The Asia Pacific (APAC) region is one of the world’s most dynamic digital landscapes. Over 60 percent of the world’s population aged between 15 and 24 years lives in APAC countries, providing enormous untapped potential to increase the role of the digital in the economic growth.
Why the Asia-Pacific is Prime for dApp Development
Blockchain technology and dApp development are important drivers for growth in the APAC, placing the region on the third position in terms of smart contract market growth that will be achieved worldwide by 2022. It is right behind North America and Europe. Within Asia Pacific, excluding Japan, blockchain growth will keep pace with the world growth rate at 72.6% CAGR.
Why are Asia-Pacific (APAC) countries among the global leaders in dApp development?
Drivers for dApps in APAC Countries
Apart from being massively populated with young people, the booming economysorely needs solutions to business issues with supply chain frauds, identity verification, cross-business collaboration, asset tracking and management, as well as to simplify cross-border payments and settlements, enforce regulatory compliance, and support trade finance.
Next, rather than veering on the side of caution like more conservative economies, for example, Europe, APAC countries have a more forward-thinking approach to adopting revolutionary digital technologies. This means that they establish dApp development with less restrictive regulatory frameworks. Such easements enable experimentation and testing for a software solution like smart contracts that are still wrapped in a lot of uncertainty.
Additionally, the growing population and economy need immediate access to financial services and without financial infrastructures based on blockchains, it would be challenging to implement changes and integrate all participants into the system.
Another reason for dApp development in APAC is workforce mobility. Many people work away from home and need practical solutions to manage cross-border payments.
Finally, the Asia-Pacific marks effective examples of combining blockchain applications with other emerging technologies. For example, the City of Taipei has introduced a smart citizen ID card, combining blockchain and IoT. IBM and Walmart collaborate with one of China’s largest food distributors to overcome food safety problems.
While it is important to recognize the potential of dApp development in the Asia-Pacific, businesses must also understand that blockchain is a solution to some but not to all business problems they currently face.
Therefore, although imperfect in execution and scalability, decentralized applications built on the blockchain still have the potential to automate many business transactions via distributed ledger technology. Acknowledging their limitations is a good strategy to silence critics who are pointing out its imperfections, forgetting that no software ever solved all problems.
Considering that the Asia-Pacific economy is on the rise, with a constantly growing middle class and an affinity for technological innovation, it wouldn’t be a huge surprise if we witness the countries in the regions being the first ones that will implement smart contracts for businesses on a wider level and create the first in the world economies massively driven by blockchain.
The biggest PVC (polyvinyl chloride, colloquially known as vinyl) producer in Vietnam comes from Taiwan:
Fulin’s two main products, PVC sponge leather and casting leather, dominate Vietnam with a market share of 86%, while their PVC sheets hold 34% of the market. 50% of the artificial leather used by the famous American handbag brand Coach comes from Fulin. Over 80% of the scooter seats on Japanese Honda and Yamaha motorcycles assembled in Vietnam are made with PVC produced by Fulin.
Fulin chairman Wang Yuan-Lin (王源林) adopted a different approach from other Taiwanese companies when they set up shop in Vietnam in 1997, electing to build their factories in the city of Haiphong, which is a two-hour drive of 100 kilometers outside of Hanoi, instead of in the more popular destinations such as Ho Chi Minh City, Bình Dương, or Đồng Nai.
His reasoning was simple. The 1997 Asian financial crisis was hampering Japanese and Korean investments in Southeast Asia. In an effort to woo investors, Haiphong in northern Vietnam was offering to give foreign companies the same generous treatment as domestic entities, outshining its compatriots in southern Vietnam.
Fulin Plastic Industry Company Chairman Wang Yuan-Lin (Source: Tiao Man Peng)
The local government approved of Fulin’s entry into Vietnam in less than ten days. Within a year, the six-hectare factory was completed. While other Taiwanese companies frugally used second-hand equipment on their production lines, Wang invested 10 million US dollars and built a brand new factory with the latest equipment.
The Wang Yung-ching of Vietnam
But Fulin lost a third of their capital the first year. The stockholder in charge of operations had experience in sales and trading, but not manufacturing. Wang was not the type to accept defeat, however. He took a more active role in management, buying up all the shares so he could have full control over how he restructured the organization.
Wang was detail-oriented and knew he had to find talent from the leading name in Taiwanese PVC manufacturing: Nan Ya Plastics Corporation of the Formosa Plastics Group. Through his connections, he was able to find an audience with Nan Ya’s senior management. Eventually, he hired retired senior manager Chu Hao-Che (朱豪哲) to be his CEO.
Nearly a dozen middle managers from Nan Ya also signed up to complete his management team. Wang took the management philosophy of famed Taiwanese entrepreneur Wang Yung-ching and put it into practice in Vietnam: seek truth from facts, get to the bottom of things, maintain integrity and precision in management.
Under the new management team, Fulin quickly made a name for itself.
At that time, Vietnam imported much of its PVC artificial leather. Fulin offered them a local supply with quality surpassing domestic competitors, and so established their brand. In less than a year, Fulin was able to break even.
Toward the end of 2003, Wang expanded into southern Vietnam and built a factory in Đồng Nai. Besides vinyl, they now made ultra-transparent PVC sheets, imitation wood PVC sheets, and printing sheeting. In 2005, they bought new equipment to begin production of PVC and PU casting leather for high-end consumer products.
The Đồng Nai plant shortened the supply chain and provided directly to the furniture, shoes, and motorcycle industry clusters in southern Vietnam.
Entering the Boutique Supply Chain
Years of experience in Vietnam gave Fulin an edge over undercutting Chinese competitors in terms of turnaround time and quality control. Demand for PVC grew as the market expanded. Fulin had become the largest PVC vinyl manufacturer in Vietnam.
