Taiwan Outflanks Competition With Design and Quality Focus

For Taiwan's manufacturers of occasional tables, the competitive landscape is becoming tougher by the year, with low-cost rivals chipping away at the commodity side of the market and rising materials costs eroding margins. This dual threat has forced the industry to rethink its strategy for survival, a strong emphasis on unique designs and superior quality emerging as a result.

Producers using iron and steel components have been particularly hard hit in the past half-year due to a more than 50% increase in the price of these materials. They have difficulty passing the extra cost on to customers due to the competition from low-cost rivals.

While many companies have moved their factories to mainland China to cut costs, most still keep some production facilities in Taiwan for making high-end products, tapping the huge pool of local R&D talent to turn out innovative products.

Strict Standards

Ming Shyan Industrial Co. has over 20 years of experience in designing and manufacturing innovative occasional tables for customers worldwide. In recent years, the company has widely employed composite materials, joining iron piping and glass, for example, to make high- end knockdown (K/D) occasional tables.

"Most of the products that come off our production lines are original designs," says company president Lin Yeong-feng.

Lin states that his company's occasional tables feature tool-free assembly and special chrome finishing that hides all signs of welding.

Japan is the company's most important export outlet, absorbing half of its total output, where Lin says its models are featured at many renowned retail furniture outlets. Other export destinations are the U.S., western Europe, and the Middle East.

One of the benefits of exporting to disparate markets around the world, according to the company, is that each has a different period of peak demand, helping Ming Shyan balance its production-facility utilization.

Ming Shyan uses computerized numerically controlled (CNC) lathes to make the joint holes on the iron pipes used in its occasional tables, ensuring precision to within 0.05mm, Lin says. "Our super-accurate hole-positioning process has helped us to make occasional tables with solid structures and attractive appearance that rival producers cannot match." Lin believes that his company is one of the most "professional" producers of high-end occasional tables in Taiwan.

Eyes on Europe

Phoebe & George Enterprise Co., a manufacturer of K/D metal furniture and computer desks, has gradually increased the use of composite materials in its models to meet a pickup in demand in the global furniture market.

The company offers iron-pipe coffee tables, end tables, and dining sets, as well as a new line of metal, wood, and glass furniture. It also produces items according to customer designs.

Phoebe & George has traditionally concentrated on the U.S. market, but last year it began exploring the European market. The company states that it has already secured big-ticket orders from two European customers and hopes to continue expanding its business there with the rollout of several European-style products this year. "Europeans like coffee tables with durable structures and simple contours," says company president George Kao.

Last year the company began making bar stools, which have quickly become one of its hottest- selling products. This year it will introduce a series of bedroom sets, which the company believes has solid prospects in the European market.

In order to meet growing demand, Phoebe & George set up a 10,000-square-meter plant in Guangdong Province, mainland China five years ago, and will establish two new facilities near the first this year. "We plan to complete the second and third plants in the second quarter and in October this year, respectively," notes Kao. "After the third plant is completed, we will have total production space of 30,000 square meters, increasing our capacity threefold from the current level."

Despite its shift of production to the mainland, Phoebe & George still procures its high-grade iron and steel from Taiwan's China Steel Corp. (CSC). "Most of the iron and steel made in the mainland is not reliable," Kao explains. "As we target high- end markets, we have to use high-quality materials to win the trust of our customers."

In addition to using high-quality materials, Phoebe & George has also implemented a stringent quality-control system. The company mainly sells original-design products, but it also welcomes orders on original equipment/design (OEM/ODM) manufacturer bases. "We are also seeking foreign furniture manufacturers who are interested in cooperating with us to develop innovative products," Kao says.

Keeping Abreast of the Market Founded in 1998, Sunstone Industry Inc. is a relative newcomer to the furniture-manufacturing sector, but its president, Jack Su, has over two decades of experience in the furniture-trading industry.

"Thanks to my insight into long-term developments in the global furniture industry, I can design products that precisely meet customers' needs," Su says. "We have an R&D team in mainland China to design innovative products and turn out items customized to meet client specifications."

The company's mainland factory in Huizhou, Guangdong Province makes iron-pipe coffee tables, dining sets, and sofa beds, and wood furniture will join its product line this year.

Sunstone mainly exports to the U.S., but it hopes to expand sales to Europe. The company started construction on a second plant in February to turn out its wood-furniture items.

Sunstone states that it ships the equivalent of 150 40-foot containers of furniture items each month. Last year it posted revenue of US$20 million, up 25% from the previous year. It expects turnover to leap by 40% this year due to a surge in orders from the U.S.

"Although we are not yet producing wooden furniture, we have received some advance orders for our models from the U.S.," says Su.

Sunstone boasts that it can deliver orders quickly thanks to its proximity to the international-grade Shatian Port. It has also adopted a stringent management system to effectively shorten delivery procedures. The company has also adopted the spirit of the ISO9002 quality- assurance system at its production facility.

Sunstone is planning to set up a showroom in Changan, Shaanxi Province, in China's northwest. "Changan has long been an center for foreign procurement," says Su.

Wood Tables

Established in 1990 as a painting processor in Taiwan, Changyi Enterprise Ltd. Relocated to mainland China in 1998. The company's mainland production facility concentrates on coffee tables made of rubber wood, oak, medium-density fiberboard (MDF), maple, and pine.

The company's integrated production line handles material sizing, painting, assembly, and packaging. Materials are sourced from New Zealand, Malaysia, and Thailand.

Over the past year, the company introduced a new management system to enhance its production capacity. "The new management system has helped us to increase our annual output to US$500,000 from US$300,000 in the past," says company president Chang Shun-chung.

Chang is confident that mainland China's entry into the World Trade Organization will have a stabilizing effect on the operating environment there.

At the end of last year, the company introduced a new series of coffee tables made of maple, other solid woods, and MDF. The tables are designed in classic styles to meet the demands of U.S. consumers.

"Besides boosting our production volume, we also pay close attention to the quality of our products," says Chang.

Changyi mainly exports products through agents and distributors in the U.S. and Canada. "We indirectly sell our products to large U.S. wholesalers, including K-mart and Wal-Mart," Chang notes.