TRANSFORMING TATUNG

New businesses for a new century

As Tatung Co approaches its centennial year in 2018, it is undergoing a transformation under president Lin Kuo Wen-Yen, one of the most successful female executives in Taiwan, now under the leadership of its first female president, Tsai Ing-wen. After more than 35 years at the only employer she has ever known since her graduation from the University of Maryland with a master’s degree, Ms Lin Kuo has been learning since day one. She’s been deeply involved in Tatung’s diversification from home appliances to higher-tech products and energy solutions, overseas expansion, and has helped steer the business through various difficult times.

As president of Tatung, the mother of two says she has been privileged to hold the position she assumed five years ago and still has a passion for the job.

“I spend 10 hours a day more or less at work. If you don’t like the job you cannot [do that],” Ms Lin Kuo, 66, tells Asia Focus at Tatung’s headquarters in Taipei.

“We have many different businesses so that makes the job very interesting. You can see that it’s challenging because you have many things to learn. I consider that as a unique opportunity that nobody else can have.”

Founded in 1918, Tatung today is best known for home appliances and consumer electronics but it also has a wide range of industrial, power generation and transmission products. Its most recent business is renewable energy, which it has begun to expand abroad in the expectation that the sector will grow continuously and become one of its major businesses in the future.

Started as a family business, Tatung was the first company in Taiwan to become publicly listed in 1967. It exports its products worldwide and employs about 32,000 people. It reported sales revenue in 2016 of NT$77.8 billion (US$2.55 billion), down from NT$94.74 billion a year earlier, due partly to an increase in cost of sales.

Being a female executive, says Ms Lin Kuo, is not easy in any part of the world. Asia, in particular, does not have many successful women executives.

“I think for all women in Taiwan or everywhere in the world, female executives always have a more difficult time than males in doing their jobs,” she says. “They have to work very hard to get the same thing (as male executives). It’s very common in every country.

“But I think it’s lucky that I am in Taiwan. Taiwan is a very free society so more and more women are taking up higher positions. Some women even set up companies and serve as their chairmen.

“I think if we compare women taking a job as vice-president or higher, Taiwan is in the forefront. Our society allows women to take credit if they work hard.”

But looking back, she says that getting as far as she has was not always easy. “It took a lot of convincing in the beginning. People don’t have to speak up. You can see from the way they look at you. It’s kind of questioning what can you do? You have to prove yourself and it’s not only once ... many, many times.

“If people realise that you can do things better than they can, and you can help them to achieve what they want, they turn from sceptics to supporters. It’s very important for me to make sure people understand what I want to do as well as what I want them to do. So communication is very important.

“I’m very lucky because I had very good mother-in-law who helped me with the family. My husband and family totally supported me. Without their support, I couldn’t do what I’m doing.”

Ms Lin Kuo’s husband, Lin Wei-shan, is the chairman of the company that was founded by his grandfather in 1918, and Ms Lin Kuo says there is no problem working together to run the company as people do not take things personally.

“When husband and wife are working in the same company, the president has to listen to the chairman no matter who they are, whether they are a family member or not. Different people with different backgrounds work in the same company so we have to follow the hierarchy,” she points out.

“Outside, men and women are equal but inside the company, he is the boss. We are professionals who follow the chain of command. You cannot say ‘I am the president but I won’t listen to the chairman.’

“Whether it’s a wife or husband, it doesn’t make any difference. A company has its rules and I think we make it very clear. This is how things work. If we make the family the company’s matter, it will be very confusing.”

DIFFICULT TIMES

Looking back, Ms Lin Kuo says Tatung has faced hardship on many occasions, from the Great Depression in the 1930s to the Asian financial crisis in the 1990s and the global economic slowdown more recently. Some factories and operations in European countries, such as the Netherlands, Germany and the United Kingdom, were shut down because the company could not bear the high costs.

However, the decisions to close some subsidiaries were made in different years, so the impact on financial performance in any given year was not significant, she adds.

“Even in the past five years, we went through a lot of changes. We created new subsidiaries and we closed some,” she says. “When the company turns from profit to loss, you have to review how long you can allow the company to improve itself. If it continues to lose and lose bigger to the point that it affects a lot of staff, that’s not a happy situation.

“Everybody makes mistakes and I am no exception. We have to learn from mistakes,” she says, laughing, in response to a question about what was the biggest mistake she had made.

When asked what was the most difficult crisis Tatung faced, Ms Lin Kuo cites the sharp appreciation of the Taiwan dollar in 1985-86.

