The quadrennial Summer Olympics extravaganza opens in Brazil on Aug. 5. Backed by 120 years of memories, the Games represent the biggest sports event on the planet, with more than 10,000 athletes from 206 countries and territories set to gather in Rio de Janeiro.

Athletes' tireless pursuit of the Olympic spirit of "faster, higher, stronger" to achieve their best and bring honor to their country captivates the world's attention during the Olympic fortnight, including in Taiwan even if local sports fans rarely have much to cheer about.

Taiwanese athletes have won a total of three gold medals and 21 medals overall in the 13 Olympic Games (1956-1972 and 1984-2012), not a particularly distinguished record.

And yet Taiwan does have a national team that is clearly a gold medalist on the Olympic stage. When the Summer Games begin, that team will be quietly breaking a sweat in multiple events in the pursuit of victory through its specialized athletic footwear, Olympic uniforms, footballs, bicycles and rackets being brandished as the weapons of choice by elite performers from around the world.

This national team consists of Taiwanese manufacturers of athletic wear and sports gear who generate over NT$460 billion a year in value for the country, divided into four major product categories.

Of that, NT$41.8 billion comes in sporting goods and a total of NT$115.6 billion a year is generated from the production of bicycles, including NT$62.1 billion in finished bicycles and NT$53.5 billion in components.

In the third category – textiles – Taiwanese vendors generate annual output value of NT$306.6 billion in products like functional fabrics and athletic apparel. The manufacturing base of the fourth category – athletic footwear – has moved away from Taiwan, but its R&D and design have remained at home and support the production of more than 100 million pairs of shoes a year.

On Taiwan's stock market, many sports-related manufacturers have share prices exceeding NT$100 (a threshold considered to be a sign of respectability), including Eclat Textile Co., Ltd., Giant Manufacturing Co., Ltd., Merida Industry Co., Ltd., Feng Tay Enterprise Co., Ltd., Li Cheng Enterprise Co., Ltd., and KMC (Kuei Meng) International Inc.

Among the sectors they represent, the bicycle has continued to deliver steady growth in recent years despite an overall slump in Taiwan's exports. There are also many unlisted companies in the sporting goods sector who are hidden champions – inconspicuous companies that are top performers in their respective fields. 

This highly valued "Made in Taiwan" (MIT) sports team has developed a powerful MIT brand that major global sports gear vendors have come to rely on to experiment with new methods, new eco-friendly production processes and new materials.

Three 'Gold Medal' Achievements

Among the many achievements of these Taiwanese manufacturers, three of them stand out in demonstrating their gold-medal pedigree.

First, in the most anticipated of all Olympic events, the men's 100-meter dash, Usain Bolt of Jamaica will be in Rio to try to win gold in the event for the third consecutive Summer Games. The track shoes he held up after taking gold in the event eight years ago in Beijing came from Taiping District in Taichung. (See Shun Chan Industry)

Second, for the soccer World Cup, Taiwan spent three years developing a ball with a more stable flight path that could be booted more accurately and would not absorb water during rainy matches. A company located in suburban Taipei, Long Way Enterprise Co., pioneered a solution using robots to bond panels together in place of the traditional method of hand-sewing balls. These new balls were used in the 2010 and 2014 World Cups and the recently concluded Copa America and Euro 2016 competitions.

Third was an effort to reduce pollution and the consumption of water in dyeing processes and not be vulnerable to water shortages. In collaboration with Nike, Far Eastern New Century Corp. developed a water-free dyeing process for sportswear that relies on recycled carbon dioxide to infuse the fabrics with color.

According to figures from market research firm Euromonitor, the global sportswear market is worth US$170 billion (NT$5.4 trillion) a year. Global retail bicycle sales total US$50 billion a year, and the general sports industry is even bigger, with annual sales of about US$470 billion (NT$15 trillion) per year in the United States alone.

Sports have become a globalized market, creating many opportunities for MIT sportswear and sporting goods manufacturers in the future. CommonWealth Magazine traveled around Taiwan to visit these pioneering manufacturers of athletic goods to find out more about their methods and ambitions, starting in the central part of the country, where a dream may be coming true.

