Crises Make FEG Stronger

On December 11, 1958 at 2 p.m., a single electrical outlet sparked a fuse causing a strip of cotton to catch fire at the Banqiao plant of Far Eastern Textile Ltd. (FETL, renamed Far Eastern New Century Corp.). The fire followed the air duct and spread uncontrollably. Far Eastern Group Founder, Mr. Yu-Ziang Hsu, heard “Fire! Fire!” and looking up realized the fire had spread to the building roof. More than 14,000 spindles of cotton were destroyed, in an incident, which almost paralyzed FETL after a major investment in Asia Cement Corporation, created tremendous pressure to maintain a positive cash flow.

Though utterly disconcerted, Mr. Yu-Ziang Hsu, was deeply moved and touched when he heard his employees volunteer to help without pay. Though depressed, he also realized giving up due to a fire, would result in financial hardship for many of them. Recovering from his initial shock, he gathered his strength, deciding against the short-term solution of purchasing used equipment. Instead, opting for a more ambitious long-term approach and lease purchased the higher quality and more expensive German Zinser spinning machinery. Ultimately this decision would raise the bar for standards of efficiency and quality and set the foundation for FETL’s competitive edge.

In 1973, during the first energy crisis, Oriental Chemical Fiber Corporation (OCFC) had a surplus of inventory and suffered deep losses. The number of downstream textile vendors dwindled from nearly 120 to barely over 30. After sustaining the business for two years, OCFC considered downsizing its number of employees. Mr. Yu-Ziang Hsu however in a crucial decision, decided to weather these difficult times for the sake of his staff and their livelihoods and in addition maintain employee morale, using the strategy of deferring partial salary payments and freezing headcount. In 1976, when the fiber market began recovery, OCFC finally posted a profit and the deferred salaries paid back with interest.

What began as a random fire in 1991 burned to the ground Far Eastern Department Stores’ Baoqing branch and Far Eastern Group’s headquarters. Estimates on the damage were as high as NT$100 million. The Group’s Founder, Mr. Yu-Ziang Hsu, FETL’s President, Douglas Tong Hsu, and vice president, Johnny Shih, were quick to remain calm and deal immediately with the crisis with preparations to resume business, promptly establishing temporary headquarters. FEG already conscientious in disaster recovery had backed up data in a secondary location. With the assistance of the Information Center restoring this data, the Group was able to operate normally within a few days. 

These crisis’s solidified relationships among employees and in these early days give confidence to the effectiveness of FEG’s disaster recovery plan, but it also heightened the need for focused preventative measures and attention to crisis management. 

In 2008, with the world reeling from the effects of the global economic crisis, many businesses in Taiwan also faced major financial hurdles. However, FEG having foreseen the crisis ahead aggressively faced this and fortified its financial structure holding strategy meetings. All subsidiaries and affiliated companies were required to develop a detailed and complete strategy via stress test for endurance to withstand the crisis. These contingency plans enabled the Group to come through the largest and most turbulent economic crisis of the 21st century virtually unscathed. Throughout its history, FEG has gone through many crises and as in the damaging fires have always risen to walk through the valley with progressively steadier steps and towards higher peaks.