Fair Friend Group Chairman Chu Yu-wei Gives a Public Welfare Lecture at the "Hung Chun-pei Culture and Education Foundation"

(Taiwan Business News) The horn has sounded for a battle over global purchasing power. Hon Hai taking a stake in Sharp, HTC investing in Beats - Taiwanese enterprises are going against the current, boldly venturing into advanced countries and the upstream of technology, buying technology and seizing brands, attempting to expand their global strength through mergers and acquisitions. In this wave of "merger and acquisition upgrading," the experience of the Fair Friend Group is worth learning from.

Last Sunday, this newspaper and the Hung Chun-pei Culture and Education Foundation invited Fair Friend Group Chairman Chu Yu-wei to speak on "Machine Tool Management, Innovation and Breakthroughs." As the head of Taiwan's largest machine tool group, Chu Yu-wei was more than willing to share his company's success stories.

Chu Yu-wei is the second-generation operator of the Fair Friend Group, the son of Chu Chih-yang, honorary chairman of the ROC Industry and Commerce Development Association. Over thirty years in the machine tool industry, Chu Chih-yang acquired thirty-nine companies worldwide. Compared with its second-place competitor, its scale leads by more than three times. Because of this, the Fair Friend Group's market influence has become one of the global economic indicators.

Machine tools, also known as the mother machines of industry, are the basic equipment essential for industrial production. When a country has strong capabilities in this industry, it not only frees domestic manufacturers from having to purchase expensive foreign equipment, but also gives them the ability to export machinery and earn considerable revenue.

In Taiwan, machine tools have long been classified as a traditional industry, and support from government resources is far less than that for the electronics industry. Yet through the painstaking efforts of nearly a million workers in this industrial chain, Taiwan's machine tool output and export rankings have consistently placed within the world's top 5 over the years.

Following the Dadu River downstream, more than a thousand precision machinery companies and tens of thousands of downstream suppliers lie hidden here, forming Taiwan's golden valley of precision machinery, with a workforce of over three hundred thousand and an annual output value of nine hundred billion. This is the world's number one precision machinery cluster by output value per unit area and the highest in density.

Without them, this year's iPhone, with global sales expected to total one hundred million units, would immediately have to be cut by half; Google would also be without its solar power plant in the desert; the semiconductor and panel industries would face a supply chain crisis; Germany's and Italy's auto parts, the gears of America's General Motors, Germany's Porsche, and South Korea's Hyundai Motor, as well as the world's largest auto market, China, whose mold processing equipment also relies on this precision valley in Taiwan.

Chu Yu-wei said that Fair Friend started out making excavators, and just happened to catch Taiwan's economic takeoff boom: selling one excavator earned enough to buy another one back, so the company began to accumulate solid capital. However, the technical threshold for machine tools is low - any technician with a little knowledge of fitting and assembly could make them - so Fair Friend began to seek another way out: mergers and acquisitions.

During the 1998 Asian financial crisis, Taiwan's Leadwell broke out in a financial crisis, at the time losing nearly 1.2 billion yuan and falling into a state of semi-shutdown. After Chu Chih-yang stepped in to run it, improving its operating structure and integrating it with the Fair Friend Group's resources, over the following years it not only turned losses into profits, but Leadwell's revenue last year reached over 3 billion yuan, which also made Fair Friend's name in one battle. This made them even more convinced that mergers and acquisitions are the best model for expanding a company's operating scale, and in the past year or two they have stepped up M&A activity globally. To this day, from satellites in outer space to submarines on the ocean floor, there are parts produced by machine tool equipment from the Fair Friend Group.

Chu Yu-wei said that, in line with international development trends, the emerging markets that the machine tool industry is now actively developing are mainly concentrated in the biomedical and green energy industries, as well as demands such as research and development of intelligent functions that increase the added value of machinery.

In addition to developing new technologies on its own, Fair Friend is also actively developing related industrial chains. It has acquired companies from the United States, Italy, Germany, Japan and elsewhere, and is actively expanding into related strongholds such as China.

Fair Friend's acquisition philosophy is very distinctive - many acquisitions choose to eliminate the brand being acquired, but Fair Friend has retained multiple original brands. This is one of Fair Friend's great success secrets, though it does not retain all acquired brands, but chooses to keep only originally well-known brands such as Leadwell, Takeuchi, and SMS. Chu Yu-yang said that the companies bought have stronger technical and product capabilities than Fair Friend, and managing them is actually very difficult; especially with different Eastern and Western cultures and different ways of thinking, there will be even greater gaps in management.

In addition, the acquired companies have their own histories - for example, SMS in the United States has a 150-year history, and Japanese companies have seventy or eighty years of history, as do European ones. Therefore, whether abroad or in Taiwan, Fair Friend upholds the principle of not sending a single person to be stationed in the companies, which is very different from how others handle acquisitions.

Chu Yu-yang said that Fair Friend only changes their concepts and ways of thinking, giving them stimulation and direction, and that is all; everything else is left to professional managers, letting the numbers and financial reports do the managing.

Hung Chun-pei Culture and Education Foundation 103rd Year Public Welfare Lecture