In Malaysia we visited Johor Bahru, where we listened to Peter Liu describe how, after his father relocated the family to the city, he would get up at 4:30 a.m., grab his passport, cross the border, and attend class in Singapore. We also met Louis Wu, whose precision machining technology cultivated over years of practice allowed him to grow his company in a difficult market and secure orders from customers in Europe and North America. 

We chose an evening to meet in Kuala Lumpur with members of the Taiwan Junior Chamber of Commerce in Malaysia. Jacky ­Huang and his wife had just finished work and came in their work clothes. Hiro Wang drove for two hours from the town of Muar. Gordon Shen and New Fu Yeong showed up in athletic clothes, ready to play ball later. Su Chen Hao, who imports coal from Indonesia for sale in the Malaysian market, joined us later.

That night we discussed Taiwan and Malaysia. We talked about current conditions and the future. . . .

Louis Wu’s extensive experience in machining technology allowed his company to grow even in bad economic times.

Same place, new circumstances

Low labor costs were a major factor in attracting Taiwanese businesses to invest in Malaysia. Plentiful forests encouraged numerous furniture makers to set up shop there. But following a rise in local wages, many employers were forced to address labor shortages by hiring foreign workers. Indecisive labor policies in Malaysia, moreover, caused personnel shortages for labor-intensive industries. “Furniture fac­tories need considerable manpower, as many as six or seven hundred workers,” Gordon Shen of Hsin ­Foong, a furniture maker, says with concern. “But the [Malaysian] government has not permitted the entry of foreign workers, so we end up having to turn business away.”

Moreover, manufacturers in mainland China rely on low-cost products to undercut the market. “Customers always point to the China price to try to drive down our prices,” says Jacky ­Huang, who runs a metal finishing factory. He can only try to convince buyers that Taiwanese-owned factories produce higher-quality products.

Louis Wu, general manager of precision machining company Bee­an­tah Industrial, says this type of competition is a lose-lose proposition and he prefers to focus on products relying on advanced technology to generate higher profit margins.

Aside from the issue of human resources, this next generation operates in an environment much more attuned to marketing. “The older generation were less concerned with marketing and market demands,” says New Fu Yeong, whose family business produces all sorts of precision-made parts. “But we must now rely more on communication with our customers to understand and adjust to their needs.”

The younger generation must also rely more on marketing to get closer to customers. “You have to have a comprehensive understanding of both business and technology,” he stresses.

Today, the political situation and operating environment are entirely different, and the new generation is facing more challenging market conditions. Demand for innovation and change, however, has provided a new stage for today’s entrepreneurs to display their creativity and capabilities.

Upgrading technology, opening markets

So how should manufacturers operate under present conditions?

Repeated financial crises in the late 1990s resulted in serious setbacks and a drop in orders for Bee­an­tah Industrial. In response, when Louis Wu and his younger brother began to take over the running of the family firm in 2005, they put their heads together and contemplated the future of the enterprise.

They decided to focus on developing sales to Europe and North America, upgrade their technology, and improve their quality control. Moreover, Wu expanded their factory’s technical capabilities in order to take orders for a wider range of products. “We have extended our machining capacity from workpiece sizes of two to 20 milli­meters in the early days to 300 mm today,” he explains.

Thanks to these improvements, the company’s sales grew by leaps and bounds. Wu chuckles as he describes his being a “troublemaker” in his schooldays. He likes to take on new challenges, and his factory today produces new samples almost daily. He believes that this shows his company’s unlimited potential.

Jacky ­Huang and his wife, who arrived at our Kuala Lumpur meeting in their work clothes, jokingly say that they don’t need to dress up for work. After a few rounds in their factory they are dirty from head to toe. They point out that this is one of the challenges to finding people who are willing to carry on the business. ­Huang recently contracted to develop casings for electronic keyboards and drum machines with a Japanese manufacturer. Because the instrument casings had to be marked with labels for the control switches, he took the opportunity to set up a new department dedicated to printing. “There’s still a market for what we were doing before, but this is a new venture for our family enterprise,” ­Huang says with optimism.

Leaderart is one of Southeast Asia’s largest ink marker manufacturers. Its founder, Roger Liu, has already overseen 27 years of consistent growth for the company since he arrived in Johor Bahru.

In the early days, he wandered from exhibition to exhibition establishing contacts to expand his business. He established working relationships with customers in over 60 countries, including the United States, Germany, France, Italy and Russia, and laid a stable foundation for the company. Today the company has an annual turnover of US$30 million and can produce around 1.5 million markers a day.

