Cheng Shin Rubber Chairman Lo Tsai-jen
Staying a Step Ahead with Foresight
Cheng Shin Rubber's new chairman, Lo Tsai-jen, is determined to sustain the "quality first" emphasis of his father, with a modern twist. In an interview with CommonWealth Magazine, Lo reveals his vision of the company.
Staying a Step Ahead with ForesightBy Ting-feng Wu
From CommonWealth Magazine (vol. 555 )
In mid-June, Lo Tsai-jen took the helm of Cheng Shin Rubber Co. Ltd., the company founded by his father, outgoing Chairman Lo Chieh. How does the new chairman, who has spent 21 years in the family business, envisage the future of the tire maker?
In an interview with CommonWealth Magazine, Lo repeatedly mentions that while his father was unfamiliar with the concept of corporate social responsibility (CSR), the senior Lo's way of running the company was consistent with the CSR principles that international automobile makers demand of their suppliers. Lo believes that his father's principled approach was crucial to modernizing Cheng Shin's corporate spirit.
The completion of a rubber testing plant in China in 2012 was a milestone for Cheng Shin. Yet Lo takes even more delight talking about the foresight he showed in 2008 in anticipating the new environmental standards the European Union (EU) was about to introduce. As a result, Cheng Shin Rubber took the lead in introducing nontoxic processing oils in tire production, substantially boosting its business reputation and orders.
Lo has realized that it takes focus to be able to look far ahead and finds that when one gets a jump on others, the fruits of one's work taste even sweeter. Lo, who likes to jog, compares being a trailblazer to the ardors of regular exercise. "In the beginning you might feel the pressure of running at the head of the pack but when you hang in there, it will become easier the longer you run."
Q: Why did you invest a huge amount in the construction of the only dedicated tire testing facility in China?
A: It is a continuation of the "quality first" maxim of Lo senior. When you build a testing facility, you demonstrate that you engage in R&D. Only if you have R&D will your buyers believe that your quality will continue to improve. In China, Cheng Shin Rubber is the only tire maker with its own testing facility.
Q: All your industry peers claim that quality comes first. How does Cheng Shin Rubber ensure that it can outdo the other tire makers?
A: As you can see, our track takes into consideration all road conditions; we have icy sections, snowy surfaces, bad road conditions and tiled pavements. German carmaker BMW even requested that we add a track customized for them to test other functions. The entire testing track mirrors topographical conditions around the world.
Q: Aren't you taking risks if you take the lead doing what others have not done yet?
A: In the beginning, we were also very worried. For instance, if you want to test tire properties, you need to bring in many cars from abroad. However, given that the Chinese government is not that open-minded, will they allow you to import these cars? Right now, many of the different cars in our test facility might be only one of their kind in all of China.
In the very beginning, when we wanted to buy cars from abroad, the officials in Kunshan were really suspicious and asked us, "Aren't you a tire manufacturer, what are you buying cars for?" But how could we run tests if we only had tires but no cars? Fortunately, these initial misgivings have been dispelled.
Q: Do you have any experiences that could be described with the proverb a hard beginning makes a good ending that you would want to share?
A: Cheng Shin Rubber took the lead in using environment-friendly oils in tire manufacturing. Previously, processing oils contained polynuclear aromatic hydrocarbons (or PAHs), which are carcinogens. Therefore, I decided ahead of time in 2008, 2009 to use environment-friendly oils that do not contain polynuclear aromatic hydrocarbons. The problem is there are only very few manufacturers of environment-friendly oils, and their output is limited. We even made a special trip to Germany to secure our supply.
We use environment-friendly oils not merely for the tires we sell in Europe but for all our products. This incurs additional costs equal to 2 percent of revenues per year. But we were also very lucky because we were the first to do this. When the EU began to regulate polynuclear aromatic hydrocarbons in 2010, many automobile makers asked which tire manufacturer uses environment-friendly processing oils? This not only boosted Cheng Shin Rubber's (brand) recognition but also increased our orders from new markets.
Q: Is there anything that you would want to share regarding your success in becoming part of the supply chain of international carmakers?
A: Corporate social responsibility (CSR). This is what international car makers take most to heart. They won't gamble away their own business reputation. This is an important factor for them in selecting cooperation partners. Car makers emphasize safety, and the tire is the only part of the car that comes in contact with the pavement.
What they care about matches Lo Senior's beliefs. The testing facility and the use of environment-friendly oils in production all reflect such thinking. Of course, cooperation with international car makers is the best way to force us to continue making progress, because you naturally end up looking like your customers.
Q: The blueprint for Cheng Shin Rubber's internationalization is very clear. However, except for an early joint venture with Toyo Tire & Rubber Co. Ltd., you now always invest as a sole investor. Why?
A: Tire manufacturing is a labor-intensive industry. Our group has nearly 30,000 employees. As soon as you have many people, corporate culture becomes very important, because there can only be one corporate culture. For a sole investor it is easier to make all employees identify with the same corporate culture.
Q: Cheng Shin Rubber is expanding rapidly. Is it easy to find talent?
A: Here we depend on your help (the media) for a turnaround (in the industry's image). Tires are also a technology intensive industry. Talent is very important, and its internationalization is even more important. However, young people in Taiwan now have a stereotypical image of the tire industry. On top of that, their international exposure is somewhat inadequate. This means we depend on our own training and talent retention.
Luckily, our stage is big enough. When we hire people, we list willingness to work abroad among our evaluation criteria. We first sift out those who are willing (to go abroad) for training. They need to undergo training at at least three factory sites before they meet our internationalization threshold.
Translated from the Chinese by Susanne Ganz