Taipei Int'l Hardware Show Proves Might of Second-ranking Exporter

The seventh Taipei International Hardware & DIY Show was held from Oct. 18 to 20, 2007, reportedly drawing over 10,000 buyers from all over the world to check out the latest products showcased by 182 exhibitors based overseas and in Taiwan.

Organized by Kaigo Co., Ltd., which represents German exhibition organizers Koeln Messe and Messe Dusseldorf in Taiwan, the annually held Taipei show aims to evolve into a global trading platform for a wide range of top-quality hardware products.

Having become the world's second-largest exporter of hand tools in 2003, when Taiwan was dethroned by mainland China, while the island is also the world's No.3 exporter of industrial fasteners. Taiwan's hand-tool industry exported some US$2.57 billion of goods in 2007, compared with US$2 billion or so the previous year, with the island's fastener export value averaging US$2.5 billion.

Exceptional Few

While most of the island's smokestack industries have seen manufacturers relocate to mainland China, the hand-tool and fastener sectors are two of the few to still retain considerable number of manufacturers at home. Such a trend suggests, from one perspective, that these suppliers are not being forced to compete on price by seeking cheaper costs across the Taiwan Strait, instead have chosen to stay put-believing that the effective way to outdo their mainland Chinese rivals is to make the most of better quality and relatively more complicated manufacturing techniques that are readily available in Taiwan.

The show saw Taiwanese exhibitors plying high quality and apparently paying more attention to the urgent need for branding, which has been commonly touted in business schools and even on TV talk shows as an effective means to fatten margins, as well as a way to achieve product differentiation. One recent business-oriented TV talk show aired in Taipei said that merely branding a Taiwan-made item with a "westernized" label would escalate the bottom-line manifolds. Plus the Taiwan-based exhibitors saw product-differentiation via branding as the strategy to fend off their mainland Chinese rivals; while another is to target professional users. The fact is that the mainland Chinese hand-tool makers have cornered the lower-end segments worldwide, or in other words, the mainland Chinese have little problems producing non-professional or cruder tools that demand basic, commonplace techniques.

Selling a Whole Package

At the 2007 show, the Taiwan branch of TengTools International Sweden AB displayed collections of tools neatly arranged in roller cabinets to underscore the company's savvy strategy: why sell only one tool when you can sell a whole cabinetful? To that end, the company literally rolled out a major star: a completely outfitted auto mechanic's dream in the form of a 16-drawer tool cabinet with casters that hold some 1,000 tools.

"Offering a wide range of products has a two-fold advantage: one that initially pulls in buyers and two that motivates them to return with replacement orders for single items or even larger sets," said Tony Liu, manager of the Taiwan branch. He boasted that his company has introduced over 200 tool sets comprising approximately 2,000 individual tools.

The company intentionally differentiates itself from name-brand suppliers whom TengTools refer as "A-brand" suppliers. "A-brand suppliers keeps in-stock virtually every tool of every specification, including those rarely used or outdated models; whereas we mainly supply popular tools," Liu stressed. He further said that A-brand suppliers may be biting off more than they can chew-taking on increasingly heavy cost burdens by making everything from major to side lines, which results from having to spend relatively more on inventorying those scarcely-used tools.

Liu, whose company depends on Taiwan-based, dedicated manufacturers for around 90% of its tools, estimated that his company's 2007 annual sales have risen 40% year on year based on rollouts of new products, and orders diverted from A-brand suppliers, whose relatively higher pricings are becoming less competitive due to the economic downturn worldwide. "Compared with theirs [A-brand suppliers' products], ours are equal in quality but significantly better priced, which makes our products especially attractive to budget-minded buyers," he said.

Tops in B-brand Segment

Liu said that TengTools is now the world's No.1 brand supplier in the B-brand hand-tool segment, which he defines lies between non-professional market and that for tools used in factories and on production lines. In other words, these are tools not good enough for professional auto mechanics but that suffice for typical factories. With over 30 dealers worldwide, his company took part in the Taipei hardware show for the first time-hoping to tap markets outside Europe.

