Eastern Textile Factory Board Split (1967)

Overview

In 1967, the Board of Directors at Eastern Textile Factory split into two opposing factions over business disagreements, creating an untenable governance situation at the 2,000-employee manufacturing operation. Jesse Chan, serving as both Purchasing Manager and Board Member, found himself on one side of the split. Rather than remain in a dysfunctional organization, Jesse’s faction agreed to sell their shares at par value plus 20%. This seemingly negative business crisis became the catalyst for the Chan family’s most transformative chapter - relocation to Taiwan, Jesse’s transition from employee to entrepreneur, and the strategic investment in four children’s American education that would shape three generations.

Background: Jesse at Eastern Textile (1957-1967)

Ten-Year Career

Jesse’s positions (by 1967):

• Purchasing Manager (operational role)

  • Bought all supplies for 2,000-worker factory
  • Critical role for factory operations
  • Significant responsibility and authority

• Board of Directors Member (governance role)

  • Strategic decision-making
  • Policy and direction setting
  • Oversight of management
  • Unusual for operational manager to serve on board

Betty’s position:

• Payroll Supervisor (since late 1950s)
  • Supervised 4-person payroll department
  • Prepared pay envelopes for 2,000 workers
  • Weekly cash payroll distribution
  • Critical financial operations role

Family Stability (1957-1967)

What they had built:

• 11 years of stable employment (1957-1968, including through board split)
• Both spouses in management positions
• Factory-provided housing (moved to factory housing before Louis born in 1965)
• Three children (Rose born 1960, Meg born 1963, Louis born 1965)
• Social network in Manila
• Professional reputation and status
• Predictable salaries and benefits

Investment in stability:

• Survived 1967 board split with children ages 7, 4, 2
• Had created comfortable life in Manila
• Both established in careers
• Family rooted in Filipino-Chinese community

The Board Split (1967)

Two Factions Form

Governance crisis:

• Board of Directors divided into two opposing groups
• Serious business disagreements (details unknown)
• Unable to reach consensus on major decisions
• Factory operations potentially at risk
• 2,000 workers’ livelihoods at stake

What might have caused split:

• Strategic direction (expansion vs. consolidation?)
• Financial management (dividend distribution vs. reinvestment?)
• Family business dynamics (founding families in conflict?)
• Management disagreements (who to promote/fire?)
• Industry challenges (competition, tariffs, regulations?)
• Personality conflicts (egos and power struggles?)

Jesse’s Faction

Jesse’s position:

• On one side of the split (not necessarily initiator)
• As Purchasing Manager: operational perspective on decisions
• As Board Member: governance responsibility
• Principle vs. pragmatism (Jesse’s WWII history suggests principled stands)

Impossible situation:

• Board deadlocked = no major decisions possible
• Factory operations hampered by governance crisis
• Unclear who had authority
• Jesse’s purchasing decisions potentially contested
• Betty’s payroll operations caught in middle
• Untenable for long-term career

Resolution: Selling Shares

The agreement: From interview: “Board split into two factions. Husband’s faction sold shares at par value plus 20%.”

Financial terms:

• Par value = original face value of shares
• Plus 20% = modest premium (not generous, but fair)
• Not a hostile buyout (negotiated exit)
• Clean break (Jesse’s faction cashed out)

What this meant:

• Jesse gave up ownership stake (if shares meant ownership)
• Or gave up board seat and employment
• Received capital from share sale
• But lost stable career after 10 years
• Betty also lost position (both left factory)

Decision to Leave Philippines (1967-1968)

Multiple Factors

Board split was catalyst, but other factors:

1. Friend in Taiwan offered business opportunity

   • Pre-existing connection to Taiwan
   • Invitation to explore entrepreneurship
   • Taiwan’s economic boom attractive

2. Capital from share sale

   • Money to start businesses
   • Not starting from zero
   • Par + 20% = entrepreneurial seed capital

3. Political instability in Philippines

   • Late 1960s unrest
   • Ferdinand Marcos consolidating power
   • Martial law coming (1972 - 5 years later)
   • Chinese-Filipino community vulnerable

4. Entrepreneurial ambition

   • Jesse had management experience (purchasing, board service)
   • Betty had management experience (payroll supervisor)
   • Both ready to be owners, not employees
   • Board split showed risks of being employee

5. Strategic timing

   • Three children (Rose 7, Meg 4, Louis 2)
   • Young enough to relocate (no established schooling)
   • Old enough to remember displacement (like Jesse’s WWII)
   • Fourth child Michelle not yet born (born 1968, possibly in Taiwan?)

