Nikkei Asia Prizes 1999

Shi Wen Long

Unique management philosophy pays off Innovative Strategies Help Shi Wen Long Foster Global Giant

BY MOTOHIKO KITAHARA
staff writer

TAIPEI - The southern Taiwan city of Tainan has a rich history and has been on the global scene since the 16th century, when the Dutch built two castles there and made the city one of their trade hubs. Tainan is also where Chi Mei Corp., the world's largest maker of acrylonitrile-butadiene-styrene (ABS) resin, is headquartered.

The life of Shi Wen Long, the 71-year-old chairman of Chi Mei, in many ways mirrors the dynamic economic development of Taiwan. In 1953, Shi and his brothers began producing toys and household goods in Tainan. The operation grew into the largest company of its kind in Taiwan. But he went beyond building toys - he wanted something more. So in 1959, Shi entrusted the toy-making business to his brothers and entered the chemical industry to found Chi Mei Corp.

His new company first focused on acrylic boards. To sell the products to processors, Chi Mei trained its own instructors to make improvements on the processing technology. This innovative sales strategy helped Chi Mei become Taiwan's largest maker of acrylic boards and earned Shi the title of "father of acrylic boards."

ABS-resin production grew into a full-fledged business about 15 years ago. Chi Mei built large plants, helping the company substantially cut costs. Current output totals about 1 million metric tons a year, more than that of all Japanese makers combined.

The Asian economic crisis has changed the shape of the ABS-resin market. The fall of the currencies of South Korea and Southeast Asian countries against the dollar triggered a flood of low-priced products from these countries, threatening Chi Mei's dominance of the ABS-resin market. To reverse the trend, the company set out to diversify. Chi Mei has established a business alliance with Fujitsu Ltd., a major Japanese computer maker, for production of thin-film transistor liquid crystal displays (LCDs). The company has secured a large plot in Tainan to begin production this year. Total investment for the first and second phase of the project is expected to amount to the equivalent of 160 billion yen ($1.3 billion). Besides production of thin-film transistor LCD, the company plans to produce LCD modules, combining the displays with its ABS resin.

Shi has a unique management philosophy. Ethnic-Chinese businessmen often prefer their enterprises to be family-controlled. Shi, in contrast, separated ownership and management during the company's formative years. He once told his employees to reject any attempts by his relatives to intervene in the management of Chi Mei in the future, telling them to use a videotape of his pledge if necessary. He also chooses not to list Chi Mei's shares on the stock exchange, citing his distrust of the market.

Chi Mei adopted a five-day workweek 12 years ago, still rare in Taiwan at that time. Shi works at his company only two days a week. "Our plant managers are like Japanese feudal lords," Shi said. "They should be given autonomy to make our company as competitive as possible." His company does not hire salespeople and takes orders by publishing price lists in newspapers. "Pushing products on the market is ineffective. Making the world's best products draws customers without the need for a big sales drive," Shi said. Despite slumping prices for raw materials, the company managed to stay in the black in 1998.

"After passing the 50-year mark, I grew more interested in how to spend the money I have earned," Shi said. One of his investments is Chi Mei Hospital, the largest hospital in southern Taiwan, equipped with 1,300 beds and state-of-the-art medical equipment. Also, the headquarters of Chi Mei house a free-admission museum that exhibits a European art collection purchased by the Chi Mei Cultural Foundation. Shi also collects Japanese swords and violins - some of which are leased to famous artists. Among his many hobbies include playing musical instruments, painting and fishing. Shi also has a deep understanding of Japanese culture, the result of being raised under Japanese colonial rule.

He is close to President Li Teng Hui and has served as an adviser to Li since 1996. Last year, Shi drew wide public attention by proclaiming Taiwan's need for an administrative overhaul. He said if he were president, he could cut taxes by half, adding that about 80% of the bureaucratic organization is unnecessary.