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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

Autocrat

In his tireless quest for quality on wheels, Toyoda Eiji made Toyota a global marque. He leads five Asian brand builders honored here


IF THERE WERE A global index of entrepreneurial dedication, Toyoda Eiji would rank close to the top. When he was president of Toyota Motor Co. from 1967 to 1982, he would test-drive for hours new models that rolled out of the factory. Then he would study them closely, making detailed observations about everything from the body to the engine parts, right down to the tires. Only if the model came up to Toyoda's high standards did it go into the market.

Such stringent checks have made Toyota one of the world's preeminent brands, probably the best-known Asian marque along with Sony. The credit for that goes in no small measure to Toyoda, 83, who as president and then chairman (1982-1992) oversaw Toyota's rise as a global carmaker. A nephew of Toyoda Sakichi, the company's late founder, Toyoda introduced manufacturing methods and robotics that transformed world automaking. He was also the driving force behind Toyota's push into the U.S. market in the late 1950s. The consummate company man, he still goes to work daily as Toyota's honorary chairman.

A mechanical engineer by training, Toyoda began his career with Toyota in 1937, the year his family, who first made textile machinery, established the car company outside Nagoya in Aichi Prefecture. His first assignment was to conduct research on automobile production for the venture soon to be started with profits from Toyoda Automatic Loom Works. After the war, the young man helped produce the Toyopet Crown, Toyota's first economy car. But few were sold, largely because of a domestic recession. "Means of transportation were limited, so we could have sold anything we made," Toyoda said later. "But the buyers had no money." Faced with losses, Toyota laid off workers, who staged mass protests, strikes and sabotage.

In 1950, Toyoda paid a visit to Ford in the U.S. He learned about mass production systems as well as "bottom-up" management, whereby supervisors solicit and try to implement workers' suggestions. Toyota entered the American market in 1957 with the Crown, but the car flopped. It cost $500 more than the popular Volkswagen Beetle, and it didn't suit American driving needs. "The reception was horrible," Toyoda admitted. "The car did not have enough power to travel on high-speed roads. But we had to get a foot in the door." Toyoda remained undaunted, insisting there would eventually be a market for Toyotas among America's baby boomers.

In 1966, Toyota launched the Corolla, the best-selling car ever, which coincided with the onset of rapid motorization in Japan. When Toyoda became president and CEO a year later, it was churning out more than 800,000 autos a year -- some 70 times the 1950 output. But the euphoria of that success didn't last long. By the early 1970s, manufacturers around the world were reeling from the oil crisis and many faced stringent emission-control laws. But Toyoda turned the challenges into opportunities to restructure the company and make production more efficient. Another boon: Toyota's small models were perfect for motorists wanting more mileage from gas.

One of Toyoda's leading achievements was to pioneer kanban or "just-in-time" production, perfected in the 1960s. It combines elements of both crafted and mass production while avoiding the high costs of the former and the rigidity of the latter. The method relies on a network of suppliers that provide components when they are needed in the quantities required. That made the automaker more flexible and adaptable to changing market conditions. Other companies in Japan -- and abroad -- adopted the Toyota Production System, which set standards for efficiency and quality.

In 1984, following in Honda's tracks, Toyota began assembling cars in the U.S. Last year, its two stateside subsidiaries produced more than 600,000 cars -- more than half of the 1 million-plus Toyotas sold in the country. Across the Atlantic, Toyota has set up plants in Britain for the EU market, unified in 1992. Last May work began on doubling the British output to 200,000 vehicles by 1998. But Toyoda Eiji is still in the office daily, watching Toyota get even more global.

-- By Ajay Singh and Murakami Mutsuko


The Maverick

Koo Cha Kyung transformed a chaebol

from the corporate culture up

At the time of Koo In Hoe's death in 1970, his eldest son Koo Cha Kyung was not the most likely candidate to lead the Lucky-Goldstar group. The 45-year-old, who was trained as a school teacher, had hardly been the most prominent player in his family's business empire. Besides, several of his uncles were very keen to take charge. Yet when key chaebol members met in January 1970, the oldest uncle pointed to the empty chair of the founder and said, "Cha Kyung, you take the seat."

