Taiwanese Electronics Makers Branch Out into Contact Lens Segment

Attracted by high margins generated by contact lenses, a couple of Taiwanese electronics manufacturers have branched out into the lucrative sector, given that the market in Asia Pacific still has considerable potential to grow.

The Asia-Pacific market for contact lenses amounts to about NT$21 billion (US$700 million) a year, with Taiwan contributing about NT$5 billion (US$18.8 million) to the total. Presently, the Taiwanese market is largely dominated by foreign brands, starting with the world's largest supplier, J&J, which commands a market share about 30%, as well as Ciba Vision, Cooper Vision and Bausch & Lomb, which together share 30-40% of the market. On another front, St.Shine Optical Co., Ltd., Taiwan's largest manufacturer and vendor of contact lenses under its St.Shine brand, has a share of around 30%.

Although selling contact lenses in Taiwan is subject to approval from authorities and production requires high technological levels, a couple of domestic electronics manufacturers, including Largan Precision Co., Ltd. (a globally leading camera lens maker), Pegatron Corp., (a large-sized electronic contract manufacturer), and BenQ Materials Corp. (optronic function film supplier affiliated with AU Optronics Corp., a top-two display panel maker in Taiwan), have been trying to tap the market, mostly through investments in partnerships and subsidiaries, having set up distribution channels and brands.

This ongoing trend, market observers said, is on the rise primarily because many of Taiwanese electronics manufacturers are eagerly looking for new businesses to improve meager profit margins from contract production, as gross profit of contact lenses sold in Taiwan can reach up to 80%, which are achievable if suppliers build cutting-edge production capability, develop owned brands and set up extensive distribution networks.

In addition to Taiwan, China is also a promising segment of the Asia-Pacific market for contact lenses. For the moment, contact lenses in China's spectacles segment has penetration rate of only 5%, compared to 25% in Taiwan, indicating tremendous growth potential. (SC)