(Nov. 13, 2006) — Taiwanese food giant Ting Hsin Group in October placed the largest single order for blow molding lines in the history of Groupe Sidel. According to the two companies, the deal could make Ting Hsin the biggest bottled-water producer in China.
The size of the deal — more than 20 blow molding lines at various Chinese factories — catches your eye, both for the obvious business it means to Sidel and for what it says about Ting Hsin and the fast pace of economic change in Asia.
China's bottled-water market, like its economy, is growing 11 percent a year. While Ting Hsin is now a company with the heft to capitalize on that, just 15 years ago its Chinese ventures were failures.
The small (at the time), family-run firm had tried and failed several times in the mainland market, falling flat trying to sell high-quality cooking oils and egg rolls that cost much more than price-conscious Chinese consumers were willing to spend.
Then, a chance encounter on a long-distance train in China changed its fortunes. A member of the family that owned the company, Wei Yin-Heng, was traveling in the cheapest seats and packing his own food to save money. When Wei opened a package of Taiwanese instant noodles, the aroma immediately caught the attention of the travelers in the budget seats.
He shared his food with fellow passengers, who couldn't find good noodles in China and loved Wei's offering. The company seized on that idea, and used it to become one of China's biggest food manufacturers.
Learning from its pricing mistakes, Ting Hsin in 1992 rolled out its own brand of good, but reasonably priced, instant noodles under the Master Kong brand. The company grew quickly.
By 2004, it had more than 40 percent of the Chinese instant noodle market, the world's largest, and became a conglomerate that owns retailers and restaurants, and is a major player in the ready-to-drink tea market.
For some, the rise of Ting Hsin is a study in how to manage China's ever-changing business environment.
London Business School professor Donald Sull, who analyzes business in developing economies, included the company in a book he wrote last year, Made in China: What Western Managers Can Learn from Trailblazing Chinese Entrepreneurs. He's taken similar looks at Brazil's topsy-turvy economy.
His advice: learn to embrace chaos and uncertainty.
The markets change too quickly for the kind of firm, longer-range plans that Western-trained business executives — or those who grew up in protected, state-owned Chinese giants — are used to.
He and a team of researchers in China took a look at eight successful Chinese firms, from better-known names like appliance maker Haier Group and computer firm Lenovo Group Ltd., to lesser-known firms like microwave oven giant Guangdong Galanz and telecom equipment firm UTStarcom.
Each of the firms showed nimbleness by identifying changing circumstances and acting quickly, and that let them best larger rivals, becoming dominant.
A key trait, Sull wrote, is that Chinese entrepreneurs are skeptical of setting broad goals. As an interesting aside, some of them told Sull they traced that back to seeing their ambitions thwarted in the country's ideologically driven 1960s experiment at remaking society, the Cultural Revolution.
Whatever the source, he said it's a skepticism and flexibility that foreign managers need to adopt in China.
Toloken is a Plastics News correspondent based in Hong Kong.