C.C. Kan A "Young Turk" in Old Age

Anna Wang　/　photos Chen Yueh-kuei　/　tr. by David Mayer

June 2000

中文日本語

The Taiwan brandy bottle grows wild in the ponds of the Taoyuan tableland, offering nature lovers a rare and beautiful sight.

There is no one in the Tai wanese business community in South Africa who is unfamiliar with Kan Chu-cheng. Indeed, the name seems to inspire a bit of awe, especially with regard to his activities as an arms manufacturer.

"Old Uncle Kan" is his Chinese nickname. C.C. Kan suffices in English. Now 75, Kan Chu-cheng first went into business 12 years ago, and within ten years his computer company had become the leader in the South African market, far ahead of second-place IBM and with a listing on the Johannesburg Stock Exchange. But the thing that has especially surprised people and piqued their curiosity is the question of why he would then establish Continental Weapons, a firm engaged in the import and manufacture of small arms.

How did Kan manage to achieve such huge success with a new career in distant and unfamiliar South Africa at an age when most people are thinking of retiring?

Although C.C. Kan is 75 years old, his hair is jet black, his movements quick, and his comments to the point. He seems for all the world to be about 60.

Every day he rises early and does a few simple stretches before heading to the den to read news from the Internet. He pays close attention to what's going on in Taiwan, South Africa, and around the world. Once he's finished reading the news, his work day begins.

Besides being the founder of Mustek Electronics, he is also chairman of a small arms importer and manufacturer, where he just last year resigned from the post of CEO and hired a local South African to take his place.

"Kan has extremely good relations with the government," says Chen Tien-chueh, director of Taiwan's bureau of information in Johannesburg. "He wouldn't be able to operate here as an arms manufacturer if the government didn't trust him."

Kan has a wide circle of friends in South Africa. He began building up his contacts in the mid-1980s, when the white-run government's apartheid policies had made the South African government an international pariah. The ROC was almost the only country on friendly terms with South Africa back then.

C.C. Kan is a public administrator by way of background, and has served in stints at the Ministry of Finance and Ministry of Economic Affairs. He was one of the most trusted assistants of former Vice-Premier Hsu Li-teh, under whom he served for many years as personal secretary. Later, after Hsu was tainted by a scandal at the Tenth Credit Cooperative and had to resign his position as vice-premier, Kan was dispatched as trade consul to the ROC embassy in South Africa.

Not long after Kan arrived in South Africa, the government there went on a big push to attract foreign investment, and was offering very favorable terms. At the same time, the government in Taiwan was working to support the computer industry in connection with its strategy of fostering the development of value-added manufacturing industries.

Kan learned that the South African computer industry was virtually non-existent, with the domestic market dominated by American, European, and Japanese brands. Government agencies and banks bought strictly IBM, while large corporations used either Japanese or European products. The South African personal computer market seemed to offer a golden opportunity for Taiwanese computer manufacturers, who excelled in assembly and OEM manufacturing. In the highly racist atmosphere of South Africa, however, Taiwan was generally seen as a backward developing country. Kan wanted to see Taiwan's high-tech products enter the South African market and change that stereotype.

After Kan relayed his analysis back to Taiwan, Chiang Ping-kun (then secretary-general of the China External Trade Development Council) asked Stan Shih of computer giant Acer to work together with Kan in organizing a computer show in South Africa. The governments of Taiwan and South Africa offered to pay all exhibit costs, while the exhibitors were only going to have to pay for the costs of individual transportation. Taiwanese manufacturers, however, expressed little interest in a market so small and far away, and only 11 firms showed up in the end. The response from the South African side, however, was much more encouraging; some 10,000 visitors (including distributors, power companies, and various state-run firms) showed up thanks to a vigorous publicity campaign by the South African government. The Taiwanese exhibitors sold everything they took to the show, and they all made connections with South African distributors.

One of the exhibitors at the show, Mustek Electronics, felt that with the diverse range of customer needs, the best thing would be to set up assembly operations in South Africa. Mustek went in together on a joint venture with Kan. With financial backing of US$250,000 from Taiwan, Kan plunged into the business world for the first time just two years before retirement age. It wasn't all smooth sailing, however.

A huge accounts receivable went uncollected in 1989, resulting in a loss of over R800,000 (about US$115,000 at today's exchange rates), but Kan wasn't deterred. After careful consideration, he and his backers in Taiwan each poured another US$250,000 in the company to get it back on its feet. He began offering high salaries to hire talented sales professionals away from other companies. A big campaign to expand the sales network pulled the company out of the red within a year, and by 1991 Mustek had overtaken Acer and IBM to capture the leading market share in South Africa.

"Looking back on it," says Kan, "it's clear that the biggest key to success is having good sales and marketing people. They need to have at least three years of experience to be competitive. Another key is after-sales service. You have to give your distributors the best possible technical support." Mustek now has 8,000 distributors nationwide and an average turnover of over US$300 million per year, which puts the company in a solid leadership position in South Africa. Mustek's PC brand, Mecer, is the runaway sales leader in the South African personal computer market. In addition, Mustek has also branched into a number of related areas by buying controlling interests in several long-time partners. The company now has three locations in South Africa, and has even established subsidiaries in Beijing and Zimbabwe.

Mustek caused a stir among investors when it listed on the Johannesburg Stock Exchange in April 1997. The initial public offering received extensive coverage in the local press. Taiwanese investors, in particular, bought heavily into Mustek. The shares were very popular with Mustek distributors and their employees, and their purchases naturally strengthened their feeling of loyalty toward the company. People everywhere were raving about C.C. Kan's fabulous success, but he himself didn't feel qualified to get involved in stock speculation, so he made plans to hire an old classmate who had spent years at Taiwan's Securities and Exchange Commission.

But it is Kan's involvement in arms dealing that arouses the greatest curiosity. Laughs Kan, "What do you mean, 'arms dealing?' The connotations are overblown. My company just distributes and manufactures weapons strictly for self-defense."

Kan established Continental Weapons in 1994 when he came to realize that economic sanctions imposed upon South Africa prevented the people there from buying guns. Spotting a good business opportunity, he began scouting for suppliers and established Continental Weapons. The new company acted as a distributor for everything from the most expensive Austrian guns to more affordable products from mainland China. In the medium price range are weapons produced by Kan's own company, which has almost no competitors in the South African market for personal weapons.

C.C. Kan has an excellent head for the finer points of doing business, and it shows in the way he runs Continental Weapons. The company has a shooting range where professionals provide instruction, and he often organizes shooting contests to generate publicity. And there's a company-run restaurant right next to the shooting range.

Personal safety in South Africa is a serious problem. Many people carry guns for self-protection, but guns are also easily available to criminals. Sometimes the possession of a gun actually increases one's chances of being shot. Not surprisingly, then, there is a raging debate in South Africa over gun control. While his small arms business is going well for the time being, Kan expects it will gradually shrink and is making plans to switch to something else.

Kan feels that the same principles have applied to his careers in both public service and business. You've just got to do the best you possibly can in every area. As long as you remain observant, make sound judgments, and treat people well, says Kan, when opportunity knocks, you'll be there to answer the door.