BUSINESSWEEK ONLINE: JULY 3, 2000 ISSUE|
Keiichi Enoki (int'l edition)
Enoki's achievement has put Japan into the fast lane of the mobile Internet and made the company a model for others to follow. More than 7.5 million Japanese now subscribe nationwide, and the total is expected to hit 15 million by yearend. The company conservatively estimates $3 billion in subscriber and other fees this year if enthusiastic Japanese keep signing up at the rate they have been. Meantime, NTT DoCoMo plans to take I-MODE global. Hong Kong will be first, with service scheduled to start later this year as part of a venture with Hutchison Telecom. In the future, I-MODE will be upgraded and packaged with a next-generation cell-phone system that DoCoMo hopes to transplant around Asia and Europe.
Enoki came up with the idea for I-MODE back in 1997, when he was asked to find a way to expand DoCoMo's voice service into data transmission. He figured gadget-crazy Japanese cell-phone users would embrace wireless access to the Net. So Enoki hired Internet experts, while company engineers raced to build a packet-data network that would offer users a constant connection all the time, without the need to dial up. In February, 1999, Enoki and his team rolled out I-MODE, making DoCoMo the world's first mobile carrier to offer subscribers commercial Net access service.
Becoming a tech maven was not Enoki's first choice. As a teenager growing up in Tokyo, he contemplated an unconventional career as an actor. But he showed a talent for math, so his parents encouraged him toward technology. He studied electrical engineering at Tokyo's prestigious Waseda University, and he joined the bureaucratic phone monopoly Nippon Telegraph & Telephone upon graduating in 1974.
Enoki, though, didn't like to conform. He took to wearing blue shirts--still his preference today--instead of the traditional white. He also developed a reputation as a free thinker, someone who wasn't afraid to contradict his bosses on company strategy. In 1992, when NTT spun off its wireless unit, few wanted to move to DoCoMo, which was regarded as a risky venture. Not Enoki, who was keen to join the new business at a time when Japan was just beginning to liberalize its wireless-phone market. ''Enoki isn't your typical NTT employee,'' observes DoCoMo President Keiji Tachikawa. ''He's very creative.'' He quickly proved himself a capable manager, setting up regional operations for the newly independent carrier. When DoCoMo wanted to branch into a new business, Enoki got the call.
A family man, Enoki credits his children for waking him up to the potential of mobile Net service. He observed his young son playing with his portable game machine and his teenage daughter engaging in ''chat'' with her friends, using a pager outfitted with a tiny keyboard. ''I saw that they had no built-in barriers to using digital gadgets as information and entertainment tools,'' he says. So Enoki thought the public would take to the wireless Web if they could do it simply, by using their cell phones.
FIXING BOTTLENECKS. Enoki is the first to admit that I-MODE is far from perfect. Because of the slow transmission speed, it's not possible yet to quickly download images or music. Much of the content is text-based and lacks vivid graphics. Given the avalanche of new subscribers, the network's servers have jammed repeatedly, leading to disruptions in service. That's part of the learning experience, counters Enoki. ''We're pioneers,'' he says. ''We're fixing the bottlenecks and paving the way for the development of the mobile Internet.''
His next challenge is to upgrade the service to complement a new broadband cellular service that DoCoMo plans to launch next year. That will make possible high-speed data transmission, as well as video. In this new wireless age, Enoki sees I-MODE emerging as a major portal and e-commerce platform. ''I'm not saying everything will be wireless,'' he explains. ''But it'll be one of the main information highways.'' And if Enoki succeeds, I-MODE will be one of the major entry points.
Yun Jong Yong (int'l edition)
Earnings were in a slump at Samsung when Yun became chief executive--just as the Asia crisis began. He quickly pushed for change, knowing that boosting profits depended on ending the company's decades-old practice of growing fast at any cost.
