Based in Vietnam Expanding into Southeast Asia: Taiwanese Chambers of Commerce President Henry Hsieh

Chang Chiung-fang　/　photos Henry Hsieh　/　tr. by Jonathan Barnard

January 2017

中文日本語 Tiếng Việt

Working in Vietnam for 20 years, Henry Hsieh has been president of the Council of Taiwanese Chambers of Commerce in Vietnam since the start of 2016. Meanwhile, he has been investing in a new factory in Binh Duong Province’s My Phuoc Industrial Park. (photo by Lin Min-hsuan)

October of 2016 marked the 20th year anniversary of Henry Hsieh’s investment in Vietnam. Now aged 53, he is in high spirts and reaching new peaks in his career. At the beginning of 2016, he took over as president of the Council of Taiwanese Chambers of Commerce in Vietnam, immediately taking up responsibility for serving Taiwanese-owned businesses in Vietnam. Near the end of July 2016, work began on his Chin Li Plastic Industrial’s third factory. When completed, the plant in Binh Duong Province’s My Phuoc Industrial Park will become Vietnam’s first plant powered by green energy. When it comes to investing in Vietnam, Hsieh has a matchless perspective and understanding.

“My way of thinking is a bit different,” says Hsieh, who has lived in Vietnam for 20 years and is still increasing his investments there. “Factories get outdated. You’ve got to constantly establish new factories, update machinery, and increase your competitiveness.”

Innovations to factory operations continue apace. Hsieh has been constantly updating equipment and pushing modernization to increase competitiveness.

Looking back

After war and a period of minimal contact with the outside world, Vietnam began to attract investment in 1996 with the enactment of a law on inward investment.” During that year Hsieh visited the country and decided to put down roots.

Over the course of 20 years of hard work, Hsieh has continually expanded his ambitions: Chin Li Plastic first built a plant in Binh Duong and then a second one in Long An, and it has moved into another industrial sector as well, as the national dealer for Taiwan’s Luxgen Motors. It has 2200 people on its payroll.

Looking back, Hsieh says moving into the Vietnamese market has turned out to be a great stroke of luck.

Chin Li Plastic was established in 1990 in Changhua, where it made mostly plastic products such as EVA foam, carpet mats, and shoe outsoles and midsoles. With the labor shortage in Taiwan growing increasingly acute, they originally proposed to establish factories in mainland China, but unfortunately in 1993 and 1994 several of the company’s customers reneged on their debts: “They went to the mainland, without paying off their debts in Taiwan,” Hsieh says with a sigh, “so that we had no money to invest in the mainland.”

In 1995 a leading footwear manufacturer, Pou Chen, moved into Vietnam. As a footwear industry supplier, Hsieh visited Vietnam the following year and made the decision to move as well.

“At first my wife objected to me going,” Hsieh says, but as “the best English speaker in the family,” he had to bite the bullet to go to Vietnam for talks with Nike, Adidas, Puma and other brands about how to obtain needed certifications and how to establish various production processes.

The hard work paid off. In 1999 the original factory began to turn a profit, and Hsieh began to think about expansion.

Innovations to factory operations continue apace. Hsieh has been constantly updating equipment and pushing modernization to increase competitiveness.

Multifaceted operations

Apart from producing EVA foam, midsoles and rubber, and operating injection plants, Hsieh expanded into the buying and selling of cars. When he imported a car from the United States for his own use in 2005, he discovered that it cost him 40% less than the local market price. That prompted him to consider going into the auto import business.

At first he imported cars from mainland China, but Chinese cars weren’t easy to sell in Vietnam. “The Vietnamese market for vehicles is M-shaped. People with money want high-end cars, and those with little money want cheap vehicles. There was no market for the mid-level vehicles I was importing.” That led him to try importing second-hand American cars. But the opportunity was short-lived: The financial crisis of 2008 led to the devaluation of the Vietnamese dong, and the following year the Vietnamese government stipulated that importers not authorized by vehicle manufacturers could not sell automobiles.

Consequently, in 2010 Hsieh formally became the Vietnam dealer for Luxgen Motors, with four locations in the north and the south. “In 2011 I was still making money, but the import tax was raised the following year, making Luxgen cars roughly the same price as BMWs and Mercedes imported from the US. We lost all competitiveness and could only sell to expat Taiwanese businessmen.”

In 2015 Hsieh closed three locations, leaving only the dealership in Binh Duong Province. He wants to continue serving customers who have purchased cars from him, but his experiences have prompted him to change his approach, and now he is preparing to import Mercedes vehicles from the United States.

Chin Li Plastic Industrial is based in Binh Duong Province’s Viet Huong Industrial Park. About 90% of neighboring factories are run by Taiwanese firms.

