130601 One Thousand Ounces of Gold: Chapter 12, Shiriro in Flux, Trip to USA, Travelling salesman

Chapter 12

Shriro in Flux

 

           The story begins in 1957. Six long years after I left China and almost three years after Jan Goldstein went to Tokyo , Mr. Krouk finally got his exit permit to leave China . By then he had fought many lonely battles with the Communist military controller in Shanghai over Shriro’s, which had sizable assets seized by the Communists. Although he risked going to jail, he managed to extract part of the company’s money.

In February 1957, Krouk and his family arrived in Hong Kong after many years of risks and hardship and I made a special trip to see him. We were both moved to tears when we saw each other again, as if we’d met again in another life. His family had grown. Young Leo was now nine, and Tony, a new arrival since May and I left Shanghai , had been born in 1953. Jacob Shriro, the founder of the company, who I now met for the first time, was also in Hong Kong . So was the young boss, Walter, who was always friendly to me.

Shriro’s had made a fortune outside China in the years after the end of World War II, mostly in consumer goods—watches, pens, washing machines, household goods, perfumes, nylon stockings. The meteoric rise of the Shriro group was partly the result of Mr. Shriro’s vision and ability in developing and cultivating important contacts while he was held in a concentration camp for most of the war years.

Mr. Krouk recounted for me how, one day toward the end of 1942, a number of enemy nationals, including British, American, and Dutch, were rounded up in Shanghai . They were brought by military jeep to a guarded military camp on Haiphong Road . Although built by the Chinese, the Japanese used this concentration camp for high-profile prisoners. You knew you didn’t have a future if you were sent there. Among them was Jacob Shriro, who had been dispatched nine years earlier in 1934 by his brothers to start a branch office of the family company in Shanghai .

In the Haiphong Road camp, Shriro made friends with the other inmates, particularly Sir Robert Calder-Marshall, who was head of an industrial company; P. S. Hopkins and Charles Ferguson, who were president and vice president, respectively, of the Shanghai Power Company; E. A. Petersen, who was worldwide vice president of the Chase Bank; and Jack Liddell, also a prominent figure.

At the end of May 1945, the inmates were suddenly moved to the town of Fengtai , not far from Peking (now Beijing ), presumably for extermination. But, as luck would have it, the war ended shortly afterward and most of the prisoners gradually trickled back to Shanghai . Mr. Shriro had a lucky escape. After almost three years in military camps, living under the most rigorous conditions, Jacob Shriro didn’t sit idle on his return; he busied himself with the affairs of the Shanghai office, which was still located in Canton Road . The financial situation prompted him to approach his new friend E. A. Petersen, who extended Shriro unlimited funds.

Financially Shanghai was going through a difficult period. The value of the local currency diminished almost daily. The Shanghai Power Company (SPC) was one of the companies experiencing real problems. Huge funds from supplying electricity to consumers were rapidly accumulating, but the company had no sensible outlet for these monies since their charter prohibited dealing in property, foreign currencies, and works of art. Jacob Shriro had a brilliant idea: his company would borrow funds on a six-month basis at a nominal interest rate with an understanding that a certain percentage of the loans in foreign currency would be repaid overseas to SPC’s nominees. Mr. Ferguson, treasurer of SPC, and Shriro’s local manager, would agree on the percentage. Mr. Shriro in New York would repay 30 percent of each loan thirty days after each transaction at a liberal free-market rate, that is, a black-market rate. Such dealings were common, although these two words were never used.

Shriro’s borrowings were repaid punctually and after six months, because of constant devaluation, they constituted just a trifle of the original value. Shriro Shanghai used the loans partly for exports but mostly for black-market remittances to Shriro New York and, in a small part, to Shriro Hong Kong. This mechanism was in operation in 1946–47 and part of 1948 but came to an abrupt end just before the economic reforms introduced by Chiang Ching Kuo. By various estimates, Shriro’s benefited to the tune of $780,000, although Shriro’s accountant arrived at a rough figure of over $1 million in net profit. Such extended bank credit, allowed Shriro to establish seventeen branches in Asia , Europe , the United States , Canada , and South America .

In the meantime, as one of the two larger U.S. importer-exporters in Japan under MacArthur’s occupation and before the revival of the giant Japanese trading houses, Shriro Japan ’s business was booming. Both Shriro Sr. and Jr. sought more expansion in consumer goods, including woollen yarns (which were to be the company’s temporary undoing), as well as in a new field, industrial manufacturing. The fat postwar profits and the extended credits they received tempted them to speculate and they bought up all over the place, expecting prices to jump.

