This is not about the Taipei 101, which is dubbed as the second highest tower in the world. It is about doing business in Taiwan, knowing their strength in various industries and how they intend to conquer the world through homes, hardware supplies, hand tools, industrial machineries, among others.
The Star was recently invited by Taiwan External Trade Development Council (TAITRA) to cover the 2012 Industry Cluster Week in Taiwan. (October 15 to 19)
Yuen-Chuan Chao, president of TAITRA, reveals that the strong industry clusters has become Taiwan’s strength in reaching out to the world market.
During the launch at the Taipei International Convention Center, Chao enjoined about 225 foreign businessmen from 23 countries to look and enter into trade deals with hundreds of Taiwanese firms.
The firms introduce their products to prospective buyers from nuts and bolts, sanitary toilet and water wares, up to car parts and accessories.
From internet communication technology (ITC), TAITRA officials reveals they are exerting more efforts to market the so-called traditional hard wares to the world market.
In the area of ITC Taiwan has branded Acer and Asus laptops and its won mobile phone brand which is HTC.
Peter W.J. Huang, executive vice president of TAITRA, , boasts of the strong industry cooperation among manufacturers of products in Taiwan.
Huang says the government has been active in “branding Taiwan” in the world market for their innovation, and high quality. “We are marketing for Taiwan excellence products,” he declares during the sidelines of the trade meetings in Tainan City.
There are about 12 major areas where specific industries thrive in the entire of Taiwan. The major clusters easily accessible with Taiwan’s High Speed Train which connects the various cities from the Taipei capital.
Targeting the high-end markets
Walter Yeh, also TAITRA executive vice president, admits that the financial crisis in the European Union are affecting their market. “It has hindrance to our exports so for the moment, we export to other countries especially the emerging markets,” Yeh says after the opening ceremonies in Taichung.
Yeh recognizes that the “emerging markets” also have high-end buyers such as China, adding that Taiwan is competing with Italy, France and Germany.
James Kuo, also of TAITRA, recognizes that Taiwan is also competing with mainland China in getting a big chunk of the world market share for exports.
“China is also very strong but Taiwan competes with high quality (products), because we also focus on the matter of safety (when used by end consumers),” Kuo says.
Kuo outlines the major cluster areas namely Taipei (ICT, electronics and software); Yilan (photovaltaics, optoelectronics); Hualien (stone crafts); Taitung (deep ocean water tourism); Pingtung (Biotechnology, autoparts); Kaohsiung (yachts, steel, nuts and screws); Tainan (optoelectronics, yachts, textile and clothing, autoparts, shipbuilding and steel; and photovaltics); Changhua (handtools, bicycles, musical instruments); Miaoli (optoelectronics, automobiles); Hsinchu (electronics and IT, optoelectronics, software and biotech); and Taoyuan (CDs, PCBs and automobiles).
To boost the local industries, Huang explains that the government helps by enhancing further research and development (R&D) programs as well as the setting up of industry rows in Tainan, Kaoshiung, Taichung and other key cities in the country.
What makes Taiwan different from the rest of the countries in Asia is that its different industries are clustered in one area, and each helps boost the other.
“Taiwan is a small country… In terms of geography situation, Taiwan is small… so every industry is developed naturally by the small and medium enterprises (SMEs),” Huang narrates.
The Taiwan cluster industry is like a satellite system where “every company produce different parts, and they come together” to produce one major product.
Due to its developed infrastructure, doing business in Taiwan seems less hassle compared to other countries in the region.
Prospective businessmen and even tourists can check in at excellent hotels in every cluster, which allows businesses to thrive even better. Traffic is not a major problem in the business hubs, and the crime situation is relatively low.
Apart from promoting local industries, Taiwan government also imposes only 17 percent corporation tax to private firms which make them more competitive in the world arena. Compared to other countries such as the Philippines which imposes 12 percent value added tax (VAT) in goods and services, Taiwan imposes only five percent VAT.
On dealing with China, Huang says the government see China as Taiwan’s partner in business relations. “And we complement each other,” he adds.
According to Huang, mainland China is one of Taiwan’s major export market because of its bigger population. “We need to also export our products to China,” he adds.
Jun Honda, of processed foods and grocery department of the Dang Chong Hong (Japan) participated in the Taiwan Procurement Week this year to look for products for their grocery business.
“We are concern about quality, the price is secondary as long as we get quality (food) for our market,” Honda tells the Star at the sidelines of the TAITRA meeting in Kaohsiung.
Kaohsiung is involved in the manufacture of nuts and screws (fasteners), Yachts and frozen sea products.
Q.X. Lam (Lim), managing director of Ettason Pty. Ltd, flew all the way with his wife, Lancy, (also the firm’s purchasing and marketing director) from North South Wales, Australia to see what Taiwan traders can provide the Aussie market.The Lam couple, who are former Vietnamese refugees, are optimistic that the Taiwan products will make it good in the Aussie markets. Their firm are involved in import, export and distribution of “fine food.”
Suppliers: Hand tools, toilet and bath wares
K&W Cutting Technology, a family enterprise turned international manufacturer of chain saws, is among the firms my tour group visited during a recent trip in Taichung City.
