Gearing Up to Take On GORE-TEX
Taiwan's Fabric Makers Embrace Branding
Taiwan's "Big Four" functional fabric makers are joining forces to turn Taiwanese textiles into a well-known brand – a sea change in an industry long dependent on contract manufacturing.
Taiwan's Fabric Makers Embrace BrandingBy Elaine Huang
From CommonWealth Magazine (vol. 399 )
Lululemon Athletica has become the latest hot name in athletic apparel with its yoga-inspired line that combines style and function. Its profits rose 300 percent in 2007 to US$31 million, earning it a spot in Business Week's list of the 50 fastest growing small companies of 2008.
Behind Lululemon's sales growth lies the hidden force of the Taiwanese textile industry, producing the trendy, comfortable "functional fabrics" used to make the company's apparel. Last year Taiwanese functional fabric manufacturer Hyperbola Textile Co. quietly began supplying Lululemon with cloth for its outdoor athletic wear.
Located in a modern office on Fuxing North Rd. in Taipei, Hyperbola is a small company with only 21 employees that relies on innovation to generate its NT$150 million in annual sales. The company focuses its efforts on the technical side of functional fabrics, including R&D and design, leaving the actual production of the materials to subcontractors. The company's showroom is a veritable bazaar of stylish fabrics with decorative patterns and popular symbols rarely found on functional fabrics in the past.
"Our strength is design, with a strong emphasis on stylish trends," says Hyperbola CEO Tina Wang.
Escaping the Shadow of Garment Brands
"In the past, our textile factory always operated out of sight, hidden by garment manufacturers. Now we want to go on the offensive," says the 40-year-old Wang, an economics major from Fu Jen Catholic University who looks younger than her age.
Hyperbola is just one of the textile companies that has survived the offshore exodus of the Taiwanese textile industry and are now thriving in Taiwan after making major efforts to reinvent themselves.
In fact, Taiwan's fabric manufacturers, who have amassed impressive technical capabilities in R&D and production through unbranded contract manufacturing for others, are undergoing a qualitative change. They are looking to emulate the world-renowned functional fabric brand GORE-TEX, ready to stand up and trumpet Taiwan's functional fabrics to the world, even to the point of marketing the brand directly to consumers.
GORE-TEX, the waterproof, breathable fabric that has been around for more than half a century, was so successfully marketed worldwide that it became not only a favored fabric of leading apparel brands, but also a household name among consumers, similar to the way CPU manufacturer Intel marketed its chips. Intel evolved from a B2B (business-to-business) model into a consumer oriented "B2B2C" (business-to-business-to-consumer) model by offering rebates to computer manufacturers who included "Intel inside" in their advertising and packaging. That strategy eventually led consumers to ask for computers using Intel chips.
According to Taiwan External Trade Development Council (TAITRA) executive vice president Walter Yeh, among all the vendors in the country's complex and highly specialized textile supply chain, Taiwan's functional fabric enterprises are the best positioned to develop their own brand.
Optimistic over the prospects of the functional fabric sector, which had a production value of NT$460 billion in 2005, TAITRA plans to bring Taiwan's big four in the industry 'Formosa Plastics Group subsidiary Formosa Taffeta Co., Everest Textile Co., Singtex Industrial Co., and Hyperbola 'to the European Outdoor Trade Fair in July to join forces in building the Taiwanese functional fabric brand.
Technical Innovation the Taiwan Edge
Technical innovation and a willingness to invest in R&D have helped Taiwanese functional fabric vendors emerge from their traditional position as OEM suppliers and build new brand image niches.
Even with world crude oil prices on the rise and upstream fiber manufacturers hurting, Singtex, for example, remains determined to invest NT$200 million in an environmentally friendly dyeing plant to guarantee the quality of its fabrics. Singtex general manager Jason Chen, who was born into an influential textile family, has been in the business for 19 years and launched Singtex Technical Fabrics five years ago. In 2007, the company had a gross margin of 20 percent on sales of NT$600 million, and an EPS (earnings per share) of NT$4. Chen has always viewed GORE-TEX as an admirable pioneer that he hopes to surpass.
