Taiwan Firms Aim for U.S.

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I was asked to speak at the Taiwan Powersports Symposium during the Dealer Expo in Indianapolis.

The event included journalists and manufacturers focused on giving an insight about Taiwan’s powersports industry and how it may impact business here in the U.S. The comments below are my own, offered during the presentation.

“While it’s unlikely any of us were in the motorcycle industry during the early 1960s, I think it’s pretty well known how the first of the Japan-made two-wheelers to enter the U.S. back then were greeted by consumers and retailers who had, up to that point, only known U.S. and European brands.

Although the things said about those early Japanese bikes weren’t too flattering, the Big Four from Japan nevertheless grew to become the major players in the U.S. motorcycle market.

Well, nowadays, I hear some people speak dubiously about machines coming from other areas of the Far East. The thing is, I find most of the folks bad-mouthing these “New Asian” products are failing to differentiate the vehicles from the lands, and factories, from which the product comes. This, to me, makes those folks doing the bad-mouthing appear critically uninformed.

———

Seven Thoughts About Taiwan’s Manufacturers
My first experience with Taiwan-made vehicles occurred in the mid 90s, when I rented a KYMCO scooter during a trip to Greece. A couple of years later, remembering the pleasant experience I had on that scoot, I rented another KYMCO scooter while in Mexico, and had an equally enjoyable experience.

Since then, I’ve been on four trips to Taiwan, visiting manufacturing facilities and riding two and four-wheel product. When the folks who know about my trips ask me what I’ve experienced during my time in Taiwan I tell them that the facilities I’ve seen there are on par with R&D and manufacturing facilities I’ve toured in Europe and the U.S., and I often break my comments down into seven simple statements:

1) Taiwan is NOT China.
2) Whereas China has proven itself to be a prolific vehicle manufacturer, Taiwan – like Japan – proves proficient at both developing AND manufacturing vehicles.
3) Taiwanese manufacturers are to Japanese manufacturers as Japanese manufacturers were to U.S. and European manufacturers.
4) Most people who’ve had a chance to inspect, ride or sell Taiwan-made vehicles know the quality of such product tends to be on par with units built in Japan and higher than many of the units imported so far from China.
5) Multiple North American and Japanese OEMs source quads, scooters and engines from Taiwanese manufacturers – among them, Yamaha, BMW, BRP and Arctic Cat.
6) While many “New Asian” suppliers entering the U.S. market often attempt to scrape together as many sales as possible as quickly as possible by moving product through multiple distributors, Taiwan-based vehicle suppliers appear to have a more long-term approach, choosing a single U.S. based importer/distributor through which they can more easily manage their business and plan for the future.
7) Finally, the seventh point I like to share is to remind folks where Kia and Hyundai were in the U.S. auto market 10 years ago. Check out their statistics now. Expect the same from the “New Asians” in the powersports industry.

———

Four Steps to Growth for Taiwan’s OEMs
The Taiwan Transportation Vehicle Manufacturers Association estimates Taiwan-made powered two-wheelers (PTWs) account for only about three percent of the 50 million PTWs sold in the global market annually.

Late last year, Charles Huang, executive director of the TTVMA, announced four steps he felt Taiwan’s powersports vehicle manufacturers needed to accomplish to increase their global market share:
1) boost production volume
2) focus on high-end machines as well as low-cost models
3) cooperate in joint development, and
4) begin investing in overseas markets.

1) Boost Volume
The Taiwanese government estimates manufacturers there produce about 1.6 million PTWs a year, about half of which are sold domestically and half exported.

“Boosting the production volume is our top priority right now,” Huang said, “because a sufficient volume often means cost competitiveness. There has been no big change in Taiwan`s PTW production volume during the past 10 years.”

I personally believe Taiwan’s leading manufacturers – those you see represented here – should have no problem in ramping up output. These are not fly-by-night operations, but huge highly diversified corporations with extremely modern facilities and an amazing amount of resources and available manpower.

2) Focus on Large Displacement Machines
Huang says companies in Taiwan need to supply more high-end models to satiate the desires of consumers in western nations.

No doubt Taiwanese manufacturers have, in the past, offered relatively small displacement machines, but that’s changing as we speak.

Taiwan’s home market underwent a major change on Nov. 1, 2007, when motorcycles displacing more than 550cc became legal to operate on highways throughout Taiwan.

The law prohibiting heavy motorcycles from Taiwan’s highway system was responsible for keeping consumers there on scooters and motorcycles typically sized between 50cc and 150cc, with heavy motorcycles — such as the cruisers and sport bikes we know here — operating mostly on congested surface streets.

Now that those heavyweights are legal, however, manufacturers have ramped up their research & development of larger displacement machines capable of being marketed to consumers both in the Taiwan home market and abroad.

A few years ago, during a visit to KYMCO, I saw parts being designed for a 500cc powerplant, an engine that two years later powered a 500cc scooter and more recently was modified to power both an ATV and a side-by-side.

During my last trip to KYMCO, in that same area of the R&D facility, I saw parts being prepped for use in a 700cc powerplant. The guys here may not want me to say much else about it, but you can bet we’ll be seeing that engine here soon, as well.

3) Cooperate in Joint Development
To speed the creation of larger displacement PTWs, Huang suggests vehicle makers should cooperate in joint development to upgrade their global competitiveness.

Did you know KYMCO currently builds product for Arctic Cat and BMW, and San Yang builds ATVs for BRP and acts as an engine supplier to numerous other OEMs? In fact, almost all Yamaha and Suzuki scooters with engines of 150cc and under that are sold in Japan, Europe, and the U.S. are now produced in Taiwan.

4) Increase Overseas Investment
Huang says Taiwan’s powersports vehicle manufacturers should mirror overseas investment moves made by companies like Honda, Kawasaki, Suzuki and Yamaha, and cultivate talented professionals with a global view and foreign-language fluency.

He says Taiwanese companies should follow the example of the top four Japanese motorcycle brands because those companies quickly developed overseas markets in the 1960s after being established in the 1950s, and now hold a majority share of the global motorcycle industry.

But that, too, is happening.

In a system not dissimilar to the one used by the Big Four from Japan and the leading European OEMs, the three major Taiwanese brands in the U.S. – KYMCO, SYM and TGB – all are represented stateside by U.S.-based companies, companies staffed by U.S. powersports industry veterans who understand the needs of a U.S. dealer network.

And that’s the only way to do it, to achieve success in a foreign market, whether your Ducati and BMW, Honda and Kawasaki, or San Yang and TGB.

In closing – We all realize we’re now living in a global marketplace, one filled with ever-changing trends and opportunities, and failure to recognize and take advantage these changes would be shortsighted. Of course, you being here shows you’re accepting of that fact. Thanks for listening.”

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One Response to “Taiwan Firms Aim for U.S.”

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