Asustek seeks to secure netbook position

Jason Tan In Taipei
27 October 2008
Business Times Singapore

The Eee PCs' success has attracted a horde of rivals including Acer, Dell

IN April, barely six months into the launch of its first Eee PC netbooks, Taiwan's Asustek Computer chief executive Jerry Shen started thinking about how to churn out another new model that might set the company's offerings apart from competitors.

When it officially unveiled its third-generation Eee PC, the S101, in Taipei this month, the mini notebook only took Asustek six months from conceptualisation, design, manufacturing to hitting the stores.

This is an improvement from the 10 months it took to produce the first-generation Eee PCs.

'Innovation speed is the key,' Mr Shen said on how Asustek intended to distance itself from rivals.

Indeed, when Asustek took the throne by introducing the world's first netbooks in October last year, it did not expect these small laptops - coming with screens no larger than 10 inches and offering basic computer features - would have taken the market by storm.

The first-generation Eee PC was equipped with a seven-inch screen, simple user navigation and most importantly - an attractive price tag of below US$300, a steep decline from a mainstream laptop selling at above US$1,000.

Four million Eee PCs have since been sold during the first year and Asustek has made available over 10 models to date.

Asustek , which also makes motherboards, aims to ship over 20 million notebooks - both mainstream notebooks and netbooks - next year, up from this year's total of 11.3 million, chairman Jonney Shih told reporters after making an appearance at the Intel Developer Forum here last week to show support for Intel's Atom processors, which are used in netbooks.

The success of Eee PCs has attracted a horde of rivals including Hewlett-Packard, Lenovo, Dell and Acer, into the fast-expanding market.

Another new player is Taiwan's BenQ, which is hoping to gain share in the market by debuting a 10-inch model in November, starting first in the Greater China region.

'The market is promising. While growth of desktops and notebooks is steady, netbook expansion could be exponential,' said Richard Hsu, BenQ associate vice-president of computing product management centre.

BenQ, whose losses forced it into bankruptcy after its takeover of Siemens' mobile phone unit failed, is pinning its hopes on a comeback with new launches of mobile devices, including these smaller PCs.

However, while the netbook outlook is promising, concerns are rising that they could eat into the share of high-end smartphones and impact makers' profitability, said Ellen Tseng, an analyst with Nomura Taiwan, in a report on Oct 3.

Another challenge for Asustek is that local rival Acer is fast catching up.

Following the launch of its first netbook 'Aspire One' in July, Acer, the world's third-largest PC maker, is set to ship five million units by December.

Sales of Aspire One notebooks were bullish despite the current credit crunch, with one million units sold in September alone, according to Scott Lin, a vice-president at Acer.

'Acer's Aspire One is gaining momentum faster than Asustek's Eee PCs owing to Acer's better user interface,' Nomura's Ms Tseng noted.

Asustek is not letting its guard down.

'The barrier was high when we first initiated the first Eee PC, but now everyone is coming into the scene, the battlefield is getting tougher,' Mr Shen said.

With the launch of the S101 at a price tag of US$699, it is shattering the impression that netbooks should be cheap and overlook the elements of design and functionality.

The model is said to 'meld fashion, aesthetics and technology', and is being compared by some to Apple's MacBook Air with its light weight of 1kg, thickness of 1.8cm and 10.2- inch screen.

It comes complete with Windows XP Home, 1GB RAM, 16GB of solid-state- drive storage, three USB ports, Wi-Fi, Bluetooth and a replaceable lithium-polymer battery that runs around five hours.

Future Eee PCs will no longer be only 'cheap' and 'simple functioning', Mr Shen said, as they could be priced anywhere from US$200 to over US$1,000 depending on functionality, and more models catering to a range of low to high- end needs will be in the pipeline next year.

