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VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL
SCIENCES

LÊ VIỆT DŨNGK

LE VIET DUNG

Participating in global supply chain of information
technology: Experience of Taiwan
Major:

International economy

Code:

9 31 01 06

ABSTRACT OF DOCTORAL THESIS
Supervisors:
1. PhD. Nguyen Binh Giang
2. Assoc., PhD. Nguyen Duy Loi

Hanoi– 2019

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The thesis was completed at:
GRADUATE ACADEMY OF SOCIAL SCIENCES,
VIETNAM ACADEMY OF SOCIAL SCIENCES

Supervisors:
Supervisor 1: PhD. Nguyen Binh Giang
Supervisor2: Assoc., PhD. Nguyen Duy Loi
Reviewer 1: Assoc., PhD. Bui Tat Thang
Reviewer 2: Assoc., PhD. Tran Cong Sach
Reviewer 3: Assoc., PhD. Nguyen Manh Hung
The dissertation will be defended before the thesis review council of the
Academy at the Graduate academy of social sciences
at

hour

minutes, day

month

year

The Thesis can be found at:
- National Library of Vietnam
- Library of Graduate academy of social sciences
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INTRODUCTION
1. The urgency of the topic
Taiwan began a period of rapid economic growth since the 1960s. Entering
the 1980s, Taiwan quickly shifted its economy to strategic industries, in which
information technology (IT) was among important industries invested by the

government. Since then, Taiwan's IT has made great progress, from the stage of
manufacturing and supplying consumer electronics, electronic components, to
the world's leading high-tech products with products like semiconductors, optics,
laptops, tablets, etc. By adopting reasonable support policies in IT development
such as establishing technology parks, developing human resources, attracting
foreign investment, encouraging IT businesses to develop product brands,
Taiwan has increasingly participated in global supply chains, even leading some
chains. Meanwhile, Vietnam's IT industry is still in a low link, has not developed
sustainably for many reasons. Some of them can be named as weak and
inadequate human resource quality, the system of domestic suppliers is small,
backward IT infrastructure, etc. Is there any possibility to bring Taiwan's
experience apply to other countries like Vietnam? Systematic and focused
research is needed to explain Taiwan's success story and explore their applicable
experiences. This is the motivation for PhD students to carry out the thesis with
the topic "Participating in global supply chain of IT industry: Experience of
Taiwan".
2. The purpose and research question of the thesis
- The purpose of this study is to clarify how Taiwan has taken to successfully
participate in global IT supply chains and draw lessons for Vietnam.
- Research tasks:
+ Systematizing with supplementing and completing scientific arguments on
global supply chains, developing concepts, criteria framework for evaluating
global supply chains and factors affecting supply chain participation global of IT
industry.
+ Analyzing characteristics, policies and tools to join the global supply chain
of the IT industry.
+ Analyzing and evaluating the process of joining the global supply chain of
Taiwan IT industry; Key measures to help Taiwan's IT industry join global
supply chains
+ Studying achievements and limitations of Taiwan IT industry when

participating in global supply chain.
+ Drawing lessons and policy recommendations for Vietnam
3. Object and scope of the thesis research
- Research objectives: strategies, policies and measures at the Government
level to successfully participate in global supply chains.
- Scope of research: from the 1980s to the present.
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4. Methodology and research methods
As generated from the global supply chain theory and the global supply chain
operating mechanism, the topic will show how a global supply chain can be
theoretically possible.
Applying that analytical framework, the topic will explore the hierarchy that
Taiwan has participated in the global supply chain in the IT industry, the
improvement in the supply chain through each stage and explain the reasons for
its upgrade.
From the practice of joining the global supply chain in Taiwan's IT industry,
the topic will assess the industry's prospects in the global supply chain in the
future.
- System analysis method: The thesis will use this method to analyze the
formation and development of the global IT supply chain of Taiwan from the
1980s to the present to clarify policies and characteristics. development of the
chain in each stage, each industry, creating the basis for drawing lessons and
policy recommendations for Vietnam.
- General analysis method: The thesis collects research works related to the
participation of Taiwan IT industry global supply chain for analysis and
evaluation, thereby seeing gaps and gaps in previous research projects, from then
on, continue to research to improve.
- Comparison method: The thesis uses comparative methods among subsectors, fields and stages in the development of supply chain of Taiwan's IT

industry. At the same time, the thesis also uses comparative methods to compare
the effectiveness of participating in the supply chain of Taiwan's IT industry with
other countries in the region and the world in order to clarify the role and position
of Taiwan in the chain. global IT supply.
- Experts method: The thesis will conduct research and get opinions of some
Vietnamese experts specializing in trade research, export of IT goods, experts on
Taiwan and Chinese economy to Find out what lessons can be learned for
Vietnam.
5. New scientific contributions of the thesis
The dissertation deeply analyzes and clarifies the status of participating in the
global supply chain of Taiwan IT industry, policies and measures of Taiwan so
that the IT industry can join the global supply chain; thereby assessing position,
rank, success and limitations when participating in global supply chain of Taiwan
IT industry.
The thesis provides necessary and sufficient conditions to participate in the
global supply chain of the IT industry in Taiwan, compared with Vietnam,
analyzing the importance of upgrading the global supply chain of Vietnam's IT
industry. ; From that, analyzing the impact of these factors on Vietnam in the
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current period is very different from the previous period of Taiwan's IT
development.
Analyzing and evaluating practices in Taiwan's global supply chain to help
clarify the reasoning of the global supply chain of the IT industry, help better
understand and better use reasoning in chain development. Global supply of IT
industry in Vietnam.
6. The theoretical and practical significance of the thesis
The thesis has a profound theoretical meaning because the thesis contributes
to systematizing the theoretical bases of the global supply chain and the

