CSR

  • Corporate Sustainability
  • Risk Management and Response Measures

Risk Management and Response Measures

Trend Analysis and Countermeasures
In consideration of the changes in the global environment and industry every year, Inventec’s governance unit, the Board of Directors, relevant committees and management units in accordance with the seven major management areas including "strategic risk", "operational risk", "financial risk", "regulatory compliance and intellectual property risk", "product safety risk", "environmental risk", "information security risk", and "occupational safety risk", carry out major risk identification and risk assessment analysis, formulate timely response strategies, and strengthen contingency mechanisms to effectively reduce risks, improve company competitiveness, and achieve the goal of sustainable operation.

1)Favorable factors Read more

  • The cloud computing industry and big data are both growing rapidly. In the future, the cloud application business opportunities are infinite. The Group has been the industry leader in the aspect of server OEM; through existing hardware technology and application software development, we can take our place in the cloud computing industry.

  • Since the functions of notebook computers are continuously improving, and the weight and modeling are becoming thinner and thinner, as well as the collocation of touch control and continuous development of all kinds of digital mobile video multimedia technologies, it has made the product line more extensive through innovation.

  • Based on the good foundation of an existing all-around product line, in addition to continuing to consolidate the notebook computer and server product fields, the Group is also gradually expanding to relevant fields such as peripheral software products, electronic information products, etc. with higher added value. Furthermore, in the solar energy photovoltaic industry, through vertical integration and Group resources sharing, the Group can take its place in the field of solar battery and module products.

  • In addition to strengthening the status of global manufacturing, research and development, and the logistics center, the Group is also actively utilizing production advantages and research and development factors in the Greater China economic circle in order to construct a real time co-working platform with high efficiency and a market feedback mechanism, and together with the setup of a research and development innovation center, we will enhance technology and product design innovation capability.

2)Unfavorable factors Read more

  • The prices of important components have dropped rapidly, causing low price computers to quickly extend, and supply manufacturers and brand manufacturers are dominating the formulation of industry standards and mastering the distribution channels, thus compressing the profits of downstream manufacturers.

    Solution: In addition to being dedicated to the development of high added value products and all-around products, we also actively improve operation efficiency in such aspects as production, marketing, logistics, etc. to reduce operation costs and improve overall operation efficiency through constructing Enterprise Resource Planning (ERP), Supply Chain Management (SCM), and six sigma improvement strategy.

  • Since manufacturers in our country cannot sufficiently supply some important key components, and we still rely on supply from overseas manufacturers, controlling both material sources and price is not easy.

    Solution: The Company has long-term cooperative and strategic ally relationships with major suppliers and has established multiple supply sources for important components to ensure sufficient component supply; we also seek all kinds of approaches to integrate the supply chain and reduce the impact.

  • Industrial technology is rapidly changing and constantly updating the environment of shortening product life cycle and meager profits, causing fierce industry competition.

    Solution: The Group will formulate a relevant operation risk management mechanism to consider various operation strategies as relevant solutions; in addition to coordinating with customers for the research and development of relevant demanded commodities, we are also dedicated to patent and intellectual property innovation in order to strengthen Group resource integration and expand emerging business investments and arrangements to respond to changes in the market.

  • Our business is mainly export sales, so the change of exchange rate will significantly impact company revenue and profit-making.

    Solution: Most of the important components of the Company are purchased and imported overseas and priced with foreign currency, and the sales are mostly priced with foreign currency, which can naturally offset the impact of change of exchange rate on revenue and cost. Furthermore, taking currency hedging measures can help us reasonably avoid exchange rate risk.

