine, in 1999 the Giant Manufacturing Co. was the
leader of bicycle industry in Taiwan, followed by Melita and Lichi. In recent years, the business of the
Giant dropped 30% and Shunchie was down 43%. But Phillip was up 18% in 1999. For the profits,
after Giant made progress in China and other countries, the result was remarkable. Melinda made a
profit rate of 11.64%. For details, please refer to Table 10.

Table 7: Countries that Taiwan Imports Bicycles From (quantity)

Ran 1995 1996 1997 1998 1999
k Country Amou % Country Amou % Country Amou % Country Amou % Country Amou %
nt nt nt nt nt
1 Malaysi 368 Indones 634 82 US 171 74 Indones 1552 68 Japan 78 54
a 48 ia ia
2 Indones 366 47 US 101 14 Japan 27 12 US 731 31 Indones 57 38
ia ia
3 UK 22 4 Vietna 23 3 Germ 15 7 Japan 8 0 German 8 6
m y
4 US 4 1 China 11 1 Spain 14 6 Thailan 3 0 Denmar 1 1
d k
5 Italy 1 0 Japan 3 0 Switzerla 2 1 German 3 0 China 1 1
nd y
Total 774 10 Total 778 10 Total 229 10 Total 2297 10 Total 145 10
0 0 0 0 0
Source: Computer files of customs and Industrial Research Institute IT IS Plan, 2000

Table 8: Countries Importing Taiwan’s Bicycles in Dollar Amount Unit: Number and %
Rank 1995 1996 1997 1998 1999
Country Amount % Country Amount % Country Amount % Country Amount % Country Amount %
1 US 9,758 35 US 8,475 31 US 7,551 31 US 11,110 37 US 8,725 36
2 Japan 4,220 15 Japan 2,794 10 Japan 2,233 9 Holland 3,071 10 Japan 3,027 12
3 Germany 2,511 8.9 Holland 2,433 9 Holland 2,094 8 Japan 2390 8 Germany 1,929 8
4 Holland 2,017 7.2 Germany 2,072 8 UK 1824 7 UK 2152 7 UK 1,746 7
5 UK 1,357 5 UK 1,435 5 Germany 1,746 7 Germany 1749 6 Holland 1,655 7
6 Switzerland 877 3 Belgium 1,049 4 Belgium 1,034 4 Belgium 1,627 5 Belgium 1,142 5
7 Canada 773 3 France 911 4 France 801 3 Canada 771 3 Canada 628 3
8 Belgium 733 3 Canada 713 3 Norway 663 3 Australia 670 2 Australia 599 2
9 Australia 533 2 Austria 622 2 Canada 649 3 France 637 2 Switzerland 542 2
10 Austria 520 2 Denmark 594 2 Australia 615 3 Sweden 608 2 Norway 452 2
Others 4,886 17 Other 5,808 21 Other 5,309 21 Other 5141 17 Other 4,078 17
Total 28,184 100 Total 26,906 100 Total 24,519 100 Total 29,925 100 Total 24,523 100
Source: Computer files of customs and Industrial Research Institute ITIS Plan, 2000

