Buoyancy in the Tempest


2009-01-15
Buoyancy in the Tempest -- An Interview with TWMA Chairman, Mr. Bill Hung -- Report by Greg Niederhaus President of BOARKE machinery, Mr. Bill Hung is also approaching his final year as Chairman of Taiwan Woodworking Machinery Association (TWMA). He welcomed a visit with wfd and shared his views with us about what he believes smart companies in Taiwan should be doing in these challenging economic times. At 47 years old, Bill is highly accomplished as a businessman, family man, engineer and scholar. With his children already at university and nearly 8 years tenure under his belt heading TWMA, wfd wanted to know what's next on his list of things to accomplish. BOARKE, by the way, is one of the leading Taiwanese manufacturers of woodworking machinery. **************************************************************** Unprecedented Economic Tribulations, Have Some Tea **************************************************************** We passed what looked like a new factory under construction on our way in to Mr. Hung's office. Sitting around a massive conference table cut from the base of a single tree at its roots, one could not mistake the man's passion for real wood. He poured us cups of Oolong tea, and kindly warned us that too much of this pick-me-up beverage would keep us awake for three days straight. Despite his wisdom, Bill is a jovial man, and his English is superb. Mr. Hung was very up-front with us in admitting a massive slow-down in orders for his machines this year. Many other companies we have visited tend to shy away from this fact, though they may only be running three days out of the week. For Bill, rather than wallow in a sea of economic uncertainty he is optimistic about the future. "This is the first time in history that the world has experienced an economic depression of this magnitude," he remarks. "Even if you look at the Great Depression in the USA, which began around 1932 and lasted a solid decade, it still doesn't compare to the situation we've got on our hands now. Neither does the more recent 1997 Asian Economic Crisis we had a while back." This seemed like a rather frivolous remark, but he went on to expound: "The key idea here is to look at things on a global level. Back in the 1930's the problem was contained within US borders. Transportation between continents was mainly by boat, communication was crude and information technology was practically nonexistent. Now we've got governments around the world scrambling to think up ways to pick up their economies. Some inject cash directly to their citizens in hope of stimulating consumerism. Others are relaxing taxes and providing duty free investment in industry. And governments are entering joint ventures with conglomerates through buying up stocks. These are all methods being implemented globally, but the fact remains that no one really knows for sure the best way to handle the situation because this is the first time ever the world has had this sort of problem on this scale. No one knows how long it will last," says Mr. Hung, "and small to mid-sized corporations gain nothing from these tactics." So why is BOARKE investing huge money in the construction of a new state-of-the-art facility? **************************** Leaders Leave Legacies **************************** As Chairman of TWMA, Bill Hung has worked to streamline industry in Taiwan on many levels, including working with the government in re-vamping the infrastructure of industrial zones, smoothing out satellite outsourcing, and establishing technical education programs. The list goes on, but Mr. Hung's main focus now is to provide guidelines for the future for the woodworking industry. In the past when things would slow down, Mr. Hung would encourage smaller companies to implement the following five activities: Re-vamp the internal structure of the company so that production can spring back effectively when orders do come in; use the down time to delve deeper into R&D; provide educational training to staff; expand facilities; and invest more into CRM or, Customer Relations Management. "After-sales service is important. Why not use your free time to pay your clients a visit and remind them that you are there to help if they need you?" "There is only one way to go when you are at rock bottom," Bill says. "If you want to believe things will never get better, why not just close up shop? Many Taiwanese bosses could learn from concepts that have existed in advanced countries for years. Namely, these concepts are called 'vertical integration' and 'horizontal integration'. Basically, with vertical integration companies eliminate outsourcing to lower costs and better control quality. Typically this is a wise move during long-term depressions, and since it leads to specialization, quality tends to improve. Horizontal integration is similar, but conversely involves expanding the product range. One way to achieve these goals is to merge smaller companies together under one roof. Teamwork is largely about humility, and many Taiwanese bosses like to be the