Risk management and countermeasures Read more

IoTs have triggered the rapid development of information and telecommunication technology, and what we are now familiar with as AI, block chain, cloud computing, big data, and 5G. To welcome the challenges of fluctuating technology, Inventec has actively invested in the application and research of industry 4.0, AI, and 5G communication. Through considerable efforts and hard work, in 2017, we have harvested significant results in these three fields for the group. In the future, we should continue to invest in novel products, such as auto electronics and health care in order to bring forward more diversified products that track concurrently with technology. In the short term, we will accelerate assets activation, and encourage research and development through combining innovations with the Internet. In the long term, in addition to product diversity, the Company will optimize Group resources through cross-industry alliance and supply chain integration. Furthermore, throughout research and development, design, production, distribution and service, the Company will provide customers with all-around solutions to improve profit making and further maintain corporate sustainable development. Mobile technologies such as joint Internet, wireless communication transmission, etc. shorten the space barrier, allowing for the smooth sharing of internal and external environmental resources of the company organization. Importing an enterprise resource integration system and financial consolidation system will improve the overall operation and handling efficiency of financial affairs. In terms of the solar optoelectronic industry, though we are constrained by the environment so that no major breakthrough is obtained, we should continue to improve manufacturing and optimize products in order to accumulate sufficient capabilities and break loose from market limitations in the future. Through active and effective financial and information technology application, the Company will assist in integrating upstream of vision and strategy, medium of process and indicator, and down to management information, action plans, etc. in order to take it as the best management tool in response to the change of technology and industry.
The relevant units of the Company have always strictly followed important policies at home and abroad, as well as law changes, and pay close attention to any changes at all times. They also actively coordinate and adjust company financial business activities in response to such changed matters. With regard to the promotion of corporate governance by competent authorities, successive issuing and amendment of the Company Act, Securities Exchange Act, and handling criterion for all kinds of businesses, the reformation of the tax regulations environment, etc., the Company actively coordinates to handle such matters as required.
 
Since 2013, listed companies have comprehensively applied IFRs, the Taiwan-IFRSs translated and issued by the Domestic Accounting Research and Development Foundation are the basis for preparing the enterprise financial report. In the face of the change of accounting principles, the Company has actively carried out training on financial and accounting personnel with relevant knowledge, smoothly matching up with the accounting system. Furthermore, the Company simultaneously maintains close communication with information personnel and coordinates with the response method of the information system according to the change to the accounting system in order to reduce the impact brought by the change of accounting principles in the future.

The rise of white-box servers and fierce competition of trade markets around the world have rendered the design and service of products one of the primary reasons for increased revenue. In addition to developing white-box clients, the company will also bring along its excellent research and development technology to vie for manufacturers' favor. In addition to pursuing further improvement of quality and quantity and cost control, OEM dealers should go deep into establishing diversified customer relationships in order to avoid the awkward situation brought
by excessive concentration of sales. The purchases and sales of the Company are mostly from and to suppliers or international brand manufacturers with considerable scale in the industry. In addition to seeking alternative materials and properly managing inventory levels to reduce the risk of material shortage by actively dispersing supplier sources, the Company also continuously and actively opens channels and exploits overseas markets; by reducing sales risk through product quality optimization, it is expected to harvest potential global markets and grow against trends.
Interest rate:In 2017, while global political and economic situations remained in flux, the Fed has made various moves to increase interest as the U.S. economy started to stabilize, which has affected the monetary policy of other countries. Like in Taiwan, since the labor market is filled with ups and downs, the investment momentum and employment has fallen short of expectations. Therefore, in 2018, the central bank will follow the trends in terms of interest rate manipulation in order to pursue stability. By focusing on the impact of the changes in interest rates on capital operations, the Company will still make the best of its portfolio by giving due consideration to liquidity and safety.
 
Exchange rate:Foreign exchange policies are absolutely not the primary reason affecting economic development, but economic development can be worked out when handling effective monetary, financial, and economic policy. Since the foreign exchange policy and trade war between China and the U.S. would inevitably affect the performance of the foreign exchange positioning of electronic OEM plants in Taiwan, the surging of hot money has to be conducted with suitable adjustments with force from the central bank. Therefore, if international major currencies are highly uncertain, the central bank would have to resort to being hawkish in the short run and a dove in the long run. As for the company, even though China and the U.S. differ in exchange rates, which could possibly undermine the natural hedging effect after balancing the claim against debt, we will deepen our relationships with international vendors and employ hedging manipulation via foreign exchange to reduce the risk of exchange rates and prevent the central bank from making use of appreciation instead of augmenting the interest rate.
 
Inflation:Monetary policies often need to consider inflation in order to prevent the actual interest rate from being distorted. Viewed holistically, the monetary policies of the U.S. remain the key issue of the global economy and financial risk. It is expected that the Central Bank will adopt an appropriate monetary policy in 2018. It must consider the consequences of real interest rates on the domestic economy to keep the economy in a relatively stable structure. In the future, the Company will still actively carry out cost and operation expenditure control, process reengineering and asset activation to mitigate the impact of inflation on business operations.