Five years ago, the famous American handbag brand Coach moved their production from Korea to Vietnam. After a strenuous evaluation period, Fulin became a certified supplier. Over half of the artificial leather used by Coach came from Fulin; in 2019, this number is expected to reach 70-80%.
The competing handbag brand Michael Kors also bought from Fulin to improve the quality of their supplies.
Wang also put great emphasis on environmental protection and sustainability.
His PU plants in southern Vietnam and Đồng Nai are environmentally-friendly. They produce solvent-free PU, waterborne PU, and TPU (thermoplastic polyurethane). The production process is free of pollutants such as toluene and DMF (dimethylformamide). Unlike traditional production processes, the new method allows for recycling, and is in compliance with European and American regulations.
It is the only environmentally-friendly PU production line in southern Vietnam, and the environmentally-friendly materials they produce can be used by international sporting brands who are committed to the ZDHC (Zero Discharge of Hazardous Chemicals) 2020 Joint Roadmap program.
The environmentally-friendly PU production line is also Fulin’s ticket to the lucrative athletic footwear market, which may be Fulin’s growth engine for years to come.
Sharing Profits with Employees
“Profits are shared with stockholders and used to look after employees,” this is Wang’s principle. Fulin made a lot of money these last few years, with an average gross profit ratio of over 20%. Middle managers in Vietnam are awarded according to their merits, and senior managers in Taiwan are also handsomely compensated.
Good employee benefits, good salary, good bonuses. A Taiwanese employee based in Đồng Nai said these were the reasons he joined Fulin.
Public Listing is a Way to Gain Exposure and Recruit Talent
Fulin recently became publicly listed on the Taiwan Stock Exchange. Says CEO and Spokesperson Huang Cheng-Hung (黃政烘), they are not doing this to raise capital, but to gain exposure and attract international brands to become their customers. They also hope to attract fresh talent from Taiwan and explore new markets.
China sent buses to flooded Kansai Airport outside of Osaka to evacuate its stranded nationals after Super Typhoon Jebi, but Taiwan did not.
President Tsai Ing-wen traveled in a military armored vehicle to avoid wading in the water when inspecting flood damage in southern Taiwan.
Following major flooding in Taiwan in late August 2018, 2 million metric tons of pomelos were dumped in the Zengwen Reservoir as farmers saw their sweat come to nothing.
Those stories, all considered “fake news,” had elements of both fact and fiction and were actually difficult for reporters to get straight. To find the truth on the Tsai Ing-wen armored vehicle story, for example, they scoured the internet to separate fact from fiction.
The many fake news stories that have permeated Taiwan’s media have drawn the attention of the United States.
When the flowers of spring bloom, it usually means Taiwanese political figures are flocking to the U.S. One of them who quietly went to Washington visited the State Department’s Global Engagement Center (GEC).
According to the U.S.’s 2017 National Defense Authorization Act, the mission of the GEC is to coordinate efforts to “expose and counter foreign state and non-state propaganda and disinformation efforts aimed at undermining United States national security interests,” especially Chinese and Russian and misinformation. The Taiwanese political figure who visited was invited to share how Taiwan has been attacked and adversely affected by disinformation.
A Global Warning: Taiwan on a War Footing
The V-Dem (Varieties of Democracy) research project led by the University of Gothenburg produces the largest global dataset on democracy. In data released through V-Dem’s Digital Society Project, Taiwan was found to be exposed to misleading viewpoints or false information disseminated by foreign governments and their agents more often than any of the 179 countries surveyed.
The United States, which saw its 2016 presidential election influenced by Russian disinformation, was the 13th most affected country.
But fake news is not the only challenge drawing the attention of many countries. The growing war over information poses an even greater concern.
“Fake news is in fact a fake issue, or maybe one of a number of fake issues,” says Puma Shen, an assistant professor with National Taipei University’s Graduate School of Criminology. “In the information war, you only get fake news when you reach the final step. You have to have penetrated society to a certain degree before you can release fake news items.”
Unlike France, which passed a controversial law against the “manipulation of information” in November 2018, Taiwan has yet to devise legislation to protect the country against China’s systematic encroachment, leading many to wonder if it will become a battleground in the burgeoning information war.
“What worries me is that future models of manipulating public opinion will be even more sophisticated,” warns National Taiwan University Graduate Institute of Journalism professor Wang Tai-li. If fake opinions and fake news become more widespread and transmitted through more varied platforms, and people absorb disinformation from various channels and internalize it into their own political beliefs, it will undoubtedly affect Taiwan’s presidential election in 2020, Wang says.
Perhaps even more important, the use of freedom of speech to attack freedom of speech and influence the democratic society that Taiwan has worked so hard to develop has led to the proliferation of biased information and fake news, resulting in “echo chambers” that affect people’s understanding of issues.
National Taipei University’s Shen contends that Taiwan has already been embroiled in an information war for a long time, with the battle for public opinion on social media now catching fire.
“Internet media has basically been weaponized. What were once platforms are now artillery,” Shen says.
And that war’s scope has widened and grown longer, with skirmishes occurring from major avenues to small alleys in battles lasting six to 12 hours that happen in rapid succession.
Manipulation of the internet has been a trend in Taiwan’s elections over the past four years. The trend began in 2014 when the Sunflower Student Movement propelled Ko Wen-je, a doctor at National Taiwan University Hospital, onto the political stage to become Taipei mayor. In 2016, the opposition Democratic Progressive Party (DPP) took control of the presidency and Taiwan’s Legislature to gain total power, and a “netizen” wave emerged.
Regular netizens were then divided into “volunteer armies” of supporters willing to defend specific political figures and “real internet armies” consisting of political public relations companies and marketing companies lured by money and the trading of favors. Then there are political party workers and advisors who form blue (pro-Kuomintang), green (pro-DPP) and white (independent camp linked to Ko Wen-je) camps loyal to their affiliations.
