Taiwan golf club makers diversify into new businesses

Taipei, Nov. 19, 2004 (CENS)--Advanced International Multitech Co. (AIM), a leading global supplier of golf clubs and heads, has announced plans to step into auto- and machinery-parts businesses by acquiring relevant companies in the fields.

AIM chairman Cheng Si-kun claimed that his company would gradually expand its product lines to include golf-peripheral businesses such as golf-club bags and balls, so as to further expand its global market share.

AIM's major rivals in Taiwan, Fu Sheng Industrial Co., Ltd. And O-Ta Precision Industry Co., Ltd., are also actively diversifying their product lines after gaining solid footholds in the international golf-club contract production market.

Fu Sheng has stepped into production of high-precision air compressors and semiconductor lead-frames. The company recently acquired a medical equipment and auto-parts plant in California originally run by Coastcast Corp. of the U.S.

O-Ta has set up a composite-material subsidiary in mainland China to produce carbon-fiber hockey sticks. The subsidiary has enjoyed flooding orders this year and is expected to reap lucrative results next year.

According to Cheng, the annual growth of the global golf equipment market remains under 10%, though over 70% of the golf clubs and heads are supplied from Taiwan makers. With high technical threshold, there is no need for the top-three golf club and head suppliers in Taiwan to engage in fierce price-cutting competition, but they can hardly expect significant sales growth in the future. In addition to setting up a new plant in Vietnam to cut costs, Cheng said, AIM has decided to more actively diversify its businesses into new fields.

According to Cheng, both high-end auto and machinery parts require precision casting production techniques, which is the core advantage of AIM. In a bid to accelerate entry into the new businesses, Cheng said, AIM would not rule out acquiring some companies in different targeted lines.

For its core golf club business, AIM has been in intensive talks with a big international brand over contract production and expects some good news next year.

The firm has set up a composite material division to develop and produce carbon-fiber front forks for bicycles. It has won orders from some big international complete-bike brands such as Bianchi and Look. According to Cheng, AIM's composite-material business is expected to enjoy a sales growth of over 30% this year to account for 11% (compared with 7% last year) of the company's total revenue. The growth rate is expected to jump to 40% next year, the chairman added.