From childhood, Ho Sheng-hsiung loved to eat peanuts, and he always had a dream: one day he wanted to own a big farm, planted all over with peanuts.
Today, his dream has come true-on the other side of the world, in Argentina.
At eight o'clock in the morning, the Argentine capital Buenos Aires is already bathed in bright sunshine.
Outside a factory four blocks long, several large container lorries are parked, apparently waiting to depart.
Going round to the main entrance, we see a middle-aged oriental man standing in the doorway, greeting each of the employees in Spanish as they arrive for work.
Even before we get close to him, we see his square-rimmed glasses and the burn scars on his right cheek. Oh! Isn't that Ho Sheng-hsiung, chairman of Chu-tsae-kang Food Industry Company, who has recently appeared frequently on Argentinian television, and has become quite a well known personality in Argentina?
Building a peanut kingdom
Speaking of Chu-tsae-kang, many people in Taiwan do not realize that it is the biggest peanut oil manufacturer in the world. But for many people in Argentina, this Taiwanese-owned company is a household name. In October last year, when Argentina's Peanut Queen was being chosen, the selection committee arranged a visit to the Chu-tsae-kang factory; by special arrangement, all the advertising space on the stage and in the auditorium at the pageant was rented to Chu-tsae-kang alone; and the advertisements prominently featured the national flags of Argentina and the Republic of China, although the two countries do not have diplomatic relations.
"This is all thanks to Ho Sheng-hsiung's influence," says Chou Chien-hung, a reporter with Argentina's only Taiwanese expat newspaper, Noticiero Tai-Ar. With a total projected investment in Argentina of US$100 million, Chu-tsae-kang is not only establishing huge factories employing the latest machinery and most advanced processes to ensure the quality of the peanut products; it is also helping local farmers to improve their peanut varieties, and supplying fertilizers to increase their yields. One could say that Ho Sheng-hsiung has brought about a peanut revolution in Argentina. His operations encompass everything from upstream farms and storage silos, to midstream oil pressing and processing plants and downstream packaging and sales operations-a veritable peanut and sunflower oil empire.
This empire was single-handedly built up from scratch by Ho Sheng-hsiung.
A dragonfly in a spider's web
In 1970, Ho Sheng-hsiung was doing his military service at the Chingchuankang air base in Taichung. At that time the base's PX store was losing money, and the officer in charge of it said that anyone who could clear a profit of at least NT$5000 a month could take over the running of it, on condition that they covered any losses themselves. Ho Sheng-hsiung volunteered for this mission.
Ho had never been much of a scholar, and had only a vocational night school certificate. But he did have a head for business. He noticed that the profit margins on the goods the store carried were very low, and decided to expand its operations. He astutely realized there was a demand among the officers and men for drinks and snacks in their off-duty hours, so he started selling ludan (eggs cooked with spices in soy sauce), wax gourd tea and so on, and did a brisk trade. By the time he was demobbed, he had made net profits totaling over NT$300,000.
In 1973, the Food Industry Research Institute was promoting low-fat peanuts. Ho Sheng-hsiung joined the program for over six months, and then began making and selling low-fat peanuts. But his family was against it, because they felt there was no future in this trade. Furthermore, when they consulted the spirits by drawing lots with divining sticks, they drew one of the worst possible responses: "A dragonfly flies into a spider's web." This terrified Ho's father, who thought that if his son went into this line of business he would be sure to die.
Ho Sheng-hsiung did not believe in evil omens, and he brought in his grandfather to overcome his father's objections. But in his third year in the business, a peanut roasting oven he was developing exploded while he was working on it. Badly injured, he was taken to a hospital in Kangshan.
With burns covering two-thirds of his body, Ho Sheng-hsiung lay semi-unconscious for a week. The doctors told his family: "Let him eat whatever he wants to, there's no hope." His anguished mother bought a bowl of his favorite baobing (flaked ice with a sweet flavoring) to feed to him. But she could not hold back her tears, and they dripped onto Ho Sheng-hsiung's wounds. The pain brought him round, and he asked for a cooked meal.
The doctors were astounded that a patient in such a critical condition had such a powerful will to live, and they decided to transfer him to National Taiwan University Hospital to see if they could save him. His treatment lasted over three years.
Abattoir here!?
Once during his treatment, while he was still covered in bandages, Ho Sheng-hsiung went to the National Ministry of Defense's central PX purchasing agency to bid for a food supply contract. There he happened to meet President Chiang Ching-kuo, who was making an inspection visit. Chiang asked Ho who the employer could be for whom he was working with such dedication.