Jacob Shriro decided to expand the watch business into the huge U.S. market: first, by promoting Shriro’s popularly priced Sandoz watches, and second, by setting up an assembly plant in Hong Kong using Swiss parts and skilled engineers to take advantage of the cheap labor market.

The first strategy failed because advertising costs in such a huge market were high. Shriro’s couldn’t afford endless spending on promotion. Business schools now show that the success rate of a new business or a startup in a new market is just one in nine. Shriro’s simply believed it would be successful in Singapore and Japan , which, right after the war, were hungry for merchandise. Shriro was an early bird at the right time in the right place. However, pitted against the U.S. market, the company’s comparatively slow and short-lived promotion didn’t tip the huge consumer market one bit. No one paid attention to Sandoz watches or a small company from the Far East . Shriro’s lost a fortune in a short time. In spite of all this, Walter Shriro wanted to get into manufacturing. He had two choices presented to him and unfortunately he made the wrong one.

By the time Mr. Krouk left, China was much better developed than Hong Kong was before and immediately after World War II. Shanghai was its business and industrial center and its largest market for industrial products. Shriro in Shanghai had once owned a textile factory that made worsted and woollen goods. Both Jacob Shriro and Krouk were familiar with the textile business and Krouk also knew the cotton textile market.

Many rich families owned cotton mills and it so happened that one of the English textile engineers in a large English-owned cotton mill, Horace Ormerod, was a close friend of Krouk’s. Omerod went to Hong Kong to work in a cotton mill owned by the same group, John Marden Inc. Here was a good opportunity for Shriro to open a cotton textile mill. The young engineer had the technical know-how and years of experience in Shanghai and Hong Kong . A factory could be up and running by 1959 or 1960—just as Hong Kong ’s textile and garment export industry was taking off. In those years, many of Hong Kong ’s textile tycoons were expanding into other fields, including electronics and real estate. In fact, they were much weaker financially than Shriro’s.

A precision engineering company owned by Cathay Pacific Airlines had been established to repair and perform maintenance for airlines that flew through Hong Kong . The number of airlines was increasing and business was good. In fact it looked like business was booming. In those early years, precision engineering was high-tech, “the new thing” with an endless future. It was very tempting!

Eric Bruestlein, the general manager after Frank Stuckey, got to know two engineers in the Cathay Pacific factory. They thought that another precision engineering company could make similar products and supply similar services all over the world. Getting business wouldn’t be a problem. One day I overheard a casual conversation over a cup of coffee between Eric and his Hong Kong team, “Every one of our materials in the Cathay factory has a card listing its origins. For example, a piece of webbing or a piece of steel, to make a seat belt on a plane, has recorded on it where the raw material came from, where it was processed, how many processes it had gone through, the name of the factory, the country and the date of processes, as well as the records of the tests conducted.” It sounded to me more detailed than a bull’s pedigree! In fact, neither Walter Shriro nor any of his managers understood a thing about it, but everyone was excited.

The two engineers were lured away from the Cathay factory and commissioned to open a new factory. A piece of land was bought in Kung Tong in the new industrial area of Kowloon and a large factory built near the harbor, which had recently been constructed by the Hong Kong government to facilitate import and export shipments with loading, unloading, and warehouse facilities. The two engineers were given a $1 million budget to purchase machinery, then a huge amount of cash. No one questioned what they planned to do. No real project was planned or even debated. Two geniuses had been found in a totally new area, the future of the industrial world. And they had better be confidential about what they were doing!

The factories were built and the machines started to arrive from different makers in different countries. They spent the $1 million. They visited many countries. But all the machines didn’t make a factory or form a production process. Nothing could be made and no orders were received. The two engineers were fired. In fact, they probably never came back! Shriro had sent Krouk and his family a round-the-world trip to see the huge empire that Shriro’s had built after the fall of China . On his return, he was to take charge of the Far East from Japan to Singapore and Hong Kong .

By the time Krouk got back, the damage had been done. The Shriro Precision Engineering Company (SPECO) became an endless drain of money. On one hand, the machinery didn’t work. Chinese engineers had been hired and technicians trained to operate the machines, but the factory made nothing! On the other hand, in an air-conditioned, hermetically sealed room, there were fifty young women in neat white uniforms who had been trained by a Swiss engineer to assemble Swiss watches for Jacob Shriro to sell in the States. The sales didn’t go as expected. The business was small; the assembling room worked only a few days a month. Yet they had to keep paying the fifty young women because they could assemble to “Swiss standard” and the company couldn’t afford to let them go.

