Like many traditional industries, Taiwan's bathroom accessories manufacturers have targeted mainland China as an alternative production base to turn out low-end products in large volume. Today more than half of them have moved their production lines across the Taiwan Strait, and those staying home have funneled resources into innovative product designs, new materials, and high-end quality to stay strong in the market.

Some of those that have already moved production lines to mainland China still keep their R&D operations and headquarters in Taiwan. With complementary operations on both sides of the strait, they can do business with foreign buyers in a more flexible way. For instance, many receive orders at the Taiwan offices and make and ship the products from their mainland plants, thereby keeping profits up.

Today low-end bathroom accessories are mostly produced in mainland China. They usually turn out such products in large quantity and export them mainly to the United States. About a decade ago, the U.S. was the major buyer of Taiwan-made bathroom accessories, but in recent years the market there has been taken over by mainland-based or -owned makers.

"Consumers don't usually pay attention to the place of manufacture; all they care is the price, particularly for such low-end products as bathroom accessories," says Yang Chung-kuo, general manager of Chang Mei Co. "Taiwan manufacturers can no longer compete against their counterparts in mainland China in the low-end market. So to survive, Taiwan manufacturers have to upgrade to high-end products."

Taking the High Road

Chang Mei has been engaged in the manufacture of furniture handles and knobs made of metal, stainless steel, zinc alloy, aluminum and brass since 1984. Today the company has expanded its product line to include bathroom hardware--mainly towel hangers. Although these products are relatively simple and common, Chang Mei makes them unique and varied through innovative designs and different materials.

"About ten years ago the United States was our major export market. And at that time we could earn solid profits of around 20%-30%," Yang states. "But today our margins have dropped to as low as 5% or even less. So, we have had to broaden our market options, and not concentrate solely on the U.S."

Since 2000, Chang Mei has been diversifying its markets to Europe and Southeast Asia to make up for lost sales in the U.S. "We believe in the rule of not putting all one's eggs in the same basket," Yang remarks. "The markets in Europe and Southeast Asia is quite different from that in the U.S., because the order volume in the former two markets is often smaller than that for the U.S., but unit prices are better, particularly in Europe.

"Generally speaking, European buyers have higher quality demands than do U.S. buyers. They also offer better prices for fulfillment of smaller-volume orders and tend to seek longer-term, more stable relationships with their suppliers."

To meet the high criteria of European buyers, Chang Mei imports most of its raw materials from Japan and Europe. "We import copper and stainless-steel plates from Japan and zinc-alloy and aluminum ingots from Europe. With these high-quality materials, we can turn out high-end products to cater to our customers' every need," Yang expresses. "We use computers to draw up the blueprints of the products and transmit them to our customers for reference, and vice versa."

Chang Mei has often found its products being copied by its rivals in the mainland, but the company is confident of its R&D capability--it can rapidly create new products. With a workforce of around 50 persons, Chang Mei entrusts 70% of its production to its contractors, and the company focuses mainly on design work. "Although we are optimistic about the future of the industry, we are worried about a shortage of skilled workers," Yang says.

Compared to such high-tech products as computers and electronics, bathroom hardware is a lackluster business that few young people want to choose for a career. "Manufacturers of bathroom hardware products rely equally on machinery and manual labor. And much of the manual work needs to be done by skillful workers with at least 10 years of experience. We cannot depend on our veteran workers forever," Yang laments.

R&D Specialist

Established in 1991, Imzu Industrial Co. started as a processor for export-oriented bathroom hardware manufacturers, and now is also a manufacturer and exporter of such products. With the continuing outflow of its clients to mainland China, Imzu finally decided in 1999 to sell directly to customers.

At first, Imzu faced difficulty in finding buyers by itself or through trading firms, and gained almost no buyers in the first couple of years. After putting more effort into R&D to fabricate high-end products, the company has finally been accepted in Europe. "Germany was our first export market and then the United Kingdom. Today the two markets have become the company's key sales outlets," Imzu's general manager Brown Lai states.

"European buyers prefer products with different designs in small quantity," Lai notes. "The company's designers have to communicate with the clients before finalizing the drafts of the products for them."

An experienced industry veteran, Lai is the self-declared mastermind leading Imzu's R&D team. "We use CAD (computer-assisted design) systems to draft the patterns of the products and e-mail the drafts to our clients for reference. They can then make revisions or write down suggestions on the drafts and send them back to us. Through this exchange of ideas, we can create products that fully meet the needs of our customers," Lai says proudly.

Imzu focuses its operations on R&D and contracts most of the manufacturing to its satellite plants. "We carefully screen our contractors and strictly inspect the products they make for us. Our high-quality products, available at reasonable prices, have won praise from our clients in Europe," Lai says.

Targeting the high-end market, Imzu has to put more emphasis on product design and innovation. This focus has helped to insulate the company from the rising competition from rivals in mainland China, which mainly mass-produces low-end items, Lai states.

Imzu's main bathroom products are towel shelves, toilet-brush holders, and mirrors. Customer-designed orders are also welcome. Currently 80% of its products are exported through traders, and the remaining 20% are marketed at home.

Gearing Up

Although Shang Yuan Enterprise Co. is a relative newcomer to the bathroom hardware industry, it hit the ground running thanks to its 18 years of experience as a manufacturer of bicycle parts.

"Bathroom accessories are regarded as trivial products compared to bicycles. But they are also relatively stand-alone items that require little or no assembly," Wu Chen-chuan, Shang Yuan's general manager, says.

Wu says his company has been able to apply much of its expertise in the bicycle industry to its new bathroom-hardware line. "Basically the hardware is the same. The difference is mainly in design and materials," Wu points out. "For bathroom accessories design is significant while materials vary according to customer needs."

Structure and style are also important factors when making bathroom hardware. "A little change can make a big difference," he says.

Since most producers use the same materials, design becomes the key to success. Shang Yuan's latest products feature the comfortable, homey look that is currently popular in home furnishings.

With a workforce of only 20 persons, Shang Yuan focuses its operations on R&D and has contracted most manufacturing work to local satellite plants. The company has developed more than 90% of its own products. "Most of our employees are experienced, skillful workers. They can turn out a wide variety of designs suitable for small-volume production, enabling us to meet the demands of our clients in Europe. And the quality of our products is no less than that of manufacturers in Europe," Wu says confidently.

Today more than 80% of Shang Yuan's products are exported through traders. In Europe, Germany and Italy are its two major export outlets. "Most of our products are patented in Germany, but we still have problems with copycats," Wu laments. "We are, nevertheless, confident that we have the creative capability to maintain our strength in the industry by continuously developing innovative new products."