Carrying months of unsold inventory had devastated the company's balance sheet. So, among other initiatives, Yun ordered home-appliance factories shut for weeks, until orders were in hand and profitability was assured. Overall, he instituted tighter inventory controls that slashed costs by $2.7 billion.
Yun then cut the workforce by more than a third to 54,000, sold or spun off dozens of noncore companies, and trimmed debt down to 78% of equity from three times equity when he took over. ''The crisis jolted the mindset among employees that changes are inevitable,'' says Yun, 56, an electronics engineer educated at Seoul National University.
The numbers say it all. In the first quarter of 2000, aftertax profits increased more than fourfold, to $1.4 billion from a year earlier. Market cap has quadrupled to $49 billion over the past year.
Yun helped make Samsung Electronics into a global VCR powerhouse in the 1980s. Today, the company is also one of the world's largest and most profitable chipmakers, with a growing strength in display panels and cell phones.
Yet Yun won't be content until Samsung Electronics ranks right up there with the consumer-electronics giants of Japan and Europe. This is not a man to rest on his achievements. ''You must maintain a sense of crisis to stay competitive,'' he says. That's advice his Korean competitors would be well advised to consider.
William Fung (int'l edition)
But he keeps finding ways to ease the cost squeeze. Li & Fung, whose U.S. clients include Toys 'R' Us, Avon, and Gymboree, has sailed smoothly through the Asian crisis into the Asian recovery, all the while profiting in a notoriously low-margin business. Sales rose 14% last year, to $2.1 billion, and profits were $74 million--up 26%. Fung predicts even better times ahead. ''In the last three years, we doubled our profits,'' he says, ''and we will double them again in the next three years.''
Fung is part of a high-powered team. His older brother Victor is Li & Fung's chairman and one of Hong Kong's consummate insiders: chairman of Hong Kong's Airport Authority, the city's Trade Development Council, and Prudential Asia's direct-investment arm. Day-to-day operations at Li & Fung are William's responsibility.
The brothers can thank their grandfather for picking the right market when he started nearly a century ago. While others in British-ruled Hong Kong tried to link up with big English firms, the Fung family focused on products for free-spending Americans. That U.S. concentration has seen the company through three generations. ''Our tendency has always been to work with the Yankee traders,'' says Fung, who graduated from Princeton University in 1970; at the ceremony, he wore an armband to protest the killings at Kent State. He went on to Harvard Business School.
To slash costs, the Fungs play a global game. Now operating in 30 countries, they are adept at buying components from high-cost countries and assembling them cheaply elsewhere. To sell a ski jacket to a customer, Fung gets microfiber from South Korea, lining from Taiwan, tags and labels from Hong Kong, and zippers from Japan, then finds a factory to put them together in China. ''That's a multinational joint venture,'' he says.
The Internet, Fung insists, won't change his tactics. While a host of dot-coms is creating online exchanges that match Asian suppliers with Western buyers, Fung says they won't undermine his business. ''People want fewer suppliers, not more,'' he says.
He is always looking for new frontiers: most recently Swaziland and Madagascar, now that a new U.S. law makes it easier to export to the U.S. from Africa. Where there is a cost-cutting opportunity, you can bet Fung is not going to miss it.
ONLINE ORIGINAL: A Chat with William Fung
Joseph Fan (int'l edition)
Fan, who learned the phone business in Hong Kong, decided to distinguish his company by focusing on connection quality. While cost may be key in Europe or the U.S., Fan believes that in Taiwan, clear connections to enable over-the-phone business transactions are most important. ''We are bringing Hong Kong quality to Taiwan,'' he says. As a result, Taiwan Cellular regularly scores high marks for service in government surveys.
Fan studied electrical and biomedical engineering at the University of Southern California and earned a master's in management from the California Institute of Technology. Then he started out with billionaire Li Ka-shing's Hong Kong-based Hutchison Telecom. In 1993, he jumped to Pacific Electric Wire & Cable Co., Taiwan Cellular's major shareholder. Using his experience bidding for mobile licenses everywhere from India to the Philippines, Fan helped put together the winning bid in Taiwan, working with executives from Pacific Electric and minority partners, such as giant Acer Inc. and U.S. telecom operator GTE Corp.
