Last February, lockdowns and work stoppages in China put an end to all shipments, causing big U.S.-based customers like TaylorMade and Callaway to anxiously urge Advanced to resume work as soon as possible. But in March, as the epidemic spread to Europe and the Americas, becoming a pandemic, customers slashed and delayed orders.

Keeping distance, golf storms back!

“In the first half of last year (customers) even said they wanted to cancel new product development,” relates AG CEO Robert Liu. The first quarter is traditionally the busy season for shipments, but all the news was bad news once work resumed following the Lunar New Year holiday.

Tide started turning in June

Golf suddenly became one of the few outdoor recreational activities suitable for “social distancing” and Americans, bored to tears, started playing golf, with over three million new players, setting a new all-time record. This prompted the National Golf Foundation to designate 2020 as the year in which golf made a comeback.

The United States accounts for half of the global golf market. And the golf industry, whose fortunes previously seemed to hang on Tiger Woods’ competition record, has suddenly seen a change of fortune.

With inventory sold out from sales channels, all of AD’s manufacturing plants started working full speed ahead. Even the new Vietnam plant, which had put on the brakes on expansion due to the pandemic, abruptly rebooted. “We had to make up for six months of orders in three months,” recounts Robert Liu.

Thanks to the intense surge in make-up production, AD recorded 31.64 percent revenue growth over the second half of last year compared to the same period the previous year, enough to rank seventeenth on CommonWealth’s  Corporate Resilience Survey. And this momentum has continued through 2021, with no signs of cooling off.

“This year there has been no slow season; everyone’s production capacity is full,” reports company chairman and president Cheng Hsi-chien, who has not seen such an optimistic outlook for golf industry performance in ages, nor has he had room for bargaining with customers in years. It is safe to say that Taiwanese golf suppliers have all profited nicely from this industry-wide prosperity.

However, cracking open the financial reports of the golf industry’s Big Four, compared to the industry veteran Fusheng Group, which operates on a higher revenue scale, and smaller and more flexible manufacturers O-TA Precision Industry and Dynamic, the Advanced Group had the largest increase in net profit after taxes last year, achieving its highest profitability in 13 years. This shows that the golf craze can only be partially credited for the Advanced Group’s outstanding performance. Additional orders in the second half of the year made up for lost sales in the first half, as overall golf industry revenue actually dropped slightly over the previous year.

The main engine of growth was 3C products. AG made it to Apple’s list of top 200 suppliers at one point. As noted in various media reports, AG engages in contract manufacturing of tablet cases.

Going outside comfort zone to take on massive 3C sector

Advanced is the first among Taiwan’s sporting goods supply chain to successfully branch out into carbon fiber composites for 3C products, specializing in such accessories as notebook computer cases and protective cases for tablets. Thanks to the remote business opportunities brought upon by lockdowns, last year the composite materials department, which supplied products to 3C brands, saw tremendous profits, with revenue increasing 70 percent, accounting for 25 percent of total company revenues.

AG has been able to feed at the 3C trough thanks to a bold decision outside of the comfort zone.

A dozen or so years ago a particular major U.S.-based consumer electronics maker purchasing agent showed up at DG’s headquarters in Kaohsiung’s Xiaogang District asking the company to help make a composite materials board. The board should be light, hard, and resistant to pressure, to be sandwiched in tablet computer protective cases.

Advanced has made carbon fiber composites since its founding, from golf clubs and heads, to bicycle frames, first-class cabin seats in Boeing 747s and mechanical arms, even integrating into upstream carbon fiber cloth materials. Having accumulated extensive carbon fiber composites know-how over the years, AG CEO Cheng Hsi-kun, Cheng Hsi-chien, and Robert Liu nevertheless grappled over the prospect of a new major U.S. customer.

Although the Advanced Group is the second-largest maker of golf equipment worldwide, it is a mature market with less than two-percent annual growth. Still, while 3C is a high growth industry, it shows that shipments are highly variable, while the rapid speed of product life cycles and production volume are completely different from those of the golf sector.

Still, when a major customer’s key contact person stated, “If you don’t do it, we won’t have anything to sell!” AG had little choice but to bear down, and utilizing the specialized machinery the customer had purchased, set out with trial production at the Chien Chen Industrial Processing Zone.

“At first there were orders for several million pieces, which became tens of millions,” relates Liu. Starting right out with three round-the-clock production shifts, this was somehow still not enough volume. Consequently, the company took over additional space in its Dong Guan golf equipment facility in China and set about playing catch up.

Carbon fiber composites require a lot of manual labor, with the carbon fiber cloth cutting and layering demanding extensive manpower, as well as a high degree of automation. Advanced devised a proprietary production technique to raise production capacity by orders of magnitude, earning the favor of a major U.S.-based customer.

A main characteristic of Taiwan’s composite materials vendors is flexibility, knowing how to control quality and design products,” relates Chen Chung-ping, special assistant at the Institute of Material and Petrochemicals Research at the Industrial Technology Research Institute, who collaborated on carbon fiber composites in AG’s early days.

Chen observes that, a decade ago, compared to other carbon fiber composites competitors in the industry who also got their start in sporting goods with diversified development, which had achieved substantial revenue results, the Advanced Group moved relatively slowly despite its urgent need to find new opportunities. And a major U.S. customer’s crucible came at the right time, “It was a touchstone for Advanced’s transformation.” 

Nowadays, in addition to making 3C products for notebook computers and automobile finishing parts, Advanced has extended its feelers out into the athletic shoe realm.

Secret weapon marathon racers, nearly banned

Marathon runners have set one after another new records in recent years. One thing they have in common is that their shoes all have a shock-absorbing carbon fiber plate inside. While they have given runners wings in competition, they have also brought about constant controversy and have nearly been banned.

The Advanced Group is one such carbon fiber vendor. In the future, not only marathon racing flats, but also tennis shoes will adapt this carbon fiber, and someday soon basketball shoes could also use the carbon fiber plate to help improve performance in the athletic arena.

From golf gear, to 3C, and on to athletic shoes, Advanced Multitech has always maintained relations with industry heavyweights, exemplifying the crux of diversified operations.

“In nearly every industry, all it takes is one big client, and seizing upon the opportunity, to prove one’s mettle,” offers Cheng Hsi-chien.

Chen is still constantly thinking of new opportunities. In addition to Advanced Multitech itself, company subsidiary Launch Technologies also holds tremendous potential. “The skin of a golf ball is very thin, using injection molded plastic at under one-mm thick. We can develop diversified products, maybe starting with earphones.”   

Advanced Multitech is well situated in various industries, thus engaging in diversified adjustment of the revenue structure could perhaps offset the fluctuations brought on by black swan events like Covid-19 to make the company a winner in hard times.

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Have you read?

♦ 2021 Top 2000 Survey: Resilience in the face of adversity

Translated by David Toman
Edited by TC Lin
Uploaded by Penny Chiang