Johnson Health Tech. Co., Taiwan`s leading fitness and gym equipment maker, has in recent years aggressively expanded its marketing channels at home and overseas. Last year the company was regarded as the world`s fifth-largest provider of fitness and gym equipment, and next year its rank is very likely to jump to the third spot on the list.

Over the past several years, Johnson has witnessed considerable growth in terms of revenue and profits. In 2005, the company`s profits shot up to US$36.7 million, the highest among the world`s top-five fitness and gym equipment makers. Lo Kuen-chuan, chairman of the company, attributes the outstanding performance to the company`s successful integration of its up- and down-stream operations. He is confident that Johnson will see annual growth of around 35% in both revenue and profits in the coming years, and discloses that Johnson`s headquarters in North America has plans for listing the company on the U.S. stock market.

Johnson has good sales in overseas markets other than Taiwan. Today the company`s sales outlets in Taiwan, mainland China and Thailand all claim the No. 1 positions in those countries in terms of sales volume, and the top three fitness club chains in the countries are also Johnson`s clients.

Compared to the world`s other leading fitness equipment producers, Johnson has enjoyed strong business in the past couple of years. Market observers disclose that last year Icon Health and Fitness, a U.S.-based company that is the world`s largest fitness equipment producer, recorded revenue of US$898 million, but the figure is predicted to fall to US$850 million this year. The company`s possible revenue drop mainly stems from its recent problems with distributors over a marketing overlap with Sears, a famous chain store in the U.S., and some of the distributors have therefore withdrawn from Icon`s client list.

Nautilus Group, the world`s No. 2 fitness equipment manufacturer, is striving to maintain its strength in the international market and is expected to score US$600-700 million in revenue for this year. Life Fitness, the world`s third-largest fitness maker, anticipates that its revenue may reach about US$500 million for the year.

Last year Johnson`s combined revenue amounted to US$267 million, and this year the company projects a sharp rise of 40%-50% in revenue. If the company grows as expected for the year, Johnson is very likely to outstrip Precor, the world`s fourth-largest producer of fitness equipment.

Lo indicates that Johnson has a sales trial at Sears stores, and so far its products have gained a good response from customers. Lo believes that Sears` well-established marketing channels will provide momentum to Johnson`s sales in the U.S., and will help it to grow rapidly in the market there.

Currently Johnson`s products are sold under its three own brands—Vision, Horizon, and Matrix—in the U.S. market. Johnson also produces fitness equipment for famous U.S. brands, including “Nautilus” and “True,” on an ODM basis. Lo indicates that Johnson expects its U.S. revenue to jump to US$240 million from last year`s US$154 million.

To expand operations in mainland China, Johnson recently invested an additional US$75 million in its second plant in Shanghai, which is scheduled to begin operating in August of this year. The plant, occupying a huge land area of 210 hectares, is estimated to generate a production value of NT$8 billion (US$242.42 million at US$1 = NT$33) per year. Combined with the existing production capacity of its first plant in the mainland, Johnson`s annual output there could reach NT$14.5 billion (US$439.39 million) soon.

If everything goes smoothly, Johnson may outpace Life Fitness to become the world`s third largest fitness equipment producer in 2007 with a global market-share jump to 12% from 2005`s 5%. Lo is ambitious to push the company to become the world`s No. 1 fitness equipment maker by 2008 and to boost its global market share to 20% in 2010.

To increase its market share in Asia, Johnson recently decided to spend US$33 million to merge the 25 sales outlets of Trans Mark, the largest fitness and gym equipment chain store in Malaysia, in addition to its existing 10 stores there. Johnson entered the market in Malaysia only last year, and its initial 10 sales outlets there may be insufficient to make the brand widely known, so the company decided to merge with Trans Mark to enlarge its market share there, Lo explains.

In the future, Johnson plans to establish subsidiaries in Hong Kong, Singapore, and Brazil to reinforce its international strength. Other than having its own sales outlets, the company is also determined to set up footholds in department stores or shopping malls around the world. This year Johnson has already successfully placed its products in famous department stores or chain stores as Sears of the U.S., ECI of Spain, Canadian Tire of Canada, Karsta of Germany, and John Lewis of U.K.

Revenues Gained by the World Top 10 Fitness Equipment Providers in 2005
Rank	Provider	Revenue (US$100M)
1	Icon Health & Fitness	8.98
2	Nautilus Group Inc.	6.07
3	Life Fitness	5.51
4	Precor	3.14
5	Johnson Group	2.67
6	Technogym	1.70
7	Fitness Quest	1.30
8	Cybex International Gym	1.15
9	Star Trac	0.90
10	True Fitness	0.75

(by Judy)