Taiwan Snowboard Makers Cutting a Wedge In OEM and Own-Brand Markets

Because Taiwan has very few people of its own who participate in snow sports, almost all of the island's makers of related products started out by producing on an original equipment manufacturing (OEM) basis for overseas contract customers.

Also, since the winter-sports season is so short, the production period for snow-sports items is only about four months. As a result, no Taiwanese manufacturer of sporting goods (including those with plants in mainland China) concentrates exclusively on snow-sports products.

Most of the leading local producers in the line, especially those that make snowboards and bindings, also turn out products such as skateboards, inline and roller skates, and ice skates. They began making snow-sports items because buyers of these other products asked them to.

Although Taiwan's snow-sports product industry had its origins less than 10 years ago, most local snowboard and binding makers have gained access for the know-how and materials sources necessary. Some of the larger producers have also been developing their own brands as a means of escaping the intense competition and low margins of OEM production, and numerous companies are now making high-end snowboards and bindings for sale in the international market under both their own and customer brands.

Freewheeling Producer for All Sports Genres

One of the premier suppliers in the line is Freesport Corp., whose product range encompasses items for winter, land, and water sports.

Freesport was founded in 1977 as a maker of roller skates and inline skates, and after gaining a solid foothold in the OEM business it began, in 1985, pushing its own-brand products in the international market. Freesport-brand products are now popular in the United States and Europe, especially in the high-end and professional markets.

The company jumped into the skateboard line in 1985, and expanded into snowboards, bindings, and boots, a well as skiboards, in 1995. Last year it added mountain boards, a newly fashionable sporting product. "All of our decisions to enter new product segments have been made after long-term market evaluation regarding technological integration and the improvement of profit margins," comments Arthur Lin, chairman of Freesport and of the Taiwan Sporting Goods Manufacturers Association (TSMA). "All of these attempts have been successful, not only in further expanding our contract production but also in our own-brand promotion in the international market."

Freesport's constant efforts to upgrade its product quality as well as its R&D and design capabilities have enabled the company to achieve a balance between its OEM/ODM (original equipment and design manufacturing) and own-brand businesses, each of which now account for about half of its revenues.

Lin says that the key to this success was its early efforts at product development and production technology upgrading, as well as its gaining of know-how from its contract customers. This helped the company to achieve world-class levels of quality, and subsequently allowed it to boost its production of own-brand products-which, however, were aimed at market niches avoiding direct competition with its contract customers but which filled supply vacancies in the market where there was an excess of demand.

A decade of such efforts have made Freesport's own-brand products well known among consumers in the industrially advanced countries, especially professionals and buyers in the high end of the market. Gradually, the company's products have achieved parallel status with big professional brands worldwide.

Despite the success it has achieved in promoting its own brand, Lin stresses, Freesport will never give up contract production for customer brands such as "Streetboss" for ski products, "Frees" for bindings, and "Solution" for snowboards.

The company set up its first mainland Chinese plant in Dongguan, Guangdong Province, in 1991 in order to lower its production costs and heighten its cost competitiveness. That plant now has 500 workers, who turn out mainly inline skates and roller skates. A second mainland plant followed in Kunshan, Jiangsu Province in 1995; there, about 200 workers make snowboards and skateboards, among other products. Another plant, at Linkou in northern Taiwan, manufactures all of Freesport's binding products using the plastic-injection method.

Producing In-House

Freesport's line of winter-sports products today encompasses ice skates, snowboards (both free-ride and freestyle types), and ski boards. It produces all of the bindings and snowboard boots for its products in-house.

Though the production period for snowboard products lasts only about four months, Lin emphasizes that this is a strategically important line because it gives the company the opportunity to link with major international brands, to strengthen production technology constantly with newer and higher-end materials, to develop design capability, and, most importantly, to promote its own brands in the international market.

Although the manufacturing of snowboard products poses difficulties and the contract business offers only small profit margins, Lin comments, "Freesport has accumulated a lot of valuable know-how and experience in board products, and this will help us to generate momentum for our branded sales in the future."

A recent example of how such know-how and experience can pay off is the new mountain-board products developed by Freesport, which combine the production technology of snowboards (for the body of the products) and skateboards (for the wheel mechanisms), along with the graphic design. No other company in the world, Lin claims, has the capability to integrate all three of these skills in-house.

