Taiwan Exhibitors Show Off Upmarket Efforts at IFFT 2002
2003/04/25 | By
IFFT 2002 took place at Tokyo Big Sight, a sprawling exhibition complex near the city's Daiba district, on Nov. 27-30. The annual show, sponsored by the International Development Association of the Furniture Industry of Japan (IDAFIJ), is seen as the most important opportunity for foreign furniture manufacturers to make inroads into the Japanese furniture market.
The 2002 event attracted 602 exhibitors from 32 countries and regions, and the exhibition space they occupied totaled 34,360 square meters. Of the overall number, 242 were domestic companies and 360 foreign firms. The largest number of overseas exhibitors, 70, came from Italy, followed by Taiwan with 59 and mainland China with 44.
The number of mainland Chinese exhibitors was up by 12 from the 2001 show. Fourteen of them formed a group¡Xthe first Chinese group ever for the fair--organized by the China National Furniture Association. The prominent presence of these participants reflected the emergence of the mainland as the largest foreign supplier of furniture to the Japanese market in recent years.
This emergence was highlighted by a 20.5% jump in sales of Chinese-made furniture in Japan to ¢D 56 billion (US$470 million at ¢D120:US$1) in the first half of 2002, despite a 0.5% drop in overall furniture imports to ¢D190 billion (US$1.6 billion).
Sales of Taiwan-made furniture to Japan, by contrast, dropped 20% to ¢D22.8 billion (US$120 million) in the first half, almost costing the island its No. 2 position among foreign suppliers. The United States followed closely, with Y22 billion.
Multitude of Difficulties
The decline reflects the difficulties faced by Taiwan's furniture industry because of weak market demand, competition from mainland China, and the mass migration of Taiwanese furniture makers to the mainland. Industry insiders say that of the mainland's US$4 billion worth of furniture exports last year, US$2.5 billion came from Taiwanese-invested factories there. As a result, Taiwan's overall furniture exports tumbled 30% in 2001, to US$1.3 billion, and remained flat in 2002.
Some Taiwanese exhibitors at the recent Tokyo show voiced doubts about the value of moving to the mainland, citing the cutthroat competition that has arisen among Taiwanese- invested and native Chinese furniture makers in the mainland.
One exhibitor said that Taiwanese manufacturers moving into the mainland typically see the prices of their products plummet by a third within three years of transplanting their production facilities. Consequently, quite a number of them have closed down or have been taken over by state- run mainland enterprises.
Those exhibitors expressing doubts regarding mainland ventures said that it is critically important to their long-term development to maintain, in Taiwan, a solid core operation dedicated to the production of more sophisticated products, research and development, and marketing. They also stressed the importance of protecting their share of the Japanese market by offering higher-end products.
Growing Along With Users
One notable example of this upmarket emphasis was a children's table set displayed by Tay Hua Furniture Corp., which won a silver best-product award in the first product competition sponsored by the IFFT organizer. One gold and four silver awards were presented, and Tay Hua was the only non-Japanese winner.
The award-winning table features a gas-spring tube that enables users to adjust the height of the table by manipulating a lever under the tabletop. The tube is imported from Germany and, according to company officials, has a product life of 20 years. The chair has a similar mechanism for height adjustment; the seat is pulled forward as its height is raised, users can fix it in position by tightening a knob, and even if the knob is not tightened a safety device ensures the seat sinks only gradually. The set is made of Formica, a specially treated material that is highly resistant to scratching.
Tay Hua's general manager, Chen Chao-ken, characterized the set at the show as "growth furniture," explaining that it can be used by people from five to 20 years old. He said that it had been selling well in Taiwan, Russia, and some European countries since its debut in mid-2002.
The company expanded into children's furniture 10 years ago, and these products now account for half of its annual sales of NT$150 million (US$4.7 million at NT$35:US$1). Sales have grown at a steady pace in recent years despite the sluggish furniture market.
Trusting in Welltrust
Another Taiwanese exhibitor in Tokyo was Welltrust Industries Co., which opened a plant in mainland China in mid-2002; despite original expectations that the new mainland plant would take over 80% of production, the company at the moment still carries out 80% of its production in Taiwan. The reason for this is the cutthroat competition faced by the mainland factory. Annual total company output amounts to about US$1.5 million, according to managing director Charly Lin.
The company's IFFT exhibit highlighted two office chairs, one with a PP-grating back and the other with a woven-rattan back, both of which are follow-up models to a popular mesh- back chair that debuted in 2001. The backs of the chairs can be adjusted by a continuous tilt, which at the same time adjusts the position of the seat to assure comfort. The chair with the PP back has been selling in Europe for US$60- 70 FOB since its introduction in mid-2002, but the rattan-backed model, which carries a price tag of US$80, made its first appearance at the November fair. If market response is favorable the company will farm production of this chair out to overseas factories, since rattan products are no longer made in Taiwan.
These two new products are the result of Welltrust's efforts to develop higher-margin, self-designed products that will enable it to escape the razor-thin profits plaguing its traditional metal furniture. The company introduces four or five new models a year, spending NT$5 million (US$140,000) on mold development alone.
In-House Design Seen as Key
A&J Co. is another Taiwanese exhibitor wanting to attract Japanese buyers with self- designed products. Its display at the fair featured a computer table with adjustable height and modular construction. The upper portion of the table's legs are empty in the middle and have sawtooth-like edges to facilitate height adjustment and the attachment of supplementary components such as a printer shelf, file cabinet, and CD rack.