“The rise of emerging online media has generated a considerable amount of noise, and China has discovered the influence it has,” says Wu Hsun-hsiao, the former legal counsel to Taiwan’s most popular online forum PTT and now a consultant to the bulletin board system. As far back as 2015, a cavalcade of Chinese “50 cent” accounts was active on PTT.
“From their IP addresses, one could see they were all entering through dummy accounts,” Wu says. Such accounts are not uncommon, whether on PTT or Facebook.
Taiwan’s elections for local government offices completely changed the landscape, with both the blue and green political camps determined to gain “air supremacy.” Renowned blogger Gene Hong, who has been engaged in the internet world since 1989 and now works as a consultant to media and technology news site Cool3c.com, says these internet armies have become more sophisticated, and their latest tactic is the “saturation attack.”
Expanding Battlefield, Sharper Tactics
“Saturation attack” is a military term in which one side uses massive firepower to overwhelm the other side’s defenses, causing a complete collapse in its position.
“The internet is inherently an open system, but if you constantly post a piece of information, more times than a person can absorb and think about, the false information becomes a closed loop and is virtually invulnerable,” Hong says, creating a situation in which people’s impressions can be easily influenced and changed.
“The problem with internet armies isn’t just false accounts. The latest type of internet armies create a ‘narrowed’ pool of information,” Hong says, referring to the practice of making it appear there are many sources of information when in fact it is very one-sided.
These groups are now not only engaging in an opinion war, but an information war, using a wide range of platforms, from PTT, Facebook, Line and YouTube to mass media to propagate their message and quickly disseminate it from the internet.
Opinion wars have seen their scope steadily expand with the rapid advance in technological devices.
“Compared with four years ago, the models used by Facebook and social networks have changed and the way they’re applied is very different,” says Wang Li-jie, chief operating officer of Sola, a public opinion monitoring company that helped Taipei Mayor Ko with his online electoral campaign. (Read: Taipei Mayor-elect Ko Wen-je: Aspiring for a More Just Society)
Wang says Taiwan entered the video era in 2018, leading to a complete revolution in marketing and publicity strategies. Images and photographs were rapidly being converted into or replaced by videos, and the dependence on YouTube surged.
Semantic analysis has emerged as a tool for devising a campaign strategy. Soochow University School of Big Data Management associate professor Camille Hu observes that analysis of semantics related to different themes was already being done during Taiwan’s national elections in 2016 to understand voters’ true intentions, and the approach has since become more mature.
Every time any individual clicks on “Like” or “Share” on Facebook, it is recorded, and this interaction is turned into data that helps illuminate every person’s preferences and political leanings. At the same time, keywords and Facebook fan pages are used to analyze popularity and activity, which inform strategies that lead to recommendations for election campaigns.
Only by applying big data analytics and forecasting can one defend and attack as necessary.
The key is to “use volume to repel takeovers,” meaning in practice that as long as one’s overall following, whether good or bad, is number one, it is easier to withstand outside incursions.
“It’s like Kaohsiung Mayor Han Kuo-yu. Right now, no matter what he says or whatever he posts on Facebook, the media will follow,” Wang says. “He has become ‘media’ in his own right.” (Read: Kaohsiung Mayor Spans US-China-Taiwan Situation)
Both the green and blue camps have created massive internet brigades to build the biggest possible internet following and popularity.
“In building an internet army, you need a certain rhythm and a direction,” says Lin Yi (pseudonym), a well-known operator within internet circles who has considerable experience in electoral campaigns. He has under him an idea team, a writing team and a tweet force.
“Articles have to be edgy and attention-grabbing enough and headlines have to be catchy enough to arouse people’s curiosity and get them to want to keep reading,” Lin says.
Content Farms the Big Battlegrounds
So-called content farms have been around in Taiwan for many years, but it was not until more recently that they moved into politics. Internet analytics site “Page Board” (專頁儀表板) calculated Taiwan’s 100 most influential fan pages and found 23 were fan pages of content farm websites.
Content farms are websites that directly use articles from other media or repackage them with sensational headlines to drive hits and leverage the higher traffic to get ads and revenue.
“[The results] suggest that many people believe content farms,” says Hong, who is also an engineer at Page Board.
Looking more closely at politically oriented fan pages, a group of pro-blue fan pages collectively dubbed the “blue flank” all rely almost exclusively on such content farms as “mission-tw.com,” “nooho.net” (meaning shout angrily), and “taidushashi” (meaning stupid Taiwan things).
In one 30-day period, of the 2,663 articles posted by the obviously pro-blue fan page “Blue Power,” 2,640, or 99 percent, came from mission-tw.com, and there are several other blue-oriented fan pages with about 75 percent of their content overlapping with “Blue Power,” such as the Facebook community the “Oppose Tsai Ing-wen Alliance.”
When you enter the mission-tw.com website, it appears initially to be a news site with such categories as “news,” “entertainment,” “pets,” and “living.” But looking more closely at the site, other than the “news” category, the others lack any content, and even its “news” simply cites articles from other media, especially the China-leaning “China Times” and “chinatimes.com,” along with United Daily News and ETtoday news. In addition, some of the “chinatimes.com” articles include some from PTT boards or Facebook fan pages.
“One day when I commented on Han Kuo-yu, the next day 466 negative stories on me appeared on the internet,” says Taoyuan City Councilor Wang Hao-yu and the head of the fan page “I Am a Zhongli Native” who has personally experienced the power of Taiwan’s content farms.
Most of the news items were posted through content farms and were discussed and quickly disseminated on Facebook. “I once estimated that this kind of website can have traffic as high as 500,000 people in a day.”
