Furniture Parts Quality and Design Driving Local Industry's Second Spring

Uncompromising quality and innovative designs have engendered a renaissance in Taiwan's furniture industry, which is quickly building a reputation for excellence in high-end markets around the world. The industry's steadily brightening future has also given rise to bright sunlight shining on the local furniture-parts industry, whose members have both contributed to and benefited from the success of their downstream users.

Furniture parts come in a broad range of materials (metals, woods, plastics, and ceramics to name a few) and styles, so it should come as no surprise that manufacturers in this segment also come in all sizes and shapes, from one-man shops to 100-plus-employee factories. Many producers have clustered in central Taiwan, especially firms specializing in metal parts.

Remarkably, given the exodus of local furniture makers to mainland China in recent times in search of lower costs, many furniture-parts producers have found ways to overcome rising manufacturing costs in Taiwan in order to stay viable in the fiercely competitive global market.

Much of this success is owed to the considerable quality edge local furniture-parts makers enjoy over their mainland counterparts, who have been forced to compete strictly on price. Indeed, the market inroads made by the mainland's makers of cheaper goods has been a major stimulus in Taiwan's scramble up the quality ladder.

In addition to rivals in developing countries, Taiwan's furniture manufacturers are beset by other challenges as well, most serious of which has been a spike in iron and steel prices. Some producers complain that the cost of these materials has soared 70% since early last year, putting a severe strain on their profit margins. Developing innovative products and incorporating new materials is one route that producers are choosing to evade the profit pinch caused by the soaring cost of metal.

Following the Customer

Founded as a trading company in 1976, Gesong Enterprises Co. used to sell hardware furniture parts made in central Taiwan to overseas markets. In 1990, the company began producing such items itself at a plant in Taoyuan, northern Taiwan. A year later, the company set up second plant near the first one, focusing on the production of plastic furniture parts.

Since then, Gesong has reduced its staff at the two plants from about 70 workers during the heydays to about 40 today. This scale-back in Taiwan has coincided with expansions across the Taiwan Strait, as the firm opened its first mainland plant in Shanghai about two years ago.

The cross-strait move was made reluctantly, according to company assistant manager Thomas Yen. "We have a lot of confidence in our products and clients, so we didn't want to follow our local industry peers to the mainland. However, the mainland has steadily become a global production base, so an export-oriented manufacturer like us has better be present there, " he explains.

Yen says that his company has a sound background in the industry that will help it overcome the competition. "We have a good R&D team and our skilled workers can turn out almost any type of furniture part that our clients demand. This has been a major reason for our strong customer loyalty, " Yen says.

With its large volume production shifted to mainland China, Gesong has focused its operations in Taiwan on the production of high-end products made of composite materials. The Taiwan plants also handle surface treatment processing and shipping affairs. The Shanghai plant will eventually be developed into the company's main production base, according to Yen.

Gesong turns out furniture parts in a wide variety of materials, patterns, sizes, and colors. "To satisfy the special orders, we can develop very expensive and exclusive molds to turn out extremely high-end products for our customers. For instance, our crystal door knobs and titanium alloy furniture legs are perfect for fancy furniture pieces, " Yen says. The company introduces an average of four to five new items per season to meet changing market needs.

Today most of Gesong's output is on OEM terms and is exported, mainly to the U. S. (absorbing 60%-70% of the total), Europe (20%), Japan, Australia, and Central and South America. "The high standard of our Japanese clients has forced us to strictly control the quality of our products. As a result, we have reduced our defect rate to below 5%, " Yen says.

To maintain its strength in the market, Gesong's marketing experts visit the company's clients in the U.S. and Europe at least once a year. "Keeping up personal contacts with our clients is very important. We personally visit them to exchange concepts on the developing trend of the products and express our concerns on what they need, " Yen says.

Last year Gesong's operations in Taiwan generated revenue of more than NT$120 million (US$3.53 million at US$1:NT$34), and this year revenue is expected to grow by 5% to 10%. The company's Shanghai plant, with a workforce of some 30 persons, started shipment at the end of last year and so far it has shipped products worth of NT$7-8 million (US$206, 000-235, 000). Seeing the developing potential there, Yen says, the company plans to set up a second plant in Shanghai next year.

Competing on Variety

Acting on a long-held interest in furniture parts design, Yang His-chin set up Yao Feng Vacuum Co. in 1984 to produce special-order parts for local furniture manufacturers. "In the beginning we turned out products based totally on the demand of our customers, " Yang says. "Later on we introduced self-developed products, which helped us to gradually expand our customer base."

