Taiwan Manufacturers Use Innovation To Win Market Niches

Dec 23, 2004 Ι Industry News Ι Lighting & LEDs Ι By Judy, CENS
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Change is a vital requirement for products that hope to maintain market share, and in the ever-changing world of today products strive to catch the eyes of consumers with novelty, freshness, and distinctiveness. Manufacturers, of course, do everything they can to equip their products with these features.

Even such mundane daily necessities as lighting products have become more innovative, fashionable, and multifunctional in recent years, at least for certain market segments. While there has been relatively little change in office and industrial lighting, commercial and home lighting products have undergone widespread changes in both materials and styles.

In general, innovative lighting products that are produced in small volumes reward their manufacturers with relatively good profit margins, and most of the lighting companies that have kept their production facilities in Taiwan are concentrating on such products.



Radiating Culture



One of these is Furaisco Enterprise Co., Ltd. Which was set up by Martin Fu in Taichung, central Taiwan, more than 15 years ago as a specialist in the development of creative lamps with a Chinese flavor. For several years before establishing his own operation, Fu had worked in another lighting company that turned out mostly artistic lamps. There he learned what he needed to know about the industry, including the selection of materials and the designing, manufacturing, and marketing of the products. He also worked for about a year in the Taipei procurement office of the United States-based Catalina Lighting Inc., where he gained know-how about the purchasing procedures and standards required by foreign buyers. He also became familiar with different types of consumers in the international market.



With a strong pride in the depth, grandeur, and uniqueness of Chinese culture, Fu wanted to use his lamps to spread that culture and make it known throughout the world. Thus Chinese calligraphy and painting are major parts of his lamp designs. "The lampshades we use are mainly made of long-fiber cloth that has been subjected to special treatment so that it can have calligraphy and painting printed on it, " he explains. "With these specially designed shades, our lamps radiate not only rays of light but also the radiance of our culture."

Furaisco's lampshades can withstand temperatures as high as 250 degrees Celsius, and modern technology and high-end dyes allow designs to be printed onto them clearly and permanently. "When we first introduced these lamps to the market, " Fu comments, "we chose to use the works of famous artists instead of unknowns. But after market demand has stabilized, we will try to use the works of younger and lesser-known artists. This way, we hope that we can give young artists with potential a stable income, and make them more willing to devote themselves to the creation of art works."

The lamps' users benefit too, Fu says: "Most employed people today have a very competitive working environment, and it is easy for them to suffer from anxiety and depression. To relieve such uncomfortable feelings, they need a cozy and comfortable home atmosphere-and an attractive lamp with soft lighting can create a pleasant atmosphere that pacifies the mind."

About half of the company's culture-themed lamps are made wholly in Taiwan; of the other half, some are purchased in mainland China and some are assembled in Taiwan using materials and parts from the mainland. Some of his friends have encouraged him to move all production to the mainland, Fu discloses, but he feels that the manufacturing environment there is not suited to the production of small-volume, high-end artistic lamps.

"To keep up the value of our artistic lamps, " Fu explains, "we usually fabricate them in small volumes of about 100 to 200 pieces per model. With those limited amounts, we can sell the lamps at pretty good prices and the higher profits they offer can encourage more artists to cooperate with us."



Keeping Focus on Taiwan



Furaisco was selling its lamps to Europe as early as six years ago, but its major market remains in Taiwan. "Our lamps have won a fairly good response in the domestic market, because consumers here are familiar and comfortable with Chinese culture, " Fu comments. "So we plan to send our roots down deeply in Taiwan before we develop overseas markets."

Last year's lamps featured mostly calligraphy; this year, most of them have paintings. Most of the lamps, Fu reports, are sold to people who love Chinese culture or to commercial establishments such as restaurants, hotels, stores, and shopping malls for decorative use.

Japanese buyers are showing interest in the culture lamps, and mainland China is a good potential market as well. To gauge the mainland's promise, the company plans to participate in Hong Kong's international lighting show next year; if the lamps prove popular at the show, the next step might be to cooperate with lighting makers in the mainland to tap the huge market there-especially during the Summer Olympics in Beijing in 2008.



Willingness to Try New Things



Another top supplier in the line is Miss Me Industrial Co., Ltd. Established in 1997 as an original equipment manufacturer (OEM) of mass-produced lighting products. However, notes Sophia Kung, the firm's founder and general manager, "That kind of manufacturing is dull and laborious, not to mention the thin profits it brings. I didn't see any future in it, so after a few years I turned to the making of innovative lamps that require human creativity. Luckily, I have that creativity."



Miss Me's lamps exhibit a soft and romantic style. "Our team takes the designing of lighting products as a creative challenge, " she says. "I feel vigorous and excited whenever I'm involved in the conceptualization of a new lamp." The popularity of her firm's lamps in the market proves the soundness of her team's creative instincts.

Kung involves herself in almost every step of her team's development of a new lamp, from design concept to the selection of materials and the manufacturing process. "In creating an innovative lamp, " she explains, "I can let my imagination run wild because there's no limit to the materials and shapes of such lamps."

