More now than ever before, Taiwanese manufacturers of packaging machines are looking for new ways to distinguish their products in a market that is crowded and becoming ever more so.

In their battle for market share, local packaging-machine producers still have cost and performance on their side. More than 30 years of accumulated development experience has enabled domestic manufacturers to produce about 95% of the parts they need, and with self-sufficiency have come cost savings. As a result, packaging machines made in Taiwan are typically cheaper than rival Japanese models, and they often outstrip their Japan-made counterparts in functions as well.



Specialization has been another strong card of local manufacturers. While few domestic producers can turn out all kinds of machines for the huge and diverse packaging market, they have learned to hone their edge in specific market segments. Today, Taiwanese packaging-equipment manufacturers can make packaging machines for almost every industry.

Yet challenges there are. While the relatively small size of local producers brings the benefits of nimble operations, it also makes it difficult for firms to raise the capital needed to grow

Over 90% of the island's approximately 200 packaging-equipment manufacturers are capitalized at less than NT$50 million (US$1.42 million at US$1:NT$35.2), and limited investment funds generally restrict them to producing tailor-made items in small volumes. This has hampered their ability to compete with Japan, Europe and the United States in the market for integrated machines.

Competition has also been growing in the lower end of the market as new entrants tap this low entry-barrier sector. This swelling threat has forced many producers to shift more effort to marketing rather than relying on cost and feature advantages alone.

Reaching Critical Mass

For others, the simple solution can often turn out to be the best. Herso Automatic Technology Co., Ltd., for example, has pinned its business strategy on the time-tested principle that costs fall as volume rises, says Yang Sheng-huo, the company's general manager.

"It's a simple idea," says Yang, "but most of domestic manufacturers are unable to carry it out because they lack the capital to buy production materials in large volumes. You need to buy in large volumes to bargain down the prices," he explains.

Herso's core items are machines for making pillow-type bags in letter-paper sizes.

Yang says that the market for this type of machine has high potential, though high costs have traditionally dampened demand. Hitting the right price zone, he says, is therefore critical to succeeding in this market.

One of the chief obstacles to paring the cost for this particular type of bag-making machine is the need for tailored production. "Costs stay high when the machines have to be custom-built because everything, from materials and software to design, has to be customized and is generally not transferable to other models. Everything is done from scratch every time," he says.


To make mass-production possible, Herso has developed standard parts and control software for its machines. By standardizing its parts, the company can buy materials in larger volumes, which translates into lower prices. Another element that is expected to further sharpen the company's edge is a planned factory in mainland China.

Yang estimates that his company's machines are priced one-third less than rival machines by other manufacturers.

Quality has not, however, fallen victim to the company's ruthless cost-cutting strategy. The company plans to sell its machines under the "Herso" brand, and it wants to make sure its name comes to represent the highest quality.

On the technology front, Yang's background as a former specialist of the Mechanical Industry Research Laboratories of the government-backed Industrial Technology Research Institute (ITRI) has been a boon for Herso. The general manager specializes in automatic control system integration, and his company has recruited a very senior engineer who has been involved in packaging industry for over 20 years. "We are now the only manufacturer in Taiwan capable of designing pillow-bag machines," he claims.

With the help of its technical expertise, Herso has designed machines with adjustable bag output volume, including a computerized model that can turn out 20 30cm x 45cm bags a minute and 70 6cm x 10cm bags in the same time.




Once the company begins volume production, Yang says, it will be able to take on Japanese competitors as well as local rivals in Taiwan.

Herso began diversifying into machine production a year ago after a decade or so in the control software development business. "We chose bag-making machines because machines for grocery commodities never lose market and they are generally in strong demand," Yang notes.

Going Global

For other companies, like Benison & Co., Ltd., growth has come from tapping new overseas markets. "Taiwan and mainland China are not enough for my company, so we have to seek more markets," says company general manager Benker Liao.

Benison is Taiwan's No. 1 supplier of PVC/PP/PE heat-shrinkable films and machines for making such materials for the past five years, accounting for at least half of Taiwan's supplies of both film and equipment, according to Liao.