Over the years, Yao Feng has built a reputation among both domestic and foreign buyers for its creative high-end parts. Today, exports, mainly to the U.S. and Europe, account for 70%-80% of the company's shipments, with the remaining 20%-30% destined for the home market.

"We specialize in making sophisticated furniture parts in a wide variety of designs and materials, including metal, plastic, and ceramic, " Yang says. "Taiwan has an excellent supply of high-grade plastics to support our production. Such materials are used in our plastic-wood composite furniture parts, which closely resemble real wood and have become quite popular as environmental consciousness grows."

To meet a variety of tastes, Yao Feng can make parts of mixed materials, like metal with plastic and/or ceramics. "With mixed materials we can create even more attractive and unique parts, " Yang says.

"Design capability is the lifeblood of furniture-parts makers, since we need to turn out numerous different kinds of items. By developing new items and patterns to meet the market needs, manufacturers can keep the loyalty of their clients, " Yang says.

"The development of new products requires a nimble and creative mind. A manufacturer needs at least 10 years' experience in the line in order to smoothly manage this level of innovation, " Yang says.


Today Taiwanese manufacturers face increasing competition from mainland China. "Output of furniture parts has been growing rapidly in the mainland, and so has the number of copycats there. However, some products they have been unable to copy, " Yang points out. "General speaking, the products made by mainland manufacturers are inferior to those made by Taiwanese producers. Moreover, foreign buyers still have more confidence in Taiwan's products in terms of quality, delivery, and supply."

Currently Yao Feng has a workforce of some 30 persons at its plant in Taichung, central Taiwan. Lathes and pressing machines take care of most manufacturing processes of the products. With the pressure of its Japanese clients, the company has tried to keep its defect rate as close to 0% as possible.

According to Yang, Yao Feng has steadily increased its output in recent years, with shipment value currently at US$500, 000 to US$600, 000 per month. The company plans to tap the potential market in Eastern Europe in the near future.

Export-Driven

Taft Enterprise Co. was founded more than 20 years ago as a manufacturer of souvenirs and works of art sold through local trading firms. As demand for these items fell, the company shifted its focus to hardware parts for lamps and furniture about a decade ago.

The move, says company manager Chou jung-tun, coincided with robust growth of lighting and furniture exports from Taiwan. "Fortunately the machinery we used to turn out souvenirs could be easily transformed to make lighting and furniture parts, " he says.

By the late 1990s, Taft supplied lighting and furniture parts to some 500 domestic manufacturers. That would prove to be the peak, as many of the firm's customers have been moving production to mainland China.

The loss of domestic business has forced Taft to turn to overseas markets; it began directly exporting to foreign customers some five or six years ago. "We encountered a lot of difficulties in tapping markets overseas at the beginning. Initially we targeted Southeast Asia and the Middle East, selling semi-finished products to manufacturers there for further processing, " Chou says.

After years of effort, Taft now has clients in more than 20 countries around the world, including the United States, Germany, the United Kingdom, Spain, France, Austria, and the Netherlands. "The U.S. and Germany, together absorbing 30% of our output, are our two major export markets. Our clients in Southeast Asia are mostly smaller firms. Our next target markets are Northern and Eastern Europe, " Chou says.

Almost all of the company's products are made of metal, including copper, iron, lead, stainless steel, and aluminum. Its plant in Tainan, southern Taiwan, handles most related manufacturing processes. Of the company's total output, about 60% are lighting parts and 40% are furniture parts.

Contact information on companies covered by the article:



Gesong Enterprise Co.
5th F., No. 57, Sec. 3 Minsheng E. Rd., Taipei, Taiwan

Tel: 886-2-2502-5101/5 or 2502-5268

Fax: 886-2-2505-6858 or 2502-5864

China Factory: Song Jiang Qu, Xin Qiao Zheng, Rong Xin Rd., Song Nan Xiao Qu, Shanghai, China

E-mail: gesong@seed.net.tw

Yao Feng Vacuum Co.
200 Hsichou Rd., Shenkang Hsiang, Taichung Hsien, Taiwan

Tel: 886-4-2561-7348/9, 2561-7901/2

Fax: 886-4-2561-7263

E-mail: buenos26@ms64.hinet.net

Taft Enterprise Co.
149 & 151, Kangchien Rd., Neihu, Taipei, Taiwan

Tel: 886-2-2797-1202, 2797-1263, 2797-1408

Fax: 886-2-2799-4317

E-mail: tft@tpts5.seed.net.tw

Website: www.buyingsources.com/h/t/taft.html