This June, the World Economic Forum (WEF) announced their agenda for their meeting next January: “the Great Reset”. It is a response to the rapid changes that have swept the world starting in 2019. It is an endeavor to find the formula for rejuvenation. 

Starting with the series of technological and financial spats that were kicked off by the trade war between China and the United States, culminating in the global COVID-19 epidemic, the greatest challenge companies are now facing is how to rediscover their potential for growth in this era of “black swan” events.

This year, CommonWealth Magazine once again conducted its survey of the Hundred Fastest Growing Companies among Taiwan’s small- and medium-sized enterprises (SMEs). The companies surveyed recorded revenues ranging from 100 million to 10 billion in 2019. They were ranked according to the compound annual growth rates (CAGR) of annual revenues from 2017 to 2019, in the hopes of searching for the powerful locomotives that will drive the growth of each industry. Along the way, we hope to identify the next Foxconn or TSMC that will transform Taiwan’s economy.

When TSMC first started out 33 years ago, it was also an SME that made about a hundred million a year. Now, its revenue is in the trillions, and its position and influence in the global market is indelible. 

Our survey shows that even as the global economy reels, and even while the established world order is thrown into disarray, the companies in our ranking are also undergoing a major reshuffle.  

60% of Taiwanese Companies Failed in Risk Management 

Over 70% of the companies that made the list last year were eliminated this year. It goes to show how hard it is for companies to survive and grow in these uncertain, competitive times.

“Change is the new normal. The era of slow and steady subsistence has gone without a trace. For SMEs, this is an unprecedented challenge,” says Chou Chien-hung (周建宏), CEO of PricewaterhouseCoopers Taiwan. 

According to PwC, in the face of the sudden pandemic, nearly 60% of Taiwanese business owners confessed that their companies lacked sufficient risk management infrastructure and were highly susceptible to outside influences. 

An analysis of Taiwan’s Hundred Fastest Growing Companies also shows that when the financial tsunami hits, Taiwan’s SMEs bore the brunt.

While this survey does not fully reflect the impact of COVID-19 on Taiwanese enterprises, we observed that the escalating trade war and the fluctuating exchange rates were enough to knock many precision machinery and computer hardware companies out of the running, even if they made the cut the previous year.

What should companies do to thrive in the face of adversity? 

“In the new age of deglobalization, resiliency is the most important competitive edge,” says Mohamed El-Erian, chief economic adviser at Allianz.

Resiliency means that companies need to predict, prepare for, and adapt to continuous changes in their environment. They need the skill set to not only survive, but thrive. Resiliency will not only help a company to persist, it may also produce unexpected growth, even as the company is flying against the wind. 

Especially in these trying times, when the global economy is unstable, and industries are excelling or failing on the toss of a coin, resiliency will become a highly valued trait—perhaps even more than efficiency or productivity. 

From Acquisition to Adaptation, Bora Makes Top Three for Second Year in a Row

“We always have a Plan A, Plan B, and Plan C. The one we wind up using is usually Plan C,” confesses Bobby Sheng, CEO of Bora Pharmaceuticals. 

A glance at CommonWealth Magazine’s list of the Hundred Fastest Growing Companies shows Bora at second place. From 2017 to 2019, its CAGR nears 106.7%. It is the only company to make it into the top three for two consecutive years.

Bora made a splash through a series of acquisitions. It bought three pharmaceutical companies in a span of five years. Sheng stresses that, “For a merger to work, resilience is important. Each company you acquire is a different beast. From operations to finances and human resources, everything needs to be carefully reevaluated. If you cannot adapt, you simply won’t make it.”

This March, Bora spent NT$830 million to buy British pharmaceutical giant GlaxoSmithKline’s Canadian plant. Who would have expected that the virus would hit during the acquisition? All the Taiwanese managers who were supposed to fly to Canada to take control of the plant were forcibly grounded. 

“We could not fly, but we had a plan to follow. We redid our budget, hired local talent, and set up video conference calls between Canada and the headquarters in Taiwan. We also worked to integrate the accounting and human resources systems in both countries.” Sheng says their previous series of acquisitions had mentally prepared the team to be always ready for battle. The entire acquisition process is still ongoing. It is slated to finish in the fourth quarter of this year—on schedule.

If resiliency is the quintessential competitive edge that companies need to survive the current crisis, then that begs the question: How can we improve our resiliency? 

Precise Insight into the Market Helps Taiwan Cogen Take the Crown

If we take a comprehensive approach and dissect the reasons why the Hundred Fastest Growing Companies made the cut, their three essential qualities are “insight into the market”, “cross-industry competitiveness”, and “digital transformation”. This is the recipe for a highly resilient enterprise. 

Because of this, the ability to follow trends and understand what the customer needs is especially important. “In our case, we remained in lockstep with the government’s energy policies,” says Min-chieh Chang, Chairman of Taiwan Cogeneration Corporation, the champion of this year’s ranking of the Hundred Fastest Growing Companies.

Taiwan Cogen is a joint venture; nearly 30% of its shares are held by Taipower. Its revenue in 2019 was nearly 7.19 billion. Its CAGR from 2017 to 2019 was 143.8%. The main driving force behind its rapid rate of growth is its focus on the trend of renewable energy. It has worked on projects that involve solar, offshore wind, and geothermal energy. It invests in power plants, develops them, and operates them. All this is done in accordance with government policies and industry needs.