participation of the global supply chain of the IT industry through the
implementation of unified concepts. , categorize supply chains and supply chain
participants, provide criteria for assessing factors affecting global supply chains;
policies and tools to engage and upgrade global supply chains of industries,
including IT.
The thesis has high practical meaning because studying the participation and
upgrading of global supply chain of Taiwan IT industry will help Vietnam to
have more reference lessons and practical policy recommendations and help the
industry. Vietnam IT effectively participates in global supply chain.

Chapter 1
OVERVIEW OF RESEARCHES OF THE GLOBAL SUPPLY CHAIN
OF TAIWAN IT INDUSTRY
1.1. Overview of research projects at home and abroad
- Study theoretical issues about global supply chains and chain characteristics.
- Study the status of taiwan's participation in global IT supply chain.
- Research related to solutions to help vietnam improve the position of the IT
industry in the global supply chain
1.2. The values of domestic and foreign researches, unrevealed gaps and
new points of the thesis
1.2.1. The values of domestic and foreign researches
In the theory part, the above-mentioned studies have partly clarified the
concept of supply chain, IT industry, global supply chain of IT. The basic
theories related to the supply chain of goods, the characteristics of the global
supply chain in the IT industry were also analyzed and evaluated by many
authors. These are the research values that the thesis will inherit to build the
analytical framework and criteria for evaluating global supply chain of IT
industry in Taiwan.
In the practical basis, previous research studies have the context of formation
and development of global IT supply chain in East Asia region, some case studies

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on supply chain participation. This is the region's countries. These are important
information for the dissertation author to understand the position and ranking of
Taiwan in the global supply chain of the IT industry, helping the author to inherit
materials and documents to form a practical basis. for the topic.
Studies on the status of participation in the global supply chain of Taiwan's
IT industry are various in scope. These studies provide information, assessments,
arguments, and arguments to help the thesis author have a basis for analyzing
policies, the status of participating in global supply chain of Taiwan's IT industry,
but success and limitations in participating in Taiwan's global IT supply chain.
Research on Vietnam's global supply chain engagement in IT is presented
through various reports, books, and research materials, with different data and
approaches. These studies mainly research on measures, policies to develop
Taiwan's IT industry, the development status of Taiwan's IT industry, the role
and position of Taiwan's IT industry in the economy and in the Global rankings
Through these studies, the author has the basis to assess the status and position
of Vietnam in participating in global IT supply chain.
1.2.2. Unrevealed gaps and new points of the thesis
Firstly, there are many gaps in research on supply chains and characteristics
of supply chains in the IT industry. Studies of the above listed theory groups have
approached the supply chain in one or several ways. As listed above, domestic
and foreign research materials are abundant, but these have not yet answered the
questions related to global supply chains, global supply chains. in the IT industry;
characteristics of the global supply chain in the IT industry; operating mechanism
of global IT supply chain; necessary and sufficient conditions to join the global
supply chain of IT industry; key policies and measures for countries to join the
global supply chain of IT. These small questions have not been thoroughly
addressed by previous studies, there has not even been a complete study to

thoroughly address the theoretical basis of the global supply chain in the IT
industry. . This is the "gap" that needs to be further studied to form an analytical
framework and evaluation criteria for the topic.
Secondly, the approach and viewpoint of research on the status of
participation in the global supply chain of Taiwan's IT industry is still various.
Data, materials and evaluation are still quite sporadic, multi-point, not logical,
systematic and not updated. Moreover, no research has answered the questions
completely: How has Taiwan participated in the global supply chain in the IT
industry and has achieved successes and limitations? This is the "gap" which is
further studied in the thesis to clarify the successes and limitations in
participating in the global supply chain of Taiwan's IT industry.
Thirdly, there are no studies on lessons learned for Vietnam. This is the gap
that the thesis continues to study. Although there have been many studies on the
status of Vietnam's IT industry development, policies and influencing factors,
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previous studies have not clearly identified the level of participation of
Vietnamese IT in Global supply chain, in-depth analysis of the factors affecting
the participation of Vietnamese IT in the global supply chain. This is an
extremely necessary task, need to be further studied in the thesis to be able to
give lessons and propose specific and most feasible solutions to improve the
efficiency of the IT industry. Vietnam in the global supply chain in the near
future. This is also the expected result of practical contributions of the thesis.
Fourthly, im terms of technique, domestic and foreign research projects
provide the basis of discrete, un systematic, not updated data, from different
sources with different approaches. Therefore, the task of the thesis is to continue
to update data, systematization and logic of data and data according to the
research tasks of the thesis.
1.2.3. Analytical framework of the topic

