Taiwan-made Pro Auto Tools Take a Run at Europeans and Americans

European and American producers of professional automobile repair tools have plenty of reasons to worry as Taiwan rivals steadily eat away at their global market shares. A combination punch of high-quality, reasonably priced and innovative products, rapid market response, and prompt delivery has enabled Taiwanese manufacturers to keep rivals in advanced countries on the defensive.

The end to the long reign of European and American auto-tool brands has been abetted by the more streamlined distribution systems made possible by the Internet. A strong commitment to product branding and strong support for distributors has also helped Taiwanese companies make inroads in targeted markets.

Commitment to product development has undoubtedly played a major role in positioning Taiwan to compete against more established names in the professional auto-tool market. Local producers have also benefited from well-established industry clusters that enable high levels of cost-cutting specialization and flexibility.

NASCAR Sponsor

Jonnesway Enterprise Co., Ltd. is one of the names aggressively expanding as a global brand. A supplier of high-level auto-repair tools, Jonnesway brings over 30 years of experience to the job of making high-level auto-repair hand and pneumatic tools. The company's products not only meet the most stringent quality requirements of the professional markets, but are also protected by numerous patents of new and innovative designs. All of these assets are helping Jonnesway build its brand.

After 20 years of effort, Jonnesway sells only own-brand tools today. The company has over 4,000 dealers in 95 countries, most of them are in major markets such as the US, Europe, Russia, South Africa, the Middle East, and Asia. About 2,600 of those dealers are in the US, where the Taiwan company is also a long-term sponsor of the world-famous NASCAR racing.

In the third quarter of 2008, Jonnesway won the 11th Rising Star Award presented by the Taiwan government. This award is presented to companies with strong growth potential and valuable brands.

Joseph Liao, president of Jonnesway, attributes his firm's success to its long work in branding. The company has concentrated on R&D, logistics, and marketing. "Our focus shows that Jonnesway is not a trading company but a brand player," claims Liao, "Our goal is for global buyers to see 'Jonnesway' as the best brand from Taiwan'."

Liao says that when Jonnesway began its branding efforts, there were few other branded tool makers in Taiwan. "When we shifted to own-brand sales, our focus was on integrating all the best tool products made on the island," he explains. "But over the past five years, which has been a high growth period for us, we have concentrated on patented products, first-class logistics (in close cooperation with our suppliers to achieve just-in-time delivery), and other areas conducive to brand development."

Liao claims that this strategy has given Jonnesway's products prize real estate in professional tool store display racks, crowding out many other international brands. "Both distributors and consumers have recognized that Jonnesway's high-quality, innovative tools will always be on the racks without any supply cuts."

Jonnesway's another core international competitiveness lies in the firm's strong R&D department. The company works closely with suppliers and customers to create products that meet changing market demand. The company also uses the most advanced manufacturing techniques, materials, and ideas to turn out trend-setting products. With its world-class R&D and innovation capability, Jonnesway has increased revenue by over 30% a year over the past five years.

First Off the Block

King Tony Tools Co., Ltd. first began developing its branded business some 23 years ago, making it the earliest of local tool makers in the own-brand segment. Today the company focuses on high-quality, specialized, and professional auto tools, wrenches, sockets and other hand tools, making it the earliest bird in local auto-tool industry.

The King Tony brand has grown to become a well-known global brand, especially in Europe, Asia, and Latin America. It also has been taking market shares from major European and American famous auto-tool brands. To further strengthen its competitiveness and access to overseas markets, the Taiwan-based company now operates branches in France, Mexico, mainland China, and the U.S. to handle marketing, sales, and logistics.

King Tony now sells over 95% of its products under its own-brand. About 5% of its output is OEM/ODM production for big international tool brands. King Tony tools are widely welcome by professional users worldwide, especially in the automotive, machinery, agricultural machinery, and other precision industries.

Vincent Lai, vice general manager of King Tony's marketing division, notes that the benefits of branding are apparent in the company's performance. "Our revenue has been growing about 15% to 20% a year for a long time. For some established Taiwan auto-tool brands, the global market outlook is quite optimistic because their quality and pricing are very competitive against European and American brands."

Lai says that the Internet has been another ally of Taiwan auto tool makers in expanding their global market share. With the help of the web, he explains, sales channels have been disintermediated so producers can sell directly to distributors rather than going through separate importers. This has added to the number of importers that are sourcing Taiwan-made auto tools worldwide.

Lai admits that his company lost money for the first 10 years of its branding effort. "But over the past 10 years our business has been booming because more and more distributors and consumers recognize the quality and professional level of our products." The company has used trial use and other global promotion activities, such as sponsoring car racing, sports teams, even social charities, to get the word out about King Tony.

King Tony has also earmarked 5% of its revenue every year to develop new products. "Attractive and innovative products are still the core value of our brand," Lai stresses. "It has also driven our steady sales growth."

Though the popularity of high-level, made-in-Taiwan auto tools has been rising in the international market, Lai, worries about the fierce competitions between Taiwanese companies. He feels that Taiwanese firms should focus on global rivals not local counterparts.

Niche Finder

Raya Enterprise Ltd. is another successful brand auto-tool maker in Taiwan. Though just 14 years old, the firm's AR high-level pneumatic tools and Custor professional auto tools have rapidly won a solid foothold in the global market thanks to their professional quality, innovative design, and strong service backing.

