Swancor Ind. Co., Ltd.
Swancor provides resin solutions mainly for corrosion-resistance and wind turbine blade applications. It has expanded its capacity rapidly by taking advantage of China's renewable energy boom, achieving an impressive growth rate. Thanks to the ECFA and its robust petrochemical supply chain, Swancor is increasing its emphasis on Taiwan as an operations headquarters, expanding production in Taiwan, and taking advantage of Taiwan's strengths to develop high end products that take will the company on a new "blue ocean" voyage.
The Swancor Ind. Co., Ltd . sells it s specialty chemical products under the "Swancor" brand name, and is a supplier of corrosion resistant resins and resins used in wind turbine blades. With a 20-years business history and sales reference in over 30 countries, Swancor is a leading Asian supplier of specialty chemicals with many applications in energy conservation and environmental protection. Swancor's operations headquarters and R&D center is located in Nantou, Taiwan, which is the home of founder and Chairman Robert Tsai.
Tsai recounts his entrepreneurial experiences 20 years ago when he was hauling his own luggage as he attended trade shows in countries around the world and worked hard to attract business. After noticing that China's renewable energy industry was experiencing a once-in-a-lifetime period of expansion, he targeted this great opportunity and achieved amazing growth for Swancor. He admits that his good luck in making correct decisions every time the company encountered an opportunity to surge ahead: "No matter whether you talk about our headquarters in Taiwan or our factories in China, Swancor's investments have all been at the right time, in the right place, and have involved the right people".
Getting Talent from Top Universities and Creating one of Taiwan's Strongest Brands
Swancor has taken advantage of its public listing on the stock exchange in 2010 to attract outstanding technical talent from Taiwan's top universities, especially National Taiwan University, National Tsinghua University, and National Chiao Tung University, forging a world-class brand name. Currently, with plants in Nantou, Shanghai, and Tianjin providing high-performance resins, Swancor sells composite materials developed in-house that are widely used in many high-tech industries in applications with critical anti-corrosion demand and high mechanical performance needs , such as for chemical resistant tanks and pipes, LED packaging, and for wind turbine blades. With customers in five continents, Swancor exemplifies "global deployment with a presence in China and roots in Taiwan."
After graduating from the chemical engineering department at National Tsing Hua University, Robert Tsai began producing chemicals for customers in Taiwan. After enjoying some initial success, he decided in 1994 to start a company in his hometown in Nantou. The business headquarters with production site is set in the Nangang Industrial Park. He then spent the period from start-up until roughly 2000 establishing the Swancor brand. Many semiconductor and petrochemical firms use large quantities of strong acids and alkalis in their manufacturing processes, and transport and storage of these chemical raw materials can present many challenges. But thanks to its expertise in the area of composite materials and high quality standards, Swancor was able to win the trust of many high-tech end-users (such as TSMC and AUO) and petrochemical firms (such as Formosa Plastics). Apart from serving the Taiwan market, Swancor began expanding its sales into Southeast Asia and Australia during this stage.
Establishing a Shanghai Plant and Advancing into the International Market
China enjoyed rapid growth in the years after 2000, and the government began providing support to the environmental protection industry. Taking advantage of what Robert Tsai saw as a once-in-a life time opportunity, Swancor experienced another growth surge. After establishing a plant in Shanghai, Swancor dramatically stepped on to the international stage.
"Many Taiwanese firms that had suffered damage or been forced to stop work in the wake of 921 earthquake of 1999 gradually resumed operations and began taking orders," recalled Tsai. "That's when I discovered that Taiwan's industry had strong roots, and decided to continue to expand the company overseas." Although the company's assets were a mere NT$110 million at the time, Tsai invested NT$80 million in a plant in the Songjiang Industrial Park in Shanghai. Tsai was the largest shareholder at that time, and he recruited top-notch personnel to accompany him to China. Having crossed the Rubicon, he moved his whole family to Shanghai.
Tsai's choice to locate his plant in Shanghai's Songjiang Industrial Park was another inspired decision. As the Songjiang Industrial Park has consistently maintained strict environmental protection and work safety requirements, having a plant in the park and complying with its regulations signifies that a firm meets international standards. "Establishing our chemical plant in Shanghai won us respect, and our ability to operate there successfully was a ticket to international recognition," said Tsai. "If your plant is seen as meeting high standards, doing business globally is a snap."
China designated environmental protection and thermal power generation as key industries in 2000, and provided generous subsidies in an effort to create domestic demand. This gave Swancor its big break, and Robert Tsai admits that he was extremely fortunate to get on board China's development train. Swancor passed the break-even point within two years of investing in China, and the Shanghai plant has consistently been the most profitable of the company's three plants since 2002.
