Upmarket Products Breathe New Life Into Taiwan's Furniture Industry

Mar 26, 2004 Ι Industry News Ι Furniture Ι By Ben, CENS
facebook twitter google+ Pin It plurk

"NY" brand chair and table set made by Jes Uni.

With an eye to penetrating high-end markets abroad, an increasing number of furniture manufacturers in Taiwan are developing innovative products with patented designs. The new products not only command higher margins than mass-market items, but are also helping Taiwan's furniture industry hone its international image as a supplier of top-quality goods.

This focus reorientation is breathing new life into the local furniture industry, which has seen its business at the commodity end of the market fall prey to cheaper producers in mainland China and Southeast Asia.

To ratchet up the production of high-end products, many domestic furniture manufacturers have begun training design talents, but admit that Taiwan has a long way to go to catch up with Italy, Germany, and Japan in this regard. At present, many domestic firms cultivate designers in-house through on-the-job training courses.

Focus on Innovation

Jes Uni Co., Ltd., founded seven years ago, is one of the furniture concerns in Taiwan that is focusing on providing exquisite high-end designer furniture. Over the past several years, the company has formed a manufacturing and marketing group specifically oriented to penetrate the global market for high-end furniture.

Jes Uni president Jesse Liau says Taiwan manufacturers have upgraded their production skills to manufacture sophisticated products. This ability, he notes, is still lacking in mainland China. Liau adds that Taiwan's ability to produce sophisticated furniture is spurred by the exodus of price-oriented firms. "Most of the firms focusing on the production of cheaper high-volume products have moved to mainland China and Southeast Asian nations," Liau explains. "Those who have stayed rooted in Taiwan cannot help but upgrade their production skills and shift to higher-added-value products."

As testimony to Jes Uni's ability to manufacture high-end furniture, the company has been licensed by such internationally recognized designers as Takeshi Nii, Noriyuki Ebina, and Yoshinari Kawamoto of Japan, as well as other top designers from from Sweden, to produce furniture based on their original designs. Items currently made by Jes Uni under such arrangements include chairs, tables, and lamps.

Liau says Nii is one of the world's most prestigious furniture designers. His works, sold under the "NY" brand, have been displayed at world-renowned museums for years. Nii began cooperating with Liau about two-and-a-half years ago when the Japanese designer decided to implement plans to commercialize his masterpieces.

Liau says his relations with leading designers are based on trust. "Without mutual trust we can't fully develop effective long-term cooperative interaction," Liau notes. "For instance, we have promised to pay Nii royalties on each item we produce according to his design concepts. We even pay royalties to designers on the items that are partly remodeled from their original designs."

Liau was once the head of the R&D department of IKEA Taiwan. This experience helped him establish good relations with many foreign designers and importers before he founded Jes Uni seven years ago. After years of development, Jes Uni boasts it has established good relations with domestic heavyweight furniture manufacturers to help it produce sophisticated products based on original designs, paving the way for it to penetrate the high end of the market.

The company president believes that Taiwan is an ideal place to produce high-end furniture, not only because of the ample supply of talented R&D personnel but also due to the ability of local manufacturers to roll out sophisticated furniture. "I don't think the Taiwanese-invested firms in mainland China can make solid profits, because foreign importers are always pressing them to cut prices," says Liau. "The only way they can succeed in the mainland is to continually expand their production scale."

Fashionable modern furniture produced by Como.

Liau says his company provides high-quality products with solid after-sale service. "Although we fully guarantee our products, we almost never see returns because of our items' superior quality," says Liau.

Despite the worldwide economic slump over the past few years, Jes Uni has doubled its sales annually by focusing on the high-end market, which Liau says is comparatively recession proof.

Despite its concentration on the Japanese market, Jes Uni has also paid a good deal of attention to developing its business in Europe. "I have good connections with some large-sized importers and retailers there," Liau says. "I believe our development in the European market will blossom in the foreseeable future."

Office Furniture

Another firm with its own design capability is Como Furniture Enterprises Co., Ltd., headquartered in the city of Taichung in central Taiwan. The company has just recently inaugurated a new plant in Changpin Industrial Park, situated in Changhua County.

Como was founded by Michael Ko, now president of the company, in 1989 as a mold developer. In the early stage the company concentrated on the development of small molds for chairs and desks, and then expanded into bigger molds for chairs.

In 1995, Como became involved in the production of self-designed computer desks and other office-furniture items. At that time, the company also established the COMTA brand to facilitate global marketing.

Over the past few years, Como has won several awards for excellence from the Ministry of Economic Affairs (MOEA) and the semi-official Taiwan External Trade Development Council (TAITRA, formerly the CETRA or the China External Trade Development Council), including Taiwan Product Excellence and Good Design Product awards.

Ko says his company spends 10% of its revenue on product development, and 20% of its staff is devoted to design work.

Thanks to its unremitting R&D efforts, the Como has won original design manufacturer (ODM) orders from several large buyers in recent years. The company's original equipment manufacturer (OEM) orders have also increased over the past several years. The company says its high-end products are sold at many chainstores in the U.S. and Europe.

Como's new 37,500-square-meter plant in Changpin Industrial Park, after undergoing a two to three month trial run, will ramp up to full production, which will be double the capacity of its existing plant.

Seating items designed by Yeong Jin.

