Taiwanese Makers Gain Strength in Mainland China

Taiwan's tiffany lamp makers found out more than a decade ago that it's very difficult for them to make their labor-intensive wares competitively in Taiwan, where wages are much higher than in neighboring areas such as the Philippines, Thailand, and mainland China. No wonder, then, that almost all have since moved to low-wage countries, and to mainland China in particular.

Most of the companies that have shifted production operations across the Taiwan Strait have relocated in Guangdong Province, with a few scattered in Shanghai, Suzhou (Jiangsu Province), and Dalian (Liaoning Province). Their mainland operations have grown--but so has those of the local competition, as have those of a slew of robust challengers from the Philippines and Thailand.

Storming Ahead

Twenty-five-year industry veteran Thunder Action Enterprise Co. was founded as a trading company, but diversified into lighting manufacturing in the 1980s. A decade later it moved its manufacturing operations to mainland China to escape soaring land and labor costs in Taiwan.

Fourteen years later, Thunder Action now has five lighting plants in the mainland-- one each in Huizhou, Chaozhou, Panyu (Guangdong) and Dalian and two in Suzhou (Jiangsu).

"Our Huizhou plant can produce a wide variety of lamps, including wall lamps, table lamps, and floor lamps. We also make tiffany lamps at one of the production lines there, " says Carrie Liu, manager of the company. Currently the plant ships about 200 containers per month, including 20- and 40-foot equivalent units, of which 20 containers are for tiffany products.

"The plant in Dalian is devoted exclusively to tiffany lamps, " Liu continues. "Its monthly shipments average 20 containers, which are shipped directly to overseas clients from Dalian Harbor."

Furnished with an experienced management team and skilled workers, the Dalian plant turns out mainly high-end table and floor tiffany lamps. Most manufacturing processes are performed in house, from design, glass cutting and patching-up to mold casting, metal brim welding, assembling and packaging.

The company's plant in Chaozhou focuses on the production of pottery lamps, while the Panyu facility manufactures bulbs. The plant in Suzhou concentrates on the production of mouth-blown glass for lampshades.

To maintain high quality, Thunder Action imports all of the stained glass for its tiffany lamps from the United States and VLM sockets from the famous Italian brand. Other non-core parts are either self-produced or purchased locally. Europe is the company's major export outlet, absorbing 70% of the products. The U.S. takes in 20%, and the remaining 10% go to Japan and Southeast Asia.

Getting Value for Money

Dlc & M. Asia Trading Co., a specialist maker of complete tiffany lamps, was established in 1975 as a trading company, and stepped into the lighting industry in 1985. After more than a decade of operation in Taiwan, the company moved its plant to Huizhou, Guangdong in 1997 due to the changing manufacturing environment on the island.

"At the beginning we spent a lot of time teaching mainland Chinese workers almost everything, from working skills to corporate ethics and proper behaviors in daily life. Compared to the workers in Taiwan, they were obviously sluggish and less efficient, " complains Morgan Yu, chairman of the company. "Even now we still ask them to attend classes three days a week. With such efforts, our employees have improved greatly both in their working skill and attitude."

Currently the workforce of DLC & M.'s Huizhou plant approaches 1, 000 persons, fabricating tiffany lamps mostly on an original equipment manufacturing (OEM) basis. With about 10 new models developed each month, the company has so far accumulated thousands of different tiffany lamp molds. To assure product quality, the company produces most of the key parts of the lamps and assembles them at its own plant. Today the company turns out 35 40-foot container equivalent units. Of which, 90% are shipped to the U.S. and the rest to Europe and Japan.

"Our U.S. clients like tiffany lamps in simple designs, which can be mass produced at relatively lower prices; while European and Japanese buyers demand complicated high-end lamps in traditional delicate designs, and with higher prices, " Yu analyzes. "We design and produce items to fully meet our customer's quality and price requirements. Our secret is to control the quality level of materials and skillfully assess the labor needed in the production of a lamp. We maximize product value, while minimizing costs."

Yu says strong after-sales service, innovative designs, and reasonable prices have helped his company stay globally competitive despite strong competition from rivals in mainland China, the Philippines and Thailand.

Supporting Plants Join the Cross-Strait Exodus

Ryhsheng Casting Industry Co. is a professional die-casting manufacturer with a history of more than two decades. Following the footsteps of most of its clients, the company has gradually moved its operations to the mainland since 1993, when it established a casting plant in Huizhou of Guangdong. In 1997, it began manufacturing tiffany lamps.

