International Economic Intelligence Knowledge and Information Supply of Strategy in Taiwan

INTERNATIONAL ECONOMIC INTELLIGENCE KNOWLEDGE AND INFORMATION SUPPLY OF STRATEGY IN TAIWAN：BASIS FOR THE DEVELOPMENT OF CONCEPTUAL NETWORKING FOR INTERNATIONAL TRADE OPERATION

A Dissertation Presented to the Faculty of the Graduate School

Bulacan State University

City of Malolos

Ph.D OF BUSINESS ADMINISTRATION

by

TONG, JONE YE

May, 2009
APPROVAL SHEET

In partial fulfillment of the requirements for the degree in Doctor of Philosophy in Business Administration, this dissertation entitled “INTERNATIONAL ECONOMIC INTELLIGENCE KNOWLEDGEAND INFORMATION SUPPLYOF STRATEGYIN TAIWAN：BASISFORTHE DEVELOPMENTOF CONCEPTUAL NETWORKINGFOR INTERNATIONAL TRADE OPERATION “, has been prepared and submitted byTong, Jone Ye, who is hereby recommended for oral examination.

HSU, CHUN-SHENG, Ph.D.

Adviser

Approved in partial fulfillment of the requirements for the degree in Doctor of in Philosophy Business Administration by the Oral Examination Committee.

MARIANODE JESUS, Ed. D.

Chairman

Accepted in partial fulfillment of the requirements for the degree in Doctor of Philosophy in Business Administration.

NORMA C. MORALA, Ed. D.

Dean, Graduate School

May, 2009

ACKNOWLEDGEMENT

Finally completing this paper is indeed a milestone in the midst of preoccupation in work, household and other social concerns, and looking after of old father. But the whole process is one of the most fulfilling experiences, which taught the researcher the real essence of humility, discipline and precision in every task. She is sharing this work to all special people who have contributed in so many ways to finish the study.

To Dr. Chun Sheng Hsu, her husband and her adviser, for his guidance and encouragement to finish this undertaking, and also for his critical inputs to focus the relevance of the study to economic and information policy.

To Dr. Chang Shih - Chia, Dr. Wen - Ruey Lee, for their technical comments to sharpen the theoretical framework and to further enhance the recommendations of the study.

To Dr. Norma C. Morala, Dean of BSU Graduate School, for the encouragement to finish this endeavor.

To Dr. Mariano De Jesus, Chairman of the Oral Examination Committee, for his insightful comments and suggestions to further improvement of the paper.

To Dr. Cecilia A. Geronimo, Dr. Hung Gao, Members of the Oral Examination Committee, for their comments and suggestions to further improvement of the paper.

Foremost of all, the writer would like to thank her family for the moral support, encouragement and inspiration to continue particularly her husband, Chun Sheng, for being patient and always keeping her company when she stays late in the computer most of enduring evenings to work hard. To Dennis, her son, for just telephones her from Unite States that she has to go on.

Above all, to the Bodhisattva for giving her the strength, the time and the special people who were instrumental in the completion of this paper.

DEDICATION

This humble undertaking is dedicated to the development of economic strategy for the country that its external trade dependency is high and has increasingly complicated trade issues in the international competition trade environment.Its special needs and concerns serve as my inspiration to pursuer this research hoping that the findings will redound to their benefits through better policies, programs, and projects.

The recommendations of this study are forwarded to my research colleagues in Taiwan universities, colleges, economic representatives and foreign economic organizations whom are interesting for “conceptual framework of international trade intelligence” with normalized “risk management mechanism”, and hoping that we will be inspired in driving on its integration and business applications.

TONG, JONE YE

ABSTRACT

For improving of practices of international trade businesses will rely on collecting; managing; evaluating and applying international trading intelligences. Due to special national trading environment of the Taiwan R.O.C., World Trade Organization (WTO) and Asia Pacific Economic Cooperation (APEC) are the only Organizations we had named and registered. Taiwan R.O.C. is pursuing better trading treatments and opportunities from getting into other Economic Communities even though glorified to be the one of The Asian Four Dragons contributed by the flexibility and agility of its domestic small businesses of the past decades.

