High-Tech Disc Jockey:Ritek's Yeh Chin-tai

Hsu Tsang-houei, a major figure in Chinese music who recently passed away, specially thanked Yeh Chin-tai when the CD A Selection of Taiwanese Folk Music was released last November. Almost all of the musicians on hand for the launch had heard of Yeh, but very few knew that he was the CEO of Ritek, a company worth billions of NT dollars.

Treasure amid black plastic

Before founding Ritek, Yeh was already a well-known figure in the Taiwan recording industry.

In the 1960s, Hsu Tsang-houei, Shih Wei-liang and other musicians labored hard at making collections of Taiwanese folk songs, but they weren't able to release them. It wasn't until 1979, when Hsu delivered an impassioned speech at the Sanchung Rotary Club about this problem, that it struck a chord with someone who could do something about it. At that time Yeh Chin-tai was CEO of First Records, which subsequently released a series of 21 albums, including recordings of Hakka eight tone, Fujian ten tone, Hengchun-style sing-and-tell, and so forth. It was the best collection of Taiwanese folk music ever made. Although the series, as expected, didn't make any money, for three years running it won the Golden Tripod, Taiwan's highest music award.

"It's not that I'm especially fond of music or culture," says Yeh, who studied engineering in the last Japanese-era class of what became the National Taipei Institute of Technology. "But my work in the recording industry brought me into contact with Peking opera, beiguan and nanguan music, and so forth. I felt that those recordings were very educational and ought to be preserved." Yeh still regrets that he didn't have video equipment, so he couldn't also make video records of folk music performances.

Back in the early 1950s the 24-year-old Yeh worked with the Broadcasting Corporation of China to record albums of BCC singers on equipment the Japanese army had left behind. He became a major player in the Taipei music industry.

"We recorded Tzu Wei's first record, Green Island Tune," says Yeh, half closing his eyes as he recalls those days. "Who would have thought it would still be popular today?" Later Yeh established the Platinum Music recording studio and went abroad to keep up on the latest industry trends. The first to bring multi-track stereo recording to Taiwan, he made a big contribution toward raising standards in the recording industry here.

Platinum is still going, run by senior recording engineer Yeh Chui-Ching, who is Yeh Chin-tai's oldest son. It is still one of Taiwan's leading studios, having recorded such chart toppers as Luo Ta-yu's "The Small Town Lukang" and Wang Chieh's "A Game, a Dream," as well as recent works by Chen Shan-ni.

Cigarette cases and plastic milk bottles

Although Yeh Chin-tai has worked in the recording industry, his field is really plastics and machinery.

After graduating from college, Yeh opened the Mingli Plastics Factory. Their first product was a plastic cigarette case. Back in those days farmers would always put cigarettes in their pockets when they went to the fields, but they would often find that their cigarettes would get crushed before they had a chance to smoke them. Both the cases and the machines to make them sold well all over Taiwan.

Noting that glass baby bottles often cracked when boiled for sterilization, Yeh then came up with the idea of replacing glass with polyethylene. His factory was the first in the world to produce plastic baby bottles. Yeh also made the sterilizers, and both lines proved to be very profitable.

In was in this period that he met the owner of the factory across from his, who was a National Assembly member. Through him, Yeh reestablished connections with BCC and once again threw himself into the recording industry. Yeh recalls a "beautiful accident": He bought a second-hand electroplater from a Japanese and tried to plate various plastic products with chrome so as to make them more resilient. Only after repeated failures and much frustration did he think about electroplating his black plastic albums with nickel and copper to make them stronger. This thrust him into the realm of media storage.

"The times change faster with each wave," says Yeh. He explains that it took 100 years after Edison invented phonograph records for something better-laser disks-to appear. Their replacements, CDs and VCDs, are now cresting, soon to be vanquished by DVDs, which though next in line are already feeling mini-disks closing in on them.

Global CD-ROM wars

Competing in the information age, Yeh has seen industries rise and fall. Resilient and flexible, he never recoils from challenges. Back when CDs were still in their infancy, Yeh relied on his old relationship with Sony and found a team of engineers associated with the Industrial Technology Research Institute before he made a push into CD production. Starting from simple pieces of compressed plastic, they went one step at a time, building a sturdy foundation of technical knowledge that Ritek still enjoys today.

In 1990 Ritek started to press CDs, becoming the first mass-production manufacturer of CDs in Taiwan. Back then, it cost Japanese manufacturers about NT$80 to press one CD. Ritek garnered market share by undercutting the competition and charging only NT$50. With the support that Yeh had long enjoyed in the recording industry here, Ritek was easily able to market its goods.

What really brought Ritek into the realm of high-technology was developing its own CD-Rs (recordable CDs). Taking a different tack from the Japanese, who were plating CD-Rs with a thin gold layer, Ritek instead developed a cheap and high-quality process for coating them with silver or aluminum. These allowed for a much lower price that in turn created more demand. It is yet another example of a Taiwanese company starting a global price war.

Marching forward

Being competitive in terms of price is one of Ritek's strong points, but it's not the whole story behind the company's success. Another important factor is that at key moments Yeh has not hesitated to invest the necessary sums when it was necessary to bring the technology to the next level.

