Unlike most trade fairs this year that witnessed a decrease in exhibitors because of the global economic recession, the three-day Taipei International Sporting Goods Show (TaiSPO) grew by 3.7 percent to 311 booths. Healthier trade and political ties with China also meant the return of a Chinese pavilion, which was banned last year. As always, fitness equipment, which makes up the majority of Taiwan’s sporting goods exports at US$476.4 million in 2008, dominated the show.
The value of exports for the top 10 Taiwanese sporting goods remains resilient. From January to February 2008, the country grew by a modest 1.75 percent to $1,218 million compared with the year before. Manufacturers attributed the growth to the rise in labor costs and taxes in China, prompting many factories to relocate back to Taiwan. Costs of raw materials including aluminum, copper and zinc all have dropped at least 25 percent in one year, which benefited the fitness equipment and bike sectors.
However, the brunt of the economic recession has yet to take full effect. The somber mood of exhibitors reflected the outlook of Taiwan’s future. It is no surprise that clients in the U.S. and Europe have already slashed orders this year. Taiwan’s export orders fell by a staggering 41.6 percent to $17.68 billion in January, the steepest decline since 1984. The head of the Taiwan Sporting Goods Manufacturers Association (TSMA) said companies have little option but to wait out the economic recession and tighten their operational efficiency. A few are focusing on China as a possible alternative market to make up for lost sales.
The U.S. mortgage crisis in particular had a direct impact on decline in sales of home fitness equipment. Manufacturers claim the lack of new homeowners meant a lack of home gyms in general. American consumers are also now more averse to purchasing big-ticket items such as fitness equipment, and would much rather pay membership fees. Local brands such as Strength Master Fitness and Sports Art Fitness are turning to commercial markets this year, selling to gyms and hotels, where sales have not been hit as severely.
Losing out in terms of production costs to countries such as Vietnam, Bangladesh and China, Taiwan is pushing for innovation to save its industry. Government-sponsored competitions are held statewide for developing the latest innovative sporting goods. TaiSPO awarded companies and graduate students who were most innovative at the show. Local companies are consistently stressing their technological advantage in being eco-friendly and high in quality.
Due to reduced orders across the board, companies are looking for new ways to develop greater sales. A growing number of local manufacturers are to introduce their own private labels to control their product’s profit margins and establish a greater reputation in the global market. Swimfit, Magtronic, Yosem International, and dozens of others all went from being OEM producers to developing their own brand this year. Larger manufacturers such as Johnson Health Tech and DK City hope to win new markets by diversifying their product portfolio into such offerings as massage chairs and electric bikes.
While many other Taiwanese fitness equipment companies are cutting costs this year, Strength Master Fitness has been going against the trend. Still riding high on sales, the company plans to go public on the Taiwan Stock Exchange by the fourth quarter of next year to develop more money for research and development. Once initiated, employees will be guaranteed shares within the company.
On the other hand, the global economic recession has driven up membership in the World Federation of the Sporting Goods Industry (WFSGI), giving the association significant lobbying power to convince governments to lower protectionist measures. WFSGI already boasts a membership from more than 50 countries including established brands such as Nike, Adidas and Lacoste. Currently, it is in talks with China’s minister of trade and commerce, rallying for free trade in sporting goods. While import taxes for sporting goods may be under 3 percent for Japan, the U.S., and Canada, China’s and India’s import taxes are over 15 percent. Time will tell whether such efforts from Taiwan can withstand the woes of the global economic recession.