Amos Ho, a manager with one of the world's biggest athletic shoe producers, the Pou Chen Group, confirmed that the company is trying to get major global brands to set up R&D and design centers in central Taiwan, which would be a huge boost to Taiwan's hopes of emerging as a global sports design center.

Global Sports Design Center

That dream may face some obstacles. In response to Pou Chen's ambitious initiative, many textile-related departments at Taiwanese universities are aggressively recruiting students. But Cheng Kou-bing, a professor with Feng Chia University's Department of Fiber and Composite Materials, says there's a real concern that Taiwan does not have enough professors and students doing research in the textile field and will not be able to meet the big brands' R&D and design needs.

If Taiwan harbors ambitions of becoming the world's design and R&D center for sporting goods, it will also need government support and incentives and access to free-trade deals, Cheng says.

"The current impasse in the TPP alone has put Taiwan at a big disadvantage against Vietnam in exporting textile products to the United States. The world's major brands cannot feel confident about shifting their centers of gravity to Taiwan," Cheng says.

Taiwan was not part of the first round of Trans-Pacific Partnership (TPP) negotiations, and with ratification of the agreement in the United States held up by election politics, a huge question mark hangs over when Taiwan might gain access to the new Asia-Pacific trading bloc headed by the U.S.

To find out why Taiwan's national MIT team has been able to perform on the world's most exalted stages, CommonWealth then went to Nangang District in Taipei to visit the company that furnishes Taiwan's top female badminton player, Tai Tzu-ying, with her rackets. Those rackets have the firepower to send shuttlecocks traveling at bullet train-like speeds with the power to crack open a watermelon.  (See Victor Sport)

At this year's Olympic Games, more than 20 badminton players besides Tai from South Korea, Malaysia and other countries will be using Victor brand brackets made by Taiwan-based Victor Rackets Ind. Corp., breaking through the traditional dominance at the elite level, including the Olympic Games, held by Japanese racket maker Yonex.

How difficult has it been for Victor to get accepted at the Olympic level? It has had to meet the extremely demanding requirements of elite players that rackets be as light as possible, yet still pack a powerful punch on smashes but also allow players to get back opponents' shots with plenty of touch. These may seem like conflicting traits, but Victor has figured them out.

First, the racket must be made of high-strength lightweight materials that give it sufficient rigidity to allow the racket's strings to be strung at the highest pressure. The rackets of regular players are usually strung at just over 20 pounds of tension, but that goes up to 35 pounds for today's elite players.

"Racket surfaces are as hard and have the same tension as rocks. If the material used to make the racket is not robust enough, the racket will simply cave in," says Victor Rackets President Bill Chen.

Chen says South Korean male badminton star Lee Yong-dae once actually pierced a watermelon with a shuttlecock smashed by a Victor-brand racket, made possible by the racket's high-tech materials that give every smash incredible power.

Having its rackets seen at top-flight competitions has paid dividends for Victor's brand marketing. When Lee performs well with his Victor racket, demand for the brand's products surges. Sales in Korea of the high-end rackets costing between NT$5,000 and NT$7,000 were once negligible but now often leave Korean distributors out of stock.

To Taiwan, the ability of a home-grown brand to find favor with elite athletes competing at the highest level is just another indication that Taiwan's sporting goods have climbed the ladder, from cheap, made-in-China commodities to products that are internationally competitive.

Shiang Tzyy-yuang, a professor in the Department of Athletic Performance at National Taiwan Normal University, says Victor has successfully emulated major international brands such as Nike, Adidas and Yonex in building a vertically integrated value chain consisting of R&D and manufacturing, research organizations and schools, the Industrial Technology Research Institute and top athletes. 

Soccer Balls: Robots in Control

A facility in the Taipei suburb of Xindian proves that Taiwan's sports manufacturing sector no longer depends on cheap labor. During the recently concluded Euro 2016 championships to the 2010 and 2014 World Cups, the eyes of hundreds of millions of fans were glued passionately to their television sets following the action. Few of them knew, however, that the balls being used or the cleats worn by the players were made in Taiwan.

The balls came from Long Way Enterprise, whose CEO, C.B. Hsu, grew up in the small town of Shifen in what is now New Taipei in a coal mining family. Hsu grew up pushing around coal mining carts and is not afraid of hard work or taking on challenges.