It is just this dedication which, over 20 years, has enabled Chu-tsae-kang's peanut oil and related products to win more than 70% of Taiwan's domestic market; the company is also Taiwan's only specialist manufacturer of sunflower oil. To ensure a dependable supply of raw materials, and to develop new markets, Chu-tsae-kang's overseas investments went first to Hong Kong, mainland China and Southeast Asian countries such as Vietnam, and then across the Pacific Ocean to Australia and on to Argentina in South America.
Many people find the name Chu-tsae-kang ("Bamboo Harbor") unsophisticated and not in keeping with the image of a multinational company. But out of reverence for his ancestors, Ho Sheng-hsiung has no intention of changing the name.
He explains that in 1974, when he had just set up in business, he called his firm Shenghsing Enterprise. But when he went to register this name it turned out to be already in use by another company. That year, during his family's ancestor worship ceremony, he looked up and saw the words "Chu-tsae-kang, Quanzhou, Fujian" (the family's ancestral place of origin) written on his ancestors' memorial tablet. It was then that he had the idea of using the name for his business.
The name "Chu-tsae-kang" had not been previously registered by anyone else, but initially it caused some unexpected difficulties. When telephone calls came in and the secretary answered "Chu-tsae-kang," many people mistook this for "abattoir" (which sounds very similar in Taiwanese dialect) and hurriedly put down the phone. So Ho Sheng-hsiung mounted an advertising campaign, and the name Chu-tsae-kang gradually became better known.
No life of ease
After about 10 years of intensive promotion, Chu-tsae-kang was selling to over 80,000 general stores throughout Taiwan, and had more than 100 lorries and over 200 employees. To manage his growing production and sales operations, Ho Sheng-hsiung introduced computers very early on, and subsequently became a completely self-taught computer expert.
On a notebook computer, Ho Sheng-hsiung has tens of thousands of files including all sorts of management rules, specifications and operating manuals, all written personally by him, from the most basic level up.
"Rather then spending two hours explaining to a subordinate how to write something, I might just as well do the whole thing myself," is Ho Sheng-hsiung's long-standing belief. Even the packaging of new products is designed, composed and printed by him on computer, using South American scenes photographed with his own digital camera.
"It's not in my fate to take things easy-I have to do everything myself." This is how Ho Sheng-hsiung describes himself, but he also confesses: "Doing things myself gives me a greater sense of satisfaction than earning an extra few hundred million NT dollars."
This management style inevitably leads to complaints about "centralism," but Ho Sheng-hsiung prefers to call it "flattening out the management hierarchy."
"If a memorandum has to crawl all the way up the management ladder, by the time it reaches the top the business opportunity has already passed," avers Ho Sheng-hsiung. He says that in the past the company used many forms, but now the Internet has made the world much smaller, and he can apply a "leveling" policy to management.
Ins and outs
Ho Sheng-hsiung says that he fully delegates decision-making powers for intermediate processes, and only watches over "what goes in and what comes out." Because he has always run the purchasing side of the business, "no-one knows raw materials and equipment prices better," so purchasing orders from the company's 11 factories worldwide all have to be sent to him for approval.
As well as controlling "what goes in," he also monitors the final results. His formula is simple and clear. He sets reference levels for certain basic areas such as personnel, production capacity, product quality, and wastage and spoilage rates: if performance in these areas falls below 50% of the reference level, the manager concerned is replaced; the better the performance in each of these areas, the greater the authority the manager receives, and the bigger the bonus he or she earns. "Never mind if you have hundreds of operating units, if you do things this way, running it all is a piece of cake."
Since he invested in Argentina, Ho Sheng-hsiung has made at least 10 trips there every year. To be able to access the Internet at all times wherever he is in the world, he has four mobile phones. "There's not one of our 11 factories worldwide which isn't under my supervision. Even if I'm on a glacier somewhere, I can still review documents."
Every day, over 100 work-related files arrive on the boss's computer from the managers of Chu-tsae-kang's various departments and divisions. Ho Sheng-hsiung, who has the characteristically feisty, autocratic style of his native southern Taiwan, has his own special method of reviewing these memoranda. Using voice transmission technology, he speaks his comments-or his curses-directly as he reads the documents, then clicks on the document's reference number to send his remarks back by e-mail. Once, when he read a proposal for a three-year contract with the Makro cash-and-carry chain, he commented angrily: "That's too cheap, are you nuts?"