The new plant is highly automated and features streamlined production procedures. "The new facility will allow us to develop more sophisticated products than ever before," says Ko. "For instance, we have installed several plastic-injection molding machines with 1,500-ton capacity, which can produce plastic parts for use in large-sized furniture items."

In addition to quality, Como pays close attention to pricing. "Furniture manufacturers around the world have to compete with rivals in mainland China, who have a great capacity to produce low-priced items," explains Ko. "Our new plant will provide a favorable production environment for us to compete with low-cost rival competitors from mainland China by keeping our own costs down." Another cost-cutting measure adopted by the company is the implementation of an electronic enterprise-resource planning (ERP) system.

Como boasts a 90% self-content rate and the ability to handle all production processes in-house, except electroplating.

Wood Furniture

Yeong Jin Furniture Factory Corp. is one of Taiwan's veteran manufacturers of wood furniture, with over half a century of manufacturing experience. In 1971, the company turned its sights to high-end furniture and began honing its corporate image. Thanks to its long-term R&D efforts, the company has become a well-known manufacturer of designer furniture.

In the early years of its founding, the company concentrated on the production of wooden cases for sewing machines and television sets. Since 1978, the company has developed laminated bentwood and self-designed machines to make sophisticated wooden furniture.

"Thanks to our skill in designing sophisticated production equipment, we are capable of developing state-of-the-art wooden furniture," says Steve Chiang, president and second-generation owner of the company.

Yeong Jin boasts it can handle such complicated processing processes as pressing, molding and cutting high-end wood furniture.

Innovation has been a continual focus of Yeong Jin over the last half century. "Since our establishment, we have concentrated on unique designs to distinguish our products from those of others," Chiang explains. "This strategy has become even more important over the past decade as Taiwan is losing its production advantage to neighboring nations."

At present, Yeong Jin exports half of total output, mostly to Japan and Europe on OEM terms, Chiang says. "Many of our foreign customers have been dealing with us for a few decades, showing they trust our ability to make high-end furniture."

Chiang says his company considers the unique demands of various living spaces and lifestyles when developing its furniture products. It has also developed a strong ability to use complex materials, including solid wood, plastics, stone and ceramic, stainless steel and aluminum, and fabrics and leather.

Eight years ago, Yeong Jin introduced its "Strauss" brand of designer furniture. The company opened a flagship shop in Taichung City, central Taiwan, in 2001, to promote the new line. The company plans to open another shop in Taipei city in the foreseeable future.

Yeong Jin says it will pump up its marketing and R&D capability in the next few years to promote the Strauss brand. "Most furniture manufacturers in Taiwan are weak in marketing and R&D work," Chiang says. "As a manufacturer focusing on designer furniture, over the past several years we have elevated our R&D capability and will continue to do so in the future. I believe that continuous R&D is the only way that Taiwan's furniture manufacturers can survive in the international marketplace."

Muscling up on R&D

Kadeya Enterprise Co., Ltd., established in 1992, is another Taiwanese furniture manufacturer specializing in own-design products. The company has an in-house R&D department with 10 specialists, representing 10% of its workforce.

Patented computer desk produced by Kadeya.

After a decade of development, Kadeya can supply a wide range of K/D furniture, including garment racks, standing mirrors, umbrella stands, dining carts, microwave oven racks, storage racks, computer desks, and drawer organizers.

"Since our production facility is in Taiwan, we have to stick to the production of self-designed, high-value-added products to enhance our international competitiveness," says Lai Chun-yi, president of the company.

During its early years, Kadeya sold its products exclusively to the domestic market. It made its first foray into overseas markets in 1997, and within one year, exports accounted for all of its sales.

"We strongly believe that Taiwan is an ideal place to develop designer furniture because we can source high-quality materials and talented R&D specialists here," says Lai. "For instance, we use steel made by China Steel Corp., which is capable of rolling out high-quality materials for domestic manufacturers of metal furniture." Lai notes that if his company moved to the mainland, it would have to pay higher transport fees to source high quality steel.

Over the past three years, Kadeya has been working hard to win ODM orders. "In the past, we heavily concentrated on OEM orders," notes Lai. "Three years ago, we began developing ODM orders based on the strength and reputation of our self-designed products. Thanks to strenuous efforts over the past several years, our ODM orders grew faster than our OEM orders last year. I believe we will be able to obtain more ODM orders in the next few years."

At present, Kadeya exports 70% of its output to Japan. "In the past, we mainly sold products to Japan on the OEM basis," says Lai. "In recent years, we have seen increase of ODM orders in that market."

Although the company still concentrates on Japan, it plans to step up sales to Europe in the next few years. "We believe our products are suitable for high-end consumers in the European market," Lai says. "In the next few years, we will keep a close watch on the development of the high-end markets in Britain and Germany."

The company has obtained many patents in Taiwan, Japan and mainland China, most of them for structural designs to make K/D furniture firmer and more comfortable. One such innovation, incorporated on the company's K/D iron-pipe furniture, ensures that the products won't change shape under heavy use.

Kadeya is a frequent exhibitor at international furniture shows held in Japan, Singapore and Europe. "Japan is one of our most important export outlets and we can meet many influential buyers at the venues of international furniture shows held in Europe and Singapore," explains Lai.
©1995-2006 Copyright China Economic News Service All Rights Reserved.