Shriro New York , after its heavy spending, declared Chapter Eleven for bankruptcy protection. Shriro’s accumulated debts from the Hong Kong & Shanghai Bank were worth millions of dollars. Their assets couldn’t cover these debts. With their business in Japan , Hong Kong , and Singapore generating good cash flow, they had to ask the bank for continuous support. The bank didn’t want to abandon the venture and decided to inject some money to make it work. It would take a while for the cash, mainly from the Japan office, to pay back the bank. SPECO offset all its Hong Kong earnings and the Japan office sold all its real estate holdings to help generate the cash.

In the midst of the crisis, the bank decided to take drastic measures against both Jacob and Walter Shriro and forced the to retire. The bank intended to appoint a management team of three, but two managers turned down the proposal and the plan fell through. Then the bank recommended that the Shriro Hong Kong manager, who still wielded some influence over Shriro Sr., go to New York to convince the boss to close the Pennsylvania operation. Simultaneously they had to negotiate the repayment program. After three months it was finally agreed upon, but to the utter dissatisfaction of both Shriros, although they had no real option. The program became a heavy burden on trading activities of the Asian branches, particularly on the Tokyo office, which was the greatest earner.

All of this changed my life. During 1960–61, it became obvious that the Taipei office had no future. Taiwan ’s economy showed no signs of taking off. Taipei was still a small country town. There were only a few airlines, and only a few ocean freighters called on Taiwan ; there were few passengers and not much foreign trade. Every time I came to Hong Kong , I asked Eric Bruestlein if he had any ideas I could develop.

During this time Eric, who had a number of years’ experience in Singapore before working in Hong Kong , became “rubber-minded.” Rubber was important on the world market. The rubber exchange in Singapore was like the stock market now. A seat on the rubber exchange could make the company a lot of money. Eric wanted to get a seat in for Shriro’s and send me there to be trained as a rubber dealer. “It’s mathematics and common sense. You could do it,” he advised me. “We’ll help you to develop a customer base.” But Shriro didn’t get the seat at the rubber exchange and I didn’t go to Singapore .

By the time I fulfilled my second contract for dairy cattle, the Taiwan businesses had been reduced to making Parker ink. The foreign exchange available for consumer goods was drying up. Local manufacturers started to make cheap ballpoint pens. In the meantime, Shriro’s problems in New York and Hong Kong became serious.

After Mr. Krouk came back to Hong Kong from his world trip, he traveled between Japan , Hong Kong , and Singapore . However, in 1961 Eric was diagnosed with throat cancer and went back to Switzerland . Krouk now had to manage the Hong Kong office and contend with SPECO, its biggest problem. He tried to consolidate Shriro’s Far East operations by closing the money-losing office in Jakarta . Its manager, Karl Mueller Jr., was moved to Hong Kong as Krouk’s assistant. Karl had studied at Aurora University in Shanghai , a few years younger than I but in the same class. I always remember him sitting in the back corner of the classroom in cold winter weather huddled inside his old heavy coat. We renewed our friendship when he accompanied Walter Shriro to Taipei several times. He was no stranger to me.

After he closed the Jakarta office, Krouk moved me to Hong Kong . In new York , Shriro’s Chapter Eleven was no secret. Parker had informed me about it when their representative came for his annual visit. It didn’t help Shriro’s relations with Parker and it became clear that Parker might take action or move its business to other agents. I didn’t yet know how serious the trouble between New York and SPECO (in Hong Kong ) was and that the bank was considering strong action. I wasn’t told to close the Taiwan office, although after Mr. Ma and Mr. Chu left, the office staff was just me, my secretary Mrs. Pan, my bookkeeper Ms. Wong, and the Parker repair man, Mr. Yao. A friend, C. C. Chow, a chemical engineer in the Taiwan Trading Company with an office next door, came twice a week to help my workers mix the ink.