In order to smooth its way into international markets, Benison plans to enter into alliances with equipment suppliers both in Taiwan and overseas. "In Taiwan, we plan to team up with manufacturers of high-quality machines by contracting them to supply us their specialty models. Abroad, we plan to act as a contract supplier for international heavyweights," he says, elaborating on his company's internationalization strategy.

Benison has targeted several potential markets outside Taiwan and mainland China, but Liao declines to specify which markets for fear that his domestic rivals will follow suit. Undercutting threats from industry newcomers in its existing markets is part of Liao's reason for diversifying into new territory.

Cultivating international trade specialists is another major step in the company's ambitious plan. According to Liao, the company will triple its number of specialists to 15 in three years by recruiting professionals conversant in various languages, such as French and Spanish.

Liao reports that his company is the most qualified manufacturers in its industry in Taiwan to tap overseas markets, thanks to its quality manufacturing and international trade capabilities. Since its establishment in 1962, the company has earned ISO9001 and CE certifications. "We could be the only ISO9001-certified Taiwanese supplier of heat-shrinkable film equipment today," he says.

As part of its international marketing strategy, the company will not promote its "Benison" brand name in markets where it supplies machines on an original equipment design/manufacturing (OEM/ODM) basis. Rather, it will focus its branded sales in Taiwan and emerging economies like mainland China and Southeast Asian nations.

Although competition in the world market for packaging machines is intense, Liao is confident that his company can win market share through its strategy. "In emerging economies, our advantage is quality. In industrially advanced markets, low price is our main edge," he notes.



Benison is a contract supplier to several Japanese companies and it is now in talks with some big players over OEM supply deals, according to Liao.

Liao closely analyzes market trends to find out which types of machine are in greatest demand. His company then focuses on the most common machine type within that segment in order to maximize output volume and bring down production costs, he says.

Benison's machines are designed to make films ranging from 6mm to 1,000mm in width for the wrapping/packaging of food, medication, electronic equipment, hardware and toys, and other applications.

Yang says his father learned heat-shrinkable film techniques from Japanese suppliers and opened a business in Taiwan. Not until 1986 did his company begin branching into equipment manufacturing, boosting output and profit as well as expanding the company's customer base. The film, Yang notes, was first used to wrap bamboo poles as a substitute for painting. "Today, it has penetrated nearly every corner of our life," he says.



Bagging New Markets

S-Dai Industrial Co., Ltd. Specializes in making machines for turning out garment, stationery and flower packaging. The company has pinned its survival on manufacturing machines that are convenient to use, while also branching into niche machines such as machines for cutting printed-circuit boards, says company general manager Jiang Jyh-long.

When Jiang founded his business around 20 years ago, the company focused on machines for making garment package bags. Over the past 10 years or so, domestic manufacturers of such machines have moved offshore along with the island's garment manufacturers. Those that remained in Taiwan, Jiang says, have had to explore new markets.

One of the first new niches to be explored by S-Dai was the flower-package and stationery-package machine markets. These two new lines have grown over the years, helping the company offset dwindling sales in the garment-package machine segment.

Over the past few years, S-Dai has introduced computerized machine models that can automatically and precisely adjust bag length. "Computerized models are 30% more efficient than manually controlled types," Jiang says. The company's automatic machines can turn out 120 to 150 30cm x 30cm bags a minute. All the control programs for the company's machines are co-developed by its engineers and contracted software developers.

Jiang says that his company can undercut Japanese and German suppliers by 30% on price while rivaling them in quality. He attributes the feat mostly to Taiwan's well-developed electronics industry. "Many Japanese and German stationery manufacturers and flower shop operators now prefer our machines to the machines supplied by manufacturers in their countries," he notes.

According to Jiang, success in the stationery and flower packaging machine markets depends on the ability of suppliers to meet customer demands for models that are attractive, precise, efficient and quiet.

All of the components used in S-Dai's machines are locally sourced, except for the servomotors, which the company buys from Japan.

