The Rehfeldt Group’s Deep Roots in Taiwan

Edward Rehfeldt father and son in the 1970s.

While in Asia in the fall of 1964, American businessman Edward J. Rehfeldt Jr. decided to make a stop in Taipei at the invitation of a friend. Before the visit was over, he had agreed to set up an electronics components factory in one of the first foreign investments on the island.

In the more than half century since then – over several stages of Taiwan’s economic development – that first enterprise has evolved into what is now the Rehfeldt Group. The founder’s son, Edward J. (Eddie) Rehfeldt III, serves as chairman, grandson Chris Rehfeldt is president, and Eddie’s brother Michael is vice president. Both Chris and Michael were born in Taiwan.

The businesses within the group, which include Air Associates and Lai Fu Trading Co., range from air-cargo airline agency to defense systems to new technologies, such as cybersecurity.

When the elder Edward Rehfeldt made that first trip to Taiwan, he had a solid grounding in the then still nascent electronics industry – but also a background of ups and downs in business. He was used to hardship and challenge. “Dad was a child of the Depression and had to quit school at the age of 14 because he was the only one in the family who could get a job,” says Eddie.

Working in Chicago’s first electronics company, the young man became a skilled hand at advertising, marketing, and sales. At the age of 36 – just before the attack on Pearl Harbor – he started his own electronics manufacturing company, together with a partner, making electronic components for radar and communications systems.

By 1948 he had grown restless, however. Selling out to his partner, Rehfeldt bought a gold mine in Durango, Colorado, and moved his young family west. They survived what was said to be the worst blizzard in Colorado history, says Eddie, but “Dad gave up when he found it cost more to get the gold out of the ground than he could sell it for.”

The next stop was Bakersfield, California, where Rehfeldt obtained the franchise for a soft drinks company called Mission Orange. “He tried to compete with Coca-Cola for a few years, but then we had the 1952 Bakersfield earthquake which badly damaged the bottling plant,” says Eddie.

“Rather than keep on trying to compete with Coke, he decided to go back into the electronics industry. He took a book of photos of the factory that he had had in Chicago, went down to Hughes Aircraft and said, ‘This is my factory in Bakersfield.’ He walked out that day with an order worth US$250,000, a lot of money in those days, to make things like transformers and magnetic amplifiers.”

In reality, all Rehfeldt had was a damaged bottling facility. He called old friends in the electronics equipment business in Chicago and had the necessary machinery airfreighted to California. Then he recruited a chief engineer by offering a former colleague the chance to abandon a freezing Minnesota winter, swung into operation, and managed to deliver to Hughes on time.

Early in 1960, Lin Shin-i, a young Taiwanese working in sales for Sumitomo in California, dropped by the plant. When Lin mentioned that he longed to go back to Taiwan on a visit, Rehfeldt bought him a round-trip airplane ticket. “That’s just the kind of guy Dad was,” says Eddie.

His father also wound up heavily in the hole after repeated visits to Las Vegas. To pay back the debts, Rehfeldt eventually had to merge the company. By that time it was 1964 and Japanese electronics companies were starting to enter the U.S. market. Hoping to work a deal to become the import agent for Japanese manufacturers, Rehfeldt headed for Japan – only to find that the large Japanese trading companies had a lock on the market.

Rather than return immediately to the U.S., Rehfeldt took up an invitation to visit Taiwan from Lin Shin-i, who by then had returned home to Taipei. The American businessman was deeply impressed by what he found on the island – a stable society, a young and well-educated population, more engineers graduating each year than could find jobs, and a newly enacted statute to encourage foreign investment. “Dad looked around and said to himself that this place was really going to take off,” says Eddie.

By coincidence, Lin Shin-i’s father, Y.L. Lin, was the government official responsible for promoting the new investment law. He gave Rehfeldt a strong sales pitch to attract his investment and came away with a firm commitment. The company Rehfeldt established, Taiwan United States Industries Co. (TUSICO), received the second foreign investment license issued by Taiwan, one week after General Instrument.

Where it all started: the first TUSICO plant.

“I was working in Chicago when Dad called and said ‘I’m going to set up a factory in Taiwan,’” Eddie remembers. “I said, ‘Where’s that?’ He said, ‘It’s Formosa.’ That rang a bell because I had written a school paper about Formosa when they were having battles over Quemoy and Matsu.”