A CommonWealth reporter tried to contact the content farm mission-tw.com and was answered by a young man’s voice speaking with a Malaysian accent who identified himself as a 25-year-old surnamed Shen. But he refused to answer any other questions, such as where he graduated from or why he was operating a website.
The Rise of YouTube
The Line and YouTube platforms also had meteoric rises last year, emerging as important channels in the influence game.
Those platforms contributed to the stunning emergence of Han Kuo-yu, a relatively unknown member of the (blue) opposition Kuomintang (KMT) who was given no chance of victory when he decided to run for mayor in Kaohsiung in 2018. Instead, he burst on the scene to end the (green) Democratic Progressive Party’s 20-year stranglehold on the city in the November elections. His big margin of victory, just over 9 percentage points, or about 150,000 votes, was as surprising as the win itself.
“When he showed the guts to run in Kaohsiung, he was destined to win. I asserted three months before the election that he would win by 150,000 votes,” boasts Pan Heng-hsu, a key player in Han’s online media campaign.
He says Han’s way with words helped push his Line group to over 100,000 people soon after it was established, helping further the team’s determination to rely on an internet strategy to boost Han’s campaign.
Most people on Line groups coalesce around social issues or their daily lives, such as civil servant groups aligned against pension cuts, groups opposed to gay rights and same-sex marriage, or groups consisting of classmates or of military people of different ranks. As President Tsai Ing-wen’s policy reforms cut deeper, the blue camp was able to take hold of an expanding number of these closed loops.
With content farms and Facebook communities steadily generating content, YouTube has been exploited to further add fuel to the fire. To increase his exposure, Han appeared on several talk shows, “and because he comes across well, things he says on television can be re-used on the internet,” Pan says bluntly.
All of Han’s interviews were cut up and made into short videos, and TV stations, after editing footage for their own use, would hand it over to the blue camp for uploading on Facebook fan pages and Line. This created a viral marketing phenomenon, with videos quickly extending their reach exponentially.
In terms of both speed of dissemination and efficiency, Line rates more highly than Facebook, and YouTube’s importance is unquestioned.
“When Kaohsiung taxi drivers have free time or are waiting for fares, they all watch YouTube,” says internet operator Lin Yi, who argued that YouTube operations definitely affected the 2018 election campaigns.
According to YouTube’s algorithmic model, when a person watches a video, YouTube then recommends or automatically runs the video with the highest traffic, meaning that a video with 1 million views could actually attract organic traffic of 5 million hits.
In the perilous world of the information war, only the winners are king. After the painful experience of 2018 when it suffered an embarrassing defeat, the green camp decided on a fresh start, changing the style of Tsai’s Facebook page that has pushed its popularity steadily higher and increasingly invigorated green fan pages.
“To be honest, the March 6 legislative by-elections relied on [the green camp’s] flanks and volunteer armies,” says a DPP party worker, referring to two DPP victories in tightly contested districts in New Taipei and Tainan that were traditional green strongholds. “The flanks are far more effective than the DPP.”
These DPP internet groups, such as “justadullan” (just block blue) and “impolite_tw,” have flourished.
After cable TV station CTi News reported the story that 2 million metric of pomelos had been dumped, these groups mounted an all-out counterattack. “They have no burdens at all. They collected agricultural information and went on the offensive,” says the party worker, who spoke on condition of anonymity.
He said the internet now is basically about who can punch the hardest. “The big problem now is that echo chambers cannot be expanded. That’s really the key.”
With primaries for each party’s presidential nomination looming, the internet brigades are quietly stirring. The green fan clubs have begun to recruit troops for their volunteer armies.
Opening the Facebook fan page “justadullan,” one sees a white star with 12 rays of light against a blue background. It is covered with a prohibition sign, accompanied by the slogan, “Beat the Communists, Build the Country.” A slogan lower down reads: “Block the Blue Army, Welcome to a Private Chat.”
This fan page with 40,000 followers has made Kaohsiung Mayor Han its target since the November elections. In the DPP presidential primary battle between the incumbent President Tsai and challenger Lai Ching-te, who served as a premier under Tsai, the site clearly supports Tsai.
A reporter sent an inquiry to the fan page and received a Line group invitation to join a training session for new hands to the volunteer army.
After the reporter joined, the group’s manager arranged for new recruits to “attend class,” requiring them to watch two 10 minute teaching videos. The videos demonstrated step by step how to track news fan pages, leave comments and “likes,” and share news links with the Line group.
When the training was completed, a new invitation to the group was received, allowing you to “join the army.”
The news links posted by participants were generally aimed at solidifying support for Tsai Ing-wen rather than emphasizing attacks on opponents or creating fake news. The manager also reminded participants to “not engage in verbal battles with groups with different points of view.”
“Even though they are on the party’s flanks, they don’t take orders from the DPP,” says a person familiar with the site. Rather than using the term “army” to describe the community, that person prefers the term “enthusiastic supporters.” Similar communities follow their own paths but will also team up from time to time.
The 2020 presidential election has already begun in earnest on the internet, though perhaps it would be more accurate to say that the public opinion battle between the blues, greens and whites never stopped.
Looking back, Taiwan’s democracy and freedom have been hard won. But now with the opinion war raging and constantly expanding, every whisper and rumor is turned into words and resources are deployed to spread fake news without limitations. These have become this new form of warfare’s sharpest weapons, doing damage not just to the enemy but also sacrificing Taiwan’s most precious values.
Complicating the problem is powerful China next door. With Beijing becoming highly proficient in online disinformation, how Taiwan handles fake news and the information war could very well be its biggest challenge in the future.
Translated by Luke Sabatier Edited by Sharon Tseng
Unemployment and underemployment represent the biggest risk for doing business around the world. That is the view of more than 12,000 business people across 140 economies, according to findings that we publish today in the first edition of a new Regional Risks for Doing Business report.