Each month, S-Dai can produce 25 packaging machines, most of which go to emerging economies such as mainland China, Southeast Asian nations and India. The company expects to boost shipments to European market soon as the circuit layouts of its machines comply with the CE standard.

PCB cutting machines are another revenue earner for S-Dai. According to Jiang, the company fills 80% of the specialty market. "This machine is very efficient and only few units are needed to handle a huge amount of boards," he explains.

Efficiency Sells

HCI Converting Equipment Co. has been luring customers with the rollout of increasingly efficient machines, according to company president Johnson Ho.

This year, HCI unveiled two new models--the FTSC-6N6040-3 three-sided sealing/stand-up/zipper pouch making machine and FSL-T1300 slitter/re-winder. The FTSC-6N6040-3 has two to three more servomotors than its predecessor; and the FSL-T1300 is the company's first slitter/re-winder powered with servomotors, which Ho says boosts the precision of the machines.

Machines like the FTSC-6N6040-3 make three-sided sealing/stand-up/zipper pouch bags by printing patterns onto several pieces of plastic films. The patterns tend to fall unevenly on the plastic film after a long run, so operators using traditional models generally have to manually slow down or speed up transmission gear in order to let the pattern fall on right place. The FTSC-6N6040-3, by comparison, is fitted with servomotors and a location sensor device to achieve precision results without the need for extra operators.

The FTSC-6N6040-3 is equipped with a unique mechanism that allows it to complete the bag in one process. Most machines require two processes to make three-sided sealing/stand-up/zipper pouch bags: one for cutting open a sealed side and the second to stick a plastic film onto the opening.

The FTSC-6N6040-3 is able to produce bags in various specifications at a maximum speed of 28 meters, or 150 bags, per minute. The ultrasonic pressure device on it makes the zigzag press on the sealing lines perfect.

On the FSL-T1300, the motors are used to rewind the slit film into precise coils.

Both machines are controlled by a programmable logical computer accompanied with a color liquid-crystal display screen.

HCI ships 70% of its equipment to developing countries and the remaining 30% to industrially advanced countries.

Ho's company designs and manufactures a full range of laminating and slitting machines as well as whole plant equipment. His company has also invested heavily in R&D to develop computerized and automated models in a bid to win more customers.

In addition to making constant innovations, Ho's company stresses product quality. To achieve total quality control (TQC), HCI requires all of its personnel to check every detail of production and be fully involved in TQC activities. "Most parts of our machines are made in-house using precision CNC machining centers," Ho says. "We also rigorously test our machines to ensure their reliability."

HCI introduced high-speed slitter/re-winder models with digital controls and high accuracy operation in response to customer demand for highly effective machines. These models have specially designed transmissions and converters, allowing them to run much faster and smoother. "They are ideal for all types and thickness of converting materials used in the packaging of industrial and electronic products," Ho says.

In view of the greater competition from mainland China and India, HCI is working closely with its customers to develop sophisticate and tailor-made machines. The company also pays close attention to inventory and standardization of its parts so that it can provide full and rapid maintenance services to customer.

Contact information on companies covered by the article:

Benison & Co., Ltd.
General manger: Benker Liao
Add: 5F, No. 278, Chung Hsiao E. Rd., Sec. 4, Taipei, Taiwan
Tel: 886-2-2772-5566; Fax: 886-2-2772-8793
E-mail: benker@benison.com.tw; Web site: www.benison.com.tw

S-DAI Industrial Co., Ltd.
General manger: Jyh-long Jiang
Add: No. 32, Alley 16, Lane 418, Chien Te Street, E. Dist., Taichung, Taiwan
Tel: 886-4-2283-3456; Fax: 886-4-2283-3459
E-mail: sdai@ms24 .hinet.net; Web site: www.s-dai.com.tw

HCI Converting Equipment Co.
President: Jason Ho
Add: No. 26, Industrial 7th Rd., Taichung Industrial Park, Taichung, Taiwan
Tel: 886-4-2359-0632; Fax: 886-4-2359-0710
E-mail: hci@hci-tw.com.tw; Web site: www.hci.cc