Most of Taiwan's makers of table lamps, including those based in mainland China, are cautious about their business prospects for the second half of this year, as they continue to nurse wounds suffered from SARS.

Taiwanese makers on both sides of the Taiwan Strait contend that their sales suffered setbacks ranging from 20% to 50% in the first half of this year as global buyers cut non-essential trips to Hong Kong, China and Taiwan--the world's three major production bases of table lamps and also the three areas worst hit by SARS.

Still, most lamp makers retain some hope that business will pick up in the second half of the year as the shadow of SARS recedes. They are also continuing to look for lucrative new niches in the table lamp market.

Light at the End of the Tunnel

NFK Lite Mfg. Co., Ltd. Says its lamp exports contracted by about 22% year-on-year in the first half of the year as international buyers cancelled or postponed overseas business trips due to SARS and the uncertainty arising from the U.S.-led war against Iraq.

The pneumonia-like SARS has infected 674 people and killed 84 in Taiwan since mid-March, making the island the world's third-worst SARS-stricken area.

Chris Chiu, sales manager of NFK Lite, predicts that shipments of the firm's desk lamps will pick up in the second half as foreign importers build up inventories to meet back-to-school demand.

NFK, a specialized maker of low-voltage halogen table lamps in Taiwan, expects its export value to decline 10% to US$8.1 million this year from the US$9 million recorded in 2002, according to Chiu.

The company began producing halogen table lamps in the early 1980s and has seen its annual turnover expand by a pace of 10% in recent years.

Over the past decade, NFK has faced a proliferation of competitors in mainland China, but it has managed to stay ahead of its rivals across the strait by offering products with innovative designs and better quality, Chiu says.

"We have been in this business for over 20 years and have established ourselves as a reliable supplier of table lamps in the global market. As a result, most of our buyers have stayed with us despite the price-undercutting tactics adopted by our counterparts in the mainland," Chiu boasts.

NFK set up a plant in Dongguan, Guangdong Province in the mainland a decade ago. Currently, the plant has a workforce of 500 workers and turns out 200,000 halogen table lamps per month, accounting for about two-thirds of its total production capacity.

In an attempt to jack up its profit margins as well as improve its competitiveness, NFK will start the production of polarized light (PL) sets at a new plant in Shanghai later this year, Chiu says.

Most of the company's table lamps feature stylish plastic bodies and metal arms, and use halogen bulbs. The lamps are sold under three brand names--Antenna, Gooseneck and Iron Wire.

Lamps in the Gooseneck series are sold mostly to the U.S. market. Wal-Mart, one of the firm's largest buyers, has been purchasing Gooseneck lamps for many years, making them trendsetters in the table lamp sector, Chiu says.

The European market, however, is the largest outlet for its Antenna series, with B&Q one of the firm's prominent buyers in that region.

Retrenching

San Yan Enterprise Co., a small plastic desk lamp maker based in Tainan, southern Taiwan, laments that its exports declined as much as 50% year-on-year in the first six months of the year.

An official of the company attributes the fall to the impact of SARS as well as the price advantage of mainland Chinese rivals.

San Yan currently exports only 20% of its products, compared with a ratio of over 70% just a few years ago, amid weakening competitiveness.

The Importance of Being Innovative

Torano Enterprise Co., an ISO9002-certified table lamp maker, says business was weak in the first half and worries that things might not improve much through the end of this year.

Torano is a major maker that has found its niche in the production of desk lamps with poly-resin bodies and poly-resin or fabric lampshades.

"Lamp-manufacturing is an old-economy industry that requires dedication to innovation and design in order to stay ahead of competitors," says a spokeswoman of the company.

Torano, like the majority of Taiwanese table lamp makers, has moved its production to the mainland to take advantage of the cheaper labor and land available there, she says.

The firm's plant in Huizhou, Guangdong Province in southern mainland China currently has a workforce of about 700 workers and is able to deliver about 60 to 70 40-foot containers of lamps per month. In addition to its core line of table lamps, Torano also produces floor lamps.

Over 80% of the company's lamp sets are shipped to major buyers in the U.S., but the company hopes it can make deeper inroads into the European market in the years to come.

Instead of expanding its current production lines of lamp sets, Torano plans to venture into the production of metal and PU leather furniture in mainland China.

"The table lamp industry has become overcrowded in mainland China recently. So we have to diversify our product lines to include other types of furniture in the hope of generating higher earnings to support our long-term development," the spokeswoman says.

SARS-proof

DLC & M. Asia Trading Co., a major producer of Tiffany-style table lamps, says that its lines at its mainland plant in Huizhou, Guangdong Province have been running in high gear since the beginning of this year, thanks to a big-ticket order from a U.S. buyer.

DLC & M. beat key rivals in mainland China and Mexico to win the contract, says company president Morgan Yu.

Yu attributes the company's competitiveness in making such labor-intensive lamps to its self-reliance in two key components--colored-glass lampshades and bronze lamp bodies.

Most makers of Tiffany table lamps in China, including Taiwanese companies, are capable of making lampshades only, and outsource bronze lamp bodies from other suppliers. This makes it harder for them to control product quality and meet delivery dates, Yu says.

In addition, Yu says that his company has devoted a great deal of effort to training the 500 workers at its Huizhou plant on efficient cutting of the colored glass used in lampshades. Some of the more complicated Tiffany lampshades require more than 2,000 small pieces of glass.

DLC & M.'s annual turnover this year is expected to reach NT$120 million (about US$3.49 million at US$1:NT$34.35), more than triple the NT$40 million or so recorded in 2002, Yu says