Taiwan's Rack and Cabinet Makers Hold Their Own Amid Downturn

Moving production offshore is not essential for survival and success

Despite being impacted by rising cost of raw materials, especially that of plastics that fluctuate with the price of oil, increasingly tightening of regulations set by western buyers who demand green materials and manufacturing, underselling competition from emerging rivals in China and S.E. Asia, and the still wobbly economic recovery in the USA and Europe, Taiwanese manufacturers of display racks and storage cabinets are holding their own in the global market by turning out innovative, quality products.

Most of Taiwan's furniture manufacturers have already moved production lines to China to tap lower cost advantages, with some operating on both sides of the Taiwan Strait and a few quixotically keeping the entire business at home on the island.

By steadfastly improving design capabilities, Taiwan's display rack and storage cabinet manufacturers have been gaining popularity among buyers globally with not only user-friendly, multi-functional items but also ones with industry-beating quality, while manufacturing flexibility enhances competitiveness by serving buyers looking for made-to-order products.

Compact Metallic Furniture

Founded in 1995 in Changhua, central Taiwan, Chang Fu Precision Co., Ltd. is a dynamic furniture manufacturer who specializes in compact metal furniture including racks, shelves, cabinets, drawers, trash cans, hangers and bathroom accessories, all of which are offered as knockdown or ready-to-assemble.

To cope with the increasingly competitive rivals in China who mostly win on lower price, Chang Fu, fully operating in Taiwan, is trying to outwit its opponents across the shore, emphasizing R&D to design high-end products. “We are mostly OEM and ODM, but still have five persons with fortes in furniture development and design engaging in R&D to upgrade products, and only 30 full-time workers,” says Joe Huang, president of the company.

“As an OEM, we are given ideas or designs by customers to turn into fully developed products, while our specialists and designers engage customers in discussions, working out the details to avoid misunderstanding and clarify specifications. But as ODM, we sometimes recommend in-house developed items to clients, whose approval will allow us to start volume production,” says Huang.

Chang Fu has a plant in Changhua that handles almost all the manufacturing except the painting that is contracted out. “Most of our products are made of metal, mainly stainless steel. However, some metallic products need special finishing, so we outsource such work to specialist surface-coating contractors,” Huang states.

In 2007 the company adopted the Quality Management System and became ISO 9001 certified in 2008. Also to do its part for the global environmental protection movement, Chang Fu tends to use recyclable and non-toxic materials in manufacturing, using for instance recycled paper for packaging and mainly recyclable metals.

The company exports all its output mostly to Europe, and its dedication to rolling out high-end products has helped build its global position over the past years.

Mixed-material Furniture

Founded in 1986, Zona Development Co., Ltd. is also located in Changhua of central Taiwan, turning out a variety of metal furniture including display cabinets, clothes racks, utility racks, shoe racks, CD & wine racks, shelves, multifunctional carts etc.

“Our products are made of a combination of materials as steel, aluminum, glass, plastics and wood that need different kinds of machine tools for bending, molding, pressing, sawing, welding and drilling,” says Michael Wu, the general manager.

After years of hard work on production transformation and improvement, Zona has built a reputation as a trustworthy maker of furniture whose products have won 20 patents, mainly for structure and design.

“Compared to the tech sector, traditional industries ply rougher environments, having to cope with increasingly more, competitive rivals. Besides, the government has mostly left operators like us to fend for ourselves, instead offering high-tech manufacturers incentives to seed further growth. So a traditional manufacturer like Zona has to put its nose to the grindstone to improve, survive with own capital and effort. Another obstacle is the image of the industry, which young people find dusty and undesirably blue-collar, so traditional industries have difficulty recruiting fresh blood. Our workers generally are older but more experienced and stable,” says Wu.

Slow Rebound
Despite the global economic recovery, Wu notes, traditional industries like furniture making seems to lag in recovery relative to high-tech ones. “Last year the prices of steel, aluminum and plastics rose by 10%-15%, resulting in our suffering a 20% sales decline. This year metal prices have been quite stable, yet the sharp appreciation of the NT-dollar against the greenback has eroded our profits since we usually export 95% of our products.”

Notwithstanding, Wu reveals that the company has developed a series of innovative products to boost sales in the coming years, saying, “We keep rolling out new products and working closely with partners to develop functionally innovative items and material combinations, as well as explore new markets like India and Russia.”

Zona exports its products mainly to Europe, mainly the U.K., Germany and France. “Adhering to ISO standards also helps to build trustworthiness, especially among German buyers. Customers believe in our quality for they know Zona sticks to strict quality control, from material spot-checks to pre-delivery inspection. Every worker in our factory tries to achieve the best quality,” says Wu.

“Unlike other Taiwanese furniture manufacturers who have moved production lines mostly to China, we have stayed in Taiwan because we are familiar with the manufacturing environment here and believe we can maintain competitiveness globally with our high-end products,” Wu says.

Wire Shelving

With a history of about two decades, Chao Yuon manufactures and designs quality wire shelving, storage carts, and wine racks, having evolved into one of the leading Taiwanese suppliers of wire shelving and wire products to the world market, as well as having built close relationships with global clients.

“We export 80% of output on the OEM and ODM basis, and sells the remaining 20% domestically. Japan is our major buyer of about 50% of the products, with Europe taking 20% and Australia 10%,” says Roy Ko, the sales manager.

“We have a strong R&D team that can help us develop products to meet special demands of clients. Having such product development capacity also helps to further build the company as an ODM, hence our inclination to create innovative, high-end products that help us defy the economic downturn,” Ko remarks.

Backed by the motto based on honesty and integrity, Chao Yuon has earned the respect of its customers, employees and competitors alike, as well as winning praise for products featuring innovative design and precision craftsmanship.

“We have a workforce of around 50 persons and have very low turnover. Generally, we develop new products every two or three months, not to mention the new designs recommended by clients every one or two weeks,” Ko discloses.

The company's plant in Taiwan is installed with advanced machines for metal cutting, bending, punching, tube forming, welding and polishing, as well as special surface treatment facilities that cat products to resist oxidation and corrosion.

“Our flexible manufacturing, quality products and prompt delivery satisfy clients, who remain loyal,” Ko emphasizes.