‘You can’t ignore difficulties’

New TSMA president promises active response to global market upheavals

Catherin Wang, one of the general managers of the Yuan Chi group, a manufacturer specialized in inflatables, was elected president of the Taiwan Sporting Goods Manufacturers Association (TSMA) last year (2011), at a time of uncertainty for the industry. Rapidly immersing herself in the issues facing the market, she has already deployed many contacts and projects to support Taiwanese manufacturers.

           With cheerful entertainment and lively conversations, Taiwan Night has become one of the most popular evenings at ISPO Munich, the trade fair for the international sports industry, held in Munich. It has turned into a tradition, held since 1999 and again attended by scores of prominent guests at this year’s edition a few weeks ago. “One of our strengths is that many people in the industry like to do business with Taiwanese manufacturers,” remarks Catherine Wang. “Such events are an opportunity for us to deepen our contacts in the international sports market, and to provide support to the Taiwanese industry.”

           Since she was elected for a three-year term last March, succeeding George Wood, Wang has spent part of her time learning about the different parts of the industry. She discovered categories like fitness and related sports equipment but found that Taiwanese manufacturers in different categories were often moving in the same direction, becoming traders as well as manufacturers to expand their business.

           The development of the Yuan Chi group itself partly reflects the trend of the last years: while based in Taiwan, it runs factories in Thailand and China, and is selling balls under its own brand name, Vega. It also produces balls for Spalding, the well-known basketball brand, and has an agreement to sell Spalding products in Taiwan and China.

Build on exposure

           For Wang, trade fairs should remain the focus of the TSMA’s actions, to help Taiwanese manufacturers develop further. “With such fairs, our manufacturers gain more exposure as well as more insights,” she said. “Our relationship with the World Federation of the Sporting Goods Industry (WFSGI) is also a key factor in this respect, because it enables us to attend crucial meetings and to bring more customers to Taiwan. It all gives our manufacturers more business opportunities.”

           The TSMA’s budget for last year also enabled it to upgrade its computer system, to capitalize on the exposure of Taiwanese manufacturers at trade fairs. The association’s website has become quicker, so that users may upload information on Taiwanese manufacturers more easily.

           Among the longer-term issues faced by many of the TSMA’s members is the fierce competition from Chinese manufacturers. “The first step is that you can’t ignore these difficulties. You have to face them,” said Wang. “But it’s important to realize that we have manufacturers of different sizes and levels, which requires different approaches. Some of the companies that already deliver a high level of research and quality are mostly interested in developing their own branded business, while others could do with more investment in their research.”

           For a start, just after Wang was elected, a bold project was launched by leading Taiwanese manufacturers of fitness equipment, to share information and implement best practices in order to improve the entire supply chain. The S-Team was initiated by Peter Lo, president of Johnson Health Tech and strongly supported by the TSMA. “We had to visit many factories in Taichung to explain the concept,” said Wang. “It’s not easy for companies to open up their factories to competitors, so we want to be a good bridge to help the industry to understand the benefits.”

Payment issues

           While this initiative will take several years to yield strong results, some Taiwanese manufacturers have also been confronted with the sluggishness of the European and American economies, sometimes leading to payment problems. Several Taiwanese companies have gone out of business because brands and retailers failed to pay their invoices or paid them with a delay, which made it harder to pre-finance production.

           “Many people are worried about this issue. It is causing fear, which is not positive for the development of our industry,” said Wang.

           Among the solutions that she is exploring is a system applied in Germany, where fund providers may deal directly with the purchasers of sporting goods.

           “The factoring system of our Taiwanese banks is that the banks pay the invoice, but the manufacturer has to pay a relatively high insurance fee and the banks’ conditions are sometimes a little strict, so we are looking into alternatives,” said Wang.

           “For example, there is German system whereby the fund provider will act as the buyer of the products and the actual buyer pays for the financing fee, even though the costs end up being share as part of the negotiations between the manufacturer and the buyer.”

Constructive partnerships

           The progress of the Economic Cooperation Framework Agreement (ECFA), the trade agreement signed by China and Taiwan in June 2010, is of particular importance for Taiwanese sporting goods makers. Wang said that import and export duties for trade with mainland China on golf balls, most fitness equipment and some other sports-related products should already be reduced this year as part of the agreement that aims to reduce or eliminate duties on bilateral trade.

           Wang said the import duties for fitness equipment exported from Taiwan to China reached 6% in 2011. The agreement reduces the duty to 3% in 2012 and to zero in 2013.

          The outcome of the presidential elections in Taiwan, in January, also has helped stabilize the nation’s relationship with mainland China.  We are not politicians, but steady conditions are important for us to conduct our business,” Wang said.

          Meanwhile, Wang urges Taiwanese manufacturers to strike constructive partnership in more categories of sporting goods production, along the same lines as the S-Team.

           “We are facing growing competition not only from mainland China but also from manufacturers in other countries that are becoming increasingly aggressive in their own efforts to gain customers, such India and Vietnam,” said Wang. “I think that sharing is one of the most important ways for the industry to move forward and to take market share.”