The more things change…

As he has expanded business operations, Hsieh has also been building up experience and contacts within the Taiwanese business community. This year is his first as president of the Council of Taiwanese Chambers of Commerce in Vietnam, and he is throwing himself into public service.

“I don’t want anything in return for serving as president,” he says. “I just want to create a good image for Taiwanese businesses in Vietnam.” In Hsieh’s view, Vietnam’s progress owes a lot to four nations: Taiwan (industry), Japan (public infrastructure), Korea (high-rise construction) and Singapore (land development). Yet, “truly the biggest contribution has been from Taiwanese businesses, by providing employment opportunities and raising incomes.”

There are a total of 14 local Taiwanese chambers of commerce in Vietnam, in locations such as Hanoi, Bac Ninh, Ho Chi Minh City and Da Nang. Hsieh’s own branch in Binh Duong is the largest, with nearly 1000 registered members and more than 2000 all told. The Taiwanese businesses there employ at least 700,000‡800,000 people. It has been called the world’s largest branch of a Taiwanese chamber of commerce.

Hsieh notes that there are about 5400 Taiwanese- owned firms in Vietnam, 75% of which are in the south. What’s more, half of those southern companies are in Binhn Duong. Taiwanese have invested in all manner of manufacturing industries. Clothing is king, followed by electronics, footwear, furniture, bicycles and so forth.

Over two decades, the investment environment in Vietnam has changed dramatically in some ways, and in other ways not at all.

The biggest change is that basic wages have soared. Hsieh points out that 20 years ago, when he had just come to invest, the basic monthly wage was only VND480,000. By now it has risen to VND3.5 million (about NT$5000). That’s seven times what it was.

The Vietnamese government hopes that the types of incoming firms will change: “They’re welcoming tech, education and services, and discouraging highly polluting industries,” says Hsieh.

But in some respects, it seems as if 20 years ago was just yesterday: Many transportation infrastructure projects, for instance, are still experiencing long delays.

Long and narrow in shape, Vietnam still lacks a highway running the length of the country. Five years ago, mass rapid transit projects were launched in Hanoi and Ho Chi Minh City, but progress has been slow: “It’s expected to take another two years before they start to operate.”

Vietnam has also long been a “rule of man” society. “Connections are key for getting things done locally,” says Hsieh. “With connections, you can do anything.” Whether operating a Taiwanese-owned business or handling the affairs of the chamber, building good connections is important.

The Council of Taiwanese Chambers of Commerce in Vietnam has been bolstering educational cooperation between the two nations in recent years. For instance, industry and academia have been working together to bring students from one country to the other on study-abroad programs, the ROC Ministry of Education has held educational fairs in Vietnam, and an internship program has been bringing second-generation Vietnamese immigrants in Taiwan to work at Taiwanese-owned factories in Vietnam.

Building bridges

In the middle of July 2015 Hsieh returned to Taiwan for an Asia Taiwanese Chamber of Commerce General Committee meeting. He brought 18 workers who had helped protect factories during anti-Chinese riots in May of 2014 to tour Taiwan. They visited Taipei 101, Tamsui, Hualien, Taitung and finally Kaohsiung, giving them a good feel for the beauty of the island.

He explains that in the past Taiwan factories would use mainland Chinese managers, and the Vietnamese workers felt that their voices were being suppressed. Sooner or later, frustrations were going to come to a boil. Large numbers of Vietnamese women have migrated to Taiwan through marriage in recent decades, and their children now comprise a second generation that can work for Taiwanese firms in Vietnam as bridges of communication. Consequently, Taiwanese factories in Vietnam are running more and more smoothly.

This year Hsieh has begun to invest in industry‡academia cooperation. On the one hand, the investment has been aimed at supporting Taiwanese students to go to Vietnam on internships, and on the other hand it is bringing students from Wenzao Ursuline University of Languages to Vietnam to teach factory workers Chinese. He is also working with the New Taipei City Education Bureau to advance its “Grandmother’s Bridge” program, which aims to send the children of Vietnamese mothers in Taiwan back to Vietnam to visit their grandparents. The program likewise aims at building bridges of communication.

“Vietnam has a population of 93 million, and the average age is only 29, so labor resources are abundant.” The “demographic dividend” still has 15 more years to run strong, he argues, stressing the importance of taking advantage of the opportunity it presents.

Of course, spreading risk is also very important. In 2010 Hsieh brought two of his top executives to Indonesia to establish factories. In addition, he has visited Myanmar five times and is planning on opening a factory there in 2018.

Having successfully established businesses in Vietnam, and now spreading his investments elsewhere in Southeast Asia, Henry Hsieh’s unique experiences are well worth studying and reflecting on.

A successful businessman, Hsieh came back to Taiwan in July 2016, bringing his outstanding Vietnamese employees on a tour of the island, which gave them a deeper understanding of Taiwanese culture.