With this method, he can review over 100 documents in an hour. Ho Sheng-hsiung says proudly: "We used to pay out over NT$800,000 in phone bills, but now it's only NT$4000 or so."
Quicker than the big conglomerates
The decision to invest in Argentina was the biggest turning point in Ho Sheng-hsiung's business career.
"One major reason for Mr. Ho's success is his ability to concentrate on his field, and spot and react to opportunities or future operating difficulties more quickly than the big conglomerates." So says accountant Liu Chi-hsiung, who has had dealings with Chu-tsae-kang for 20 years and is very familiar with the company's development.
Liu explains that in response to a shortage of raw produce and to Taiwan's impending accession to the WTO, Chu-tsae-kang decided to invest in Argentina, which is the world's largest producer of sunflower seeds.
The pampas country of central Argentina enjoys abundant rainfall and has rich, fertile soil which can be farmed intensively without irrigation. The region is suitable for both arable farming and stock rearing, and is famous as one of the world's granaries. Furthermore, harvests come in the opposite half of the year to those in the northern hemisphere, which helps to balance out the supply of raw materials.
Buying many farms is a way to gain direct control over his supply of raw produce, but for Ho Sheng-hsiung, going to Argentina has also given him a sense of coming home.
"In Australia I experienced racial prejudice. But here I get respect. Not only is there no prejudice against Chinese, people from Taiwan are held in high regard." Ho Sheng-hsiung says that once when he was eating a meal in the restaurant of a large hotel in Australia, the waiter kept repeating that the food there was very expensive, as if he thought Ho couldn't afford it. Ho Sheng-hsiung finds attitudes like this intolerable. Soon after going to Argentina in 1992, he decided to sell his Australian factory.
The sun comes down from the sky
In Argentina, things were very different. At that time inflation there was severe, and the political situation unstable. To encourage Chu-tsae-kang to invest, the Argentinian finance minister personally came to Taiwan to sign an investment guarantee agreement with Ho Sheng-hsiung. The factory he bought had been previously owned by a family of Italian descent. When the father fell ill, his son wanted to sell. He asked Ho Sheng-hsiung curiously: "If you've got all that money, why would you want to buy a factory?"
In Argentina, with its clear class distinctions, the boss was "as high as the sun in the sky." He rarely came to the factory, and when he did he would only curse the employees. But to everyone's surprise, when Ho Sheng-hsiung took over he not only came and lived in the factory, but also ate with the employees and even went fishing with them on days off.
"People in Taiwan are very flexible, and they respond to money incentives. Over here, they do things by the book-they do what's expected of them, but it's a waste of time trying to push them to do more." Ho Sheng-hsiung says that Argentina was once the fifth richest country on earth, and has abundant resources. But its people are more romantic than practical by nature, and they might walk off the job in the factory, leaving the machines running, to go home and watch a football match on TV.
To change his employees' habits, Ho began a "brainwashing campaign"-during training sessions, he good-naturedly explained time and again: "Argentina is your country, but although I wasn't born here, I've chosen it as my second home. By using your raw materials and your workers, I help you earn foreign exchange. I eat in the factory and I sleep in the factory. You've got no reason not to care about your own factory."
Teaching by example
In the summer of last year, an Argentinian television program ran a report on Chu-tsae-kang. In a country with frequent labor disputes, the reporter asked Ho Sheng-hsiung curiously: "Mr. Ho, since you're on such friendly terms with your workers, aren't you afraid that one day they might not do what you tell them?"
When a group from an Argentinian chamber of commerce visited Chu-tsae-kang, they too could not help wondering: "Did you develop your management style after adapting to Argentinian culture, or are you simply applying Taiwanese-style management?"
Ho says frankly that he wants to introduce the Taiwanese spirit of all-out hard work to Argentina. He treats his workers as if they were his own family, but any whose attitudes are incompatible with his approach, he replaces. "It's like selecting peanuts: the bad ones have to go-with severance pay according to government regulations."
When China Steel Corporation chairman Wang Chung-yu visited Argentina, he joyfully greeted Ho Sheng-hsiung as a respected equal, and asked him: "Taiwanese bosses sleep in the factory and work harder than their employees; do Argentinian bosses have the same spirit?"
Explanation is never as effective as teaching by example. Once, an underground water pipe was leaking beneath the factory. The Argentinian workers didn't think they could deal with it, and none of them was willing to go 36 meters below ground-the equivalent of 12 storeys-with Ho Sheng-hsiung to investigate. He had no choice but to fetch three workers over from Taiwan, put on overalls and go down himself.
