Selling to ASEAN
Unlike the many Taiwanese businesses that still see ASEAN as a low-cost "factory," Acer Computers has been selling to this newly wealthy market, and turning big profits in the process. How did Acer become ASEAN's number-one notebook computer brand?
"At a July computer expo in Bangkok, one of every two computers sold was an Acer," says Harry Yang, the managing director of Acer Thailand. Yang says that Acer established itself in ASEAN early, and that it has put down deep roots. The company began laying the groundwork here in the 1980s, while the world's other major computer makers were still focused on Europe, the US, and China. After establishing distributors in each of the ASEAN nations, it listed Acer Computer International, a subsidiary handling sales and service in the Singaporean, Malaysian, Indonesian, Filipino, and Thai markets, on the Singaporean stock market in 1995.
Yang says that when he first transferred from Australia to Thailand, the Thai government still didn't allow foreign firms to set up wholly owned local subsidiaries. Acer therefore had to establish a joint venture with a Thai computer firm. But the two firms had very different notions about decision-making and operations, which caused headaches from the outset. Then, the year after the joint venture was formed, the Asian Financial Crisis swept across the region. The company lost one-quarter of its capital base of THB200 million almost overnight. "Who would have guessed that the financial crisis would actually save us?" muses Yang. He explains that in an effort to rescue the economy from the crisis the Thai government decided to permit foreign firms to create wholly owned subsidiaries. As a result, Yang at last had free rein to run the company the way he wanted.
"At the time, I was focused on three things," says Yang. "First, if we were going to put down solid roots, I had to build a service network. Second, I needed to carry out a major realignment of our distributors, culling the weaker ones and supporting the stronger ones. Third, I set about establishing 13 branches around Thailand to stay on top of local markets." Yang says that he first targeted the government and academic markets by using payment plans to entice hundreds of thousands of students and civil servants to buy their first computers, then won over the private sector by offering rapid repair and maintenance services.
"In Bangkok alone, we hired 250 service technicians and assembled a fleet of 13 cars and 20 motorcycles for repair calls," recalls Yang. "We recruited a virtual army, even outfitting them with GPS systems." The Thai banks were particularly demanding, requiring that maintenance techs show up within two hours of a repair call. But his people managed to deliver, in spite of Bangkok's enormous sprawl-it covers over five times the area of Taipei-and its terrible traffic.
Yang has also crisscrossed the country for more than a decade to maintain good relationships with Acer's distributors "Localization is crucial to Acer's strategy," he says. "That means hiring local people and tailoring our products to local demand."
Acer is ASEAN's number-one notebook computer brand, controlling 30-40% of the market in each of its member nations. It also has a 10-20% market share in each of ASEAN's desktop markets. Figures like that helped the company keep last year's revenues at about THB14 billion (about NT$14 billion) in spite of the sluggishness of the economy. Acer hopes to grow them to THB15 billion this year.
Acer, unlike other Taiwanese businesses that fixed their sights on Europe and America, has been sowing seeds in Southeast Asia for 20 years. The company is now reaping a bountiful harvest, and has great prospects for further development in the region. After all, only about 10 million of Thailand's 65 million people currently own computers. And Acer's development plans now extend to more recent additions to ASEAN-nations such as Vietnam and Cambodia-as well.
Looking at the incentives for Taiwanese investment in ASEAN-that is, at everything from cheap land, labor, and materials to tax perks, industrial policy, risk distribution, and the development of new markets-it seems that though the issues under consideration differ at every point in time and with every firm's every project, all of the Taiwanese firms that have been successful have played to their strengths and built their own niche. We should applaud these firms as they turn Southeast Asian economic integration to their own advantage.
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