Table 9: Revenue of Bicycle Industry of Taiwan in 1999

Revenue Growth Rate Net Profit Rate of Profit Production
Rank
(NT$100M) (%) (NT$100M) (%) Capital Number of Value of
Company
Manufacturing (NT$100M) Employees Employees
1999 1998 1997 1999 1998 1999 1998 1999 1998 1999 1998
Industry (NT$M)
1 1 1 228 Giant 46.52 68.10 -31.69 37 5.09 5.89 10.94 8.65 19.76 1,000 4.65
2 2 4 317 Merida 32.72 38.73 -15.04 50 2.09 3.17 6.39 8.19 15.08 700 4.67
3 3 3 407 Lee Chi 24.65 25.03 -1.52 20 2.87 4.62 11.64 18.46 21.02 688 3.58
4 4 7 496 Ming 20.53 -16.88 0.90 260 7.90
Cycle
5 6 6 659 Ideal 15.31 15.86 -3.47 33 0.63 1.11 4.11 7.00 6.16 420 3.65
6 5 2 716 Fairly Bike 13.85 11.69 18.48 4 0.01 0.02 0.07 0.17 0.70. 270 5.13
7 869 Kenstone 10.95 -0.17 -1.55 1.66 190 5.76
8 8 10 973 Sunrace 93.7 -14.35 0.78 8.32 6.07 256 3.66
9 7 8 1,048 Fritzjou 8.41 14.82 -43.25 34 0.88 180 4.67
10 10 9 1,117 Kalloy 7.66 8.51 -9.99 14 0.01 0.12 1.47 202 3.79
11 9 5 1,124 Falcon 7.62 9.87 -22.80 -35 0.18 1.46 2.36 14.79 15.42 285 2.67
Note: Rate of profit= (Net profit/Revenue) x 100 %
Production value of employee= Revenue/Number of employees
Source: Tiensha Magazine May of 1999 and 2000, Industrial Research Institute IT IS Plan, 2000

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Advantages and Analysis of the Bicycle Industry in Taiwan
Analysis on industrial advantages.
1. SWOT analysis
a. Terms for the development of bicycle industry in Taiwan
(1) Advantages:
 With complete upstream and downstream system, the cooperation of parts industry will be beneficial
to the bicycle industry.
 The support of government in research will help the industry greatly.
 With the dexterity in technology and high efficiency, the bicycle industry can handle OEM or ODM.
(2) Disadvantages:
 Some parts such as speed transformer, flying wheel, and brake have to be imported from the other
countries and being controlled by these countries.
 With high rising in labor and land costs as well as the environmental protection, the less value-added
products are losing competitive power.
(3) Opportunity
 The growing demands of leisure and the variety in market are beneficial to
 domestic bicycle industry.
 High awareness in environmental protection can promote the use of bicycles.
 The development of e-commerce can greatly lower the cost and expand the market.
(4) Threat
 The plants that move to foreign countries will compete with domestic manufacturers and become the
potential crisis of industry.
 Because of the speedy development of China, India, and Southeast Asian countries in bicycle industry,
the domestic industry will face the strong competitors.
 The rising of protectionism will be barriers to free trade and unfavorable to the export of Taiwan.
The bicycle industry of Taiwan has long been the leader in the world market, but with the
development of China, India and East European countries, the gap is narrowing. It is imperative for the
government and enterprises of Taiwan to improve the competitive power, so as to continue the leadership.
Besides, the division of labor is the trend of international development. With new competitors, the
policy of localization is the necessary measure. Under such conditions, the move of low price bicycle to
be manufactured in low cost area is inevitable. To cope with the market development, the strategy of the
domestic manufactures is to establish manufacturing plants close to the market. This will also lessen the
pressure from the protectionism.
In addition, the continued research for high quality product is the necessary requirement to maintain
the competitive power. At present, the domestic manufacturers are studying to develop the magnesium
alloy and electric bicycle.
For the marketing, the development of electronic business is the trend. The establishment of
Internet to eliminate the dealers for the direct sales to the end users will greatly enhance sales. The
promotion of Business to Business (B to B) and Business to Consumers (B to C) will establish the sales
network.
In short, the government must cooperate with industry in research, production and sales to keep the
leadership of bicycle industry in the world.

144 The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008
Strengths, weaknesses, opportunities, and threats of Taiwan’s bicycle industry.
The strengths, weaknesses, opportunities, and threats of Taiwan’s bicycle industry can be seen in
the following table.