In 1975, he set up his own business selling Velcro tape and then got into manufacturing protective gear for different sports, becoming the biggest supplier of protective items to Major League Baseball and to ice hockey leagues and emerging as a true hidden champion in the sector.

But Hsu was surprised when Adidas came to him in 2006 to make World Cup soccer balls because he had never produced them before and was not that interested in the sport to begin with.

So he admitted to his lack of experience in the field, only to be told by Adidas that "it's because you haven't done this before, you won't have the burden or constraints of tradition so you can boldly innovate and challenge [the status quo]."

Among the problems that Adidas wanted to address was the tendency of traditional soccer balls to absorb moisture and get heavier when used in rainy weather, influencing the ball's flight path and possibly match results. In addition, balls had always been sewn together by hand, but the lack of precision in the process made it difficult to get perfectly round spheres consistently, which also affected performance.

To deal with these problems, Long Way experimented with bonding together the panels that make up a soccer ball's outer shell. The process eliminated the hand-sewn seams that let moisture in and created a smooth ball more resistant to the thumps it absorbed by being kicked around. But Long Way still had to figure out what the optimal bonding process was while pumping out a perfectly round product.

Hsu's answer was to invest in an automated production line staffed with robots. It started with lasers automatically cutting the propeller-shaped leather panels with high precision and then turning the panels over to robots to be thermally bonded together. Hsu believed that was the only way to achieve the extremely high precision and panel positioning requirements needed, and the result was a consistently round and tight soccer ball.

The last piece of the puzzle to give the ball's flight greater stability was resolved by a Long Way innovation inspired by another sport. Hsu pointed to the rough texture of the balls being used at Euro 2016 in France to explain the solution.

"The ball's surface has many little raised dots to control the ball's flight speed and angle and stabilize its flight. Soccer balls used to be smooth; this rough texture is based on the same principle as dimples in golf balls, which allow balls to maintain steadier flight paths," Hsu says. 

Six Strings of Yarn = 1 Pair of Shoes

Athletic footwear has also entered the Industry 4.0 era and is now being knitted together using the same process as socks. Getting a closer look at the changes upending this traditionally labor-intensive sector means heading to the heart of Taiwan's shoe-manufacturing cluster – Taichung.

In a speech Feng Tay Enterprises RD&D General Manager Mark Sheu is giving at the Footwear & Recreation Technology Research Institute, he reveals that Taiwan is entering an era of shoe manufacturing when workers watch machines run from an air-conditioned environment.

Taiwan Footwear Manufacturers Association Secretary-General Lai Chi-chien says soaring labor costs for many years in both China and Vietnam are changing the way the industry operates in the future. Those high costs compelled Nike, Adidas and other leading athletic footwear brands as early as five or six years ago to collaborate with their supply chains on developing new shoe production processes.

The most labor-intensive tasks in making shoes have typically been sewing processes, with workers sewing different materials onto the shoe before applying the sole. Because of the wide array of materials used and the softness of shoe components, machines have trouble gripping them and holding them in a fixed position, making automation nearly impossible.

Consequently, the shoe factories supplying the big brands often employ at least 10,000 and sometimes even 100,000 workers.

But that is changing. In Taiwan's Yunlin County, workers are making shoes in the comfort of an air-conditioned environment. Hsu explains that today's flat knitting machines can knit "one-piece uppers" (the part of the shoe above the sole) with a variety of functions using six different types of yarn simultaneously, and only three workers sitting in a temperature-controlled computer room are needed to operate and watch over hundreds of machines.

So what are the implications for Taiwan of robots making shoes and soccer balls?

Two Opportunities, One Danger

They present two opportunities and one danger.

One of the opportunities is that Industry 4.0 brings shoe production back to Taiwan, creating new jobs. A new shoe manufacturer – Hueite International Co., Ltd., which sells shoes under the F • Knit brand – has already set up shop in New Taipei, the first time that has happened in 25 years, when the massive exodus of Taiwanese shoe producers began.

Only when entering Hueite's facility does one realize it is the more than four-decades old textile machine plant of Kauo Heng Precision Machinery Industrial Co., Ltd. Kauo Heng created and developed in-house a machine that can knit shoes and then decided to go into the shoe business itself.