Based on the results inherited from domestic and foreign research works, gaps
and research tasks, the thesis will proceed according to the analytical framework
as follows:

Chapter 2
THEORETICAL BASIS AND PRACTICE RELATED TO THE
PARTICIPATION OF THE GLOBAL SUPPLY CHAIN OF THE IT
INDUSTRY
2.1. Overview of the global supply chain
2.1.1. The basic concepts
- Supply chain:
Supply chain includes all activities related to the supply, production and
distribution of a complete product or service, starting from the first supplier to
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the final consumer customer. In other words, a single supply chain is a process
that begins with raw materials until the final product is created and delivered to
the end consumer.
- Global supply chain:
Global supply chain is understood as a worldwide supply network when a
company buys or uses goods and services from abroad. The global supply chain
involves connecting all partners, resources and businesses involved in the
production, processing and distribution of raw materials, finished products or
providing services to consumers. final.
- Distinguish global supply chains and global value chains:
Global supply chains and global value chains are conceptually different.
Global supply chains imply all activities related to the connection of
procurement, production and logistics activities of products on a global scale;
meanwhile, the value chain involves a series of production activities, creating

added value for the product through consumers. The supply chain involves
managing the operations of the business, so that the product is moved from one
place to another, while the value chain is related to the business administration
of the enterprise.
- International production network and global supply chain:
Global production networks are production and service enterprises in many
different countries around the world closely linked, interdependent, involved in
the production, distribution, and provision of services. maintenance service,
warranty during use of a product.
2.1.2. Global supply chain structure and global supply chain actors
2.1.2.1. Supply chain structure
The supply chain links many independent businesses, each with its own
internal structure and organization corresponding to its own characteristics and
objectives.
A supply chain consists of vertical structure and horizontal structure. The
vertical structure of the chain is calculated by the number of levels / classes along
the length of the chain, the vertical distance is calculated as the distance from the
central enterprise to the final customer. In the longitudinal structure, its previous
activities (from a business moving to suppliers of materials) are called upstream
structures; and the activities behind it (from a business moving products out to
customers are called downstream structures.
The horizontal structure of the chain is calculated by the number of
enterprises at each level / tier. The arrangement of tier / tier enterprises allows
identification of central businesses of the chain. In many chains, customers are
aware of the central business through the product brand that the chain brings,
even if the business does not perform the production function and does not have
large fixed assets.
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2.1.2.2. Subjects participating in the supply chain
A supply chain consists of many stakeholders. The term supply chain shows
that a link provides products that move from suppliers to manufacturers,
distributors, retailers and ultimately customers along the supply chain.
2.1.3. Factors that influence supply chain development
There are five key factors that govern the development of a global supply
chain: production, storage, location, transport and information.
2.1.4. Policies and measures to join the global supply chain
Firstly, developing infrastructure to improve trade operations, facilitating cost
reduction in global supply chains. The role of logistics infrastructure for global
supply chains relates to weaknesses. Element: (a) Warehouse, (b) Ship goods
from one location to another in the country, (c) Ship from one country to another,
(d) Transportation (road, rail, air, ship), (e) IT infrastructure and
communications, (f) Outsourcing, (g) Innovation-innovation, (h) Government
policy (how to facilitate logistics, giving how innovation, trade policy).
Second, policies related to trade liberalization and economic opening
Third, improve internal resources of domestic enterprises to effectively
participate in global supply chains
Fourth, develop human resources to help businesses effectively participate in
global supply chains.
2.2. Join the global supply chain of the IT industry
2.2.1. Global supply chain of IT industry
- IT supply chain: IT supply chain includes all activities related to the supply,
production and distribution of an IT product or a complete IT service, starting
from the first supplier to final consumer customers.
The main feature of IT products is the scale, complexity and fragmented
manufacturing processes in the global supply chain. The IT industry consists of
many different sectors and products (from computers and peripherals, to
components in automotive and aviation products), so it has a very large market
segmentation consumer, business and industrial equipment. IT products also

have similar characteristics, modularized and easily exchanged in the market.
2.2.2. Subjects participating in the IT supply chain
The supply chain of the IT industry is often characterized by very high levels
of outsourcing and outsourcing. The natural starting point of the IT supply chain
also starts with materials, raw materials, then goes to the processing stages
(Contract manufacturer-CM) and original design manufacturers (Original design
manufacturer - ODM), followed by the original equipment manufacturer (OEM),
followed by the branded companies, then to the distribution channel through
level 1, 2, 3 customers, .. n, then to the final consumer. Each industry can have
many different global supply chains. Each global chain consists of many member
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companies participating in each other. A company can simultaneously participate
in many global supply chains. Participation in the global supply chain means that
the business becomes a member of the chain, a country with a domestic
enterprise or a foreign direct investment enterprise participates in the chain.
2.2.3. Conditions for participating in the global supply chain of IT industry
- Human conditions: Supply chain activities of IT industry require low labor
costs in the first stage of the supply chain because most of the assembly activities
use a lot of labor, and spend Cheap labor costs can minimize the overall costs of
businesses entering the supply chain.
- Capital conditions: to participate deeply in the IT supply chain, requiring
businesses to raise their capital potential. The more deeply involved in the supply
chain, the greater the level of automation and modern technological processes.
This creates difficulties for small businesses, with little capital because it creates
higher risks and cannot bring big, valuable contracts to small businesses that are
financially scarce. Because of this condition, the IT industry is often the industry
attracting more FDI because FDI often comes with abundant capital, modern
technology, can create spillover effects and increase efficiency in using