Table 10: SWOT Competitive Status

Strengths  With high standards in bicycle manufacturing technology, it is easy to develop the
parts industry.
 With an international point of view, the industry has established local
manufacturing and sales center in foreign countries.
 The government of Taiwan encourages the research in parts development.
Weaknesses  Shortage and rising cost in labor have lowered the competitive power in the
international market.
 The maturity in technology has eliminated the barrier to enter the market and
increase the competition.
 Not enough input for high quality research. Being the traditional industry, the
turnover of employees is high and having difficulty to form the research team.
 The development of the parts industry is behind Japan, and controlled by it. With
a small domestic market, the industry is export-oriented, but the small-scale will
hinder the sales channels.
 The depreciation of the Japanese Yen is larger than that of the NT dollar, it is
unfavorable to the parts importers.
Opportunities  With cooperation of industry in parts and bicycle manufacturing, the industry can
produce high quality bicycles.
 The high rising consciousness in exercise and health creates new demands in
Europe, the US and Japan, that will expand the markets.
Threats  The rising of protectionism prevents the free trade and affects the sales of bicycles.
 The moving of domestic manufacturers to China creates strong competitors. The
low priced bicycles from China, India and the southeast countries become competitors
in the world market.
 The anti-dumping tax charged by European Union constitutes a strong threat to the
small and mid-scale enterprises.

Analysis on International Competition

Porter (1998), master of the US competitive analyst, considered that the competitive power of a
nation in international market would depend on four environment factors. They are production elements,
demand conditions, the expression and support of related industry, and strategy and structure of
enterprises and competitors.
Production elements.
The natural resources of a nation will play a very important role in the competition. In recent
years, China and Thailand have created competitive power in manufacturing industry by cheap labor.
To an economically advanced country, the production elements are derived from creation instead of
natural formation, and will differ in each country by its industry. Generally speaking, the production
elements can be categorized as: manpower, natural resources, knowledge resources, capital resources and
infrastructure construction. The first type of classification is to divide the elements into elementary
production element and high production element. In order to keep the competitive advantages, an

The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008 145
enterprise has to depend on high production element, which requires large amount of investment in
manpower and capital.
The second classification is to divide the elements into general production element and professional
production element. As the bicycle industry depends on elementary production element, it can be easily
moved to China. The headquarters of a business need high production element. As the professional
production element is a continued process, today’s professional production element can be tomorrow’s
general production element. Without continued upgrade in professional production element, the
competitive power of a company will decrease.
Term of demand (promoting power of industry).
The domestic market is the second key element of competitive advantage. The population,
weather, social structure and character of economic system will influence the demands of domestic
market. Some people consider that the competitive power of an industry depends on the scale of
domestic market, because the market will influence the scale of economy. But the demands of domestic
market do not necessary equal to the competitive power of that nation. It is because the international
market will help the small domestic market. For example, the bicycle industry of Taiwan has small
domestic market, yet it still can develop to be the important suppliers of the world.
The ―Off-shore Shipping Center‖ is to transship the cargo from China without entry or clear the
customs. It was started in April 1997 for container shipment between Kaohsiung and Fuchou (Xiamen).
At the end of October, the Executive Yuan passed the Plan for ―Expanding the Function of
Off-shore Shipping Center and the Entry of Goods.‖ The important agendas included: expending the
original function of transshipment to the processing and extending the bound warehouse to ―Free
Processing District,‖ ―Science-based Parks,‖ and ―Goods Flow District.‖, It also includes the business
coordination between air and ocean shipment, air and land shipment, and ocean and land shipment.
The expansion of the scope and function of ―Off-shore Shipping Center‖ are good news to the
related companies. Many shipping companies have started the logistic center in the southern part of
Taiwan.
In the first stage, the operations were limited to Kaohsiung seaport. The Chinese goods were first
received at ―Processing for Export District,‖ then, the goods were re-exported after intensive value-added
process. The semi-products made in China can be re-labeled to ―made in Taiwan‖ after being processed.
It can also be exempted from the original restriction of 35% value added limitation.

CONCLUSION AND SUGGESTIONS

Conclusion
In order to raise the domestic gross production, increase the employment opportunity and heighten
the economic status of Taiwan in the world, the enterprises are necessary to integrate their regional
resources. At the same time, the government must help the industry establish the logistic center for the
convenience of doing the processing work in Taiwan. The free imports/exports of goods and low
taxation will not only encourage the enterprises keep their ―root‖ in Taiwan but also attract international
investment. For that purpose, it is necessary to plan the global logistic center. The promotion of
regional coordination and air/sea shipment can be explained as follows:
For the coordination of regional integration and for the promotion of global industrial growth, the
world is working hard to implement the policy of free trade. Under the operation of the WTO, the world
is continuing the realization of free trade. For example, in ASEAN, the member countries are lowering