For three months, I managed the SPECO factory. It was hopeless. When I got there, I was told that the engineers had suggested a year before that the factory make plastic and aluminum eyeglass frames. Aluminum frames were popular at the time. Shriro’s, desperate to do something with its “precision machines,” was anxious to give this a try. We received a frame order from the United States for half a million dollars, but on the condition that we take over the machines from an old factory in the U.S. and move them to Hong Kong to make use of the cheap labor. They expected many orders. We immediately spent $50,000 on the plant equipment and $150,000 to buy the old machines. Then the order was canceled! By the time I got there, the machines were still in the warehouse at the harbor in their wooden crates.

I had nothing to do at SPECO. With the problems in New York and Hong Kong , SPECO received no spare parts, New York had no sales, and Shriro’s office in Switzerland had no money. New York wouldn’t make a decision. The young women continued to come every morning and then spent the whole day looking at a blank table. It was both silly and sad.

Obviously SPECO needed to be closed as quickly as possible, and indeed it did a few months after I left. Also obviously, Shriro Hong Kong still needed to maintain its regular business in famous-brand pens, watches, and cameras. There was no work for me, or for Karl Mueller. Krouk now ran back and forth between Tokyo and Singapore . The Hong Kong Bank counted on the managers  in Tokyo , Hong Kong , and Singapore to use their cash flow to pay back the millions of dollars of loans owed to them! I talked to Krouk about letting me go back to Taipei . With a small ink manufacturing plant on my third floor and with low overhead, I could struggle to make a living. I even thought of using my savings and the money May brought with her (almost $6,000) from Shanghai to open a pen shop in Hen Yang Road .

Krouk agreed to move me back to his office. The engineers didn’t need a manager. He said he would discuss with Walter Shriro the possibility of me buying out the Taipei office at its book value. This was close to $55,000. I had to sell my provident funds in Hong Kong, which had accumulated since 1952, and I had to borrow money from the banks in Taipei to add to May’s money from her parents. Even so, I could raise only $35,000. Krouk suggested I pay the balance of $20,000 in two or three years, when I would have money. But again he needed Walter Shriro’s approval, so I had to wait in the Hong Kong office.

While I was waiting, I sat at a desk face to face with Philip Nicholson, Shriro’s young English manager who oversaw the textile exports, a new division established a year before when Alexander’s Department Store in New York City started using Shriro as its buying agent in Hong Kong. He was about to leave Shriro’s because Alexander’s buyers had told him that, at the end of a one-year contract, the store was going to leave Shriro’s and join Myers Australia. Myers was going to start its own buying office in Hong Kong. (The Farkas family in New York, which owned Alexander’s, and the Myer family in Australia were old friends.) Philip Nicholson planned to leave Shriro’s as well. Another friend, Ian MacCabe, the chief accounting officer in the Far East, also planned to leave to establish an auditing office in Hong Kong.

In April 1963, after a trip to Tokyo, I met Mr. Krouk at the airport. He had Walter Shriro’s approval to draft a simple contract and sign the office over to me. I signed off my insurance policy and went to Taiwan to raise the rest of the money to pay the first payment of $35,000.

 

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<1> A Trip to the States

 

After I signed the agreement with Krouk in Hong Kong, I went back to Taipei. I had been away for three months, just as my visa was to be renewed. In the meantime, May was told to stay in Taipei and wait. Back in Taipei, after the initial success of U.S. aid projects in agriculture, the U.S. government started to help Taiwan build up industry, beginning with textiles and light manufacturing and gradually moving to cement and construction. Needless to say, I still couldn’t find a place for my new company.

In my early years with Shriro’s, business boomed, with the exception of the Taiwan office. Almost as a rule, Walter Shriro gave every new executive a round-the-world trip to see his other offices. Taiwan, however, was a small office, initially set up for the Parker Pen Company—and on a small, underdeveloped island with no future in sight. As a manager with a turnover much smaller than any one of the Hong Kong sales executives, I couldn’t expect such a trip—and my Taiwan office certainly couldn’t afford to pay for one. However, after my first business trip to Australia and on my way back to Taipei, I stopped in Hong Kong for a few days. May was waiting for me at her father’s house. Before I left Taipei I had asked Walter Shriro’s permission to visit Tokyo before we returned home. He agreed and sent us there for two weeks, all expenses paid. It would be our first trip to Japan.

I went back to Taipei in April 1963. I struggled for three or four months with the business since my only operation was the manufacture of Parker Quink ink. May sold all her small pieces of gold and her gold jewelry to raise working capital and pay expenses. (She told me the only thing she didn’t sell was a small gold rat made from one ounce of solid gold because I was born in the year of the rat!)

