Sport for All, Sport ForeverSport for All, Sport Forever TAIWAN’S SPORTING GOODS INDUSTRY ANALYSISTAIWAN’S SPORTING GOODS INDUSTRY ANALYSIS

GEORGE WOOD GEORGE WOOD 吳日盛吳日盛 1958/12/021958/12/02

Profile:Profile:• Victoria University Switzerland Ph.D. CandidateVictoria University Switzerland Ph.D. Candidate

• TBS Group Corporation ChairmanTBS Group Corporation Chairman• DFS International Corp.(Boston) PresidentDFS International Corp.(Boston) President• T-Zone International Inc.(New Jersey)T-Zone International Inc.(New Jersey) PresidentPresident• Inti - Education Group Inti - Education Group Executive SupervisorExecutive Supervisor• TSMA………………………………………TSMA………………………………………Executive Supervisor Executive Supervisor (TSMA - Taiwan Sporting Goods Manufacturers Association)

Taiwan’s sporting goods Taiwan’s sporting goods industryindustry

History and Development TendencyHistory and Development Tendency 1970, Developing export trade.

1979, Providing OEM manufacturing services for leading brand name companies.

1980’s, Developing labor-intensive and low value-added products to fill a leading role in the worldwide sporting goods industry.

1990’s, Proceeding industry upgrade and relocation strategies. - Designing and developing high value-added products in Taiwan. - Moving labor intensive and low value products to the regions with lower labor costs, such as Mainland China and Southeast Asia. 2000's, After adopting relocation strategy, local corporate producers have gradually appeared to be the more threatened competitors. After 2005, domestic companies are expected to confront the next wave of drastic competition.

At present, 90% of the sporting goods are still made for exportation.

Taiwan’s sporting goods Taiwan’s sporting goods industryindustry

Taiwan’s Sporting Goods Export Amounts

Year Export Amount

(1,000 USD) Average（％）

1997 1,754,977 -8.9

1998 1,367,823 -22

1999 1,271,439 -7

2000 1,656,355 30

2001 1,271,719 -23

2002 1,270,758 -0.08

2003 1,261,049 -0.76

The export figures hit the lowest amount in 1999, and then increased in 2000, however, exportation has steadily declined since 2001.

Taiwan’s sporting goods Taiwan’s sporting goods industryindustry Export Market Unit 1,000 USD

Country 2003 2002 2001 2000 1999 1998

USA 375,119 399,444 402,337 570,559 340,631 395,688

Japan 128,190 155,822 222,835 264,664 273,562 301,057

H.K 239,631 184,681 140,386 156,992 137,835 128,752

Germany 39,096 42,174 56,721 93,097 60,910 55,223

England 55,959 62,839 59,778 74,983 48,996 53,900

Others 423,054 425,798 389,662 491,638 409,505 433,203

Total 1,261,04 1,270,75 1,271,71 1,651,93 1,271,43 1,367,82

USA is the largest export market amounted to US$ 375.11 million. The following major export markets are Hong Kong and Japan, with export value US$ 239.63 million and US$ 128.19 million, respectively.

Five Forces AnalysisFive Forces Analysis

Current Industrial Condition

Five-Force Analysis

Industrial Attraction

The Rivalry

among

Competing

Sellers

A. Various product lines, individual enterprise focuses on

self-market.

B. Products export to international market, competitors spread

worldwide.

C. Recession in market demands, compete drastically.

D. Highly substitutes between similar products, compete

drastically.

The Rivalry

among

Competing

Sellers

Medium

Medium

Supplier

Bargaining

Power

A. Lack of integrated ability of downstream firms, lower down the

bargaining power.

B. Drastically competition between suppliers, lower down the

bargaining power.

C. Negligible difference in products variety, lower down the

bargaining power.

D. Trade companies as the major customers of the supplier,

lower down the bargaining power.

Supplier

Bargaining

Power

Low

High

Five Forces AnalysisFive Forces Analysis

Current Industrial Condition

Five-Force Analysis

Industrial Attraction

Buyer

Bargaining

Power

A. Large quantities purchasing, increase the bargaining power.

B. Negligible differences in products variety, increase the

bargaining power.

C. Non-mainstream products for customers, decrease the

bargaining power.

D. Shortage ability of upstream and downstream firms

integration, decrease the bargaining power.

Buyer

Bargaining

Power

Medium

Medium

Threats

from

Potential

Entry of

New

Competitors

A. Economies of scale, increase the entry barrier of potential

competitors.

B. Slow growing industry, decrease the threat of potential

competitors.

C. Non-professional skilled industry, increase the threat of

potential competitors.

