Adopting Various Strategies to Stay Ahead in Furniture Parts Sector

It is not surprising that a couple of decades ago Taiwan-based home furnishings and furniture parts makers had already built a considerable reputation worldwide for quality and flexible production; for after all Taiwan has been, since its industrialization, gradually sharpening its plastics and metals manufacturing skills, which have benefited from learning via transferred technology as Japanese and European brands and suppliers of wide ranging goods have set up OEM manufacturing on the island. But Taiwan's furniture parts making sector, about 20 years ago when manufacturing costs spiraled on the island, had no option but to move offshore, especially to China. In the intervening years, Taiwan-based furniture parts makers have not, while fending off rapidly strengthening rivals from emerging economies who are resorting to both no-nonsense and fly-by-night tactics to win, swayed from building high quality products that deliver maximum value per purchasing dollar, as well as consistently offering trustworthy quality control and improving manufacturing caliber, which have successfully impressed global buyers that made-in-Taiwan furniture parts is second-to-none.

Threatened Leadership

Leadership in business is rarely everlasting, where even GM's erstwhile, rock-solid dominance as the biggest carmaker globally is threatened by Toyota, and such principle also applies to Taiwan-based furniture parts makers, whose livelihoods have been shaken up by emerging rivals in China and Vietnam. A couple of factors are working effectively for these emerging competitors: lower costs and general conscientiousness. It is already formidable to keep at bay Chinese and Vietnamese suppliers who can undersell Taiwan-based makers, but it is agonizing news for the latter to hear that such rivals are increasingly discovering what they also had to learn in the beginning-that minimizing price is self-destructive but focusing on quality is a productive, long-term strategy to success.

Most industry reports harp on about the amazing, intimidating capacity of Chinese and Vietnamese furniture parts makers' to undersell Taiwan-based counterparts, but, given current manufacturing technology and available raw materials being similar in Taiwan and other emerging economies, one suspects that the picture of competition is more complicated, especially when sleight-of-hand is an age-old tactic used in business albeit not often shared outside inner circles or reported openly. One such deception is sending buyers samples with satisfactory quality but delivering eventually substandard products, a ruse allowing emerging suppliers to quote unfairly competitive prices. With the even playing field spoilt by such underhanded schemes, Taiwan-based furniture parts makers, besides trying to honestly upgrade quality and R&D, are also exposing the shadier side of the business-enlightening potential buyers as to the pros and cons of product quality-via education.

Exposing PU Imposters

One maker who has a vested interest in educating buyers and users to tell apart fake PU casters from PVC (polyvinyl chloride) ones is Da Yin We Tong Co., Ltd., (DYWT) an ODM (original design manufacturer) specializing in development and production of PU (polyurethane) casters, which are costlier than PVC ones but feature more desirable mechanical properties.

DYWT was originally a contract supplier of PU sports shoe soles for Nike, hence accumulating ample know-how in the industrial plastic. Realizing that making PU soles is no longer profitable, the company decided to diversify into producing PU casters two years ago.

Total R&D Dedication

Noteworthy is DYWT's total dedication to revamping its business-the company actually shuttered its operations for a full year to focus on doing costly R&D on the characteristics of PU casters and related production machinery. After successfully developing its first set of colored PU casters, the company officially reopened in 2006 in Taichung county, central Taiwan.

David Yang, president of the company, said that DYWT wields comparatively superior R&D capacity, complete with advanced 3-dimensional design technology to accurately build molds in-house. Also, the company is capable of independently fine-tuning production machinery, effectively enabling the firm to consistently improve production capability and capacity. Despite being a relative newcomer with only two years in the sector, DYWT has already achieved single-month volume of 500,000 casters. Since it debuted the first batch of improved PU casters last September, DYWT has garnered trust, recognition from buyers in many nations, with orders delivered to Japan, the U.K, Germany, Poland and China.

Upon finding out some Chinese makers have been playing the game unfairly-deceiving buyers by passing off polyvinyl chloride (PVC) casters as PU-made, Yang said, "We can't put up with such deception, while above all PVC is health-hazardous as well as inferior in quality relative to PU."

"Indeed, Chinese makers are making unexpected progress in product quality. But it is incredible that some of them dare to cheat buyers by selling PVC casters as PU ones, which is why they can undersell us," Yang commented. "Thus, we try hard to educate customers to learn to identify real PU casters from fakes, an important task for both sellers and buyers because users' health and safety depend on makers' conscientiousness. Adhering to such practice is DYWT's unwavering motto."

Despite being costlier than PVC, PU casters can better cushion impact and are water-resistant, wear-resistant and recyclable. Furthermore, DYWT's PU casters feature improved structure and compound for better durability, hence are especially popular with European household users. After a year of concentration on improving PU casters, Yang believes that his company has prevailed most Chinese counterparts by offering better quality and lower production costs, adding, "We just want to differ from Chinese competitors with superior PU casters."

Stick to Reliable Production

One maker that has made focusing on setting up sound, integrated production lines in- house pay off is Shen Shan International Glide Mfg. Corp., established in 1981 in Taichung County, central Taiwan. Such strategy has successfully built ample customer trust over the years.

Starting as a maker of injected plastic furniture parts some 25 years ago, Shen Shan has through the years built a considerable product portfolio. The company, with 35 workers in its 33,000-square-meter plant, manufactures a variety of plastic furniture parts, including plugs, casters and related accessories, as well as a series of hardware that have been exported to Australia, the U.S., Germany and Canada.