resources. force in IT businesses
- Conditions on the policy environment: The Government needs to create a
friendly business environment for the activities of the IT supply chain as
incentives for import tax, tax credit, infrastructure. Normally, IT industry
businesses often seek local producers in places with attractive investment
environment and favorable infrastructure. Signing free trade agreements,
building technology parks, export processing zones, technology parks with
advanced infrastructure, and geographic proximity will help businesses save
money. types of costs (including transportation costs) when participating in the
supply chain.
- Technological conditions: IT products all have a short product life cycle, so
businesses that want to participate deeply in the global supply chain must
constantly innovate technology in a very short time. At the same time, it also
requires goods to be delivered to the final market in a very short time. The life
cycle of IT products is gradually shrinking along with the development of
technology 4.0 is a great challenge for businesses that want to deeply participate
in the supply chain. The short product life cycle also causes enterprises to focus
more on geographical advantages, because the remote location makes the
challenges of the IT product life cycle even bigger because the products must be
transported to the localities. Away from the main supplier.
With the above conditions when participating in the global supply chain of IT
industry, governments often make policies suitable to each stage of development
of the industry to help businesses deeply participate in the supply chain. The
detail as below:
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- At the first stage when participating in the supply chain: this is the main
stage of enterprises focusing on the supply of low value-added assembly products
and components. At this stage, governments often focus on mobilizing large

human resources, low cost, favorable infrastructure, a favorable investment
environment to attract FDI enterprises in the IT industry. However, in the early
stages, governments had to implement next support policies for businesses to be
ready to participate in the next stage of the supply chain, namely: increasing
R&D spending for enterprises and IT investment projects, encouraging the
construction of laboratories and research centers for IT products; create a
favorable financial environment to develop intellectual property protection
rights; improve scientific research environment; Financial support and advice for
IT businesses.
- In the next stage: enterprises focus on participating in the supply of IT
products and components which are assembled and produced with low and
medium value added. At this stage, workers' skills and R&D activities are very
important for businesses that want to join the industry's supply chain. Countries
often focus on developing human resources, building schools / research institutes
to train talents for the IT industry, developing long-term strategies to prioritize
technology transfer and scientific and technological development for IT industry.
- At the final stage: enterprises focus on participating in the supply of products
that are produced and designed with high added value and brand. To join the
supply chain in this period, businesses have reached high levels of technology
and human resources. Businesses tend to look for market channels, suppliers
abroad to transfer technology, gradually shifting lower supply stages abroad to
save costs.
2.3. Background of the formation and development of global supply chain
of IT industry in East Asia and opportunities for participation of countries in
the region
- The formation and development of the East Asia IT industry supply chain
The development of global production networks in the IT industry began to
take place in the 1960s. In the first phase, the IT industry has globalized
production, moved from North America to Europe and then to Japan for NIE and
ASEAN-4 countries (Singapore, Malaysia, Thailand and the Philippines). In the

second half of the 1980s, the competitiveness of East Asian countries particularly
in areas such as semiconductors, consumer electronics and personal computers
improved significantly and East Asian countries began to occupy greater
proportion of the total world trade turnover in the IT sector.
Since the late 1980s, East Asia has become the focus of most of the electronic
manufacturing processes by outsourcing and processing for companies in the US.
The development of global production networks in the industry electronics have
been carried out in stages, primarily due to the transition of labor-intensive
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manufacturing operations of US, European and Japanese producers to the next
NIE and ASEAN-4 countries. that is expanded to all ASEAN countries and
China. When electronics manufacturers in NIE countries gain expertise and
when labor costs increase, the second wave of outsourcing and outsourcing in
the global supply chain of IT has occurred to countries. Asia has lower wages.
In the early 1990s, China began to participate in the global IT supply chain. In
early 2004, 70% of Taiwanese laptops were manufactured in China. Also, in the
mid-1990s, Vietnam started to participate in the global supply chain of East Asia
IT sector when Japanese consumer electronics enterprises such as Matsushita,
Sony, JVC, Toshiba moved their production sites to Vietnam. From 2005
onwards, Vietnam started to become a supplier of electronic components and
other IT products to the US, Japan, Europe and many other regions of the world.
The participation of East Asian countries in the global supply chain of IT is
quite different. For nearly 30 years, East Asia in general and China in particular
have become increasingly important in the global IT supply chain. The
participation of East Asia in the global supply chain IT industry is tested by many
standards: In the first phase of the development process, the East Asian electronic
enterprises produced many types of goods. Quality consumer electronics, signing
contracts with foreign customers assembling electronic chips, making integrated

