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At a ceremony on the morning of Sept. 8 at New Taipei City Plaza, a large corrugated box made of recycled paper sat on a stage bearing the name “Cheng Loong” in both Chinese and English. When the box was opened, a big green and blue balloon representing the Earth popped out, symbolizing the 60th anniversary of Taiwan’s biggest paper manufacturing group and the hope for another successful 60 years.

Opening the box at the front of the stage was the company’s third-generation leader and incumbent chairperson, Suanne Cheng (鄭舒云).

The 44-year-old took over the company’s reins from her father Cheng Cheng-loong (鄭政隆) nine years ago to become the only female chairperson of Taiwan’s big three paper companies – Cheng Loong, Yuen Foong Yu, and Longchen P&P. She has also been rather enigmatic, appearing publicly only at annual shareholder meetings and even then passing the microphone to the company’s management team and retreating into the background.

Yet despite her low-key style, Cheng Loong’s market value has risen 60 percent to NT$20.3 billion since she took over, and its net income of NT$3.74 billion and earnings per share of NT$3.4 in 2018 were both record highs for the company.

Cheng Loong Corp. Chairperson Suanne Cheng (left) and President Tsai Tong-ho (front, right) lead the company’s 60th anniversary celebration earlier this year. The two have delivered strong results since Cheng took over the company’s helm from her father nearly 10 years ago.

Cheng Loong boasts a broad product line, covering everything from industrial-use paper and paper containers to household paper goods and packaging solutions. It supplies the cardboard boxes for Apple iPhones, shoe boxes for Nike, and the toilet paper used in many homes.

Cheng Loong’s headquarters in Banqiao District, the site of the company’s first paper factory, is now surrounded by other urban towers. From the conference room on the 25th floor, one gets a great view of the entire Taipei basin.

“When we do something, we usually don’t think about satisfying the present. (We want to) handle problems proactively and make preparations a step ahead of time,” Cheng tells CommonWealth Magazine in an exclusive interview.

Cheng Long Chairperson Suanne Cheng is accelerating the company’s international reach while paying tribute to the circular economy at home through creative recycling. (Photo by Chien-Ying Chiu/CW)

Facing Heavy Turbulence

The soft-spoken Cheng, who was the oldest daughter among her family's four children, studied music from the time she was young and dreamed of opening a coffee shop. But she ended up following the succession path plotted out for her by her father.

After returning to Taiwan from studying overseas, she began working at Cheng Loong at the age of 26 and gained experience in the human resources and finance departments. She then became her father’s special assistant, company spokesperson and finally vice chairman, gradually rising to the fore and emerging as a rare female succession figure in Taiwan’s conservative paper manufacturing sector.

Cheng said her most memorable moment at this established family-run company in which nearly 90 percent of employees are men was her first day at work when her father brought her to a meeting.

“There were 20 senior managers lined up, all 40- to 50-year-old men. I was the only woman there,” she recalls, only highlighting the difficulties she has faced leading the company.

That has been especially true in the past year, one of the most turbulent years ever in the cross-Taiwan Strait paper industry.

It started when China strictly limited the amount of waste paper that paper manufacturers could import and was then followed by the U.S.-China trade war that has dealt a blow to China’s manufacturing sector and domestic demand, affecting demand for paper products. (Read: Trouble in the Recycling Kingdom)

Under this dual threat, Cheng Loong and Longchen P&P saw their net income in the first half of 2019 fall 68.5 percent and 90 percent, respectively, from the same period a year earlier.

Having seen her uncle and father work hard to build up the business she had inherited and now facing the industry’s most turbulent times since the global financial tsunami, Cheng admitted: “The paper industry has seen heavy and rapid volatility during this time. It’s completely different from anything in the past.”

China imposed strict restrictions on imports of waste paper by paper manufacturers last year, dealing a blow to the sector on both sides of the Taiwan Strait. The photo shows waste paper stacked in Cheng Loong’s paper mill in Zhubei in northern Taiwan. (Read: Trouble in the Recycling Kingdom)

In its heyday, Cheng Loong production bases were spread around Taiwan, China and Southeast Asia. That expansive network included 13 factories in China, including paper production base Shanghai Chung Loong Paper Mill and paper product facilities in Dongguan and Kunshan.

Almost all of these facilities were put up by her father and his team of managers. Cheng herself also traveled to China frequently to participate in the development of these factories, and she witnessed China’s rapid economic rise together with her father’s generation.

Now, with the United States and China locked in confrontation and global supply chains shifting, Cheng and her company have reached a critical juncture, one requiring urgent change.