Since the Main Land China was releasing its business markets and luring by benefits of her huge populations and low labor costs for investments and trading techniques, Asian four dragons are facing to challenges of losing their competitive strength due to scatter owned business resources to the Main Land China. How to develop a strategic policy to reduce business risks and improve trading efficiencies for inland trading operators will be the critical issue to facilitate transition of unfavorable business models.

Trading information is the major topic to be studied in the report. Information relating to the international trade practices are collected and are defined by Categorized Trading Factors upon their static and dynamic characteristics. All Trading Factors are numbered from their source, i.e., seven Economic Organizations which can most representing trading weightings with the Taiwan R.O.C. are presented to allocate their trading agreements to build a pilot Hierarchical Information Network. All Trading Factors are titled “Intelligence” for emphasizing with their dynamic senses and suggested to interface with static factors and cohere with actions to accomplish details to the trading operators.

TABLE OF CONTENTS

…………………………………………………………………………… Page

TITLE PAGE……………………………………………………………… i

APPROVAL SHEET……………………………………………………… ii

ACKNOWLEDGEMENT………………………………………………… iii

DEDICATION…………………………………………………………….. iv

ABSTRACT……………………………………………………………….. v

TABLE OF CONTENTS………………………………………………….. vi

LIST OF TABLES………………………………………………………… viii

LIST OF FIGURE……………………………………………….………… ix

LIST OF APPENDICES…………………………………………………... x

EXECUTIVE SUMMARY…………………………..…………………… xi

CHAPTER

I. THE PROBLEM AND ITS BACKGROUND………………………1

Introduction…………………………………………………………1

Statement of Problem……………………………………………….2

Significance of the Study…………………………………………...3

Scope and Delimitation of Study…………………………………...6

II. THEORETICAL FRAMEWORK………………………………….9

Related Literature and Related Study (Literature Review)…...... 9

Conceptual Framework……………………………………………..12

Hypothesis of the Study (Study Scope on Economic Factors) …….14

Definition of Terms. ……………………………………………….15

III. METHODS OF RESEARCH……………………………………...25

Proposed Methods and Techniques of the Study………………..…25

Intelligence Knowledge Development and Information Supply

StrategyDevelopment………………………………..……………25

IV. PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA………………………………………………………………..28

Research Findings……………………………………………….…28

Presentation, Analysis and interpretation of Data……………….…31

Development of Conceptual Networking for International Trade Operation…………………………………………………………...35

V. CONCLUSIONS AND RECOMMENDATION………….………43

Summary of Findings from the Study…..…………………………..43

Recommendations……………………..……………………………44

APPENDICES………………………………………..…….………………51

LIST OF TABLE

Table………………………………………………………….………………………..page

4.1 Whole economic variation in Taiwan from 1996 to 2006……………………..28

4.2 Industry variation in Taiwan from 1996 to 2006 (Base on GDP weighting) …28

4.3 Participation of Taiwan and related economic nations in regional or global economic groups or organizations……………………………………………30