Chao’s big break came after his friend, James Chen who works for TAITRA, encouraged him to join an international trade fair in Germany at a time when he was almost ready to give up on his small business.
Chao was then a government employee and decided to drop his job and turned into the manufacturing of power tools including hole saw, jigsaw blades, hack saws and blades, hand saws, pruning and bow saws, and other wood working saws.
After so much hard work and slowly making his products to be at par with world standards, Chao’s company now exports to the United States, European Union and Canada.
K&W Cutting Technology is now a US$ 16-million firm, specializing in the selling of hole saws and hacksaw blades. It has a headquarters in Nantou, Taiwan, with warehouse in Los Angeles, USA; and manufacturing plans in Shanghai, China and Vietnam.
K&W supplies its products to world-renowned brands such as Bosch, Black and Decker, Dewalt, StanleyJulie Sy, a Filipina who is working as sales manager of the TYC Brothers, attests that Taiwan firms are strict in the implementation of strict guidelines for high quality, precise lighting products. The TYC produces car headlights for Toyota, BMW, and Isuzu among others.
There are about 180 Filipino overseas workers in TYC who enjoy a relatively high salaries and benefits in the firm, which is among the companies owned and operated by the Wu brothers.
Sy, who gave The Star and two journalists from Indonesia a tour of the TYC plant in Tainan City, says their company supplies headlights to big companies such as Honda, Toyota and General Motors in the United States.
They have also tapped the interior lamps market in the US and conquered an estimated 30 percent of the market shares on buses and caravan for the interior lamps.
Trade meetings help small companies
The Armac Industrial Co. Ltd, which is engaged in the manufacture of impact wrench, met with prospective buyers in the trade meeting in Taichung City.
Fey Chang, a sales officer of Armac Industrial, said such activity organized by TAITRA helps their firm to reach out with different buyers from all over the world and market the impact wrench.
“This is convenient because we don’t need to go abroad, spend money for airfare and accommodation to reach to our market,” Chang says. She adds that “this is a good business opportunity” for their firm.
Chang’s firm has attended international trade fairs, including one in Germany, in efforts to tap the European market.
TAITRA’s Huang explained that Taichung is best known for hand tools and its toilet and bath ware industries. (recorded interview at Iphone)
“This is a huge market and in this regard, Taiwan has a very good capacity to supplying good quantities of tools, especially wrench,” Huang explains.
First, Taiwan has a good material because it manufactures steel.
Taiwan’s second advantage emphasizes on design and patent for the different markets, and then branding.
Handtools include not just household use screwdrivers but for big industries. Waterware ranges from faucet, bath tubs and shower fittings. “We serve the hotels also because they need big quantity and high quality,’” Huang says.
According to Huang, Taiwan’s demand for hand tools and water ware “is still growing.”
“Handtool is necessity for daily life. I think the demand is still growing. But there is keen competition among several countries including China and other countries.
“Taiwan is very strong because all the hand tool companies are all concentrated in Taichung area,” Huang says. “All companies are concentrated in the Taichung area. Every industry is connected together. Every company they have their supporting companies, which means different service for hand tool. Some for polishing… within the 30-kilometer (distance) radius,” Huang explains.
There are companies specialize in welding, while others for polishing and other products.
“The cluster is the most competitive (characteristic) of the Taiwan industry,” Huang explains. Hand tools and water ware products are exported to European, United States, China and Japan markets, he adds.
Companies in the Philippines
Gerry Huang, sales manager of Luchu Shinyee Works, Co. Ltd, reveals that their firm has an estimate revenue of US$ 20 in total sales last year for nuts and screws. The firm has been in the business for the past 45 years.
About 25 years ago, Luchu Shinyee has branched out to the Philippines where two manufacturing are situated at an economic zone in Rosario, Cavite plants. It also has a plant in mainland China.
Huang laments that the growing number of manufacturers coming from China and India have caused their sales volume to decline in the world market. “But the domestic is very stable,” he says.
In their Philippine-based plants, the firm has an annual export to Europe of about 1000 metric ton a year, representing about 10 percent of market share globally. There are 200 workers in the Cavite factories, some were formerly working in the headquarters in Taiwan.
“There is now over supply in the market because of the massive production of (same products) in China and India, but ours are better compared to them,” he says.
During the industry cluster week, local traders hope to reach out to foreign buyers to enable them to have a global reach.
This way, TAITRA officials are optimistic that the local firm suppliers will be able to propagate their businesses, allowing Taiwan products ranging from automobile parts, screws, food to energy production to get a major share in the global market.
James Yang, foreign department manager of Shin Ho Sing Ocean based in Kaoshiung, said they have penetrated the United States, Canada and European markets for the Taiwan brand “Jane Jane”.
Yang’s firm is involved in export of frozen foods such as shrimp, fish balls, and vegetarian style abalone, mostly used in Chinese hot spots, restaurants. They have also distributed their products in major supermarkets.
(Note: TAITRA is a non-profit foundation established by the Ministry of Economic Affairs in cooperation with private industrial and commercial groups to assist the local market in expanding to foreign trade.
TAITRA is helping local traders to tap the world market by developing new market segments in various countries in Eastern Europe, Africa, Middle East and Central and South America, and Asia. The group also assists manufacturers to develop brand at the same time, to create a favorable Taiwan brand to enter the international market.)