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Taiwan:
A World Class Player! Taiwan Sporting Goods Industry Backgrounder |
I. PREFACETaiwan
sporting goods, especially physical fitness equipment, golf products,
roller skates and billiard products, continue to make their mark on the
international market. Taiwan sporting goods manufacturers, based on the
rich experience accumulated with more than 30 years of industrial
experience, solid foundation and cutting edge technology of affiliated
industries, plus its continued efforts in design and R&D, win praise
from buyers from around the world.
As techniques on information, communication and transportation reach a new stage, the global consumers product market, in which sporting goods also plays a part, is rapidly converging with a new wave of production and sales. Therefore the world of sporting goods is increasingly linked to fashion trends, personal incomes and prices. Such changes did not only bring about huge challenges for the highly export-oriented sporting goods industry of Taiwan but also lead this industry into an era of innovation, product design, and quality control. |
II.
HISTORY AND CURRENT STATUS
Taiwan’s
sporting goods industry has been blossoming since 1979 when
advanced techniques were introduced from abroad to fill massive
OEM orders from leading brand name companies that sent orders to Taiwan
producers. Since then Taiwan has become acknowledged as a major supplier
to the international sporting goods market. Taiwan’s
racket makers began in the early 1980s to introduce various compound
materials in the production of sporting goods, and have since
successfully developed new techniques for using compound materials on
different rackets, golf club shafts and fishing rods.
With high and stable quality products, Taiwan has been able to
fill a leading role in the worldwide sporting goods industries. The
years from 1990 to 1996 represent a period of transformation for
Taiwan’s sporting goods industry. Manufacturers placed much effort on
both industry upgrades and relocation. While designing and developing
high added-value products in Taiwan, they moved labor intensive
production and low value products to regions with lower labor costs.
After
the export of tennis rackets dropped from the peak, high added-value
products including golf products, roller skates and indoor physical
fitness equipment took their place to become major export categories.
Taiwan producers have experienced other adjustments in global marketing
besides changes in product categories. Among them the major change was a
major adjustment in strategy from production oriented to marketing
oriented. Currently the export of Taiwan’s sporting goods is often seen in the pattern of taking order/payment in Taiwan and producing/shipping out from factories based in Southeast Asian countries or China. This trade pattern is particularly so for traditional sporting goods such as tennis rackets, golf accessories, roller skates and all types of balls. Those that remain in Taiwan for production and export and include those with high added-value or fashion products for which manufacturers devote their efforts to the design and R&D, for example multi-function home-use physical fitness equipment, and golf clubs made of new materials. |
III.
ANALYSIS OF EXPORTS
The
export value of Taiwan’s sporting good for 2002 amounted to US$ 1.27
billion , slightly dropping 9% compared to 2001. In reviewing the
development of Taiwan’s sporting goods industry, we find that exports
peaked in the 1980s and remained stable with a value of around US$1.8
billion in the 1990s. The highest record US$1.93 billion was made in
1992, and the second highest value was in 1996. The export value hit
bottom in 1999 and increased in 2000, however exports have been
declining since 2001. In individual lines for 2002, exports of tennis balls grew 25.585%, diving masks increased by 43.78%, and skis grew by 208.96%. On the other hand exports of other products decreased, including golf club 13.44%, tennis /badminton racket 56.32%, and table tennis equipment 26.75%. Physical
fitness equipment and golf products remain the two major export
categories in Taiwan’s sporting goods industry.
In 2002, export value of fitness equipment reached US$340.63
million, and the export value of golf products amounted to US$288.39
million. Manufacturing of
golf products has a history of more than twenty years in Taiwan and the
main items exported included golf club heads and carbon fiber shafts.
Based on the world class product development capability and
manufacturing facility, Taiwan maintains a vital position in the global
golf products market. Aside from providing OEM manufacturing services
for leading brand name companies, Taiwan manufacturers have also been
devoted to product design, the development of new materials such as
titanium and ceramics, as well as promoting self-brand products. Physical fitness equipment is one product among the fastest growing categories in recent years, and its export value exceeded that of the golf products for the first time in 2000 and has become the number one export. An analysis of the export categories of Taiwan’s sporting goods and the market structure reveals a trend toward centralization in product category, i.e., the share of physical fitness equipment, golf products and roller skates gets higher each year. However, it is seen that the share of roller skates has dropped significantly since 1997, while physical fitness equipment and golf products have become Taiwan’s two major export categories. The U.S., Japan, and European region are the main export markets for Taiwan sporting goods. Also growing is the Hong Kong market which serves largely as the trans-shipment hub for components and finished products to be delivered to China. |
IV. COMPETITIVENESS ANALYSIS1.
Strengths
A.