Taiwan Cellular still is privately held, but investors have given Fan a thumbs-up by boosting the share price of Pacific Electric 34% this year, compared with a measly 4% rise on the overall index. Taiwan Cellular may get spun off; Fan is also plotting the company's Internet strategy, unveiling 1,000 wireless access protocol services for subscribers.
Despite a hectic schedule, Fan finds time for calm: As a student, he covered half his expenses teaching Tai Chi, and now he teaches the ancient art at his daughter's elementary school every other morning. Then he races to the office. ''It's 9.7 kilometers,'' he says, ''and I drive fast.'' Taiwan Cellular's users are glad he does.
ONLINE ORIGINAL: A Chat with Joseph Fan
Toshifumi Suzuki (int'l edition)
Not content with 10 million customers per day, Suzuki keeps looking for ways to attract more. The latest: pushing into cyberspace. Seven-Eleven is installing Internet kiosks and depot centers in its 8,000 stores so that millions more customers will come in to pick up goods they order on the Net. Suzuki's goal isn't to make money on pickups but to snare extra foot traffic to boost sales. Suzuki will never stop redefining the corner store.
Nita Ing (int'l edition)
Three decades later, the 45-year-old Ing is still making waves. Issue No.1, she says, is smashing the ''black gold,'' or corrupt links, between Taiwan politicians, gangsters, and big companies, and ushering in a more democratic age. ''It affects business, and it affects government policy,'' she says. As chairman and CEO of the $15 billion Taiwan High Speed Rail Corp., the island's high-speed train program, she considers it particularly important that she set an example by running a squeaky-clean operation.
To demonstrate her desire for change, Ing broke ranks with most of Taiwan's business elite and served as an economic adviser to Democratic Progressive Party candidate--and now President--Chen Shui-bian. Ing felt that Chen, as an outsider who opposed the formerly ruling KMT, would be best suited to clean up Taiwan's corrupt practices. She now serves on a blue-ribbon national strategic development committee and maintains close ties to the President.
Ing is determined to keep the train project on the straight and narrow. The new line, which when finished in 2005 will whisk passengers from one end of the island to the other in 90 minutes, is one of the world's most costly. Ing is instituting a series of anti-corruption measures for the embryonic project, ranging from competitive bidding to seminars aimed at inculcating an anti-graft culture. She has learned about gangsters and extortionists firsthand, running up against them in her other role as president of Continental Engineering Corp., a construction company founded by her father. She fought those toughs--and she'll keep on fighting them.
Edward Tian (int'l edition)
Fortunately for Tian, that feeling is now serving him well. He's playing a key role in transforming China's stodgy state economy--first by building one of China's strongest Internet infrastructure companies, and now by shaking up the telecom sector as head of China NetCom Corp.
Tian, who studied at the Chinese Academy of Sciences in Beijing, was fascinated by the spread of personal computers in Beijing's university district in the 1980s. He went on to Texas Tech University in 1987 for his PhD. There he was first exposed to the Internet--and recognized its importance. ''I felt this to be a fundamental, profound technology,'' says Tian. ''I told my friends we can't miss this chance'' to be part of bringing the technology to China.
So finally, Tian, along with another Chinese student in Texas, returned to Beijing in 1993 and founded AsiaInfo, a company providing infrastructure solutions and software products for China's booming Internet sector. But just before AsiaInfo listed on Nasdaq a year ago, Tian, eager to play a role in reforming China's telecom sector, left the company for a new position as CEO of NetCom, China's newest telecom player. In accepting an 85% pay cut at his new job, Tian also demanded--and won--the right to have control over hiring and firing. That's rare even for a CEO in China's state sector, where political concerns often determine staffing. With 320 employees already working at NetCom headquarters, Tian plans to hire 700 more by yearend to meet the company's ambitious goals of laying 8,000 kilometers of fiber-optic cable by December.
