"Everything above 200 meters falls under the jurisdiction of the Ministry of National Defense. Everything under 200 meters belongs to Thunder Tiger and Aling Lai!" Every weekend, at beaches and along rivers throughout Taiwan, you can see countless people, remote control devices in hand, staring into space with fascination. They watch fixated as their model airplanes, less than two meters in length, rush through the air, twist and turn, collide. . . . From time to time one glides gracefully in to the runway, bringing cries of appreciation from onlookers. When you hear people repeat the jest quoted above, which is well known to all those who are serious about the hobby of remote-controlled models, it hardly needs to be added that no company is held in higher esteem than Thunder Tiger.

"Before Thunder Tiger, except for the military, Chinese had never produced anything that could fly freely in the air," say Lai, a small man who looks you straight in the eye and has a ready smile.

More than just a game

Aling Lai was born in 1949 to a middle-class family. In his early teens, through a foreign priest at Viator Jr. High School, he came in contact with the world of remote-controlled (R/C) model airplanes, which was far beyond the reach of most people then. It is addictive to control a flying airplane, and Lai loved to play with models whenever he had free time. He took them apart and put them back together again, fixing this, replacing that, always trying to make them fly even higher, faster, and smoother.

In those days Taiwan's economy was undeveloped, and per capita income was less than US$1000. Model airplanes were all imported, with customs duty of 150%, making them a precious commodity indeed. Though Aling Lai is a somewhat shy and introverted person, because of his great enthusiasm, he gradually became the core figure and central point of exchange for a group of good friends. If anyone needed a part, they would look to him to get it, and often supply couldn't keep up with demand.

"That's when I began to feel that there was a market for this kind of thing, and I experimented with producing things myself." Lai's business acumen sprouted at an early age, and he was a company boss by the time he was 20. He would take apart existing models, make some plastic parts, and make his own new versions by hand. In this way he created Taiwan's model toy industry, with product lines that came to include R/C airplanes, cars, paddle wheel boats, and more.

Not long after taking up this half-fun, half-serious enterprise, Aling Lai entered the navy for his compulsory military service. After three years, he returned to take up where he had left off. This time he decided to open a shop on Taya Road in Taichung City, because he recognized that this was a road frequented by American troops. Not only were some GIs interested in model airplanes and cars, they often had new technology and market information they could provide to Lai. He learned that in the small circle of R/C aficionados, customers are more like fellow cult members, and if you can develop a rapport with them, they will have extremely high "consumer loyalty."

As an enthusiast himself, Aling Lai served for a long period of time as the chairman of the Chinese Taipei Aero Modelling Association. He put up the money and did the work to organize all kinds of activities, and at the same time through these activities promoted sales of his scaled-down machines. By the 1980s, his name had become virtually synonymous with the world of remote-controlled models in Taiwan.

In the last few years, Internet marketing has become all the rage. Lai, who has always kept in mind the adage "keeping the customer satisfied is the best marketing approach," hired four professionals to track the opinions of members of model clubs in Taiwan, the US, and other countries. He always gives substantive responses to any emails received from customers within seven days.

Developing a global brand name

"Once, before a new product even went on sale, there were already more than 1000 comments on the Internet about it," says Lai. It also often happens that dedicated modelers can come up with small modifications that leave even Thunder Tiger designers wondering, "Now why didn't I think of that?!"

Given the fact that R/C models can cost upwards of NT$10,000, most of the dedicated amateurs are well-off people in mid-career. These are the same people who are active online, and this combination of characteristics means that products can become known globally overnight, or equally can become overnight flops. Thunder Tiger, which saw what was coming five years ago when the Internet was still in the early stages of its development, seems to have a deeper understanding than many others of how to use the Internet to monitor the market, stay close to customers, and create a sense of codepen-dence with clients. At the same time, this has forced Thunder Tiger to break out of the typical mold of small manufacturers, and directly face up to the challenge of globalization.

There is another important respect in which Thunder Tiger differs from the crowd. As Lai says: "Since the day we were founded, we have always operated under our own brand name." Thunder Tiger has never made products to order using blueprints provided by foreign buyers. It has, however, marketed its own products through another brand name.