Taiwan makers are capable of filling market demand and satisfying
customer needs. Flexibility on taking orders for various products with
individual volumes, and speediness in making samples of new products are
also strengths of Taiwan manufacturers, which enable them to meet the
trend for low-volume and multi-style product. B.
Taiwan producers are highly sophisticated in using different
materials and finishing techniques. Buyers find product quality
trustworthy. C.
A comprehensive production system has been made with close cooperation between the center and satellite factories which
means both lower production costs and risks, and shorter production
times. D.
The related machine industry and molding industry are well
developed, thus the majority of facilities and molds are available
locally except for some fine testing equipment and special machines. Not
only are the costs for setting up factories lowered, but also less time
is required when it comes to production line expansion and maintenance. E.
Taiwan manufacturers are mostly financially sound, and therefore
capable of withstanding the pressure of holding stock due to poor sales. F.
The Taiwan government provides a complete subsidiary structure
with many organizations such as CETRA, The China Production Center,
Medium and Small Business Administration of MOEA, Industrial Development
Bureau, and Industrial Technology Research Institute.
Their tasks include holding international exhibitions, buyer
referrals, marketing information collection, production management
counseling and assistance in R&D. The Taiwan Sporting Goods
Manufacturers Association and the Taipei Sporting Goods
Association also play an important role in resource integration
for promoting industry upgrades and sales. 2.
Weaknesses A.
A large portion of Taiwan makers are doing business mainly by
providing OEM and ODM manufacturing services, while those leading brand
name companies in the U.S. and Japan keep their grip on marketing profit
and sales channels. As a result, Taiwan’s share of self-brands remains
low. B.
Since main source materials are from abroad and it is difficult
to lower production costs. C.
Labor shortages cause increased production costs. 3.
Opportunities A.
The popularity of exercising is steadily growing worldwide. B.
Taiwan has been ahead in the development of the information and
electronics technology, and local sporting goods makers should exploit
this advantage to develop hi tech physical fitness equipment. C.
Taiwan makers should keep working on techniques of integrating
compound materials into sporting goods. D.
Production bases in China and Southeast Asian countries should
adapt flexible production in order to maintain Taiwan’s international
market share. 4.
Threats A.
As the influence from consumers and sales channels increase and
products get quickly eliminated, manufacturers are confronting severe
trials in their ability to develop and design new products. B.
The global market has grown just as the life cycle of products
have increasingly shorten. Global competitive mass production capability
has become a challenge for local makers. C.
Retail sales channels are moving to include multiple as well as
large-scale markets. This presents a big challenge to traditional sales
channels and has a direct impact on the export-oriented manufacturers in
Taiwan. D.
Leading brand name companies are cooperating with sales channels
to capture a larger market share to block entry of new brand names. E. The share of products exported from China by Taiwan-invested sporting goods companies to EC and US markets has exceeded Taiwan’s domestically-made products, and Taiwan’s share is still growing. |
V.
PROSPECTS AND SUGGESTIONS
China
has become the factory of the world and its sporting goods exports now
exceed those of Taiwan. However, a large portion of exported goods are
from factories invested by Taiwan manufacturers. Taiwan producers have
placed stress upon the international division of labor to keep
competitive. Through internal integration and closer cooperation
with other companies, they are striving to enhance brand image to become
even more globally competitive. In
the global sporting goods market the share of leading brand names have
not been extraordinary. Total sales volume of the world’s ten leading
brand names account for less than 20% of the global market. However, the
situation is expected to change in the future. Famous brands such as
Nike, Reebok and Fila, with the advantage of brand image, continue to
expand their production of lines and markets.
Meanwhile they are using OEM or ODM to collect high-quality
products with competitive price to sell under their own brand names.
Taiwan’s financial might has let it mobilize mail promotions,
open new markets that offer after-sale services. It is foreseen that big
companies will become even larger and stronger in the market. In
face of the above trends, Taiwan makers continue to enhance domestic R&D and marketing of high-tech products while expanding
their use of overseas production bases. They may also apply the
successful experiences of Italy and Switzerland in transforming and
upgrading traditional industries such as shoe-making, garments and
watchmaking. In addition, the supply-demand chain may be changed from
the upstream to the downstream factories to create more business
opportunities for both suppliers and buyers.
Participation in international promotion activities held by CETRA
and various manufacturers association will also help improve Taiwan’s
advantage in international marketing to let the Taiwan sporting goods
industry be even more cooperative on the international market.
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Table A Exports/Imports Value of Taiwan-made Sporting GoodsUnit：1,000
US $
Source：Import/Export
Statistics of the R.O.C. Customs Table B Exports of
Taiwan-made Sporting Goods, by Products Category
Unit：1,000
US $
Source：Import/Export Statistics of the R.O.C. Customs
Table C Imports of
Taiwan-made Sporting Goods, by Products Category
Source：Import/Export Statistics of the R.O.C. Customs |