Pulling Out of China in Favor of Southeast Asia

Heading west to China was largely responsible for elevating Cheng Loong’s asset value to more than NT$60 billion, ranking it fourth among industrial paper groups in Asia. Going south to invest in Vietnam is the company’s new engine of growth and has been Cheng’s most important initiative since she became Cheng Loong’s chairperson.

“In the future, Vietnam will become our second home,” Cheng stresses. The country only accounts for around 11 percent of Cheng Loong’s total revenues at present, compared to 65 percent coming from Taiwan and 23-24 percent coming from China. But that is expected to rise to 25 percent of total revenue in 10 years.

Why did Cheng Loong decide to make the strategic move to Southeast Asia earlier than others? Five years ago, Yuen Foong Yu and Longchen P&P remained steadfast in sticking to China as their main production base, but Cheng Loong began assessing whether or not to close its Shanghai paper mill and invest in Vietnam.

Behind the shift in attitude was a Chinese government policy known as “emptying the cage for new birds” that has gradually eliminated factories in coastal cities in the name of environmental protection and promoted industrial transformation and upgrading. Under such circumstances, Cheng Loong’s Shanghai factory, located a mere 10-plus kilometers from the Oriental Pearl Tower, was destined to be moved away.

Cheng felt the company faced only two choices: move to more inland Chinese cities or simply move out and relocate to Southeast Asia.

“It was like always having a time bomb there and never knowing when it might explode,” she says, describing Cheng Loong’s predicament at the time.

By relocating to an inland Chinese city, Cheng Loong would have faced less restrictive environmental constraints and temporarily avoided pressure from China’s government.

But “although now it’s Shanghai, sooner or later the policy would have extended inland to one province after another until we would have had to relocate again. Also, our paper product factories and customers are almost all along the coast, so if our paper mills were too far away, they would not be economically viable,” Cheng explains.

Consequently, she decided to keep nine downstream paper product plants in China but to close the Shanghai paper manufacturing plant and move that capacity to Vietnam. Cheng Loong invested more than NT$32 billion to integrate two existing paper product facilities and a new paper plant in Binh Duong province near Ho Chi Minh City, providing complete one-stop shop services to customers in the rapidly growing Vietnamese domestic market.

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Building a ‘Second Home’ in Vietnam

To achieve Cheng Loong’s ambition of becoming Vietnam’s biggest paper-making group, Cheng and her younger brother Frank Cheng (鄭人銘) – the company’s vice chairman in charge of overseas business – traveled to Vietnam almost every month looking for land and proceeding with their investment project.

At the same time, middle and high-level managers were on the move. Top managers of business groups at the company’s Taiwan headquarters were sent to Vietnam on a rotating basis to ensure that all financial, personnel and production management systems in its early stage of operations there were consistent with and connected to Taiwan’s.

Cheng Loong President Tsai Tong-ho (蔡東和) says the decision at the time to leave China and move to Vietnam “was in fact seen with skepticism by outsiders who did not look at the move that favorably.”

For example, the seemingly simple actions of selling land and a factory in China could have run up against buyers who did not meet their commitments and failed to come up with the money. The move could have also resulted in heavy financial or human resource losses, all of which would have led to additional costs for the company.

“Investing in a paper products factory only takes tens of millions of U.S. dollars, but investing in a paper mill costs hundreds of millions of U.S. dollars. It is also at least 10 times more complicated – you have to move and then build a new facility. It’s not that easy,” Cheng says.

Those risks explain why other Taiwan-invested paper manufacturers have been unwilling to pull out of China, but Cheng Loong was not deterred.

“Cheng Loong closed down its Shanghai plant because of this existing history,” says a top manager at a major industrial paper company. When China’s government requires factories to relocate, they have no choice but to cooperate, but it was this policy “surprise” from Beijing that indeed drove Cheng Loong to invest in Vietnam.

That turned out to be highly fortuitous for the paper conglomerate.

“We did not know that one to two years after making this decision [China] would issue its ban [on imports of some types of waste paper] and then the U.S.-China trade war would break out, causing businesses to relocate. We made our evaluation based on conditions that existed at the time and felt that going to Vietnam was the most suitable option for us. Looking back, all we can say is that we were quite lucky,” Cheng says.

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Investing in the Green Economy

As it is building its second home in Vietnam, Cheng Loong has refocused attention on its first home – Taiwan. Cheng has devised a new development strategy for its home market: the circular economy and green energy.

Cheng Loong has successfully recycled waste laminated paper into pulp that can produce eco-friendly toilet paper, not only lowering production costs but also reducing environmental pollution.