In September, the Rotary Club held its Annual International Convention in St. Louis, Missouri. I thought it would be good to make the trip. I knew several managers at the 7-Up company’s headquarters in St. Louis and also could visit the Parker headquarters in Janesville, Wisconsin. I wanted to go. Besides, my sister Pauline was studying for her Ph.D. in Los Angeles on a full scholarship from the Catholic Church. I could see her too.

I joined a ten-man delegation from the Rotary Club of Taipei. The government of Taiwan had placed tight restrictions on anyone traveling abroad and this was a much easier way to get to the States. The club took care of passports and visas, making it unnecessary for me to answer all the inevitable bureaucratic questions. I couldn’t have had a better sponsor. I had dreamed of visiting the States since graduating from Aurora University. A number of graduates from my years, both from Aurora and other universities, including my friends from rich families and others who received Mao’s scholarships, had gone there to study. But I had never had the chance.

My Rotarian friend Mr. Chen, nicknamed “Gorilla,” the vice president of a travel agency, led the group. I was in good hands. Every step was well planned. I stopped in Los Angeles, where Pauline and a friend picked me up at the airport. It was about ten o’clock in the morning. The flight, on a propeller plane, had taken more than thirty hours. I was tired. Pauline knew that I was stopping only for one night, so she took me to an early lunch and then, with her friend, we went straight to Disneyland. By the time they booked me into the Ambassador Hotel, I was dead tired but very happy and went straight to sleep without any dinner.

I joined the others on the flight to St. Louis to attend the three-day convention. Between functions I visited the 7-Up factory. But I heard the same old story—Chiang Kai-shek’s government didn’t consider soft drinks a necessity, so Taiwan need not spend hard currency in making and selling it. At the end of the convention, “Gorilla” put me on a plane for Chicago, where the Parker Company sent a car to pick me up and drive me to Janesville. I wasn’t expecting it, but I received a very warm welcome. I was Parker’s smallest agent in the world. My yearly purchase, anywhere between $50,000 and $100,000, depending on the government foreign-currency allocation for the year, was smaller than any of the larger shops in Hong Kong or Singapore. Nevertheless, Frank Mathay, the vice president for export, greeted me with a broad smile and open arms and then took me to the president, Dan Parker.

Frank Mathay was also highly respected by the Parker family. He was a German-American, strong-minded and straightforward. When he was young, he had worked for the company’s founder, George S. Parker. He accompanied him to many countries, including China, in the old days when owning a Parker pen was a status symbol. Then Shanghai was ruled by foreign concessions, so there were no import restrictions. Mathay had appointed the largest book publisher in China, the Commercial Press in Shanghai, as Parker’s exclusive agent, and in fact while I was visiting him, the general manager of Commercial Press, Y. O. Wong, became Taiwan’s prime minister.

Mathay invited me and a few other Parker executives to his house for dinner. During the evening Mathay got out his old records from his China trips many years ago. Although he had once learned the Chinese language and some calligraphy, now, a good twenty years later, he had only a vague recollection. He asked me to explain them to refresh his memory and to show his other guests how interesting Chinese culture and literature is. He brought out a book made of the finest Chinese rice paper, in perfect condition. On the first page was the famous Chinese poem—in fact it was “lesson number one” for anyone reading the poems of the T’ang Dynasty:

                                       

The moonlight coming through my window

to the foot of my bed

makes the floor white and bright

I think it is the frost on the ground

I can’t help but lower my eyes

and think of my loved one at home.

I lift my eyes to look at the moon

                       

Mathay was pleased with my translation of the old poem into simple English and then showed us some souvenirs he had bought in China. One of them was a Chinese teapot with six cups, made of fine dark reddish-brown clay. My hometown, Yixin g, is famous for producing such tea sets and they were once sold all over the world. I explained about Yixing’s teapots and the Chinese custom of drinking tea. Immediately I remembered a story we used to tell to each other as teenagers.

                                       

A foreign visitor asks a Chinese, “Why do you have so many wives and concubines? We only have one.”

“How many tea cups do you have for a teapot?”

                           

Instead I told a story about boiling water for making tea:

                           

After suffering several defeats in war during the Ching Dynasty, China opened its doors to world business and diplomatic relations. Our prime minister, the famous H. T. Lee, ordered by the empress, made a tour through Europe and England. On one occasion he was politely addressed by high officials at a social gathering in England. “We find your system of fixed marriage very strange. We, in the West, let boys and girls meet together. They fall in love. They get married and  have a happy marriage. In China, boys and girls never see each other until the night of the wedding!”