Last year Singtex moved into new offices in the Wu Gu Industrial District, which serve as the company's R&D center, undertaking everything from developing raw materials and designing fabrics to making apparel samples. Here, comparisons between Singtex and GORE-TEX technology are evident everywhere.
"The speed of and capacity for technical innovation among Taiwan's functional fabric vendors is without a doubt on a par with GORE-TEX," Chen asserts with a confident smile.
One example of this innovative prowess is a trademarked fabric called Cocona, which Chen helped develop in Singtex's laboratories in cooperation with U.S.-based company TrapTek, LLC. Named by Time magazine as one of "The Most Amazing Inventions of 2005," the fabric's yarns are infused with activated carbon from coconut husks that enables the material to absorb perspiration, trap nasty smells and protect against UV rays. Singtex was also the only company in the textile industry last year to win a "Taiwan Excellence Award," given to local companies that most embody the spirit of innovation and added value.
Building Brands with Outside Help
Technological innovation generated by investment in R&D undoubtedly builds brand value, but beyond a company's branded partners being aware of its innovations, consumers also have to gain such awareness for the firm's brand to maximize its impact.
To Taiwan's functional fabric manufacturers, the "B2B2C" brand marketing model is a completely new experience. Up against industry giant GORE-TEX, the one fabric brand widely recognized among global consumers, Taiwan's textile vendors are learning to communicate with consumers, hoping that brand marketing will deepen recognition of their products.
Just like a fish vendor who attracts customers by educating them on the best way to cook the fish he's selling, Taiwan's functional fabric suppliers make clothes out of their new fabrics to allow clients to test the design and feel of the material on their bodies. Singtex's lab has one mannequin wearing outdoor cycling apparel made for the world's biggest bicycle producer, Taiwan-based Giant Manufacturing, and another donning casual outdoor wear with an iPod feature built in.
Taiwan's vendors have also adopted the practice of "borrowing strength to gain strength." Everest, Singtex and Hyperbola have all engaged in co-branding, working with apparel brands to make inroads into consumer markets.
Singtex, for example, not only is cooperating with overseas clothing brands, but also has hang tags of its own attached to apparel using its fabric, that, like GORE-TEX tags, use drawings to detail the fabric's special characteristics. Chen has also sold his fabrics at a discount 're-classifying the lost revenues as marketing expenses 'to have the "Singtex" brand name embroidered directly in the apparel sold to consumers.
"The name will be worn directly by the customer, rather than having the hang tag cut off after the item is bought," Chen says.
Riding the Eco Train
Taiwan's textile vendors are not relying solely on technology to promote brand recognition. They are also pushing added value.
Known as "Professor Yeh" in the textile industry, Everest president Roger Yeh has recently been touting the virtues of "C2C," based on the 2002 work Cradle to Cradle by German chemist Michael Braungart and American architect William McDonough that set off an environmental whirlwind.
Everest, which had sales of NT$7.2 billion in 2007, operates plants in Tainan, Shanghai and Bangkok that produce 7.4 million yards of functional fabric a year. Of the company's total workforce of more than 3,000 employees, the 200 working in the Everest Technology Research Center in Tainan have recently focused their attention on applying waste-reducing C2C concepts to the development of new fabrics. Yeh has begun to think about the materials and processes he uses to make his products, turning environmental awareness into a value-added component of the brand.
To apply for the internationally recognized "bluesign" environmental standard for the textile industry, Yeh spent a year revamping his company's production processes and material compositions, eventually earning bluesign certification in April. The approval set off a wave of bluesign mania among functional fabric vendors in Taiwan.
While GORE-TEX's influence shows no signs of abating, Taiwan's relative newcomers to the market are quietly hard at work, hoping that the brands they are building will one day emerge from the GORE-TEX shadow and yield considerable influence of their own.
Translated from the Chinese by Luke Sabatier
Chinese Version: 台灣機能布 走上品牌路