boss. So they need to sacrifice their ideologies in order to ensure their survival, and accept the fact that they may make less money in the short term. But it is better to have a smaller piece of the pie than not to have any, and if companies learn to work together their chances of sharing larger pies in the future increase, while being part of an entity that can better compete with giants in Germany or Italy." Back to the point. What's this legacy Bill is preparing for the industry? Bill points out what's going on educationally on the university level. "National universities are a cinch to get into," he says, "and they are a whole lot cheaper than private ones. In fact, private universities are having trouble staying afloat because families are struggling with the cost of tuition. This is happening globally, not just in Taiwan. What we suggest are partnerships between schools like Harvard and private universities here in Taiwan. Neither country allows universities from other countries to set up franchises on their land, but if there were new programs which integrate the schools' resources and yield dual degrees, you could graduate from a local school here in Taiwan and sport a Harvard degree, without even setting foot on that campus. That's tantamount to 'Big Face', with a very attractive price tag." Bill's legacy is essentially a call for mass integration of domestic manufacturers of woodworking machinery, plain but not so simple. Guidelines for this movement are on the drawing board. If you want to compete internationally, you've got to humble out and pool your resources. The days of "everybody is a boss" are gone. That doesn't wash when you are up against Germany and Italy. Taiwan enjoys a ranking of third, just under those two countries, for export of its woodworking machinery. This achievement is born of excellent quality, performance and durability at attractive prices. More on Bill Hung's legacy will follow in the next subsection... ****************************** Leading Through Example ****************************** Mr. Hung is eager to lead his company, BOARKE into the South American arena. "South America buys a tremendous amount of woodworking machinery and Taiwan wants a piece of the action." So far, Germany and Italy are the major players down there, specifically in Brazil. BOARKE is among a handful of Taiwanese companies that actually have the will and the resources to set up in Brazil, yet they realize it would be tough going against such already well established companies alone. The idea is to merge their resources, enter the market, and share the proceeds. "As I said before," he emphasizes, "if you want to stake a claim to a promising market, you can't be greedy. We will bite the bullet, so to speak, in the initial stages of this venture. Everyone stands to make money, albeit not in such sums as we are accustomed to. But what will ensue is a market share nonetheless. When times get better economically, we will be poised to stand amongst the giants, because we made early sacrifices to establish ourselves there." Bill's message to the masses of small businesses in Taiwan is a tough one. "R&D allows you to keep updating your products and stay competitive. Put yourself in a position where you can push down against the piranhas nipping at your heels while pushing upwards against the big boys. Vertical and horizontal integration will serve as power to both your right and left hands. If you are a company that does not want to change your ways, you will go down. Learn to cooperate and do it while you are still attractive. If you wait till you owe money, it will be too late. Work together and earn the right to be the boss. Don't just call yourself a 'boss' because you like how it sounds. The government won't inject money into non-benchmark companies, so learn to save yourselves." ******************** Surfing and Hope ******************** "You are from California", Bill joked. "You know what it's like to wait for a wave in the ebb of a tide. Do you ever really believe that your wave will never come? If you did, then you wouldn't be out there in the first place, right?" That got a nod, though everyone knows surfing never really could compare to snowboarding. "The point is, business will get better. It is inevitable. We are building this new factory because I have faith. Look back in history and you'll see that things always get better, then they slow down, and the cycle repeats." At a young age, Mr. Bill Hung is at the helm of both a top notch company and a national industrial association. Now, he is wrapping up his EMBA. Certainly, this incredible optimism should not be written off to naïveté. His legacy will commence next year, his guidelines laid out clearly, and those who want to break away from tradition will have an incarnate example to derive inspiration from. Sharpen your tools, sweep your shop floor, dream up new advancements, visit your clients, build friendships with your competitors and most importantly, wax your surfboard. All work and no play… is sure to dull your competitive edge.
Leave a message