Mr. Shi Wen-long, an Eighty-year-old Dreamer
Present:Founder of the Chi Mei Corporation
Education:Mechanics division, Technical College of Tainan (now a part of the NCKU)
Interests:Music, Fishing, Painting and Sculpting
On a narrow road near the old town centre of Tainan, in a small three-story house built forty years ago, lives Mr. Shi Wen-long, the founder of Chi Mei Corporation. Although Mr. Shi now often appears in the Forbes rich list, he does not live in a big, lavish house. Indeed, his home, besides some musical instruments and his collection of paintings, is not a mansion and is as plain as his office in the company is. Despite this simple lifestyle, Mr. Shi is very active in his various charity works, having contributed at least 1 billion NT dollars to building a museum in the Metropolitan Park of Tainan.
As such, one may find some easy similarities between Mr. Shi and Warren Buffett, the second richest man in the world. Like him, Buffett still lives in a the same house he bought more than forty years ago, and in 2006 he announced plans to donate US$37 billion to the Bill & Melinda Gates Foundation to aid numerous good causes, and leave only a relatively small amount of money to his children. Mr. Shi has a similar philosophy. He believes that if children do not know how to spend money wisely, there is no point in leaving them too much, as it will eventually become a poison that ruins their life. Therefore, it is enough to leave a small amount that takes care of their basic needs. With this in mind, Mr. Shi has no need to hold back his charitable efforts.
Enjoying Life: the Wisdom of Delegation
The year 2008 was particularly special to Mr. Shi, as turned 80 years old and one of his companies, Chi Mei Optoelectronics, celebrated its 10th anniversary. In 2010, the cornerstone of these businesses, Chi Mei Corporation, will see its 50th anniversary. Mr. Shi now runs businesses that range from food to electronics, from acrylic boards to LCD panels, from petroleum products to paintings, and in his life has gone from managing a company that started with venture capital of NT$ 20,000 to one that has an annual turnover of NT$ 500 billion, from one with just four partners to one with 40,000 employees. In short, Mr. Shi’s life mirrors the recent history of Taiwan’s economic development, moving from traditional to high-tech industries. However, despite the huge growth in size and complexity of Chi Mei Corporation, Mr. Shi’s focus on efficient and effective delegation mean that the eighty-year-old entrepreneur still lives a free and relaxing life. Indeed, his philosophy of management has been highly regarded and studied, both inside and outside Taiwan.
Many people know that Mr Shi does not like to go to work. In fact, he only goes to his office two and half days a week and spends most of the rest of his time sea fishing. In addition, there are hardly any phone calls for him when he is at home, except those from his fishing partners asking him out to go on a trip.
In comparison to other business leaders who usually work twelve hours a day, Mr. Shi lives a simple life. Terry Guo, chairman of the Hon Hai Group, and Johnny Shin, chairman of ASUS, have both said that they envy his way of life, and have sought advice on the secrets of delegation and time management.
“You have such a relaxing life. But we are always so busy. How can you do it?” several entrepreneurs from the high-tech industry have asked.
“Just put down, and let go.” Mr. Shi once answered adding, “as chairman of a company, I believe, we should spend a lot of time on thinking about the future of the firm, not preoccupy ourselves with details.”
“If a business manager hopes to educate his subordinates to bring out the best in them, he must assume that people are worthy of his trust and must give them as much responsibility as possible.” This is the philosophy of Konosuke Matsushita, founder of Panasonic. Mr. Shi, without doubt, is the leading practitioner of this philosophy in Taiwan. For example, Chi Mei Optoelectronics saw the potential of LCD televisions quite early on, and thus the specifications of its panels were different from those of its rivals. The decision to follow such a strategy was made by a team of professionals after a thorough evaluation of the market, while at other companies an important decision like this would have been made solely by the boss. In Chi Mei employees have the opportunity to decide what is best for their company, and thus, the chief executive does not need to spend too much time at work.
Some people are curious about whether Mr. Shi is thinking about business strategy when he goes fishing, and some speculate that perhaps he gets a sense of achievement when fighting with big fish. However, Mr. Shi has said frankly that he never thinks of company businesses in his free time, and that the so-called sense of achievement in catching a big fish is of no importance to him. To him, watching the sea and appreciating the beauty of it, especially at sunrise, is reason enough to pursue such a hobby. Mr. Shi has no great secret in his fishing trips, but instead relaxes and enjoys the view.
In running his business, Mr. Shi admits that he follows his own ideas and has been influenced little by others. “Of course, I have ideas of my own,” he smiles, “and that is what a chief executive should be like.”