Such success has come on the back of many failures. For example, the company once tried to contract an American design house to design and work out the graphics for a new series of boards, but the attempt failed because the resulting graphic styles were not popular with users in Europe-where snow sports originated. After that lesson, Freesport now limits its graphic design to Austrian companies on the reasoning that those companies know what sort of visual feeling that the majority of end-users of the company's models want.

Another concern, Lin points out, is that there are fewer than five suppliers of the key materials used in the production of snowboards. Also, good snowboard functions, durability, and safety come from accumulated know-how and actual experience in usage-and Taiwan is not a place where snow sports are highly popular, or even possible. Another difficulty is that different markets have different requirements depending on the varying snow conditions, especially hardness.

This, the chairman notes, "is why the OEM/ODM business is so important and why we'll never give it up. Our early days as a contract manufacturer for big international snowboard brands gave us a chance to engage in technical exchanges with the buyers and learn how to outsource key materials. Now we're in a stage of development where we strive for the further upgrading of our technology so that we can outstrip our customers."


To gain still more key know-how, the company has contracted with professional athletes to conduct snow trials with its board products in different countries. The knowledge gained from such trials is combined to design and finalize the specifications and other details of new snowboard products. "This is a cost-intensive and long-term investment," Lin says. "But it will pay off in the next five years as our own-brand products become more popular in the high-end and professional segments of the global market."

Successfully Playing the Snowy Field

Another successful company in Taiwan's winter-sport product sector is Playmaker Co. The firm has a varied lineup of sporting goods that includes inline skates, ice skates, skateboards, snowboards and bindings, short skis, and related protective gear. For years the company has been promoting its own brands, including "Cocoon" for snow-sports products and "California Pro" for land-sports items, in the international market.

The company's vice president, Perry Hsieh, notes that Playmaker was established in 1968 and has since then made a number of well-judged decisions about diversifying into new fields. About two decades ago, for example, the company adapted to the changing landscape of the sporting-goods industry by shifting its focus away from badminton rackets--the popularity of the sport was dropping--and into skateboard products, which were becoming more popular. Further diversifications followed in 1999, into inline skates (under the California Pro brand) and snowboard products. Water-sports items have become another focus of its diversification in recent years, with the development of wakeboard and kiteboard products.

Today, Hsieh comments, his company offers a comprehensive range of products for land, snow, and water sports, and he is confident of its future development, particularly in upmarket products. Annual shipments currently amount to around 40,000 snowboards, 300,000 pairs of snowboard bindings, and 80,000 pairs of short and carving skis. He expects these figures to grow rapidly over the next few years.

The company now makes about three-fourths of its products on an OEM/ODM basis for more than 20 major international sporting-goods brands in the U.S., Europe, and Japan. The remainder is sold in the top end of the market under Playmaker's own brands.

Nightmare Competition

"The only way to escape the nightmare of low-price contract production is to develop own-brand sales," Hsieh says. "But sporting-goods products often require a high safety index and special know-how about advanced materials if the manufacturer wants to develop the high end of the market. Playmaker itself, after gaining a solid foothold in contract production, started developing its own-brand sales about six years ago-a little before we began diversifying into snow- and water-sports products-and this immediately brought us face-to-face with new challenges."

Most Asian snowboard makers possess limited knowledge about snowboard products because of the region's shortage of experience and history in the line. The most efficient way to overcome this difficulty, Hsieh says, is to devote constant efforts to strengthening R&D and to seek cooperation with foreign designers, especially in countries where snow sports are popular.

Playmaker's R&D team consists of over 20 experienced professionals who handle product development in Taiwan. They are assisted by numerous European design houses that develop graphic designs for the company's snow products.

The company's production is carried out in two plants, one in the central Taiwan city of Taichung (with about 200 workers) and the other in mainland China's Fuzhou Province (with about 500 employees). Hsieh claims that Playmaker is Taiwan's most comprehensive manufacturer of equipment for land, snow, and water sports, and boasts that it has a very high self-production ratio, which is a key factor in the production of items with a high degree of quality and safety.

To achieve the highest level of safety and the most modern styling so as to establish its brand image in the shortest time, Hsieh says, his company contracted with European design houses to develop graphic patterns for its snowboards and worked with customers in different markets and cultural areas to assure that the products would be popular hits.

Playmaker also secures the cooperation of foreign professional snowboarders in working out the structures and material formulas for its new boards. The company also studies the most advanced snowboard models on the market in refining its own offerings into newer and better products.

Over the past few years Playmaker has developed more than 50 snowboard models, some with functions or structural designs that are protected by patents, and the number is constantly on the increase.