circuits, moving forward to become ODMs, producing laptops with trade private
label. In the next phase, suppliers in Asia have moved to technology development
activities, developing design capabilities, providing global support services and
using effective digital information systems. fruit. Each country has its own way
of participating in the supply chain and in East Asia it forms two types of
suppliers, which are high-level suppliers and low-end suppliers.
- Opportunities to join the global supply chain of IT for countries: The 4.0
revolution is strongly impacting the global supply chain of IT. 4 impacts of the
4.0 revolution on global supply chains, which are: (1) Smart factory; (2) Internet
of Services; (3) Big data; (4) High quality of human resources.
And to cope with these changes, supply chain managers need to focus:
Supplier management; Implementing transparent supply chain; Planning needs;
Design supply network.
Chapter 3
PRACTICE PARTICIPATING IN THE CHAIN OF GLOBAL IT
INDUSTRY OF TAIWAN
3.1. Domestic and international context when Taiwan participates in
global IT supply chain
3.1.1. Domestic context
Taiwan's economic development history underwent 5 major development
stages:
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Stage 1: Land reform in the 1950s to form a small and medium-scale
agricultural economy;
Stage 2: Developing labor-intensive export industries in the 1960s such as
textiles and light industry;
Stage 3: Due to the impact of the Middle East oil crisis (1970s), Taiwan
shifted its focus to developing chemical industries;

Stage 4: from the early 1980s began to shift to processing and exporting
electronics and semiconductors;
Stage 5: In the early 2000s, deep integration into the global economy, taking
IT and digital technology as the basic foundation for economic development.
Corresponding to these periods of economic development, Taiwan joined the
global IT supply chain starting very early, in the 1960s when the country started
from the assembly of electronic devices such as machines. recording (radio)
transistors, cassette recorders, etc. In the 1970s, Taiwan began to develop
enterprises producing electronic components such as CRT electronic discharge
tubes, microchips, electronic clocks, drums. words for the beginning of the video.
In the 1980s, Taiwan began to participate in the field of computer manufacturing
with semiconductor equipment products, personal computers, color screen
computers. In the 1990s, Taiwan started implementing microelectronics
production, quickly became the world's leading supplier of motherboard
products, monitors, scanners and computer mice. In the first two decades of the
21st century, Taiwan has been one of the most deeply involved countries in the
global IT chain, especially in the areas of IC packaging, microchip testing, IC
design, processing. create DRAM
3.1.2. International context
Taiwan is deeply involved in the global IT supply chain in the context of the
world entering the era of regionalization and globalization. The basic
characteristics of globalization and regionalization have placed Taiwan in new
opportunities and challenges. The biggest opportunity is to make it easy for
Taiwan to participate in the global economy, because the country has made
remarkable progress in capital-intensive and labor-intensive industries and
human resources. High quality and skilled. However, the challenge posed to
Taiwan from globalization is not much. Taiwan is forced to join global
organizations, such as the WTO, liberalize domestic industries and finance,
loosen foreign exchange controls, quickly implement export-oriented
industrialization strategies to adapt with the flow of science and technology in

the world and adapting to the value chain, global supply chain.
Since the IT revolution broke out, overseas production has grown very fast in
this area. The leaders of OEM branches have established a new system of
production and sales points in foreign countries and in some cases, they have
established their strong position in the network. global production. The rapid
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development of the information technology industry in the world has forced East
Asian countries, including Taiwan, to be flexible in investing in the country's
electronic information businesses, diversified. produce products of all kinds,
expand the network of supply components and goods processing for foreign
firms, and at the same time, to benefit the OEMs and contract manufacturers,
thereby grasping technological know-how and management skills, gradually
upgrading the country's IT industry under active government policy support.
3.2. The policies and measures for IT development of the Taiwan
government to join the global supply chain
3.2.1. Develop infrastructure for global supply chain of IT industry
As of 2011, Taiwan has about 19 state-established technology research
institutes, including eight research institutes with the function of designing
industrial policies, technology, and 11 research institutes with functions. the
ability to perform industry and technology. Among those research institutes,
there are institutes specializing in information technology functions such as the
Institute of Industrial Technology Research (ITRI), IT Research Institute (III),
Hsinchu Science Park.
3.2.2. Policy related to trade liberalization and economic opening:
Together with Kaohsiung Export Processing Zone, other export processing
zones have been set up by Taiwan to serve export, focusing on R&D investment
and production. High-value IT products, testing and packaging of electronic
chips (such as Nantze export processing zones), LCD modules (Kaohsiung

processing zone) and optoelectronics (optoelectronics) products (processing
zones) export Taichung). These 3 Nantze, Kaohsiung and Taichung export
processing zones are also the largest FDI attraction in Taiwan. So far, there are
8 processing zones in Taiwan, built in central and southern Taiwan.
3.2.3. Developing small and medium enterprises to effectively participate in
the global IT supply chain
According to the Ministry of Economic Relations, in 2010 Taiwan had about
1.24 million small and medium enterprises, accounting for 97.77% of Taiwan's
total enterprises. To support the development of small and medium enterprises,
the Taiwanese government has established a number of funds such as the Small
and Medium Enterprise Development Fund and the National Development Fund.
In Taiwan today there are about 140 incubators and 81% of them belong to
universities. Taiwan also has two venture capital funds, Angel Fund and National
Development Fund (NDF), to invest in reciprocal investments in the internet
sector with international investment funds.
3.2.4. Developing human resources for IT
Taiwan in the process of IT industrialization and development has been very
successful in investing in developing highly qualified human resources in a
systematic and serious way. In the process of industrialization, Taiwan was soon
14


