2015-12-28

Interview with Economic Daily

After Hsieh, Kuo-Tong, general manager of Taroko Fiber, officially took over the family business, he briskly ended the textile business started in the previous generation, and spent NT$ 5 billion to set up a large-scale sports and leisure shopping center in Kaohsiung, Caoya Road, the first in the world to move an international track into a shopping mall. It is necessary to rely on professional managers to completely turn over Taiwan’s circulation department store, and target a market value of 10 billion yuan within three years.

Talking about the Keelung Xie family, most people will think of former legislator Xie Guoliang, a political star cultivated by the Xie family, and the family business Daluge fiber has rarely become the focus of attention, until his brother Xie Guodong, who is the general manager, made a big move to set up a large sports and leisure shopping center in Kaohsiung Caoya Road, and ended the starting business of Daluge – textile industry, so that the outside world realized that Daluge has been officially succeeded by the second metabolic state.

Hsieh, Kuo-Tong believes that Taiwan’s consumption power has always existed, but there are too few interesting places, and Taroko should rely on the power of professional managers to find out the untapped consumption power, and use innovative business models to completely flip Taiwan’s circulation department store industry and make Taiwan more interesting; And Taroko is also in place with the blessing of Caoya Road and China’s layout, and the market value will rush to the NT$10 billion mark within three years.

For the transformation of the company, Hsieh, Kuo-Tong talked about the overall strategy and ideas for the first time. The following is a summary of the interview:

Withdraw the textile industry and fight for transformation

Q: Why did you transform your family textile business into the athleisure industry?

A: The family has been running a baseball battling cage for a long time, and entered the Taimao Shopping Center in 2005, it was unexpectedly found that the effect was better, and it was more crowded than opening a base outside, which also opened the idea of Taroko fiber transformation; Five years ago, Chen Shangwen, the general manager of Baiwen, who runs a fitness factory, strongly recommended me to go to Kaohsiung to see the land, because it was close to the Kaohsiung MRT, the rent was reasonable, and the textile industry was also experiencing bottlenecks at that time.

What started as a dream to create fun places here is now coming true.

Grab the bell deer to break into southern Taiwan

Question: How did the Taroko Caoya Road rise to prominence in southern Taiwan?

A: Although Caoya Road is a shopping mall, it has many complex theme parks and sports facilities, including fitness factories, bouncing courts, bowling alleys, basketball courts, baseball fields, game love parks, etc. Among them, the biggest selling point is the introduction of Japan’s oldest international circuit – Suzuka Circuit, even the F1 race has been held locally, I visited the door with Vice President Xu Junqi, and finally obtained the other party’s agreement to cooperate, which is a great encouragement to Daluka, because this is the first time Suzuka Circuit has set foot in an overseas market.

Sports and leisure business area accounted for 25% of the business area of Caoya Road Shopping Mall, ranking the highest proportion of shopping malls in the world. Caoya Road has also invested nearly 100 million yuan to introduce European-style trams, which will give the people of southern Taiwan a new look.

Q: What are the operational goals of Caoya Road?

A: It is currently confirmed that it will open in mid-March next year, and although the Lunar New Year holiday in February is missed, the overall quality should not be damaged. Next year’s operating target is 5 billion yuan, according to International Accounting Principles (IFRS), contribute to the revenue of Taroko about NT$ 1.7 billion, deduct fixed fee allocation, there will be a surplus next year, the company currently sets that the market value of Taroko will be NT$10 billion in three years.

Q: Southern Department Store launched the “grass project”, how will it respond?

A: It will not have much impact, our characteristics are unique, and the progress of brand investment is also expected, everyone works hard, and the brand they have is not a key point for the grass. Whether it will impact the industry, I don’t know.

Foreign commercial real estate development has made a great breakthrough, have been transformed into shopping centers, on the other hand, domestic, still to the department store industry as the main body, but the rise of e-commerce, online shopping as a trend, in recent years, you can see that the department store industry to boost performance, year by year is more and more hard, Taiwan does not need more offices and hotels, but to let a small family spend time.