In 2010, Liu began handing over control of the business to his son Peter Liu and his daughter Charis Liu Kuang Pei. Peter manages the factory, while his sister is responsible for procurement, market management, accounting, quality control, and other aspects of the business.

After middle school, Peter studied in the United States. He then worked at Quanta Computer and Hon Hai Precision Industry, two major electronics companies in Taiwan, where he learned about the operation of large manufacturing concerns. After returning to Malaysia, he gradually became involved in running the family business. His first major task was to further automate production. “The most effective means of addressing the labor shortage and ensuring quality was to reduce our dependence on manual operations,” he says. Toward that end, he first systematized the company’s product code system and sought to make the production process more efficient by cutting out redundant operations and eliminating waste. 

Settling down in Taiwan after her marriage, Charis carried on her work at the company just as before. She conducts daily meetings with various departments by means of videoconferencing on her iPad. And in fact, the day we interviewed Roger he looped in his daughter via iPad to join the conversation.

There’s a lot more to manufacturing color markers than one might imagine. They are subject to rigorous quality-­control standards and other specifications. Complexities arise from requirements such as freedom from heavy metals, the degree of airtight fit of the cap and end plug, and the cap removal force. Forty quality-control personnel work in the factory, inspecting products at every stage of production. “Almost without us realizing it, manufacturing for European and American companies, with their exacting standards, led to our own improvements,” Roger Liu explains.

Technology and efficiency are important elements in precision machining. Louis Wu’s plant still has a number of traditional semi-automatic machines that are used flexibly to support his production lines.

From manufacturing to service

Upgrading technology often leads to upgraded thinking.

In the face of fierce market competition, Louis Wu tries to establish close cooperative relationships with his customers. He points to his cooperation with a European manufacturer as an example. First the client’s engineers drew up plans for a new product. They then gave the design to Wu for trial manufacture. After four years of back-and-forth revisions, the new product was a success, and Wu had established a consistent new stream of purchase orders.

Unsatisfied with playing the role of a traditional manu­fac­turer, Wu changed his approach and began to think of himself as a service provider. By doing so, he won the trust of clients and won manufacturing contracts for Bee­an­tah. It was this unceasing pursuit of technological improvements and the trust built over time that allowed the company to establish stable working relationships with foreign manufacturers such as Dyson in the UK, Sharp and Shimano in Japan, and Motorola in the US.

Leaderart has also developed new plans for the future. Beyond its subcontracting for major brands, Leaderart once sold products under its own brand name, but the venture proved unsustainable. This year the company plans to establish a new factory in Vietnam and restart production for its own line.

And in Muar, Malaysia, Hiro Wang, young and full of creativity, spotted a trend among 25‡35-year-olds for buying designer furniture that uses composite materials. In 2015, he founded the boutique company Hill Product, which specializes in high-end hardwood furniture. It is helping to create new frontiers for Wang’s furniture business. Wang spent all of last year in Malaysia scouring over 700 exhibitions and sales shows large and small to better understand market trends. “Despite the depreciation of the ringgit, the Malaysian domestic market is still strong,” Wang says. “As long as Malaysians don’t go abroad, they’ll keep spending domestically.”

Wang is also working with an Italian designer, and his products will be displayed in Milan next year, helping to expand into the European market.

On the night we met with these second-generation entrepreneurs, we talked about running a family business and the difficulties encountered in their industries. The conversation touched on a wide array of topics, from exchange rate fluctuations to labor shortages. During our meeting, Su Chen Hao, who runs a coal trading enterprise, was especially moving when he shared his concerns that coal would be slowly squeezed out of the market. The fuel’s uncertain future has prompted Su to make use of his experience and resources in Malaysia to build new partnerships with Taiwanese entrepreneurs. 

These children of the first generation of Taiwanese businesspeople, who have already been established in a foreign land for more than two decades, still care about Taiwan. They note with concern that the Taiwanese business community operating in Malaysia is being slowly marginalized as China’s growing economic clout begins to affect the country. They are therefore highly supportive of the ROC government’s New Southbound Policy and hope it will help leading Taiwanese companies to expand into Malaysia. They are also happy to act as intermediaries between the two countries, helping to match the right people with the right industries and to make use of contacts and resources cultivated over years of operating in Malaysia to assist even more Taiwanese enterprises.

Hiro Wang founded Hill Product to win over younger customers by focusing on high-end designer products. (courtesy of Hiro Wang)

Roger Liu (left) works with family members to make the business a success. From Taiwan, his daughter Charis helps manage the company through videoconferencing on her iPad.