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Metal Furniture Parts Makers in Taiwan Create Blue Oceans

Taiwanese suppliers target high-end niches to battle low-end competition

Dec 16, 2016 | By Steve

Taiwanese furniture parts makers aims for niches by tapping higher-end segments.Taiwanese furniture parts makers aims for niches by tapping higher-end segments.

With their advanced manufacturing technology, skilled workers, and a strong global reputation for quality and on-time delivery, Taiwanese metal furniture parts makers have plenty of reasons for optimism in their showdown with emerging rivals from mainland China and Southeast Asia.

Even though the global competition has become increasingly harsh over the decade, a few domestic companies are carving out competitive niches through a strategy focusing on high-end and branded production, a segment that commands far higher margins than the industry's mainstay OEM output.

Tech Edge
The Cheng Hsin Iron Works Factory, based in central Taiwan county of Taichung, has gained extensive experience in metalworking over the past 40-plus years. In the beginning, the company mainly produced metal parts for agricultural machinery and water tanks, earning a good reputation for quality among domestic clients.

When Shieh Yi-chih succeeded his father at the company helm about two decades ago, he was determined to diversify Cheng Hsin's product line into metal furniture parts, a goal it achieved 10 years ago. Today the company turns out mats, table legs and a range of other furniture parts, winning 20 patents in the process. "We landed big orders for our patented cabinet legs, including WD-09, WD-10 and WD-11, from an Italian buyer for use in high-end furniture," Shieh says.

The company uses advanced manufacturing technology and deep-drawing presses that can shape metal without welding, resulting in a smoother and brighter finish. "A Canadian buyer visited our plant and was stunned by the aluminum alloy pots we made with this technology. He bought 60 units and adopted it as his company's logo in 60 branches," Shieh recalls. "Taiwanese have an international reputation for their good production processes," he says. "Undoubtedly, this is our strongest advantage in the competition with China and Vietnam."

Shieh says that Taiwan's flexible production mode has also given local producers an edge in the furniture parts business, where the product variety is huge and custom designed goods are in high demand.

Shieh acknowledges that competitors from China and Southeast Asia have an edge in low labor costs, access to foreign capital, and raw materials. "It is a bit late for Taiwanese makers to consider moving into China," he says. "We have to keep our advantages to stay competitive. Cheng Hsin is evolving as a technology-oriented metal furniture parts supplier providing high-end and high-added-value products."

Commitment to High Quality
Founded in 1987, Hsien Hsing Hardware Co., Ltd. is a metalworking firm in Changhua County, central Taiwan. The company specializes in OEM and ODM manufacturing metal furniture parts, including nuts, screws and bolts, mainly for OA furniture suppliers.

The company relies on advanced equipment and a skilled workforce to ensure the quality of its output across a wide range of metal furniture parts.

Chang Hui-chuan, one of the company's owners, says that Hsien Hsing is good at controlling production process. T-nuts used for assembling tables and tabletops are among the company's most profitable exports. Chang says that business is slow and the company has to work harder to earn a profit.

Quality is the company's main advantage in countering emerging rivals from China and Southeast Asia, Chang says. "Facing cut-throat price competition, Taiwanese metal furniture part makers need to constantly refine and reinforce their products to build a solid and unbeatable reputation for quality," she says. "Our quality and improved production processes have enabled us to maintain a gross profit margin of at least 10%," she notes. Hsien Hsing is also tackling rising raw material costs by reducing waste and defects.

Chang points out that her company plans to diversify product lines to yield earnings in the future. "Hsien Hsing has invested in punching machinery, which can be used to manufacture a plenty of products," she says.

Springing Inspiration for New Products
Jih Jia Hardware Enterprise Co., Ltd., a professional metalworking firm in Changhua, central Taiwan, has been making zinc alloy products for more than 20 years. The company's main products include zinc alloy hinges, handles and other metal parts for high-end furniture.

One of the adjustments the company has been making is to turn out new products, such as the multi-stage hinge.

A traditional hinge is made from two pieces of metal and assembled by a bolt. This design is unable to control the pace or manner that a door closes. The door may be snapped by a sudden force, damaging the door or even injuring one's fingers.

By contrast, Jih Jia's multi-stage hinge has a sophisticated design in which the bolt works as a buffer that eases the pace at which the door closes. "Doors fitted with these hinges won't slam shut or hurt someone," Hu proudly says. "This new product is patented, so we expect it to generate higher margins and help us combat rising costs." The company plans to export the new hinge mainly to the United States.