Buyers of this table can choose from four different kinds of top: glass, PVC, melamine, and medium-density fiberboard (MDF). The MDF top has a powder coating; this represents a technological breakthrough, since powder coating could formerly be applied only to metal products.
Powder coating is environment-friendly, since the scattered powder particles can be collected by static electricity and reused. Traditional liquid paint, in contrast, produces hazardous fumes during the production process. In addition, the powder-coating process generates much less wastewater than liquid painting does. Finally, one coat of powder is enough, whereas a product with a complicated shape may require up to six coats of liquid paint, making it harder to control the final effect. Another advantage of powder coating is that the coat is harder and can endure higher temperatures than liquid paint.
The new computer table, which was developed by A&J's four-person design team, was introduced in September 2002. A trial order for some 200 units has been received from a Dutch buyer; the company's general manager, Jeneson Hsu, predicts that the computer table will give a strong boost to the firm's sales of metal furniture, which topped US$1.5 million in 2002.
Trying and Succeeding
Tribest Co. displayed a SOHO (small office, home office) set aimed at the niche market that has arisen with Japan's growing SOHO population. The set consists of a computer table, file cabinet, storage cabinet, and supplementary table with adjustable height. All of the components are furnished with casters, enabling them to be moved around freely. The computer table, which carries a price tag of US$50, doubles as a study table with a small shelf for an LCD (liquid crystal display) monitor. (LCD monitors are gradually replacing larger cathode-ray tube, or CRT, monitors.) The tabletop is made of E1-class MDF, which contains a relatively low level of formaldehyde, a chemical compound hazardous to human health. Tribest, like A&J, uses environment-friendly powder coating for its tabletop.
The company began developing SOHO furniture several years ago, and these products now make up over 40% of its total output. Its total sales topped NT$500 million (US$14 million) in 2001, with Japan accounting for 70% and the U.S. 30%.
No Screws Needed
Founder Co.'s display at the show focused on aluminum shelving featuring flexible assembly, for use in either the living room or the study. The vertical parts of the frame can be extended all the way to the ceiling, where they are fixed in place with rubber funnel-shaped heads that negate the need for screws. The number of shelves, and the space between them, can be adjusted at will. The product is made of aluminum, which is anodized to make it more resistant to scratching.
The shelving was designed by Founder's seven-person design department and is a result of the firm's ongoing program to cultivate in- house designers and develop self-designed products. Current plans call for the spending of NT$10 million (US$290,000) on this program over the next several years. In addition to its own design team, the company also employs three contract designers, one French and two Taiwanese, to help with design work.
Founder expanded into complete aluminum products three years ago¡Xbefore that, it had concentrated on aluminum parts¡Xin order to avoid acute competition from parts makers in mainland China. The firm's vice president, Mayer Lin, noted at the show that aluminum furniture has become increasingly popular in Japan because of its lightweight and rust-free features. In addition, the price of aluminum furniture has dropped to just 20-30% more than iron furniture, down from 100% more in the past.
The Product Parade Continues
The booth manned by Tung Keng Enterprise Co. highlighted two beds, tiltable up to 70 degrees in an ergonomic curvature by an electric controller, that were developed by contract Japanese designers and manufactured at the company's plant in central Taiwan. The beds feature hidden casters, enhancing their attractiveness, and are priced at ¢D68,000 (US$560) for one and ¢D29,800 (US$250) for the other.
Tung Keng also displayed a number of baby- furniture items that are made in its Shanghai plant, which was inaugurated in October 2001 and handles the production of lower-priced products. Japan accounted for 40% of the company's NT$1 billion (US$290 million) in sales in 2001.
In its IFFT display, Jui Feng Enterprise Co. showcased bentwood furniture aimed at young Japanese consumers. Bentwood is made of different layers of wood that are glued together, giving it the feel of solid wood but costing much less. The bentwood used in the company's furniture is sourced from Taiwan- invested factories in Vietnam, with metal parts being procured from manufacturers in Taiwan. Jui Feng itself handles design and mold development.
The company also exhibited K/D (knock-down) cabinets, made of MDF and featuring contrasting white and red colors, at the Tokyo show.
Sen Kuan Corp. also took aim at Japan's young consumers with a display of stackable acrylic storage shelves. The shelves are round in shape and have acrylic panels as backing, which allows more variety in color and shape and can also avoid the expansion and contraction that is caused by temperature changes. The shelf- layers are attached with iron slips fastened in place with screws, and their number can be adjusted flexibly by users. The company exports all of its output to Japan, where most of the items are sold through mail-order companies.
The bright colors of the ABS (Acrylonitrile butadiene styrene) bathroom furniture displayed by Dah Shan Plastics Co. attracted a lot of attention at the fair. Besides being colorful, these products also feature light weight and low price; a bathroom storage cabinet, for instance, carries a price tag of only US$55. Company officials noted that ABS furniture is environmentally friendly, with production processes that generate much less pollution than PVC.
Dah Shan started making ABS furniture in late 2001 to avoid intense competition from manufacturers in mainland China for its original line of ABS materials. Expansion into furniture cost the company NT$10 million (US$280,000), mainly for the development of molds. Furniture, which is sold mainly through mail-order firms in Taiwan, now accounts for 50% of Dah Shan's total sales of around NT$15 million (US$420,000) a year.