Variety Opens Door to Niche Markets

With the regional exodus of lamp manufacturers to lower-cost mainland China, Taiwan's lampshade makers have been forced to relocate their operations across the Taiwan Strait in growing numbers since the early 1990s. Industry insiders say the trend has been an inevitable one for a labor-intensive business such as lampshade production, as relatively high wage levels have all but priced Taiwan-based operations out of the market.

A lampshade is one of the most eye-catching parts of a lamp, and it also defines the lighting effect produced. Some lamp makers produce their own lampshades, while others turn to specialist companies that can offer hundreds of patterns and designs to meet various lighting needs.

Glass and textiles are the two most widely used materials for lampshades, due to their high transparency and heat resistance. But this hasn't stopped producers from experimenting with other materials to give their products a unique look and lighting effect. Metal shades, for example, are popular for halogen and standard desk lamps, while paper shades are often employed for elegant classical-style lamps due to their environment-friendly appeal and ability to create a cozy atmosphere reminiscent of "the good old days" in the markets at which they are targeted.

Mainland Bound

Established in Taiwan in 1978, Star Lux Industrial Co. has expanded from metal desk lamp and artistic table and floor lamp production into the manufacture of lampshades. In the early 1990s the company began to struggle under soaring labor and land costs for its operations in Taiwan.


"The exodus of Taiwanese manufacturers to mainland China has encouraged more and more foreign buyers to place orders directly with suppliers there, " says Star Lux manager Kelly Kao. "We wanted to stay in Taiwan, but the deteriorating manufacturing environment forced us to follow in the steps of other Taiwan lighting makers and cross to the mainland."

In 1999 Star Lux began cooperating with a lighting-production counterpart to jointly produce lighting products in Dongguan, Guangdong Province. The company ended that partnership in 2003 and moved to Zhongshan, also in Guangdong, to go it alone.

The Zhongshan plant has a workforce of 30 to 50 persons, who turn out about 15 to 20 40-foot-equivalent container units of lighting products each month. Whole-set lamps account for 60% of its output, and lampshades make up the balance. Everythign that rolls off its lines is destined for overseas markets, mainly the United States and Canada.

While wages are much lower in mainland China than Taiwan, Taiwanese employers often face higher turnover rates at mainland operations, and there is also the challenge of bringing work skills up to company standards, says Kao. "Our lampshades require a lot of needlework, so most of our workers are females, who have numbler hands, and have sewing experience, " he says.

Star Lux uses a wide range of materials in its products, including linen, paper, parchment, feather, beads, coconut-shell fiber, and seashells. Most of these materials can be purchased locally, but the higher-end materials such as parchment are sourced from Holland.

Star Lux fabricates mostly high-end lampshades, which are less prone to copying by rivals due to their more complicated designs, manufacturing processes and materials. These high-end items also command a premium over mass-market models.

Kao warns that Taiwanese lampshade makers need to stay alert to the growing challenge from mainland competitors, which have been making rapid gains in recent years. She urges Taiwanese lampshade makers to put more emphasis on R&D and develop more innovative products to retain their market niches against the mainland newcomers.

Keeping a Technological Edge

Very Luck Glass Co. was founded in 1969 as a gift maker, but shifted its focus to lampshades in 1979, says Chiu Wen-hu, chairman of the company.

The transition coincided with the eyday of the lighting industry in Taiwan during the early 1980s. A lot of manufacturers joined the lamp sector at this time, but few concentrated on lampshades, leaving the field open to Very Luck. "For the first couple of years our lampshades were supplied mainly to local lighting factories, and our main materials were paper, plastic and rattan, " Chiu says.

"The manufacture of such lampshades required a lot of manual work, and the labor wages in Taiwan started to soar in the mid-1980s, raising our manufacturing costs, " Chiu recalls. "To expand our product lines and lower production costs, we began making glass lampshades in 1982. Very Luck was the first lampshade maker in Taiwan to export milky-white lampshades for ceiling lighting fan kits to the U.S."

In 1987, Very Luck began cooperating with Japan's Osaka Special Glass (OSG), which makes glass mainly for lighting products. During their cooperation, which lasted until 2000, Very Luck purchased manufacturing equipment from OSG, while the latter dispatched technicians to help upgrade the manufacturing technology of the former. Very Luck also had authorized OSG as its sole agent in Japan.

In 1989, Very Luck moved its lighting operations to the mainland to lower manufacturing cost. "Late in 1980s Taiwan's manufacturing environment sharply deteriorated and more and more lighting makers started to spring up. To maintain our competitiveness, we had to move to the other side of the Taiwan Strait, " Chiu says.