146 The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008
the tariff rate and raising the degree of free trade. In Japan, Indonesia and the Philippines, they are
continuing the promotion of free trade. In the year 2005, a Free-Trade Area for the America (FTAA)
will be established; the European Union will also establish a free-trade area in Europe.
For the air/sea shipment, the Boeing Company estimated that the global air shipment would
increase 6.7% annually between 1996 and 2016, with Asia the highest growth area. Each year, the air
transportation in China will increase 9.2%. Within twenty years, China will become the largest civil
aviation market outside of the US. Take Shanghai as an example, its air shipment has grown many
times in recent years. Many US enterprises have entered the world’s largest market –China. Even
though there are differences in political viewpoints by countries, yet no company can ignore the business
opportunities. With economic growth in Asia-Pacific area, the air shipment will grow accordingly.
The plan of establishing Taiwan as the Asia-Pacific Operation Center is ticking away. Under present
conditions, Taiwan will depend more on China. If the government continues the delay, the operation
center will skip Taiwan and to be established in Shanghai.
For the government of Taiwan the opening up of the ―Three links‖ with China is imperative.
China is like a ―black hole‖ to suck in the global capital. Under such circumstances, Japan and
Singapore are facing the crisis of being ―marginalized.‖ To cope with the trend, the government of
Taiwan must plan to establish Taiwan as the global information center, and creating a win-win situation
with China.

Suggestions
Integral policy.
The geographical location of Taiwan is favorable to become the global operation center. And the
growth of industry also has great impact to air/sea shipment. In recent years, the development of
high-tech industry and the move out of the traditional industry have changed the structure and sales of the
enterprises. In order to cope with the industrial changes, the government should study the measures of
strategy to create the value-added products and the air cargos so as to develop the business.
In the future, the utilization of the sea/air shipment will be greatly increased. If the government
supports the development, it will be a key factor for the success of establishing the global logistic center.
For the integration of the industry.
1. Establishing a complete operation center for the business. To have the warehousing, shipping and
manufacturing in one location for the logistic operation is the best strategy to improve the quality of
industry and to cope with the global competition. In the early stages, the government took the measures
of ―Processing for Export District,‖ and ―Science-based Industrial Park,‖ which had created the economic
miracle of Taiwan in 1970s and 1990s.
Under the trend of free trade and globalization, the enterprises have to raise the service standard by
shortening the delivery time and lowering the shipping cost.
2. Planning the ―Off-shore Operation Center‖ to help the current economic special district. Owing to the
lack of creation, the economic competitive power of Taiwan has dropped. Learning from the advanced
countries of the US, Singapore and the development of ―Off-shore Operation Center‖ will help Taiwan to
be the global logistic operation center.
For the land use.
1. Because the traditional industry has changed its structure, it is more imperative to plan for the
establishment of global logistic center at the land close to Taichung and Kaohsiung seaports. To cope

The Journal of Human Resource and Adult Learning Vol. 4, Num. 1, June 2008 147
with the fast changes in the world market and to raise the competitive power of Taiwan, it is necessary to
utilize the idled land for the global logistic center.
2. Establishing the special districts close to all seaports or airports to improve their competitive power.
This measure is to attract the enterprises from foreign countries to establish the global logistic center in
Taiwan. Under current conditions, the competitive power of these airports or seaports is inferior to other
Asian ports. The measures of establishing professional districts to improve the business will not only
liberalized the airports and seaports, but also improve the integral economy of Taiwan.
For the construction on software and hardware.
1. In regard to the hardware, in order to maintain the competitive power of Taiwan in the world market,
the government must pay attention to the electronic business, and its effect to the establishment of global
logistic center. The government must also consider the technical side of problems.
2. As the logistic business is derived from the internationalization, those who engage in that business
must be able to communicate with other enterprises. For that purpose, it is necessary to familiarize with
foreign languages. For the training, the government can start from the basic education and the
professional training. It can also encourage the cooperation of enterprises as well as learning from other
advanced countries.

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