Zhongshan North Road in Taipei is home to many of Taiwan's venerable family-owned businesses. One company headquarters, the 15-story Taiwan Cement Building buttressed by massive stone pillars, evokes a particularly aristocratic aura, proudly towering over what has been regarded as Taiwan's most prominent boulevard since the Japanese colonial era.

Its elevated entrance wards off the bustle of the city like a majestic guard. The contrasting calm in the building's lobby reflects the stylish presence of the century-old Koo family.

Once the site of Taiwan's first seven-story reinforced concrete building – later replaced by the current structure – over the past 50 years this address has seen the rise and fall and resurgence of one of Taiwan's five wealthiest families.

On Dec. 2, former president Chen Shui-bian was transferred to a prison in Taoyuan County to begin serving three separate jail sentences totaling nearly 20 years. Among them was an 11-year sentence for taking a NT$400 million bribe from Leslie Koo related to a land deal in Longtan. The next day, in an exclusive interview with CommonWealth Magazine, the Taiwan Cement chairman and second oldest son of the late Koo Chen-fu maintained the poise nurtured by his family and calmly said, "I don't have any special feelings about the case."

The Longtan land deal, in fact, highlights the heavy pressure and difficult predicament Leslie Koo faced when he took charge of the family's affairs. One mistake, and the venerable family could have easily sunk on his watch.  

A Tangled Web of Scandal and Debt

Following the death of Leslie Koo's older brother Chester on Christmas night 2001, a number of risky "landmine" companies in which Chester Koo had invested over the previous 10 years began exploding. Overnight, Leslie Koo went from being unaware of the sheer magnitude of the family's financial woes to being entangled in over NT$25 billion of debt.

One of those landmines was set off in June 2003, when Dayu Development Corp., a property subsidiary of the family-controlled Koos Group that was still led at the time by Koo Chen-fu, began bouncing checks. If Dayu's finances were not quickly resolved, the Koos Group would collapse. So Leslie Koo immediately turned his attention to a parcel of land Dayu owned in the Longtan area.

Koo later admitted to paying what he described as a commission – and what the court ruled was a bribe – to a close associate of former first lady Wu Shu-chen in exchange for having President Chen pressure officials from Taiwan's Hsinchu Science Park to first rent and then buy the land and make it part of its Longtan Science Park development.

The transaction earned Dayu much-needed cash to keep it afloat.

Two years ago, Koo voluntarily met with Special Investigation Division prosecutors who were looking into the corruption allegations against former president Chen to explain his role in the Longtan land-purchase scandal. As Koo was leaving the prosecutor's office after the questioning concluded, he found himself quickly surrounded by microphones and video cameras. Reporters pressed him repeatedly on whether his father knew about the land deal, a line of questioning that left Koo saddened and humiliated.

Despite doing everything he could to extricate himself and his family from their mountain of debt, he had ended up getting sucked into another storm and casting the shadow of scandal over the Koo family.

Facing the mob of reporters, Koo gathered himself for a few seconds, pursed his lips, and then in a barely audible quivering voice said, "At that time, my father had already gotten cancer. My brother had passed away. We then divided the family business with Jeffrey Koo's side of the family… and then Dayu began bouncing checks. I did not have the heart to worry him."

Thinking of his father and also of the torment he suffered at the time, Koo fought back tears. "He definitely did not know. I was the one who was handling it. This is not an honorable situation. I should apologize to everybody," Koo said.

Losing a Father, a Brother and Half an Empire

Having lost his older brother in late 2001 and his father at the beginning of 2005, and having divided the family business with older cousin Jeffrey Koo Sr., Koo desperately tried to salvage what was left of his family's honor by sustaining Taiwan Cement Corp., which was mired in problems of its own.

At the lowest point in his life, Koo decided to sell 90 percent of the family's assets after consulting with his wife and children, hoping that the proceeds could be turned into the silver bullet that would save Taiwan Cement. Bearing his family's sense of mission, he had little choice but to devote himself totally to the goal.

He invested the funds raised from the asset sale in the company's stock, which had plummeted to rock-bottom levels below NT$10 per share. By staking his entire personal wealth on Taiwan Cement, Koo had deepened the Koo family's commitment to the company.

"My long-term commitment to always be here is a steadying force that the family brings to the company," Koo says.

In the reception room next to the chairman's office on the 14th floor of the Taiwan Cement Building, three different clocks peer at unsuspecting visitors, curiously frozen in time. Their hands have not moved in many years.

"This room has been kept the way my father had it. Every item in this room was put here by my father," Koo says. When the batteries that his father put in the three clocks ran out of juice, Koo let time stop to preserve the memories from when his father was still around.

But time stood still for neither Taiwan Cement nor Koo himself. Branded for life with the family's badge of honor and filled with determination to restore the family's pride, Koo pushed the company harder than ever before.

"My father contributed the prime part of his life to Taiwan Cement. If the company were to go from bad to worse on my watch, then I would have been better off leaving it altogether," Koo says. But that would have been nearly impossible for Koo to do. After being handed the company by his father, who had served as chairman and president of Taiwan Cement for 30 years, Koo had an especially strong sense of mission because he was carrying on the family line.