Non-casino elements debut in Macau's Cotai

Jason Tan in Macau

1 September 2008
Business Times Singapore

Las Vegas Sands cutting reliance on gaming with entertainment, retail spots

WITH the debut of its first resident show and a luxury mall, Las Vegas Sands is in full gear to spice up the Cotai Strip scene here by adding entertainment and retail elements, in a bid to cut dependence on its gaming-driven revenues.
Last week, the Venetian Macao - the world's biggest mega casino-resort and the first property on the Cotai Strip - formally raised the curtain on the much-touted Zaia, a 90-minute resident production from Cirque du Soleil.
The same day, its adjacent neighbour, Four Seasons Hotel Macao, also opened its doors by boasting the first luxury mall in the former Portuguese enclave, adding hype to Cotai's development.
'We are changing Macau from a gaming-centred to a multi-faceted destination,' William Weidner, president and chief operating officer of Las Vegas Sands, told reporters.
In 2004, the US firm launched an ambitious project by reclaiming land in between Taipa and Coloane islands - hence the name 'Cotai', aiming to recreate the success of Las Vegas Strip here.
The project, which will welcome at least 10 more hotels by 2010, runs at a total cost of US$13.5 billion.
It is expected that in 2010, non-gaming activities will account for 45 per cent of all Cotai Strip's profits, up from this year's estimation of 40 per cent, according to Mr Weidner.
When Cotai takes shape, gaming floor area will take up only 3 per cent of the total floor space, leaving the bulk to non-gaming businesses, he said.
Zaia, for one, will kick off a series of seven Las Vegas-style resident performances along the Cotai Strip. The Canadian circus troupe Cirque du Soleil has poured over US$150 million into the show, which debuted at a custom-built 1,800-seat theatre inside the Venetian Macao last Thursday.
'It is an untried model in Macau and Venetian is the first doing it,' David Green, a Macau-based gaming practice director with PricewaterhouseCoopers, told BT.
Sands is trying to replicate the successful model in Las Vegas, where 60 per cent of revenues are generated from non-gaming activities - such as retail and restaurants, but is not sure if it will take off in Macau, Mr Green said.
Over at Four Seasons, its luxury mall - The Shoppes at Four Seasons, is eyeing China's big spenders who are willing to splurge on luxury goods. The 211,000 square foot mall gathers 180 world renowned brands, such as Gucci, Hermes, Fendi and Louis Vuitton, under one roof, of which 60 are new to Macau. 'Now, there will be more non-casino reasons for people to come here and spend,' said Mr Weidner.


Accompanying story: Macau casino boom faces threats

AT NIGHT, the Cotai Strip is glowing with lights, bustling with cranes and construction workers.
Launched on August 28 last year, the Venetian Macau is the first property rising in the reclaimed land between two smaller islands of Macau. Exactly the same day a year later, Four Seasons Hotel opens its doors to visitors.
By next year, Traders, Sheraton and Shangri-La will welcome guests. By 2010, other big hoteliers to move into the strip will include Hilton, Intercontinental and Conrad.
When the Cotai Strip takes full shape, what it will have on offer will stretch the imagination: 20,000 hotel rooms, over 3 million square feet of retail space, and 2.5 million square feet of meeting and convention facilities.
Sheldon Adelson, chairman of Las Vegas Sands, told reporters last week: 'Upon completion, the Cotai Strip will be the world's top convention and exhibition hub. Even the combined space offered in Shanghai and Beijing is of no competition.'
While Macau has already surpassed the Las Vegas Strip as the world's top gambling centre in terms of gaming revenues, its future prospect does face looming threats. For one, China is trying to cool the Macau boom with restriction on mainlanders' visits.
Beijing is reported to be planning to further restrict individual mainlanders from visiting the gaming city to once every six months instead of every two months, starting from October. Since July 1, mainlanders from selected cities travelling under Beijing's individual visitation scheme - who represent over 50 per cent of all tourists to Macau - have been permitted to visit the enclave once every two months.
That itself was a shift from a once-a-month rule enforced on June 1, and before that, a twice-a-month policy was in effect.
'It is a variable impossible for casino operators and Macau government to control,' said David Green, gaming practice director with PricewaterhouseCoopers.
Meanwhile, the capital markets have lost their previously voracious appetite for casino stocks. This is the result of the credit squeeze and escalating fuel costs, which indirectly impact destination casinos; there are also concerns about earning outlooks, especially those stocks with exposure to the Macau market. Sands reported a second-quarter loss of US$8.8 million, attributed to the increased interest costs of loans underpinning developments in Macau, Las Vegas and Singapore; as well as higher running costs of the Venetian Macao and the Palazzo in Las Vegas.
'Casino firms are typically highly geared, and susceptible to a combination of declining earnings and rising costs of capital,' Mr Green said.

