With your recognition and support, I would appeal to you to leave my wealth to the public for the sake of the society, so that the enterprise into which I voted my life can perpetuate and benefit the staff and the community forever . 1 ” Wang Hunching, founder of Formosa Plastics Group, 2004 On October 16, 2008, the people of Taiwan mourned the death of Wang Young- aching, the legendary founder of Formosa Plastics Group (FPC). He died at the age of 92. An entrepreneur and philanthropist, Wang Young-aching symbolized determination, hard work, and the rise of Taiwan.
Just one day before he died, he was inspecting Fag’s business in the United States. At his memorial service, Taiwanese leaders praised him as “the glory of Taiwan” and “a compassionate person dedicated to charity. 2 He left behind a huge estate (worth US$5. 5 billion) and a giant business empire. 3 Although succession had been on his agenda for many years, he did not leave a will. No Wang Young-icings management philosophy was famous: “Get to the root of the issue. “4 Only by understanding fundamentals, he believed, can problems be solved efficiently.
He would typically work out every detail of a process. As Chi Chive, chairman of the Taiwan Stock Exchange, noted, “They [Formosa Plastics Group] even have an SOP [standard operating procedure] for constructing 1 “A Letter to My Children” (in Chinese), Taiwan United Daily News, November , 2008, http://mage. Dun. Com/mage/ people/ D-158874, accessed August 24, 2009. The full letter can be found in Exhibit 1. 2 “Memorial Taiwanese tycoon,” The Straits Times, November http://app. Goose. Com/article/ALeqM5jloMLphvCYaAbAv5DigDvDeMkWVg, accessed August 24, 2009. 008, 3 With a fortune assessed at LOS$5. 5 billion, Wang Young-aching was ranked as 78th wealthiest person in the world in 2008. He was the second-wealthiest man in Taiwan. See “The World’s Billionaires,” Forbes, March http://www. Forbes. Com/lists/2008/10/billionaires_YES-Wang- family_OMAR. HTML, accessed August 24, 2009. 5, DO 4 Wang Young-aching, “My Views on Managing Business by Chinese” (in Chinese), published by China Axing People’s Publishing House, 1998. Professors Lie Jinn and Joseph p. H. Fan, Chinese University of Hong Kong, and Doctoral Candidate Winnie S.
C. Lounge, The university of Hong Kong, prepared this case. Professor Fan wishes to acknowledge the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CUCKOO’S/AH) for their assistance with his research. This case was developed from published sources. HOBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright C 2010 President and Fellows of Harvard College.
To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www. Hobs. Harvard. Du/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Vishnu Dakar Kobo University until June 2014. Copying or posting is an infringement of copyright. [email protected] Harvard. Du or 617. 783. 7860. 10-026 walls outside buildings. They will not miss any details. “5 Given Hang’s meticulous nature, it seemed especially surprising to observers that he did not leave a will. Before he died, Wang Young-aching had emphasized his goal of “business continuity. ” He believed that if his business could be handed down from generation to generation, he would be able to serve society even after his death. But could that vision be realized? Exhibit AAA shows the 60-month cumulative abnormal return of stocks of Formosa Plastics Group before
Hangs death; Exhibit b shows the same statistics for the listed family firms Of three Asian economies”Hong Kong, Singapore, and Taiwan. The Legend of Wang Young-aching Wang Young-icings life was a classic rags-to-riches story. He was born in 1 917, the son of a poor tea farmer in Northern Taiwan. Even as a small child, Wang Young-aching helped out with family chores; by the age of seven he was feeding the pigs and fetching 10 buckets of water every day. Still, he insisted on going to school and walked three hours (20 kilometers (about 12. Miles)) to and from his school on bare feet. Though family members all worked hard wrought the year, they earned little, and Wang Young-aching could only finish elementary school. When Wang Young-aching was 1 5, his family sent him to serve as an apprentice in a rice store in Jiao in Southern Taiwan. He worked diligently at the job and had the opportunity to learn how to keep the books, control costs, and run the business. One year later, with the NINTHS his father had raised from friends and neighbors, he opened his own rice store with his younger brother, Wang Young-tsar. At first, Wang Young-aching peddled his rice door to door, but had only a few customers, since many people obtained rice from other resources. Gradually, he built up his reputation by improving product quality, delivery service, and sales strategy. For example, he would thoroughly separate out the bran and sand from the rice before selling it; he personally delivered rice to customers; and he would record his customers’ family size and rice consumption per meal so that he could anticipate the next delivery time before the customers ran out of stock.
His efforts led to a tenfold increase in sales in two years. Success did not make him complacent. He continued to work hard, and his diligence improved not only his own business UT also the lives of his employees, who had been living in poverty. Wang Young-aching had built his business during the years of Japanese rule over Taiwan. Thus his business was at a disadvantage in relation to Japanese rice stores that were backed by the government. But Wang did not give up. Every day he worked harder and longer than his competitors, staying open until 10:30 p. M.
While his neighbors enjoyed their hot baths, he took cold showers, even in winter. “This allowed me to save three Japanese seen a day, and these three Seen would buy me three pecks Of rice,” he explained in a beech at the Wharton School of Business in 5 Gao Y-fan, “Formosa Plastics without Wang Young-aching”succession, Steerage, System and Strategy”Four Big Challenges Ensued” (in Chinese), Globalizes Monthly, December 1, 2008, up. 266-269. A standard operating procedure (SOP) is a document that contains written instructions covering operational features in a definite sequence.