When the Argentinian workers saw with their own eyes how the boss was willing to do "front-line" work himself, they were convinced that he was more than just talk, and after that they did his bidding without complaint.
A peanut revolution
As well as changing people, Ho Sheng-hsiung also wanted to change the peanut varieties grown in Argentina, and local production habits.
Ho Sheng-hsiung discovered that despite the high value of peanuts, after harvesting the Argentinian farmers left the crop lying in the fields where it was exposed to the wind and the rain, which encouraged the growth of the toxic mold Aspergillus flavus. Ho Sheng-hsiung made plans to implement an all-round reform, ranging from the varieties grown and the method of sowing to the method of harvesting.
To take harvesting as an example, as soon as the peanuts are picked they are now washed and artificially dried, and then passed through computerized sorting machines which remove moldy nuts, to ensure that the later products are completely free of the carcinogenic aflatoxins which the Aspergillus mold produces.
In terms of varieties, Ho Sheng-hsiung felt that the Argentinian peanuts were too small, not rich enough in oil, and too dark in color, and so were not suitable for pressing for oil. He introduced the variety Taiwan 132, which he promoted widely on pampas farms.
"I wanted to fully convince them with our methods," says Ho.
Going to Argentina together
Ho Sheng-hsiung has great ambitions for his business in Argentina, but he believes that to really succeed there, he needs to attract other investors from Asia, including Taiwanese and Hong Kong firms, so that they can help each other grow and prosper.
With this in mind, Ho plans to develop an industrial park to the north of Buenos Aires, and is building a 16-storey headquarters building not far from the Argentinian presidential office. At the first recruitment meeting last year in Hong Kong, over 10 firms registered, including makers of cardboard cartons, steel cans and industrial dies. Many such ancillary industries are interested in setting up in the park.
The investment environment in Argentina was reformed by changes in the law in 1993. Since then, foreign investments no longer require special approval, but need only be registered with the local government. Foreign investors are treated equally with local investors.
"Argentina is actually very like Taiwan. They also put friendship before reason and reason before the letter of the law. They are flexible and value personal relationships, and they don't forget a favor. They're not stiff in the way they do things, like the Americans. That's our opportunity." Huang Shu-e, an ROC Ministry of Economic Affairs official who has been stationed in Argentina for many years, says that the standard of living there is very close to ours: the average per capita national income was US$7579 in 1995. And their cinemas too have midnight screenings.
"If you want to earn money, you couldn't find a more suitable place. The peso exchange rate is one to one with the US dollar, so if you earn a peso you've earned a dollar. Big companies can come here and grab a piece of the local market," says Huang Shu-e. She comments that Argentina has a well-educated workforce and an established industrial base; what it lacks is international experience. Taiwanese firms can come here and share in their assets, and develop international markets together.
A taxing experience
However, there are still many intangible obstacles to investing in Argentina. When a delegation from the Chinese National Association of Industry and Commerce, on a tour of Latin America, went to Argentina to meet the under-minister of trade, delegation leader Wang Chung-yu said that Argentina still only gives single-entry visas to ROC passport holders, which is very inconvenient for investors who need to make frequent visits.
Furthermore, the ROC and Argentina need to sign bilateral trade agreements, otherwise investors face double taxation; and the tax rates in Argentina are higher than in other Mercosur countries.
Ho Sheng-hsiung has himself experienced the burden of heavy taxation.
Chu-tsae-kang has a brand new sunflower oil plant in Kangshan, Kaohsiung County, with silos for 8000 tons of raw materials. In fact, this factory was to have been built in Argentina, but when the brand-new machinery arrived there, the Argentine government wanted to collect US$8.6 million in customs duties.
Angrily, Ho Sheng-hsiung had the machines shipped back to Taiwan, where the government not only allowed him to bring in foreign workers as a special case, but also provided all kinds of incentives. "The difference really was enormous." Ho Sheng-hsiung says with feeling that when taxes owed to the Argentine government are at all late they impose fines, but when a refund is due they are in no hurry.
"If you invest in manufacturing in Argentina, directly buying up an old factory costs a tenth or less of the price of building a new one," says Ho Sheng-hsiung from his own experience.
From peanuts to chickens
For instance, his oil refining plant in central Argentina formerly belonged to a government cooperative. It has silos so large that the entire Taiwanese peanut harvest would take 20 years to fill them. The complex includes a raw materials processing plant, a peanut shelling plant, an oil pressing plant, a solvent separation plant, a refining plant and a fertilizer plant.