Industrial Tools

Hitachi Koki Co., Ltd. of Japan showcased power tools for construction, metalworking and woodworking at the show through its Taiwan dealer, Bright Mountain Co., Ltd. Generally made for the Taiwan construction industry, the Japanese tool maker offers jackhammers for breaking concrete walls and ground, impact drivers, impact wrenches, rotary hammers, impact drillers, stone cutters, and polishers. Its line of woodworking tools for the Taiwan market include jig saws, saber saws, planers, and circular saws, with disc grinders being the major line for metalworking.

The Hitachi dealer pointed out that although mainland China-made tools and Taiwan-made ones have gradually cut into Hitachi's dominance in the Taiwan tool market, Hitachi tools still has room to grow in the Taiwan market, with the reason being that "Hitachi tools are unmatched for superb precision," concluded a Bright Mountain sales specialist.

Bright Mountain has been Hitachi's dealer for over 40 years, with the well-known Japanese brand having cornered 30-40% of the Taiwan construction-tool market, according to the sales specialist. And he said that the house building market in the central and southern Taiwan have been improving, which would likely realize more business opportunities.

Professional Tools

Niche Rich International Corp., a Taiwan-based tool maker, promoted a number of products at this show, including lacquer-spraying systems, pipe wrenches, ratchet wrenches, and sockets, with most such products being for professional users.

The company has built a name for itself especially in mainland China and Europe under house brands for around 10 years. Its brand names include Kinglion for spraying systems and Nicher for wrenches and screwdrivers. "Kinglion is now a well known brand in mainland China and we have begun exploring the American paint sprayer market," said company president, Richard Yu.

Hsieh, a sales executive, explained that branding has quickly helped her company become well known at a time when the competition had been growing ruthless. "But you cannot build a brand too hastily, rather only by trying to attain a goal gradually and penetrating markets a step at a time," she stressed and that brand operation now accounts for some 40% of the company's revenue.

Yu noted that price hikes in materials worldwide have forced sprayer-system buyers to be more cost savvy. "They're now seeking machines that can help them reduce costs. Our machines can reduce lacquering cost by 30% by even coating, which rids of the need to spray repeatedly," he boasted. Yu added that his sprayers are ideal tools for wood, plastic, leather and metal workpieces.

Intelligent Sprayer

The company's WSD-9000 five-side spraying system is ideal for reducing labor costs for its automatic features. This unit is outfitted with a programmable logic controller as its brain and intelligent human interface for easy operation; while its automatic mechanisms can clean its spray guns, hoses, and paint tanks-hence minimizing labor input in the cleaning.

The WSD-9000 measures 2,250mm long, 1,500mm wide and 2,000mm high and can handle workpieces as small as 50mm long, 50mm wide and 25mm high.

The company supplies air pressure tanks that handle enamels, liquid chemicals, glues, fluid foods and sticky materials in addition to lacquer.

Niche Rich also supplies wrenches and screwdrivers for a variety of applications like automotive repairing and pipe repairing.

The company began as a trader and later opened factories in Taiwan and mainland China four years ago. Yu boasted of running a pretty strong research and development unit, the major contributor to the high precision of the company's machines. "Our R&D team is still working on some 20 projects featuring relatively superior advantages," Yu claimed.

Becoming Gender-sensitive

Garden tools displayed by G-Pro Industries Corp. clearly showed that global garden-tool suppliers are finally paying more attention to the differing needs of female hobby gardeners, who are apparently a growing segment. "Retailers are now asking manufacturers to supply tools specially made for women, who have long been overlooked or ignored in the past," said Andy Shih, a G-Pro sales specialist.

Tools for women, the specialist noted, are readily recognizable from their packaging and design. The company's tools designed for ladies, for instance, feature packaging printed with a woman gardening alongside a child, as well as featuring slimmer dimensions in addition to ergonomic touches.

"However, female-dedicated tools have yet to become dominant products in this segment," the specialists stressed.

He pointed out that such a trend has been born out of a shift in leisure practice: increasingly more women are turning to gardening as hobby rather than necessity, hence generating demands for user-friendly or ergonomic designs in the grips of tools as recreational gardeners tend to spend extended hours using such tools. "Building ergonomic design into tools allows users to enjoy gardening for hours on end as the tools are simply more comfortable to hold," he explained.

Toward such user-friendly ends, the company uses three-dimension software to locate ergonomic points on prototypes before beginning volume production. "This is what is called 'reverse engineering' as adopted by Boeing. Using such approach shows that we truly care about consumers' level of comfort as they handle our tools despite having to shoulder relatively higher costs," the specialist noted.

