PING releases contract orders to 3 Taiwan golf club makers

Taipei, June 15, 2004 (CENS)--PING, the No. 5 golf equipment brand in the U.S. market, has finalized contract orders with several Taiwanese partners, including Fu Sheng Industrial Co., Ltd., O-Ta Precision Industry Co., Ltd. And Advanced International Multitech Co.

Industry sources said that PING is expected to release at least NT$400 million (US$11.9 million) worth of orders to the three new partners.

Due mainly to cost concerns, most big international golf equipment brands have turned to outsource high-quality golf heads and clubs overseas, especially from Taiwan. Such a development trend has made four Taiwan contract suppliers become the world's top-four golf club makers, including Fu Sheng, O-Ta, Advanced International and Dynamic Precision Industry Corp.

Industry sources said that PING never released contract orders before, but it recently became active contacting the said three local partners to provide product samples. Highly satisfied with the items made by local makers, PING finally decided to enlist all the three companies as qualified contract suppliers.

The sources said that O-Ta will win at least NT$200 million (US$5.95 million) worth of orders from PING, and Fu Sheng over NT$60 million (US$1.79 million).

O-Ta Chairman Lee Kung-wen said that his company will continue building a customer service infrastructure in Taiwan and mainland China to provide most satisfactory services to customers. O-Ta is carrying out the Six-Sigma operation standard at its plants in Taiwan and mainland China, seeking to pursue the goal of defect-free production.

Lee claimed that all of O-Ta's customers are very confident of his company's OEM/ODM (original equipment/design manufacturing) supply capability. O-Ta expects to ship 3.1 million golf club heads and 2.9 million clubs this year.

O-Ta president Lin Chung-chian said that PING will place orders for various kinds of products, showing the American company's high recognition of O-Ta's technical capability. O-Ta is injecting a big amount of money into expanding its production facilities in mainland China, and the expansion project includes setting up independent plant buildings for different contract customers such as Nike, Callaway and Bridge Stone. Lin added that his company will also build an independent plant for handling PING's orders in the future.

Advanced International Chairman Cheng Si-kun said that his company will soon complete a capacity expansion project at the company's plant in Dongguan, Guangdong Province, mainland China, adding the number of club head production lines to 70 from 60 currently.

To diversify its operating risks, Advanced International will not further expand its mainland facilities, and, instead, will consider setting up additional operations in Taiwan, Vietnam or other eastern Europe nations. Cheng explained that Vietnam has good investment environment, while eastern European nations own strong machining capability and low costs. Advanced International will also continue seeking new land for plant expansion in Taiwan and will keep production of high value-added items on the island, Cheng said.

Advanced International has successfully developed carbon-fiber golf club heads and won small-batch contract orders recently. The company said that the production cost of carbon-fiber heads is even higher than that of titanium-alloy counterparts. Advanced International plans to start mass-producing such advanced head products first at its Taiwan plant.

Taiwan Golf Equipment Makers' American Customers
Company	Annual Production Volume (Unit: 10,000 clubs)	Major American Customers
Fu Sheng	1,350	Callaway, Cobra-Titlest, Nike
Advanced International	415	Callaway, Cleveland
O-Ta	309	Callaway, Nike, Cobra-Titlest
Dynamic Precision	218	Taylor Made

Source: The companies