As Lai explains, "Having your own brand name and intellectual property rights is the only way to avoid being exploited by those who control distribution networks." Thunder Tiger currently has five direct-sales centers around the world, and 35 retail partners. Most recently, in June they opened a subsidiary in Germany.

In terms of raw corporate strength, Thunder Tiger, with only 600 employees, still cannot compete with major international manufacturers like Associated of the US and Tamiya of Japan. These are long-established firms of great size, and models constitute only a small percentage of their total operating revenues. Nonetheless, Aling Lai says with confidence that Thunder Tiger's manufacturing capabilities are second to none.

In Taiwan, Thunder Tiger is the uncontested leader. But in the international marketplace, it adopts an "underdog mentality," aiming at consumers with products of somewhat lower price or higher differentiation. Thunder Tiger, though respected, remains a small player in the US$2 billion R/C model industry.

No fears for the novice

Thunder Tiger's latest differentiated product is the "super combo." It is aimed at creating a new market by attracting new people to the hobby. The R/C airplane industry is small and highly specialized, and typically the three major parts-the remote control, the body of the aircraft itself, and the engine-are made by different companies. Users have to assemble their own machines by hand. This DIY approach can be tremendous fun, but it is also intimidating to the uninitiated.

Thunder Tiger started off by manufacturing engines, and gradually expanded into other product lines. It was the first company in the world with all three major elements under one roof. Now that Lai is putting out the "super combo," rookies only have to open the package, do a little basic assembly, and then take off, minimizing the painful process of learning by trial and error.

Lurking behind the super combo are concerns about the future of the global modelling market. James Wang, a model enthusiast whose fascination took him all the way to the specialized realm of helicopters, and who now works at Sikorsky, says that these days American kids would rather be in online chat rooms or playing video games than outdoors flying model planes. There are fears that there will be no R/Cers in the future to take over from the current crop.

Meanwhile, back in Taiwan, space is limited, and there are only three legal locations to fly R/C aircraft. Recently, Thunder Tiger has been developing model helicopters, which require no runways but can take off and land vertically, in hopes that this will open the door to even more people to enjoy this fun and healthy form of recreation.

Toy heaven

For the future, Thunder Tiger is looking to the unexplored territory of mainland China's 1.2 billion-strong market. As early as 1996, Lai, wearing his hat as chairman of the Taiwan Toy Manufacturers' Association, led an observation group to the heartland of plastic model production in mainland China-Yutao in Zhejiang Province. There, not far from the home of the Ming-dynasty philosopher Wang Yangming, they contracted for a tract of land more than 200 hectares in size for an industrial park of their own. Already more than 30 Taiwan toy companies have set up factories there.

With the opening of mainland China's domestic market, this year Thunder Tiger's model cars and airplanes formally went on sale there for the first time. As expected, they have been an instant hit, and so far the company has racked up an impressive hundreds of thousands of US dollars in sales. This has enabled Thunder Tiger to anticipate growth for this year of 30-50% despite the economic downturn.

Looking to the future, the mainland will become increasingly important. But at the same time, the headquarters back in Taiwan is continually upgrading and researching new products and exploring new industries. One product that is getting particular attention is the model jet engine, winner of a Gold National Award of Excellence.

As far as engines go, the engine for a model aircraft, while small, is based on the same principles and comprises the same components as a full-size aircraft engine. Aling Lai has been studying engine design for more than 30 years, from combustion engines, including two- and four-stroke engines, to jet engines, and now they've even begun to develop electric engines.

A jet engine is a very expensive proposition for a modeler, costing at least US$3000. Moreover, they are very noisy and easily catch fire in event of crashes. Except for enthusiasts at the very cutting edge, very few people opt for them. Nonetheless, six years ago Lai approached the government with a plan to develop a miniature jet engine. But even then he had his eyes on more than the model industry. He was looking at much broader applications and market potential for jet engines.

Jet engine Plan X

Lai says that jet engine technology is very fundamental. The focus of research is on thermodynamics, including heat conduction and heat dissipation technology. The knowledge can be applied to a number of realms, from the dentist's drill to weather drones to guidance and targeting systems in the defense industry. Ultimately the Ministry of Economic Affairs decided to adopt the idea, and created a special technology development program, led by the Industrial Technology Research Institute, with Thunder Tiger as the core enterprise. They spent five years and NT$3 billion, with good results.

