| Summary: | 碩士 === 國立成功大學 === 經營管理碩士學位學程(AMBA) === 104 === The Impacts of Cross-straits Economic Cooperation Framework Agreement (ECFA) on Taiwan’s stainless steel industry and Their Coping Strategies
OU,SHAO-XUAN
LI,DE-JIANG
Advanced Master Business Administration College of Management
SUMMARY
This study hopes to stand on the point of Taiwanese stainless steel business to explore the actual impacts on this industry as our government planning and promoting ECFA, and then, to find the innovative developing strategy for business operating on both sides by in-depth interviews and case study.
The major challenges are: the shortage of operational workers, the saturation of China's stainless steel market leads price competition. The interviees believe that ECFA and Agreement on Trade in Goods will bring Taiwanese stainless steel industry threats in the short-term. However, in the long term, it should be helpful. Because China market is huge, especially there are important national policies to support this industry. In addition, though the cost competition will be more intense in the future, but there also exists demands for high quality products. Taiwanese government still has too much intervention on the industry, and relevant laws and norms do not set standards of enforcement.
The mail strategies include: factory automation, turn the focus to technology and quality upgrade, diversity and customized production, customer service improvment, accurate delivery control, and certain specifications production. The companies hope to lower the threats from raw material price to minimum as much as possible. Besieds China, the companies can also consider new market strategy of emerging countries. Finally, if they have government support in international development, they will have greater competitive edges.
Key words: ECFA, Cross-Strait Agreement on Trade in Goods, stainless steel industry, FTA, dimond model
INTRODUCTION
Because the mainland China actively developed steel industry, it results in excess capacity. In addition, due to the signing of Cross-strait Economic Framework Agreement (ECFA) which allows the import tariffs of part of stainless steel decreasing to zero, the Chinese stainless steel products took the advantage of low-cost to export to Taiwan. This study hopes to stand on the point of Taiwanese stainless steel business to explore the actual impacts on this industry as our government planning and promoting cross-strait economic and trade policies, and then, to find the innovative developing strategy for business operating on both sides by in-depth interviews and case study.
MATERIALS AND METHODS
This research takes the method of case study and the scope covers Taiwanese stainless industry. We aim at current industrial development situation, trends, and the coopetition strategies the two-sides enterprises may take after the implementation of Cross-strait ECFA and Agreement on Trade in Goods by the expert interview, and finally propose conclusions and practical suggestions according to findings. This study belongs to qualitative case study. We use Poter’s Dimond model structure to design the interview questions outline and analyze the transcripts of interview.
Therefore, it may not be suitable for the businesses on other section of stainless steel industry chain or other industries. Following researchers can study through the integration of a variety of industries or business’s strategic objectives in order to obtain a more comprehensive conclusion.
Because of different personal standpoint and situation, this research may not totally exclude researcher’s subjective consciousness expression. We recommend the following researchers can adopt different research methods with different tools, such as observations, surveys and so on to strengthen research reliability and validity.
RESULTS AND DISCUSSION
According to Diamond Model, this study summed up the major challenges of stainless steel industry as facing ECFA and Agreement on Trade in Goods are: the shortage of operational workders, the saturation of China's stainless steel market makes companies carry out price competition. In addition, the cost of raw materials has significant impact on the stainless steel industry, particularly the nickel price. Currently, the price of raw materials is still at a low state, this reflects the bad stainless steel market status, and companies are dropping in production. The companies we interviewed believe that after the implementation of ECFA and Agreement on Trade in Goods, it will bring Taiwanese stainless steel industry threats in the short-term. However, in the long term, it should be helpful. After all, the market of mainland China is huge, especially there are important national policies to support this industry.
Besides, if we view the industry from global perspective, all countries currently control their stainless steel markets by tariff and trade measures. This is also the reason that the phenomenon of stainless steel price competition is not so serious in Europe and the US compared to other countries.
In the future, after the opening of Cross-strait Agreement on Trade in Goods, though the two sides will also become a fully competitive market, and the cost competition will be more intense, but they believe there also exists many demands for high quality products. The stainless steel companies are not easy to adopt differential strategies, unless the refining technology of special steel gradually spreads in the industry. The players can consider towards the right hand side of U-shaped smile curve to develop their channels. Now, the Taiwanese government still has too much intervention on the development of the industry, and relevant laws and norms do not set standards of enforcement.
The mail strategies of stainless steel industry include: factory automation, turn the focus to technology and quality upgrade, diversity and customized production, customer service improvment, accurate delivery control, and certain specifications production. By these ways, they hope to lower the threats from raw material price to minimum as much as possible. In addition, after the implementation of the goods trade agreement, the business expect to get cheaper prices of raw materials so the added value of quality will be higher. Now, the products from Mainland China still have poor quality, but the interviewees also acknowledged that if they start to pay attention to quality, their progress will be quite rapid. Taiwanese stainless steel industry must first start early before they wake up, so that we may probably get pioneer first-mover advantage. If Taiwanese stainless steel industry can continue to improve in terms of cost, quality, delivery, service and other competitive conditions, the opening will not be threat but increase sales.
Besieds China, the companies can also think about new marketing strategy of emerging countries. Finally, regarding the role of government, if the enterprises have strong government support and back-up in international development, they will have greater competitive edges. Relevant laws and norms should also have a set of enforcement standards; otherwise, it will make law-abiding small and medium enterprises at a loss. In addition, the government can hold more international exhibitions, or help the stainless steel companies to attend foreign exhibitors to explore more business opportunities.
CONCLUSION
ECFA indeed has an impact on both sides of many industries and the development of corporates strategies, the stainless steel industry is no exception. Since ECFA will reduce some stainless steel import tariffs to zero, the imports from China will increase. The main consideration of downstream of this industry becomes cost factor, while the product quality of upstream in China, Korea has been close to Taiwanese companies. The main purpose of this study is to examine the impacts of cross-strait ECFA on Taiwan stainless steel industry and propose the business strategy for the stainless steel industry such as: factory automation, turn the focus to technology and quality upgrade, diversity and customized production, customer service improvment, accurate delivery control, and certain specifications production. The companies hope to lower the threats from raw material price to minimum as much as possible. Besieds China, the companies can also consider new market strategy of emerging countries. Finally, if they have government support in international development, they will have greater competitive edges.
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