The prime minister paused and smiled, touching his moustache with his fingers. “Gentlemen,” he answered, looking at the tea being served by his English hosts, made with boiled water. “In China, marriage is the beginning of an interesting life. We boil cold water. It starts to warm up. It boils at 100 degrees Celsius. You have water already boiled. You could add nothing more to the marriage! It is already 100 degrees. It may even evaporate!”

Everyone was amused by the prime minister’s answer. He had defended his country’s old-fashioned customs by way of an elegant joke—although whether or not it is a good custom is another matter! “We have a scholar in our Taiwan office!” Mathay declared as he got up to say goodbye to his guests. It had been a good dinner. “Come to my office tomorrow morning at 9:00,” he said to me. “We’ll talk business.”

The next morning I explained my problem to Mathay, about the limited amount of foreign exchange and how most pens were smuggled into Taiwan, whereas I had to pay 40 percent plus an 8 percent surtax. I told him that I had tried my best to promote Parker pens for the company as well as for Shriro’s, but that I didn’t have enough pens to sell because my price is higher than the smugglers. I could never compete with the smugglers in Parker 51s. If I could lower my cost of Parker 21s and ballpoint pens, I could sell at the same price as the smugglers!

Mathay discussed this problem with Phil Hull and his technicians. They agreed to sell me Parker 21 and Jotter ballpoint pen parts and authorize me to assemble them in Taiwan. I could take advantage of the lower labor and packaging costs. Parker’s assistance allowed me to import more pens and promote them more efficiently. I visited the pen dealers and retailers more often because I had more pens to sell. I began to dress up retailers’ pen counters and place newspaper ads to supplement Parker’s own advertising.

When I got back to Taiwan, with Parker’s support, I immediately began to petition the Chinese government through two Rotarians who sat on the foreign-exchange committee. My argument was that the Parker 21 sells for only NT$120 or U.S.$4.00 at retail. Therefore, since students and soldiers could afford to own a Parker at this price, the pens are not a luxury item. Furthermore, I convinced them that we needed Parker parts. At the time, about two million people had moved from China to Taiwan, adding to the local population of about nine million (1960s figures) and there were a million Parker pens in use. With “Parker parts” as the magic words, I got my foreign-exchange allocation increased to $150,000 per year. At the reduced price, I was able to do enough business to make the balance of my payments to Shriro’s. And finally, I was also beginning to make a profit.

None of this was easy. We had to work day and night for two weeks to make ink and assemble pens. We could sell the pens only in the small towns and cities beyond the reach of the smugglers from Taipei’s seaport of Keelung. The smugglers sold in Taipei because their prices were still a little lower. And they received money in cash to pay to the ships’ crews who carried the smugglers’ merchandise into Taiwan.

May began to work on finances. The payments we collected from each countryside wholesaler were in stacks of local bank checks. For $100,000 we could have as many as 300 small checks from different small, remote banks. The checks were postdated up to thirty to ninety days and of course some would turn out to be bad. The large bank in Taipei, to which we owed money, didn’t like handling these small local checks. Fortunately, May had experience in the Young family’s bank in Shanghai and she knew how to make friends with bank managers. She got them to accept the small checks and thus reduced our interest costs.

Not long after I made this first visit to the States and started assembling Parker 21 low-priced pens and Parker Jotter ballpoint pens, Parker made an unexpected move in Hong Kong. They severed relations in Hong Kong with Shriro’s and switched the Parker agency to a Wally Kwok, a friend of Parker’s vice president. Kwok wasn’t in the pen business or even in the import-export business. Wally Kwok was sixty at the time and a very charming person. Nevertheless, to change the agency to someone not in the pen business provoked some talk among people in the pen and stationery business.

I got the news in Taipei and immediately went to Hong Kong. I knew I had to go during the ninety-day advance notice Parker gave Shriro’s. My company had inherited the Taiwan agency from Shriro Hong Kong, but in the meantime the agency had been “reconfirmed” by Parker during my visit to Janesville and approved by Frank Mathay. Nevertheless, Mathay was due to retire that year.