"After the oil is pressed out of the peanuts, the residue can be used as chicken feed. The chicken guano can be mixed with peanut shells to make fertilizer, and the fertilizer can be used on the farms to grow peanuts." Ho Sheng-hsiung says that with this kind of integrated operation there are no waste products at all. As well as sending 16 engineers from Taiwan to give support, Ho has even brought over skilled workers from a large chicken farm in Luchu, Kaohsiung, preparing to make a go of poultry farming too.
Because almost everything is automated, "One production line only takes two people to run. It's terrific." Brimming with pride, he says that today there is not one part of his peanut empire's operations which is dependent on other suppliers. His lifelong dream-to own a large farm-has also finally been realized, and in a big way: the farm is 36 million hectares in area, with a perimeter of 144 kilometers, equivalent to the distance from Keelung to Miaoli in Taiwan.
In April last year Ho Sheng-hsiung signed a contract to supply Hong Kong's China International group with products worth NT$1.8 billion per year. Late last year he also set up a large peanut oil factory, with its own wharf, in Shenzhen, and this year, with the Kangshan plant and the second Argentinian oil factory complete, his annual turnover looks set to top NT$10 billion.
Don't overdo it
Ho Sheng-hsiung's longtime friend Liu Chi-hsiung says that as Chu-tsae-kang continues to grow, it will get to be more than Ho Sheng-hsiung can handle alone. He ought to find two or three talented business people to run it with him, as the core of the group's personnel. This would increase the stability and strength of the business.
But with Ho Sheng-hsiung's character of trusting nobody but himself to do anything properly, can he take such a step?
"He has to, whether he 'can' or not, otherwise he will be too busy to enjoy what he earns," says Liu Chi-hsiung bluntly.
Ho Sheng-hsiung plans to retire at age 64. When he switches on his computer, the message appears: "A regular lifestyle + committed work = an honorable retirement; time resources calculation = 8 hours x 25 days x 12 months x 19 years, only 45,000 hours left."
In the wide open spaces of Argentina, all his ambitions seem to have been set free to gallop. "The next 20 years will be the golden years of my career," says Ho Sheng-hsiung enthusiastically, as he drives along the motorway in his BMW 750. He could never drive it flat out in Taiwan, so he had it shipped out to Argentina.
Look out! We're already doing 180 km/h.
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This huge oil storage tank is filled with Ho Sheng-hsiung's ambitions for his peanut empire.
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(above) Argentina's pampas country, famous as one of the world's granaries, is also the world's greatest producer of sunflower seeds. (courtesy of Ho Sheng-hsiung)
(left) When an Argentinian chamber of commerce delegation comes to visit, Ho Sheng-hsiung lays on his own peanuts and high-protein peanut powder for the guests to sample.
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(above) In Argentina, with its poor labor relations and clear class distinctions, Ho Sheng-hsiung's common touch keeps him on good terms with his workers.
A notebook computer is an essential management tool for Ho Sheng-hsiung. Wherever he may be, he is in full control of his 11 factories around the globe.
p.129
(above, below) He Sheng-hsiung likes to develop products himself. Recently, using vacuum and cold pressure processes, he developed peanuts in their shells with garlic, cheese and chocolate flavors. It comes as no surprise that his products have won many awards.
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Advertisements at CKS International Airport seem to confirm Chu-tsae-kang's status as a multinational company. But this backlit ad, of which Ho Sheng-hsiung is particularly proud, is all his own work, created on the computer using image editing software and his own photographs.
(above) Argentina's pampas country, famous as one of the world's granaries, is also the world's greatest producer of sunflower seeds. (courtesy of Ho Sheng-hsiung)
(left) When an Argentinian chamber of commerce delegation comes to visit, Ho Sheng-hsiung lays on his own peanuts and highprotein peanut powder for the guests to sample.
A notebook computer is an essential management tool for Ho Sheng-hsiung. Wherever he may be, he is in full control of his 11 factories around the globe.
(above) In Argentina, with its poor labor relations and clear class distinctions, Ho Sheng-hsiung's common touch keeps him on good terms with his workers.
Advertisements at CKS International Airport seem to confirm Chu-tsae-kang's status as a multinational company. But this backlit ad, of which Ho Sheng-hsiung is particularly proud, is all his own work, created on the computer using image editing software and his own photographs.
above, below) He Sheng-hsiung likes to develop products himself. Recently using vacuum and cold pressure processes, he developed peanuts in their shells with garlic, cheese and chocolate flavors. It comes as no surprise that his products have won many awards.