Sanyang Industry Co., a Taiwanese manufacturer that markets its powered two-wheelers (PTWs) under the SYM brand, has signed an agreement with Motoskal Dan Enjin Nasional Sdn. Bhd. (Modenas) of Malaysia to supply technology and parts for the local production of a 150cc motor scooter there.

Sanyang expects the new agreement for this scooter, which goes by the name of Joyride in Taiwan and Elegan in Malaysia, to bring in about NT$300 million (US$9 million at US$1:NT$33) in additional revenue per year.

In the PTW industry, Sanyang is No. 2 in Taiwan and Modenas, in which three Japanese partners have ownership stakes, is No. 1 in Malaysia. The Malaysian company is looking for cooperative partners in Taiwan as a rapid and efficient means of boosting the level of its technology and the price range of its products, industry sources say. Last year it signed a contract with Taiwan's Motive Power Industry Co. (which manufacturers under the PGO brand) for the transfer of technology that enabled it to make the first 125cc scooter in Malaysia, the Karisma 125.

Under the new agreement, Sanyang will supply key parts for scooters, including engines, for the production of the Elegan 150. Output is expected to be in the range of 6,000 to 8,000 units this year, and to increase in 2005.

The new contract will further strengthen Sanyang's PTW business. At its 50th anniversary celebration last year, the company announced a plan to turn out 1.5 million units at facilities in Taiwan, Vietnam, and mainland China in 2007, to account for about 5% of the global market.

To overcome protectionism in many foreign markets, Taiwan's PTW makers are exporting technology and key parts instead of completed vehicles. In addition to Sanyang, Kwang Yang Motor Co. (Taiwan's biggest producer in the line, marketing under the KYMCO brand) and Motive Power are also doing this.

First Exporter

Kwang Yang was the first local company to export PTW production technology and key parts, which it now supplies to S.C. KYMCO in the Philippines, Saba Pishtaz Motor in Iran, and Autotecnica Colombiana in Colombia. Exports are expected to grow to about 18,000 sets of parts this year as Taiwan-developed scooters gain popularity in these markets.

One local PTW maker says that almost all of Taiwan's PTW manufacturers have gradually broken away from the technical control of their Japanese partners, and have developed their own independent R&D capability. Taiwan already plays an important role in the international PTW market, the maker adds, but its overseas deployment in the field has been slow compared with its Japanese counterparts.

With the strong R&D capability and price competitiveness of Taiwan's PTW manufacturers, the source comments, more and more producers in developing countries are looking for cooperative ties with them. This, of course, increases the export business of the local PTW makers.

Motive Power, for example, supplies about 20,000 sets of key PTW parts to Modenas every year, enabling the Taiwanese company to turn profitable last year and allowing it to develop business opportunities in developing nations, especially in Southeast Asia, more vigorously.