Unaffected by the grassing project

Q: What is the development strategy in Taiwan?

A: Find out the untapped consumer demand, everyone is thinking about the circulation department store, most of them will think of Xinyi Planning Area or Taichung Phase 7 and other essence areas, but let me give an example, Miaoli recently opened a new “Shangshun Shopping Center”, the Starbucks business is very good, you can know that the second and third-tier cities also have consumer demand, but the industry has not explored it in the past; Besides, I like to go to Hualien, but it’s boring at night, there is nowhere to go, and Taiwan is very uninteresting compared to Japan.

The sports center in Shuangbei City has a very high utilization rate, but in our opinion, its internal design is not exquisite, so what we have to do is to commercialize and live the sports center, and plan to build 20 shopping centers in Taiwan in the next ten years.

Q: How to explore consumer demand?

A: This kind of business model can only be explored step by step, just like the new era of Taichung Taroko, we are still accumulating experience, because we have to spend three years to transform the new era of Taichung Taroko to try to see what is feasible and what is not. But I must emphasize that Taroko is not a lone landlord or professional investor, holding undeveloped commercial land, they also enter the market after some evaluation before buying land, and what Taroko has to do, in addition to thinking about whether this land is suitable for sports and leisure venues, but also to find the most appropriate entertainment facilities.

The development of Japanese-style hot springs attracts crowds

Q: Is the mainland the same business pattern as Taiwan?

A: The mainland sports and leisure industry has just risen, so far, only we have achieved sports combined with shopping centers, and Taiwan’s sports and leisure industry developed earlier, Taiwan’s experience in the past five years can be copied to the mainland, but the rise of mainland e-commerce, the market changes too fast, “we are thinking about the mainland development strategy every week, but every week is changing the strategy”, for the mainland business model, I can only say that it is currently undecided, with the end of 2017 20 stores in place, the business model will also become clear.

Q: Aren’t you worried about your business model being learned by your peers?

A: Each base is tailor-made, each land area and space are different, how to adapt to local conditions, it takes experience to accumulate, in addition, Taroko will continue to innovate, which is our core value.

Q: What is the listing strategy of “Taroko Development”?

A: It is a professional commercial real estate and operating company, commercial real estate capital demand is very large, in addition, the capital developed by Taroko is slightly higher than that of the parent company Taroko Fiber, so that it is listed on the cabinet for the parent company, moreover, Taroko development has external investors such as Fubon Jinchuang, and it is also good for external shareholders.

At present, Taroko Fiber holds about 85% of the equity of Taroko Development, and its shareholding will decline after listing, but it has not yet been finalized, and it is expected to apply for a public offering at the end of this year, and according to the schedule, it will be transferred to listing in 2017.

Q: What’s next?

A: In October this year, the Taroko Bath Company has been established, which will develop Japanese-style hot baths (Japanese-style hot springs), Japanese baths, evolved from public baths in the past, and currently have a large number of baths in the city center, although they are artificial hot springs, but they soak like natural hot springs, but drive more crowds; Taiwanese people also like to soak in hot springs, millions of people go to Japan every year to play, so we found a Japanese bath professional design team, from the space, material, equipment, all by the Japanese team is responsible, the first Taroko warm bath will be in Kaohsiung Caoya Road, covering an area of nearly 800 pings, at the same time, attached to a light food area.

Q: How does Taroko face the doubts of the outside world when it takes away textiles and changes to sports and leisure?

Q: The outside world often says, “You don’t have a big scale, you have to do a theme park, you have to do a shopping center, you can’t do it well, and now you have to do this”, but our investment is not the imagination of the outside world, but relying on the talents of internal and external professional teams, in Kusanagi, if we do not get the cooperation of Suzuka Japan, we dare not put the track in the shopping center; If there were no professional managers, we would not dare to do a shopping center, and we are very confident that we will definitely do this if we know the best know how.