KYMCO Capital General Manager Gary Ting (丁學文), a man who has had a great deal of experience with growing markets overseas, recently spoke at the CommonWealth Economic Forum (CWEF) Summer Session.
He points out that traditional Taiwanese companies have little understanding of the pain points of new markets. As the saying goes, money talks. Capital is the global language of the future, and Taiwan can be the veterinarian of all the world’s “unicorns”. Below are excerpts from his speech: What is KYMCO Capital? When I came back to Taiwan a couple of years ago, everyone called it a venture capital fund. But in Singapore, they called us a “cross-industry fund”. In Shanghai, we are labelled as a private equity fund.
If I may try and introduce ourselves in my own words, I would say we are different from others in two unique ways. First, our DNA is multinational. Our position is to use the tools and methods of a capitalistic investment fund to build an international cross-industry platform. We want to facilitate a conversation between Taiwan’s solid traditional businesses with the “unicorns” of up-and-coming markets. That is our business model.
Returning to Taiwan to Solve Taiwanese Companies’ Two Ills
What made us decide to go down this path? Fifteen years ago, we discovered a simple truth. Taiwanese industries have two pain points. Firstly, traditional OEM and ODM businesses are unfamiliar with how to make money through investments. Secondly, we have almost no understanding of emerging markets.
This made us think: We can solve the pain points of Taiwanese companies. One of the biggest changes to hit the market in the wake of the COVID-19 pandemic was Tesla’s stock prices surpassing those of Toyota on June 8th. Today, Tesla’s value is twice that of Toyota’s. For the past fifteen years, we watched the strong grow stronger, even as the world became more capitalistic. In the process, KYMCO Capital learned from the experience and pain points of unicorn companies from China, India, and Southeast Asia.
Since we knew what problems were plaguing the unicorns, we decided two years ago to return to Taiwan. With Taiwan as our base, we will initiate dialogue with all the unicorns of the world.
“We Don’t Want Money. We Want Your Future.”
How the Southeast Asian unicorn Grab became linked with KYMCO Capital is a story full of drama and intrigue. In 2018, KYMCO participated in the Tokyo Motorcycle Show. All the world thought our ambition began and ended with making electric motorcycles. But we were about much more than that.
Afterwards, Grab sent their people to Taiwan to study the total solution we were proposing. We first took them to Kwang Yang’s headquarters in Kaohsiung. After the tour, we told them it was just the first stop. The second stop was in Taipei.
When they visited our Taipei office, they thought we were going to quote them. They asked how much? I said, “We are a private equity. We have the money and the solution. We don’t want your money. We want to give you our solution. In exchange, we want shares. We want to be a part of your future.”
Unicorns excel in two things. They know how to get funding, and they know the local market. So, we reached a consensus. The corporate structure that resulted from our negotiation was quite different from what we started with. We only invested US$30 million, but because we offered resources in addition to capital, we had a say at board meetings. We requested that both sides put in money to build a logistics center. It was a good way for us to learn more about emerging markets.
As a result of this model, we had two major revelations.
Number one: We used capital to buy our way into their strategy making process. This solves the pain point of Taiwanese companies not understanding the local market of these growing economies. Number two: We communicated through capital, and we transformed our role from seller to buyer. We teamed up to approach the market together.
Capital is the Global Language of the Future
In Taiwan, we pride ourselves on our OEM and ODM businesses. But when it comes to globalization, all we can do is sell our hard work to foreign brands.
Why do Taiwanese companies often face an uphill battle? It’s because we try to apply our methods to strange new places. We go to a foreign country and buy land and machines to prepare for production. Because we need to cut costs, we are forever racking our brains to try to acquire land and more business-friendly policies from local governments. Because we are reliant on them, we are always at a disadvantage.
It’s very different to buy instead of sell. If we are a private equity, we can set up shop in Singapore or New Delhi. We can understand local politics and their business-related policies. We will learn the capital speak, through which we will negotiate with all the world’s future businesses. The United States and China are butting heads. English will no longer be the global language. Only the language of capitalists will open doors and initiate dialogues.
China-US Rivalry is Taiwan’s Opportunity
I find that in one way, Taiwan is going in the opposite direction from the rest of the world. While the number of entrepreneurs and investment funds is skyrocketing in growing economies, here in Taiwan, I find that all the investment funds have disappeared.
In spite of this, why do I still feel Taiwan has a chance? Because the idea of innovation is trending. It is all that governments and private businesses are talking about. Young people in this country do not want to be left behind. Traditional Taiwanese businesses are also looking to transform. Therein lies our chance. To call valuable start-ups “unicorns” only became popular six years ago. At the time, only 39 start-ups in all the world had a market value of over US$ 1 billion. Now, there are 586 such unicorns around the globe.
If this trend shows us the future, then we must learn the language of unicorns.
There is only one unicorn in Taiwan. But Taiwan does not have to breed its own unicorns. Taiwan has the finest traditional automaking craftsmanship in the world. It has also the best human capital. We can be the doctor who heals the unicorns’ ills. The more unicorns there are, the more patients we will have. What we can do is to provide them with a total solution. The U.S. and China are at loggerheads? That’s great news. If no one is doing business with the Chinese, isn’t that an opportunity for the Taiwanese?
In the wake of the pandemic, I see two trends: there will be more unicorns, and regional development will become more fractured.
There are some who say Taiwan has no standing in the world. But as they say in English, “We are nothing, but we can be anything.”
Taiwan’s chance is now. This crisis is our opportunity.