What’s more, it has demonstrated cross-industry competitiveness. “If you lack the means to acquire others, you can be acquired by others, or you can combine your resources in a cluster—whatever it takes to scale up.”

Especially when enterprises are looking to transform their businesses and find new opportunities, cross-industry cooperation is a viable option. For example, in recent years, major technology companies such as Foxconn, Acer, and Qisda have gone out of their way to work with hospitals and develop smart medical solutions.

Coming in at number 33 is Growww Media. Over the past three years, Growww grew through cross-industry consolidation and achieved a CAGR of over 31%. This February, it was announced that Growww was acquired by Japan’s second-largest advertising and marketing group, Hakuhodo, for precisely this reason.

The last essential quality is “digital transformation”. This is the most important and fundamental piece of infrastructure a company must establish to build resiliency. 

For instance, Sumeeko produces automobile components for the global market. During the last two years, in order to fulfill the customized orders of various top-tier European and American automotive companies, Sumeeko has simultaneously employed computer systems to replace conventional human decision-making processes. It has worked proactively to prepare for smart manufacturing. “If we want to keep growing,  automation is essential,” says Sumeeko Chairman Alex Chen.

As we turn our eye toward the second half of this year, we can forecast that the pandemic will go on, and the American presidential election will constitute an additional element of uncertainty. All this will be tossed into the tumultuous brew that is already the global political and economic situation. 

If we want to cultivate the ability to thrive in the face of adversity, we can learn from the experiences of these fast-growing, highly resilient companies. The only way to continue to grow is to face the challenges head-on and find a way out of your difficulties. 

Which Industries are Growing the Fastest?
Renewable Energy and Holding Companies Break the Mold

CommonWealth Magazine’s Hundred Fastest Growing Companies survey looks at Taiwanese SMEs that have made between 100 million and 10 billion in revenue. They are then ranked by their CAGR from 2017 to 2019. Of the five fastest-growing industries, “water, electricity, and natural gas” came in at number one, with an average CAGR of 17.04%. At the lead are Taiwan Cogen, and the biomass renewable energy company Grand Green Energy (源大環能). We can see that the country’s energy policy has helped shine a spotlight on the burgeoning renewable energy industry and the circular economy.

Coming in at number two on our list of fastest growing industries is “Cultural and Creative Businesses”. The average CAGR is 16.41%. Creative and performance arts are performing very well, with examples such as Kwan’s International and Kham Inc.  The former hit the jackpot by organizing concerts in Taiwan and abroad. But due to the ongoing COVID-19 crisis, its revenue fell by nearly 80% during the first half of this year compared to last year. Getting out of this slump is an existential challenge it must face.

“Holding Companies” come in at number three. We are talking about companies like Lien Hwa Industrial Holdings, which started by producing flour, but is now investing in such diverse sectors as computers, consumer electronics, IT channels, and petrochemicals. Last year, it transformed into a holding company. It plans for its various subsidiaries to go public in order to hasten the transformation process. 

The Furniture and Home Furnishings industry grew by more than 10% despite the trade war. Examples include Techcential International, one of Malaysia’s top five wooden furnishing manufacturers, and Ching Feng, a curtains manufacturer targeting the North American market. Their accomplishments in global sales have helped their businesses grow.

70% Fell Out of the Running Due to the Trade War

This year is the second consecutive year that CommonWealth Magazine has conducted the  Hundred Fastest Growing Companies” survey. Compared to last year’s result, we can see that the trade war between China and the United States in 2019 led to a major reshuffling of the rankings. Of the 100 companies that made the list in 2019, only 29 of them remain in 2020.

Source: Shutterstock

There are three reasons why a company may not make the cut. If its CAGR from 2017 to 2019 is less than 19.47%, it is out of the running. If it recorded a net loss in 2019, or if its annual revenue surpassed 10 billion dollars, it is also not considered. 

If we take a closer look at companies that didn’t make the list because of their falling revenue or recording a net loss instead of a net profit, we can see that most of them were directly impacted by the trade war between China and the United States. Machinery, PCB, and semiconductor equipment manufacturers were all hamstrung by the limitations imposed by the United States on Chinese exports. If their customers postpone plans to expand production or install equipment, this also has an adverse effect on the suppliers.

The global economy is reeling, and competition is heating up. Taiwanese SMEs are mainly exporters. It will be more difficult than ever before to sustain rapid growth. Their crisis management skills will be put to the test. 

Though more than 70% of our reigning champions failed to make a comeback, among the Hundred Fastest Growing Companies of 2019, there is one who recorded an annual revenue of over 10 billion, and left the list of SMEs to join the major league of large enterprises: Sigurd Corporation, an independent provider of semiconductor assembly and test services.

Sigurd is a member of MediaTek’s supply chain. Its revenue in 2019 was 10.05 billion dollars, which was an increase of 5.3% compared to 2018. Sigurd is benefiting from the deluge of chip orders for 5G smartphones, cell towers, and power management. Its revenue during the first half of this year also broke records compared to the same period last year.

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Have you read?
♦ Does Taiwan Have Enough Power for TSMC?
♦ Taiwan’s New-Generation Food Revolution
♦ Which Startups Do Hon Hai and MediaTek Ventures Favor?

Translated by Jack Chou
Edited by TC Lin
Uploaded by Penny Chiang