Ties to Asia Give Tustin Firm Export Clout : Marketing: Alton Industries, owned by a Taiwan conglomerate, tries to even out the trade imbalance by boosting U.S. exports to Asia.
From the comfort of his large office across from the Tustin Marine Corps Air Station, Michael Lee contemplates what among the vast array of American products might be a hit with consumers in Taiwan and Hong Kong.
Lee, 40, is president of Alton Industries Corp. in Tustin, a subsidiary of Taiwan’s Yieh Loong Group, a giant conglomerate with its principal interest in steelmaking. Yieh Loong established the import-export company as part of a larger effort by the Taiwanese government to encourage more U.S. imports to help reduce Taiwan’s huge $9.8-billion trade surplus with the United States.
Alton’s major goal is to boost U.S. exports by helping American companies establish markets in Taiwan, Japan and Southeast Asia.
Taiwan, with a population of 20 million, may not have the consumer buying power to balance the country’s trade surplus with the United States by itself. For that reason, Alton has established sales offices in Indonesia, the Philippines and Thailand, and plans next month to open offices in Hong Kong and Mexico.
For the time being, however, Alton must contend with its own little trade surplus. Since opening the trading company in Tustin last October, it has imported $9 million worth of consumer goods from the Far East, most of it going to big Southland retailers like Fedco, Price Club and Home Depot.
But it has exported only $300,000 worth of U.S. products--primarily lumber, unprocessed steel, refrigerators and washers and dryers--to the Far East.
Over the long run, Alton hopes to boost its exports by establishing manufacturing facilities in the United States, either through joint ventures or by acquiring companies, Lee said. For starters, Alton is shopping for a bathroom furniture and accessories manufacturer.
“There’s a big market for Western-style bathroom products and kitchen gadgets in the Far East, especially in Taiwan,” he said. In Taiwan, the economic boom of the 1970s and 1980s has raised per capita income to $8,400.
“Americans take for granted many things they use every day and many of these products have a large market in the Far East,” he said. Some examples are garbage disposals and electric vegetable and meat choppers.
The Yieh Loong Group did not need much prodding by the Taipei government to establish the local trading company. It has been trying to diversify its business for some time, and the Tustin operation is part of that effort, said Alton Chairman P.H. Lee. P.H. Lee is Michael’s older brother.
“Yieh Loong has given Alton an unlimited credit line. So long as the trading company needs the money, we will be there to financially support this enterprise,” P.H. Lee said in a recent interview.
Yieh Loong Group is different from many other large Taiwan companies because most of its sales come from the Taiwan market. About 80% of its $850 million in annual sales comes from domestic business and the remainder from exports to Japan and countries in Southeast Asia and the Middle East, P.H. Lee said.
The conglomerate started 13 years ago as a steelmaker, churning out stainless steel wires, pipes and tubes at the time of a major construction boom in Taiwan. The company grew rapidly as the Taipei government undertook major projects to improve the nation’s housing as well as build bridges and roadways.
The group expects sales to hit $1 billion this year, despite an economic slowdown in most foreign markets. While the group is now somewhat shielded from economic woes abroad, it realizes that Taiwan’s economy cannot continue to expand as rapidly as it has forever, P.H. Lee said.
“Alton will be the foot soldier for the group to explore new areas of business opportunity abroad,” said the elder Lee. He added that Alton expects sales of about $24 million this year.
A Balancing Act Taiwan has instituted several measures to reduce its trade surplus with the United States, including lowering tariffs on 3,500 U.S. products and adopting an aggressive “buy American”policy. U.S. Trade Deficit In billions of dollars U.S. Imports from Taiwan ‘87: $26.4 ‘91**: $23.0 U.S. Exports to Taiwan ‘87: $7.4 ‘91**: $13.2 Trade deficit: ‘91**: $9.8 billion * 1988 export figures include $2.78 billion in gold bullion purchased by Taiwan’s Central Bank and 1989 export figures include an $18-million gold bullion purchase. ** Estimate U.S. Exports Electronics: 28.8% Motorized vehicles: 15.2% Foodstuffs: 9l8% Industrial equipment: 9.8% Chemicals: 9.1% U.S. Imports Electronics: 26.1% Apparel, accessories: 18.7% Toys, games, sports equipment: 13.0% Metal, metal products: 7.8% Industrial equipment: 6.1% Source: U.S. Department of Commerce