“I remember, just three or four years after I first joined the company, the NT dollar was appreciating. It went up to 28 against one US dollar and people projected it would go to 26. Before, it had been at 36 and over a few months it went up to 28. Not only Tatung but every company in Taiwan during that period was affected and suffered big losses,” she recalls.

“All the managers at that time took pay cuts. That situation lasted for one year before things were back to normal. That was the most difficult incident in Tatung’s history.”

The Asian financial crisis in 1997-98, meanwhile, did not affect Taiwan dramatically, in her view, because the island economy didn’t have too much foreign debt.

“I think it’s more of a problem for other countries but for Taiwan it was less serious. Secondly, it affected financial institutions more, so if you tended to take loans from the banks that was difficult, but if your company’s cash flow could sustain it, you didn’t have that much of a problem.

“During difficult times, we have to sit down and discuss how we can face challenges, how we can find solutions. And when the decision is made, we go for it. Of course during those changes, it was not easy. My role, when the board and the chairman made a decision, was to coordinate with all the parties and take the lead in execution; I was totally involved.

“Of course, there are issues because people can have different opinions. I have to be a coordinator to make sure that everyone moves in the same direction.”

Following the crisis, Tatung continued to grow because the company was able to adapt to the environment and market changes, something it continues to do today.

“We keep adapting ourselves,” she notes. “We keep changing with the business environment, keep changing our product distribution. This is another reason why the company has been able to sustain itself for a very long time.”

In her view, another reason Tatung has survived many crises over the past 99 years is business diversification.

“Every business has up and down cycles. When you have several businesses, when one business is up, the other is down. It kind of balances out. You have some buffers.”

As well, the company has maintained four management principles — honesty, integrity, frugality and industry.

“Tatung has been considered a trustworthy company, an honest business entity for customers. That’s one of the key reasons we have been sustainable because we need customers to keep the company,” adds Ms Lin Kuo.

However, in recent years that reputation has been tested in a protracted legal case involving Mr Lin, who was convicted in 2011 of embezzling Tatung funds to repay a loan taken out by a friend’s company in which Mr Lin had invested. He successfully appealed the conviction last year and is awaiting a new trial, which the company maintains will clear his name.

CHANGE AND SUCCESSION

Meanwhile, Tatung continues the process of successfully transforming itself into a conglomerate specialising in energy-saving and green energy-related systems and services, diversifying beyond fields such as IT products and appliances where cutthroat competition keeps margins low. It has pioneered the development of a national smart grid in Taiwan and many IoT (Internet of Things) solutions.

Looking ahead, Ms Lin Kuo says energy solutions, energy saving and carbon reduction technologies will become the major businesses for Tatung over the next five years.

“We keep on innovating our products. They can be smarter and more energy-efficient. So I believe innovation will continue to keep the company growing,” she says.

To keep the business running smoothly, she believes Tatung has to continue developing more talented young people to take over jobs of the current executives in the future.

“We see that in Europe, there are a lot of companies that have lasted for over 100 years. As well, a lot of Japanese conglomerates have lasted longer than 100 years,” she says.

“We should develop more talent because 10 or 20 years from now, I won’t be here so the transition to the next generation of managers is very important for the company to keep going.”

At this stage, Ms Lin Kuo and other top management of Tatung have begun to work on a succession plan. The fourth generation of the family does not seem to have a strong interest in joining the company so it will be critical to find more talent outside.

“I think it’s important for the company to have a system for succession with one generation of general managers passing on to another generation,” she says.

The family’s ownership is a small percentage in the publicly listed company.

“We are strict about good corporate governance. The younger generation of the family, meanwhile, does not seem to be interested in running the company. They say, ‘Your job is tough’,” she says with a big laugh.

“If we can find outside talents who are better than the insiders, we won’t rule out the possibility,” she points out.

In the past 10 years, Tatung has been steadily promoting qualified managers of business units to higher positions. As well, internal training programmes have been conducted and outside consultants have been hired to review management and devise programmes to promote potential leaders.

“We are picking some selective targets and watching their performance,” she says, but adds that it is still hard to project when she and the chairman will step down.

“I think that’s what we will see in the future when the time is right,” Ms Lin Kuo says.

“The leaders will have to have a vision and they need to take leadership,” she says about the qualifications of the new Tatung chairman and president. “This is a very tough job. To me, that person has to like the job to do it.”

We keep on innovating our products. They can be smarter and more energyefficient. So I believe innovation will continue to keep the company growgro ing. ... WeW see that in Europe, there are a lot of companies that last for over 100 years. As well, a lot of Japanese conglomerates have lasted longer than 100 years”