 2010-12-13 |
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2010 Financial Person of the Year: YC Group President Lee Chih-Hsien
Successful Complementary Strategy with ACHEM Merger Doubles YC's Market Value and Launches New Five-Year Plan
December 13, 2010 | Next Magazine No. 729
What’s remarkable is that YC did not eliminate ACHEM or conduct a large-scale personnel reshuffle; instead, they only assigned two senior managers to handle the smooth and quiet integration of operations. In 2010, both YC and ACHEM hit new highs in revenue and net profit for the first three quarters, solidifying YC's dominance as Asia's leading adhesive tape manufacturer and putting it at the forefront of the international market. The successful synergy of the merger has already taken effect.
YC Group President Lee Chih-Hsien was the driving force behind this corporate union. He emphasized that there was no prior intention to acquire ACHEM, but last year, with the right timing, circumstances, and people, they decided to complete the investment deal within legal boundaries.
Regarding the external view that YC was "small acquiring large," Lee has a different perspective. If you look at the tenure and scale, that’s true, but at the time of the merger, both companies’ net worth was already comparable, and YC’s market value exceeded ACHEM’s. YC was in its entrepreneurial phase, moving fast and aggressively, while ACHEM was in a mature, stable phase, able to withstand challenges. The two companies had different cultures but highly complementary products and markets. Collaborating was more beneficial than a forced merger. Lee's insight proved to be spot on.
Success Chapter One: Implementing Profit-Sharing to Encourage Growth
Emerging from the low-tech, low-margin adhesive tape industry, YC has never lost money in its 32 years of operation, thanks to Lee's unique entrepreneurial mindset and management methods. "When I was young, I saw that most industry veterans ran their businesses like family workshops, and no matter how hard they worked, annual revenue barely exceeded a hundred million NT dollars. It became clear to me that relying solely on a single store was not a long-term strategy."
The adhesive tape industry is different from others because every industry needs packaging tape. Market share is more important than economic conditions. The wider the sales channels, the higher the revenue. Once Lee figured out the key to profitability, he adopted a direct sales model and was the first to introduce a "profit-sharing system" in the trading industry, rewarding salespeople with high bonuses. "Everyone makes money together; everyone is the boss, and we grow the business together." This unwittingly laid the foundation for the company’s sustainability.
Success Chapter Two: Vertical Integration to Build a Tape Empire
During the first decade of his business, Lee gradually built up his distribution channels for adhesive tape and packaging materials. He then moved to the next step—entering the production and manufacturing of tape. OPP adhesive tape, with its broad application and simplicity, was easy to start with. Lee added a production line every six months. "In business, it's all about quality, price, and service. Adhesive tape has a long product lifecycle, and we need to keep improving quality and technology to compete with large manufacturers."
In addition, YC began to move upstream to seek cost reductions without compromising quality by producing the raw material for BOPP adhesive tape—BOPP film. This marked the first step in Lee's vertical integration strategy. To this day, YC has developed into a fully integrated company, from raw materials to sales. The merger with ACHEM, which specialized in tape production and had international sales channels, allowed Lee to fully realize his long-term vision of creating a tape empire.
Success Chapter Three: Diversification to Increase Group Profitability
The world's largest high-tech companies have annual revenues measured in trillions, while the adhesive tape industry leaders only have hundreds of billions, due to the differences in industry scale. However, the small pond couldn't contain the dragon, and Lee had long started diversifying into other businesses. After SARS ended, he gradually acquired land worth tens of billions in the Greater Taipei area and founded Wangzhou Construction, formally entering the real estate industry.
"At first, it was out of my desire to keep my roots in Taiwan," Lee explained. Taiwan is small, with limited natural resources, and most of its land and resources shouldn't be used to develop manufacturing. In the future, he plans to shift tape production to China and Vietnam. Moreover, having entered the market early, the cost of acquiring land was relatively low. The land is primarily located in prime areas such as Neihu's Phase 5, Xinzhuang's Subcenter, and the Linkou redevelopment zone. Recent real estate projects have brought stable and substantial profits to the group.
Attention to Detail and Strong Execution: The Secret to 30 Years of Continuous Growth
Many are curious how Lee has consistently made the right decisions at each transformation, successfully upgrading the company each time.
Starting from scratch, Lee emphasizes the importance of focus in everything he does. According to long-time subordinates, he is as attentive to details as he is to direction, willing to delegate authority and share profits. In terms of execution, he takes quality control seriously, minimizing error rates. Delegating authority and profit-sharing motivate employees to treat their work as a business and work hard together, while excellent execution drives the company's continuous improvement and reduces preventable losses.
Lee leads a disciplined life, doesn't smoke or drink, and rarely socializes. He works six days a week and spends a lot of time reviewing documents. "I never casually sign off on documents," Lee emphasized. "I always carefully review the content. In the past, I found that internal documents often became mere formalities, and the only people who really understood the process were me and the staff handling them." This meticulous management approach has given Lee a deep understanding of the industry’s trends and allowed him to develop sharp observational skills, ensuring he never misses an opportunity.
2010 was a fruitful year for Lee Chih-Hsien, and it also marked the first year of YC Group. The company’s five-year plan (2011–2015), referred to as the "115 Plan," will officially begin. Lee plans to focus on five key areas: adhesive tape, film, packaging material distribution, real estate, and new ventures, aiming to surpass NT$100 billion in total assets. |
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