devoting resources to invest in developing human resources to meet the
technology transfer process, thus jumping up the technological ladder higher
than many other developing countries. . The economic development process of
Taiwan in general and the IT industry in particular has a close connection with
education and vocational training in high-tech industries. According to Taiwan
Ministry of Education (2012) data, Taiwan as of 2012 has 155 high-level
vocational schools, 14 low-level universities and 77 research universities. A total
of 246 universities and vocational schools across the country. The boom of the

vocational and higher education system in Taiwan has produced generations of
IT engineers who are capable of meeting the nation's industry development
strategy. In 2011, there were about 3,176 PhDs, 37,303 masters, 485,371
engineers and bachelors, 366,499 graduates of high-level vocational schools.
3.3. The process of participating in Taiwan's global IT supply chain
3.3.1. Before the 1980s:
In the 1960s, in Taiwan, established consumer electronics enterprises in the
form of attracting foreign investment. Taiwanese electronics in the 1960s were
mainly outsourced to US manufacturers based in Taiwan, in which small and
medium-sized enterprises (SMEs) of Taiwan served as the core to provide
assembly process for export to the US.
In the 1970s, due to Taiwan's implementation of an import substitution
strategy, the heavy industry and chemical industry were focused on, so most of
the electronics industry in Taiwan was still due to foreign enterprises hold.
During this period, more than three-quarters of Taiwan's electric and electronic
enterprises were foreign enterprises, accounting for two-thirds of Taiwan's
exports. In 1973, the Institute of Industrial Technology (ITRI) was established
and in 1974, the Electronic Industry Institute (ERSO) was established, part of the
ITRI, focusing on semiconductor products. In 1978, the first microchip factory
was established at ITRI and in 1979 ITRI successfully developed a commercial
microchip chip for watches and began ordering for domestic industrialists to
make progress. Production of electronic watches in the country. With these
products, Taiwan began officially entering the global supply chain at the global
stage of manufacturing (CM) and original equipment manufacturing (OEM). In
this period, the way of participation of Taiwanese businesses in the global supply
chain is as follows: a Taiwanese IT product manufacturer conducts production
and assembly of products in accordance with the requirements. Detailed and
exact requirements for products ordered by the ordering party.
3.3.2. From the 1980s to the present:
In the early 1980s, Taiwan IT industry strongly developed OEM products.

During this period, Taiwan's production and export of IT goods was mainly
related to intermediate goods such as electronic circuits, packaging and testing
of electronic IC products, liquid crystal displays (LCD ), light-emitting diodes
15


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

design, marketing and branding.
Since 2000, Taiwan has gradually upgraded its IT industry to become original
brand manufacturers, meaning that Taiwan's IT products have gradually reached
consumers. final. Thanks to the upward movement in the value chain created for
end-users, Taiwanese firms have been easily accepted by consumers for brands
of personal computers, smartphones and other peripherals by the products are
cheaper than foreign brands and the quality of Taiwanese companies is relatively
good. However, in the process of participating in OBM, IT firms also face
significant challenges in brand promotion by consumers who are familiar with
old brands such as HP, Samsung, Apple, etc. Therefore, In order to have such
famous brands, Taiwan's IT enterprises have focused on R&D and investing in
major market channels to avoid brand competition with other foreign firms,
copper. Time can locate your brand in the world market.
3.4. Evaluation the participation of Taiwan's IT industry supply chain
3.4.1. Success
First, Taiwan is in a high position in the global IT supply chain. Taiwan IT
industry currently has an important position in the global supply chain. Taiwan
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is the world's No. 1 laptop manufacturer with an average monthly output of more
than 14 million units. Taiwan is trying to become the world's tech giant. By the
end of 2013, the total value of global IC design reached 81.36 billion USD,
Taiwan reached 16.32 billion USD, ranked second in the world market for global
IC design. In IC packaging and inspection, Taiwan ranked first in the world with
revenue of 4.35 billion USD in 2013. In the semiconductor manufacturing
service phase, Taiwan ranked first in the world with revenue reached. 25.5 billion
USD. In addition, Taiwan also ranks high in the global supply chain in the field
of manufacturing microelectromechanical systems (Micro Electro Mechanical
Systems - MEMS), LED and many other products. Taiwan IT enterprises have

