Y.C. Wang Leaves Behind Inspiring and Legendary Entrepreneurship

Y.C. Wang, founder of the Formosa Plastics Group (FPG), died on Oct. 19 at the age of 92. Despite his departure, Wang will likely ring the halls of corporations in Taiwan as well as business schools and homes by being a storybook example of a self-made tycoon, one who achieved mega-success without even junior-high schooling. Leaving behind more than inspirational entrepreneurship, Wang also has built over his lifetime a cross-national industrial empire that began perhaps as the earliest example of a large-scale plastics factory in Taiwan.

A tale of successful entrepreneurship told countless times in Taiwan, Wang's journey to corporate captain began shortly after he had graduated from elementary school, when he tapped his ambition by borrowing NT$200 (about US$5 in those days) from his father to start a rice retailer. Later and based on his success as a retailer, Wang ventured into wooden piling, which reportedly made him significant profits. In 1952 and backed by the U.S. aid fund, Wang built a PVC plant in Kaohsiung, the southern Taiwan industrial city, paving the way for his petrochemical empire.

Broad Diversification

FPG's operations span the petrochemical, plastics, medical care, biotechnology, thermal power, and electronics industries. Group revenues reached NT$1.97 billion (US$60.6 billion at NT$32.5:US$1) last year, trailing closely in Taiwan only to leading Hon Hai with NT$2 trillion (US$61.5 billion). FPG's revenues are expected to hit NT$2.3-2.5 trillion (US$70.8-77 billion) this year, or over 20% of the island's gross domestic product. FPG was Taiwan's most profitable conglomerate in 2007, achieving NT$219.1 billion (US$6.7 billion) in after-tax net profit.

FPG has factories not only in Taiwan but also the United States, China, and Vietnam.

Heart of FPG

Likely the most striking among Wang's industrial achievements is the FPG's huge petrochemical complex in the Mailiao Offshore Industrial Zone in the southern county of Yunlin, where Wang built Taiwan's sixth naphtha cracking plant, the first privately owned one on 2,555 hectares of reclaimed land.

Backed by investment so far totaling NT$625 billion (US$19.2 billion), the Mailiao complex is the world's second-largest petrochemical facility with complete, vertically integrated production involving oil refining, up- and midstream petrochemical materials, and downstream products. Its fourth-stage expansion gives the complex an annual ethylene capacity of 3 million metric tons, largest globally. The complex has its own steam co-generation plant, thermal power plant, and dedicated deep-water industrial harbor with 60-million metric-ton yearly cargo-handling capacity-second in Taiwan after Kaohsiung Harbor.

Medical Facilities

Wang's entrepreneurship branched out into healthcare in the form of the Chang Gung Memorial Hospital, headquartered in Linkou, Taipei County and with branches in Taipei City, Keelung, Chiayi, and Kaohsiung, which include a children's unit, a Chinese-medicine facility, and a chronic-disease hospital.

The Chang Gung chain received NT$30 billion (US$920 million) in healthcare payments from Taiwan's National Health Insurance program last year, exceeding any other hospital. Such success is attributable to the FPG management system as well as stringent cost-control, a practice for which the group is famous.

Timely Handover

Making sure the FPG would not lose steam in its continued development, Wang two years ago passed the baton of leadership to a seven-member executive team headed by Wang Wen-yuan, the eldest son of Y.C. Wang's brother and long-time business partner, Y.T. Wang. The team will complete a number of mega-projects envisioned by the group's founder.

One such project is the development of a petrochemical complex in the Beilun petrochemical zone in Ningbo in Zhejiang Province, China at a cost of US$10 billion. The complex will have oil-refining capacity of 10 million metric tons yearly, along with naphtha cracking facilities capable of turning out 1.2 million metric tons of ethylene annually.

Longstanding Dream

The Beilun project rekindles Y.C. Wang's longtime dream to expand his petrochemical empire across the Taiwan Straits. Such ambition was shattered in the 1980s, when Wang had planned to invest US$7 billion on a petrochemical complex in Xiamen, Fujian Province, due to opposition from the Taiwan government.

The Beilun project remains a dream so far-being stalled this time by the mainland Chinese petrochemical manufacturers, who want a dominant role.

FPG has already invested over US$1.4 billion in China, mainly manufacturing downstream petrochemical products such as PVC (polyvinyl chloride) fabric and tubes.

Rocky Road

Stalled by strong opposition while trying to expand his Chang Gung healthcare network into China, Wang finally, after 10 years of effort, achieved a breakthrough by inaugurating the Xiamen Chang Gung Hospital this year.

Rising eco-sensitivity has also been thorns in FPG's side: Two major projects in Taiwan are sidelined for environmental reasons, including the NT$137 billion (US$4.2 billion) steel plant in the Mailiao industrial zone, and the NT$232 billion (US$7.1 billion) fifth-stage expansion of the sixth naphtha cracker.

FPG's fate in Vietnam seems to mirror Tata Motors' in W. Bengal, India-its plan to build a large steel foundry in Vietnam is on the rocks due to difficulty of obtaining from the 1,000 or so landowners their properties.

The new seven-member leadership at FPG seems to be set for more rough seas, especially in light of the recent global financial fallout. Although business has boomed over the past couple of years, but the current global downturn is expected to sap demand worldwide in the next two years. Also more competition that may set up a buyer's market is in the works: several big petrochemical projects in China and the Middle East are scheduled to start up, boosting global ethylene capacity significantly.