The first Parker boss I met was Daniel Parker. He was going to Washington, D.C., to enter politics. His cousin, George Parker, whom I had never met, succeeded him. Any of his business went through Ed Boggs, the new vice president. I went to see him to protect my own business. Ed Boggs was in Hong Kong with his new wife during the ninety-day transition. Moreover, he had decided to make his residence in Hong Kong and form a new company called Parker FEAO (Parker Far East Area Office). The FEAO, however, wouldn’t carry out any business. Wally Kwok would open a new Parker Distributors (Hong Kong) Ltd. with Parker as a junior joint partner in the venture to handle the sales.

To be honest, Ed Boggs didn’t know much about Hong Kong or the Orient. He traveled all over the world and used to say he started Parker businesses in remote areas such as Africa, the Middle East, and South America. The Kwok family, on the other hand, was beginning to follow in Shriro’s footsteps. Boggs became powerful at Parker. He covered all the important markets in the Orient. Hong Kong and Singapore, both free ports with no import duty, were Parker’s largest export markets; Japan wasn’t yet a big market. Hence people bought and smuggled goods from Hong Kong into China, Taiwan, Thailand, and Vietnam. In Singapore people did the same with imported goods smuggled to Malaysia, Indonesia, and the Philippines.

In these early years, Ed Boggs and Wally Kwok were friendly to me. I was young and my market couldn’t be smaller, but Boggs assured me that my Taiwan business wouldn’t change. He was aware of Mathay’s decision. Wally Kwok, as his new agent, had many dinner parties to show Mr. and Mrs. Boggs the Orient and its high-society nightlife and May and I joined them. We were staying at the famous new Mandarin Hotel in the middle of downtown Hong Kong, near the water and facing the Hong Kong Kowloon ferry. While we were staying here, I heard of the death of my former boss, James Lee.

Less than a year after I had visited Janesville, Mathay retired. A few years later, he died. It seemed that I visited Parker Pen at the right time and was lucky that he did me such a favor not long before his retirement. How could I not remember him whenever I thought about my difficult start and every time during the next twenty years when I made my annual visit to Parker. I won’t forget him.

<1> The Traveling Salesman

 

With Frank Mathay’s approval, I began to import parts and assemble Parker 21 and ballpoint pens. I had to target my sales at small towns and villages; the cities had too many smuggled goods. Getting around was difficult, so I bought a car, a little English MG Magnet four-door sedan. I was about to start my new life as a traveling salesman!

In 1963 May and I made our first trip all over the island of Taiwan. Each of the seven or eight smaller cities we visited had between five and ten stationers who would stock about a dozen pens. In the small towns, there might be one or two shops. I soon found that I couldn’t sell to them directly because the shops were too small and had no money. We took with us on this trip S. M. Shieh, the owner of a larger stationery wholesaler in the city of Taichung. His activities covered the three nearby cities of Tai Chung, Nantou, and Changhua. I was the driver. May sat next to me, watching and worrying about the traffic. Mr. Shieh sat in the back.

Shieh took us to about ten shops to see for ourselves how they operated. My first impression told me the whole situation. The three of us walked in. The shop was dirty and messy. We sat down with the owner. His wife offered us a drink, the long-established Black Pines lemonade. It cost 20 cents and the four of us shared the bottle, which shows how poor life was in those days. The wife set out four small teacups, one for each of us, and half-filled them with the lemonade, leaving about a third of the bottle remaining. This was how respectable guests were entertained.

Shieh told me he could sell each time three or six or even a dozen pens to each shop owner. He had to sell them other, cheaper pens as well as pencils and stationery to make his trip worthwhile. To make matters worse, the shops didn’t pay until the pens were sold. He would come back a week later to collect a check just for the merchandise sold. The check would still be thirty to sixty days postdated. “These shops have no capital,” explained Shieh. “My merchandise is their capital! We have to watch them all the time. If we sense that the owner may go bankrupt—say if he drinks, gambles, or runs around with women—we take back our merchandise. I could be your dealer, but I must sell other brands and stationery at the same time to pay my traveling costs.”

Right away I realized two things. First, that to sell to these small shops took time and was extremely difficult. The owners had all the time in the world to talk to you about other things before they told you how many pens they wanted to buy, if indeed they wanted to buy at all! Second, collecting payment was impossible—except for a man like Shieh, who lived nearby and could visit the shops more frequently.

After making the tour with several wholesalers in several districts of interior cities and towns, I had an idea how to manage my sales once my Parker parts arrived. I would get my own company to cover the city of Taipei. I would pay my repair man, Mr. Yao, a higher salary. Yao could also visit city shops every evening or a few times a week. The shops stayed open until 9:00 p.m. and the city was small; he would go there to chat, have tea, and make friends.