Hu says his company has not considered setting up business operations in the mainland, bucking the general trend of the local industry. "China faces some of the same problems we have in Taiwan, such as soaring raw material and oil costs, and rising training expenses," Hu notes. "So we really need to compete on our reputation for the best products," he says.

Founded over 30 years ago in Taichung City, central Taiwan, Jry Chuen Enterprise Co., Ltd. specializes in knock-down (KD) and do-it-yourself (DIY) furniture fittings, accessories and parts, including handles, bolts, knobs, table legs, and cabinet lags.

Through its steady investment in advanced equipment and molds, the company has developed a reputation for both quality and variety. The company also provides production capacity to supplement the operations of other metal parts producers. Currently the company can produce at least hundreds of thousands of bolts per month.

"We are extremely proud of our quality," says Tsai Shu-chen, manager of the company. "Since my husband and I decided to plunge into the field of furniture parts, we have stuck to strict quality requirements to offer the best products to our customers." Indeed, the company's products have been adopted by some big-name customers, including IKEA, Home Depot and Wal-Mart.

Apart from quality, Jry Chuen is known for its prompt delivery. "Many years ago, a French furniture parts wholesaler ordered a huge amount of KD fittings," recalls Tsai. "However, the wholesaler mistook the specifications and asked us to rework the product." Tsai recalls. "Despite the extra production and transportation costs, we made a new mold, sent the samples and finally completed the products and sent them to the customer before the deadline." Not surprisingly, the wholesaler was amazed at Jry Chuen's efficiency and quick delivery.

Nevertheless, the company has also suffered from the soaring cost of metal, pressure from China and Southeast Asia, and a lackluster domestic market. "We considered closing the plant. But our loyal customers encouraged us to stick it out," Tsai recalls.

To survive and grow, Taiwanese metal furniture parts makers need to develop and market their own brands, Tsai notes.

"International buyers appreciate Taiwanese makers for having more reliable quality and delivery compared to other suppliers in emerging countries," Tsai mentions. "This advantage makes it easier for us to develop our own brands and to market the MIT (Made in Taiwan) images in international markets."

Jry Chuen plans to train its marketing personnel and diversify its product lines to enhance the value of its branded products. "Since creating our own brand, we must avoid limiting ourselves or being pessimistic about the future. We need to keep improving to remain a market leader," Tsai says.

Quick Change Artist
Since 1980, Zyh Yin Enterprise Co., Ltd. has been making bolts, screws, nuts and other furniture parts at its plant in northern Taiwan.

With a skilled workforce of 70 persons engaging in R&D, quality control, sales and marketing, the ISO-9001-certified company has successfully won orders from large-sized furniture wholesalers, like IKEA, around the world. So far, the company exports most of its output to 37 countries in North America, Europe, and Southeast Asia.

Company chairman Chen Chi-shiang observes that, "Because information is so readily available now, customers are inclined to bargain for better quality at lower prices. So we always have to keep an eye on information to stay at the top of the line."

The company closely tracks market trends and raw material prices to develop strategies for paring costs. The company contracts overseas metal suppliers to secure a reliable quality, quantity and price for metals. It also regularly improves its production processes and has expanded output to reduce unit cost through higher quantity. Moreover, the company continually updates machinery to ensure output meets quality requirements.

Through these efforts, the company can compete on quality and price against emerging rivals. "Taiwanese makers should try to change with the market to meet demand and develop their reputation," Chen says. "We can't control the market. So we need to find ways to adapt to it. That's the way Taiwanese makers can become leading metal parts suppliers in the world market."

Chen acknowledges the importance of branding. "This is one possible route for Taiwanese producers to take," he says. "But the going can be tough." In fact, Chen's company had been developing branded products for quite a while, but obstacles along the way have discouraged it. "Since we wanted to promote products marked with our own brand, we have faced many choke points," he recalls. "For large-sized enterprises, like IKEA, it is not easy and simple to change their fixed purchasing patterns, even if we provide products 20% to 30% cheaper than existing ones."

Based on his experience, Chen concludes that producing on an OEM or ODM basis is more feasible than selling branded products. "Taiwanese makers have a good reputation that has earned them orders from international buyers. I think Zyh Yin can do more to promote its OEM or ODM products," he says, "When our customers order OEM or ODM products, they know they are getting quality that comes with the Zyh Yin name."

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