The company's managing director Sen-mao Wu said that the firm is a seasoned furniture parts maker, on both OEM (original equipment manufacturer) and ODM basis, that deserves to be proud of its sound production lines and warehousing facilities. However, the key to its success may be the company's considerable skill and experience in building tooling or molds-of which over 1,000 are currently stocked in-house-that solidly support its competitiveness in the sector.

"Its wealth of in-house know-how in tooling allows Shen Shan to achieve maximum production efficiency by readily being able to build any mold as necessary to accelerate production, hence minimizing lead-time," Wu commented. "In addition, such ability achieves high production flexibility and product variety, as well as helps us to integrate production in the factory for optimized product quality and minimized production costs."

R&D Know-how as Advantage

Applying its R&D know-how is another advantage Shen Shan uses to compete against typical furniture parts makers. "We tap our seasoned know-how in application of industrial plastics, such as PVC and PE (polyethylene) to offer professional advice and helpful information on material characteristics, which enables customers to make informed decisions when developing new furniture parts," Wu said. "For example, we advise customers to reinforce structures of new parts and improve material formula to better adapt such parts for use under different conditions."

Backed by a skillful R&D team, the company has recently diversified into medical hardware and related accessories, a range requiring relatively higher production technology and advanced facilities. Being able to develop higher-precision items reflects the company's R&D capability.

Competing by Focusing on High-end

Since its establishment in 1998 in central Taiwan, Meng Nung Enterprise Co., Ltd. has succeeded in sharpening its competitive edge by honing products into high-end, functional furniture parts and hardware.

Meng Nung is a specialist OEM maker of furniture hardware and metal parts, offering thousands of items, including handles, storage racks, towel racks, tissue holders, and aluminum alloy parts. Besides working with leading domestic suppliers of systematic furniture, the company is also a competent ODM maker, helping to develop new products.

While sparing no effort to pursue the best quality and R&D capability, Ching-mu Chen, owner of Meng Nung, praised CENS's promotional program, which has helped the company tap the domestic retail market, as well as overseas markets in Singapore, Japan, the Philippines, Germany, Italy, and the U.S.

Going Upmarket as Strategy

Besides, to take on the market challenges worldwide, the company has moved towards product differentiation-setting its line apart from conventional, low-priced ones. "Price competition is a dead-end for us nowadays because we simply cannot win against Chinese makers at that game," Chen said. Meng Nung's strategy is to go upmarket by developing high-end aluminum alloy parts and hardware.

"We spend two to three years developing aluminum-alloy parts, which requires thorough knowledge since such metal poses extreme challenges during processing," Chen said. "For example it is virtually impossible to detect flaws on aluminum alloy until you finish electroplating." In other words, it is critical for profitability for a maker to be able to effectively maintain quality control of raw materials, otherwise it costs even more to dispose of defective output. Such exacting processing demands sometimes foil beginners in aluminum alloy parts making, a hurdle that Meng Nung cleared.

Success at First Try

Not only able to specially finish aluminum alloy furniture parts with streamlined, stylish look, Meng Nung, Chen said, also amazed Japanese buyers with its introduction of a batch of aluminum chairs, a first attempt. The Japanese buyer ordered 100 units after seeing them the first time despite a relatively high price. Undoubtedly the company's sophisticated processing technologies contributed to the success of such chairs.

Another successful line is its aluminum-alloy decorative furniture parts for merchandise display racks and supports, which are ideally suited for both commercial and household applications.

"In fact, I was surprised to see professional interior decorators exclusively adopt our decorative parts for a whole retail area for women's intimate apparel in IDEE Department Store (a well-known retailer in Taipei)," Chen recalls. "This line can be used in art galleries, malls, gardens and homes." In a word, they are versatile.

A typical medium-sized enterprise in Taiwan, Meng Nung keeps learning to improve management of production, costs, and personnel. "Compared to foreign competitors, Taiwan-based furniture parts makers boast competitive edge in quality, production and reasonable pricing." Chen commented. "Furniture markets exist everywhere; as long as we stay informed of trends, we can find niches."

R&D Partnership

Founded in 1984 and with a history of about 25 years, Chang Mei Co., Ltd., located in Changhua County, central Taiwan, is a veteran maker of brass handles and knobs that is widely relied upon by global buyers.

Hiring a workforce of 45 people in its 1,300-square-meter plant, Chang Mei is a specialist OEM maker of cabinet knobs, handles, legs, towel hooks and related accessories, with around 95% of its products sold overseas, including the U.S., Europe, Japan, Australia and Latin America.

The company is noted for its long-term cooperation with educational institutes to engage in R&D on applying composites and alloys, such as zinc and aluminum alloys, according to its president Lien-chu Yang. Also, the company is heavily focused on being green-adopting state-of-the-art manufacturing technologies and materials to produce lead-free, eye-catching products.

To cope with threats from emerging rivals worldwide, Yang said that his company vowed to integrate production lines in-house to enhance production efficiency and flexibility, adding, "With integrated production facilities, Chang Mei can better control product quality than before, winning customers' trust by being a capable, quality-consistent supplier." Also Taiwan-based makers have not neglected the importance of the key to outdoing emerging makers, which include offering good product quality, prompt delivery and timely service.