The second biggest risk is “failure of national governance.” These findings should ring alarm bells. At a time when the world is often distracted by the latest twists and turns of accelerating news cycles, they provide cautionary evidence of weaknesses in the foundations of our political and economic systems.
Source: World Economic Forum
The regional impact of global risks
The World Economic Forum has been analysing risks at the global level since 2006 in its annual Global Risks Report, highlighting the vulnerability of our increasingly networked and interconnected world to volatility and disruption.
But even the most global of risks crystallise locally and are experienced differently. If global risks demand our attention, it is ultimately because they entail harm to the lives and livelihoods of particular people in particular places. These particularities cut across several dimensions, from wealth and nationality to gender and profession. In our new report, we are seeking to shed some light on one of these dimensions: the regional.
Our starting point is the data from our Executive Opinion Survey, which each year gauges sentiment about the business environment in individual economies. As part of the survey, respondents are presented with a list of 30 risks and asked to select up to five that they view as a concern in terms of doing business.
This framing is important—we are capturing perceptions about operational impacts rather than the more holistic risk perspective that we can focus on in the Global Risks Report. This probably explains some of the big differences between the two reports, such as the fact that environmental risks predominate in the Global Risks Report, but rise to prominence only in a small number of countries in Regional Risks for Doing Business.
Cyber-attacks are a growing concern
As the table below indicates, there are marked differences in the profile of the risks highlighted by businesses in different regions. On an aggregate global basis, cyber-attacks jumped in the rankings, from eighth position according to last year’s data to fifth position this year. But it was the number one risk in three of our eight regions.
Unsurprisingly, cyber-attacks tended to be flagged as a concern in the world’s more advanced economies. Of the 19 countries that ranked it number one, 14 were from Europe and North America (the others were India, Indonesia, Japan, Singapore and the United Arab Emirates).
Source: World Economic Forum
Unemployment and underemployment was ranked in first place in just one region, Sub-Saharan Africa, where respondents in 22 of the 34 economies we surveyed cited it as the top risk for doing business. However, it was a top-five risk in every region except North America, and this consistency pushed it to the top of the overall global results.
The underlying significance of the unemployment risk needs to be cautiously interpreted, as it may reflect quite different challenges across countries, such as weak growth, talent shortages or labour-market disruptions caused by automation.
In Sub-Saharan Africa, countries face the profound challenge of creating sufficient jobs to meet the needs of the working-age population that is expected to more than double to 1.6 billion by 2050. Quality of employment matters too – at present 70% of workers in Sub-Saharan Africa are in vulnerable employment, compared to a global average of 46%.
In both South Asia and Latin America, failures of national governance topped the list of business risks according to respondents. The scale of the strains being experienced in much of Latin America is highlighted by the fact that the second-placed risk in that region is “profound social instability.”
This follows a marked deepening of social tensions across much of the region – in particular, successive corruption scandals have reaffirmed electorates’ mistrust of institutions and reinforced political polarisation.
The critical situation in Venezuela is reflected in the risks prioritised by survey respondents there: “unmanageable inflation,” “state collapse or crisis,” “profound social instability,” “food crisis” and “failure of national governance.”
Energy price shocks were perceived as the biggest risk for doing business in Eurasia and in the Middle East and North Africa (MENA). Oil producers have benefited from rising oil prices over the past year. However, vulnerabilities to swings in prices have not disappeared, particularly in countries where government spending is rising, such as Saudi Arabia, which was one of five MENA countries to rank energy prices as the top risk to doing business.
Regional coordination is crucial
One consequence of the geopolitical shifts that are underway is the increasing likelihood that regional developments will have a greater impact on the wider international system.
Nation states acting alone cannot manage, let alone resolve, the global challenges facing the world, but coordination at the global level appears increasingly fraught with geopolitical tensions.
Some of these tensions are less pronounced at the regional level, and we expect regions to play an increasingly active and important role in the world in the years ahead. For this reason, understanding the risks each region faces is essential if we are to better understand the forces shaping the global landscape.
Hon Hai Precision Industry Co. chairman Terry Gou attended an event at the American Institute in Taiwan (AIT) early on the morning of April 16 to mark the fortieth anniversary of the Taiwan Relations Act.
Before heading inside, in response to persistent questioning by members of the media about whether he has decided to run for president, Gou let it slip that he might participate in the Kuomintang (KMT) party’s presidential primary.
Spreading rapidly over online media and television news, word of Gou’s response stunned all of Taiwan, as people wondered if the rumors of Taiwan’s richest man perhaps becoming president were true.
Speaking to CommonWealth, an unnamed source familiar with the inner workings at Hon Hai revealed that Terry Gou first toyed with running for the presidency after such atypical politicians as U.S. president Donald Trump and Kaohsiung mayor Han Kuo-yu defied expectations to win their respective races.
“Terry Gou is a very proud man,” relates the source. This explains why Gou remained mum about his intentions at first, being careful to first set the stage for a run behind the scenes, starting with Facebook and LINE fan pages in January and March, respectively, as a platform for airing his views on national issues and take the pulse of the potential reception. A team was even established inside Hon Hai to conduct public opinion polls and test the waters for a prospective run.
Once again surrounded by media during a break during the meeting on the sixteenth, Gou began speaking at length, addressing issues “at the presidential level.” As the atmosphere began to resemble a campaign speech, a reporter suddenly asked, “Chairman Gou, could you really let go of Hon Hai?”
Photo by Chien-Ying Chiu
“That’s a great question,” he answered seriously before proceeding to share an anecdote he had never spoken about before, about the late Formosa Plastics Chairman Wang Yung-ching, the “god of management”.
Learning to Let Go Allows Staff to Learn and Grow
“I once spoke with Chairman Wang,” he said. “You might not know this, but Wang had retreated to the second line by then.” In 2006, two years before his death, Wang Yung-ching retreated to the second line with his brother, Wang Yung-tsai, handing over decision-making authority over the Formosa Plastics Group to a seven-member policy team.