Just as important, Tian has a license to operate an international gateway for China's Internet and hopes to expand into traditional telecom service. NetCom can then be a tougher competitor to monopoly China Telecom. ''I'm a true believer in competition,'' says Tian. ''Only with competition can China build modern enterprises.'' Plans call for NetCom to seek dual listings on Nasdaq and in Hong Kong next year. ''I want to prove to the outside world that in China, we can build a new-generation company,'' he says. Tian certainly has a good shot.
K.S. Wong (int'l edition)
To reach that goal, the 53-year-old Canadian-educated engineer has done a lot of pruning and rebuilding. It all started in 1998, when he was chairman of Nomura Securities in Singapore. The government needed someone to revive its ailing Sembawang Corp. The company had piled up losses by following government directives to expand out of its core ship-repair business and into ventures ranging from a delicatessen chain to an industrial park in China. The government tapped Wong to take Sembawang and merge it with a healthy Singapore Technologies Industrial Corp. (STIC), where Wong had earlier been president.
Wong lost no time trimming fat. He sold Sembawang's retail and food units and merged the rest with STIC, calling the new company SembCorp Industries. ''Strategies are not things to be hung on the wall; they're meant to be executed,'' says Wong. The remaining ship-repair, construction, engineering, information technology, and logistics businesses are now among the most efficient in Asia. The revamped SembCorp exceeded government targets of 12% return on equity by 2%, and Wong's asset sales helped log profits of $215 million last year, compared with a $302 million loss in 1998. Wong meets with his five division heads individually once a month to measure their progress and hold them to their goals. ''I take a helicopter view and let capable people run the show,'' he says.
His next step is to transform SembCorp into a multinational by merging remaining divisions such as marine engineering, which can dry-dock gargantuan oceangoing vessels, with foreign partners. And he's scouting for other partners to create a worldwide system on the Internet for supply-chain management. Wong's rapid progress is raising the bar for other Singapore companies--indeed, Semb- Corp is now one of the most profitable in the government's stable. ''My benchmarks are global companies,'' says Wong. If he continues along this track, he may soon have one of his own.
Peter Lau (int'l edition)
Fortunately for Giordano, customers disagree. Thanks to Lau's efforts to upgrade quality, simplify colors, keep up with new styles, and relentlessly cut costs, sales at the casual-wear retailer jumped 20% last year, to $400 million, while profits quadrupled, to $46 million. ''We are religious about reducing waste,'' he says.
Now, the modest manager is pushing into Calvin Klein territory, with a racy ads featuring buff models. But Lau won't go too far. ''You have to stand out,'' he says, ''but you don't want to antagonize your customers.''
ONLINE ORIGINAL: A Chat with Peter Lau
Liu Chuanzhi (int'l edition)
Liu no longer has such worries. In the 13 years since, he has built Legend into one of China's first internationally renowned companies. With sales of $2.2 billion and profits of $62 million last year, Legend is by far the leading PC manufacturer in China. Liu, who as a child in Shanghai and Beijing dreamed of becoming a fighter pilot, outmaneuvered such rivals as Hewlett-Packard, IBM, and Compaq in the quest for market share, and now commands 21.5% of China's domestic market.
Liu originally worked as a computer engineer and founded Legend with 10 scientists from the Chinese Academy of Sciences in 1984, turning their professional research to commercial use. Over the years, he introduced an extensive stock-options program and pushed young talent into higher management.
With margins in PCs narrowing, Liu isn't resting. He is busy moving Legend into Internet plays in portals and e-commerce. But as he passes day-to-day control on to deputies, he is planning to focus more on the big picture. ''My role will be switched from a film director to a producer,'' says Liu. ''I want to focus more on finding venture capital and nurturing young talent.'' And on sleeping peacefully.