G-Pro has in-house a squad of product developers who have mastered computer-aided software, mold development and product design. "We design products and brand logos in-house. So, we've won many patents and, thus, our ODM operation takes a bigger role than OEM operation," the specialist said.

Besides being gender-sensitive, the company's products are also green-complying with RoHS and PHS regulations-and are mainly shipped to Europe, the United States, Australia and New Zealand.

Electrical Power Tools

Yih Cheng Factory Co., Ltd., a leading Taiwanese manufacturer of electrical power tools, displayed cordless impact wrenches for automotive repair at the show. "We're entering the professional tool segment from non-pro tools in hope of achieving product differentiation, a strategy to fend off underselling competitors," said company president J.K. Lin.

According to Lin, the company's products at the show clearly spoke the message "good quality at less-expensive pricing." "We're telling buyers that Taiwan still has tool manufacturers like us equipped with highly integrated capacity that allows us to handle much of the production, from designing, metal forging, surface treatment to packaging," he boasted.

Despite having branded its Europe-bound products with "Lancer," the company still derives the lion's share of its revenues from OEM and ODM operations; while besides Europe, the United States, South America, Southeast Asia and Japan are the company's major export destinations. Yih Cheng ships products conforming to all the major quality standards, including ISO9001:2000, CE, GS, CSA, CUL, PSE, SAA, ASME/ANSI, DIN-GS/VPA, and VDE.

Like many of the island's toolmakers, Yi Cheng has opened factories in mainland China to produce low-end products of standard specifications. However, Lin believes that Taiwan-based makers would slow expansions in China and likely move to Vietnam in light of the latest news that the mainland authorities, since last year, have begun to cut tax rebates granted to exporters operating in the mainland. "Another paradoxical advantage for Taiwan-based tool makers is that increasingly more Western buyers are returning with orders since they are growing tired of the substandard quality so often seen in China," he said.

ERP Expertise

Management consultants like Easystem Co., Ltd. are gaining popularity among Taiwanese tool makers as the complexity in the sector continues to creep upward. At this show, Easystem promoted its Enterprise Resource Planning (ERP) solutions specifically designed for hand-tool production. According to the company's general manager, J.H. Liao, the company had signed up over 10 local tool suppliers as clients.

"Management approaches for tool production are quite different from those of other industries because tool production is relatively more complicated not only in processing but also specifications," Liao explained. He added that tool makers are now developing the capability to deliver orders with diversified products but in low-volume, making production heavily dependent on computerized changes in molding, material control and manufacturing processes.

Liao claimed that his company is a management-solution provider dedicated to hand-tool production in Taiwan. "Most existing peers cannot design tailor-made solutions for tool makers because they simply do not understand the sector," he said, and that he has gleaned such expertise applicable to tool-making management from his past experience in automotive-gear, machine-tool and high-tech industries.

Liao was bullish about the local demand for ERP solutions for hand-tool production, saying that his company's reputation is increasingly spread by word-of-mouth, thanks to satisfied clients. "Many of our clients began adopting our ERP solutions after accepting our assistance in installing ISO systems," he noted.

Laser-cut Saws

UM:Kogyo Inc. of Japan, the manufacturer of Silky-branded saws, markets its saws in Taiwan through its dealer Yueh Hsiang Enterprise Co., Ltd. The Japanese supplier promoted saws specially made for orchardists. A sales representative boasted that his company's saws are very durable thanks to a high-tech processing technique: "We cut the saw teeth with laser and then sharpen them with diamond sanders; so our saws easily cut trees either vertically or horizontally regardless of the orientation of fiber growth," he reported.

The sales representative also claimed that the 50-year-old UM:Kogyo is the first worldwide to laser-cut saw teeth, compared with the traditional forging methods.

Besides being technologically-advanced, the Japanese supplier is also market-sensitive, as it promoted saws specially designed for orchards, seeing that the recession in the house-building and woodworking segments in Taiwan have sapped the demands for such industrial saws.

UM:Kogyo packs its saws in biodegradable materials in to meet the ever rising green consciousness; while it has also introduced saws made with female users in mind, taking after the cue given by other market-savvy suppliers who have become more gender-sensitive.