AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2003 arrow Vol.33- No.6 arrow Cover Story: Succeeding By Design
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Business executives, scholars, and politicians gathered at the Taipei International Convention Center last month for the annual Symbol of Excellence awards ceremony...

Business executives, scholars, and politicians gathered at the Taipei International Convention Center last month for the annual Symbol of Excellence awards ceremony, the culmination of months of evaluation to select Taiwan's best products. Winners are allowed to use a special red logo on their packaging.

But while the award recipients reveled in their glory, judges noted many of the same concerns that have been expressed for years. Product design, materials usage, and brand promotion and presentation - all aspects related to a knowledge-based economy -- continue to be weaknesses for Taiwan manufacturers.

"Choice of materials is definitely very important to me. You disappoint consumers if you make the product appear valuable on the package, but they open it up and realize the materials are not so good," said judge Henning Horn, director of the Stuttgart Design Centre, a German product design consultancy and the only foreign judge on this year's panel. "The first touch of the product is important; you need to feel the quality," he said.

Horn expressed disappointment that product design does not receive more consideration here as a part of the product development process. It's a concern he has voiced to company executives each of the four years he's been a judge.

"It has to start with the boards of management," he said. "Design awareness has to start there, and it's [a question of regarding] design as not only cosmetic, but also as conceptual."

As Taiwanese companies seek to move up to more knowledge-based, value-added production, a fundamental change in mindset is needed in the area of product design. Foreign executives continue to point out that while Taiwan may be able to move up the value-added "smiling curve" either through better R&D or through increased services, the international perception still remains that Taiwan products are cheap. This was brought home to Taiwanese late last year when an ad for Smirnoff vodka poked fun at Taiwan's reputation for poorly made products. While politicians ranted about the unfair stereotype, hardly anyone stopped to ask why the stereotype persists.

Someone who is endeavoring to change the way Taiwan-made products are viewed is Tony Chang, executive director of the Design Promotion Center at CETRA, Taiwan's trade promotion organization. Chang spends his days persuading Taiwan companies to improve their product design and then helping them to do so. Since few Taiwan products are unique, manufacturers need to climb the smiling curve by adding design to their toolbox of services. By now, says Chang, most Taiwan manufacturers have recognized the importance of design.

Horn is more skeptical. "Certainly there's been some improvement, but there's still a long way to go," he says.

To help promote the cause and make it easier for companies to access designers, the Design Promotion Center has 30 in-house designers among its 60 staff, many of them foreign-trained. In addition, the center conducts market research and collates market data for access by subscriber companies. A company that pays a membership fee of NT$30,000 (US$862) per year gets access to the center's whole library of design ideas and market statistics. For an extra payment, companies can engage with the center's staff on specific research and design projects.

"We want to upgrade their design capabilities to a world-class level," Chang says. The center also conducts regular seminars on design and branding, and subsidizes Taiwanese product designers' attendance at year-long training courses in the United States and Europe.

Over the long term, Chang also hopes to build more Taiwan brands. "Design and branding go together," he says. One of Taiwan's best-known brand names, Giant, has proven that strong design and a strong brand go hand in hand. The Taichung County-based bicycle maker is quite low-tech in terms of manufacturing process, with most of the production still done by "inefficient" manual labor. Instead, Giant has accumulated extensive knowledge in materials and product design, and understands exactly what each market wants and can accept. "If you'd said that a Taiwanese company could charge US$10,000 for a bicycle, most people wouldn't believe you," said SOE judge Lin Ying-feng, a professor of commerce at National Chengchi University.

But Giant remains an exception. Overall, the structure of the Taiwan economy tends to stand in the way of brand-building. "Most companies in Taiwan are SMEs, so they don't have the time or the resources to build a brand image," Lin says.

Another problem is that many don't want to build a brand. Chang points to an unnamed company in Neihu that has NT$10 billion (US$287 million) it's willing to spend on design, yet is still wary of building too strong a brand name lest it offend OEM customers.

That problem has been faced time and again by Taiwan manufacturers that have built up their business by servicing foreign brand-name companies. Launching their own brand, essentially in competition with their own customers, puts that business base at risk.

Acer Group split its Acer Inc. unit into two parts, Acer and Wistron, to deal with that problem after its main customer, IBM, started complaining. Acer now no longer makes anything, while Wistron remains an OEM manufacturer for brand names, including both Acer and IBM.

Chang points to BenQ as a case study in good design, research, and brand building. The name didn't even exist two years ago, when the company was known as Acer Communications and Multimedia (ACM), but it has grown into an internationally recognized brand. The product lineup of BenQ is not greatly different from when it was ACM -- the difference is in the knowledge the company has accumulated, and the way that knowledge has been put to use to make better products and to target them at the right market.

Chang notes that BenQ's 50-person design team, which he says includes psychologists, has proven what can be done when a company decides to step up to the next level.

To date, Taiwan has only three prominent international brands -- Acer, BenQ, and Giant, but Chang says he's confident that number can be boosted to ten by 2010.

---T.C.
 
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