More Taiwan firms join in solar chase

Greater China News
Published October 20, 2008
Business Times Singapore

A recent entrant is Ritek, which formed a joint venture with a Dutch firm

By JASON TAN
IN TAIPEI

YES, solar power may still seem something far-fetched to most, but its promising outlook has lured a horde of Taiwanese companies to secure a foothold in the industry.

The island's tech firms, well-known for their strong contract manufacturing capability, have joined in the solar fray to produce everything from materials, modules to cells and panels.

A recent entrant is Ritek Corporation, the world's third-largest Blu-ray DVD maker. Last Tuesday, it announced a joint venture with Netherlands-based Scheuten Solar to produce thin-film solar cells, which are used in solar panels on roofs. The initial capital investment is NT$600 million (S$27.2 million), with each taking 50 per cent stake.

'There is untapped opportunity in solar power,' said Ritek CEO Cordon Yeh. 'With soaring petrol prices and the current credit crunch, prospect of solar industry is shining brightly.'

Industry veterans predict the photovoltaic market worldwide is set to grow exponentially over the next decade. The growth will be fuelled by governments' push for utilities to use low-polluting energy sources and their subsidies in the purchase of solar power systems.

Ritek would utilise its thin-film coating expertise in optical disc production to churn out copper indium gallium selenide (CIGS)-based solar cells. This would make the company the first in Taiwan to use such material, compared to other rivals mainly using silicon, said Mr Yeh.

The company was betting on the faster uptake of CIGS cells as their costs would drop to around US$1 next year, compared to the more expensive amorphous silicon cells, which were expected to drop to the similar price point only in 2011, he added.

The company said the new venture would churn out 30MW output by this year's end, with production capability to rise to 120MW in 2010.

With Ritek entering the scene, there are now more than 40 Taiwanese companies taking part in the solar chase. Of them, at least half are making solar cells, including big names Motech Industries and E-ton Solar Tech, according to Arthur Hsu, an analyst with Topology Research Institute in Taipei.

'Taiwan's firms have the technology know-how in the production of panels and optical discs, among others. This will shorten their learning curve in solar market and enable them to jump into mass production soonest,' he told BT.

Taiwan's 'god of mgt' dies at age 91

Published October 17, 2008
Business Times Singapore

Formosa Plastics' Wang Yung-ching a legendary figure
By JASON TAN
IN TAIPEI

FORMOSA Plastics Group founder Wang Yung-ching, dubbed 'Taiwan's god of management', has died, aged 91.

A legendary figure in Taiwan business and a household name here, Mr Wang died in his sleep on Wednesday morning while on a business trip to the US, Formosa Plastics Group said.

'His death is the end of a role model,' said Horng Shun-ching, a business administration professor at National Chengchi University in Taipei. 'He was a typical older-generation Taiwanese entrepreneur, who was hardworking, prudent and down to earth - values that younger businessmen now lack.'

Mr Wang's rags-to-riches background is an inspiring tale for most Taiwanese.

Born to a farming family, he dropped out of school at 15 and opened a rice shop a year later with NT$200 (S$9) of capital borrowed from his father.

He went on to found Formosa Plastics Corporation in 1954. The business empire gradually expanded to include oil refining, hospitals, bio-technology to cars and semiconductors.

As Taiwan's biggest industrial conglomerate, Formosa Plastics Group's subsidiaries include Formosa Plastics Corp, the world's second-largest maker of polyvinyl chloride, and Nan Ya Plastics Corp, the biggest processor of plastics used in pipes and imitation leather. Another unit, Formosa Petrochemical Corp, is Taiwan's only publicly traded oil refiner.

Last year, the group was Taiwan's most profitable enterprise group with net income of NT$219 billion. Total revenue surged 21.7 per cent to NT$2 trillion.

Despite his success and wealth, which earned him a place in the Forbes billionaire list alongside Terry Gou, another Taiwan big shot who is chairman of Hon Hai Precision Industry, Mr Wang led a frugal life.

'He was known for using the same towel for over 10 years and always wore the same few business suits,' Prof Horng said.

Mr Wang's frugality also applied to his businesses. He emphasised the importance of 'cost down', meaning that an enterprise can only be sustainable and boost efficiency when it has the lowest possible overheads.

