Despite the economic slowdown over the past year and a half, Taiwan's display-rack industry has continued to prosper by shipping price-competitive products from low-cost plants in mainland China--a strategy that well suits the growing global demand for low- to medium-priced display racks.

Producers, particularly small and medium-sized companies, have also extended their overseas reach by cooperating with distributors, investing in trading companies, and even developing their own distribution channels.

At home, Taiwan's display-rack makers are tapping new growth by marketing their wares to the burgeoning number of hypermarkets dotting the island. Hypermarkets in Japan are also serving as a channel for local display-rack makers to penetrate that traditionally tough-to-crack market.

Overseas orders on original equipment/design manufacturing (OEM/ODM) terms are also proving another major source of growth for domestic display-rack suppliers. They force producers to develop new production skills in order to meet the varied and specific demands of each OEM buyer.

Despite the continued growth in sales, domestic rack manufacturers worry that the rising cost of raw materials, notably iron and steel, over the past year and the recent appreciation of the local currency against the U.S. greenback could knock the wind out of their sales.

Normally, higher costs can be passed onto consumers through higher prices. But in today's market, say producers, there is little room for price hikes. Still, some industry insiders believe price hikes could become inevitable if production costs continue to rise next year.

Safety First

Shun Yang International Co., Ltd., established in 1997, is a specialist manufacturer of display racks and shelves along with relevant parts and accessories. The company is based in Taiwan but its manufacturing facilities are located on both sides of the Taiwan Strait.

Shun Yang's racks are made of steel and finished with various powder coatings, including one that mimics the warm feeling of natural wood.

In addition to their quality craftsmanship, racks made by the company emphasize safety, according to company president Tung Wen-fu. "We pay a lot of attention to strengthening the structural safety of our products, because safety represents quality in the display-rack business."

Shun Yang currently exports 70% of its output, with the remainder going to the domestic Taiwan and China markets. The company says that the bulk of its products are sold to hypermarkets. Standard products with common specifications dominate its range of product offerings, but original equipment/design manufacturer (OEM/ODM) orders are also welcomed.

Tung says he has more than a decade of experience in the display-rack business and is the guiding force behind his company's product-development work.

Faced with rising steel and iron prices, Shun Yang has been trying to cut costs through plant automation. In addition to its production facilities in Taiwan, the company recently invested in a 504,000-square-foot plant in the mainland Chinese city of Kunshan, Jiangsu Province. The plant, a joint venture with a local partner, is an integrated production facility accommodating iron-cutting, electroplating, assembly, and packaging.

To assure the quality of its products, the company uses new advanced production equipment at the Kunshan plant. The company boasts the plant can electroplate enough display racks to fill six 20-foot containers each day.

"The integrated plant can roll out display racks of the same quality as those made in Taiwan," says Tung. "With the added capacity, we are developing a wider range of display racks to best meet customer demand."

From Marketer to Manufacturer

Big Fame Industrial Co., Ltd., founded in 1987, is a distributor of display racks with shareholdings in manufacturing firms on both sides of the Taiwan Strait. Over the last five years, the company has expanded its operations to include product design and manufacturing. Many of its products are patented in the U.S., Germany, mainland China, Taiwan, Japan, and South Korea.

Over the years, Big Fame has expanded from the distribution of lighting parts to the trading of metal-tube furniture. In 1998, the company invested in Minxiang Metal Work Co. in mainland China and King Jeou Sheng Metal Works Co. in Taiwan to produce original-design lamps and metal-pipe furniture. King Jeou Sheng focuses on lighting and related parts and display racks for commercial use, while Minxiang concentrates on sanitary and bathroom accessory parts, lighting fixtures, and display racks for household use.

In 1999, the company founded Wireman Co. in Taiwan to produce metal-wire products for lamps, furniture parts, and bathroom and kitchen accessories. The company also expanded into advertising and promoting cigarettes, liquors, and other commercial goods. The company says it aims to provide a full range of products through integrated design, manufacturing, and trading.

