With over three decades of experience in the chemicals industry across markets in the West and Asia-Pacific, Kraton Formosa Polymers Corp. President Mike Wong knows how to run a successful business in a sometimes controversial sector. From negotiating and overseeing the successful formation of a joint venture, to ensuring the health, safety, and environmental standards at large chemical plants, Wong is a go-to source of knowledge not just regarding the industry, but about management in general.
Kraton Formosa Polymers is a joint venture between Houston-based Kraton Corp., a 2000s spinoff from Shell Chemicals, and the Formosa Petrochemicals Corporation of the Formosa Plastics Group.
Wong met with TOPICS Senior Editor Jeremy Olivier and AmCham Publications Intern Jason Wu in February to discuss his decision to pursue a business career, his views on Taiwan’s chemicals industry, and how he has honed his management style over the years. An abridged version of the conversation follows.
Although you received your MBA from Northwestern University’s Kellogg School of Management, you first obtained a bachelor’s degree in chemistry from UC Berkeley. Did you originally plan to go into business, or did you develop that interest later on?
I originally chose chemistry as a major because I wanted to work in research post-graduation. After my sophomore year at Berkeley, I was lucky enough to be chosen for an internship at Chevron’s headquarters in San Francisco. I was working in the company’s business group, with the marketing and commercial team. That experience really opened my eyes, and I ended interning with the company the following two summers as well.
After getting some exposure to the business world, I decided that I was probably more suited to working in that field, since I am generally more inclined to work with people. I enjoy dealing with customers and suppliers, as well as the financial aspects of running a business. And although I never spent a day in the lab, I was able to apply some of the basic knowledge I got from my undergraduate studies to my current career.
What are some notable characteristics of Taiwan’s chemicals industry?
This industry has been around for a long time, and a lot of people working in it are very knowledgeable. The major companies are local enterprises, such as the Formosa Group, USI Far East, and Chimei. These primarily family-run companies are very well-established and very financially strong. This aspect makes the industry here quite different from other markets in Southeast Asia and China, where it is more of an up-and-coming, highly leveraged sector.
The flipside is that there is very little growth in Taiwan’s chemicals industry, largely because of legislation. Given certain political concerns, Taiwan’s regulatory system is not as favorable to growth in this sector as it is to other industries, such as semiconductors and IT. As a result, not as many people want to go into this industry, and that is a problem. So, rather than try to expand in the market here, most chemicals enterprises end up going overseas, choosing locations based on the availability of raw materials – usually the Middle East for hydrocarbons or the U.S. for shale gas – or closeness to the market, for which China is the most obvious choice.
What effects have the U.S.-China trade dispute and COVID-19 had on this industry?
To be honest, the impact of the trade dispute on the chemicals industry is secondary to that of cross-Strait relations. Given the regulatory issues I just mentioned, the scale of production in Taiwan is limited – the plants here are not huge. So, when China is unable to purchase products from the U.S. because of high tariffs, South Korean suppliers have actually been the ones taking advantage of the situation due to their huge capacity.
For Taiwan petrochemicals firms, the impact of the Economic Cooperation Framework Agreement (ECFA), signed between the Taiwan and China governments in 2010, was significant for Taiwanese chemical producers who wanted to export to China. Although it is a 10-year agreement, we in the industry would like to see it continue in perpetuity.
As for the pandemic, initially the impact was huge, largely because of the commodity price swing. Oil prices in Q2 2020 dropped significantly. Under such circumstances, people stop buying because they don’t know what the future will hold.
However, since then, demand has gradually returned. Certain segments might not be back to pre-pandemic levels, but the industry as a whole is not doing too badly. This is because chemical products go into a lot of things we use in our daily lives – garments, cleaning products, and medical gloves and equipment, among others.
The latest challenge is actually shipping. The orders are in the books but it’s very hard these days to ship products, especially given the lack of sufficient containers. A lot them are stuck in U.S. ports because of staff reductions.
You were directly involved in the establishment of Kraton Formosa Polymers’ hydrogenated styrenic block copolymer (HSBC) plant at the Mailiao complex in central Taiwan in 2017. What lessons did you learn from your experience overseeing such a large-scale project?
I had two takeaways from that experience. Number one was how to get permits to build something as big as our plant in Mailiao. There is a lot of uncertainty throughout this process, and it sometimes gets political given the chemicals industry’s public image regarding environmental impact and safety. A convincing argument needed to be made for why the project was being undertaken.
Once that hurdle is cleared, to begin building an US$200 million facility is a huge undertaking with a lot of moving parts. You need a lot of resources, and managing all of that in addition to forming a good team is quite challenging. One of the benefits of this being a joint venture, though, is that the Formosa Group has been a great partner. They know the market, they know suppliers and vendors, and they know how to deal with the banks and project financing. Having a local partner like that is crucial.
What are some of the unique challenges of leading large chemical and petrochemical firms? How do you work to overcome such challenges?
Internally, the challenge is always about getting your team to focus on safety. Chemicals factories are hazardous – it’s just the nature of the business. But we need to make sure every single one of our employees fully appreciates and understands that, and that requires lots of training.
Externally, the main issue is public image. Since everyone is watching us, and what we do impacts people’s lives, we have to run our factories safely. We don’t want to have accidents or injuries, nor do we want to have our operations contaminate the local environment. Strong public scrutiny of chemicals companies is a certainty – rightfully so considering the industry’s spotty record and inherent risk.
Do you have a particular management style or philosophy? What do you see as your strengths?
I would say I’m a pretty open individual. I like to work collaboratively with my team, and I encourage input from team members. I want the people I work with to take ownership of what they do, and I don’t like to constantly be looking over their shoulders.
I’m also a pretty good team builder. To motivate your team to reach your standards, you need to give them the space to do what they need to do. But at the same time, you need to know how to delegate wisely and understand when to intervene when necessary.
Of course, I have weaknesses, too; we all do! I tend to overestimate problems. That might not sound like a weakness, but when you overestimate, you might commit too many resources to something that is not actually that big of a deal. It can also lead you to become too conservative and you might miss out on some opportunities. It can be quite difficult to find the right balance.
Did you have a mentor during the early stages of your career? How did their guidance shape you as a professional?
I always thank my very first boss at Chevron, when I was starting out in commercial sales and marketing. Having the right mentor makes a big difference, and mine taught me the importance of planning and organization. For instance, before you go to visit customers, you need to have a specific objective and do your homework because the last thing you want to do is waste your counterpart’s time.
You want to establish that you’re representing a successful and reliable supplier that they would be willing to buy from, and you’ve got to have something of value that you’re bringing to the table.
What are your thoughts on the concept of work-life balance? How do you like to spend your own leisure time?
I think work-life balance is important, but I also think it’s a function of how smart and efficient you are in your work. I’m definitely not someone who spends 24 hours a day on my work, but then I also try not to procrastinate and instead take care of the immediate issues right away. There are of course things you cannot address immediately, but you can organize a plan and ensure that things are resolved in a timely manner. The same goes for my team. It doesn’t matter if you’re sitting at your desk for eight hours a day or you decide to work from home for six. As long as the job gets done, that’s what’s important.
In my leisure time, I like to play golf, but more for the enjoyment of being out on the green and getting some exercise, rather than getting a good score. When I’m not playing golf, I like spending time outdoors with my wife – walking or cycling. Although the COVID-19 pandemic has prevented us from traveling abroad, in normal times we also enjoyed skiing in the winter in Japan.