4.4 Influences of economic factors and classification……………………………..37

4.5 Definition of hierarchical symbols of WTO factors……………………..….…38

5.1 Bureau of Foreign Trade website, 2008/02……………………………………43

LIST OF FIGURE

Figure………………………………………………………………………………….page

1. Conceptual Model of the Study………………………………………………xiv

2.1 Development of Conceptual Networking for International Trade Operations..14

3.1 Research Flow Chart of Intelligence Knowledge Development………………26

3.2 Research Flow Chart of Information Supply Strategy Development…………26

4.1 Distribution curve of Taiwan Agriculture from 1996 to 2006…………….…..29

4.2 Distribution curve of Taiwan Industry from 1996 to 2006……………………29

4.3 Distribution curve of Taiwan Service Trade from 1996 to 2006……………...29

4.4 Flow of Presentation, Analysis and interpretation of Data……………………34

4.5 Influence scale and classification of domestic and foreign economic factors...39

4.6 Framework of hierarchical economic factors…………………………………39

LIST OF APPENDIX

Appendix………………………………………………………………………………page

1 Framework of WTO Economic and Trade Factor…………….………………51

2 Framework of OCED Economic and Trade Factor………….………………..80

3 Framework of NAFTA Economic and Trade Factor……….…………………81

4 Framework of FTAA Economic and Trade Factor………….………………...114

5 Framework of EU Economic and Trade Factor……………….………………126

6 Framework of ASEAN Economic and Trade Factor………….………………127

7 Framework of APEC Economic and Trade Factor……………………………142

8 Conceptual Networking of WTO………………………………...... 156

EXECUTIVE SUMMARY

Introduction

In recent decades, the global economic situation has been changeable. How could Taiwan external trade be expanded to international trade information (including trade regulations of global and regional economic organizations) and valued in globalization? At present, economic information network of Bureau of Foreign Trade, Ministry of Economic Affairs, provide organizational regulations and economic articles, participate in organizational process and conferences and influence Taiwan industries. However, only few scholars have probed into the specific regulations of some economic organizations, and there is the lack of complete and systematic study, generalization and framework.

Among information websites in Taiwan, except for economic information network (Bureau of Foreign Trade) which involves intelligence knowledge of WTO, this study did not find other websites which can systematically provide information such as economic organizations. Trading companies’ acquisition of economic information through Internet is still the key of future international trade managers. Effective collection of immediate and important international trade information in economic institutions of the government, and the related policy which are provided for the users in simple measures would directly influence the competitiveness of domestic trading firms.

How to systematically construct effective international economic intelligence knowledge and intelligence information supply of strategy in Taiwanese government is the subject of this study.

Statement of Problem

The general problem of the study is: How does international economic knowledge and information supply of strategy in Taiwan be evaluated and use as basis for the development of conceptual networking for international trade operation?

Specifically, the study sought answers to the following questions:

1. How may the international economic knowledge be measured in terms of:

1.1 degree of dependence on foreign trade in Taiwan;

1.2 main target markets of export and import of Taiwan;

1.3 trade Police and Regulation Executions of economic groups or organizations of main export and import target markets of Taiwan;

1.4 strategy measures of Taiwan Government with respect to external economic variations of main export and import target markets of Taiwan;

1.5 dependence of internet applications in Taiwan industries; and

1.6 Current Trade e-environment in Taiwan?

2. How may the information supply strategy be measured in terms of:

2.1 external trading factor;

2.2 internal trading factor.

3. How can a conceptual networking for international trade operation be developed based on the findings of the study?

Scope and Delimitation of the Study

This Study focused on the main target markets (including U.S.; Europe; ASEAN 10; Japan; Hong Kong and China), where Taiwan had 85.8% gross exported value and 67.5% gross imported value in 2006. ( on U.S. market, Taiwan had 14.4% gross exported value and 11.2% gross imported value. on Europe market, Taiwan had 14.4% gross exported value and 11.2% gross imported value, on ASEAN 10 market, Taiwan had 13.3% gross exported value and 11.5% gross imported value, on Japan market, Taiwan had 7.3% gross exported value and 22.8% gross imported value, on Hong Kong market, Taiwan had 16.7% gross exported value and 1% gross imported value, on China market, Taiwan had 23.1% gross exported value and 12.2% gross imported value).

The study collected “trade policy” and “regulation execution” in Economic Organizations of these Taiwan main market countries and the “measures” of Taiwan Government itself. Based on the scoped Economic Organizations, this Study transformed them into the information structure by hierarchical framework, and defined the Information that might influence international trade operation or the risks of the industries in Taiwan as collected and planed economic factors upon foreign and domestic scales.

Conceptual Framework

The study used an In-Process-Output Model since the study evaluated the international economic knowledge and information supply of strategy in as basis for the development of conceptual networking for international trade operation.

Figure 1 presents the conceptual model of the study.

The figure consists of three frames. The first frame is the Input which contains the related literature and studies on the variables of the study, documents from the Taiwan Ministry of Economic Affairs and Institute of Information Industry authorized by Department of Industrial Technology and other related documents.