Taiwan President Ma Ying-jeou and many entrepreneurs have expressed sadness at Mr Wang's passing.

Small Name in TVs Has Big Plans

By JASON TAN
Published: October 5, 2008
New York Times

http://www.nytimes.com/2008/10/06/business/worldbusiness/06vizio.html?_r=1&scp=4&sq=jason%20tan&st=cse

TAIPEI, Taiwan — Buoyed by success in American stores, the TV company Vizio is hoping to expand to other countries.

Vizio, which is based in Irvine, Calif., is considered a third-tier electronics brand behind better-known names like Samsung, Sony, Sharp and Panasonic.

But in terms of sales in the United States, the brand ranks right behind Samsung and Sony. It has grabbed almost 10 percent of the market by getting its LCD TVs into Costco Wholesale, Wal-Mart Stores, Sam’s Club, Circuit City, Target and Sears and pricing the TVs at less than the better-known brands.

“Put Sony and Vizio flat-panel TVs in a row and cover up the logos, and most people wouldn’t be able to tell which is which,” said Alpha Wu, chairman and chief executive of Amtran Technology, based in Taiwan, which owns a 23 percent stake in Vizio. Amtran makes more than 80 percent of Vizio’s TVs, Mr. Wu said.

“The attractive price tags are made possible by a lower overhead,” Mr. Wu said.

It is giving the company ideas. It plans to expand into Japan, China and Europe. In August, Vizio began selling a 42-inch LCD TV in Costco stores in Japan for 99,000 yen ($930). At a price at least one-third cheaper than Japanese brands, the first batch of 400 sold quickly.

Vizio will start selling TVs in Canada this year. It plans to sell TVs in China and Europe by 2010, Mr. Wu said. “We are a small company focused on what we do best. When we grow, we will slowly move into other markets.”

The risk is that a low-price strategy may not lead to long-term success. Olevia, made by Syntax-Brillian, was pushing its way into the top sales ranks several years ago. It outlined big plans for greater success. It recently filed for bankruptcy protection.

Sony and Samsung heated up the competition this year by also cutting TV prices, with Samsung introducing a value line of TVs for the mass market.

The aggressive moves kept Samsung, based in Seoul, South Korea, at the top of the North American market in the second quarter, according to statistics from the researcher DisplaySearch.

“Pricing strategy may be effective for a certain period of time, but it may not last long,” said Peter Liu, a senior director at Samsung Taiwan. “Brand recognition is what counts.”

George Chang, an analyst with Citigroup in Taipei, said that Vizio would lose attractiveness if first-tier brands cut their prices. “It will have to maintain the price gap to stay competitive.”



This article has been revised to reflect the following correction:

Correction: October 7, 2008
An article and a headline on Monday about plans by Vizio, a seller of televisions, to expand into new countries referred incorrectly to the company and its ambitions. Vizio is based in Irvine, Calif., and hopes to expand to other countries based on its success in the United States. It is not a Taiwanese company that is considering worldwide expansion because of success in the American marketplace. (A Taiwanese company, Amtran Technology, owns a 23 percent stake in Vizio and makes more than 80 percent of Vizio’s TV sets.)

Awfully Chocolate makes Taipei comeback

It has found a new partner to sell simple chocolate cakes.

By JASON TAN
IN TAIPEI
Business Times Singapore

ON Sept 12, a typhoon started to ravage Taiwan, sending strong winds and rains into the island in the evening.

But over at Shi Da Road - a famous Taipei night market full of restaurants and value-buy shops - queues formed outside a cake shop at 3.30 pm, with people eagerly waiting to purchase half-priced chocolate cakes.

Franchised from Singapore's Awfully Chocolate, the new outlet made its debut that day by slashing the price of its chocolate cakes by half to NT$345 (S$15). All 300 pieces of cake were sold out by 7 pm, with the sales collections going to charity.

The marketing gimmick apparently worked, but it wasn't all smooth sailing when the home-grown Singapore firm first moved into Taiwan in 2006. The then Taiwanese franchisee breached the agreement by running the business in its own way and trying to set up a competing outlet, Lyn Lee, one of the owners of Awfully Chocolate, told BT on the opening day.