"Having no experience and less knowledge of the working environment in the mainland, we had a hard time getting oriented there, " he says. "It took us more than two years to settle down with the plant being finally completed in 1991 in Humen, near Dongguan, Guangdong Province."

In beginning years the workforce of the company's Humen plant was around 200. "We had a hard time managing our workers there, because they had grown up in an environment quite different from that in Taiwan and were educated in a quite different way, " Chiu recalls. "Communication gaps between the Taiwanese management team and local workers caused the company to suffer operation losses for the first three or four years. It was a frustrating experience."

After consulting with pioneering Taiwanese investors there who disclosed their managing secrets, Chiu finally turned his company back towards profitability. "Since mainland workers are comparatively sloppy and passive in working attitude, we had to adopt military-like management rules. We gave them clear-cut instructions and asked them to do exactly as they were told, otherwise, they would be punished, " Chiu notes. "Under this strict management regime, we found our workers become more efficient and everything went smoothly."

At the beginning, says Chiu, Very Luck used facilities transferred from Taiwan for its mainland operations. As output in the mainland grew, the company added new equipment, including an automatic smelting furnace that can operate around the clock. Currently the furnace produces 350 tons of liquid glass per day.

Today the Humen plant has 35 production lines and a workforce of more than 1, 000 persons. It fabricates about 30, 000 to 40, 000 glass lampshades per day in 35 models. In 2002 the company's revenue reached a peak high of US$10 million. Revenue shrank slightly in 2003 due to the outbreak of severe acute respiratory syndrome (SARS) and the U.S.-Iraq war. The company expects revenue to rebound by 10% this year as the global economy gathers steam.

Very Luck's lampshades are exported to the United States, accounting for 60% of the total, with the rest destined for Europe, Middle East, and Southeast Asia.

To enhance its manufacturing technology, Very Luck has recently imported a high-end smelting furnace for the treatment of specialty glass. And the company also bought water knives from the U.S. for the delicate and precise cutting of solid glass. "We first draw the patterns on the glass lampshades, cut the lines with water knives, and then put the lampshades into the special furnace for processing, " Chiu says. "This kind of high-end product need higher manufacturing technology, which is not easy for mainland counterparts to copy."

To upgrade its lampshade selection, Very Luck recently invested NT$20 million (US$590, 000) to buy sophisticated German equipment to make crystal lampshades. It also imports crystal materials (including 8% and 24% lead) from Australia and Italy. In addition, the company intends to produce other crystal items to diversify its product line this year into artistic items mainly for the household decorative market.

Growing Fast

Situated in Dongguan, Guangdong Province, Jingwei Lighting was established in 1997 by company president Louky Liu, a veteran trader of lighting products, who has overcome numerous obstacles to make his young enterprise succeed.

The first challenge faced by Jingwei was to raise capital, because financial markets in the mainland remain immature and banks are hesitant to lend to private concerns. "I started up the company with my own savings and devoted my full energies into managing the company so that it could stand firm today, " Liu says.

From 1997 to 2000, Jingwei enjoyed annual growth of 100% to 200% in revenue, and still admirable rates of 50% in each of the past three years. With five professional designers, the company is able to develop more than 10 new lampshade models a month. Today the company ships 200, 000 to 300, 000 lampshades a month, with annual production value of around RMB10-14 million (US$1.25-1.75 million).

Jingwei supplies 70% of its lampshades to lighting makers in the mainland and exports the remaining 30% mainly to the U.S. and Europe. "We also export a small volume of products to South Africa. Lately we have received inquires from the Middle East and Australia, " Liu says.

Jingwei purchases most of its materials locally, and imports high-grade cloth and paper from Taiwan and parchment from Australia for high-end products. "All of the raw materials we use have to be further processed before use in lampshade production, " Liu says.

"Most lampshades are quite low-end in terms of manufacturing skills required, so workers often leave to start their own cottage factories. The cut-throat prices offered by such participants have thrown the market into chaos and threaten the smooth operations of established players, " Liu says. "Product copying also reduced the life cycle of a newly developed lampshade to about six months."

To maintain competitiveness, Jingwei is planning to import advanced equipment to enhance its production capacity and trim its workforce to cut costs. "We are going to upgrade our operating efficiency and enlarge production volume. Moreover, we will cultivate marketing talent to promote sales and explore the global market, " Liu says.

"Although lampshade production is a traditional and highly competitive industry, I believe the industry will not fade out. On the contrary, the demand for lampshades will continue to grow. So, we will maintain our strength in the line and actively tap overseas markets, " Liu says.