Showing Mercy: Rejecting Mergers and Redundancies
Several years ago when the LCD panels industry was in recession, many people suggested that to stay competitive Chi Mei Optoelectronics should buy out some smaller LCD panel manufacturers. However, Mr. Shi refused to do so and his reason surprised many. “I do want to do that,” he emphasised, “but I can’t possibly keep employing all the workers.” He pointed out that the purpose of a merger was to increase the scale of production and reduce costs, namely, to lay off people. In so doing, however, many workers and their families would suffer, which would cause problems in the wider society. Mr. Shi did not have the heart to do this, so the idea of buying other firms was dropped at this time.
However, Chi Mei has sometimes made such deals. Seven years ago, Chi Mei Optoelectronics took over IDT, a subsidiary of IBM in Japan. Though paying a high price for the company, Mr. Shi said that Chi Mei acquired some much needed technology and professionals in the process.
In fact, Mr. Shi holds a high regard for companies who have used tactical mergers to expand and strengthen their scale of production, as in the deals undertaken by AU Optronics Corporation, which lead to the firm becoming the largest LCD panel manufacturer in the world.
Having an Astute Eye: the Wisdom of Creating an Edge
Mr. Shi showed his business acumen from an early age, when he began producing materials such as acrylic and ABS. In those days, acrylic was produced by Japanese companies, which usually employed many workers to manually clean the two glass plates between which the acrylic had been injected. This inevitably meant high labour costs, so Chi Mei took another approach, by skipping the cleaning process and selling so-called “sub-quality” products. Mr. Shi felt that since most of their products were used as outdoor advertising signs, people would not be able to notice any small flaws on the surface, and thus an acceptable quality could be produced at lower prices.
It should be noted that at the time the highest quality acrylic products were used on to make shades for desk lamps, which people observe from a close distance. It was Mr. Shi’s vision to see that he could actually start a new market for a new kind of product, thus turning an apparent position of weakness into one of competitive strength.
The success of Chi Mei’s acrylic business has thus largely been due to the combination of efficient processes and effective strategies, and the same philosophy was also applied to its ABS business, for which Chi Mei is now the number one producer in the world. Originally, most companies produced their ABS products as engineering plastic materials, but Chi Mei saw them more as general use materials. Mr. Shi thought this was similar to running a buffet-style restaurant. While other companies could offer lot of variety the amount that was actually produced of each product was rather small, which kept costs high. In contrast, Chi Me only offered three products, and thus produced a lot of each, enabling it to keep prices low. In addition, the firm also adopted a “one price policy”, and the simplicity of this meant that no sales people were required.
A similar story can be told with regard to Chi Mei’s relationship with ARCO. In December, 1987, Chi Mei signed a ten-year supply contract for SM with ARCO, in which the structure of its production cost was listed, and the sales price was set according to the variations in cost over time. Therefore, after the contract was signed, no more price negotiations were necessary, which saved a lot of time, effort and uncertainty for both companies.
However, while Mr. Shi’s business sense has long made headlines, his charitable efforts have been less widely known.
Harbouring Dreams: Building a Convalescent Hospital
Over the last seven years, Mr. Shi has attempted to find a piece of land in Tainan County for a convalescent hospital to house psychiatric patients, who often present considerable financial burdens to less privileged families, as well as receiving sub-standard care at home. Although the process of acquiring the land has not gone very smoothly, Mr. Shi is still working towards achieving this dream.
In addition, he has also been working with the Tainan county government and the Council for Cultural Affairs on a museum project in the new Tainan Metropolitan Park. The county government has offered a piece of land and built the park, while Chi Mei has donated NT$ 1 billion dollars of equipment to the museum. When it is completed, the museum will be transferred to the Council for Cultural Affairs, who will run its daily operations.
As Mr. Shi says, “Chi Mei should make contributions to Tainan,” and he has long been an entrepreneur who takes the issue of social responsibility seriously and cares about his home county very much. He has said that there are 23 counties/cities in Taiwan and if every entrepreneur could pick a place to carry out charitable works, the whole Taiwan would be certain of a better tomorrow.
Jack Welch, the former CEO of General Electric, saw management as about simplifying complicated problems and bringing planning to chaotic situations. In the same spirit, whether focusing on traditional businesses, high-tech industry or charitable concerns, Mr. Shi has the knack of rapidly grasping key issues and seeing what should be done, and thus there is no doubt that he can be seen as the leading management guru of Taiwan.
(Translated from Vol. 591, Business Today.)