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

gradually become aware of the end consumer (corporate customers). head of
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network). Some Taiwanese companies started proactively proposing product
designs, organizing production lines, packaging and logistics plans. Taiwan
continues to penetrate the global supply chain thanks to product packaging lines.
Among the 10 largest IT packaging enterprises in the world, there are 4
Taiwanese firms: ASE, SPIL, PTI, ChipMOS.
In the number of the world's top 20 IT design firms, the US has 11 firms
(ranked at the top of the list), followed by Taiwan (5 firms), Europe (2 firms),
Singapore (1 firm), China (1 firm). Taiwan's 5 largest IT product design firms
are Media Tek, Novatek, Reatek, Avago and MStar.
Taiwan's success in joining the global IT supply chain thanks to three basic
characteristics: 1) creating low-cost products and becoming a strategic provider
for foreign businesses; 2) Use different technology channels to become make
products in Taiwan; 3) accept the presence of transnational companies in
strategic industries.
3.4.2. Limitations
First, Taiwan participates in mainly supply chain of hardware IT products, is
facing competition with other countries, especially China: When participating in
OEM and ODM supply chain, The IT industry is mainly interested in two types
of business, that is to take advantage of price and control the quantity of products.
Therefore, when participating in the product supply chain to the outside market,
Taiwan's IT products face a number of challenges such as losing a lot of waiting
time, products going away with repeated nature (not new) and must maintain
price advantages. Although Taiwan's IT products have a great advantage in terms
of product design and manufacturing, these challenges have made Taiwanese
products compete with some competitors, especially China. The country - where
IT products of the same type are much cheaper. This is also the reason in recent

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

direct contact with consumers.
Secondly, enterprises in Taiwan's IT industry are mostly small and medium
enterprises. The drawback of these businesses is that there is not enough potential
to acquire new technology or bring the production process to the most advanced
technological process in the world with branches of global business networks
worldwide as big businesses do.
Third, Taiwan's IT enterprises are now facing increasingly fierce competition
pressure not only from China, but also from other emerging economies in Asia.
Fourth, due to historical disagreements between Taiwan and mainland China,
Taiwan has difficulty in participating in bilateral and regional free trade
agreements (FTAs).
Chapter 4
PROSPECT TO PARTICIPATE IN THE GLOBAL SUPPLY CHAIN
OF VIETNAM'S IT INDUSTRY AND SOME POLICY
RECOMMENDATIONS
4.1. The participation of Vietnam's IT industry in the global supply chain
4.1.1. The process of IT formation and development in Vietnam
Since the early 1990s Vietnam has begun to develop the electronics industry.
From a small number of civil electronic assembly enterprises, joint venture with
Japanese electronics companies such as SONY, NATIONAL, SANYO, etc. in
the 1990s, by the end of 2008, Vietnam had 909 manufacturing enterprises
installed assemble and trade these items. Types of products, modes of production
and business are diversified at high speed, typically in consumer electronics,
industrial electronics and computers.
From the form of importing SKD to IKD, domestic enterprises have formed
their own strategic ideas of branding for electronic products manufactured in
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Vietnam. Enterprises producing electronics such as Viettronic Thu Duc, Bien

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

spare parts and components for assembly. They mainly use cheap labor and land.
Thus, although Vietnam IT industry has achieved rapid growth in recent
years, has made great contributions to export, which brings high value of foreign
currency and attracts large forces. Domestic workers, evaluated as a symbol of
Vietnam's economic integration, but Vietnamese domestic enterprises in the IT
industry are almost out of the supply chain. Domestic enterprises can only supply
packaging, carton boxes, fasteners and packing, which is more difficult to
participate in high value-added supply stages.
4.1.3. Advantages and disadvantages of Vietnam IT industry when
participating in global supply chain
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* Advantages
First, Vietnam has a favorable geographical position, located in an area with
a fast-growing and dynamic industry, including the IT industry. This is a great
advantage because geography is one of the factors affecting supply chain
operations.
Second, the advantage of labor and resources for the IT industry.
Third, Vietnam integrates deeply into the world economy, creating favorable
conditions for participation in the global supply chain of IT.
* Disadvantages
Firstly, domestic enterprises are weak, can only participate in low positions
in the global supply chain.
Secondly, Vietnam completely depends on IT industry outsourcing contracts
in the global supply chain. Due to the lack of self-supply of raw materials for
ourselves, we have to import from outside, so Vietnam depends on that supply
itself. The production capacity of the industry is still limited.
Thirdly, the technology level of the IT industry in Vietnam is still low, the
technology gap is too far from the regional countries, so it is very difficult to

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


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

products. Due to a long time working for large IT firms in foreign countries,
Taiwan IT enterprises have chosen to select separate products, satisfying
customers both in price and quality, making the difference of Taiwan IT products
among hundreds of IT products in the world market.
Lesson 5: caution in brand development to avoid unfortunate faults in the
global supply chain. Taiwan has encountered those faults when assessing the
potential of the world market for hardware IT, lead to Bullwhip effect in global
supply chain. To avoid this unfortunate break, the development of global brands
of Taiwanese IT enterprises took place with extreme caution. Because electronics
technology changes so rapidly, transnational companies are ready to deliver the
latest technologies to developing countries to focus their efforts on new
technologies. The lesson is: how to consider the strategy of placing your supply
chain to control risks and achieve potential equilibrium for the parties. These
solutions range from defining the basic strategy of supplying the market to
deciding the right tactics. On the other hand, it is difficult for Taiwanese IT
enterprises to have their own supply chain system to build completely a supply
chain system, but need to cooperate with businesses. other foreign countries.
4.3. Policy recommendations for Vietnam
Firstly, focus on developing industry to support IT industry.
In order to implement the industrial development policy supporting the IT
industry, the following 4 groups of solutions should be implemented:
- Thoroughly review and supplement policies and solutions for industrial
development to support IT sector, with priority given to reviewing and
supplementing policies and solutions on taxes, land and import administrative
procedures components, technology support, product consumption support,
investment promotion, etc.
- Review, adjust the planning, establish industrial parks, transaction centers
specializing in industry to support IT industry, create focal points, link programs
and information between domestic and foreign enterprises with Supporting
industry enterprises.