Since these innovative lamps are usually produced in small volumes, Miss Me markets the majority of its lamps in Taiwan and ships only small quantities to Japan and Singapore. "Around 70% of our products are sold locally, " she notes, "with the rest going to those two countries. Taiwan has developed into a diversified society, and the people here are fairly willing to try new things and to accept novel lamps."

Miss Me is riding the tide of environmentalism by using environment-friendly natural materials in its lamps. "Thanks to technological developments, " Kung stresses, "we can find a lot of materials that are light in weight and have longer durability. These materials are suitable for making large lamps used in public areas. We often use light-weight alloy metals as the main materials for lamps to be installed in such places as stores, shopping malls, and open public areas. For home lighting we prefer natural materials like paper, cloth, and wood, because these materials create a more cozy atmosphere than cold-feeling metal."

The company turns out only a few thousand lamps a month, but they command high prices because of their innovative designs. "A large part of the value of such a lamp is in its design, " Kung remarks. "Frankly, consumers are not so concerned about price; what they care most about is the unique design."

More than 70% of the company's lamps feature innovative designs, while the rest incorporate traditional patterns. In addition to its own plant in Taiwan, Miss Me cooperates with six other manufacturers on the island and recently signed up six OEM plants in the mainland to join its manufacturing pool. "Our high-end lamps are almost 100% assembled in Taiwan, " Kung reports, "but some are assembled here with parts imported from the mainland. And we entrust the production of simple lamps with uniform designs to our OEM plants in the mainland.

"Since most of our lamps carry our own 'Miss Me' brand, we have to be very careful about quality. Before a lamp is marketed it has to go through test after test; to maintain the good reputation of our own-brand lamps, we spare neither time nor money on quality control."

Kung plans to set up a new plant in the mainland to turn out industrial lamps to fill a growing demand; the company's current OEM plants there focus mainly on traditional large-volume lamps, plus innovative lamps that require a lot of manual work.

One innovative new product that the company is promoting right now is a ball-like lamp enveloped in tangled aluminum threads. These lamps need a lot of manual input; a single lamp, 30 to 50 centimeters in diameter, takes one person about three days to complete. The lamps have attracted a great deal of attention since their recent debut.



R&D Weaponry the Key



Euphoria Industrial Ltd. Has been in the lighting industry for less than five years; and its managing director, Jack Liou (who himself has been in the field for more than two decades), says that "The only way for us to survive in this extremely competitive field is to take the market lead. And to be ahead of our rivals is to develop creative and innovative lighting products.

These candle-like lamps developed by Euphoria create a soft and romantic atmosphere.

"The key to success is the manufacturer's foresight; if you can take the leading position in the industry, you can be closer to market success than others. If we can put a product on the market six months or a year ahead of others, then we can beat them with better profits and leave them far behind by developing more new products.

"I've been in the industry long enough to see its ups and downs on Taiwan; and to stay in the line here, I have to figure out a better way to handle it. It's now almost impossible for lighting makers in Taiwan to survive by turning out products in large quantities but with thin profits, because they can't compete with their counterparts in the mainland."

Liou went to the mainland to evaluate the manufacturing environment there back in 1987, but decided to stay in Taiwan. "Both Taiwan and the mainland have their advantages and disadvantages, " he explains. "Wherever lighting manufacturers intend to settle, they should make good use of the advantages of that place and conquer its disadvantages."

He suggests that manufacturers staying in Taiwan put more emphasis on R&D, which is the most powerful weapon in the fight for market share today. "One of the advantages for manufacturers in Taiwan, " he says, "is their access to quality personnel who can develop high-end products able to create a market niche. Development of the world market with innovative products is the way we should go."

In Taiwan, Euphoria concentrates on designing and molding, while commissioning production to plants on both sides of the Taiwan Strait. "We entrust products which require sophisticated manufacturing machinery to our contracted plants in Taiwan, " he says. "For products that are suitable for production in the mainland, we leave them to factories there."

With the strong backing of Taiwan's thriving electronics industry, Euphoria recently developed a series of compact light emitting diode (LED) lamps which normally come with integrated circuit (IC) chips to provide various functions. "LED lamps have become more and more popular these days, " Liou notes, "because they can be used flexibly as emergency lights, commercial lights, or home decorative lights."

Most of the LED lamps are rechargeable and environment-friendly, which helps boost their popularity in the U.S. and Europe. A recently developed LED lamp is like a candle in that it provides warm, ambient light that creates a soothing or even romantic atmosphere. Unlike a candle, though, it cannot be blown out by the wind.

Already in promotion is a series of new color-changing LED-based lighting systems. "All of these lighting systems have controllers which can deliver preset sequences, with up to 12 color washes, that change every 14 seconds. These systems can be used to create special effects in conference rooms, concert halls, shops, and your living room at home.

Liou hopes that his company will be able to maintain an annual growth rate of 20%, and he is anxious to establish his own-brand LED lamps which will hit the global lighting market in the near future.

All of the company's products are exported to Europe (which takes 70% of the total) and the United States. Most of the European buyers are from Germany, France, Italy, and the United Kingdom.
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