The Calculation

What they were leaving:

• ✗ Stable dual income (both employed)
• ✗ Management positions (status)
• ✗ Factory housing (benefit)
• ✗ Manila social network (community)
• ✗ Philippines (home country)
• ✗ Extended family nearby (support system)

What they were gaining:

• ✓ Capital from share sale (starting money)
• ✓ Business opportunities in Taiwan (entrepreneurship)
• ✓ Taiwan’s economic boom (growth environment)
• ✓ Fresh start (no board politics)
• ✓ Control of own destiny (owner vs. employee)
• ✓ Potential for greater wealth (unlimited upside)

The risk:

• Giving up certainty for possibility
• Three young children depending on success
• Moving to new country (though Chinese cultural ties)
• Starting businesses with no guarantee of success
• Could fail and have nothing

Jesse and Betty’s courage:

• Took the risk (left stability)
• Believed in themselves (management experience)
• Trusted their judgment (Taiwan opportunity)
• Willing to start over (resilience from WWII)
• Both had survived displacement before (WWII refugees)

Immediate Aftermath (1968)

Relocation to Taiwan

Major transition:

• Family moved to Taiwan (1968)
• Jesse age 39
• Betty age 32
• Rose age 8
• Meg age 5
• Louis age 3
• Michelle born 1968 (before or after move?)

What they took:

• Capital from share sale
• Management experience (Jesse and Betty)
• Multilingual skills (Jesse’s 7 languages)
• Entrepreneurial determination
• Young family (children adaptable)

Starting Over (1968-1970)

Jesse’s first ventures in Taiwan:

1. Nightclub (MC and owner)

   • Leveraged multilingual skills (7 languages)
   • Entertainment business (cash flow)
   • Jesse as master of ceremonies (personality-based)

2. Real estate development (Cherry Hill)

   • Capital-intensive (share sale money invested?)
   • Building three-story buildings
   • Property appreciation strategy

3. Import/export (continued career)

   • Leveraged Philippines business connections
   • Jesse’s previous industry experience
   • International trade expertise

Betty’s ventures:

• Bakery business (managed by Betty)
• Additional income stream
• Family security (if Jesse’s ventures failed)

Long-Term Consequences

22 Years in Taiwan (1968-1990)

What board split enabled:

• Forced entrepreneurship (Jesse became business owner)
• Wealth building (nightclub, real estate, import/export)
• Strategic location (Taiwan as base for US immigration prep)
• American education investment (TAS tuition $10k/year per child)
• Four children educated (Rose, Meg, Louis, Michelle at TAS)
• Professional success (all four to top US universities)
• US immigration (1990, as prepared Americans)

If board split hadn’t happened:

• Jesse and Betty might have stayed at Eastern Textile until retirement
• Children educated in Philippine public schools (Tagalog/Filipino curriculum)
• No TAS (no $10k/year to spend on American education)
• No Taiwan wealth building (salary-based income only)
• Possibly no US immigration (or much harder transition)
• Different trajectory entirely

The Counterfactual

If Jesse’s faction had won board battle:

• Jesse remains at Eastern Textile (stable career)
• But Philippines entering turbulent period (martial law 1972)
• Chinese-Filipino businesses targeted under Marcos
• Children educated in Philippines (not TAS)
• Limited wealth building (salary vs. ownership)
• Harder path to US immigration (language barriers)

The board split was blessing in disguise:

• Pushed Jesse and Betty into entrepreneurship
• Timing was fortunate (before martial law 1972)
• Taiwan provided perfect staging ground
• Capital from share sale enabled business starts
• 22 years in Taiwan = wealth + education
• Family positioned for multigenerational success

Jesse and Betty’s Leadership

Crisis as Opportunity

Pattern from WWII:

• Jesse’s WWII: Father died (1942) → fled to Fujian → survived Japanese occupation → befriended colonel
• Betty’s WWII: Family fled Japanese (1940) → multiple displacements → survived through faith
• Both learned: Crisis requires adaptation and courage

1967 board split as crisis:

• Could have been devastating (losing stable jobs)
• Instead became catalyst for transformation
• Jesse and Betty chose risk over safety
• Used crisis as opportunity for growth
• Resilience from wartime experience

Decision-Making as Partnership

Jesse and Betty together:

• Both employed at factory (both lost jobs)
• Both had management experience (capable of entrepreneurship)
• Both raised in Chinese-Filipino business culture (understood entrepreneurship)
• Both survived WWII displacement (resilient)
• Both put children first (education priority)

Mutual decision:

• Not just Jesse’s choice (both careers at stake)
• Betty supported risk-taking (left stable job)
• Both committed to Taiwan move
• Both worked in Taiwan businesses
• Partnership enabled success

Impact on Children

Rose, Meg, Louis (Present During Crisis)

Ages during board split:

• Rose: 7 years old (old enough to sense tension)
• Meg: 4 years old (aware of changes)
• Louis: 2 years old (too young to remember)
• Michelle: Not yet born (born 1968)

What children experienced:

• Parents stressed about board split
• Discussion of big changes
• Moving to new country (Taiwan)
• Parents starting businesses
• Uncertainty and risk

What children learned:

• Adaptability: Family can relocate and rebuild
• Entrepreneurship: Parents chose to be owners, not employees
• Risk-taking: Sometimes leaving stability is necessary
• Resilience: Family survives and thrives through change
• Education priority: Parents invested everything in TAS