In April 2019, she set up a new unit – a sustainability department – to reverse the company’s passive attitude of the past. Cheng wanted each of its factories to look proactively for areas in which they fell short environmentally and learn from the outside to make improvements.

“The inspiration was to pursue a ‘virtuous cycle’ between industry and society,” Cheng says. “For some things, you can’t just look at the immediate benefits. If you feel you should do something, then you should do it. We have felt that within our industry we have acted pretty responsibly, but you find out that society has higher demands of you. With that in mind, we cannot be satisfied with how things are now.”

Cheng Loong’s new direction is symbolized by the massive pile of used lunch boxes, paper bowls, and paper cups stacked a story high in a corner of the company’s paper mill in Zhubei in northern Taiwan. These discarded laminated paper products differ from regular paper waste because of their plastic coating layer, and once the coating is removed and the paper turned into a pulp, the resulting material can be used to produce Bristol board (an uncoated paper board) and even eco-friendly toilet paper.

The process reduces the environmental pollution caused by waste paper tableware and containers.

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Taiwan had long had trouble recycling laminated paper (used in such things as paper cups or bags), but Cheng Loong’s ability to do it and turn it into eco-friendly toilet paper represents one of Cheng’s major achievements. Another has been her aggressive pursuit of new markets featuring paper for household use and stationary and art products, a departure from the company’s emphasis on developing industrial-use paper adopted during her father’s era.

Because of that, the company’s marketing and packaging solution departments have hired more female staff, bringing a new vibe to this once staid family enterprise.

To boost sales, Cheng has emerged as the company’s top “creative director,” immediately transmitting ingenious designs back to headquarters in Taiwan for inspiration whenever spotting them during her overseas travels.

That creative bent has rubbed off on her team. At last year’s Flora Expo, for example, Cheng Loong set up an exhibition venue built from recycled paper tubes and displays featuring paper art works and furniture, all put together by company staffers. The display served to build a connection between the paper industry and the public.

Suanne Cheng has earned the moniker “creative director” from employees for her development of artistic and culturally creative products, which has injected a new energy into the male-dominated paper industry.

“It may be because after I took over, I felt that everybody needed more exposure to the outside world rather than simply working hard in the office. So we encouraged our colleagues to take part in different competitions to gradually cultivate different perspectives and sources of inspiration,” Cheng says.

A Steady Corporate Culture

Though Cheng has followed a different strategic development direction than her father, the corporate culture handed down over three generations remains evident in her words and actions.

Nowhere was that more obvious than on the cover of a compilation of sayings by Cheng Cheng-loong published by the company on its 60th anniversary, which highlighted two characters meaning “steady.”

The first saying in the compilation reads “Only where traditions are passed on is a company’s image revealed,” reflecting Cheng Loong’s low-profile, pragmatic, responsible approach to business and the indelible values the father has passed on to his daughter.

Tsai Shih-yu (蔡石玉), the manager of Cheng Loong’s Zhubei paper mill, recalls that when Cheng toured the facility last year, she joined factory staff in getting close looks at different pieces of equipment.

“We thought we should show our chairperson more appealing areas in front of the factory and not let her see dirtier or messier spots in back. But she said she wanted to see those spots to get an idea of where we can do better,” he says.

“She is very good at getting to the heart of the matter. Like one time she looked at the toilet paper we were making and asked: ‘How much bacteria is there per gram of this toilet paper,’” Tsai says.

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Externally, Cheng has accelerated the company’s international expansion; internally, she has strengthened the development of a circular economy mindset, reflected in the goals for 2019 she set at a major group meeting at the end of last year: “innovate and change, aim for perfection, cultivate local markets and reach new heights.”

Facing a rapidly changing global environment, she says bluntly that strengthening the nurturing of local talent in Vietnam and elevating production efficiency and quality stand out as the main challenges for Cheng Loong in the near future.

“Every time I go to Vietnam, I tell the managers there that they have to take seriously the cultivation of local talent,” Cheng says.

“Our Taiwanese factory has many foreign workers. In the past they were mostly from Thailand and Indonesia but now an increasing number are from Vietnam, and we are strengthening their training. Those who perform well can work at our factory in Vietnam after they return home.”

Carrying the responsibility and mission of her family’s 60-year business on her shoulders, Cheng is now in a position in which her every move could affect the global reach of Taiwan’s paper industry. Her moves will also determine how quickly and how far Cheng Loong can travel in its next 60 years.

Translated by Luke Sabatier

Edited by Sharon Tseng