A Taiwanese Company Throws in the Towel

Posted by: Bruce Einhorn on August 24, 2007

For Asian companies looking to jumpstart their efforts to build a global brand, the case of the strangely-named Taiwanese company BenQ is a scary example of just how wrong things can go. A former subsidiary of Acer that became an independent company early this decade, BenQ was a very successful maker of TVs, computers and cell phones for other companies while also slowly but steadily building a global name for itself. Then in 2005 top brass decided to speed up its brand-name push by acquiring the money-losing mobile phone operation of Siemens, figuring a smart young Asian company could succeed where a conglomerate from Old Europe couldn’t. The move turned out to be a disaster for the Taiwanese consumer electronics company. A year later, BenQ’s newly acquired German operation went belly up and the parent company has been struggling with lawsuits and losses ever since.

Today, there’s some news that the worst may be over for poor BenQ. The company reported that it had made a small profit for the second quarter, the first for BenQ after seven quarters of losses. And the company is trying to put its star-crossed brand strategy to rest. Next month, BenQ will dump its brand business completely and rename itself Qisda Corp. What will the new Qisda Corp. do? Focus on what BenQ used to do best, manufacturing electronics for other companies.

Reader Comments

Nik

August 25, 2007 3:42 PM

Bruce,

It is an interesing article. The story reads of an acquisition gone wrong. I do not know the circumstances that led BenQ to acquire a money losing division. BenQ (or its intermediary that helped close the deal) evidently seem to have overlooked the complexities in turning around a sick company and achieve the synergy.

A lot of companies get adventurous in an effort to grow; quickly. But there are no quick fixes. This story also reminds me of the merger between Daimler and Chrysler that went wrong. Daimler reportedly wanted to bolster its standing in the US market. And at the time of merger with Chrylser, Daimler touted it to be the 'Merger of Equals'. As we know, the merger ran in to severe trouble and the shareholders at Daimler kept on losing money while Chrysler was bled by foreign carmakers in the US market. The reasons for the merger to nosedive are many however, insiders point out to two primary reasons; mismanagement and cultural differences between two companies.

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