Gou believes that he planted the seed with advice he gave Wang, relating that the Qianlong Emperor’s 60-year reign was a key contributor to the decline of the Qing dynasty. Therefore, one should hand responsibility over to younger people.
Changing course, he spoke about the executives at his own company, saying, “I trained them and have worked with them for 40 years. I need to learn how to let go so they can learn and grow.”
Judging from Gou’s public pronouncements, a potential presidential run is still in the long-term consideration stage. However, “letting go” and “stepping back to the second line” appear to be inevitable.
According to the Public Official Property Reporting Act, publicly listed and over-the-counter stocks held by a presidential candidate (including spouse and minor children) must be placed in a trust and reported within three months of the inauguration date. Should Gou’s 1.33 million shares of Hon Hai stock all be entered into a trust, he would not risk losing his eligibility as CEO of Hon Hai Precision.
That said, general popular sentiment could become an issue if the nation’s top official were also at the helm of a large corporation. Should Gou decide to declare his candidacy, he would surely have to distance himself from Hon Hai to a certain degree.
Chinese online retailer Alibaba has been keeping track of what consumers are talking about, what they are searching for, and most importantly, the products they are unable to find.
Analyzing data from more than 600 million monthly active users, Alibaba has identified gaps in the market and alerted retail companies eager to create products to fill them.
It has helped Mars create a new chocolate bar, given Unilever information to develop a range of pollution-beating cosmetics, and also advises companies on how best to market their new products.
As one of the world’s largest e-commerce companies, Alibaba is favourably positioned to discover the wants, needs and aspirations of customers.
In addition to its major online shopping platforms – alibaba.com, Taobao and Tmall – Alibaba Group Holding has many other assets including online payment platform Alipay, China’s biggest digital advertising business, and its own hybrid version of YouTube and Netflix (Youku).
At Tmall Innovation Center – the company’s market research department – analysts have access to a wealth of data on consumer behaviour and preferences, making it one of the biggest focus groups in the world.
Duan Ling, director of brand marketing and head of the centre, told Bloomberg: “We can see where there are blank spaces and unmet needs in the market.”
Big data is providing companies with new tools to monitor and analyse consumer behaviour, which is changing the way products are conceived and manufactured.
Know Your Customer
Technology continues to transform the manufacturing sector as the Fourth Industrial Revolution gains pace. The internet of things (IoT) connects devices, services and user information like never before, allowing companies to collect vast amounts of market information.
According to the World Economic Forum white paper Technology and Innovation for the Future of Production: Accelerating Value Creation, 70% of captured production data isn’t used.
Artificial intelligence (AI) enables companies to make sense of the overwhelming amounts of data harvested, which then helps them better understand their customers and make more informed business decisions.
As the chart shows, IoT investment is increasing rapidly. The IoT and AI can help streamline processes from the shop floor to customer delivery, boosting efficiency, improving quality standards and predicting production or maintenance problems before they happen.
IoT technology allows manufacturers to carry their quality control processes into the homes of customers. Products with sensors embedded in them can provide real-time data on how, when and where a product is being used, throughout its lifespan.
Armed with valuable information on a product’s performance, manufacturers can design and build improved products that meet customers’ needs.
However, this also raises privacy concerns about how data is used and who controls it. Manufacturers that handle data carefully should emerge with a competitive advantage by earning customers’ trust, but may still be at risk of security breaches from criminals targeting personal information and payment details.
Some of the most prestigious brands and most sought-after employers have long reserved themselves for those who have graduated from university with a degree. But the times they are a-changin’, as Bob Dylan once sang.
The shift in recruitment practices is taking place across a range of different sectors, with technology and accounting firms amongst those who have recently decided that a university degree is no longer a requirement.
The reason many employers are adopting a less rigid stance when choosing their ideal candidates relates to a combination of recruitment and talent management challenges.
In addition, employers are increasingly waking up to the importance of diversity and inclusion (D&I). Google is one of the most visible brands taking its D&I responsibilities seriously. In its most recent diversity report, it details its aims, strategy and progress to date: “… despite significant effort, and some pockets of success, we need to do more to achieve our desired diversity and inclusion outcomes,” the report says.
As a result, we are witnessing employers having to rethink their recruitment and retention strategies. This involves working harder to support minority communities within their employee base, as well as attracting new employees from a wider talent pool.
An Emphasis on Experience
For many years, Google was famed for requiring all employees to have a university degree. That is no longer the case. Peruse the job ads over at Google and you will see phrases like “bachelor’s degree or equivalent practical experience” listed in the role requirements for sales managers and software engineers alike.
It’s a significant change of outlook, and Google is not alone.
Publishing giant Penguin Random House dropped its degree requirement in 2016, and in 2015 the global accountancy firm EY announced it would no longer evaluate potential employees on their degree or other academic qualifications; Deloitte has done much the same, as has PwC. “The world of business is changing, and there are now many professional opportunities available to you straight out of school,” according to the PwC website for school and college leavers.
Another sought-after brand that no longer stipulates the need for a degree in its job ads is Apple. From retail to engineering, the company that recently saw its market capitalisation hit the $1 trillion mark, now puts the emphasis on experience rather than university attendance. Again, Apple is placing significant emphasis on the D&I efforts it is making. “The people here at Apple don’t just create products – they create the kind of wonder that’s revolutionized entire industries. It’s the diversity of those people and their ideas that inspires the innovation that runs through everything we do,” it writes on its website.
With so much emphasis on the importance of a diverse workforce, it is important that employers look beyond their usual hunting grounds, and attract recruits who have a range of backgrounds and mindsets, reflecting the make-up of the population at large.
