Medical Furniture Offers High-Margin Relief For Taiwan Furniture Producers

As prices plunge in their traditional markets, furniture makers in Taiwan are desperately looking for new high-margin series that play to their competitive edge in design and quality. For many, medical furniture is proving to be the ticket to ride.

One nice thing about the medical-furniture market is that it can only get bigger as the world grays and living standards rise. Hospital applications aside, there is a booming business to be done in home-care medical furniture, especially in the industrially advanced markets. The home-care segment is likely to continue growing at a healthy pace as more and more countries subsidize home-care equipment to reduce the need for expensive hospital care.

For Taiwan's furniture makers, the medical market presents both new challenges and new rewards. Such products require advanced manufacturing capability, strict quality control, a major investment in production equipment, strong product-development capability and, for some items, stringent safety/quality certifications. Of course the extra effort and cost also mean fewer competitors and higher margins for those that make the grade.

Bed of Roses
One company that has successfully expanded into the medical furniture line is Saimay Industrial Co., Ltd., which was founded as a steel plate and pipe furniture maker, but now generates over half of its revenue from medical furniture. The company expects the ratio to jump even higher in the coming years.

Established in 1979, Saimay has long been a leading steel plate and pipe furniture maker in Taiwan. It is currently the only local company to use high-end laser-cutting machines to produce such items.

Saimay chairman Wang Chao-yang says that Saimay's expansion into the medical furniture segment came by chance, when the company helped a partner manufacture medical beds. Impressed by the high margins to be earned from the segment, the company decided that medical beds would help it upgrade its operations.

After overcoming many bottlenecks, Saimay finally launched its high-end medical bed line in 1995. Saimay invested heavily in developing molds and dies for such products and set up a medical bed plant in Zhuhai, mainland China five years ago to meet the huge demand there. Wang claims that the mainland plant supplied over 10, 000 medical beds under the Acare brand to major hospitals in mainland China last year, making Saimay the top Taiwan-based supplier of such items there.

Since debuting its first medical bed, Saimay has gradually diversified its medical furniture line to include cabinets, trolleys, carts and other items. Its expansion into these new lines has been smoothed by its strong development, design and manufacturing capabilities.

Along the way, Saimay has also pioneered new ground in the industry. For example, Wang claims that his company developed the world's first medical-use full-ABS bed stand with drawers last year. The model has proven to be a huge success thanks to its rust-free materials, low-cost and easy assembly/disassembly. Indeed, it has inspired many copycat designs by rivals.

In addition to making medical furniture, Saimay derives half of its revenue from custom-made office furniture, high-end computer desks, book cabinets, and TV cabinets.

Wang says that investment, technology and constant R&D are all critical to success in the medical furniture segment. But the most important factor is quality. In order to ensure the best quality, Saimay only uses German-made motors on its electric bed models, and every part and component must be made with the highest precision level, Wang says.

After gaining a solid foothold in medical bed market, Wang says that his company plans to soon set up a new plastic injection and processing plant in mainland China to help the company develop its medical furniture business.

Saimay employs about 50 workers at its plant in northern Taiwan and over 80 workers at its Zhuhai plants. The company sells its medical furniture products to mainland China and other Asian nations.

SARS-Buster
Since its spinoff from the Jiou Shing Group in 2001, Sigma-care Development Co., Ltd. Has grown to become one of the top-two medical bed makers in Taiwan. The company has supplied high-end medical beds to Invacare of the U.S., the No. 2 medical bed brand there, and Equips of Singapore on original equipment manufacturing (OEM) terms for about 18 years as a business division of the Jiou Shing Group.

Last year, Sigma-care shipped about 18, 000 high-end medical beds to major markets including the U.S., Singapore, Europe and Taiwan. The company expects to deliver more units this year, with a growing part of them bearing the Sigma brand.

Sigma-care closely cooperates with steel material, surface coating and PU-foam making companies affiliated with the Jiou Shing Group, sourcing materials and processing services from such partners in order to focus on product design and final assembly. The company produces all of the parts and components used in its products, except for the electric motors.

Sigma-care has installed two robot arms at its plant to weld bed frames and it expects to add four such welding machines in the future to reduce its workforces and improve margins.

Sigma-care currently supplies a wide range of medical products, including cabinets, mattresses, trolleys and carts, and 86 types of home-care and medical beds, ranging from top-end models with advanced digital weight scale systems to high-quality home-care beds.

