Building Hardware Manufacturers Fight Low-Cost Rivals By Outstripping Them in Value

Under fire from low-cost competitors, Taiwanese manufacturers of building hardware are now rolling out higher-added-value products faster than ever before. They are also wooing buyers by offering the convenience of a full range of products.

Opening Doors to New Markets E Tai Enterprise Co., Ltd., Taiwan's largest manufacturer of folding shower curtains and a major supplier of aluminum window and door frames, recently has been making a determined effort to improve its manufacturing capability.

With the addition of an in-house design team and testing facilities, the company now offers top quality bathroom products, such as reinforced glass doors and partitions for shower rooms and bathrooms with a proven ability to resist impact from a 45-kilogram iron ball at its testing lab.

Other new products include reinforced glass basins, toilet seats, bathtubs, and aluminum shower panels. The company also makes most of the parts for its high-added-value bathroom suites. All of its products are sold under the "Itai" brand.

Most of the bathroom products made by E Tai are made for the European market, which places a premium on space-saving designs and sophisticated styling. "Living space today has become very limited, so our products highlight simplicity and barrier-free designs to impart a spacious feel in the rooms they are installed," says company general manger Thomas Hung.

Hung emphasizes that his company's products appeal to high-income consumers with what he calls their "five-star hotel" feel. E Tai supplies a variety of bathroom units, from shower rooms and massage bathtubs to steam cabins.

Some of E Tai's steam cabins feature a computerized control panel with CD player, FM radio, TV, and VCD wireless phone. The full-feature model is priced at about NT$100,000 (US$2,900 at US$1:NT$35) a unit, or only one-eighth the cost of an equivalent Italian model, Hung says. E Tai also offers more basic steam-cabin models for the average consumer.

E Tai focuses mainly on the home- improvement market, which is much more lucrative than the new-home market, says Hung.

To meet the diverse tastes of different buyers, E Tai has set up an eight-specialist design team to develop customized models. The company has also begun offering integrated services, from bathroom planning and building to installation. "We are as much a service company as we are a manufacturer," Hung says.

Reinforced glass basins are one of E Tai's fast- growing lines, following a series of reports of ceramic bathroom ware that have cracked and badly hurt users in Taiwan. Its glass basins are able to endure a wide range of temperatures. As a further guarantee, most of the basins made by E Tai are insured.

In addition to its main factory in Keelung, northern Taiwan, E Tai also produces bathroom products in mainland China, Thailand, and Singapore. These overseas factories were opened to meet the local needs of those markets.

Hung notes that the Chinese mainland is emerging as the world's most important market for bathroom products. His company's mainland branch, he says, plans to introduce products in the 15 cities closest to Shanghai through its two stores in the Shanghai hub. The plant makes both luxury and mainstream models to satisfy the broad spectrum of purchasing power in the mainland market, Hung notes.

In Taiwan, E Tai has seven retail outlets and plans to open five more stores this year. Currently, the domestic market absorbs around 80% of the company's output, but Hung hopes to increase the ex-Taiwan share to 80% in five years, with the mainland market acting as the main engine of its overseas expansion.

E Tai has also contracted agents in Vietnam, Thailand, Singapore, Malaysia, the United States, Canada, Morocco, India, Costa Rica, Ecuador, Peru, and Australia to promote sales in those markets.

"In all of our markets, our winning strategy is to frequently present new-model competitive products," Hung says. Hung notes that the average life cycle of bathroom products is two years, and his company introduces at least two new models a year.

Well Positioned Established in 1989, Ferro-Carbon Enterprise Co., Ltd. Is a manufacturer of tile tools, including its recently introduced position fixer for tile drills.

The patented tool is composed of a palm-size suction cup, a metal plate, and tile-hole cutters. The tool boasts the world's widest range of cutting diameters, with set increments from 6mm to 83mm.

The unit is firmly secured in position by the suction cup. The plate is then fixed on one side of the cup, leaving the other side flush with the tile. The side resting on the tile has round holes, through which cutters can be fixed and driven down by power drills. The cup has a suction force of 50 kilograms.

Ferro-Carbon spent one year and US$90,000 to develop the unique tool, which it debuted about half a year ago.

Company chairman Steve Chen notes that the international market for tile tools has been good in recent years. Once sold only at professional hardware stores, such devices are now widely available at chainstores selling DIY (do-it-yourself) tools. Ferro-Carbon ships the position fixer to the United Kingdom, France, Spain, Portugal, Australia, the United States, and Canada.

In response to strong demand, Ferro-Carbon recently moved into a 54,000-square-foot factory, five times the size of its original plant, says Chen.

Chen stresses that in his industry the only way to win over rivals is by supplying as many items as possible. Ferro-Carbon supplies around 1,000 types of tool for cutting tiles, bricks, wallpaper, and other materials. "We supply the world's widest range of tools," he declares. Every year, he says, his company spends around NT$10 million (US$290,000) on product development.

Ferro-Carbon has posted annual revenue in a range of around NT$500 million (US$14 million) to NT$600 million (US$17 million) in recent years, and Chen projects the figure to rise 20% to 30% annually over the next four to five years.

All of the company's tools are made in Taiwan. Chen has no intention to move production to mainland China in the short term, though the firm does plan to open a procurement office there. Plans are also afoot to sell tools through B&Q home improvement stores in the mainland.

Water Tight Sunghao Metals Co., Ltd. Is a dedicated manufacturer of brass taps. Its self-shutting faucets, says company owner Y.Y. Yieh, are the highest-quality products of their kind in Taiwan.

Sunghao rolled out the self-shutting taps around four years ago after thoroughly testing the new product at the government-backed Industrial Technology Research Institute (ITRI). According to Yieh, the tests proved the taps will shut in accordance with preset times even after 200,000 uses, and without leakage. Yieh attributes the high quality of Sunghao's self-shutting series to the 30 years of experience accumulated by the company in standard-type faucet production.

Over 80% of the company's products are exported, with the Middle East absorbing the majority. In Taiwan, the company sells most of its products to government organizations and schools, which are attracted by the products' water-saving functions. Yieh is optimistic about the market for self-shutting taps since concern over water conservation is growing worldwide.

He says his company's sales have risen 20% to 30% each of the past few years. Though he confesses concern about competition from mainland China, he is confident that Taiwan will maintain its quality edge over its rivals on the other side of the Taiwan Strait.

Low Quality Plus High Quality

Taylor Shyu Enterprise Co., Ltd. Has built up a wide range of stainless-steel fittings and brass fittings for handrails, balustrades, and other architectural wares since its establishment 11 years ago.

According to company owner R.K. Hsu, Taylor Shyu supplies over 1,000 types of metal fittings. Most of these products are produced in low volumes and stress high- quality workmanship.

The firm also imports semi-finished parts from mainland China, where production costs are one-tenth those in Taiwan, Hsu claims.

Such cost-cutting measures are vital to the survival of Hsu's company, which faces intensifying competition from emerging economies such as India, the owner declares. "Indian manufacturers have many advantages over their Taiwanese counterparts, including access to low-cost brass," he explains.

Hsu's strategy to counter these low-cost competitors is to produce products with sophisticated designs and advanced processing. To this end, his company has invested in a forging factory in Taiwan and introduced manufacturing techniques from Germany.

Despite the low-cost competition, Hsu's company has been able to retain the loyalty of its 100-some regular buyers. "They have stayed with us because they trust our quality and credibility," he says.