For those entering the job market, there may never have been a better time to trade on individual strengths and seek out the best opportunities.
Thirteen years ago, W. Chan Kim and Renée Mauborgne swept the world with a new vision for corporate strategy in the book “Blue Ocean Strategy.” Last year, they presented a set of strategic tools in their new book “Blue Ocean Shift: Beyond Competing: Proven Steps to Inspire Confidence and Seize New Growth” to help companies apply the strategy in a changing world.
Chaney Ho, an executive director with industrial automation specialist Advantech Co., and Joseph Huang, president of E.Sun Financial Holding Co., are both fans of the authors and the concept.
Ho says that when the blue ocean strategy was first introduced, he put it into practice by analyzing and revising his company’s strategy.
Ho was looking to compete with China-based EVOC Intelligent Technology, which was founded by a former Advantech employee in China and has received financial support from China’s government. Carefully applying the blue ocean strategic map, he analyzed the differences between Advantech and EVOC and decided to eliminate the company’s advertising budget, allocating the resources instead to strengthen the stability of Advantech’s products and relationships with its big clients. (Read: Advantech Launches Counter Attack from Europe)
Huang said he was particularly impressed by the authors’ emphasis on the need for a humanistic process, or “humanness,” in executing a blue ocean shift.
After speaking with Ho and Huang, CommonWealth Magazine asked Kim and Mauborgne some of the questions that popped up as the two executives applied the strategy to their businesses. Here are excerpts of the conversation.
CommonWealth Magazine: It has been more than 10 years since “Blue Ocean Strategy” was published. Do you think “Blue Ocean Strategy” is still a comprehensive tool for companies nowadays? More than 10 years later, have you revised the theory? If so, why?
W. Chan Kim & Renée Mauborgne: What has happened in the past decade is consistent with our observations about the pattern of value innovation and new market creation. Tech companies have brought significant changes to the financial industry with profound implications for consumers and the society at large.
Yet underlying the creation of a new market and new demand was still value innovation rather than technological innovation or disruption.
Those successful FinTech companies have used new technologies to address the pain points of users caused by traditional financial services and in turn create breakthroughs in value for consumers. Their innovations, therefore, were firmly anchored in value. We should also remember that there were companies that eventually failed despite the bleeding-edge technologies they possessed because they did not offer innovative value to consumers.
This is an important point for traditional financial institutions to appreciate, as once they see new technologies as enabling tools to help them achieve value innovation, they can take an active part in shaping the future outlook of the industry rather than being disrupted by these technologies.
Renée Mauborgne and W. Chan Kim (Source: Blue Ocean Shift Team)
On a more general level, new developments in the past decade have made our theory more relevant than ever before. For most organizations, it is more imperative than before to pursue blue ocean shift. The market today is much more crowded than 10 years ago due to increased participation of global players from emerging economies and the emergence of tools for global communications, transactions and advertising that generally make it faster and easier to become a global player.
The rise of emerging economies and the huge market demand they represent also call on organizations to come up with offerings that are both high-value and affordable to these markets characterized by relatively low per-capita income on the one hand, and increasingly sophisticated consumer tastes on the other.
Moreover, the rising influence and use of social media have shifted the power and credibility of voice from organizations to individuals, making it increasingly impossible for organizations to over-market their me-too offerings.
There has hardly been a time in history when achieving innovative value at lower cost became a pressing need in so many industries, sectors, countries and regions.
CW: According to the book, a blue ocean and red ocean are clearly different concepts. However, companies sometimes feel confused over whether they are situated in a blue or red ocean. Are there signs or indicators you can recommend to help companies identify their situation?
Kim & Mauborgne: When you are in the red ocean, normally you will find yourself trapped in cutthroat competition. Profit margins are declining, downward pressure on price is mounting, and products are getting commoditized in your industry.
In order to evaluate accurately and systematically whether your offerings are in the red ocean, the first blue ocean tool you want to use is the Strategy Canvas – a one-page visual analytical that depicts the way an organization configures its offering to buyers in relation to those of its competitors.
The horizontal axis of the strategy canvas specifies the key factors the industry competes on and invests in; the vertical axis captures the offering level buyers receive or experience for each of an industry’s key competing factors. This tool allows you to draw and compare the strategic profiles of your offering and those of your competitors in a picture; see and understand where you and your competitors are currently investing; the product, service and delivery factors the industry is competing on; and what customers receive from existing competitive offerings.
This exercise pushes you to take a step back from the detail you are typically enmeshed in and clearly see your industry’s defining contours. When the strategic profiles of industry players are converging, the industry is turning into a red ocean of bloody competition. If you are in such a situation, it is time to think about a blue ocean shift.
A second tool you want to use here is the Pioneer-Migrator-Settler (PMS) Map. Pioneers are businesses or offerings that represent value innovations. A value innovator stands apart from the competition by offering a leap in value. Settlers are “me-too’s” that offer value imitation. Migrators represent a value improvement over the competition and may even be best in class but they do not offer innovative value.
While the as-is strategy canvas enables you to evaluate where a particular offering of yours stands in the industry, the PMS Map allows you to plot all your existing offerings on the map and assess the strength of your organization’s portfolio of offerings. When you do the exercise, if you have many “me-too” settlers in your portfolio, making a blue ocean shift is imperative for your company in order to create new momentum for profitable growth in the future. Conversely, if you have quite a few pioneers in the portfolio, they are your blue oceans and the sources of your company’s profitable growth. (Read: Taiwanese Food Makers Choosing Blue Ocean over Red Ocean)
CW: The financial industry tends to be highly regulated. Financial institutions often identify new business opportunities but cannot take advantage of them because of regulations. What can they do when they face such situations?