All that's visible on the factory floor are Kauo Heng machines topped with bunches of yarn, and much like a fabric knitting factory the machines are in constant motion, and the shoe, the eyelets for the laces and the designated pattern take shape one-by-one. The knit product is then folded and sewn together and bonded with a sole sourced from an outside supplier to create a finished pair of shoes.  

Albert Ho, chief brand officer for Hueite and a second-generation member of the family that runs Kauo Heng, says the factory is the only shoe production facility in northern Taiwan and all of the materials it uses are MIT. Because most of the processes are completely automated, it saves large volumes of manpower, meaning that factories once forced out of Taiwan can now operate in the Taipei area.

The second opportunity is for Taiwan's robust supply chain to be transformed into a global design and R&D center for sporting goods. At a time when environmental and pollution issues are taking on greater importance, the responsibility of developing eco-friendly materials has fallen on manufacturers, and plastics company Shun Chan Industry Co., Ltd. has embraced the challenge.

Company chairman Jack Yang explains that chemical foaming agents are normally added to shoe soles in the past to achieve the proper texture, but the process is often accompanied by pollution concerns. Today, however, the company and its brand customers have developed a "physical foaming" process to make midsoles that uses nitrogen as a blowing agent to induce foaming. The process does not pollute and generates products that are lighter, meeting the environmental and performance demands of the big brands.

Aside from Shun Chan, Far Eastern New Century has developed waterless dyeing technology with Nike that replaces the water usually used as the dyeing medium with carbon dioxide, eliminated water pollution.

These innovations indicate that Taiwan has evolved into much more than just a contract manufacturing hub and is now capable of developing new materials and designing eco-friendly processes.

"Taiwan's industrial chain is a complete chain. Like Rome, it wasn't built in a day. The technology was accumulated through 20 to 30 years of trial and error," says Hwang Sheng-jye, a professor in National Cheng Kung University's Department of Mechanical Engineering.

"From shoes and sports equipment to performance textiles, they can meet the standards of international vendors and have introduced ‘smart manufacturing.' Taiwan should consider leveraging its old base to create the possibilities of tomorrow."

Feng Chia University's Cheng sees a similar opportunity.

"It's like an actor who through great performances becomes a director. Taiwan has the chance to become the Asia-Pacific R&D center for major brands. Taiwan-made athletic apparel has a real opportunity to shine at the Olympics, in ball sports and in track and field," Cheng says.

That's why Pou Chen is aggressively recruiting 50 major brands to set up R&D and design centers in Taiwan and have the local supply chain help them design and produce even better products.

If there's a danger, it's that the innovative manufacturing approaches introduced by Industry 4.0 are breaking down boundaries between industries. If soccer balls can be thermally bonded by robots and shoes can be whipped up by knitting machines, then electronics contractors can extend their businesses to the production of sporting goods.

In October 2015, Nike partnered with Singapore-based Flextronics International Ltd. to apply the tech sector's automation and supply chain management experience to shoe manufacturing. Adidas has already completed testing of its first automated production line in Germany and plans to begin mass production next year.

Feng Tay's Hsu says Nike and Flextronics have set up a factory in Mexico and Adidas is partnering with an electronics company on a factory in the United States, in both cases hoping to take advantage of the tech specialists' proximity to the market. Hsu sees the big brands as trying "to get rid of us" by collaborating with the tech sector and focusing on logistics functions, including such back-end management functions as transportation, warehousing and parts and component purchasing.

"A lot of people are saying they won't succeed, but I think they'll actually find success and surpass us very quickly," Hsu warns.  

For "Made in Taiwan" to ascend to the Olympics and the World Cup speaks to the success and the hardships of the transformation undergone by Taiwan's sporting goods manufacturers. Those achievements also showcase how Taiwan's old-economy sector has leveraged its industry cluster advantage. But threats also exist. The global supply chain is being reshuffled, and Taiwan can't afford to fall behind.

How the country's producers respond to these challenges will determine if the Olympics and the World Cup continue to be stages on which they shine.

Translated from the Chinese by Luke Sabatier