I appointed four wholesalers by dividing the areas into four districts: M. T. Lin looked after Tao Yuen and Shincho; S. M. Shieh took Taichung, Nantou, and Chianghua; C. K. Chua had Chia Yi, Taipan, and Kaohsiung; and T. H. Chao took Taiwan’s east coast mountain area. The East West Highway had not yet been built, so I left most of the east coast to Chao. I visited the wholesalers every two weeks and took them along to their major customers to push sales.

May insisted on going with me each time I made a trip, even though I assured her that I was a careful driver. We put my Parker pen inventory in the trunk of the MG. I could take orders for Quink ink and send it on later. We would go to Tao Yuen City and pick up Mr. Lin or one of his two sons. Having started early, we’d arrive, after an hour and a half’s drive, still early in the morning. We would do three or four stores in the city in a morning and then visit the nearby towns and do three or four more in the afternoon. If we sold ten dozen, Lin would usually take another ten dozen for the shops we didn’t get to visit. I gave Lin ninety days’ credit and received full payment for the twenty dozen at a wholesale price. Lin made a margin of 10 percent. I could afford the ninety days because I could borrow from the banks, but for Lin this was more difficult.

Lin, however, never wanted to issue me his own checks. He would take the local bank’s checks, which he received from the next tier of shops to whom he sold his merchandise. These were called “customers checks.” We’d get a pile of them, from NT$100 (New Taiwan Dollars) to a few hundred dollars, odds and ends, predated by as much as 120 days. May then had the unpleasant job of begging our bank to accept the checks

We would leave Tao Yuen in the evening and drive to Tai Chung, staying at a small hotel for the night. We would visit Shieh for the next day and a half. On the third day we would be in Chia Yi, where C. K. Chua was our favorite dealer. He took pity on us each time we got there late in the afternoon. He often waited and helped us check into the small hotel he knew. In return I would buy him a good dinner. He was a happy and open person who liked to drink but never overdid it. By the time we were halfway through our dinner, however, he would be very friendly. “Mr. and Mrs. Jen, don’t work too hard!” he would laugh loudly, giving us more and more advice, as one would to an old friend. (And indeed he did become one of our best friends in Taiwan and we miss him to this day.) “You two sleep late tomorrow morning! I’ll come at 11:00 a.m. By that time I’ll have figured out how many pens you’ll be able to sell in my city. Chia Yi is my home city and I am good friends with everybody. You don’t need to visit them! Leave your sales materials with me and I’ll display them. You need not see to it yourselves!”

On the fourth day Chua would work with us from 11:00 a.m. to 9:00 p.m., covering both Tainan and Kaoshiung. At the end of the trip, he never gave us the bothersome “customers’ checks.” Instead he would give us three of his own checks—dated thirty, sixty, and ninety days in advance. Then he would say, “Take a look at the leftovers in your trunk. Give me all that’s left and I’ll give you a ninety-day predated check.”

For over a year, this was our routine and we made some twenty-five similar trips. We never stopped to relax. As soon as we were finished with Chua, we would rush back, driving at night to get back to Taipei by the fifth day. It wasn’t easy. Once we got lost in the mountains in the middle of the night. We went to the nearest Police Box where the policeman was sitting and watching. He closed his door, got into our car, drove us to the right highway, and then insisted on walking back. “I can do some patrolling anyway,” he said, and set off on foot with his torchlight. A few times I got a flat tire on the highway and May would help me push the car and change the tire.

It was a tough job selling Parker pens in the country towns this way. Several times, when we were still a few hours from Taipei, May and I would be so tired that we’d pull off the road in the middle of the night outside some small town. We’d lock the doors and fall asleep until the next morning. Once, we pulled the car onto the side of the main street of Chung-li, a town about an hour’s drive from Taipei before the new high-speed highway had been built. The noise from a group of soldiers woke us up at about 6:00 a.m. They had come down from their barracks in the nearby mountains to buy vegetables and meat and were bargaining with the vendors. We were in the middle of the fresh food market on Chung-li’s main market street! The sellers had already set up their food displays while we were still asleep in our car and people were already walking along the narrow street. We quickly drove on to Taipei!

In spite of such funny incidents, these were tough times as we tried to get started. We hoped for better days to come.