Kim & Mauborgne: A fundamental principle of the blue ocean approach is to look across existing boundaries of competitions. Indeed regulations in the financial industry are especially heavy. But outside the traditional industry, financial innovations have been happening. The new FinTech sector is rapidly taking shape. Retail companies are offering banking services based on their large consumer networks. These, of course, are themselves the results of reconstruction across market boundaries.
Chaney Ho, Co-founder, Executive Director & Acting General Manager, Adventech Europe (Source: CW)
But here we need to consider the total amount of time needed for a strategic transformation, which includes not only the formulation of strategy but also its execution. Without going through the proper process and ensuring buy-in and support at different levels of the organization, execution can take a much longer time. Hence, the total amount of time needed for the shift under the hierarchical approach is likely to take much longer.
Second, while the blue ocean shift process can be initiated at any level of the organization, for Asian companies, more than for their Western counterparts, top management’s engagement in and support for the initiative from the very start is likely to make a shift move more efficient as this will set the tone and build the momentum in the entire organization.
CW: We have found Taiwanese companies usually create internal competition between different units or divisions rather than to build a blue ocean team when they attempt transformations. What are the pros and cons of doing that?
Kim & Mauborgne: Creating inner competition between different units or divisions can be a good and effective way to improve operational efficiency under a given strategy. But the competitive divides also tend to create silos or even cause a degree of tension between units/divisions. Hence, the inner competition approach often is not suitable for driving innovative blue ocean projects. (Read: Can Taiwan Set Course for the ‘Blue Ocean’?)
The typical challenge a company may encounter in using these tools is that out of a sense of urgency for making the needed blue ocean shift, the management might feel that going through all these steps and processes can be time-consuming and therefore would rather give top-down orders and ask its people to dive into the technical process of conceiving and making a blue ocean shift.
However, without addressing upfront the basic human truths that reside within each of us, attempts to drive organizations to become more creative and innovative are likely to fail. Indeed, humanness builds psychological understanding into the strategic process and strengthens our confidence to act by eliciting our emotional engagement. It relaxes us and inspires us to tap into our curiosity and creativity, which is critical for reshaping and reimagining industry boundaries.
You need to construct a team where you gather representatives from all the functions and organizational levels that will play a key role in bringing a new offering to market. That would usually include someone from HR, IT, marketing, finance, manufacturing, R&D, and sales, as well as someone on the front lines, like a call center staff member or someone who works on the store floor. Instead of encouraging competition between units/divisions, therefore, at this point you need to build collective wisdom and united efforts across them. (Read: The Secret of the World’s Most Competitive Nation)
Once the strategy for making a blue ocean shift is created and execution is well underway, the method of inner competition can be relevant as it will drive different units to move more efficiently towards the newly agreed strategic goal.
“Slasher” has become a popular new term. It describes people making good use of their multiple strengths in their careers. Could the blue ocean strategy be implemented by individuals? Have you seen any such cases?
Kim & Mauborgne: Yes, the blue ocean method can certainly be applied to value innovating personal development.
To value innovate your career, for example, the first question you need to ask yourself is: is my career really stalling? The ‘as-is’ strategy canvas can give you the answer. Plotting your career profile against your peers is useful as it shows the extent to which you stand apart (or don’t stand apart) in the job market. If your strategic profile doesn’t stand apart from that of your peers, you’re a me-too.
To make a blue ocean shift, you need to consider what factors of competition you can eliminate, reduce, raise and create that will help you to stand apart. You can do this by filling in the Eliminate-Reduce-Raise-Create (ERRC) Grid. These four actions allow you to break away from the competition by reconstructing factors across conventional boundaries of competition.
Finally, draw your ‘to-be’ strategy canvas. This is the strategy canvas that depicts the ideal state you want to reach. This will show you in one simple visual how to stand apart from the competition and make a blue ocean shift in your career.
At the personal level, making a blue ocean shift is about setting your own rules rather than benchmarking the competition and being just another me-too.
A telling example is that of Mina Boström Nakicenovic, a former swim champion, who, after a 27-year break and with limited time to train, won gold and silver medals in the Swedish National Masters Championship. To achieve these results, Mina had consciously applied the blue ocean tools to analyzing what the competition was focusing on and what unique strength and technique she should work on in order to stand apart.
Mina found that good swimmers tended to focus on the short-distance and freestyle categories in the competition. Using the four actions framework of blue ocean shift, she eliminated these categories for herself and focused on the 200-meter backstroke. And instead of training intensively and for long hours to get back into the best possible shape, given the limited amount of time she had, she focused on the turning technique, which was critical to increasing speed in backstroke swimming. Her achievement testified to the success of this strategy.
It doesn’t matter where you are in the world, chances are that if you have a job, you feel like you work too hard. But a new survey has revealed dramatic differences in the number of hours worked in different cities.
Mumbai tops the chart with a whacking annual average of 3,315 hours. At the other end of the scale is Rome, where the average worker clocks up only 1,581 hours per year – well under half the figure for their Mumbaikar counterparts.
The UBS study found that the five hardest-working cities are all in emerging economies, with residents of Hanoi, Mexico City, New Delhi and Bogota all putting in similar hours.
Many Western cities featured towards the middle of the ranking, with the average New Yorker working 2,045 hours and the average Londoner 2,002.
Europe dominated the bottom of the table with Paris, Copenhagen, Moscow and Helsinki all working an average of 1,750 hours, or fewer, per year.
Take a Break
The survey also revealed huge differences in the amount of holiday entitlement in different parts of the world.
The hard-working Mumbai population were among those with the least time off, at only 10.4 days of vacation per year.
Workers in Los Angeles had even less, at 10.1 days, and in Lagos, holidays averaged just 6.1 days per year.
Those who prefer a more leisurely break should head to Riyadh, which averaged 37 days per year, or Russia. Workers in Moscow and St Petersburg get 33.3 and 32.3 days annual holiday respectively.