Sporting goods firms stretch into niche markets, build up brands

This article was written by Allen Hsu and published by the Taiwan Journal on April 27, 2007. It features Taiwan's sporting goods industry, which is second only to the defense sector in using advanced composite materials.

Carbon fiber is a strong, highly durable plastic used in rocket motors and airplane wings. However, it can also be found in ordinary sports equipment. According to the Taiwan Sporting Goods Manufacturers Association, companies in Taiwan were among the first to launch large-scale production of carbon-fiber tennis rackets. Later, they also applied the material to fishing rods and golf clubs. Such innovation show how much the sporting goods industry has evolved in Taiwan, drawing buyers from all over the world.

The 2007 Taipei International Sporting Goods Show (TaiSPO) took place at the Taipei World Trade Center from April 9 to 12, 2007. Representatives from famed international organizations, such as the World Federation of the Sporting Goods Industry, flew to Taiwan to attend the event. Indeed, the show is currently the leading sporting goods trade event in Asia.

The World Federation of the Sporting Goods Industry is based in Switzerland and represents about 9,000 industry suppliers, national organizations and sporting goods companies. Other prominent participants in the show included representatives from the Messe Munchen GmbH, a trade show company in Munich; the German Federation of the Sporting Goods Industry; and the Association of Japan Sporting Goods Industry.

According to these international representatives, the sporting industry is still quite a young industry, but a very dynamic, successful and increasingly big one, with a yearly global turnover of more than US$210 billion. These representatives see great opportunity in the world's graying population. As this demographic group grows, there will be more people who need to exercise to stave off the effects of aging. The elderly may also turn to physical activities as a way to stay busy. In fact, many of them tend to stick with the fitness movement with vigor and vitality.

According to the World Federation of the Sporting Goods Industry, current statistics of the sporting goods industry in the United States -- the world's largest market -- show that people increasingly participate in exercise. In 2006, treadmills accounted for US$1 billion in wholesale shipments in the United States. Other two types of home exercise equipment, elliptical trainers and stationery bicycles, generated US$725 million and US$400 million, respectively.

Indeed, in the West, more people are getting older and couples are having fewer children. This trend is changing how people spend their free time. New markets are emerging, for children's sports, hip-hop fashion, and middle-aged people who are concerned about their health. All of these factors are contributing to the growth of the sporting goods industry worldwide.

The popularity of sports is evident in statistics of TV broadcasts, where games of the U.S.-based National Basketball Association, England's Wimbledon tennis tournament and FIFA World Cup soccer matches draw millions of viewers. The 2006 World Cup was aired in 214 countries and, together with other international sporting events, created great prosperity in the sports sector.

According to the Taiwan Sporting Goods Manufacturers Association, as the economy has developed to a certain level, people with disposable income are more willing to spend money on sports, whether through ticket purchases to watch ball games or joining fitness clubs to exercise. As a result, Taiwan's sporting goods sector is expected to have an annual growth rate of 5 percent in the next few years. In 2006, Taiwan imported about US$285 milion of sporting goods. Meanwhile, sporting products from Taiwan, including golf gear, fitness equipment and outdoor supplies, are now considered top products in terms of quality and innovation in the international market.

According to this article, Taiwan's sporting goods industry started to prosper in 1979. Since then, the nation has become a principal manufacturing base, exporting to countries such as the United States, United Kingdom and Japan. Most companies in Taiwan are doing contract manufacturing for famous international brands because they are small- and medium-sized enterprises that can hardly afford to compete with giant foreign companies.

However, some businesses in Taiwan have managed to survive. For example, the Kiddygarden Products Corp. was established in 1991 and manufactured low-end toys, such as bouncing balls. Later, the company began to offer higher-end items, including exercise, fitness and yoga equipment. Indeed, the company estimates that fitness and yoga products will become the most popular items in the sporting goods sector and may account for 90 percent of its annual sales in the next few years.

Kiddygarden also produces plastic balls that look simple but require a certain level of manufacturing technology. Product safety is paramount, especially for items sold in North American and European markets where stricter regulations exist. Indeed, a good safety record is vital to a company's image. German manufacturers particularly emphasize this point. They also focus on design, functionality and convenience.

According to the Bureau of Foreign Trade, the brand value of Taiwan's sporting goods has increased in recent years. Taiwan's enterprises now enjoy recognition globally. For example, Taiwan's Johnson Health Tech Co. Ltd. is now the world's 4th-largest fitness equipment manufacturer, while Hi Mark Group exports its products to over 65 countries. Other companies, such as Sunteko Inc., SportsArt Fitness, and Greenmaster Industrial Corp., are also role models.

In addition to efforts made by businesses, the success of branding also relied on assistance from the government. For the purpose of developing overseas markets, the Bureau of Foreign Trade launched the "Competitive Industry Overseas Market Development Program" in 2006. The program targets sporting goods as one of the sectors to focus on. It has two major functions -- international marketing and brand development.

To achieve the goal of international marketing, the Bureau of Foreign Trade holds trade shows overseas to make international buyers aware of the advantages of Taiwan's manufacturers. To develop a global brand, the government in Taiwan also provides capital, loans and consultation services to companies that are qualified and willing to develop their brands. In order to further encourage companies, the Bureau of Foreign Trade has been hosting Taiwan's Top Ten Global Brands competition and the Taiwan Excellence Awards in recent years.

Facing fierce competition from developing countries, particularly in Southeast Asia, Taiwan's sporting goods sector needs to carve out a new niche. It has found it by playing to the nation's strengths in cutting-edge technologies. By designing more advanced products and equipment, Taiwan's advantages in electronic and mechanical technologies have benefited local sporting goods enterprises.

For example, Taiwan's manufacturers are now offering fitness machines that feature electronic controls, flat-panel displays and computerized gauges. Even an exercise bike can be equipped with multimedia entertainment and Internet access, so that users can exercise and play games simultaneously. These high-tech features also protect Taiwan-made products against low-cost producers, since they cannot be copied without considerable expense.