Insiders say an emphasis on family harmony tempered hard-boiled business strategy that day. And it was just that spirit that became a recurring theme during Koo's hugely successful reign. In the following quarter century, he presided over the group's transformation from the maker of other companies' radios and televisions to a chemicals and electronics giant that is now South Korea's third-largest conglomerate. One of Koo's last acts as group chairman before handing the reins to his eldest son last year at the age of 69 was to consolidate and simplify the chaebol's various brand names -- Goldstar, Lucky, Lucky-Goldstar -- into one modern marque: LG. To promote the new corporate badge, the marketing campaign alone cost some $100 million.

The LG Group traces its origins to a Pusan trading company founded by Koo In Hoe in 1947. One of its first products was a face cream called Lucky, a hot seller from the start. When problems arose with the bottle caps, Koo decided to make his own containers. Before long, Lucky was South Korea's first mass producer of plastic goods and by the mid-1970s had become the country's largest and most diversified chemical manufacturer.

As the company expanded in its core sector, a subsidiary called Goldstar was making impressive inroads into electronics. In 1958 it built South Korea's first radios. When Koo Cha Kyung took over in 1970, he oversaw the push into color TVs, an area where Goldstar made its name. Then came VCRs and in the mid-1980s Goldstar mass marketed and popularized the microwave oven in the U.S. Until then, Korean electronics manufacturers were clone-makers; they made TVs and VCRs under license for better-known companies. Koo, however, was one of the first chaebol chiefs to undertake the expensive process of building his own brand.

If one strategy characterized Koo's vision, it was his decision to ditch the chaebol's penchant for going it alone. Instead, he forged strategic partnerships with foreign firms that had the technology Lucky Goldstar needed to be globally competitive. In 1976 Goldstar began making radios for Zenith. Last year, that partnership came full circle when LG bought a majority stake in the U.S. firm, a move that allows LG to exploit Zenith's prowess in high-definition TV.

Another partnership proved extremely lucrative. In the late 1980s, Lucky-Goldstar lagged behind its rival chaebol Samsung and other companies in the competitive memory-chip industry. Koo knew that to be on the cutting edge his company needed to begin making DRAM chips. Rather than throw millions into research and development, he opted to tie up with Japanese electronics giant Hitachi. Today LG Semicon is the seventh-largest maker of memory chips.

When LG suffered massive labor unrest and profits declined sharply in 1987-1988, Koo once again sought outside help, enlisting U.S. management consultancy McKinsey & Co. to help restructure the chaebol. Koo devolved authority to the CEOs of the various subsidiaries and took direction from a committee in which founding family members and professional managers had an equal say -- unusual behavior for a chaebol chief. So radical was the shift in corporate culture that it took nearly seven years for employees to adapt to the new reality.

Even Koo's decision to retire was unusual. He was arguably the first chaebol boss to do so before failing health or advanced age forced the issue. Koo shed tears at his retirement ceremony and implored his lieutenants to continue the management revolution he began, namely to favor consensus over autocracy. Today he lives in a farming village in southwestern Korea, where he avoids publicity and tends to his current interest: launching the Yon Am Chuksan (livestock-breeding) University he founded to boost the competitiveness of Korea's agricultural industry. And despite his denials, Koo still keeps a keen eye on the conglomerate he did so much to change and build into a world player.

-- By Robin Ajello, with reporting from Seoul


Road King

Rahul Bajaj may be mellowing,

but don't expect him to fade away

After decades of leading India's largest motor scooter company with an iron hand, industrialist Rahul Bajaj is finally mellowing. Until just a few years ago, the chairman and managing director of Bajaj Auto insisted on making every corporate decision himself. For that, he was often described as autocratic, inflexible and arrogant. "Even though Bajaj was a highly professional company," says Tarun Das, secretary-general of the Confederation of Indian Industry, "the joke was that one could not spend five rupees [14 cents] without Bajaj's permission."

