Taiyen chairman leaves corporate world for politics

Cheng Po-ching (鄭寶清), former chairman of Taiyen Biotech Co (臺鹽), was once dubbed "the man who turns salt into gold" after revamping the old state-run salt monopoly into a money-spinning cosmetics maker. But whether the firm will continue on the path of success is now an open question following the marketing master's departure yesterday.

Cheng resigned from the chairmanship of Taiyen yesterday to run for the post of Taoyuan County commissioner, handing the reins to company president Chiou Wen-an (邱文安), who will be acting chairman.

Chiou, 64, has worked as salt factory director for Taiyen in Miaoli County, as well as serving as vice president.

Taiyen, formerly known as Taiwan Salt Corp or Taisalt, became a model state-run enterprise and was successfully privatized in November 2003. Its well-known collagen cosmetics brand "Lu-Miel" quickly caught consumers' attention as it was the first local company to apply medical-use ingredients to skincare products.

Cheng, a former lawmaker, is considered to be the man who made Lu-Miel a household name with marketing gimmicks that included inviting various legislators to endorse and advertise the products, as well as injecting a new market-based culture into the old state-run firm to improve competitiveness.

Instant hit

The success pushed Taiyen's share price up by 50 percent within one month after being listed on the Taiwan Stock Exchange. Taiyen reported net income of NT$1.03 million and earnings per share (EPS) of NT$3.9 last year.

But its business started to go downhill this year as more players joined the lucrative collagen cosmetics market, including Formosa Petrochemical Corp (台塑石化), Taiwan Sugar Corp (台糖), Uni-President Group (統一集團) and some overseas cosmetics makers.

For the first seven months of the year, Taiyen's sales slumped by 24 percent to NT$1.72 billion, with pre-tax earnings of NT$249 million and EPS of NT$0.90.

New plans

To turn the situation around, Chiou plans to follow two strategies. The company's first mission, Chiou said, is to safeguard its salt business, which accounts for about 60 percent of its revenue. The liberalization of the salt market means the company has cut wholesale prices twice this year to fight off rivals, Chiou said. Currently, Taiyen's domestic market share in consumer-use salt remains at 90 percent, with industrial-use salt at 70 percent, he said.

The second measure is to introduce new collagen cosmetics products to stimulate sales, and an expansion into overseas markets such as Malaysia, Singapore, Hong Kong, China and the US, Chiou said.

Cosmetics products contributed 20 percent of Taiyen's profit, he added.

But Chiou may need to adjust his priorities.

"The profitability of salt is not as high as cosmetics ? in fact, Taiyen should shift more focus to regaining its turf in the collagen skin-care products," said Daniel Kao (高憲容), an analyst at Marbo Securities Consultant Co (萬寶證券).

In contrast to Cheng's image as a young entrepreneur, Chiou, 64, who has spent most of his time in the state-run system, will find it more difficult to be a strong fixture at Taiyen. But he can maintain profitability if he follows in Cheng's footsteps and continues to innovate and expand, rather than merely guarding the older business, which only churns out slim profits, Kao said.

At the handing-over ceremony Chiou expressed optimism.