The move into lamp manufacturing, says company chairman Liu Ming-chun, was not easy. "We had a pretty hard time in the beginning as the manufacture of tiffany lamps is more complicated than and quite different from the simple die-casting we have been familiar with, " he explains. "Tiffany lamps require a lot of labor input to make different lampshade patterns and develop precision molds for lamp bases."



Generally speaking, the major manual processes in tiffany lamp production include selection of suitable stained glass, glass cutting, and piecing up the glass pieces to form puzzle-like patterns. "Usually a small-sized tiffany lampshade needs around 200-300 pieces of glass, while larger shades can use up to 2, 000 pieces, " Liu adds.

Apart from the manual work on glass, the welding and polishing of metal trims and assembling of the lamp also require skilled labor. "A new hand usually requires about six months of on-the-job training before becoming familiar with the line, " Liu notes. "Today we have about 600 workers, up from about 30 persons during our early years. Their average wages are about half the wage level in Taiwan."

"With strenuous efforts for years, our products have been approved by several safety standards, such as UL of the U.S., CAL of Canada, and TUV of Germany. Moreover, our plant has been ISO 9001 and ISO 2000 certified, " Liu says.

In 2002, Ryhsheng decided to move all of its production lines to the mainland, reducing the functions of its Taiwan office to order taking. "The longer we stay in the mainland, the deeper our roots there become, " Liu says frankly. "The Chinese mainland is becoming a global manufacturing base, and we can get most of the facilities and materials we need there."

Today Ryhsheng ships some 20 to 30 containers (40-foot equivalent units) of tiffany lamps per month, mainly to the United States, Canada, Japan and the United Kingdom. But even as its output grows, the company is facing fiercer competition as well. "The monthly output of tiffany lamps in the mainland is estimated to total 700 to 800 containers (40-foot equivalent units). The massive production of the lamps there has resulted in the thinning of profits. Some five or six years ago a normal size tiffany lamp would fetch several hundreds of U.S. dollars. But now the price has fallen to only scores of U.S. dollars."

To outpace strong rivals in the mainland, Liu suggests, Taiwanese lighting makers have to work harder and put more emphasis on R&D and marketing. Continually developing unique and innovative products, he says, is the key to exploiting market niches.

Artistic Design

Established in 1980, C.A.K. Metal Arts Co. has been specializing in the production of artistically designed bronze products, of which tiffany lamps are among its popular items. "Tiffany lamps with kaleidoscope-like stained glass are practical artistic works and welcome among consumers. The lamps have become one of our main items, " says company manager Daniel Yang. "The bases of our tiffany lamps are made of bronze, which are more elegant and expensive than those made of aluminum-alloy."

From 1980 to 1990, the company rolled out its products from its plant in Juifang, a small town in northern Taiwan, and displayed the products at the show room it rented in the Taipei World Trade Center. However, soaring wage and land costs in the 1990s forced C.A.K. to move its operations to Shanghai in mainland China in 1992. Today, the mainland company, named Shanghai Centralgem Light Industry Development Ltd. (SCLID), turns out tiffany lamps.

"We picked Shanghai because the city had a relatively advanced infrastructure and efficient government administration at the time of our move, " Yang states. "The company was then the only Taiwanese tiffany lamp maker in Shanghai, but now there are about three such Taiwanese manufacturers there."

SCLID started its first shipment of tiffany lamps in November 1992, and has been running very well ever since, except during the Asian financial storm in the late 1990s and the severe acute respiratory syndrome (SARS), which struck the greater China region in the first half of 2003.

The company's annual shipment value from the mainland averaged US$1.5-1.8 million in the beginning years. In 1996 and 1997, shipment value peaked at around US$3 million per year. Today, the company turns out around US$2 million worth of lamps per year with a workforce of some 200 persons.

To uphold the quality of its products, SCLID purchases 60% of its stained glass from the U.S. and the remaining 40% from glass factories in Shanghai. "The price of the U.S. glass is about threefold of that provided by Shanghai glass manufacturers. And for high-end products, we prefer to use U.S. glass, " Yang notes. Currently the company sells 70% of its tiffany lamps to the U.S. and the remaining 30% to Europe and Japan.

"The main difference between tiffany lamps is in the designs of the lampshades, which are easy to copy. So, to defeat the copycats, we have tried hard to enhance our technology for manufacturing the bronze lamp bases, such as the adoption of lost wax technology, which is difficult for mainland Chinese counterparts to learn, " Yang explains.

Other than copycats, local manufacturers in the mainland have gradually emerged as threatening rivals. Ironically, many of these have been founded by the former employees of Taiwanese lighting companies. "The only way for Taiwanese manufacturers to survive is to continually lower their manufacturing costs and develop innovative lamps, " Yang remarks.