Bajaj is a radically different man today. The "King of the Road," as he is known in local industry circles, has gradually distanced himself from the day-to-day running of his $1.4-billion company. In the last few years, he has delegated substantial control to his cousin, Madhur Bajaj, 43, and to his 29-year-old son Rajiv. Younger son Sanjiv, 26, will soon join the company after completing his MBA at Harvard University. Bajaj himself plans to step down as company CEO in 2001. "After all, I'm 58 and not getting any younger," he says. "I don't have the same energy that I used to have in my younger days."

A middle-weight boxer in his youth, Bajaj went on to steer his family's 51-year-old company to fame through sheer ambition and hard work. When he returned from Harvard with an MBA in 1965, his father Kamalnayan Bajaj put him through a rigorous three-year training program as a shop-floor apprentice. In 1968, at the age of 30, Rahul was given a free hand to run the company. Nine years later, he was micro-managing all of the firm's operations, particularly the crucial areas of production, finance and labor relations. Under his guidance, the company grew to be the world's fourth-largest maker of motor scooters and the leading producer of India's ubiquitous three-wheeled auto rickshaws.

Few corporate names are as well known in India as Bajaj. One reason dates back to the early 1980s, when the company launched a successful advertising campaign for its scooters, using the slogan, "You just can't beat a Bajaj." Over the years, the Bajaj name practically became synonymous with motor-scooters and its prestige grew with its fame. In 1983, then-industries minister N.D. Tiwari described Bajaj Auto as one of the "best managed quality undertakings in India."

But by the mid-1980s, Bajaj slipped as undisputed king of the road. His company began facing intense competition from a string of motorcycle joint-venture companies that sprang up. Bajaj was simultaneously hit with a lawsuit by Piaggio of Italy, with whom his grandfather Jamnalal, the company founder, had signed a technical-collaboration deal in 1960. Piaggio claimed that Bajaj was violating an agreement forbidding the export of products made with Piaggio technology. Bajaj contested the suit and a court ruled in his company's favor in 1991.

His troubles were far from over. A recession in the early 1990s caused an unexpected downturn in Bajaj Auto's profits. The CEO reacted by launching a major restructuring drive, converting Bajaj Auto from a purely production-driven outfit to one with a marketing wing and a revamped R&D department. The strategy paid off. In 1994, Bajaj realized his dream of producing 1 million motor scooters a year. The firm cornered 46% of the market in motorcycles and two- and three-wheel scooters, aided by a highly successful joint venture with Japan's Kawasaki to produce a popular four-stroke, 100-cc bike. Bajaj's exports have also been zooming. In addition to Bangladesh and West Asia, Bajaj products are now available in Iran and parts of Africa and Latin America.

Although the boss now welcomes foreign competition, that was not always the case. In 1993, he was among a dozen industrialists who appealed to the government to create a "level playing field" by assuring that local businessmen could raise funds as cheaply at home as foreign investors do abroad. "Government intervention is essential," Bajaj says today. "Unless doing business in this country becomes a pleasure, you can't hope to be an effective global player." He points to Asia's Tiger economies and China as examples of nations that have "leveraged their comparative advantages in their domestic markets and the global trade arena."

The odds may be stacked against Indian entrepreneurs, but that does not deter Bajaj. "I love my work too much," he says, striding across his office to gaze out a picture window overlooking a factory floor crammed with machines and technicians. "So I will probably die with my boots on."

So much for retirement plans.

-- By Ajay Singh and Shirish Nadkarni/Bombay


Movie Magic

For seven decades, Run Run Shaw has been entertaining the masses

Run Run Shaw was once asked what kind of movies he preferred to make. "Ones that make money," he replied. Not beautiful films, or challenging ones. Shaw has made a career out of giving ordinary folk what they want to see. Back in the 1920s, he and his elder brother Runme produced a play, Man from Shensi, at a theater their family owned in Shanghai. On opening night, the hero fell through the stage's rotten planks. The audience roared with laughter. Sensing a winner, the brothers quickly incorporated the mishap into successive performances. Man from Shensi became a smash hit and was later turned into a movie.