Andy Sung, general manager of Sigma-care, claims that his company's core competitiveness lies in its strong development capability, which enables it to quickly introduce new bed types for different body sizes and uses in various markets. It also prides itself on achieving consistently high quality through its vigorous quality control and abundant manufacturing experience, while charging only about one-third the price of similar models made in the U.S. and Japan.

Sung says that his company's medical beds have other advantages as well. For example, its products are coated with an antibacterial material to prevent second-time infections at hospitals. This extra layer of protection made Sigma-care beds one of the most widely used medical beds in severe acute respiratory syndrome (SARS) isolation wards in Taiwan.

Another innovation introduced by Sigma-care is low bed-height design (LHD) beds, which are safer and more comfortable for patients. Such beds rise 27cm to 35 cm from the ground, compared to 45cm for most other bed models. The lower height makes it easier for older and movement-impaired patients to get into and out of the beds, and it also makes it easier for healthcare workers to do their job. In order to pull this off, says Sung, all of the bed-elevation mechanisms had to be redesigned to decrease the load on the motors.


Sigma-care has also been a pioneer in the use of modular designs. The company is able to produce multiple bed models from a few basic bed frames, extending the breadth of its product line and enabling the company to quickly introduce new models.

Sung says that most of the parts can be replaced without tools, and others require only simple tools and a few basic procedures. All of the serial numbers of the bed parts are listed in an illustrated chart included with the bed to help customers easily order replacement parts.

Sigma-care provides a two-year guarantee on all of its beds, one year longer than the guarantees offered by most other providers.

Total Solutions Provider
Elitex Metal Group Manufacturing Corp. was established in 1992 as a metal parts producer and transformed into a manufacturer of medical furniture.

Elitex has grown to become Taiwan's largest and most comprehensive supplier of durable medical equipment and home care equipment to hospitals and long-term care centers worldwide. The company supplies hundreds of different products, over 80% of which are self-developed.

"Elitex is a total-solution provider in the medical furniture sector with unmatched product selection, development capability, and manufacturing versatility, " claims Elitex chairman Frank Huang. Thanks to its strong R&D capability and investment--over NT$20 million (US$590, 000 at US$1:NT$34) per year--Elitex now supplies a very wide range of products, including manual and electrical hospital beds, patient lifts, canes, crutches, hygienic adapters, stands, mechanical walkers, medical chairs and tables, stools and surgical instrument trays, and wheeled stretchers. The company can meet Food and Drug Administration (FDA) standards and is an ISO-9001-approved maker.

"Elitex's competitive edge lies mainly in our small-batch, large-variety production mode, " Huang says. "This requires long-term and intensive mold/die investment as well as strong and versatile manufacturing capability."

Elitex has a comprehensive in-house manufacturing ability, including tubing, pressing, machining, welding, assembly, computerized-controlled chrome plating, and powder-coating, helping the company to effectively control the cost and quality of its products.

Huang says that Elitex uses the best materials and advanced techniques to make its products more lightweight and automatic and thereby position its products for high-end markets. For example, the company is making greater use of aluminum-alloy materials in place of steel in its products.

Electronic, electric, hydraulic and automated parts and modules to let them more user-friendly and functional are also gaining importance in the products made by Elitex, says Huang, to meet the need of understaffed hospitals and increasingly heavy patients. In addition, Huang says, Elitex has been also trying to develop various kinds of space-saving foldable medical furniture.

As its products become better, Elitex shifted its emphasis from original equipment manufacturing (OEM) to original design manufacturing (ODM) orders. The company's average profit margin, the chairman says, has also increased to between 30% to 40%. "More and more big foreign customers are asking us to develop and produce new items based on their ideas alone. This has made us an important partner of such firms, rather than just a contract producer." Elitex has a 10-person R&D team and works closely with universities to develop new techniques and mechanisms.

Like many companies in Taiwan, Elitex recognizes the importance of brand development to assure profits and achieve stable growth. The company has been setting up overseas sales branches and recruiting local sales people to market its Xcare brand products in Europe and the U.S. According to Huang, Xcare products are expected to account for 20% to 30% of Elitex's annual revenue in the coming two to three years, though the company will still retain its OEM/ODM business. Elitex is accelerating its new-product development in a bid to rapidly and effectively expand its product lines and develop own-brand sales.