A year after the Wuchang Uprising in 1912, when Founder Hsu was only two months old, the Republic of China was established. The era of imperial China and its dynasties had come to an end and a new and modern China was born, providing him with an ideal environment to build his future legacy.
The history of the Far Eastern Group is inextricably linked to China and Taiwan’s recent past. This includes such times of turbulence as the resistance period, the Communist and the Kuomintang (KMT) civil war, the retreat of the Nationalist government to Taiwan; student and labor movements, political and financial liberalization. Taiwan certainly experienced a range of obstacles to overcome, but eventually turned itself from a depressed economy into a revitalized economic miracle. Y. Z. Hsu is an example of how one man turned crisis into his advantage building from initially nothing to what today is a vast conglomerate spanning such major industries as textiles, polyesters, petrochemicals, cement, retail, transportation and financial services.
Aside from standing at the forefront of Taiwan’s economic growth, his management philosophy and emphasis on social responsibility surpassed that of the ordinary entrepreneur. Hsu truly was an outstanding example of a model citizen. Zhao-Zhong Yu, the former president of National Taiwan University, pointed out that Hsu had a gift and ability to think ahead and was a pioneer in the leadership of the modern era.
Role models generally speaking, usually have had a role model of their own. For Hsu, this individual was Jian Zhang, a merchant scholar from the end of the Qing Dynasty (1844-1912) who, like Hsu, came from Jiangsu Province. Zhang resigned from his post in the imperial court and returned to his hometown to devote himself to local development there. He established a textile business, hospital, libraries, parks, and playgrounds for the immediate benefit of his employees and staff, but benefiting the local community at large as well.
At the age of 26, Hsu began this quest by establishing Shanghai Tung Mao Hua Food Company in Shanghai. And because of its early trade liberalization, Shanghai was quick to adopt Western business concepts. Shanghai also had the advantage of being the Yangtze River’s major port, and it quickly became one of the earliest textile production centers in China. Shanghai was also home to a number of major early trading companies, and these companies were some of the first in China to use modern business procedures, such as purchase orders and invoicing. In order to facilitate international trade, language skills became a priority. Hsu took the extraordinary initiative at the time to hire an English instructor for his employees to improve their language skills and communication in the ever expanding and internationalizing city that Shanghai was becoming.
Learning from his early business experience and the greater “macro” environment, Hsu came to develop his own unique management philosophy: “Sincerity, Diligence, Thrift and Prudence.” These four words while appearing simplistic, possess hidden meaning.
Since “Sincerity” was one of the company’s guiding principles, Far Eastern had earned a reputation for trustworthiness domestically and abroad. As a result, the company was granted a loan and was able to obtain future loans from international financial institutions, taking the necessary steps towards expanding its business internationally. Kuan-Tao Li, chief counselor at the law firm of Lee and Li, believes that Far Eastern’s trustworthiness and integrity allowed the company to expand internationally at a time when Taiwan’s economy had yet to develop. Because of Far Eastern Group’s core principles, international financial institutions were willing to extend loans to take advantage of growing opportunities.
In another case in 1958, a fire broke out at the Far Eastern Knitting Factory, and the entire factory was nearly destroyed. At that time, Far Eastern Group was heavily vested in the newly established Asia Cement Corporation, and was under extreme financial pressure brought about from the loan and many of its vendors were concerned over cash-flow. Amid the factory’s burned rubble, Hsu stood at the site somberly and said: “I will rise and stand again.” Obtaining cash from the bank and securing it in the office for vendor payments, he restored confidence by preventing a run on the bank, hence averting crisis.
Hsu loved his work, and was proud to spend time with his team of managers and staff. Whenever a new plant was under construction, Hsu would always visit the site to personally oversee the progress, supervise quality and resolve issues that emerged. In 1993, when Far Eastern was constructing its first major high-rise building, weak from medical complications and already at an advanced age in his 80s, he still made it a point to visit the Taipei construction site every week. At that time, the only means of getting around the site was on foot or by a rudimentary construction elevator. Hsu was always the first person to visit each level and he did so floor by floor: “You need to be at the forefront, if you want it done well,” he once exclaimed.
In contrast to the admired Western characteristics of cleverness, skillfulness, and efficiency, Hsu’s concept of “Thrift” is embodied in the traditionally admired Eastern Philosophy of humbleness, modesty, and a lowprofile. After experiencing the war torn turbulence of the Japanese invasion and the subsequent civil war in China, Hsu had struggled through many difficult points in his life, giving him a different perspective on what constitutes success. A true measure of a company’s success, was its operational success. For example, when Oriental Chemical Fiber Corporation commenced its operations in 1971, improvements in both the quality and quantity of the production were needed to exceed expectations. Hsu, however, encouraged his employees not to be discouraged or intimidated, but resourceful. “There is an abundance of gold in the factory. Processed and scrap fiber can be recycled as ‘byproduct.’ Everyone should be encouraged to convert this into a valuable and usable product, and there should be a staff reward to those who are able to do this,” he said. When Li-Yan Pao, the factory director at that time, heard about Hsu’s inspirational words, he put in place a productivity reward policy motivating the factory employees to improve the manufacturing process, and, in turn, increased the factory’s output and productivity.
Prudence according to founder Hsu, does not mean overt conservatism or backward thinking. Rather, it means a careful evaluation of the risks and opportunities with a bold step forward once an initiative is decided. Hsu once said, “From Shanghai to Taiwan, Far Eastern never stops investing, and never stops looking forward.” Hsu’s concept of “Prudence” is a thoughtful approach towards the future, seeking the right opportunities, while at the same time staying grounded.
When the shipping industry was facing an all-time low, for example, Hsu answered the government’s call and purchased a dry bulk ship from China Shipbuilding Corporation. While advised by staff and peers against this decision, Hsu determined that the shipping industry had been experiencing an economic downturn for a while, and it had reached its bottom.
Furthermore, since shipbuilding required two years, by the time this ship was ready for its maiden voyage, it was estimated that market conditions would have become favorable again. This strategic planning helped U-Ming Marine Transport Corporation to advance and prosper, and develop a reputation as one the most reliable dry bulk shipping companies based in Taiwan.
With this move, Far Eastern moved from land to ocean transportation and closer towards internationalization. Hsu once said, “See what others have yet to see; find a niche, and step forward before others, there, you have a great chance at success.”
n addition to Hsu’s management philosophy, he has had a great impact on society through his communityoriented mindset. Today, in the twenty-first century, most businesses incorporate and promote social responsibility. Forty-five years ago, however, Hsu was a pioneer of his generation, though following in the footsteps of his early hero Jian Zhang. After steady success in business, Hsu turned his focus to develop and improve the lives of citizens through the fields of athletics, academics, and medicine.
Far Eastern Group was built on the foundations of cotton, his first love. It was a major product of his hometown, and thereby held a special place in his heart. “Cotton is humble,” Hsu once said. “It doesn’t have a fragrant smell or an exotic color, and yet it provides much warmth to human beings. The origin and spirit of my business comes from cotton.” The spirit and beauty of cotton symbolize the core value that Hsu has always insisted upon and wishes to pass on to future generations.
Abstract from "FEG 60th Anniversary Book" Download