Taiwanese producers aim to grow through niches

By Gary James -- Furniture Today, February 4, 2007

Taipei, Taiwan — Once the No. 1 import source for U.S. wood furniture, Taiwan fell off many buyers' radar screens in the early 1990s as mainland China began its rise to dominance.

But despite the exodus of wood manufacturing across the strait that separates the two countries, Taiwan maintains an important role in global furniture sourcing, particularly in metal and glass furniture.

In 2005, the country shipped $611.6 million worth of furniture to the United States, ranking it sixth among import sources. More than $205 million of that amount was metal furniture and parts, a 5% increase over the previous year.

Mainland China continues to pose big challenges for Taiwanese producers, undercutting them on price with much lower labor rates and, in some cases, raw material costs. But there are a number of Taiwanese producers that continue to grow their businesses, leveraging their technical know-how and design originality and, in some cases, teaming up with other sources either in Taiwan or mainland China.

For most of these companies, increasing exports to the United States and other offshore markets is the key to survival. To help facilitate this, local manufacturers, with the help of the Taiwan External Trade Development Council, have revived the Taipei International Furniture Show. In January, Furniture/Today traveled to Taiwan to get a preview of some of the products that will be on display at the show.

Office chair activity

At Camelking International in Tu Cheng City outside Taipei, designers are developing stylish new office chairs for potential export customers. The exclusive agent in Taiwan for German office seating source Interstuhl, Camelking also provides a variety of office chairs and chair components to Interstuhl through its network of affiliated plants in mainland China.

Now, Camelking is testing several new chair models that its own design team has developed, for sale either to Interstuhl or to new customers for home and office use.

The line includes the new E101 model, named after the world's tallest skyscraper, the Taipei 101 building. Like its namesake, the E101 leather chair features a variety of innovative design features, including height-adjustable armrests, swivel arm support and a sliding and height-adjustable backrest.

Also in development is the C101 chair, which features high-tech MemoSorb latex memory foam that absorbs body heat while keeping its body-friendly shape. This model also features a 90-degree adjustable backrest, adjustable headrest and a seat-depth adjustment, along with an aluminum base and 65-millimeter casters.

"We have five designers on staff, as well as a partnership with a local design school," said Alex Wang, Camelking's president. "We are developing new models with creative style and added functions to meet the needs of today's businesses and consumers. We'd like to expand our business in markets that Interstuhl doesn't currently reach."

The Interstuhl line now accounts for 75% of Camelking's sales. In addition to serving the Taiwanese market with its own line of chairs, Camelking also sells some parts to contract furniture source Herman Miller in the United States.

And it also worked on a test line for superstore chain Office Depot but opted not to pursue that business.

"Our chairs are designed with more of a European feeling, with sleek styling and quality construction," said Wang. "We decided that the Office Depot-type of chair wasn't a good fit for us. Our strength is quality along with value."

Battling price pressures

Hsinchuang City-based Euro American, which began operations in 1975, exports its line of entertainment, barstools, tables and storage furniture to the United States and Europe. In this country, customers include Top 100 chain Ikea and Omni Mount, a major distributor. Euro American also is exploring new export markets such as Singapore, South Africa and the Middle East in an effort to spark new sales.

"Business has gotten very tough for Taiwanese producers," said Kiyoko Chen, general manager. "Competitors in China are offering such low prices. We have tried to cut costs as much as possible but we don't want to lower the quality of our product."

Euro American has passed Ikea's tough I-way certification process as well as the ISO 9001: 2000 standard.

For many of today's buyers, "price is the most important issue," added Chen. "They care less about quality. That makes it very difficult. We want to stay in Taiwan, but with the cost of raw materials such as stainless steel and aluminum rising, it's difficult."

To distinguish itself from Chinese producers, Euro American is putting more emphasis on its in-house design capabilities. It also is considering showing at a major U.S. furniture market, either Las Vegas or High Point.

"We been to Cologne and also showed twice in Milan," said Chen. "If we can find the right location, we'll show in the United States."

Sauna strategy

For Itai, a producer of shower enclosures and other bath items based in Keelun, its latest product category — in-home spas and saunas — may be a stretch for furniture retailers. But with some stores having good success with fireplace cabinets, pool tables and backyard barbeques, the possibility of establishing a presence in the furniture store channel isn't necessarily a pipe dream.

Itai recently showed its new line at the International Pool and Spa Expo in Las Vegas. The line includes a variety of models, accommodating from one to four people with features such as built-in music systems and adjustable lighting. The units are constructed of pine, alder and aspen.

"We expect this to be a good growth area for us," said James Tsai, manager of the Itai's export department. "Our plan is to find strong distributors in our target markets that have the contacts we need to get started."

Itai already has quite a bit of expertise in the spa and sauna category through its affiliation with Tylo of Sweden. Itai is the exclusive distributor of Tylo spas and saunas in Taiwan.

Itai produces its spas and saunas at its Shanghai, China, plant. They are designed to ship in flat packs for consumer assembly.

"These will be very sharply priced," said Tsai. "And we will offer them in two levels of quality — good and better."

