You nurse a cup of hot Ovaltine in the morning and grab the remote control powered by Energizer batteries to switch on the TV. At noon, you season your lunch at a restaurant with a generous helping of Heinz ketchup or perhaps Tabasco sauce. In the afternoon you munch handfuls of Haribo gummy bears while enjoying a cup of Twinings tea, and conclude your indulgence with a soothing Valta lozenge.

You would not be able to enjoy any of these foreign brand products in Taiwan weren’t it for Taiwan Hsin Lin Enterprise Co. Ltd., also known as THL.

THL is a conglomerate of around 20 subsidiaries, generating annual group revenue worth NT$10 billion. The company acts as distributor for more than 60 imported brands. Even foreign brands with subsidiaries in Taiwan often entrust THL with logistics, personnel matters, marketing and channel management for their products.

Compensating defeated competitors

THL has been successful bringing foreign brands to Taiwan for 47 years; trading is firmly imprinted in the family business’ DNA. Long before the Chinese Nationalist government was forced to retreat to Taiwan at the end of the civil war in China in 1949, the ancestors of the Chen family ran a paper pulp plant in China’s Fujian Province, and exported pulp and Chinese fir to Taiwan. In return, they imported sugar from Taiwan and porcelain from Japan. After Chen Hong-bin, father of THL Chairman David H.T. Chen, fled to Taiwan with the Nationalists, he opened a wholesale store for Chinese medicinal ingredients on Taipei’s Dihua Street while also exporting oranges and watermelons to Hong Kong and Singapore.

Subsequently, he founded Zhongxing Food, the predecessor of THL in the northern port city of Keelung in 1949, selling Bovril beef extract and Brand’s essence of chicken, which were both the rage in Taiwan, as an agent. From his childhood days in Keelung, David Chen still vividly remembers the many stores in the alleys that sold foreign products brought in by crew members on shore leave from vessels that docked in the port. He even obtained his first watch in a deal with a sailor.

After graduating from Nanyang Technical University in Singapore, Chen joined his father in the family business. In his early thirties, he became the boss of newly founded trading company THL. Ever since, his business philosophy has been “Amiability makes you rich”.

American baby food brand Gerber was originally distributed by another trading company. Gerber asked THL to participate in a pitch competition. Eventually, THL won exclusive agency, but the original agent refused to accept the decision. Chen promised his opponent to pay three percent of the annual revenue generated by the Gerber brand as compensation in the first year, two percent in the second year and one percent in the third year to make the defeat more palatable, an offer that even Gerber felt was rather unbelievable. Yet, the move greatly boosted the popularity of THL.

“I am an old-school businessman; one less enemy means one more friend,” says Chen.

Hailing from a port city and having studied abroad, Chen has a knack for picking foreign products that have the potential to become winners in the local market.

Thirty years ago, when Taiwan had only traditional beauty parlors, Chen introduced the German professional hair salon brand Schwarzkopf. When Western restaurants were still far from common, he became a distributor for McCormick, the largest spice brand in the United States. Foreign companies entrust their brands to Chen because they value the fact that he is willing to go the extra mile to cultivate the Taiwanese market and create value for them.

For instance, a decade ago, hardly any Taiwanese drank sparkling mineral water. Italian sparkling water San Pellegrino, which was in THL’s portfolio, was therefore a hard sell, even at high-end Western-style restaurants.

But given the popularity of sparkling water in Europe and the United States, Chen felt that Taiwanese consumers had simply lacked the opportunity to sample the foreign beverage. In a flash of genius, Chen suddenly remembered that Hong Kong-style restaurants charged their patrons “tea money”, so he suggested that restaurants collect “water money” and offer unlimited refills as incentive. This is how many customers came to try the bubbly drink for the first time. Rather unexpectedly, many guests became loyal customers, directly ordering San Pellegrino during their next restaurant visit.

“I even went to restaurants that did not have San Pellegrino on their menu, and, pretending to be a guest, tried to order San Pellegrino sparkling water,” says Chen. His requests triggered the restaurants’ curiosity about the brand. Chen waited until San Pellegrino had gained some popularity and gradually won acceptance among consumers before he listed the bottled water with hypermarkets and convenience stores.

Associated British Foods (ABF), which has collaborated with THL for nearly 30 years, has experienced first-hand that THL is not an ordinary agent.

Vicky Chang, ABF Taiwan and Hong Kong regional manager, notes that the average agent is haggling over every penny, whereas THL is growing with its customers. The ABF brand Twinings Tea, for instance, is positioning itself as a high-end product. When Twinings Tea had just entered Taiwan, it did not yet have a market, “THL spent extra money to store [our teas] in a cold storage warehouse, and even trained a group of sophisticated salespeople who exclusively promoted sales with five-star hotels,” recalls Chang. Today, Twinings Tea is offered at all major hotels in Taiwan.

One reason for this is that Chen only picks brands that he personally likes and endorses.

Key customer gone, revenue halved and lesson learned

THL has also stumbled on its way to success. Twelve years ago, a foreign company made THL its authorized agent for five of its brands, subsequently tripling its revenue in five years. Eying Taiwan’s booming market, the company’s headquarters then withdrew the authorization to work the market itself. “For us, the damage was huge, since these brands accounted for over half of our revenue,’ recalls Chen.

When the then vice president stepped down to take responsibility for this disastrous development, Chen’s son Terence rose to the occasion and took over. Having gone to school in Britain from the sixth grade on, Terence had a very different approach to doing business from his father. Within just three years, he made up the losses.

“This setback taught us the lesson that we must diversify the brands we represent to spread the risk,” says Chen.

THL got back on its feet again, and today has grown its portfolio to 60 imported brands. Revenue has jumped five-fold, and thanks to the broad mix of brands it represents, THL is no longer at the mercy of a single brand or customer.

“The Taiwan offices of foreign brands are often manned with just a handful of people. For them, the cost of handling logistics and negotiating listings in house is definitely higher than if they go through THL,” explains Chen. 

Transparency is key when it comes to winning the trust of brand manufacturers. Therefore, THL shares its pricing strategy, profit forecasts and other important business information with the original manufacturers.

As far as sales channels are concerned, THL provides one-stop shopping services. Previously buyers seeking to add ten products to their product range had to negotiate with 10 different manufacturers separately. THL, however, provides a variety of products from different brands in one package, which allows a retailer to save costs on channel management and logistics. PX Mart, Taiwan’s leading supermarket chain, stocks more than 100 products from around 20 foreign brands via THL.

Aside from traditional retail channels and e-commerce platforms, the company has also massively expanded into different sales channels in recent years, ranging from pet specialty stores, drugstores and schools to automatic vending machines. On top of that, it also sells ion water from homegrown brand Taiyan and Energizer batteries to 57 prisons across the island.

Joining hands with HCT Logistics for e-Commerce

Although THL has kept a low profile during its 47-year-long history, its 20 subsidiaries are always on top of business trends.

Hsin Hsin Galaxy (HH Galaxy), a joint venture with HCT Logistics, has evolved into Taiwan’s largest e-commerce operations service provider. Counting prominent brands such as Kao, l’Oreal, Johnson & Johnson and New Balance among its customers, the company generated annual revenue worth NT$1.5 billion in 2019.

THL is not keen to earn margins as a middleman but rather seeks to provide value-added services. That’s the secret recipe that makes THL indispensable for brands and channels alike.

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Translated by Susanne Ganz
Edited by TC Lin
Uploaded by Penny Chiang