Company director Juliet Lee says that Raya initially focused on high-level professional auto-repair tools and gradually introduced its AR own-brand pneumatic tool products. The line was an instant success due to their outstanding cost/performance ratio in the professional-user sector. In 2005, the company began more aggressively developing in the own-brand market with the debut of its Custor auto-repair hand-tools.

Lee says that her company has promoted the Custor line through major trade shows and advertising in professional magazines. "We try to inform our customers that Custor is strictly a professional auto tool brand."

In order to build its professional image, Raya spends heavily on product development and design, as well as on creating a comprehensive line of products compatible with standard sizes for various models. Patented new functions and innovative ideas, as well as advanced materials and key parts are major elements in the company's brand strategy.

Lee is very optimistic about Custor's future in the professional auto-tool market. "Taiwanese tool brands are not only taking market share from major European and American counterparts," she says. "They are also extending their lead over low-cost rivals in mainland China in both quality, function, and reliability. This is crucial because the emphasis in the professional tool market is not on low price but on functionality."

As a newcomer, Raya needed to find its own niche. Lee says that the specifications of Custor products are aimed at meeting a targeted high-end professional market.

"Customer satisfaction is the best promotion for our products," Lee says. "Part of this satisfaction owes to our combination of professional quality and reasonable pricing. Reliable on-time delivery, achieved by keeping ample product inventories, has also won customer loyalty," she says.

Sales of Custor tools have been growing rapidly over the past four years, Lee says. And Raya has been aggressively extending its product lines to meet customer demands. "At our company, customer complaints are handled at a higher priority than orders," Lee says, "because we focus on branding."

Merits of Independence

Another well-known auto and hand tool brand in Taiwan is Honiton Industries Inc. Company general manager Roy Chen says that his company insists on developing and making all of its products in-house, noting that the longer development time is balanced by greater flexibility in building the company's corporate and brand images.

Honiton specializes in small-batch, large-variety production of self-developed tools. Chen claims that his products are unrivaled structurally and in terms of function, designs and quality. "By focusing on self-developed products, we can market products that are based on our own ideas and also meet customer demand," Chen explains. "We constantly upgrade our products to meet the various requirements of our buyers. This strategy differs sharply from the outsourcing model used by most of our counterparts in Taiwan."

Chen says that independence has enabled Honiton to adopt the best materials in a cost-effective manner, giving his company a cost/performance ratio edge in targeted applications. He admits that without outsourcing it takes his company longer to develop a broad line of branded products. But over the long-term the company's strategy enhances brand sustainability.

"I think care and diligence are more important than rapid response to market trends," Chen says. "We have been working hard and carefully on developing newer and better tools, including many world firsts, such as patented magnetic extension bars (that can more easily pull off a loose nut) and a patented LED extension bar (that illuminates dark work areas or crowded engine compartments).

Innovation, functionality, and durability have earned Honiton a strong reputation in the global tool market. But behind that success lies a high level of investment in R&D work and mold/die development.

Largest Air Grinder, Sander Maker in Taiwan

Gison Machinery Co., Ltd. is the most experienced maker of high-level air tools in Taiwan, with over 35 years of experiences in the line.

Gison is also the largest, most comprehensive, and most specialized supplier of pneumatic grinders and sanders for professional users in Taiwan. The firm also supplies industry-leading wet air sanders and other wet air tools as well as impact wrenches.

The firm's GP brand is synonymous with high-end air tools in Taiwan, which is the world's leading supplier in this segment.

Canny Lin, general manager of Gison, points out that the air-tool line boomed in Taiwan about 15 to 16 years ago and a group of Taiwanese makers jumped onto the bandwagon to make air tools more affordable and reliable. As low-cost rivals in mainland China crowded into the business, in recent year, he said, most Taiwanese air-tool makers began making high-level, professional products.

"Image and quality are the top priorities for brand success in the air-tool industry," Lin explains. "Gison rolled out the GP brand about 20 years ago. From the very start we registered the brand name and trademark in all industrially advanced nations, showing our strong commitment to establishing a sustainable brand in the market. We have steadily upgraded the GP brand in recent years. For example, new models under the brand have won the Taiwan Excellence Award (granted to companies and products focus on quality and innovation) for several years. The unique styling and innovative functions designs of GP tools have also helped us to escape the 'me-too' syndrome."

Gison adds about two to three new models to the GP product family each year. The brand has enjoyed considerable market penetration in Europe. In addition to its own-brand line, Gison supplies about half of its output on an ODM basis. Lin says that the GP brand image has helped his company win ODM business from more and more big international air-tool brands.

"Constant product development, improvement, and innovation are the core elements of the GP brand," Lin claims. "Gison has one of the strongest R&D teams in the local air-tool line." There are about 15 people on Gison's R&D team, which is headed by Lin himself.

Gison's R&D strength has translated into a number of industry-first and best-of-class products, such as the world's only pneumatic edge-profiling machine, a high-level air sander with five global patents (in dust-proof, quick release mechanism for pad, safety device, bearing-oil leakage-prevention, etc.). A revolutionary mechanism for air tools is also on the drawing board and is expected to hit the market in the near future, Lin says. The company's R&D team is also hard at work on a turbo-type pneumatic drive system to replace traditional rotor type systems.

By focusing on products with high technical thresholds, Gison has not only enhanced its brand image, but also increased sales. Lin says that his company has enjoyed annual revenue growth in the range of 15% to 20% for many years.