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

- Apply the training model of 3 parties: enterprises - institutes, schools - state
management agencies to train highly skilled human resources according to
enterprises' requirements.
- Actively cooperate in research, attract foreign experts to transfer and support
IT development.
Thirdly, developing IT industry clusters.
- The State should have measures to master the development of the IT
industry, thereby building industrial parks, industrial clusters and key technology
parks to attract the gathering and investment of enterprises, creating making
connections, improving the performance of IT businesses.
- Forming electronic industrial clusters (clusters): Forming electronic
industrial clusters to promote the gathering and investment of enterprises in order
to create links and improve the efficiency of electric enterprises death. It is
necessary to research and develop policies and support the establishment of
electronic industrial clusters.
Fourthly, actively develop domestic and international production links to
control supply chain activities.
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- Enterprises need to proactively seek market information, potential industry
and international standards, based on that, orient and develop long-term
development plans, focusing on forming a specialized production segment in the
global electronics industry.
- Enterprises need to promote links both horizontally and vertically.
- Enhance the role of industry organizations in the IT industry to connect
business links.
- Actively linking domestic enterprises with foreign enterprises to produce
components, details, intermediate products, etc.
Fifth, attaching importance to the role of small and medium enterprises,

focusing on building and promoting corporate image to enhance the level of trust
in transactions with suppliers.
- Encourage and have preferential policies for small and medium enterprises
to invest in innovation of modern technology and equipment, not polluting the
environment.
- Actively improve the production process and perfect the standards in
supplying products and components for FDI factories such as Samsung, Itel, LG,
etc.
- Support to build and improve the capacity of small and medium enterprises
to participate in the supply chain.
- Develop active strategies on the supply of raw materials, equipment,
components and other products for small and medium enterprises, helping small
and medium enterprises effectively utilize domestic raw materials, term import
processing, gradually self-sufficient domestic materials, and limiting and
minimizing inventory and product defects when participating in the supply chain.
Sixth, developing infrastructure for IT industry
- Development of airports in the region, IT industry cluster should be
concerned.
- Stable power supply system is also essential for IT industry.
CONCLUSION
First, participating in the global supply chain is a necessary task for each
country to be able to upgrade the position and rank of its economy and the key
products of each country. international markets. To join the global supply chain,
countries use a variety of different measures and policies, depending on the
industry/ product) because participating in global supply chains is not easy. first
of all in the internal forces of domestic enterprises, the competitiveness of
enterprises, government support policies, to minimize the risks and faults that are
always present in the supply chain. Especially in the context of global supply
chain IT industry has a very high level of product outsourcing and outsourcing.
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The internal forces of each nation will determine the position of participating in
the supply chain at different levels.
Secondly, in East Asia, the global supply chain participation in IT industry is
very dynamic, which has formed high-level suppliers (Japan, Taiwan, Korea),
houses lower supply (Malaysia, Thailand, Indonesia, China), followed by
Vietnam and other countries. In the era of IT revolution 4.0 is developing
strongly and affecting all countries in the world as well as East Asia region,
countries in the region are facing great opportunities and challenges in
participating in the chain. Global supply of IT industry.
Thirdly, the participation of Taiwan's global IT supply chain started in the
early 1980s, before Vietnam a decade, but has achieved a lot of success. So far,
Taiwan is considered to have participated in OBM position, but the strongest
participation in the class of providing OEM and ODM. Taiwan's IT products
currently stand high in the world, highly competitive. In the process of
participating in the supply chain, Taiwan has avoided the break in the chain, there
is a strong connection between the stages in the chain. Although there are some
limitations, in general, participation in Taiwan's supply chain is considered
successful, for many different reasons, in which the effectiveness of policy and
measures of the Taiwanese rights during the past few decades in upgrading the
supply chain position of Taiwan IT enterprises.
Fourthly, Taiwan's IT industry provides many lessons and policy
recommendations for Vietnam, especially in the context of Vietnam's young IT
industry, making positive contributions to exports and increasing. chief
economist. Compared to Taiwan, Vietnam has not accumulated enough
conditions to upgrade the position of IT industry in the global supply chain for
many different reasons. The experience of Taiwan is completely practical,
helping Vietnam reconsider the shortcomings and bottlenecks of the IT industry
when participating in the world market. The author of the thesis has proposed 5

groups of policy recommendations and some solutions to implement those
recommendations. Derived from Vietnamese practices and practices to join the
global supply chain of Taiwan's IT industry, policy recommendations and
solutions that hope to have practical value to help Vietnam improve its industry
production capacity. IT, more deeply involved in the global supply chain.

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