Jimmy Chu:  Build a Kingdom by Mergers

Commercial Times   March 29^th, 2011

Jimmy Chu, Chairman of FAIR FRIEND GROUP (FFG), for him opening new and more businesses is already his life style rather than just a job. In 1989, FAIR FRIEND was a small company with simply NTD$ 1 million annual revenue, totally behind comparison with Leadwell of NTD$ 2 billion. In 20 years, FAIR FRIEND merged Leadwell and becomes the first machine tools builder which exceeds annual turnover NTD$ 10 billion; an achievement Chu is proud of.

Graduated from Department of Marin Engineering, National Taiwan Ocean University (NTOU) in 1970, Chu worked as second engineer on a vessel for 4 years and earned his fundamental capital for the beginning of his entrepreneurship. In the 80s, Chu was the Taiwanese agent of Kobe Steel Group. The second crude oil crisis endangered his business. Fortunately thru successful negotiation and management, Chu was able to survive such adversity and carried out even more successful businesses afterwards.

6 Mergers in 6 Months

1989 was the year when Chu kicked off for his merging operations. Merely in 6 months he made 6 M&A deals happen. At the time FAIR FRIEND was just a million-dollar company, but Chu ambitiously announced that in 10 years FAIR FRIEND would surpass Leadwell. In light of production, techniques and service system, generally it would take 20 to 30 years to catch up the differences in these aspects. Therefore, everyone including his colleagues took such statement as no more than a bluff or brag. The Asia financial storm opened a chance. To maintain its cash flow Leadwell desperately needed financial supports from outside. Of course Chu wouldn¡¦t let such opportunity slip away. The second year of his take-over, Leadwell turned deficits to profits, and now Leadwell contributes 12% to the total annual turnover of FFG Machine Tools Division. In 2008, FFG Machine Tools Division reached NTD$ 10.3 annual turnover, becoming the first 10-billion-class Taiwanese machine tool builder.

Chu expressed that FFG sets up productions site in Taiwan, China, the U.S., Europe, Italy, Japan and Korea. On top of that, the latest plan for this year is to open a new plant in India. Different from other machine tool builders, Chu owned his first company by acquisition instead of establishment. Instead of fully integrating different companies, he keeps every of them operating independently. Thereby, distributing channels, dealers, clients are well maintained under different brand names, providing a wider product range for clients.

Acquiring Techniques from Joint Venture

Chu emphasized that other competitors set plants in Taiwan and China; however, FFG creates its leading edge of international joint venture. Cooperating with leading, representative manufacturers in regions around the world enable FFG to acquire some exclusive techniques and to obtain great technological advances. This is the reason FFG has joint ventures with CNC lathe maker TAKAMAZ in Japan and China; with MECTRON in China, with trillion-Yen-turnover TOYODA in China. In aspects of brand visibility, market penetration, marketing, R&D dynamics, production and services, Chu considers int¡¦l joint venture is the very key to FFG¡¦s success over others. For the same reason, in contrast with the depression in Taiwanese machine tools industry due to 2009 financial crisis, FFG annual turnover increased from NTD$ 10.3 billion in 2008 to NTD$ 11.5 billion in 2009.

FFG has invested and worked in China for many years. Chu said, including Beijing, Shanghai, Chongqing and other 30 provinces, he takes every province as a state, a nation to put in efforts.

Service First

Chu always educates his teams that not to limit themselves in manufacturing sector because of producing machine tools, solar batteries and PCB. You provide products to clients but it is the service that really creates the extra value and satisfaction. Therefore, building up excellent reputation and brand image with outstanding service quality is the very key to success.

FFG established the Institute of Electromechanics in Hangzhou as a talent pool. These students, who will become part of the driving power in FFG, are able to know FFG¡¦s core values early when they are still educated in the school.

Chu explained that, simply Hangzhou Feeler received orders for 1,880 machines in 2009 and 3,950 units in 2010. Orders for 2011 are estimated to reach 6,000 units. In January, Hangzhou Feeler received orders for 621 units, amounting NTD$ 287 million. ¡§The scale of such huge production is far beyond others¡¨, Chu confidently said.

To forge a distinctive brand image, form 2011 Chu plans to spend 1% of NTD$ 30 billion FFG annual profits on advertising and promotional campaigns at TIMTOS 2011. The same ¡¥exclusive ambient advertising¡¦ package is likely to be implemented at EMO 2011.

Challenge to be the Champ

Chu doesn¡¦t satisfy with current achievements. He set up the goal for FFG¡¦s annual production output: 12,800 or 12,900 units, and sets 13,000 units as an advance challenge. By 2018, FFG Machine Tools Division will reach NTD$ 100 billion annual turnover, surpassing MAZAK and DMG, and uplift the ranking from 11^th to the 1^st. An investment worth NTD$1.8 billion will be conducted this and next year for building 200MW solar battery factories. Nevertheless, in 3 years, the production will increase to 1GW. Also, Chu will further purchase 60% stock share of a European solar modular manufacturer. In light of these ambitious plans, it¡¦s not hard to see how FFG doubles its annual turnover by NTD$ 50 billion during the years between 2011 and 2020.