Pihsiang to set up healthcare electric scooter plant in Shanghai

Dec 30, 2003 Ι Industry In-Focus Ι Powersports Ι By Quincy, CENS
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Taipei, Dec. 30, 2003 (CENS)--Taiwan's Pihsiang Machinery Manufacturing Co., Ltd., a leading maker of health-care electric scooters, recently announced plans to set up a new plant in Shanghai, mainland China.

Pihsiang president Chiang Ching-ming said that his company decided to set up the mainland plant mainly to utilize lower-cost labor there for the production of lower-end electric scooter models. With the mainland facility, Chiang claimed that Pihsiang is expected to further expand its market share of the lower-end segment and further compress rivals' competitiveness.

After intensive evaluation, according to Chiang, Pihsiang plans to set up the electric scooter facility in Shanghai rather than in the originally planned Guangdong Province. Pihsiang is scheduled to buy a land in Shanghai in March or April next year and invest about US$7 million to construct the new facility.

The mainland plant will start mass production in late 2004 at the earliest and its production volume will outstrip that of the company's new plant in Taiwan in the future. To meet the growing global demand, Pihsiang recently inaugurated a new electric scooter plant in central Taiwan, which cost the company about NT$800 million (US$23.46 million at US$1: NT$34.1) and currently has an annual capacity of 200,000 healthcare scooters.

Healthcare electric scooter has been a major product category in Taiwan's medical equipment exports. Taiwan exported about NT$19.3 billion (US$565.98 million) worth of medical equipment in the first three quarters this year, including about NT$6.4 billion (US$187.68 million) worth, or over 30%, of patient-use mobile vehicles. Pihsiang has been the No. 1 exporter of healthcare electric scooters in Taiwan, which currently has annual revenue of NT$2.5 billion (US$73.31 million) for a gross profit rate of over 40% from such business.

Chiang said that many newcomers on the island have joined production of healthcare electric scooters after Pihsiang went public on the Taiwan Stock Exchange market and posted brilliant operation performance. Currently, the president said, dozens of companies, including motorcycle, electric motor and even sheet-metal parts makers, have jumped into the line, somewhat causing price-cutting competition in the export market. With limited production capacity, Chiang said, Pihsiang can hardly swallow many contract orders and is forced to let part of the orders flow to the hands of newcomers.

Chiang claimed that Pihsiang's superb technical advantages and high profitability are the best tools to survive price-cutting competition in the past three years. The president stressed that his company's decision to set up a plant in Shanghai would further compress the space of rivals' survival and create a beachhead in the huge mainland China market.

For lower costs there, several leading local makers of medical equipment have moved the production lines for some products across the Taiwan Strait, including Apex Medical Corp., Microlife Corp. and Rossmax International Ltd. Etc.

Apex moved the production of low technical-level items, such as walking-aide equipment (walkers and rollators) to its plant in Shanghai in 2000. Rossmax, a leading maker of electronic blood pressure gauges, started mass production at its Shanghai plant in April this year and boosted its annual shipment volume of such product to about 1.5 million units this year, up 50% from last year. With the cost advantages in Shanghai, Rossmax said that it could maintain a certain level of margins in even the lower-end market.

Microlife, a major supplier of blood pressure gauges and electronic thermometers, set up a mainland subsidiary in Shenzhen in 1993 and has integrated the company's strong capability in developing key parts in Taiwan and a strong marketing team to successfully tap the European market for both own-brand and original equipment manufacturing (OEM) businesses.
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