E Tai Sets Sights On World Bathroom Ware Market

President Paul Hung of E Tai Enterprise Co., who is now 50-some years old, first began thinking about internationalization in business when he worked for Cathay Pacific Airways as an errand boy at Taipei's Sungshan Airport more than 30 years ago.

There, he recalls, "Every day we saw many foreign businesspeople, coming and going in a rush to fight for their business interests." In 1977 he opened his own business, and since that time he has never forgotten what internationalization means to businesspeople: making their businesses widely known as a means of promoting growth.

Starting out small as a maker of aluminum door and window frames, E Tai expanded into shower-door production 14 years later to escape overcrowding in its original business. It also began promoting its first brand name, "Itai." Today the company is Taiwan's No. 1 supplier of shower-stall doors, with revenues of NT$500 million (US$15 million at NT$33:US$1) in 2003. In fact, the president claims, his company is the largest of its type in Asia.

Over the past two years the firm has entered into alliances with several international companies, including Tylo AB of Finland, the world's top supplier of steam cabins with a 33% share of the global market.

Hung espouses a pragmatic and stable strategy for his company's internationalization: "Keep roots in Taiwan, and expand in the mainland Chinese and international market."

When it went into the shower-door business, the company enjoyed the advantage of mature processing skills developed during its production of aluminum door and window frames. At that time, Hung says, the island's consumers depended on imports for much of their bathroom ware. Giving them a local source of supply was not difficult for him, he comments; the only difference between making door frames and shower-door frames is that the latter have to be waterproof. To make things come out right, he studied European-made shower stalls.

The Lure of High Quality

Exports of shower doors began soon after production started. Superior quality helped the products to gain approval from the Hong Kong Housing Authority, and to be adopted for use in Thailand's royal palace.

Over the past few years the company has entered into the field of higher-added-value shower stalls and steam cabins. It now employs an army of designers and architects to develop products that are sold in more than 200 contracted stores and 10 company-operated outlets, as well as to 360 contracted construction companies and 1,700 contracted designers.

Designers in the firm's Keelung headquarters use computer-aided design (CAD) to develop bathroom suits for housing renovations and new buildings. Company employees talk regularly with the Mechanical Engineering Department of National Taiwan Ocean University about breaking through the technical bottlenecks they encounter. This helped them, for example, resolve a problem with reinforced glass manufacturing two years ago.

Good after-sales service and maintenance is another of the company's strong points, and one which, Hung claims, his domestic rivals do not possess. "After-sales service has become increasingly important, especially as we have developed some electronics-laden steam cabins," he explains. E Tai's luxury steam cabins feature computer-controlled video, audio, and massage systems that contain crisscrossing circuit loops and human-machine interfaces needing regular maintenance.

"Electronics is what distinguishes our products from others," Hung stresses. To emphasize this, the company has spent NT$4 million on a multi-year lease of eight large advertising T bars along the Sun Yat-sen Freeway to promote its "eTai" brand.

Going international, the company opened a procurement and marketing office in Shanghai in 2002; recently, Rong Xin House Decoration Co. and Shanghai Home De'cor, leading interior-decoration firms there, signed contracts with E Tai for the supply of bathroom ware. "Shanghai is an ideal place for building a name, because it's already a highly internationalized metropolis with the most intensive business activity in mainland China," Hung notes.

Alliances for Internationalization

Last year, E Tai initiated its strategy of forging alliances as a means of making its brand names know outside the Greater China area. Late last year it inked a contract to sell Tylo's steam cabins in Taiwan in return for the Finnish company's commitment to sell E Tai products through its global distribution channels.

Another agreement was signed at almost the same time with the Spanish importer Inportema, which sells shower stalls and steam cabins through about 200 outlets around the country. Inportema decided on the Taiwanese company largely because of price, explains Inportema's chairman and CEO, Francisco Martin. "E Tai's steam cabins," he says, "are priced at around 40% less than comparable European-made products."

Hung claims that quality was another strong supporting factor behind his company's defeat of its international rivals to win these deals.

To boost overseas sales, E Tai set up a trading office early last year and equipped it with trading specialists fluent in English, French, German, Spanish, Polish, Czech, and Russian; some of them, Hung says, are native speakers. He expects overseas sales of his branded products to contribute a substantial amount to his revenues this year, which are projected to reach NT$800 million (US$24 million).

Since many consumers cannot afford shower stalls and steam cabins, E Tai has introduced tailor-made products for budget customers in Taiwan. One of these, for example, is a 1.5-ping (54 square foot) bathroom that includes a shower stall and is priced at NT$50,000. "Our strategy is very simple," Hung says, "It's consumer oriented."

Upmarket steam cabins and shower stalls have become standard bathroom equipment even in many less-expensive houses for middle-class consumers in Taiwan. This is a sharp contrast from the past. "For a long time this equipment was seen as suitable only for expensive villa-style houses for the rich," notes a sales person at a newly completed residential development in a suburb of Taoyuan City, south of Taipei.

The company is also in the luxury-item market, and recently signed a contract to supply steam cabins to the five-star Far Eastern Plaza Hotel in Taipei. Soon, Hung believes, "more hotels, home-stay facilities, motels, and spas will begin to install this equipment as Taiwan seeks to develop itself into an 'island of tourism.'"

The president is counting on higher-added-value cabins and stalls to make up revenue lost to rival shower-door suppliers from mainland China. In this new market, he says confidently, "They can hardly compete with us, since we have already established our name and quality image in this market."