Logic Solutions

Globalization Goes Reverse As Logic Solutions Provides Sourcing Expertise To Manufacturing Firms Investigating China

Jimmy Hsiao

Globalization has become a word to describe massive ability of companies across the world to perform business operations anywhere. It has become allied to the American auto industry, which has suffered for some time from influx of foreign autos and the ability of those car-makers to shop their goods to the U. S. market without concurrently providing markets in the foreign nations for all American-made vehicles.

American companies are learning to benefit from the global approach through a sourcing component provided by an Ann Arbor-based technology company whose principals are schooled in the ways of doing business in China. This helps businesses in the U. S. learn the ways of China and aids them in setting up operations there as well as selling in the huge Chinese market.

Reverse Globalization
Logic Solutions has an innovative reputation for reverse globalization from its world headquarters in Ann Arbor, where it was founded 12 years ago. The recognition comes as Logic operates from offices in China and India and serves customers in those nations as well as outsourcing technology development projects to its people working there. The primary result for Logic’s clients is to open global markets in cost-effective ways.

The 90-employee firm, which began as a web site development business and now has moved to focus primarily on back-end web infrastructure and programming, has found a new market niche because of its expertise in dealing with China.

Logic was founded by Jimmy Hsiao, a native of Taiwan who worked in industry for eight years including being a consultant in information technology for Ford. The company is fast becoming known among American manufacturing companies for its expertise in providing guidance for developing manufacturing business in foreign lands, especially China.

“Companies have very few resources in China and with our experience and people there, as well as knowledge of the Chinese market, we are able to provide meaningful guidance and direction and to introduce many of these firms to the right people in China,” Hsiao explained.

“So this is a form of reverse globalization where we are able to not only outsource to our operations in China and India, but to have customers who want to learn how to do business with Chinese manufacturers,” Hsiao continued.

Seizing New Business Opportunity
Recognizing and seizing this opportunity to help companies develop alternative places to manufacture came at a great time in Logic’s history.

“We really took off and became a strong force in developing web sites in the late 1990s,” Hsiao noted. “Then the dot.com bust hit and we suffered badly like everyone else. We had to refocus our business. The addition of this globalization capability in the last few years has provided us a good new source of business that is much needed by American manufacturing companies.”

Logic Solutions started and settled in Ann Arbor, and maintains its headquarters here, because of the availability of good talent, closeness to customers in the broad variety of customers it serves and quality of life.

In addition to its counseling business for manufacturing in China,
Logic Solutions is a web innovation business that develops e-business programs, places IT workers, develops software, does programming for a variety of businesses in several industries, and develops the back-end of web sites, working with content providers.

Saw Power of Internet Early
While Hsiao was a graduate student and researcher at U of M, he was introduced to the power of Internet. “We used Internet to connect to the supercomputer centers around the country to work on research projects,” he explained. “During the years of working in the industry, I kept thinking that I should jump into an internet-related business.

“Both my wife and I went to University of Michigan. I had a good job at Mallinckrodt Sensor Systems in Ann Arbor, but felt the entrepreneurial spirit to do something of my own,” said Hsiao. “I started Logic when my wife and my children went back to Japan to be with relatives on vacation and I just decided that this was the time to start my business. Ann Arbor is a great place to launch internet based IT business with the abundant talents and infrastructure available in the area. Many of my early employees were students of the University.”

In 1995, while reading about browser-based technology with his family away, “I thought this the perfect time to jump in the business,” Hsiao recalled. “I captured the moment and tendered my resignation. I faxed my wife saying that I was hired by Logic Solutions to be the first CEO. And that we own 100 percent of Logic Solutions.”

Turning Opportunity To Reality
“I actually had no funding, business plan, or industry connection. I spent the summer writing a business plan about eLearning leveraging internet technology. I also started looking for some funding and realized that I could only count on “friends and family.” I raised about $150,000 of angel money (without knowing the term “angel”) and put in about 50 percent of the initial capital. I figured that should last me for a year.

“In August that summer, I went to Japan to pick up my wife and children,” Hsiao continued. “During that trip, I told some of my Japanese friends about my eLearning idea and the power of Internet. One of my Japanese friends asked me the cost of developing and hosting a website. I told him that I would let him know after I returned to the U.S.

“When we got back to the U.S., I soon realized that working from home with two little kids would not suffice. I asked my wife to find a day care for the kids. She came home and said that she found a place for the kids, and better yet she found a place for me across the hallway of the day care. In other words, she kicked all of us out,” he jokes. “That was when I started working in the basement office across from the Children’s Play Space in downtown Ann Arbor.

Writes Software for California Firm
“Concurrently, my sister and brother-in-law were launching a new company called Logiclink in California to focus on hospitality industry. I volunteered to write the software code for their product and got a consulting fee. I wrote the initial version of software within one month. It is still the foundation of their software today. They later made millions from that piece of business,” Hsiao explained. “I also found that hosting website in the U.S. was about 30 percent of the cost in Japan. I hired a part-time student Zhen (who became my manager in China 5 years later) to setup a website hosting service for Japanese clients. These two projects paid a portion of my expenses, so I could continue to develop the eLearning package.

“Through a graphic designer who worked near my office, I gave a free lecture on websites to other designers. A few days later, I got a call from one of the design firms, Envision, to see if I wanted to learn about a potential project, Hsiao said.

“That meeting changed the nature of Logic Solutions. I was given a very large project by Ford. That changed the direction of Logic Solutions to become an eBusiness consulting firm. We grew from 3 people to about 10 people after one year and we moved to the site where we remain today on Plymouth Road.

China Ties Develop
“From 1995-99, we grew rapidly, rising to 80 employees in two locations, Ann Arbor and Dearborn. We had more projects that we could find people to work on. That was when we decided to look at China as potential place for finding additional talent. We sent Zhen to establish a development center.

“In the next few years, with the dot com bust and the downturn of automotive sector, Logic had to downsize and seek financial assistance” said Hsiao. “Fortunately, our competitiveness in outsourcing helped us to weather the storm. When all consulting work almost stopped, I fortunately had my sister. The software that I helped them write early on enabled them to make many millions, so they provided us funding to continue to do research and development for their company during the very difficult period of time.

“We hit our low point in 2001, but we have been growing since then by adding products and partnering with local design firms to sell to their client base while we provided the backend integration of Internet sites,” he explained.

Turning to China
“In 2005, our business again took a new direction as some clients asked about China sourcing and China as a market. We took some of them to China and investigated the marketplace. While some of them have starting sourcing from China, there were some that have established plants, done tradeshows and found local partnerships with our help.

“As with many technology companies, you have to be ready to move in new directions because of the way technology propels change,” Hsiao enthuses. “We have proven the ability to adapt to change, to use it to our benefit.”

“I continue to find Ann Arbor an excellent location for our business. Unlike the coasts, there are not as many Asian American businesses here that can assist the Midwest companies in the type of services that we are providing. Ann Arbor is close the heart of many manufacturers and their suppliers. It’s a good place to raise a family, start and grow a business,” Hsiao concludes.

“I continue to find Ann Arbor an excellent location for our business. Unlike the coasts, there are not as many Asian American businesses here that can assist the Midwest companies in the type of services that we are providing. Ann Arbor is close the heart of many manufacturers and their suppliers. It’s a good place to raise a family, start and grow a business.”

Jimmy Hsiao
Founder
Logic Solutions