1

Input Process Output

Figure 1. Conceptual Model of the Study

The second frame is the Process that deals on the presentation and evaluation of the following: (1) international economic knowledge measured in terms of degree of dependence on foreign trade in Taiwan; main target markets of export and import of Taiwan; trade Policy and Regulation Executions of economic groups or organizations of main export and import target markets of Taiwan; strategy measures of Taiwan government with respect to external economic variations of main export and import target markets of Taiwan; dependence of internet applications in Taiwan industries; and current trade e-environment in Taiwan; and (2) information supply strategy described in terms of external trading factor and internal trading factor. The Output of the study is the development of the conceptual networking for international trade operation.

Summary of Findings

The findings of the study are presented herein:

1. Observing the Taiwan whole economic environment, there is no violent variations after accession to WTO in 2002.

2. Observing the structure of the main industries of Taiwan, it had obviously changed since the day when Taiwan filed an application with WTO on January 1st 1995,

3. Observing the above inputs, from 1996 to 2006, it is influenced that Taiwan went through significant economy impacts two times. The Asian financial storm is one of the spot and serious impacts for economic stabilities, the Taiwan Economic and Trade Agencies need to adopt the mechanism of management of the risk management to provide instant results in order to reduce the short-term impacts and long-term risks. However, the participation of WTO is the result that Taiwan Government had engaged long time and provided proper measures with scheduled timetable for domestic economics and trade operators.

4. For domestic trade operators that can develop business strategy to reduce their business risks with respect to Governmental measures in the effective time domain, it will rely on how to access economic and trade knowledge and information effectively for increasing business opportunities and interests.

5. Domestic trade companies should construct a convenient and effective mechanism to search for and acquire the operational information. For instance, a trade company conducts business with Ireland, and thus it should keep track of the economic policy of that country, further recognize the tariff duties, limit and fine regulations related to the goods in WTO, OECD, EU, and plan the long, medium and short-term operational positions by operational strategy decision-making of risk management and immediate correct information.

6. If international trade intelligence information can be effectively collected and applied through a supply system of “international economic information” and “governmental measures” to allow companies to be more flexible, companies would certainly grow in the complicated and changeable environment.

Recommendations

The researchers recommends the following on the basis of the findings of the study:

1. Based on the concept of international trade intelligence knowledge and conceptual framework (conceptual framework of national trading intelligence), this study collected the economic factor collection of 7 economic organizations and domestic measures. This is only a small part of the overall economic information in terms of practical trade. In order to fulfill overall trading demands, it must rely on government, private organizations, or institutes with sufficient manpower and resources.

2. The construction and maintenance of the “conceptual framework of international trade intelligence” are professional and continuous. For the negotiations between Taiwan economic representatives and foreign economic organizations, the progress and expected bottom line should be reorganized and announced by the institutions authorized by the government, which are transformed into e-information and shown in “conceptual framework of international trade intelligence” so that international trade companies or related industries in Taiwan can have sufficient time to be prepared.

3. The analytical study on international economic intelligence is the main task of corporate sustainable operation. In the future, the study on international intelligence information will be closely connected with high-tech information system. The success of management system of international trade intelligence knowledge relies on the acquisition, reorganization, analysis and application related to the industry and rapid information exchange. Sufficient and correct data source, proper collection model and rapid delivery will allow trade companies to have the information with proper quality, quantity and time to make the right decisions.

4. This paper proposes the framework of external and internal data with regard to information acquisition which can function as the criteria for companies to conduct knowledge management of industry study. The framework construction of international trade intelligence knowledge is significant for companies to increase their competitiveness.

5. The “conceptual framework of international trade intelligence” in this paper might allow domestic trade companies or related industries to have “rapid”, “correct” and “effective” trade intelligence information. However, after the trade companies and industry acquire the trade intelligence information needed, how will they effectively assess the risk, recognize the levels of the risk and risk management or further modify the operational strategy. It will be the direction of future study.

6. Based on the “conceptual framework of international trade intelligence” with normalized “risk management mechanism”, this paper provides a complete application framework for domestic companies of international trade or related firms to reduce risk and have highly flexible operation and management.