Taiwan Trade Shows: Dressed For Success

The thing about the global market– and it is the thing about the global market–is that it is full of surprises.

Those unexpected elements might consist of a competitor suddenly entering your market area, at least to your estimation; the pleasant surprise of high quality from a low-cost supplier; or competition from a country you never even knew existed.

Then there are the grassroots, low level I-should-have-expected-this surprises, like when your luggage doesn’t arrive and you end up touring a trade show half a world away from your home in a hotel-issue suit (black, white shirt, silver tie, very snappy).

Which is why I ended up spending my first day of the Taiwan AMPA show virtually indistinguishable from my most obliging hosts at the Grand Hyatt in Taipei–as long as you didn’t notice my loafers or polka-dot socks, that is.

The show, about an eighth larger in space and with a third more exhibitors than last year, has become a mainstay of the Far East auto parts industry; with more than 930 exhibitors, plus hundreds more at the accompanying AutoTronics and Motorcycle shows, it is easy to see why.

Taiwan, for all its self-deprecation and head-to-head competition with Mainland China, has managed to carve a handy niche for itself in the auto parts industry, and a reputation for steadily improving quality.

“Auto parts and accessories that are made in Taiwan are known to the world,” said Fadah Hsieh, vice-minister of economic affairs, at the event’s opening. “‘Made in Taiwan’ has become synonymous with innovative technology and excellent quality.” The numbers are impressive for this island economy: $4.96 billion U. S. in manufactured parts in 2007, with exports rising to $4.77 billion U. S.

There was certainly no shortage of hard parts on display–wheels, shocks, struts, engine valves, pistons, bearings, and rotating electrical components abound–but few segments have as much history among Taiwan’s auto parts business as crash parts.

“For crash parts, the biggest aftermarket supply base is still here in Taiwan,” notes Galen Chen of lighting supplier Depo over a traditional coffee and cookies at the show. Chen says that it’s almost a tradition, and one that will continue.

“We are starting to see some competition from China and India, and the Taiwanese are setting up plants there to remain competitive.”

Still, he says, the quality-value equation remains very important for the collision industry, even in the face of increased price competition.

“We can still continue to give insurers enough difference in parts price to not have them declare vehicles a total loss,” he says, adding that the aftermarket provides an important buffer against the original equipment service sector’s monopoly.

“That is one of the functions of the aftermarket in the marketplace: to be the force on the other side of the equation. It keeps the OES parts pricing competitive.”

Staying abreast of current technology is an important element in being able to provide an attractive alternative to original equipment parts. For lighting suppliers, that means light-emitting-diode (LED) technology.

“People are more and more interested in LED lights for forward and tail lighting,” says Ricky Huang of Sirius Light Technology.

The introduction of LED headlights, by Toyota in particular, caught many by surprise, he says, forcing R&D departments to burn the midnight oil to capitalize on the trend for accessory lighting.

“It was quite fast. Design was not that long, but we had to tool up.” By March, three months after the decision was made to develop an LED forward-lighting product–a four-LED, SAE-compliant fog light–units were rolling off the line.

“There will be a proper launch at SEMA, but the certifications are all done,” says Huang. It represents a significant change in positioning for a company that previously had not been seen as on the leading edge of product technology.

“LED forward lighting is a big new step for the company,” he admits, but it has been a worthwhile one so far.

Overall, though, he sees Sirius and its competitors as all experiencing the same market pressures.

“Cost and quality are still the key challenges. Worldwide raw materials are increasing,” and getting price rises is tough. “This is at least part of the justification for pushing hard to get LED into the market.”

Homy Hsu, vice-chairman of Eagle Eyes Traffic Ind. Co., Ltd., says that the push for new parts and technology brings added pressures too.

“Car design life is shorter–two years where it used to be four or more,” he says, adding that his company already produces more than 2,000 items, with as many as 15 new ones being added every year.

He says that while the volume and investment required to produce items such as LED lighting are considerable, they do have the effect of raising the bar for less committed competition.

And, in general, that is a welcome development, says Aimee Huang, general manager, aftermarket sales department for TYC Brother Industrial Co., Ltd. TYC is generally regarded as a leader among Taiwanese lighting suppliers, with 80% of its business in the aftermarket (though notable among its OEM contracts is the much-touted $2,500 Tata Nano).

She says the firm’s customer base does not tend to be price-motivated; with five warehouses in North America, training, marketing, and an expanding repertoire of products, the company is focused on a high-service model. For companies focused on quality, she notes that the move by insurers to mandate CAPA parts is a help to upper-echelon suppliers.

Depo’s Chen agrees that the CAPA initiative has become a very important achievement.

“It’s good that we have things like CAPA. It acts like an agent of change. They asked manufacturers to step up and make a quality part, and that’s what they did.

“On the one hand, it pushes manufacturers, but also gives them motivation, since 80% of the repairs are paid for by insurers.”

He says that even with that strong force in the market, there is increasing pressure on pricing from the price-driven sector in the market. He pegs that at about 20% of collision shops.

“There is always a group who are only after pricing”–forcing the supply chain to deliver price over quality at least to those customers–“that will affect the image of aftermarket parts.”

The worst of the aftermarket parts, particularly in the lighting market, are those that do not meet government standards.

“There are problems in that [some] products haven’t met DOT, SAE, or CAPA [standards],” says TYC’s Huang, though she adds that those problems are on the wane, at least in the U. S. “The DOT is quite diligent and if the product does not meet the standards, it goes back.”

This, she says, is good for quality suppliers.

Still, Chen is a bit philosophical about the matter, adding that there will always be a price-driven segment, as in any industry. His focus is on something else, though.

“The biggest challenge is, and will continue to be, to make a part that will be accepted by the bodyshop and by the bodyshop technician. We can talk about quality, but we have to get that message out.”

Technology: Beyond the Hard Part

While Taiwan has become a hard parts supplier extraordinaire to the aftermarket, it has also built a strong name for itself as a consumer electronics supplier. And, over the past five years or so, many have turned their attention to automotive electronics.

Much of this development has focused on video display technologies– Taiwan has a very established LCD production base– so one of the key areas at Autotronics was in the GPS arena.

One notable company has focused efforts on integrating various technologies into a single unit.

Mitac International Corp. has taken its GPS experience and headed down the road to convergence with its AVN prototype, which supports navigation functions, works with a DVD player or car stereo, and provides output to th
e LCD screen. (I have to admit that I am a newbie to much of this technology, but this is apparently, quite a feat.) And, says the company, it could end up being offered as an aftermarket-installed unit, though it is most likely to arrive through the OES channel.

Regarding a more understandable technology, Systems & Technology Corp. had a whole raft of GPS-related tracking devices for fleet management.

Its Intellitrac modules–there are several with varying capabilities– are designed to be integrated into a delivery vehicle or truck, so that fleet managers can track the activity of those vehicles remotely and, presumably, more tightly hone schedule and rerouting. Capabilities include Cell ID positioning function, CCD image capture support, CAN bus support, Voice, SMS, CS data, and other communications, as well as a number of control features to remotely inform fleet managers of tampering or a malfunction– all of it done remotely. For fleets large and small, the benefits of that are obvious.