Taiwan's Furniture Makers Steer Through Uncertain Recovery

Three makers of bathroom and kitchen

While occasional reports point to a slow recovery in the global economy, recent news from the U.S. say that the American economy is still being held back by near-ten-percent unemployment, hesitant consumer spending and a massive middle who are working double-time to stay solvent. Other negative factors include a severe budget cut in England, the credit crisis in Greece, sky-high unemployment in Spain, and a collapsed real estate segment in Ireland; while China's policy to cool the housing market has caused its stock market to decline significantly so far this year. The collective impact has taken a toll inevitably on traditional manufacturing, including furniture making in Taiwan

Books can be written about the darkest days of Taiwan's furniture industry in the 1990s, when rising rivals from emerging countries forced massive out-migration from the island to Southeast Asia for cheaper material and operating costs, sapping strength from Taiwan's erstwhile glory as a sizable furniture supplier. Though not all chose to leave for greener pastures, some opted to stay, upgrading techniques and capabilities to go upmarket, evolving from OEM (original equipment manufacturer) to ODM (original design manufacturer) to successfully compete against upstarts.

Interviewing three Taiwanese makers of bathroom and kitchen furniture reveals the heartaches and rigors of being in business, which calls for each to devise one's own way to survive through the downturns. However different their product lines may be, they share a common trait: a single-mindedness to weather the worst so as to see better times.

Zona

Michael Wu, general manager of Zona Development Co., Ltd., founded in 1987 in Changhua County, central Taiwan, still stays true to his mission to be a top-notch bathroom furniture maker amid increasingly challenging market over the past two years, confirming to launch new products this year.

Starting as a subcontract metal processor, Zona later diversified into wire furniture and accessories like racks, shelves and hangers. However and realizing then intense competition in the segment prevented sustainable business development, Wu farsightedly moved to steer his company into the metal-tube furniture segment, specifically the bathrooms line about 10 years ago.

European Preferred

After years of hard work on production transformation and improvement, Zona has built good reputation as a top-caliber maker of bathroom furniture, including bathroom trolleys, corner racks, utility racks, multi-functional carts, telescopic shelves, bathroom cabinets, cupboard tables, class display stands and cabinets, towel holders, toilet paper holders and bathroom fittings. Designed to meet European preference for compact, stylish and futuristic exterior, Zona has found wide acceptance and fully exports to that market, based on recognized quality and reasonable prices.

Despite recovering global economy, Wu says that traditional industries like furniture recover much more slowly than high-tech ones, after admitting to having suffered a 20% sales decline in 2009, as well as increasing difficulty in doing business due partly to rising prices of steel and plastic that erode profit, and partly to more price-sensitive consumers who tend to shop for familiar products.

Notwithstanding, Wu seems undaunted. Confirming that his company has developed a series of innovative products to boost sales in the coming years, Wu says, “To overcome challenging times, we are working closer with partners to develop functionally innovative products and material combinations, while exploring new markets like India and Russia.”

For example, Wu shows the newest Shower Cabby series cabinets, which feature choice of colors and modular design that enhances expandability. More notable is that each cabinet, simply designed with frame and square glass faces, can be opened on any of the four sides as well as rotatable. Such intelligent design catches foreign customers' attention to underscore the company's dedication to R&D.

Practicing ISO standards also helps to build trustworthiness, especially among German buyers. Wu says, “Customers believe in our quality for they know Zona sticks to the books in quality control, from material spot-check to pre-delivery inspection. Every worker in our factory tries to achieve the best quality.”

Displaying perhaps the most valuable asset of SMEs in Taiwan, Wu says that his company is not discouraged amid the current tough time, but is determined to adapt to changing markets.

Yiing Jii

Yiing Jii Enterprise Co., Ltd. is another who proved moving offshore was not the only option for Taiwanese furniture makers in the 1990s, having since built a high profile in the line, showing the company president Henry Yang's religious belief that not being sheepish is sometimes the smart strategy.

The company, founded in 1986 in Changhua County, turns out metal K/D furniture, dining carts, computer racks, OA chairs, bulletin boards, bathroom accessories, kitchen racks, toilet seats, hangers, hooks and coat hooks, storage boxes and carts, garbage cans, metal-tube furniture, with over 60% going to Europe, 30% to the U.S. and the remainder elsewhere.

The global downturn caused the company to lose 15% in sales in 2009, which was better than the industry average of nearly 30% in Taiwan, to which Yang simply attributes the company's decades-long adherence to R&D.

R&D Capability

Demonstrating an example of its R&D capability, Yang shows the Toilet Seat series developed in 2009, pointing out that each is specially processed with to render the surface antibacterial, and, in addition to choices of color and graphics, features a small, replaceable aromatic oil dispenser to enhance the olfactory experience. The company's R&D wisdom to turn a conventional, mundane toilet seat into an aesthetic, mood-enhancing product has proven successful, for the Toilet Seat series have been sought-after since debut last year.

Regardless of market uncertainty in 2010, the company has developed this year the LED-integrated dining table, which are mainly of glass, stainless steel tubes and processed in compliance with the REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) Regulation. “This product will help Yiing Jii to stimulate sales in the coming few years, and we continue to practice what we preach: being innovative is to succeed in our line regardless of business climate,” says Yang.

Admitting that his company hasn't seen significant turnaround in sales in the first half of this year despite reports of global economic recovery, Yang says such is a common phenomenon in Taiwan's furniture industry, because each maker has been coping with rising material prices after the Chinese New Year, while trying to outbid rivals from emerging countries, not to mention that overseas buyers are more conservative in restocking to avoid operating risks.

Despite uncertain industrial recovery, Yang has ambitiously set a goal to double sales in 2012 from this year, by market diversification and continuous effort on product R&D, which is the company's forte.

Zhou Yong

Zhou Yong Co., Ltd. is also a noteworthy bathroom furniture maker, for its dedication to customer satisfaction has helped to keep it busy since the fourth quarter of 2008, when most of its counterparts started falter due to the global financial system collapse.

Established in 1996 in Changhua County, central Taiwan, Zhou Yong has been an OEM and ODM of metal shelves, display racks, metal and K/D furniture for commercial and household uses, with two factories on the island. Being fully focused on production and service efficiency, the company has quickly become a top-5 maker of display racks by shipment in Taiwan, despite being only 14 years old, which C.S. Ko, chairman, partly attributes to strong commitment to building trustworthiness among customers.

To make sure of unbeatable quality and production efficiency, the ISO-9001-certified company discusses production plans and schedules with engineers and subcontractors, as well as strictly carries out quality inspection throughout production and delivery at its own and subcontractors' plants. Ko proudly claims that years of steadfast concentration on quality assurance has made total believers out of its customers from the U.S., Europe and Japan. “Sometimes new customers skip evaluation tours of our factories just based on our name.”

Besides, the company pays special attention to marketability of products. Upon receiving new orders, Zhou Yong's workforce immediately analyzes target markets to draft and design suitable prototype, a service which many customers find practical and useful. “We realize that making plain, typical products that are unappealing will only lead to marketing failure. Therefore, Zhou Yong helps customers to study target segments to develop more marketable, satisfactory products,” says Ko.

Also, Ko stresses the importance of offering steady prices to build customer loyalty. “Our costs of raw materials surged 170% on average in 2008 to almost choke us; but we decided to absorb such cost rises throughout the year to avoid interrupting our steady-price policy.”