"We clearly distinguish our output in Taiwan and mainland China," says Philip Lo, president of the company. "Mass-produced items are shipped directly from the mainland, and small-volume specialty orders are filled in Taiwan," he says. This practice, he notes, enables the company to take advantage of the respective strengths of mainland China (cheap production inputs) and Taiwan (an ample supply of design talent).

The company notes its commercial-display racks are made in Taiwan for export to Japan and Europe. Big Fame has sold its products to Japan's hypermarkets for several years, and some such buyers there have placed OEM and ODM orders with the company as well, says Lo.

Lo admits that it is not easy to produce display racks for the hypermarket sector. "Different hypermarkets demand different products that convey specific styles," Lo states. "To meet the special requirements of hypermarkets, we have to roll out many specifically designed products. Of course, we have to negotiate with our customers before the designs of the requested products are finalized."

One of the items that can represent Big Fames' design ability is a series of display racks with innovative double-sided fasteners to ensure strength and stability. The company states that it has been exporting these products to Japan for over two years now.

Lo says his company has offered one-stop-shopping services to foreign customers for several years. In addition to its self-produced display racks, sanitary and bathroom accessory parts, and lighting parts, Big Fame helps customers to source industrial products made by other manufacturers in both Taiwan and mainland China. "Most of our customers have confidence in our ability to offer good transaction terms and high-quality products at competitive prices," Lo boasts.

Well Certified

With an integrated production facility in mainland China, Skilltek Industries Inc. specializes in the manufacture of metallic products, including display racks, supermarket shelves, shopping carts, depository cages, storage shelves, and supermarket equipment.

The ISO9001-certified company boasts that its products are approved by the U.S.-based National Sanitary Foundation (NSF), meaning they are suitable for use in hospitals, restaurants, and semiconductor foundries. This quality guarantee has opened doors for the company in Europe, the U.S., and Japan. The company claims that it currently has a 50% share of Japan's household display-rack market.

"We develop innovative display racks exclusively for Japanese customers," says Mark Chen, managing director of the company. "That's why we have the lion's share of the Japanese market."

To meet the demands of its critical Japanese customers, Skilltek has employed salt-spraying testing equipment to ensure that its products stand up to erosion, Chen says.

Chen claims that his company is capable of producing a full range of display racks for family, business, and industrial use. With a do-it-yourself (DIY) design, the company's light-duty display racks have a load capacity of 75 kilograms. Its heavy-duty display racks, with a 150 kg load capacity, are mainly supplied to the business sector. Extra-heavy-duty display racks with 250 kg loading capacity are especially designed for the industrial sector.

Skilltek moved its production facility to Shanghai in mainland China about 13 years ago. The 150,000-square-meter facility has 1,100 workers and follows a strict quality-inspection system.

The Shanghai plant has automated chrome and zinc plating systems and specializes in powder coating, welding, and machining. The company also employs around 20 designers to dream up new products.

"We have to constantly design new display racks to meet the requirements of our customers from different markets the world over," Chen says. "Each of our designers has over a decade of experience in this field."

Despite its concentration on the Japan and U.S. markets, the company is now paying more attention to other markets. Currently it has a sales agent in Japan and is seeking others in markets throughout the rest of the world.

In the near future, the company will roll out a logistics system to help penetrate the mainland's hypermarkets and supermarkets, says Chen. The system, he says, will help speed up deliveries to its mainland buyers.

Chrome Specialist

Omni-Power Co., established in 1986, specializes in satin-chrome and brushed-chrome finished display racks, store furniture, ship fittings, sign holders, hangers, and display mannequins.

The company operates a 55,000-square-foot factory in Chiayi County, southern Taiwan, and a 36,500-square-foot warehouse in Los Angeles to ensure prompt delivery to its North American customers.

Omni-Power has an R&D team that regularly develops new products to meet the demand of customers from around the world.

In the first half of this year, the company launched several new product series, including lockable garment rack covers made of navy blue nylon. The new product measures 60 inches long and 50 inches wide. Other new items include a salesman's bag, acrylic hosiery bin, acrylic brochure holder, diamond wire shelving system, and small commercial garment rack.

Omi-Power's products are NSF-approved, testament to the quality of its products. The company says it welcomes cooperation with overseas customers in designing and developing new products.