Long-Term Lessons

Board split taught next generation:

• Don’t stay in untenable situations (Jesse left factory)
• Take calculated risks (entrepreneurship over employment)
• Crisis can be opportunity (board split → Taiwan → success)
• Invest in what matters (education over luxury)
• Family adapts and survives (resilience from parents)

Influenced career choices:

• Rose: Attorney, nonprofit leader (entrepreneurial in social sector)
• Meg: [Career to be documented] (business-minded per sources)
• Louis: Filmmaker (entrepreneurial creative career)
• Michelle: [Career to be documented]

Historical Context

Philippine Business Environment (1967)

Economic challenges:

• Import-substitution policies (tariffs and protectionism)
• Political instability (approaching martial law 1972)
• Chinese-Filipino business community vulnerable
• Capital flight beginning (wealthy leaving)

Why board split happened:

• Possibly disagreement over business strategy in uncertain times
• Family business tensions (common in Philippine corporate governance)
• Divergent visions for textile industry future
• Personal conflicts amplified by stress

Taiwan as Destination (1968)

Why Taiwan attractive:

• Economic miracle beginning (rapid industrialization)
• Political stability (Kuomintang governance)
• Chinese cultural continuity (Mandarin, traditional culture)
• Business opportunities (growing middle class)
• American influence (US military presence, Western orientation)
• Strategic location (gateway to Asia-Pacific)

Timing fortunate:

• Taiwan economy accelerating (1960s-1980s boom)
• Before Taiwan’s political transition (democratization 1980s-1990s)
• Stable environment for business building
• International school (TAS) available for children

Financial Details

Share Sale Proceeds

Par value plus 20%:

• Amount unknown (to be researched)
• Likely substantial (Jesse had board seat = significant shares?)
• Enough to start multiple businesses in Taiwan
• Seed capital for nightclub, real estate
• Family living expenses during transition

Use of capital:

• Nightclub startup costs (venue, orchestra, staff)
• Real estate investment (Cherry Hill Development)
• Import/export working capital
• Family relocation costs (Philippines to Taiwan)
• Reserve for TAS tuition (knowing children’s education priority)

Comparing to Staying

If stayed at Eastern Textile:

• Dual salaries (Jesse + Betty)
• Limited wealth building (employee salaries)
• No ownership upside
• Vulnerable to board decisions
• Factory could have closed (textile industry challenges)

By leaving:

• Initial capital (share sale)
• Multiple business income streams (nightclub, real estate, import/export, bakery)
• Unlimited upside (owner profits)
• Control of own destiny
• Diversified risk (multiple ventures)

Result:

• Taiwan ventures generated $40k+/year (peak years, for TAS tuition alone)
• Plus family living expenses
• Plus business reinvestment
• Far exceeded factory salaries

Legacy

Transformative Crisis

The board split (1967) was pivot point:

• Before: Employees in Manila (stable but limited)
• After: Entrepreneurs in Taiwan (risky but unlimited)

Enabled:

1. Immediate: Capital for business starts (1968)
2. Medium-term: Wealth building through businesses (1968-1990)
3. Long-term: Children’s TAS education ($400k+ investment)
4. Generational: US immigration as prepared Americans (1990)
5. Multigenerational: Grandchildren’s opportunities (Nicholas, Ryan, Samantha + 5 others)

Family Mythology

“The board split” became family story:

• Crisis that became opportunity
• Moment parents chose risk over safety
• Catalyst for Taiwan chapter
• Reason family ended up in America
• Lesson in resilience and adaptation

Told to children and grandchildren:

• “Lolo and Lola left stable jobs to start businesses”
• “The board split forced us to Taiwan”
• “Your TAS education was possible because of entrepreneurship”
• “Risk-taking runs in the family”

Research Questions

• What specifically caused the board split? (strategic disagreement? family feud?)
• Who were the other board members? (factions’ composition)
• How long did board conflict last before split? (months? years?)
• Exact amount from share sale? (par value + 20% = how much?)
• Were other employees affected? (did others leave?)
• What happened to Eastern Textile after split? (still operating? closed?)
• Did Jesse maintain any connection to factory/Philippines? (business ties?)
• How did Jesse learn about Taiwan opportunity? (friend’s name? introduction?)
• When exactly did family move to Taiwan? (1968 what month?)
• Where did family live initially in Taiwan? (before establishing businesses)
• How long until businesses became profitable? (struggle period?)
• Did Jesse and Betty ever regret leaving? (in retrospect)

---

The 1967 Eastern Textile Factory board split forced Jesse and Betty Chan to choose between staying in a dysfunctional organization or taking the entrepreneurial leap into the unknown. Their decision to sell shares and relocate to Taiwan transformed a governance crisis into the catalyst for multigenerational success - 22 years of wealth building, $400,000+ invested in children’s American education, and the foundation for eight grandchildren’s opportunities in the United States. What appeared to be a career setback became the most consequential decision of their lives, proving that sometimes the path to success requires leaving stability behind.