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Sporting Goods Heating Up

Taiwan’s Golf Gear Manufacturers Bounce Back as Tiger Woods Returns to Glory

Taiwan’s Golf Gear Manufacturers Bounce Back as Tiger Woods Returns to Glory

Source:Justin Wu/CW

Taiwan’s top four golf club manufacturers all experienced a surge in business volume and the highest stock prices in some time following Tiger Woods’ victory.

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Taiwan’s Golf Gear Manufacturers Bounce Back as Tiger Woods Returns to Glory

By Ching Fang Wu
web only

Golf superstar Tiger Woods’ PGA Masters win following an 11-year drought has not only changed Woods himself, but given the entire global golf industry a potent shot in the arm. Having weathered a “lost decade,” Taiwan’s four largest golf gear OEM manufacturers are now welcoming the triumphant return of the king. With one company recording as much as five-fold growth in profits in the first quarter this year over the same period last year, golf stocks are set to bounce back vigorously against the background of an intensifying U.S.-China trade war.

The U.S.-China trade war has sent shockwaves through stock markets worldwide, sending the prices of numerous blue chip stocks spiraling. Against this background, one industry’s profitability and stock prices quietly climbed over the past month, all due to the man that changed the entire industry.

In mid-April this year, 43-year-old golf superstar Tiger Woods won the PGA US Masters Championship, his first major tournament victory in 11 years. As soon as the news got out, not only was the golf world abuzz, but the reverberations were felt all the way over in Taiwan, where 80 percent of all golf equipment is manufactured.

Source: Tiger Tiger Woods’ official fan page

“We haven’t seen such a high volume of transactions in a long time,” said O-TA Precision Industry assistant general manager Lee Chung-mu.

Taiwan’s top four golf club manufacturers, Fu Sheng Industrial, O-Ta, Advanced International Multitech, and Dynamic Precision Industry, all experienced a surge in business volume and the highest stock prices in some time following Tiger’s victory. In contrast to the pall cast over the stock market of late by U.S.-China trade tensions, golf stocks have performed exceptionally well.

Fu Sheng Industrial commands 40 percent of the global market for golf clubs, with clients including Callaway, TaylorMade, Titleist, Dunlop, and Mizuno. Pictured here is Lee Liang-chen, the second-generation CEO of Fu Sheng Industrial (Photo by Justin Wu/CW)

There is a saying in the sporting goods industry that goes, “Win on Sunday, sell on Monday.” Still, the Woods effect goes beyond strong sales for a day or two. In fact, the entire golf industry essentially moves up or down with Tiger.

He not only brings change, he epitomizes change.

                       

The period that saw Tiger down and out due to a divorce and multiple scandals was practically a “lost decade” for the golf industry, during which numerous golf course operators went bankrupt, and mergers took place across the industry.

In 2016, Nike withdrew from the golf club market, retaining just its golf apparel business. The same year saw the successive bankruptcies of golf retail giants Golfsmith and the Sports Authority. The following year, Adidas took a loss with the sale of its golf club brand, TaylorMade.

For years, there was a popular saying around the golf community: “He doesn’t just move the needle - he is the needle,” underscoring Woods’ importance as a barometer of golf industry health. Even outside the golf world, it would be hard to find another legendary player in the entire sports industry with comparable stature to Tiger.

“Buying momentum has been super strong (since the Masters)!” related Harry Arnett, senior vice president of Callaway during an episode of the company’s podcast. Even though Tiger Woods uses clubs made by competitor TaylorMade, the impact of Tiger’s comeback after more than a decade has swept the entire golf market.

“It’s not that people just want to buy whatever brand of clubs he uses. It’s not that simple.” All brands benefit from Tiger.

Source: Tiger Tiger Woods’ official fan page

Boomers Retiring, Sporting Goods Heating Up

Woods’ brilliant return is just one of the reasons for the golf market’s steady heating up this year. Another key factor is that this year the United States - the world’s largest golf market - welcomes the largest generation of retirements in history, as the post-war baby boomers start retiring. The sustained bull market since the financial crisis has further contributed to this retiring generation’s willingness to spend considerable amounts of money on sports and recreation, purchasing high-unit-price goods.

In 2018, around 24 million people played golf on American golf courses, the first increase (of 1.7 percent) in 14 years. And although it just represents just marginal growth, for a market that had been in the doldrums for years, it is tremendously exciting.

The capital market was the first to notice golf’s upsurge. For instance, Callaway’s stock has risen steadily in recent years, returning to the level it was at before the financial crisis. A good portion of this year’s sales is expected to come from the contribution of high-unit price products.

From the customer side, Taiwanese OEM manufacturers have felt the economic upturn. As a result, “in recent years there has been development of more diverse, high-unit price articles,” observes Lee Chung-mu.

Taiwanese OEM manufacturers turned in a decent report card in the first quarter of this year, with widespread growth in net after-tax profits over the same period last year. Among them, Advanced International Multitech saw more than 200 percent growth, and O-TA Precision over fivefold.

In the current U.S.-China trade war, the U.S. has not yet placed golf equipment on its tariff target list, and industry members continue to sit back and watch to see the impact on future markets.

How long can the current “Tiger effect” continue? This fall, Tiger Woods is set to take part in the first formal PGA competition ever held in Japan, the world’s second-largest golf market. And all eyes are on the King of Clubs to see how big a sensation he causes in Japan.

Taiwan, which handles contract manufacturing accounting for 80 percent of golf industry sales, is sure to be one of the biggest beneficiaries of Tiger’s triumphant return.

Translated by David Toman
Edited by Sharon Tseng

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