Leading Taiwan Cement to a New Generation of Brilliance

In early 2004, Koo, who had by that time worked for the company for more than 20 years, was compiling a book commemorating Taiwan Cement's 50 years and saw that from a previous period of glory, it had fallen into dire straits. In 2001, its earnings per share barely had a heartbeat at under NT$0.1, and not much had improved two years later when EPS was NT$0.6.

"I think that if Taiwan Cement continued on as it was at the time, it could not have seen another 50 years," says Koo with emotion.

At that point in time, Taiwan's cement industry was already mature and offered few prospects for growth. Taiwan Cement's 10-million-ton annual capacity alone was enough to meet the country's domestic demand, without even considering Asia Cement, Goldsun Development & Construction and other suppliers. Supply clearly outweighed demand in Taiwan's cement market.

Asia Cement had responded to the threat years earlier by investing in China through foreign subsidiaries, well before Taiwan's government permitted cement vendors to move into China. The company's foresight allowed it to benefit mightily from the construction frenzy that gripped China starting in 2000.

But Taiwan Cement was at a disadvantage. Because Koo Chen-fu headed the Straits Exchange Foundation – a semi-official organization responsible for contacts with China – and was a member of the Kuomintang's Central Committee, the company felt obliged to follow the government's "no haste" policy (going slow with investment in China) when mulling investment possibilities across the Taiwan Strait, and thus lost out on a good opportunity.

As a result, when he took control of Taiwan Cement, Leslie Koo decided to enter China in a big way, pledging to build 20 million tons of capacity there within five years. But the strategy met with strong resistance from some employees.

"We were only up to 10 million tons in Taiwan after being here for 50 years. How could we achieve double that amount in China (in such a short time)?" Many people suggested that he "take it slowly" in carrying out his expansion strategy and "not be in too much of a rush and not advance recklessly."

"Everybody wanted to do what was right for the company, but expectations of speed, timing and results were different," Koo says.

When his father was still running the company, Koo was close to his colleagues and not particularly forceful. But with Taiwan Cement's future in peril, he had to get tough.

"We had all worked together for 20 years. If an incremental approach had been effective, we would not have been facing the predicament we were in. And then you tell me we need to take a go-slow approach? I could not accept that." 

But Koo's management challenges were only beginning. He needed his managers to help build Taiwan Cement's presence in China, but because of the heavy workload there and the intense pressure to expand, they were not willing to leave their comfortable jobs in Taiwan. So Koo was forced to dispatch a group of them to China against their will. Within days, they tendered their resignations and applied for early retirement, dealing a blow to Koo's leadership authority.

He refused to surrender, however, and fired the rebellious subordinates after they failed to report to work for three consecutive days. He also promoted to management positions a group of core people who had remained buried in the company's hierarchy because of its longstanding system of promotion based on seniority.

He also recruited talent from outside the company with experience in the financial and high-tech sectors to fill key posts. They all were required to help Taiwan Cement move toward the goals that Koo had set.

China's No. 4 Cement Vendor

Koo's China strategy clearly made a priority of concentrating on southern China and using economies of scale to grab market share.

The company now has a total of eight production lines in its Yingde and Guigang factories in Guangdong Province and an overall capacity of 18 million tons a year. Following its acquisition of the Chinese cement business of Prosperity International Holdings (HK) earlier this year to further boost capacity, it has become the leading cement producer in southern China, and big enough to be the region's cement price benchmark.

Last year Taiwan Cement also rose to the position of fourth largest cement maker in all of China.

"If we hadn't quickly jumped to that level – we were already 10 years behind, and our thinking lagged 10 years behind too – we would have stayed 10 years behind forever. But that's not the way Taiwan Cement should be," says Koo, reflecting his deep feelings and high expectations for the company.

An analyst at a foreign-invested securities firm notes that cement is by definition a regional business, because it is not a material that is easily transported, making it impossible for one company to dominate all of China. The key players, he says, are vying for regional leadership positions, and Taiwan Cement has already succeeded in achieving this.

"Once you build an operation up to a certain scale, it gains stronger momentum for growth," the analyst observes.

Taiwan Cement completed its acquisition of Prosperity International's cement business in May, not only strengthening its hand in southern China, but also helping it gain a foothold in the potentially lucrative central and western China markets through the company's plants in Yunnan, Guizhou, Chongqing and Liaoning.

Taiwan Cement quickly achieved its five-year goal, and its production capacity in China now stands at 40 million tons a year. Two more production lines will be opened during each of the next two years, pushing capacity to 50 million tons a year, moving closer to Koo's goal for the company's second five-year plan.

"Everybody is following him with their hearts and souls," says Edward Huang, Taiwan Cement's senior vice president who has been with the company for 38 years. One of the few members of the old guard to throw in their lot with Koo, Huang looks proudly at the results the company's chairman has generated with his bold strategy.

"After six or seven years, it looks like the direction chosen at the time was the right one."

In his trademark blue shirt with sleeves typically rolled up to his elbow, Koo appears ready to jump into battle to defend his family's honor at any time. The family's century-long history, which began with first-generation patriarch Koo Hsien-jung, may have suffered changes in fortune in the recent past, but under the watchful eye of Leslie Koo, it is still being written.

Translated from the Chinese by Luke Sabatier