Most Taiwanese makers of chandeliers and pendant lamps are expressing bright hopes for the future, and many are projecting higher rates of export growth this year thanks to improved design and manufacturing capabilities.

The migration of manufacturers and their parts suppliers to mainland China has enabled them to form large industrial clusters with the advantages of an abundance of suppliers of raw materials, parts, and components, as well as cheap skilled labor.

Industry sources estimate that more than 400 of the island 's lamp makers, including 200 specialized makers of chandeliers and pendant lamps, have made the move across the Taiwan Strait to set up factories in China. This has helped them to free up more funds for research and development, and for the improvement of their design capability. This accomplishment has enabled them to become OEM/ODM (original equipment manufacturing and original design manufacturing) suppliers to leading international lamp retailers such as Home Depot.

Importance of Design and Marketing

One of the companies that has gone to China is Tigon Lighting Manufacturing Ltd., which shifted its production facilities across the Taiwan Strait 12 years ago and now, according to its vice chairman Kenny Huang, maintains an R&D department with more than 200 designers. This helps the firm design about 80% of its lamps, with 20% being left to outside design houses. The company won ISO9001 certification in 2000.

For their chandeliers, the R&D team has developed a knock-down arm design that reduces both the cost and size of packaging by 70%, Huang claims, adding that the detachable arms are protected by patents in many countries.

"Design and marketing capability has been the driving force in our continuous growth over the past 12 years, " Huang comments. His exports grew only modestly last year because of the severe acute respiratory syndrome (SARS) outbreak, he says, but post-Christmas orders are picking up and he expects a better performance in 2004.

In fact, Tigon's three factories in China have been working overtime since the beginning of the year, and production through the first quarter is expected to be right at full capacity. To accommodate the growing business, the company may boost its work force in the three plants to 4,000, up from 3,500 now.

Much of the company's growth is coming from relatively profitable chandeliers, which now account for 35% of total lamp production. The ratio is projected to rise to 50% by the end of the year.

"Aspire "-ations for New Markets

Verona Co. saw the value of its exports shoot up 40% in 2003 to US$7 million, thanks to increasing demand from major clients in the United States, says senior executive Tracy Wang. Exports are expected to continue growing this year, possibly by up to 30%.

Verona produces wall lamps, floor lamps, ceiling mounts, and other lighting fixtures in addition to chandeliers and pendant lamps. More than 95% of its lamp products are shipped to the U.S., nearly half of which goes to just two retail giants, Home Depot and Lowes.

In addition to supplying buyers on an OEM/ODM basis, Verona also markets products under its own "Aspire " brand. It is now working to diversify into new markets in Europe and Southeast Asia.

The company designs most of its own lamps and, Wang says, offers each buyer exclusive designs in order to avoid price competition.

Having moved all of its production to China four years ago, Verona now operates three factories with a total of 600 workers there. A recent surge of orders-enough to keep production lines humming until the end of the first quarter--has prompted the company to consider building a new factory.

Growth Via New Products

Kuzco Lighting Co., a specialized trading company that focuses on lighting fixtures and outsources production to a Taiwanese-invested company in mainland China, did even better than Verona in 2003, with export sales doubling to US$5 million according to managing director Yang Shao-kun. New products and the expansion of marketing into South America helped boost sales. The U.S., however, remains the company' s biggest market.

Kuzco focuses on ceiling lamps and other lighting fixtures along with chandeliers and pendant lamps. Yang predicts that his exports will expand between 50% and 60% this year. To achieve that growth, the company will launch 10 new series of lighting fixtures during the year and will step up marketing efforts in Europe, India, and the Middle East.

The aforementioned Taiwanese-invested contract manufacturer, Yang states, can turn out enough products to fill 150 40-foot containers a month, but is currently producing only 40% of that amount, or 60 containers. This gives it the capability of ramping up production rapidly if more orders than expected come in.

Moving Wisely in the Ways of Industry

Weisley Industrial Co., a specialized chandelier exporter, recorded a 20% increase in exports to US$5 million in 2003 following an expansion of its product line to include outdoor lamps, reports its managing director Allen Chang. The contribution of chandeliers to total sales last year dropped from 80% to 60%, and is expected to remain at that level in 2004.

Chang worries that orders for his firm 's products might drop 10% in the first half of this year compared with the same period of 2003. The reason is that the company will possibly be forced to hike its prices because of rising costs for materials and, perhaps, an appreciation of the renminbi (RMB) against the U.S. dollar.

Weisley outsources production equally between Taiwan-invested and locally-invested manufacturers in China. Chang asserts that local Chinese lamp makers have come on very strong recently, and that their product quality and workmanship now almost matches that of Taiwan-invested producers.

The managing director adds that the cluster of Taiwanese manufacturers in Guangdong Province has helped lower the technology barrier for local Chinese producers. "Taiwanese-invested companies in China are expected to maintain their lead for the next three to five years, " Chang comments, "but they will lose their niche if they fail to come out with a constant stream of new designs."