Deriving the Greatest Benefit from Taiwan and China and Expanding Operations in Taiwan
Robert Tsai recalled that when attending a wind power industry conference in China in 2005, he gained a keen impression from the state of the industry that the time had come for the development of wind power. He immediately embarked on an R&D program, and quickly received Germany's GL certification. When, not long thereafter, China announced its "Renewable Energy Act," Swancor had already gained a position at the forefront of the industry, and had earned the recognition of Chinese customers. According to Tsai, since manufacturers had to guarantee that the composite materials used in wind turbine blades can sustain for over 20 years in both corrosion-resistance and fatigue performance. Swancor invested heavily in testing instruments so as to ensure that its raw materials were up to standard. Thanks to Swancor's foresight and early acquisition of international certification, it was readily able to attract orders from buyers throughout China.
In Tsai's eyes, the period between 2004 and 2005, which was when the company grew the fastest, was the key to establishing the Swancor brand. From the perspective of investment, establishment of its Shanghai plant to 2000 marked the beginning of major league growth. It should be mentioned, however, in spite of Swancor's stellar performance in China, it has spent the past year or more trimming its Chinese manpower and production capacity, while keeping its center of operations in Taiwan. For instance, Swancor has reduced personnel at its Tianjin plant from 65 at the beginning of last year to 29 today. It similarly downsized its Shanghai plant from 190 employees last year to the current 101 persons. Why has Tsai shrunk his China team while preparing to expand the scale of Swancor's operations in Taiwan?
According to Tsai's explanation, the Shanghai plant's early goal of reaching out to international markets has already been reached, and the company currently plans to shift capacity from Tianjin to Taiwan. In addition, OEM production at the Shanghai plant has been farmed out to a local Japanese firm, allowing Swancor to focus on brand manufacturing and marketing. In addition to the fact that Swancor's resin products are on the ECFA Early Harvest List, Taiwan operation also has multiple attractions, including stronger petrochemical supply chain, lower cost of funds, only one-fourth interest on loans and approximately half of business income tax compared with China. The fact that the soaring cost of labor in China makes wages for Taiwan's highly skilled manpower seem more reasonable. As a consequence, Swancor is adjusting the division of labor between its plants and expanding production in Taiwan. Swancor seeks to take advantage of Taiwan's superior R&D to achieve a "blue ocean" business environment and develop high-margin products.
Establishing a Veteran Team with a Family Atmosphere and Looking Forward to Supportive Policy Measures
As gross margins in Taiwan's semiconductor and electronics industries get ever thinner, many young people are seeking careers in traditional industries. Swancor provides its employees with benefits that are widely envied outside the industry. For example, the company gives employees 15% of earnings when EPS is less than NT$3, and 20% of earnings when EPS is over NT$3. As a result, staff turnover at Swancor is practically nonexistent. The relationship between workers and management has remained mostly harmonious in Taiwan, says Tsai, and a basis of mutual trust can ease management costs. Over the years, Tsai has striven to establish a "combat-ready team with a family atmosphere," and he believes that his current Taiwan team is very close to this ideal.
A stable petrochemical supply chain ensures the competitiveness of his industry, says Tsai, and Taiwan's supply chain is currently very strong. However, Tsai also worries that the upstream supply feeding Taiwan's petrochemical industry may start to dry up in the future, and is also concerned about the limited demand in the Taiwan market. Apart from this, he believes that Taiwan is the best site for establishing an Asian operations headquarters due to its abundant and highly accessible funds and talent, and reasonable taxes. He is currently planning to expand Swancor's Taiwan headquarters and R&D center to the Zhongxing Advanced Research Park, while continuing to realize the company's mission of "providing customers with the highest value products and services in the fields of energy saving and environmental protection."
As a leading manufacturer of materials used in wind power, Tsai is responding to the government's green energy policy by participating in the development of offshore wind farms. He also looks forward to finding applications for Swancor's advanced energy-saving solutions for wind turbine blades in Taiwan, and hopes to help provide the island with nonpolluting green energy. "Although there are high levels of risk and difficulty, green energy is a global trend and the country's future," said Tsai, "and Swancor is determined to persist in this undertaking. We only hope that the government will not make martyrs out of us."
Tsai explains that because Taiwan lacks experience in this type of project, the work requires coordination between many agencies. Other issues include EIA and fishing rights issues, and the sheer technical difficulty-which is even greater than the difficulty of building oil platforms-of constructing wind platforms weighing several hundred times in the middle of the ocean. But in spite of these difficulties, Tsai does not fall back from the challenge: "I believe our team has the ability to integrate the many aspects involved. Many European countries have successfully completed similar projects. We will acquire the necessary advanced technologies, and we will certainly see green wind turbines sprouting up all over the Taiwan Strait." He wants the government to clarify its stance, and looks forward to Swancor's continued investment in Taiwan after energy policies and supporting measures are in place.
Source： Department of Investment Services, MOEA