Shaw has been accused of running his film studios like factories, of putting profit before art, of borrowing from Hollywood. But if you ask Singaporeans, Malaysians or Hong Kongers where they saw their first movie, chances are it was in a Shaw Brothers cinema. Chinese audiences the world over love their Hong Kong soap operas and costume dramas. More than likely, they were made by TVB, the Hong Kong television station Shaw launched in 1967. Indeed, Sir Run Run, knighted by Britain in 1977 for his philanthropy, co-founded Southeast Asia's post-war movie industry and launched scores of nobodies to international stardom.

In 1924, the Shaw brothers, sons of a Shanghai textile magnate, bought a camera and made Man from Shensi. The film earned big money and made them the metropolis's celluloid pioneers. But with war looming, the brothers fled south in pursuit of better prospects. In 1927, Runme arrived in Malaya and quickly noted a dearth of cinemas. He scraped together the money to open four.

Besides making their own movies, the Shaws began importing foreign ones to Malaya in the early 1930s. Profits piled up until 1941, when the Japanese overran Asia. The Shaws converted their assets into gold, jewelry and cash and buried their hoard in the back garden. The Japanese occupiers were not kind to the brothers. Their theaters were trashed, their equipment stolen, their houses razed. Runme reportedly was forced to produce Japanese propaganda films.

After the war, the brothers dug up their treasure and started fresh. They renovated their cinemas and bought the latest movie equipment to feed the post-war hunger for entertainment. In 1959, Run Run Shaw moved to Hong Kong, where he set up Shaw Brothers Productions and Movietown. A sprawling complex where stars lived and worked, it became the nucleus of his film empire. Until then, the local industry was cranking out 400 hour-long potboilers a year with budgets rarely surpassing $800. Shaw introduced what was then radical for Hong Kong, but standard in Hollywood: budgets of up to $50,000 and two-hour movies. The strategy paid off and Hong Kong's modern film industry was born.

Shaw went on to produce more than 1,000 movies, many of them shown regionwide and in the U.S. in the Shaw chain, which once had 200 cinemas. While his films were never critically acclaimed, they found fans even in the West, starting with 1973's Five Fingers of Death, which helped popularize the kung-fu genre.

In 1967, Run Run Shaw launched a television station and changed the lives of Hong Kong people forever. The prosaically named Television Broadcasts Ltd. operates two channels, Chinese-language Jade and English-language Pearl. The parent company controls 80% of the Hong Kong market and boasts the world's largest library of Chinese programs, seen wherever Chinese live. In 1993, Shaw launched TVBS, a Mandarin satellite channel, distributed via cable in Taiwan, the Philippines, Singapore and Thailand. Profitable after three years, the operation may consolidate Shaw's ambition to reach audiences worldwide. Though Shaw did not visit China for 40 years, he has plans to beam TVBS programs into the mainland, should the authorities permit him to do so.

TVB's triumph has eclipsed Shaw's movie studio, especially since top producer Raymond Chow left and, to the dismay of his former boss and friend, set up rival Golden Harvest in the 1970s. Shaw owns 39.6% of TVB, which derives most of its earnings from a virtual monopoly on Chinese broadcasting. Still, in recent years TVB's ad revenues have declined because of Hong Kong's sluggish economy and Shaw is returning to his roots -- making movies. A risky move, given the lackluster state of the local film industry. But Shaw, 89 this month, has worked movie magic before. Perhaps the next Shaw Brothers film will help beat back the current Hollywood invasion. And who knows, the critics might even approve.

