The Shiue family started with raincoats and ended up in the surf.
In 1948, Shiue Pi-goong suddenly became the sole breadwinner for his father's 10-member family, and as a result he quit his job as a schoolteacher to seek his fortune elsewhere. What has transpired since is a classic rags-to-riches story, and now the architect of a multimillion dollar company is passing it on to his sons.
Today the company, which is located in northeastern Ilan County's Wujie township, has several buildings that sit in the center of an expansive stretch of rice fields. They house the Shei Chung Hsin Industrial Co., which is the heart of the Sheico Group, a leading manufacturer of windsurfing, diving, jet-ski and other water-sport outfits. Until the recent publication of reports on the company, few people knew that it was the US$1.5 billion market's top global supplier, manufacturing 80 percent of windsurfing suits and 50 percent of diving suits. The head office commands eight plants producing neoprene rubber sheets, spandex yarns and finished goods in China, Taiwan and Thailand.
Like many others among the million-strong domestic small and medium-sized enterprises, the Sheico Group is an example of the entrepreneurial spirit that has driven the country's economic development over the past five decades. The story began when Shiue, now the 76-year-old president of the group, was forced to find another source of income. In 1948 inflation veered out of control and led to exorbitant price markups.
Shiue had been an elementary schoolteacher for two years. At the time, the job was a coveted post because teachers were highly respected and competition was stiff. As a result of the rampant inflation, teachers did not receive their paychecks for three months, and by the time they were paid, their wages were virtually worthless. "Most of my colleagues managed to get by because they could work on a family farm or a business on the side," Shiue says. "But teaching was my only source of income." Waiting for back pay became intolerable when the other breadwinner of Shiue's family, his father, a clog trader, took ill. Shiue had to study his options fast.
He decided to quit and became a vendor. His family and several of his colleagues tried to discourage him, but he was determined. "With the entire family's survival at risk, losing face was the least of my concerns," he says. "As long as I'm honest, I don't mind disdainful looks." Ilan County has more rain than sun all year round. Shiue took advantage of the weather and chose to set up a stall selling rain gear in front of a bank not far from home.
To lure early birds and night owls, Shiue began business before six o'clock in the morning and did not close until an hour before midnight. He fitted his display table to the average height of his customers to make browsing comfortable, and he took notes of the names and faces of those who walked by regularly, customer or not, so he could greet them properly once they stopped to look at his goods. His business soon picked up and a year later, his only competitor, who had lingered a few stalls away, chose to relocate.
"I've always believed that, without any skills, all I can count on is the will to work harder and longer than others," Shiue says. Within a year, the economy picked up and the teachers began to get their back pay, and at the same time he became the only vendor in his area. By then, however, Shiue enjoyed what he was doing. "What I made in a month's time was far greater than what a teacher earned in a year," he says. "Even if I could have, I wouldn't have wanted to return to teaching." He put aside some money, got married and bought a small storefront so his wife could manage a business selling the same wares while Shiue kept vending.
Two years later, police began clamping down on vendors, so Shiue closed his stall, purchased a motorcycle and began a rain-gear wholesale business. He kept his suppliers informed of customer feedback hoping to improve his products. A number of customers pointed out that the stiff rubber shoes were uncomfortable and failed to keep their feet warm during winter. Shiue asked his suppliers to add lining to the shoes, and soon after competing factories copied the idea.
After nearly a decade, Shiue decided to push his business to a new level by setting up his own production lines. He purchased the current site of the company, which used to be a dilapidated sugar refinery, and hired 20 people to start manufacturing rain gear. The move completed vertical integration from production to retail, and as a manufacturer he found himself in an industry already dominated by two widely known brand names. In 1965 the factory took its official name and Shiue spent most of his time on the road, driving a pickup to market and delivering his products around the island.
The pickup gave way to larger ones as business grew, and eventually Shiue bought a truck, painted it bright red and put his logo on it. It was his only form of advertising. "It worked well in bringing in business on the road," he says. "Often when I pulled over for a meal, it drew some wholesaler or retailer to me for business."
Meanwhile, the textile and ready-made clothing industries grew rapidly, but Shiue was content with the niche he had created and avoided complicating his business. His company gradually became the third largest player in the market with more than 100 employees. It took his two sons, Shiue Chih-cheng and Shiue Min-cheng, to move the company to a different sphere that was to extend the company name outside Taiwan.
Shiue Min-cheng says he and his siblings had been hearing stories about his father's business trips at the dinner table since they were kids. In college, they all chose to major in business. "Perhaps by father's influence, perhaps by nature, I've always wanted to be a businessman," he says. "All the books I've read were related to business." During his college years in Taipei County, he covered sales of the region by motorcycle. He says riding a motorcycle under the scorching sun in summer or up the mountain roads against icy wind in winter was tough training, but he enjoyed the reward--a sense of fulfillment after closing a deal.