A few months later, Eddie got on a plane to help with the new venture. To save legal fees, he and his father personally made the rounds of “all 39 government agencies” whose permission was required to start operations,” he says.

The senior Rehfeldt again utilized his electronics industry connections and convinced an old friend, the inventor of the miniature hearing aid and owner of Knowles Electronics, to invest in TUSICO and have his miniature hearing aid coils made there. Other business followed, including relays and memory core assemblies for IBM, and components for early electronic calculators and integrated circuits for RCA.

But another challenge then arose: how to get the products to the U.S. quickly in the absence of any regular air cargo service. Flying Tiger Lines was then carrying military supplies to Vietnam for the U.S. Defense Department, but the planes were returning empty. Rehfeldt obtained agency rights from Flying Tiger and set about filling the return flights. It worked out so well that son Eddie was able to convince General Instrument to take two round-trip charters a week – bringing in production materials from the U.S. and transporting finished product back.

The first Flying Tiger jumbo jet to land in Kaohsiung, a charter for Taipower, in 1973.

“Since Flying Tigers had a few planes convertible for passengers, we also started providing charters to help Taiwanese students get to the States,” says Eddie. “So a year after we started the factory, we were also in the airline business. It was my job every morning to go to the airport to oversee the loading of the planes and then head for the factory to supervise production.”

Together with General Instrument, the senior Rehfeldt used his industry contacts to persuade many other American electronics companies to set up operations in Taiwan. “He felt that the more business that came in, the better,” says Eddie. Those operations were the springboard for Taiwan’s later emergence as a global player in technology products.

In 1978, the air cargo business expanded when the group’s Air Associates hooked up with the small Luxembourg-based airline Cargolux, which was then flying charters to Hong Kong. With the Rehfeldts’ help, Cargolux was granted rights to serve Taipei – its first scheduled traffic rights anywhere in the world. The airline recently celebrated 40 years of service to Taiwan in cooperation with the Rehfeldts’ Air Associates.

Later the Rehfeldts played matchmaker in bringing Cargolux together with China Airlines in a joint venture that enabled the Taiwanese carrier to gain its first landing rights in Europe and to build a cargo business using Luxembourg as a hub.

In the 1970s, Rehfeldt had been joined by his older brother Charlie, and they approached Zenith for rights to bring the first color TV sets into Taiwan. RCA got wind of the plan and – by offering the agency for RCA’s defense business as a sweetener – persuaded the Rehfeldts to import its TVs instead. Until increased tariffs killed the market, the Rehfeldts’ trading company did a big business selling RCA televisions, as well as Amana refrigerators and Sears washers and dryers.

Charlie Rehfeldt with posters of the American appliances the group was importing.

Long-term, however, the entry into the defense sector was more significant. Besides RCA, the group over the decades has worked with such major multinational suppliers as General Dynamics, Lockheed-Martin, Thompson CSF, FMC, and General Electric for military equipment, as well as McDonnell-Douglas for passenger and freighter aircraft sold to CAL, EVA, and others. It also helped Canada’s Bombardier win aircraft orders from Taiwanese airlines, plus rolling stock contracts for the Taipei MRT’s Neihu Line.

Eddie speaks with special pride of the group’s role in arranging for General Dynamics to provide 200 engineers to assist with Taiwan’s development of its Indigenous Defense Fighters in the 1980s, as well as its 14-year effort that contributed to the U.S. government’s 1992 decision to sell F-16 fighter aircraft to Taiwan. He also cites the company’s part in persuading RCA to utilize its Aegis technology in helping Taiwan develop a phased-array radar system for its defensive missiles.

Currently, under the leadership of Chris Rehfeldt, the group is focusing on bringing some of the world’s best cybersecurity technology to Taiwan for both military and business applications. It is working with a leading U.S. software company in this field, FireEye, as well as several Israeli suppliers, including artificial intelligence specialist Deep Instinct. Major Taiwanese banks, airlines, and insurance companies are among the group’s customers.

“Taiwan is one of the most hacked places in the world, and in fact is a test bed for China’s hacks against the United States,” says Eddie. “We want to do what we can to help Taiwan protect itself in every way possible.”