Cnet Columnist Says Asus Screwed Eee Brand Because It's From Taiwan

Illustration for article titled Cnet Columnist Says Asus Screwed Eee Brand Because Its From Taiwan

Jonathan Gardner of Cnet Asia had an interesting take on Asus' over-stretching of the Eee brand, blaming it on the company's inability to change their local, “Confucian” corporate culture. Gardner, a columnist who apparently knows people, declared that “Asus will not be the next Samsung,” mainly because they're following the path of a “typical” Taiwan business story. So, by interesting, I mean arguably incorrect and also kind of racist.

So the Eee was a minor global hit with the budget-conscious and started to get a bit of brand recognition out there. What next? Never the strategic thinkers, the company did what any Taiwan firm would do—flood the market with brand and line extensions... ...ASUS is no different from most in this regard. Sure, they have an Italian as their "design director", but no other outside adviser with any sort of influence. Their leadership is all very local with a local mindset, not those of the foreign-educated Korean type that Samsung brought in when it wanted to start revolutionizing its corporate culture. And that's an important point: It took Samsung and others many years to become powerful global brands. And many of those early years were spent reforming the company from within and building a strong focus on a corporate mission and strategy. They didn't waste a lot of time on chasing feeble trends.

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Granted, we've been a little confused by Asus' Eee line-up as well. We'd love to see them return to their roots and maybe stop slapping the name Eee on things that aren't cheap and netbooky. But blaming the dilution of their brand on them being Taiwanese is, considering the amount of tech-based success stories that have come out of the island, facetious. Look at HTC, for example. The maker of the first Google Android handset has watched its revenues skyrocket at ten times the pace of the standard phone market. Or maybe Acer, who now commands second place in notebook shipments and third in PC shipments all over the world. While Taiwan's brands still aren't as globally recognized as their Korean and Japanese neighbors, the countries are all following pretty similar paths—moving from components manufacturing to high-tech, name-brand merchandise. Besides, both Japan and South Korea got their best known brands up there without giving up "Asian corporate culture.” Samsung, despite its attempts to open up and adhere to global competition standards, is still run by a chaebol. Sony only appointed its first non-Japanese CEO two years ago. While there are tons of problems with the closed nature of Asian conglomerates, a “lack of focus” and iffy brand-building gimmicks probably aren't on that list. And lastly, can you really call the netbook a “feeble trend?” A study in September pegged low-cost laptops as the driving force behind increased PC shipments at a time of economic sluggishness. If anything, Asus is the proud daddy of a movement that's changed the entire industry. Not all of Asus' recent moves have seemed particularly smart. But thinking their nationality has something to do with it—that's just plain dumb. [Cnet Asia]

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DISCUSSION

This is not racist. Having worked in Taiwan for a number of years and working with quite a few companies there this is absolutely and unfortunately true.

Many Taiwanese, like Koreans, study overseas, especially in the US. The big distinction, however, is that Koreans generally go back to work for Korean companies whereas Taiwanese remain overseas or return to Taiwan to work for foreign companies. And there's a very simple reason why, foreign companies pay significantly better than Taiwanese companies do. So all the talent is going elsewhere.

And the problem is that Taiwanese management doesn't really know how to effectively utilize the talent they do have. More than once I've seen companies drive away talented people. Taiwanese companies do very good work, much better than the Chinese could ever dream of, but the just don't capitalize on it. They rarely define a clear direction for themselves. So they'll stumble onto a product that turns out to be a success and then completely fail at sustaining that success.

One good example of a Taiwanese company that tried to do too much too quickly with little planning was Acer. Back in the 90s they started selling their computers, mainly laptops in the US. And they were generally received well. They even managed to get a few good product placements, the most prominent I recall being the first Mission Impossible movie.

Unfortunately, just as they built this equity, they went and screwed it all up by trying to turn themselves into a Sony overnight. They started selling all kinds of other electronics in the US and ultimately alienated consumers.

Unlike the US where companies are generally run by people with business or marketing degrees Taiwanese companies are run by engineers. It ensures they understand the technology but it also means they don't appreciate branding, they don't know how to market themselves and they seem to have trouble focusing on the future outside of the current product being developed. Taiwanese companies rarely develop an organized family of products like Apple, Dell, Samsung, Sony and others do. Instead they pump out a haphazard collection of products with little rhyme or reason.

Ultimately one of the biggest problems I encountered is that Taiwanese are cheap. They're still obsessed with trying to compete on price, but they lost that battle long ago to China. Japan and Korea at one point were known for cheap goods, but decades ago they made the transition from pure OEM manufacturing to developing their own products. And more importantly, they made the decision to focus on quality and innovation over price. Taiwanese companies need to do the same to remain viable.

Of course, Korean and Japanese companies had the distinct advantage of being backed by the government. The infusion of capital ensured that they had the flexibility to build research and development capabilities. Taiwanese companies have been generally left to fend for themselves.

I've found that the US divisions of Taiwanese companies generally try to do what they can to build success but upper management gives them little leeway. They don't seem to really take suggestions seriously and just keep on doing what they've always done. Most companies tend to hire a token foreigner to work at headquarters but these guys never seem to do much. I think they're hired mainly so that the company can claim they're thinking internationally.

I have learned that Taiwanese companies generally have enjoyed more success in Europe. But I think the retail market there isn't so entrenched as it is in the US. And competing on price is a more effective strategy in Europe.

I've been noticing change in Taiwanese attitudes. People are starting to wake up and notice these problems. However, it really is ingrained in the culture. They need one prominent company to do things right for others to start seeing the need for change. My concern is that they're going to fall behind South Korean and Japan and ultimately lose to China and other emerging markets.