"Ten years ago, when we first started producing CDs, one machine required five or six persons to operate," Yeh recalls. "When a flood of orders came in, we'd have everyone working overtime with shifts going around the clock, but we still weren't able to keep up with demand. That's when the workers took the initiative to suggest that we automate." Now everything from ordering and production to storage and shipping is computerized. One person is typically responsible for about 10 machines. The whole process has been shortened, and quality is high. The amount that the same 3,000 workers can produce has exploded from 200,000 a month to 200 million a month.

Automation has meant that the workers have had to learn how to operate sophisticated machinery and computers, so that Ritek has advanced out of the ranks of the traditional plastic disc pressers. Automation has also allowed the company to lower costs at a time when the price of data storage media has been plummeting. In the third quarter last year, the price of a CD-ROM suddenly fell from 60 US cents to 40 cents, which isn't far from the 30 cents it costs to make. It's a long way from the US$14 that they cost when they first hit the market five years ago. Yet Ritek has still managed to maintain operating profits of 22%, and the falling prices haven't crushed it.

The coming wave of technology will focus on light and small portable data devices such as PDAs and MP3 players, so the challenge for Ritek is allowing devices that are becoming smaller and smaller to have larger data capacities and higher fidelity.

Yeh points out that the patent rights for mini-discs are owned entirely by big Japanese companies, but Ritek is the only company manufacturing them. Ritek is also part of a group (which includes Dataplay, Samsung and Toshiba) that is researching and developing a data storage device no larger than a wrist watch, as well as the applications for it. Ritek will be responsible for the production of the disk.

Far-sighted

A year and a half ago Ritek invested in the production of OLED (organic light-emitting diode) displays, which is yet another technology used in portable computing devices that relies on thin opto-electrical film application techniques. Currently Ritek is the largest producer of OLEDs in the world. Ritek has also begun to explore fiber optics used in the information industry. Last year Ritek invested in production of fiber-optic connectors with Taiwan Memory Technology. This one of the products Yeh is proudest of.

"In the future, when fiber optic applications mature, a house will need a dozen or so of these connectors," Yeh says. Currently, the fiber optic connectors being produced by TMT sell for US$7 a piece. But they can't keep up with demand, so Yeh has gone to the mainland to establish more factories, where he has cast his eyes upon the vast mainland market.

On the topic of fiber optics and the internet, Yeh is particularly knowledgeable and incisive. Whenever Yeh goes to Japan he happily brings back lots of Japanese books about economics and technology, such as those about third-generation mobile phones, hand-held devices and so forth. "I study the concepts presented in these books, and then I use the viewpoint of a businessman to see if there would be any problems implementing them." Yeh has a house full of Japanese books and reads Japanese newspapers every day.

Working hard to get a grip on technological trends, he believes that only the far-sighted will end up winners. He often cites the example of the owner of the Japanese fast food chain Yoshinoya, who predicted as early as 1980, when there was a great US-Japan trade imbalance, that America would force Japan to open its beef market. Taking hold of the opportunity, he bought a cattle ranch in America. He hadn't expected that strident protests from Japanese farmers would delay the market opening. As a result, Yoshinoya struggled for many years and nearly went bankrupt. For the past two years, however, Japan has been open to imported beef, and Yoshinoya has done very well. And its chairman Matsuda has been elevated into the ranks of highly respected model Japanese entrepreneurs.

Early morning mountain wisdom

Possessing a corporate farsightedness and determination that is similar to Yoshinoya, Ritek has been groping its way toward international affirmation. In October last year, Forbes Magazine selected 300 small companies around the world that it considered worth investing in. Only two were chosen from Taiwan: Nien Hsing Textile and Ritek. Then at the end of November Morgan Stanley decided to include Ritek in its index of Taiwan stocks. Although these are tough times for the stock market here, and Ritek's share price has tumbled along with other high-priced electronics companies, Yeh is very pleased to have received these kudos from abroad.

Getting on in years, Yeh turned over day-to-day responsibility for the business to his hard-nosed second son Yeh Chui-jing a decade ago. Yeh Chin-tai still holds the position of chairman. As diligent as ever, he still scurries back and forth between Taipei and the Hukou area of Hsinchu on a daily basis. And he often flies to Australia, America, Japan and Britain to check out factories and investment trends.

"Going to work every day is a responsibility I owe myself," says Yeh. "It's an expression of my will." With regard to his son's strategic decisions, however, Yeh just observes and makes suggestions but tries not to interfere. "If you want to cultivate a successor, you must tolerate mistakes, for he can only grow by making them for himself."

By participating but not meddling, the old man gains peace of mind. Yeh goes to bed every evening at 8:30, and then rises at 4:00 before the sun comes up. At 5:00 he goes to Yangmingshan and starts his walk up into the hills. At 6:00 he reaches his destination and with some of his climbing buddies makes tea in a small farmhouse. Then he peacefully awaits the dawn. "You young people don't often enjoy that peaceful mountain scenery!"

Yeh embodies a pleasant combination of activity and tranquility that has helped Ritek to succeed. His character projects a soft glow quite unlike the brash glare that typically surrounds the new "technobility."