Taipei Times: In your five decades with Ten Ren, what's your biggest achievement?
Lee Rie-ho (
PHOTO: GEORGE TSORNG, TAIPEI TIMES
The tea-making industry is a traditional business, but we hope to rejuvenate the industry through a combination of innovative products, quality service, modern design and new management concepts. Therefore, I am quite proud to say we are still the only tea company listed on the Taiwan stock exchange. No tea company is listed on the Chinese stock exchange so far.
TT: Ten Ren Group has recovered from its severe business crisis of 12 years ago, when you lost NT$3 billion after expanding into the securities business. How long did it take you to pay off the debt and how did you manage to get your business moving forward again?
Lee: It was not the sort of experience that you want to have. I still remember two of my lawyers advising me to leave the country because they didn't think I could pay the debt. I was accused of violating the Securities Transaction Law (
But I decided to not to leave and I managed to clear up the NT$3 billion debt in two years. Why? Because I knew I needed to have the support of my relatives and friends if I ever wanted to make a comeback.
When I first entered the Chinese market in 1991 and 1992, I knew that this market of more than 1 billion people was full of potential. Unlike some Southeast Asian countries, such as Vietnam, Malaysia and Thailand, where people grow tea but do not drink it, the Chinese have a very long history in both growing tea and drinking it. With more than 40 years of tea-making experience, I believed I could succeed there, and I have proved it.
TT: You have vowed never to get involved in the securities business again. Do you really mean that? Don't you want to invest in other financial markets, like real estate?
Lee: I absolutely mean it [laughs]. I know myself very well and I dare not invest in stock markets again. Meanwhile, the world of tea is so vast that, from planting it to producing it to packaging it, there is always something I can do to learn and improve. Therefore, I don't think I will have much extra time to get involved in things other than tea.
Financial investments of course involve high earnings, but also involve high risk. Though I have pledged not to get involved in any kind of financial investment for the rest of my life, it is not my business whether my sons will do the same. But I hope they have learned something from their old father's experience.
TT: So far Ten Ren has seized about 12 percent of Taiwan's tea market, while Ten Fu in China has also grown quickly in the recent past, raking in about 300 million yuan (NT$1.23 billion) in sales a year. What's your outlook for the tea business?
Lee: There's ample room for growth, especially in China, where for centuries tea has been the drink of choice. Currently we have established nearly 400 Ten Fu retail outlets in China, but that accounts for only 1.2 percent of the market. We hope to open as many as 1,000 outlets and gain a share of 10 percent in that market within 10 years.
I am very optimistic about the tea business in the long run because China boasts many tea varieties, such as green tea, jasmine tea and longjing tea, which we can develop into products through our marketing and management strategies developed here. If the government allows the importation of Chinese tea into Taiwan, Ten Ren and Ten Fu can complement each other, and we can collectively bring our brands to international markets.
TT: Have you considered franchising Ten Fu outlets to emerging Chinese entrepreneurs to help drive annual sales to the 9 billion Chinese yuan (NT$36.9 billion) that you expect in 10 years?
Lee: It is not easy to run a franchise business in China. Currently we wholly own our Ten Fu outlets, because we have found that Chinese entrepreneurs have been slow to develop the necessary respect for law. Newly-rich Chinese have no intention of respecting corporate culture. Instead, they will aggressively pirate your products and your management, and violate contracts to make continuation of the venture impossible. Despite that, I have hope for the younger Chinese generation and hope the situation will change over the next three to five years. Perhaps then we will begin to consider franchising in China.
TT: What's your plan for internationalization? You have collaborated with Swire Coca-Cola Taiwan Ltd to produce and market bottled oolong and green tea drinks using the Ten Ren brand in Taiwan. What's next?
Lee: While China is our major investment priority for the time being, we also want to move into other international markets. Our cooperation with Coca-Cola is just the first step. From there we hope to expand the products to other places in China and other markets abroad in the future. We believe we can gain from Coca-Cola's international marketing experience to promote Ten Ren or Ten Fu bottled drinks in the world market. Such a collaboration is like a marriage of high-quality tea and excellent marketing strategies.
TT: When will Ten Ren bottled drinks appear in China? Will Ten Fu produce bottled drinks there soon?
Lee: Based on our agreement with Coca-Cola, our bottled drinks are only produced and marketed in the Taiwanese market. If we plan to market the bottled drinks overseas, Coca-Cola will enjoy proprietary rights for the deal. It is too early to say when we will launch bottled drinks in China. We are planning to start working on that project with Coca-Cola in four years. But we are still evaluating whether or not to use the Ten Ren or Ten Fu brand for bottled drinks in China.
TT: Cha for Tea has quietly expanded into an international chain. How many Cha restaurants do you now have around the world? What do you believe the prospects are for this new style of tea restaurant?
Lee: The Cha for Tea chain has been around for three years and it represents a combination of a traditional tea house and a modern restaurant. Currently we have six Cha restaurants in Taiwan and are planning to open a seventh one in Neihu in February. We will launch larger Cha restaurants in Hsinchu, Tainan and Kaohsiung next year.
Outside of Taiwan, we have opened six such restaurants worldwide -- three in Los Angeles, two in Japan and one in Australia. We have decided to team up with a Japanese noodle chain, which has more than 300 outlets there, as Japan is in our overseas expansion plan for next year. South Korea and the UK would be our next focus after Japan.
We also do not rule out the possibility of introducing restaurants such as Cha for Tea to China, but not at this time -- probably in three years. My plan is that, after setting up 20 Cha restaurants in Taiwan, we may open the first such restaurant in China, either in Beijing or in Shanghai.
TT: In your plan for Cha restaurants overseas, will you mainly target Chinese neighborhoods abroad?
Lee: We opened several Cha restaurants in Los Angeles and Toronto three years ago on an experimental basis. Currently we are targeting Chinese communities but expect to expand to non-Chinese populations gradually.
TT: Many Taiwanese businesses have moved their operations to China in recent years and hope to reap a bonanza, but plenty of them still lose money. What is the secret of your success?
Lee: It's simple. Do what you are already doing here and take care of the business yourself. Don't simply trust your Chinese partners to take care of the business on your behalf, because often you will find you are in an odd position whereby you're supposed to control the company, but your Chinese partners actually control everything and don't listen to your instructions. Other advice for Taiwanese businesses is that you'd better have enough capital before you try to set up shop in China. Remember, in a society with a poor legal structure, it is easy for corruption to flourish.
TT: What are the prospects for Taiwan's economy after the upcoming presidential election?
Lee: No matter who's elected in the presidential election, as long as the president keeps the island's whole population in mind, the economy is going to fare well. But I really hope the government can remove all restrictions on cross-strait links as soon as possible, as liberalization will help develop Taiwan's economy. I also believe relaxation would be helpful in bringing some stability to cross-strait relations.
Some say direct links will only result in companies' leaving Taiwan at an even faster rate, with only debt remaining in Taiwan. That is possible, but you cannot apply this idea to all Taiwanese businesspeople.
Take Formosa Plastics Group (
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