The first attempt into Taiwan's market thus hit a snag and it folded a year later, with lawsuits still ongoing in Taiwan and Singapore, the firm said.

But this time, Awfully Chocolate was determined to make a comeback.

After few months of negotiations and flights between Taipei and Singapore, Ms Lee sealed the deal with a new Taiwanese franchisee. 'Finding the perfect partner is like marriage. You have got to find someone with the right mind and right motive,' she said.

What unites them this time is their 'common love in serving simple chocolate cakes', she added.

Indeed, its Taiwanese partner Jocelin Lu chanced upon Awfully Chocolate when it first opened in Taipei. 'Our sweet tooth is picky and my friends and I just loved those cakes,' recalled Ms Lu, who later decided to talk to the Singapore firm for a possible partnership.

What both parties hit on was the concept of offering consumers dark chocolate cakes with a rich, original flavour and minus all the frills, she said. Customers will find only chocolate cakes and chocolate ice creams on sale here. 'As long as we follow what's agreed upon the licensing contract, the partnership will be fruitful,' Ms Lu added.

By end-2009, two more outlets are expected to serve dessert lovers in Taipei. And more expansion is in the pipeline, as Awfully Chocolate will see its first franchised outlet opening in Hong Kong next month.

Set up in 1998, the Singapore firm currently has six branches on local shores, with locations including VivoCity and Republic Plaza. Other overseas outlets are in Jakarta, Shanghai and Beijing.

This article was first published in The Business Times on September 22, 2008.

China milk crisis hits Taiwan businesses hard

Published October 6, 2008
Business Times Singapore

But some firms take measures to ensure it's business as usual

By JASON TAN
IN TAIPEI

WALK into any 7-Eleven store in Taiwan, and you would see signs displayed prominently on beverage racks reassuring customers the dairy products at the outlet are safe to consume.

'The milk used in our dairy products is either locally produced, or imported from New Zealand and Australia,' the signs state.

China's tainted-milk crisis has spilt over the straits into Taiwan, hitting the island's businesses hard.

It started on Sept 21 when King Car, a major Taiwanese beverage company which makes Mr Brown canned coffees, voluntarily recalled 120,000 cases of eight products that contained melamine.

Chinese milk suppliers were reportedly adding melamine to watered-down milk to boost protein level. The toxic industrial chemical has sickened 54,000 children and killed four in China.

King Car - which purchased plant protein from a China supplier for use in its instant coffees that later tested positive for melamine - is expected to suffer a loss of at least NT$100 million (S$4.5 million) from the recall of its products.

Taiwan, despite its political differences with China, has grown dependent on the mainland by moving production facilities there to tap the lower labour and material costs.

'Now it is impossible to be 'China-free',' King Car officials told local media on the impact of China-made merchandises.

Purchasing ingredients from China suppliers was a business strategy to diversify its supply base and lower costs, the company said.

Taiwan's three largest hypermarket chains - Carrefour, RT-Mart and Far Eastern Geant - also saw their businesses dragged down by the crisis.

Each of them has pulled at least 100 items from store shelves since the crisis struck.

'The biggest issue now is how to restore consumers' confidence on dairy products sold in the market as a whole,' Margery Ho, public relations assistant manager of RT-Mart, told BT.

RT-Mart saw its bakery sales dropped as much as 30 per cent during the first three days of the crisis.

The hypermarket later used milk from New Zealand instead for its bakeries, and slashed prices of 20 items by half for a week to restore sales.

'Now we see the bakery sales picking up to the pre-crisis level,' Ms Ho added.

But despite the milk scare, it is still business as usual for some.

'Only about 10 per cent of customers asked us about the issue. And we explained to them that our cakes didn't contain milk,' said Jocelin Lu at Awfully Chocolate, a Singapore-franchised chocolate cake shop in Taipei.

Since its opening in mid-September, customer flow at the shop had been within expectations and the milk scare did not have a visible impact on business, Ms Lu said.

And to 7-Eleven, Taiwan's largest convenient store chain with 4,800 outlets island-wide, taking steps such as sending items for safety checks apparently worked.

'Consumers still make purchases, but they switch from milk teas to drinks without milk or fresh milk produced in Taiwan,' said a public relations officer from President Chain Store Corporation, which runs 7-Eleven.