-- Reported by Law Siu Lan/Hong Kong


Rise of a Tiger

Aw Boon Haw stamped his mark

on the family empire -- literally

Many have tried since. But few entrepreneurs have hitched their persona to their product as successfully as Singapore's Tiger Balm king. For Aw Boon Haw, who died in 1954, promoting himself and his medicinal balm worked hand in hand. From the day he took charge of the family concern in 1908, Aw literally stamped his mark on it. His name, Boon Haw, means "gentle tiger" in his native Hakka dialect. And his trademark -- a springing image of his carnivorous namesake -- soon adorned every small tin or hexagonal glass jar of the pain-killing salve at the center of the business. "As his prosperity and personality took on legendary proportions, the fame and fortunes of Tiger Balm became inextricably tied to that of the 'Tiger' himself," write Singapore academics Brenda Yeoh and Peggy Teo in their treatise, From Tiger Balm Gardens to Dragon World.

Behind the hype was a simple yet exotic product; the soothing camphor and eucalyptus oil-based ointment promises users relief from an array of discomforts, including muscle pain, insect bites and headaches. The recipe is said to be derived from an ancient folk remedy invented for a lusty Chinese emperor who, as a result of his promiscuity, suffered from persistent back pain. Lynn Pan, director of the Chinese Heritage Center in Singapore, suggests the product has more mythic than medicinal value. "There's nothing much to Tiger Balm," she says. "Yet Aw conveyed a feel-good factor. He understood the power of branding."

Always a savvy promoter, the entrepreneur leveraged the balm business into an empire with interests in pharmaceuticals, banking, insurance, rubber and newspapers. But in 1969, Aw's nephew Cheng Chye listed the holding company, Haw Par Brothers, which later sold off some operations. Today, Tiger Balm, owned by Singapore's United Overseas Bank, sells in some 70 countries in Asia, Europe and North America.

Despite his moniker, the young Aw was far from gentle. Born to a Chinese herbalist in 1882 in Rangoon, he was a perpetual truant from school. In his mid teens, he was expelled for beating up his teacher and sent to the family's ancestral village in China's Fujian province. Aw's younger brother Boon Par ("gentle leopard") was left to run his father's medicine shop. When the senior Aw died, Boon Par asked his tough-minded brother to return and take control of the business. Boon Par, meanwhile, apprenticed himself to a local pharmacist, U Thaw. Before the master passed away, he bequeathed his secret recipe for a pain-relieving ointment to his apprentice with the proviso that if he became rich from it, he should give some of his earnings to charity.

The Aw brothers worked to improve the formula. At first, Boon Haw used his ethnic Hakka ties to sell the product to local Chinese medicine shops in Burma on consignment under the brand name Ban Kim Ewe (Ten Thousand Golden Oil). "Aw Boon Haw was a genius in promotion, advertising and marketing," says his biographer, Sam King. As the business expanded into Southeast Asia in the late 1920s, Aw Boon Haw looked for more extravagant ways of promotion. In one instance, he built a tiger-shaped car from which Aw distributed enameled posters of his pharmaceutical products.

In 1929, Boon Haw founded Sin Chew Jit Poh in Singapore, the first of a group of newspapers in the region, only three years after opening for business in the Lion City. The title was followed by Chinese- and English-language papers in Hong Kong, Taiwan and Thailand. The group later established the "small man's bank," Chung Khiaw Bank, and a life insurance company.

The brothers kept their promise to U Thaw. Aw Boon Haw received the Order of the British Empire for his donations to hospitals, schools and nursing homes. The tycoon saw in every philanthropic act a promotional opportunity. "Boon Haw always ensured that a plaque bearing his and his brother's name or the tiger trademark was displayed in the most conspicuous part of the institution to which he had generously donated funds," Yeoh and Teo write.

The Aw name and entrepreneurial spirit live on in other ways as well. One scion, daughter Sally Aw Sian, 65, tends a multi-billion-dollar offshoot of the family empire; she has successfully turned the ailing Sing Tao newspaper group into one of Hong Kong's most profitable media companies. Evidently, the tigers haven't lost their spring.

-- By Matthew Fletcher and Santha Oorjitham/Singapore


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