Morris Chang (int'l edition)
It passed with flying colors. Within an hour of the quake, which struck about 2 a.m., TSMC engineers raced to the company's two plants to survey damage and start cleanup. Chang was soon on the phone to Taiwan's Premier, seeking help in getting the power back on. Production fully resumed after only 10 days, and TSMC won kudos from customers for quickly getting lines up again. Net profits this year are forecast at $2 billion on $5 billion in sales, more than double last year.
Chang, who jump-started Taiwan's chip industry in the '80s after returning from a successful career with Texas Instruments, is now advising the government on how to improve Taiwan's universities to produce better entrepreneurs His answer: the private sector.
Toshi T. Doi (int'l edition)
Since its debut a year ago, Aibo has charmed the world, though relatively few fans have been lucky enough to adopt one. Sony has sold a limited supply of 45,000 of them--at $2,000 each, plus accessories--generating more than $100 million in sales.
Doi, a jazz buff who plays the alto saxophone and a South American flute, envisions a future populated with digital creatures. ''Ten years from now, there will be robots in each home and office walking around and entertaining people,'' he predicts. Doi is preparing for that day: He's working on full production of Aibo, along with other critters. ''My plan is to build this into one of Sony's main business fields,'' says Doi. That's how the tail wags the dog.
Carlos Ghosn (int'l edition)
Ghosn, who will become Nissan's president later this summer, is applying his well-honed techniques and winning over skeptics. He's implementing a downsizing regime he unveiled last October and closing plants to cut capacity by a third. And he's weeding through Nissan's keiretsu-linked suppliers and dumping them if they don't meet demands to improve quality and cut costs.
Shareholders are optimistic that Ghosn can pull it off. Nissan's stock has jumped 50% from last fall's depressed levels. And the betting is that Ghosn will produce an operating profit of $900 million in the fiscal year ending next March. Of course, Nissan isn't out of the woods yet. Its balance sheet is terrifying: $12.7 billion in debt on the auto maker's books and an additional $10.7 billion linked to its sales finance companies.
But Ghosn, who grew up in France after leaving Brazil at 16 and studied engineering at the Ecole Polytechnique, says that in 10 months he has already made more progress on cost-cutting at Nissan than he did in the same time frame at Renault.
Ghosn is truly a car guy. When he's not test-driving Nissan cars, he's jawboning with the company's new design team to jazz up the company's image. ''The creativity of Nissan was always there,'' he says. ''Now, we are unleashing it.'' If he can engineer a turnaround, he will have unleashed more than that. In a land where gradualism is the norm, Ghosn's tough-love management is a shocker. But if it works, there may be Ghosn clones showing up all over Japan.
Koo Bon Moo (int'l edition)
Dacom stands out as a model for improving corporate transparency and shareholder rights. By bringing in outsiders, Koo is sending a strong message that there will be an end to a chaebol practice that's outrageous to Western investors: shifting money from a profitable unit to bail out weak affiliates controlled by founding families. ''Dacom will continue to better its governance system and management transparency,'' Koo pledges. ''Other LG Group units will take similar steps in the future.''
Koo, who prefers to dress casually and is generally media-shy, is an avid bird watcher who keeps a telescope in his office so he can peer at the birds on a tiny islet in the Han River that runs through Seoul. He studied business administration at Ashland University in Ohio, and then honed his management skills for 20 years at LG Chemical and LG Electronics before he took over LG's helm in 1995. He immediately pledged to promote openness and transparency. A year later, he unveiled a reform plan placing emphasis on profitability and shareholder value, instead of expansion at any cost.
Koo has followed through at Dacom, which he took over in January after a fight for control with another chaebol. He immediately set up talks with shareholder activists to hear and accept their recommendations aimed at establishing a ''global-standard'' corporate governance system. Explained Koo shortly after taking the helm: ''Our society has learned a lot of lessons from the recent economic crisis. But what we businessmen must pay attention to is changing the corporate governance system.''
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