Take for example the dentist's drill. A model jet engine turns at 100,000 rpm, while a drill turns at 260,000 to 400,000 rpm. Moreover, a drill gives off no heat, only water and air. Because it is very difficult to completely disinfect a drill, in order to prevent the spread of the AIDS virus, in the future use of individual disposable drills will become widespread. With this market in mind, Thunder Tiger has been actively looking for European and Japanese partners for research and development. Not only has the company purchased a high precision machine tool (at the hefty price of US$750,000) of a type of which there are only two in all of Asia, it also recently hired German engineers to work in its headquarters in the Taichung Industrial Park.

This year, Thunder Tiger signed an agreement with the government for another technology development plan. They plan to budget NT$30 million per year for the development of unmanned drones which will operate at altitudes of between 3000 and 10,000 meters to undertake weather observation missions during typhoons. Besides jet engines, the production of unmanned drones also involves an accurate global positioning system and high-grade computer avionics. In Taiwan these two technology realms are currently in the hands of the Chung-Shan Institute of Science and Technology and computer giant Advantech, respectively. Thunder Tiger's role as the system coordinator for the entire program is a pivotal and far-reaching one.

Another development that has Aling Lai smiling is that the heat dissipation technology developed for jet engines can be applied to the information industry. While the information industry has been red-hot for years, e-cooling remains an unresolved headache. Lai, who was inspired to act when he had the experience of having an overhead projector become an overheated projector during one of his own presentations, has formed a company together with Harbinger Venture Management Co., Ltd. (a MiTAC subsidiary), and a venture capital firm led by former minister without portfolio Yang Shih-chien, to focus on using "aerospace grade" technology to resolve the heat dissipation problem in the information technology industry.

"A design based on the cooling techniques used in jet engines would definitely be much more effective than the typical electric fans now in use, and would be less costly to manufacture," explains Lai. Currently a major computer manufacturer in Taiwan has acquired the design patent to this kind of technology, which will be applied to the production of as many as 200,000 notebook computers a year.

Creating talent

Opportunities for new products should come one after the other. Will capital become a problem? Aling Lai is not worried. Given Thunder Tiger's currently low debt ratio of 20%, and the addition of money from venture capitalists, cash should not be hard to drum up.

"Finding skilled people, that's the real problem!" It turns out that different industries have their own rules of the game, and the model industry is very different from the medical products or aerospace fields. Thunder Tiger, which has been specializing in models for more than 20 years, has never tried a multilateral development project, so this will be a major challenge.

As Lai says: "If there are no skilled people, you have to go and find them, or train them for yourself." Lai often encourages his staff by citing the example of Evergreen shipping managers who have smoothly made the transition to the hotel industry. This June, he asked that all middle-level managers begin thinking about the objectives they wish to pursue in the next three years. "If you just want to keep doing what you are doing now, don't bother!" Lai believes that since the company wants to transform itself, it's up to the staff to keep pace.

Looking back, Thunder Tiger has come a long way from those days when it observed and copied others and pieced its products together by hand. It has reached its objective of complete automation of the production process and of complete in-house design of the models it makes. It has successfully entered the international market and is expanding its base in mainland China. Step by step, it has laid the foundation for its status as a winner in the remote-controlled model industry. Today, Thunder Tiger is at a new turning point. All of those who have been following Thunder Tiger with fascination for so long would be well advised to keep watching-there's lots more to come.

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(courtesy of Aling Lai)

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After 30 years of dedicated effort, the name Aling Lai is now synonymous with remote-controlled models in Taiwan.

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These may look like toys, but the design, technology, and market competition are only for the big boys. The photo shows Aling Lai with a friend at a competition he joined abroad. (courtesy of Aling Lai)

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Taiwan is small and densely populated, so R/C fans are confined to a few beaches and riverside areas.

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James M. Wang, attributes manager for marine helicopters at Sikorsky, was a Thunder Tiger fan as a child. He came to Taichung on vacation to help Thunder Tiger test-fly new models and to write an article about the company for Model Builder Magazine.

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(courtesy of Aling Lai)