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Lessons in Community Relations

Why Good Neighbors Do Better Business


Community protests halted work at Catcher Technology's plant in Suzhou. But by making a favorable public impression, Master Kong has become China's number-one noodle brand. For Taiwanese enterprises operating in China, good community relations are not optional.



Why Good Neighbors Do Better Business

By Benjamin Chiang
From CommonWealth Magazine (vol. 485 )

This year marks the 40th anniversary of the founding of Catcher Technology Co., Ltd. In that time, company president Allen Horng has led Catcher's metamorphosis from a small factory operating out of a corrugated metal hut in Tainan County to the world's largest maker of aluminum and magnesium casings for computers and consumer electronics, with a concomitant share price at one point reaching an all-time high of NT$277.

In an imperfect world, however, good fortune and calamity are seldom strangers. After setting new highs for operating revenue and earnings, suddenly this October Catcher found itself mired in a work stoppage at its plant in Suzhou, China.

At 11 p.m. on the evening of Oct. 15, Catcher vice president for technology Borange Huang and vice president Jimmy Chen received an emergency message from the Suzhou Industrial Park Management Commission: "There's a riot in Fenghuang district. You have to shut down operations." The orders coming across the telephone were succinct and powerful.

In that moment, Huang, in command of the 30,000 plus Catcher Group workforce, realized there would be no smoothing over the roiling discontent over the issue of factory emissions that had been simmering now for several months. The next day, the CNC machines – critical to operations at the Suzhou plant – would have to be shut down.

He immediately called an emergency meeting of more than 200 Taiwanese company executives, who promptly gathered at Catcher's plant site at just before 1 a.m.

"Since the Suzhou plant was built, we'd never been called to an emergency meeting in the middle of the night before," one Catcher executive divulges. Once gathered, each Taiwanese executive became responsible for text messaging or otherwise contacting all subordinate management personnel in their respective departments to advise them not to report to the plant the following day. Within the hour, all Catcher management personnel had promptly replied with status reports.

Catcher Extends Communication to Community

Allen Horng decided on the spot to move a portion of production capacity to the company's plant in the city of Suqian, north of Suzhou.

"Workers willing to go to Suqian will get salary raises of 200 renminbi," he declared.

The next morning at 8 a.m., the 30,000-strong workforce ordinarily streaming through the gates of Catcher's Kesheng and Keli plants in Suzhou had vanished. Replacing them was a fleet of a dozen or so buses hauling two or three hundred Catcher employees north on the 500-kilometer journey to Suqian. Meanwhile, another group from Catcher was busy negotiating with Suqian municipal government officials on the lease of suitable plant space and dormitory facilities to accommodate several thousand workers within the city's industrial district.

"Why didn't they disclose the work stoppage a little sooner to better prepare us to transfer our orders?" complained one Catcher client, marveling at how there could be a work stoppage with Christmas approaching, the high season for product shipments.

If clients were on edge, Allen Horng was even more so. Horng even recalled his brother, Catcher Suzhou general manager David Hung, then on leave in Taiwan recuperating from an illness, to oversee transfer operations. Day in and day out, Hung made the 1,000-kilometer round-trip, keeping a close watch on the progress of moving the production line to the new plant site.

The once deserted Suqian Industrial District was suddenly bustling with activity, with the influx of several thousand Catcher employees.

And Catcher's sales team sprung into action as well, flying from Taiwan to Suzhou to take clients on the five-hour road trip to the Suqian plant site.

When the clients saw the plant, they immediately began snapping up production capacity, with one client saying straight up: "I want the output from this whole building."

While that was ongoing, improvement projects were underway at Catcher's Suzhou plant to reduce environmental pollution, and the company is hopeful the plant will be back online soon.

The work stoppage has taught Allen Horng a valuable lesson. Corporate social responsibility must necessarily involve communications with all interested parties – not only clients, shareholders and employees but also residents of the surrounding communities.

Catcher's work stoppage can further be seen as a microcosm of Taiwanese business in China. The operational mentality of Taiwanese companies is also facing a critical, transformational moment. "They need to upgrade themselves and move from the days of working to win the hearts of government officials and clients, to an era of working to win the hearts of the larger community," says Leu Horng-der, a professor at Chung Yuan Christian University's Graduate School of Business Administration.

Master Kong: Crafting a Favorable Impression

As China's people have begun to enjoy the fruits of economic prosperity, they have increasingly sought to express and defend their rights and interests, resulting in a proliferation of rights movements that grows by the day.

"Taiwanese businesses must avoid becoming plunderers of resources and eliciting public backlash," says Benson Chang, north China regional manager for Tingyi (Cayman Islands) Holding Corp., which owns Master Kong, China's number one beverage and instant noodle brand.

"We make a big effort to create a ‘favorable impression' among the local populace," insists Kodak Ko, chief of staff for Master Kong's chairman and CEO Wei Ing-Chou.

The Master Kong brand and its products have become a part of everyday life among China's consumers. The degree of consumer preference for the brand is closely linked to the company's image.

Master Kong has divided China's 1.3 billion people in seven different operating regions, each with its own deeply entrenched distribution network and public service endeavors operating in tandem.

Benson Chang's north China region, for example, spans Shandong, Hebei, Henan, Shanxi and part of Inner Mongolia, a market encompassing 300 million people.

"He deals exclusively with corporate relations, both internal and external, across his region," says Ko. "He doesn't oversee day-to-day operations."

Each regional chairman has a set of operating indices designed to measure the favorable impression of local operations among the general public. Simply put, each regional chairman shoulders the burden of a corporate social responsibility assets-to-liabilities balance sheet.

"Wherever there's a Master Kong plant, we're engaged in public relations," Chang says, with each plant region assigned dedicated public relations personnel charged with carrying out local community, media and government relations.

In Chinese provinces like Sichuan and Henan that have seen massive outflows of manpower, the huge numbers of young people packing up and leaving their hometowns to find work in the coastal cities has created a social problem in the form of numerous "stay-behind kids" (parents leave home to find work, kids left in the care of grandparents).

Many Taiwanese businesses have donated to so-called "hope schools" in provinces across China, but most only donate money. Master Kong donates not just money, but effort and manpower as well.

In Chongqing and Chengdu, Master Kong donated two schools and set up a special office to see to the needs of stay-behind kids, training local volunteers to assist children with academic tutoring.

What most deeply impressed Professor Leu was how "Master Kong requires employees to go out into the surrounding communities monthly to assist in carrying out community service efforts and bringing those opinions and reactions they hear firsthand back to headquarters to serve as a basis for future improvements."

Aside from its deep involvement in community service, Master Kong continually learns from day-to-day operations to streamline and improve its operational flow, further gaining favor within the community.

Each day, dozens of trucks enter and exit the grounds of Master Kong's plants. The modus operandi at most companies is to demand that delivery trucks remain on standby outside the walls of the plant compound, snarling traffic.

But Master Kong insists on seeking a suitable vacant lot in the vicinity of its plants to temporarily park its fleet of delivery trucks. When the trucks need to make a delivery, they are notified to enter the plant grounds for loading, greatly reducing traffic headaches for the surrounding community.

"Building relationships is not about gaining benefit, it's about peaceful coexistence with local residents and the community," says Ko. In his view, the key to sustainable operations in China for Taiwanese businesses is an ongoing effort to garner the support of local residents, and not merely wait for an incident to occur before patching up relations.

Translated from the Chinese by Brian Kennedy