Making Money the Proper Way
The chairman of Uni-President, renowned for its contributions to disaster relief and aid to impoverished communities, shares his insights on balancing responsibilities to shareholders and the public interest.
Making Money the Proper WayBy Isabella Wu, Ching-hsuan Huang, Ming-ling Hsieh
From CommonWealth Magazine (vol. 367 )
The Uni-President Group, which marks its 40th anniversary this year, is Taiwan's largest foodmaker, and a giant of retail distribution. The company's annual revenues were estimated to have topped US$10 billion last year, with growth mainly coming from the Chinese market. Uni-President is also set to join the ranks of international brands, now that it has become a sponsor of next year's Olympic Summer Games in Beijing.
Uni-President not only is big in size, but also often breaks new ground, not just in business, but also when it comes to philanthropy. As early as 29 years ago, when Taiwan's industry was not very developed and the national per capita income stood at just US$1,000 per annum, Uni-President took the initiative to found the President Enterprises Foundation for Social Welfare and Charity. Back then, the company had just begun to post a small profit with an annual revenue of NT$5.58 billion.
Over the years the foundation has helped almost 26,000 families with its projects ranging from relief measures for the victims of coal mine accidents and natural disasters in the early days to medical assistance for poor patients later on. As of 2005, it had given away NT$200 million in charity funds.
Kao has apparently never had a problem with helping others. “You get something from society, so you need to contribute something to it. This is only reasonable,” Kao says with a broad smile.
Passing On a Corporate Culture of Decency
Aside from its philanthropic activities, it has been Uni-President Group's corporate culture that has given society, and its own employees, the most positive impression.
Uni-President's decent, respectable corporate culture and values began with Wu San-lien, Wu Hsiu-chi and other Group founders, who handed them down from generation to generation. Lured by the company's distinct management and corporate culture, people in Tainan, where the conglomerate is based, are all too willing to wait for job openings there. The locals want their sons and daughters to work for Uni-President, knowing they will be in good hands.
We should not underestimate the power of a large corporation, since it impacts the livelihood of thousands of employees, hundreds of thousands of stockholders and ultimately the stability of society at large.
Kao counts among the famed “Tainan Gang,” a group of pioneering business magnates from southern Taiwan who founded some of Taiwan's most successful and largest corporations. In his exclusive interview with the CommonWealth magazine, Kao freely talked about the corporate culture that the Tainan Gang has been handing down, as well as his ideas about corporate social responsibility.
Following are highlights from the interview:
Q: The Uni-President Group established a charity foundation as early as 30 years ago. Nowadays more and more companies are following suit. Why?
A: It's actually quite simple. A company can only be successful if it has the general public's support. How could our company develop if no one bought our products? This means that enterprises and society have a very close relationship. So, if you take from society, you have to give back to it.
Without Money, No Charity
The Uni-President Group started out 40 years ago with just 82 employees. Back then we were very small with a paid-in capital of just NT$56 million. Growing gradually over the past four decades, we have expanded to more than 80,000 employees now.
In the very beginning we had little capital and the business did not makemuch money, so even if we wanted to support philanthropic causes, we were not able to do it. If you want to do good deeds, you first need money, that's for sure. Whatever you want to do, you definitely first need to have money.
Once you have made some money, you can start to think about how to contribute to society. If you told me what would be the best way to serve the public interest now, I would still be willing to take money out of my pocket again. A part of what you gain from society, you need to contribute to it. That's only reasonable.
Only Money Used Right Makes Sense
But money that we spend on contributing to society must be useful. Sometimes spending money is useless. It doesn't make sense. We must find out what society presently needs most, which charitable activities are most needed. We need to look at the needs of society. It makes sense only if these funds are used the right way.
Therefore, any charitable undertaking must first of all contribute to society. We have to make choices so that the general public understands that what we do is significant.
Nowadays, we need to do many things, so that every day I am thinking about what would be the best thing to do. For instance, some people want to build libraries, but I think, where are the books going to come from once the library is finished? It's easy for the public libraries to acquire several hundred thousand books, but it may take years for private libraries just to collect them from the government and private donors. So while it is very meaningful to build libraries, such projects don't make sense if no one visits these buildings, if they stand around unused.
Q: There is so much to do. How does Uni-President choose its charity projects?
A: When choosing what charitable project to do, it's the same as deciding what a company is going to invest in. Wrong investments are a waste of money, while right investments make money. And then there is the humanitarian aspect.
One [of our activities] is our social welfare foundation, whose mission is to provide relief in emergencies and disasters, to help the poor. We have helped tens of thousands of families in the past. I think that such activities, providing emergency aid in times of great difficulty, are quite meaningful.
The other is our health foundation, which is concerned with the health of every individual citizen. Actually, as a food company we have a lot to do with health as well.
Winning Trust from Shareholders, Consumers and Directors
Q: Many people argue that philanthropy also means spending shareholder money. How can the two goals – making money for shareholders and spending their money for the public interest – be reconciled?
A: No doubt, when we want to do large charitable projects, the board of directors needs to approve them, though we usually don't need their green light every year. But if shareholders want to attack you at the annual meeting, it also hurts a lot.
Therefore, first of all, our management team is doing a very proper job. So the shareholders believe that this team won't act recklessly. They have confidence in us. Particularly when it comes to doing good deeds, to serving the public interest, our shareholders and board of directors will support us.
Leaders Must Walk the Talk
Q: Corporate values are quite influential. Are straight corporate values also some sort of contribution to society?
A: Yes. All the bad things in a company, a social organization or a government trickle down from those at the top. If subordinates don't do a good job, the upper echelons are there to control them. But if those at the top don't do the right thing, if they do bad things, their subordinates won't be able to control them. As a result, many companies fold, because the people at the top are no good, take bribes and so on. If the employees see this, they will also be corrupt. Therefore, the person at the helm of a company is vital for its success. It is very important for a business leader to show people that he practices what he preaches.
In our company three offenses will get you fired right away. First, it is prohibited to privately engage in any unlawful affairs. Second, if a married employee gets involved with a colleague, both must leave the company. Third, you're fired if you're caught gambling, because gambling is the beginning of a family's misfortune. Gamblers who lose, borrow money, and if they can't borrow any money, they steal it. Gambling is the biggest vice in our society. That's why I don't play mahjong.
Q: Is innovation very important for a company?
A: A company can't survive without innovation. For example, when we started with the 7-Eleven convenience store chain, we lost money for a long time. But we were still confident that it would work. I thought, why should it lose money in Taiwan, given that it was a success in Japan and the United States? It turned out that Taiwan's national income at the time had not reached the necessary level – it was just too early. If we had waited another two or three years, it would have been just right.
But in hindsight I must say if we hadn't begun those two or three years earlier, 7-Eleven would not be as well known as it is today.
It's actually no small feat opening more than 4,400 7-Eleven stores in Taiwan. With more than 4,400 stores for a population of 23 million, it's the highest store density in the world. Japan with its 120 million people has just 12,000 7-Eleven stores. Our density is higher. This shows that it depends on human effort whether a goal can be achieved.
(Compiled by Ching-hsuan Huang)
Translated from the Chinese by Susanne Ganz
Chinese Version: 企業最要緊的是規矩賺錢