"We were raised to bear hardship and believe in hard work," Shiue Min-cheng says. "Kids of my generation, now 50, take discipline for granted." Their father would challenge them to shower in cold water in winter and rewarded them if they did. Even as interns, they worked just as hard as their father and other employees. The older brother, Shiue Chih-cheng, entered the company after he graduated from university. Well aware that the competitive rain-gear market was rather limited, he began to look at other possibilities.
In 1977, the older brother traveled to Germany. At a fabric trade fair he came across a new outfit for an emerging sport, windsurfing. He bought some samples to take home to study. After many careful trials, he and the company's in-house engineers discovered that the facilities used to produce rain gear could easily be re-equipped to make windsurfing suits. They decided this was the market they wanted to explore. Less than two years later, the company became the first windsurfing-gear manufacturer outside America, Europe and Japan, and a very competitive one due to lower labor costs.
It took Sheico two years to produce their own textiles, instead of relying on Japanese suppliers, but it was a worthy investment. "Our production costs dropped substantially," the younger brother says. "More importantly, we're in total control of our production and can test new synthetic rubber formulas to create superior textiles that better satisfy our customers."
The younger brother says the step was crucial to strengthening R&D capability and distinguishing Sheico from its competitors. The company has since seen its growth double year on year to become the leading original-equipment manufacturer in this narrow, but competitive, market. Sheico now has more than 7,000 employees and hosts more than 100 buyers every year at its headquarters. It set up its R&D center near the headquarters to facililate on-site testing to meet customer demands.
It takes more than cutting-edge technology to make a business succeed. Shiue Min-cheng says the company's greatest asset is its commitment to honesty, a value his father sought to instill in his children early on. "He even named us with the word," he says. "Cheng" literally means honesty. This commitment shows in their business relationships. Once a buyer starts doing business with Sheico, he says, the relationship continues as long as the buyer stays in the same business. Most of the company's business relation ships last longer than 10 years, and one of their clients has been doing business with the company for over 26 years.
The elder Shiue talks about how honesty once won customer loyalty. In 1996 the current site of the Sheico head office suffered a severe loss when a man police described as suffering from a bipolar disorder attacked the site's two plants with napalm bombs on two consecutive nights. Consequently, half of the production base was burned to the ground. Without trying to cover it up or downplay its loss, Sheico promptly informed buyers of the incident, the remaining supply available after the fires and the estimated length of delay for meeting orders. "Our competitors tried to snatch our customers by making us look worse," Shiue Min-cheng says. "They didn't realize that our clients had learned the exact details from us immediately."
After the disaster, Sheico kept updating its buyers on the progress of restoration. The estimated recovery would take three months, but the employees worked overtime and were able to recover 50-percent production in one month and 80 percent within two months. "Our buyers were surprised to find their orders were met almost without delay," Shiue Min-cheng says. His father says after the incident their customers had more faith in Sheico, while the younger son says the crisis worked to the company's advantage because the destroyed factories were replaced by more advanced, efficient ones.
Aside from its loyal customers, Sheico has another asset, loyal employees. After the fires, the more than 300 Sheico employees signed a letter asking the president to cut their pay by 20 percent and delay their paychecks by three months to help the company through difficult times. But the Shiues decided that the employees should not suffer for the loss. Their employees received their paychecks on time. In return for their effort after the fires, the company awarded them a larger bonus than they had received the previous Chinese New Year.
Treating employees well, says Huang Kuei-chen, head of the company's legal affairs department, is a value the older and younger Shiues share. She remembers an instance where a female employee, who had been with Sheico for 23 years, failed to come to work without leave for an entire week. The personnel office issued a notice to the employee stating that further absence would lead to dismissal.
Shiue Min-cheng canceled the notice, pointing out to Huang that the employee was less than two years away from getting a pension. A dismissal meant no pension. He told Huang to explain the gravity of the matter to the employee and find ways to make up for the absence if the employee decided to come back to work. "I was new at the time and surprised to realize that our boss kept our best interests at heart," she says. "He's a rare case."
"Only satisfied employees can create happy customers," Shiue Min-cheng says. "Our experienced employees are precious to us. We depend on them, not the other way around." He believes Sheico has many challenges to meet, such as upgrading management to keep up with growth, before it can be considered on the same level as Taiwan's top IT firms.
The energetic older Shiue still works eight hours a day, normally after a 10-kilometer jog. The younger son enjoys doing business as much as his father does. "I can't think of any other job that would allow me to see so much of the world and meet so many people from different cultures," he says. In a few years the third generation will finish its education and perhaps carry on the family tradition--that is, Shiue Min-cheng says, if they qualify.