Question

what was the internationalization strategy of ACER and why was it successful ?

Answer 1

In 1990, Acer’s investments in overseas business suffered a
huge loss. Suddenly, accusations and derision poured upon Acer.

At that time, government agencies questioned our continued
investment plans overseas and journalists criticized that Acer had been ‘dashing’
too fast. Even shareholders and employees were not supportive. Some colleagues
even challenged me directly why the money they worked so hard to earn was lost
in overseas operations.

Almost ten years of smooth globalization operation was
encountering a bottleneck seemingly hard to break through.

As pressure continued to build up, I had to come up with
solutions. Suddenly an idea occurred to me. Under the circumstances, the only
way to convince our employees and investors was to invite our foreign partners
also to invest in Acer and to share the risk. If we invest, they will invest
more; if we lose, they will lose more. That was the only way that I could
continue to make an investment overseas.

Subsequently, Acer developed a new strategy of ‘global
brand, local touch.’ This strategy solved most issues that had been hampering
Acer’s globalization plan, such as finance, brand name image and management
efficiency. It is like applying the right medication to cure multiple diseases
at once.

Since 1993, Acer has become the number one computer brand in
Latin America, Southeast Asia and the Middle East. In 1994, Acer’s US
operation began to turn profitable after continuously suffering losses for
several years. Acer has since become the ninth largest brand in the US personal
computers market among fierce competition. It made Acer the seventh largest
computer manufacturer worldwide in 1994.

This strategy does not come from an accidental inspiration
.On the contrary, it is derived from countless lessons, challenges and pressures
and thus formed a unique globalization model for Acer.

My earliest international experience could be traced back to
my days at Qualitron when I was sent to support the US branch office in Los
Angeles. As the office was understaffed, we had to do everything ourselves
including the clumsy way of using a telex. This was a new experience for me–I
had always been an engineer and a manager.

The know-how of internationalization is much more complicated
than expected. In a foreign country where we are not familiar with the people
and the place, it is sometimes difficult to collect a payment. If executives
extend even more credit lines in order to get orders, they will not know where
to recover the bad debt, which may have been created intentionally by customers.

With this experience of managing an overseas business, we
immediately planned to set up a US office when Acer was started. At about that
time, Edward Change, one of my classmates, who worked for Hewlett-Packard of
Silicon Valley, happened to come back to Taiwan. I invited him to join Acer to
be in charge of the US business. As Edward had never done any business before, I
crammed him with a session on how to do business. He took it seriously and even
tape-recorded the lesson. As such, Acer made the first step in globalization.

Growing with partners

Acer’s US office was officially inaugurated in 1977. Edward
had a 60% share and Acer had 40%.

Before this office was set up, we could only make 5-10% of
commission out of every sale. After the office was established, Edward would get
goods from suppliers, resell to Taiwan, and Acer Taiwan would pay the commission
to the US office on a regular basis. This way, our US office could get larger
discounts from the US supplier and generate profits from the price difference.
Moreover, the calculation on commission was faster and better assured. More
importantly, the US office could enjoy credit lines extended from the suppliers,
and sometimes Edward would pay for us first.

Acer’s history is a history of continuous partnership. Acer
was co-founded by several schoolmates. The US operation was also a partnership.
The establishment of branch offices in Taichung and Kaohsiung in 1979 was also
composed of 40% from Acer and 20% from three other partners in each city. This
model has greatly influenced Acer’s later strategy of ‘local touch’ and
‘local majority shareholders.’