The Hottest Soap Opera In Taipei

The family feud at Formosa Plastics has the island riveted

It's a drama worthy of prime-time TV. Last year, Y.C. Wang, the patriarchal founder of Formosa Plastics Group, Taiwan's biggest company, banished his son Winston from the family firm for a year as punishment for an extramarital affair. Now the time is up, and Wang has announced his son will not return because he hasn't mended his ways.

A company aide says no one in the family wants to talk about this private matter, but that isn't keeping all Taiwan from obsessing over the island's own version of Dallas. Winston, 45, managed the electronics division at Nan Ya Plastics Corp., the largest of the companies that make up the group, which has sales of $6.2 billion. Considered the most capable member of the family's second generation, Winston was expected eventually to succeed his 79-year-old father as chairman. Instead, the group appears headed for a period in which the remaining siblings and one of the elder Wang's three wives, Li Pao-chu, vie with one another and with a stable core of professional managers for control. "It's likely to be a big succession fight, and that could be destabilizing to the company in the short term," says K.C. Kao, a plastics-industry analyst at ING Barings Ltd.

The succession problem is one that numerous family-run corporate groups in Asia face as they struggle to balance strong personalities with the need for stable, modern management. In Formosa Plastics' case, the trouble started last year when an affair the younger Wang was having with one of his business-management students erupted onto the pages of the local press. The elder Wang was probably angered more at the public spectacle than he was at the affair, which is common enough for a businessman in Chinese society. Wang recently chastised his son again in public for not being "repentant" and lacking "filial piety." He also told local reporters that the company could prosper without his son.

Formosa watchers regard the powerful Li as a key player in this drama. She is rumored to have encouraged press coverage of the affair as a way to force out Winston, who is the son of another of Wang's wives. Li, also known in the press as San Niang, which means "third wife," holds no formal position in the company, but is considered one of the group's most influential figures. "San Niang is very likely to get more power in the process," says Barings' Kao. Two of her daughters already hold key positions in the company. One, Wang Rui-yu, is on the board of Chang Gong Memorial Hospital, which acts as a kind of holding company for stock in Formosa's three main divisions. She also has some financial oversight of division managers.

LOYALISTS. Although San Niang could amass more influence, she would have a hard time replacing Y.C. Wang as maximum leader. One reason is Wang's decision to promote professional managers to steer the group. Career managers are running Formosa Plastics Corp. and likely will continue to guide Nan Ya in Winston's absence. Of the three companies, only Formosa Chemical & Fiber Corp. is run directly by a Wang family member--Winston's cousin, William, who heads one of the clan's factions. Winston has a loyal following among Nan Ya's managers, but his return seems unlikely.

As the company lurches into this family crisis, operations remain sound. "It's a world-class company and it has a very, very deep management structure," says Nathan Emerson, an analyst at HG Asia Ltd. in Taiwan. Yet the succession won't be easy, particularly if Y.C. Wang dies before it is resolved. Analysts expect to see volatility in the stock prices of the various firms as family shareholders acquire shares to outmaneuver one another. Whatever the outcome, Taiwanese will be glued to their screens to see what happens next.

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