Returning to Taiwan for R&D and Production
Having gone to China for the huge market, only to move the production line back to Taiwan, Victor Sports found that only a racquet designed and produced in Taiwan could topple the industry leader. From Taiwan to Korea, Malaysia and Indonesia, many national team players are now sporting Victor’s distinctive corporate logo.
Returning to Taiwan for R&D and ProductionBy Kaiyuan Teng
From CommonWealth Magazine (vol. 603 )
At this year’s Olympic Games in Rio de Janeiro, over 20 athletes in the badminton competition will be wielding racquets made in Taiwan. Among them will be Taiwan’s youngest ladies’ champion, Tai Tzu-ying, and Korean star Lee Yong Dae.
Just how particular are top badminton players about racquet selection? Leading manufacturer Victor knows best. Bill Chen, president of Victor Rackets Corporation, relates that tolerances among racquets of the same model for most high-end racquets on the market are between three to five grams; however, racquets for use by professionals cannot vary by more than one gram.
Chan Peng Soon, formerly ranked third worldwide in the mixed doubles category, also uses Victor racquets. He says that competition has intensified so much over the past decade or so that the margin between winning and losing can be a question of a tiny fraction of a second, making racquet weight critical.
“I’ve played with a number of Victor racquets, and this JS-10 model is neither too heavy or too light. It’s just right for me,” says Chan.
Light, Fast, Strong, Stable
A good racquet must not only be lightweight, but offer both flexibility and strength. This is why Victor uses the same resin and graphene, reputedly the world’s lightest and strongest carbon fiber, that is used in Formula One race cars and airplane manufacturing.
Professor Tzyy-yuang Shiang of National Taiwan Normal University’s Department of Athletic Performance relates that a good racquet must provide excellent speed and stability all the way from the head to the shaft and grip.
This knowledge is the result of years of involvement in sports science and research by Victor.
In order to provide a Korean national team that puts a premium on speed with the best racquets, Victor went to Korea to take high-speed video of athletes striking the shuttlecock. They supplemented this data with interviews with athletes to glean critical data and insight into on-court usage. This was then fed into computer simulations before finally producing the racquet.
Victor has maintained long-running partnerships with the Industrial Technology Research Institute, National Taiwan Normal University, and National Chiao Tung University.
In the early days Victor made over 100 iterations of a racquet, trying more than 100 combinations of materials, weights, shafts, and heads.
Shiang believes that Victor is one of the few Taiwanese sports brands capable of bringing together sports science professionals, quickly developing prototypes, and proceeding to athlete testing. These are the critical factors that allow Victor to compete as a brand with other major international brands.
Recently, Victor has moved both its research and development center and high-end production line back to Taiwan.
Victor’s former five-story manufacturing facility in the Taipei industrial satellite area of Nangang became a storage space packed with merchandise after the company moved production lines to China, the dim light accentuating the feel of an aged factory in disuse.
However, in 2008, Victor’s second generation, led by company president Bill Chen, made the bold decision to move back to Taiwan and establish international marketing and R&D headquarters at home.
Today, the lights are back on and gleaming at Victor’s Nangang manufacturing plant.
How has an established brand like Victor gone about returning home and becoming an international brand?
Victor got its start in 1968 on the banks of the Keelung River as a contract manufacturer, moving its facility to Nangang a decade later. After getting its start largely in badminton, the company steadily shifted its production lines to China from 1989 in the effort to source more raw materials for badminton, eventually opening up markets in Europe, Southeast Asia, Canada and China.
The westward move paid off as the rapid development of the Chinese market helped Victor establish a foundation and accumulate sufficient capital to pour into R&D. On the other hand, as Chen notes, Victor faced similar pressures in China as other Taiwanese businesses in subsequent years, including rising wages and industry upgrading.
For years, the Japanese Yonex brand has dominated the high-end badminton manufacturing realm, while Victor concentrated largely in the early days on low- to mid-range racquets.
Industries must engage in transformation, and as Chen relates, Victor needs experts in sports science. Top R&D personnel, however, are hard to find in China, and tend to lack loyalty, so Victor decided to return to Taiwan in 2008 to set up R&D and marketing headquarters.
For the first year or two, Chen had planned to take on the high-end market by following the model of basing R&D and marketing in Taiwan while keeping the manufacturing in China. However, he soon learned that new research and development without enhancing the precision of conventional production lines made it impossible to produce high-end racquets capable of shaking the market leader’s dominant hold.
This is what ultimately led Victor to move its production line back to Taiwan, recruiting over 40 R&D and marketing experts spanning sports science, design and planning, and materials science.
Partnering with Korea, Taking on Japan
Even back in the company’s earliest days, company founder Chen Deng-li (Bill Chen’s father) appreciated the importance of branding.
“Our negotiating power regarding products was under the control of the brands. Sometimes when we did something well they would still ask for a discount. We had our own brand at the time, but only with low volume; the benefit was that we could at least control our own pricing, along with higher profits,” says Bill Chen.
Apart from good products, a good way to go up against an industry giant with one’s own brand is for your products to be featured in top-level competitions and achieve excellent results.
It took Victor a full nine years to convince the Korean national badminton team just to test its racquets.
Victor entered the Korean market in 2000, bearing fists full of cash in hopes of sponsoring the national team, only to get summarily rebuffed.
Chen relates that, at the time, the traditional badminton powerhouses of China, Korea, Indonesia, and Malaysia all had exclusive full sponsorship deals with Victor’s competitors.
“Although we had achieved a little bit of name recognition internationally, there were essentially no active players for us to sign with Victor; none of them would even consider negotiating contract to give our racquets a try,” Chen recalls.
As a result, Victor had little choice but to proceed from the middle school level, looking for sponsorship opportunities in the effort to raise awareness of the brand. “In Korea we took a ‘work towards the center from the outside’ approach, starting with corporate and club teams, with the next level being middle schools. Then, when the students join club teams, the best players go on to the national team,” Chen says.
It would be nine long years before this grassroots strategy yielded returns. The Korean national team finally agreed to take Victor products with them around the world to competitions. It also marked the first time that another brand had wrestled national team sponsorship rights away from Yonex.
The way Chen tells it, the first time Victor broke Yonex’s monopoly with its sponsorship of the Korean national team was a major watershed in the badminton world. At the same time, it allowed their racquets to be talked about on the same level as high-end racquets.
Chen also notes that Victor’s sales of premium-priced racquets grew 30 to 40 percent after securing sponsorship of the Korean national team, and product prices grew in a similar fashion.
Chen believes that perseverance is the most important quality in promoting a brand. Following years of closely observing the badminton market and proposing marketing strategies, “The most basic and most important thing is determination, and a willingness to invest; the rest is just about raising the technical level,” he says.
For instance, Victor has been with Tai Tzu-ying since she was in sixth grade.
Martin Lu, head of Victor’s global marketing division, adds that Victor truly began working on establishing the brand’s reputation after the second generational succession. “You reap what you sow. A lot of industry rivals noticed Victor playing the brand card, and in an instant were frantically throwing down enough money to buy a house. But none of them kept up with their investments.”
From the industry exodus to returning to Taiwan to set up corporate headquarters, Victor boldly took on the high end sports market, taking Victor’s manufacturing and a Taiwanese brand to the ultimate sports arena – the Olympics.
Translated from the Chinese by David Toman