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New Twist in Asian Cultural Gap Story : Industry: As Asian firms build plants elsewhere in Asia,factory managers find that the locals' habits can drive them up the wall.

TRADE BOOM: The Rise of Intra-Asia CommerceFebruary 18, 1991|SAM JAMESON | TIMES STAFF WRITER

BANGKOK, Thailand For decades, American businessmen have complained about how hard it

is to adapt to different cultures in Asia.

Now, it's Asians who are increasingly complaining about cultural gaps with other Asians.

That's not surprising given the increasing investments that some Asian nations--particularly suchnewcomers as Taiwan and South Korea--are making in other Asian nations.

Japanese report trouble with the capitalistic inclination of mainland Chinese communists to extracthigh fees and wages from foreign enterprises operating in China. South Koreans, whose bureaucracyoften drives Americans up the wall, throw up their hands over government red tape in the Philippines.

And Chinese from Taiwan find that their fellow Asians often work at a pace far less hurried than theirown.

Thailand's Buddhism is a major lure to the new Asian investors because it offers the prospect ofsmooth labor-management relations. It has helped make the country the No. 1 recipient ofinvestment, despite wages that are significantly higher than in Indonesia.

Tension between ethnic groups and worries about the political future have kept Indonesia behindThailand, while lack of national unity and political chaos have anchored the Philippines at near thebottom of the list of Asian investors' preferences.

Cultural affinity with Chinese communities throughout Asia clearly gives cash-laden Chinese fromTaiwan and Hong Kong the advantage in the new wave of investment, putting them in position tocapitalize on cheaper wages and growing domestic markets in Southeast Asia. Ties with localChinese have given Taiwan businessmen the confidence that Japanese and South Koreans lackwhen it comes to doing business in such countries as the Philippines and Indonesia.

Cultural gaps, nonetheless, persist.

Take the cases of Taiwan Liton Electronic, a Taipei-based manufacturer of electronic components,and Samsung, the giant South Korean electronics firm. Both report running into cultural problemsafter operating their first factories in Thailand a little more than a year.

Albert Chang, vice president and manager of the Taiwan firm's factory in Bangkok, said a strongChinese heritage in Thailand means that "the cultural barrier is not as big as Americans find it." Morethan two-thirds of the Thai people are believed to have Chinese heritage or a Chinese ancestor intheir family tree, two or three generations back.

But Taiwan Chinese like to get things done in a hurry, and sabai-sabai (take it easy) is the motto inThailand, Chang said. "It's an easy-going, agricultural kind of mentality. Thais ask us, 'Why are you in

such a hurry?' "

Chang said he pushed a Thai construction company so hard to meet the schedule for completion ofa plant for Timex, his former employer here, that "the Thai construction engineers would just walkaway from us. They didn't want to talk with us."

The Timex plant was finished a month and a half behind schedule--better than average, he said.Taiwan Liton's factory was finished about two months late.

Park Jong Ha, manager of Thai Samsung Electronics Co.'s new plant 70 miles southeast ofBangkok, had a similar experience. "We planned to build the plant in six months, but it took nearly ayear."

"Tomorrow, the sun also rises" is how he described the Thai attitude toward schedules.


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"In Thailand, they install the machinery after the building is completed. In Korea, we install themachinery after the roof and the floor are complete, and when the building is finished, all of themachinery is installed," he said.

Park said he found it hard to win Thai understanding of moves that the Korean management wantsto make to increase efficiency.

"If an obstacle develops, the Thais will try to go around it. Koreans try to go through it," he added.

Siam, the old name for Thailand, "means 'freedom,' and the Thai people are very free," Park said."By contrast, Koreans and Japanese are very regimented."

The Korean manager recalled that Koreans went through a process of absorbing managementtechniques from Japan when Japanese started investing in South Korea 20 years ago.

"We thought (much of the initial Japanese advice) was very strange, but three to five years later,we came to understand they were correct," Park said. "Maybe the Thais also will change because ofthe Korean and Japanese investment."

Chang praised Thai workers for their "dexterity and intelligence to learn their jobs quickly." But healso said Taiwan Liton had been forced to adopt a unique bonus system to induce Thai workers justto show up.

A worker who does his job every working day during a month gets a 5-baht-a-day (20-cent-a-day)bonus, Chang said. Thai law permits workers to take 30 days of sick leave a year--but doesn't requirethem to produce a doctor's certificate or other evidence of illness, he explained.

The "communications gap" that Americans have faced over the years with Asian languages is evenworse for Taiwan Liton.

Chang said middle-level Chinese technicians from Taiwan don't speak English and Thai workershere don't speak Chinese--or English, for that matter. Initially the Chinese management team had to

rely on English to communicate with Thai managers.

"But ultimately, our technicians here have to learn Thai," he said.