A front row seat

Golden Golf Lighting, based in Chung Li City, already has a big presence in the United States. It's particularly visible in college and professional basketball stadiums, where its logo-adorned folding chairs provide a comfortable place for players such as Shaquille O'Neal to rest their legs when they're not making slam dunks on the court.

But company owner Frank Lin also sees big potential in American homes, where sports-obsessed fans might like some seating that bears their favorite team's logo.

"We need to study the market more closely to understand how to best develop this opportunity," said Lin, who currently sells his line to U.S. sales agents with deep contacts in the sports and school channels.

In addition to providing seating in a family room for game fans, Lin sees possibilities in the home office, where castered versions of his chairs might provide an affordable alternative to traditional office chairs.

"Our new line of chairs features a larger, more comfortable seat and stronger construction," said Lin. He added that his company also has the ability to tailor the chairs' edge trim with a variety of durable insets, including wood.

"These aren't your typical folding chairs," he said. "They are designed to fit the body in comfort, particularly when you're cheering on your team."

He said his chairs are built to last 10 years or more, compared to all-steel versions that often fail after only six months of use.

Golden Golf Lighting ships about 100,000 folding chairs to the United States annually, Lin estimated.

Competing in plastic

For Harlin, a producer of resin outdoor furniture, shelving, pallets and other injection-molded plastic products, generating profits remains a constant challenge. In the United States, the company sells its line to such big home improvement chains as Home Depot and Lowe's, where every penny counts when it comes to pricing.

"These buyers are always looking for ways to get the price lower," said Joseph Hsu, CEO of the Taichung-based producer. "We want the business, but we have to make money, too."

Buyers' pursuit of the lowest possible price often ends in disappointment as quality drops and returns rise," he said, adding, "Stores can end up with a lot of complaints."

To differentiate itself, Harlin has invested steadily in improvements at its 172,000-square-foot plant. It has achieved ISO 9001 and 14001 certification and produces its own tooling to ensure consistent quality.

"Customers might end up paying $1 more per chair than if they sourced from mainland China, but they end up with far fewer headaches," said Hsu.

"Our chairs are better designed, and they're much more comfortable. They also are more durable."

Last year was a tough one for Taiwanese producers, he said. Rising gas prices also have resulted in price increases for plastic pellets, causing some additional pressures on the bottom line.

"We're optimistic about 2007," said Hsu. But to ensure his plant stays active, he's busy exploring new categories, including plastic fencing.

Creating an edge

At Shuter, another producer of injection-molded plastic products based in Taichung, exports are the engine of growth. In the United States, the company supplies a variety of storage items to Home Depot, and it has begun working with the Container Store as well.

Shuter is hoping that these relationships will lead to additional opportunities for its products, particularly for its Livinbox home storage line.

Currently under development are several furniture items with storage function, including a castered bench and a small rolling cabinet.

"We are able to combine plastic and metal in the same piece, which is very difficult," said Yira Wu, marketing manager. "We do our own design work and get lots of feedback from our customers on what their consumers need. We are an ODM (original design) manufacturer, not an OEM."

Color plays a big part in the Livinbox line, as do design touches such as textured metal treatments on the sides of certain items.

"Staying in business in Taiwan is very hard," said Wu. "To survive, we have to strive to develop new ideas. We have to do things that other companies can't do."

Exports account for 40% of Shuter's sales. In two years, Wu sees exports contributing more than 50%.

Glass expertise

Growing export business also is a key priority at Taiwan Mirror Glass, a producer of glass furniture, home accents and giftware. The company has been selling mirrors and glass tops to Ikea for nearly 10 years. TMG is Ikea's largest supplier in Taiwan and among its top 10 suppliers worldwide.

But TMG produces a wide range of glass items that Ikea doesn't carry, and these are the products it hopes to begin distributing in the United States through some new customers.

In furniture, these products include occasional tables, desks and entertainment systems.

"TMG is unusual, in that it cooperates with other companies and designers throughout the Changua area," said Meiling Chen, an assistant professor at Dayeh University and a consultant to TMG. "That gives TMG access to a pool of design talent."

These cooperative arrangements also help TMG handle a large-volume customer like Ikea, since it can farm out some glass production during times of peak demand.

The company does a good job of meeting Ikea's needs, said Carol Lin, senior business developer for Ikea Trading. "They offer us a very good product at a good price," Lin said. "The fact that they are located near the source of their raw materials is an advantage."

TMG aims to work through sales agents or distributors as it expands in the United States, but if it can't find the right partner, it will set up its own sales network, said Jackson Lin, general manager.

The company also intends to set up a U.S. warehouse to support its growth.

"Our glass has so many applications, from the home to the office to hotels and restaurants," Lin said. "We want to find new markets so that we can support our artists and our partners in growing our business."

To demonstrate its capabilities in glass, TMG features a museum at its headquarters, where it shows products that range from large applications such as glass flooring and partitions to intricate glass insects and bowls.

TMG even has a version of Taipei's 101 skyscraper on display, done completely in glass.