Threats

from

Potential

Entry of

New

Competitors

Medium

- Low

Medium

-

High

Five Forces AnalysisFive Forces Analysis

Current Industrial Condition

Five-Force Analysis

Industrial Attraction

Competitive

Threats

from

Substitute

Products

A. Clearly defined market, decrease product substitutions.

B. New and trendy sports, increase product substitutions.

C. Low switching cost of sports to end users, increase

product substitutions.

Competitive

Threats

from

Substitute

Products

Medium

- Low

Medium

-

High

Conclusion

Medium - Low Medium-High

Sport for All

– Improved quality of life

– Gov’s policy: two days furlough per week system

– Well-developed broadcast system

• A wide variety of national sports has been rapidly developing in Taiwan, such as

baseball, basketball, golf, and billiard.

SWOT AnalysisSWOT Analysis

Strengths

a. The scale of small and medium enterprises is capable of filling

market demand and satisfying customer needs.

b. Trustworthy quality endorsed by international buyers.

c. Good development in relation to upstream and downstream.

d. Two-day furlough per week system.

e. Holding exhibitions periodically to promote the brands.

f. Support from the Taiwanese Government.

Weaknesses

a. Increased influence on customer power and channels, rapid elimination

of products, and the lack of enterprise research and innovate abilities.

b. Challenges of traditional channels.

c. Lack of international marketing capabilities, hard to create own brands.

d. Main raw materials rely on imports, difficult to reduce costs.

e. The scale of small and medium enterprises makes it difficult to recruit

professionals.

SWOT AnalysisSWOT Analysis

Opportunities

a. The popularity of exercising is steadily growing worldwide.

b. Professional high-tech industry in Taiwan supports the

development of sporting goods manufactories.

c. Similar cultural and racial factors with Mainland China facilitate

Taiwan enterprises to establish their production bases there.

d. Stable growth of people who exercise regularly.

Threats

a. Branding competitions, larger enterprises dominate the market

while overwhelming marketing budgets.

b. New enterprises from China’s sporting goods industry impact

the development of Taiwanese enterprises.

c. The global market has grown just as the life cycle of products

has increasingly decreased.

d. Increased impact of consumers.

Taiwan’s sporting goods industryTaiwan’s sporting goods industry Conclusion and RecommendationsConclusion and Recommendations

A. Expanding marketing channelsA. Expanding marketing channels - Establishing production and - Establishing production and marketing bases in the primary export in the primary export markets such as Europe and the US.markets such as Europe and the US. - Adopting - Adopting local brandlocal brand strategy to create a brand-name image. strategy to create a brand-name image. - Conducting the perception by existing channels to extend the present- Conducting the perception by existing channels to extend the present products integrated with advance technology.products integrated with advance technology. - Involving in the end user sales service system to build up a resource - Involving in the end user sales service system to build up a resource co-sharing entity with importers or local wholesaler and even magnify co-sharing entity with importers or local wholesaler and even magnify the effect of bilateral balance.the effect of bilateral balance.

B. Jointing purchasing and resources manipulation B. Jointing purchasing and resources manipulation - Economy scale- Economy scale -- Reducing raw material costs.-- Reducing raw material costs. -- Enhancing bargaining power. -- Enhancing bargaining power. - Small and medium enterprises possess the characters of flexibility - Small and medium enterprises possess the characters of flexibility and rapidity. Under the networking tendency, natural resources and and rapidity. Under the networking tendency, natural resources and manpower specialties of various countries should be nimbly used to manpower specialties of various countries should be nimbly used to enhance the operational functions and strengthen competitive enhance the operational functions and strengthen competitive

advantage. advantage.

Taiwan’s sporting goods Taiwan’s sporting goods industryindustry Conclusion and Recommendations Conclusion and Recommendations

C. Accelerating the automationC. Accelerating the automation

- E-commerce application programs/EDI Internet /Networking- E-commerce application programs/EDI Internet /Networking -- Increasing production efficiency.-- Increasing production efficiency. -- Decreasing operational costs.-- Decreasing operational costs.

D. Increasing the potential of research and developmentD. Increasing the potential of research and development

- Keeping core competitive advantages such as - Keeping core competitive advantages such as R&D R&D designdesign in Taiwan to produce high-quality, superior products.in Taiwan to produce high-quality, superior products. - Adopting reverse thinking based on viewpoint of consumers to carry - Adopting reverse thinking based on viewpoint of consumers to carry out R&D.out R&D. - Seeking producers in low-cost nations to manufacture low-end items.- Seeking producers in low-cost nations to manufacture low-end items. - Based on the experience of one’s own industry, it is easy to form a - Based on the experience of one’s own industry, it is easy to form a specialized bias. Enterprises should get rid of the confined specialized bias. Enterprises should get rid of the confined concept ofconcept of existing products and markets in order to build up the non-existing products and markets in order to build up the non- existingexisting products and markets or even extend the scope of products to products and markets or even extend the scope of products to createcreate

added value and innovative value.added value and innovative value.

The End The End

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