Samsung is also forced to use English as its working language. Park complained about the addedcost of writing documents in English and Thai. In Malaysia, Singapore and the Philippines, "onlyEnglish is OK," he said.

Taiwan Liton and Samsung differ in their motives for their investments here.Taiwan Liton built a $12-million plant as a new base for exports, which, Chang said, are expected

to reach $36 million in 1991. Samsung invested $4.5 million to manufacture 200,000 small color TVsets and 60,000 videocassette players a year in partnership with Saha, a textiles and cosmeticsmaker. It is interested in both exports and the booming domestic market now dominated by Japaneseelectronics firms.

Saha has domestic marketing capability, and Samsung has the know-how and markets for exports."So we got married," Park explained.

The management techniques that Samsung and Taiwan Liton bring to Thailand also differ. Parkdescribed Samsung's management as one adapted from the Japanese model, while Taiwan Liton'smanagement is a Chinese derivative of American management.

Taiwan Liton's top three officers quit Texas Instruments Co. in 1975 to establish a firm tomanufacture the light-emitting diodes that show the numbers in digital clocks or the channels in TVsets.

"Fifteen years ago, wages in Malaysia and Singapore were higher than in Taiwan," Paul Y. S. Lin,

Taiwan Liton's president, said in Taipei. "Today, wages in Taiwan are 30% higher than Singapore.Malaysian wages are only one-third of ours."


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Park said wages in Thailand are only one-fifth of what Samsung pays in South Korea.

Investments in labor-saving equipment have enabled Taiwan Liton and Samsung to raiseproductivity to cover the added costs of wage increases at home, which have been averaging morethan 10% a year, officials of both firms said.

But executives of the two companies said they haven't been able to cope with currencyrealignments, which have driven up the cost of exporting from Taiwan and South Korea. Even worse,finding workers at any wage is becoming difficult, they added.

"We have a good team and good technology in Taiwan," Raymond Soong, Taiwan Liton'schairman, said in Taipei. "We can do much more business than we do now. But to expand, we haveto increase our capacity. We can't fill the orders we get because we can't get enough workers."

In Taiwan, "we spend millions of (Taiwan) dollars trying to recruit people, but the number ofapplicants just keeps decreasing. In Thailand, all we have to do is just put up a poster. If we need 100workers, 1,000 apply," he said.

Park echoed the same complaint about South Korea. "If we need 100 people for factory work, only70 apply," he said.

Korean workers, moreover, reject more than two hours a day of overtime, in contrast with Thais,"who are delighted to work any amount of overtime," said Ahn Buk Hyon, senior executive director ofplanning and administration at Samsung Electronics in Suwon, South Korea.

Soong said Taiwan Liton had set a goal of reaching $1 billion in sales by 2000--but Lin correctedhim: "No, within three years, we can reach $1 billion. At the most--five years." Sales now amount to$500 million a year.

Much of the expansion will come from the new thrust overseas, they agreed.

Four years ago, Taiwan Liton set up a supplier relationship with a firm in the Philippines. In 1989 itbuilt its first overseas factory in Thailand and established a supplier relationship with a mainlandChina firm near Hong Kong. And now it is building three factories in Malaysia.

It has also decided to invest in a plant in Europe. Scotland and eastern Germany are the maincandidates, Soong said.

Taiwan Liton is not cutting back at home, however. Lin said he expects the parent firm to holdemployment stable at the current level of 5,300 while upgrading productivity to increase output.Production of new and more sophisticated products will be increased in Taiwan, and less complexgoods, such as the light-emitting diodes, will be produced in overseas plants, like the one in Thailand.

Research and development in Taiwan will also be strengthened, he said.

Taiwan Liton so far has not gained much benefit from the cheaper wages at its Bangkok plant,which employs 1,000, Chang said. Including costs of importing raw materials, "the unit labor cost isnearly as much as in Taiwan," he said.

Because of the newness of the operation, Chang said, "efficiency is still low." Even operating at fullcapacity, the saving in labor cost probably will be only 10% to 15% below Taiwan, he said. "Thebiggest contribution to the company here is the labor supply."

Park said Samsung's 200 Thai workers have a better productivity record than Samsung hadexpected. "We thought productivity would be no more than 60% of Korea. But it has turned out to be90%," he said.

Samsung's Thai joint venture, he added, plans to start the manufacture of washing machines and

refrigerators for the local market this year.


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Like Taiwan Liton, Samsung Electronics sees much of its expansion coming from overseasproduction. The firm, which had $6.1 billion in sales in 1989, is producing about 5% of its householdelectronics products overseas but will probably do 20% of its manufacturing in foreign plants fouryears from now, Ahn said.

But, like Japanese and Taiwan firms, "the more sophisticated products will continue to be producedat home," he added.

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