Taipei Times: The separation of your brand and manufacturing businesses in 2000 was a crucial and drastic move for Acer. How does that separation help you focus on building your brand business?
Wang Jen-tang (
We now implement the policy of "one company, one brand and one global team" to take charge of our branding with consistency. This has helped us expedite our policy-making process, which is our advantage in the PC industry, where speediness determines victory.
TT: What do you mean to "fully leverage" your manufacturing partners?
Wang: Since quitting manufacturing, we are now exploiting the strength of our manufacturing partners through outsourcing many processes, including manufacturing, distribution networks and industrial design.
For instance, we now cooperate with Quanta Computer Inc (廣達), Wistron Inc (緯創資通) and Compal Electronics Inc (仁寶) in the manufacturing of notebook computers, and with Hon Hai Precision Industry Co (鴻海精密), Micro-Star International Co (微星) and Elite Group Computer System Co (精英電腦) in the production of desktop computers.
We are not only taking advantage of our partners' manufacturing capabilities, but also their distribution networks in prospective markets to help deliver our products to customers.
TT: Many Taiwanese contract manufacturers are shifting to developing brand-name products. Is branding the right direction for Taiwan's information technology industry?
Wang: In my opinion, the branding business is not necessarily better, nor does it necessarily enjoy higher gross margins and profits than original design manufacturing (ODM). They are two different business models.
ODM is a "merchandise business," which is more about technology and products, whereas branding is a "people business," which is more related to thinking and marketing.
Most Taiwanese companies think that a branding business must be linked to its own manufacturing for better growth. But actually they are two different businesses, with different focuses and investments.
Taiwanese ODM companies that would like to expand into the brand-name business for a better return have to separate these two businesses and let branding departments find their own way. There is little likelihood of success if they just want the brand business to help sell more products shipped from their own factories.
TT: Are you suggesting that other ODM makers shouldn't develop their branding strategies like Acer did?
Wang: What I'm saying is that brand positioning, brand promotion and relations with market and distribution partners are the core of a brand-name business, which requires long-term, constant and stable management.
It is very difficult to make consumers remember and accept your brand. They run away as soon as they notice any slack in your efforts to perpetuate the brand. Thus in order to develop the brand into a sustainable one, companies should set up a specialized force, which must have both determination and sufficient resources.
TT: Acer was ranked by International Data Corp as the eighth-largest PC vendor in China, with 1.76 percent of market share last year. With China one of your focus markets this year, how will Acer boost its market power there?
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