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CW: So why do we invite Diamond Group? 

If you happen to own shoes from brands like Puma, New Balance, Mizuno, or On Running, it's highly likely that they were manufactured in factories operated by the Diamond Group.

Annually, the Diamond Group produces an astonishing 35 million pairs of sports shoes distributed worldwide. But their expertise doesn't stop there; they also manufacture a wide range of sports equipment, including items like baseball gloves and ice hockey gear. This extensive production takes place across 18 factories situated in six different countries.

Now, let's provide an introduction for those who are unfamiliar with Diamond Group. Bang, could you please describe Diamond Group and its core business?

Bang: Diamond Group is a global contract manufacturer specializing in producing branded athletic footwear and sporting goods. We manufacture products for renowned global brands like Puma, Mizuno, New Balance, and various other athletic equipment brands. 

Our operations are conducted within our network of 18 factories spread across six countries. Many might not recognize the name "Diamond," but you've likely encountered our products without realizing it. Whether you're watching a major league baseball game or observing a professional football match in the Premier League, or even witnessing NHL action on the ice, chances are you've seen athletes wearing our products. We're all around you, even if our name isn't immediately familiar.

CW: So for example, for baseball, what's on a baseball player that would be made by Diamond Group?

Bang: Pretty much head to toe. From the batting helmet, the baseball glove, the bat, the ball, to the shoe. And also for ice hockey, we make everything except for the stick and skate.

CW: How did the company start? 

Bang: The company started about 50 years ago. So actually we got our roots from sporting goods, even before footwear. Our founder, chairman, Mr. Charles Chen, actually got his career start in the sporting goods business, working for a Japanese sporting goods equipment. Then from there, he became a representative and buyer for a US sporting goods brand.

And I think it was during that time, he saw the vibrant market for sport and the demand for sporting goods. At that time, Taiwan's sporting goods manufacturing industry boomed. And being an athlete himself, going around playing baseball, I think it was that passion for sports that got him the urge to also join this sports manufacturing boom in Taiwan.So he went into the business of manufacturing sporting goods. 

CW: Bang, can you share how you joined the company?

Bang: I became part of the company thanks to family ties. In 1997, after graduating from MIT Sloan School of Business, my girlfriend's father, who happened to be visiting his daughter, invited me to accompany him to a sports trade show during his business trip to Atlanta. I accepted the offer, and after three days at the show, he asked if I'd consider a career in this field. This was during the early days of the dot-com boom, and many of my classmates were heading to banking, consulting, or Silicon Valley. But the energy and excitement of the sports industry, given my own athletic background, drew me in.

CW: It's fascinating how lucrative this industry has become. I also discovered that you and Louis were involved in the software business. Can you elaborate on that and its success?

Louis: My journey was quite different from Bang's. Growing up in Taiwan's education-focused system, I didn't have much exposure to sports; I couldn't even tell my parents about participating in school activities like basketball games. During college, I witnessed the internet's rise and, along with friends and my future brother-in-law, Bang, we co-founded a software company. It's now listed as stock symbol 7547, known as Intumit, combining "Internet," "NTU" (National Taiwan University), and "MIT" (Massachusetts Institute of Technology). Six of the first 10 co-founders graduated from NTU, and three from MIT.

I never thought I'd return to take over a family business. I used to tell others, "Why be the second generation when you can be the first?" In 2003, I felt my family business needed me, like a calling. So, without overthinking it, I headed to our factory in mainland China and embarked on my journey in the shoemaking industry.

CW: How's Diamond Group's current status and why do you need a presence in numerous places?

Bang: Our operations heavily rely on labor and are influenced by the global trade environment. We continually strive to balance costs while meeting customer demands. Regarding labor costs and availability, it's like every decade, we move to the next location with cheaper labor.

CW: Initially, everything was produced in Taiwan, right? When did the first relocation occur?

Bang: The initial move was triggered when the U.S. imposed quotas on Taiwan's footwear and apparel production, around the late '70s or early '80s. We first migrated to the Philippines, then later to China due to rising labor costs. Subsequently, we expanded to Indonesia and Vietnam, driven by labor availability and duty considerations, especially in Europe.

"Europe imposed anti-dumping duties on Chinese footwear and aimed to support emerging Southeast Asian countries, granting preferential duty treatment to Vietnam and Indonesia. European exports compelled us to establish new production locations, as per our customers' requests.

CW: According to Commonwealth's recent report on the shoemaking industry in Taiwan, it seems that the current trend is to establish operations in India. Why is India becoming a hotspot for this industry now?

Bang: It appears that the interest in India goes beyond just finding a new manufacturing location; it's about tapping into the next promising market. Currently, China stands as the largest market for footwear, with a significant portion of the production catering to local consumers. India seems poised to become the next big market. This shift is somewhat reminiscent of Apple's decision to relocate its supply chain to India for iPhone production.

CW: Making a pair of shoes is a daily experience for most of us, but few realize the complexity and the number of people and processes involved. Can you shed some light on the shoe-making process?

Bang: Crafting a pair of shoes isn't as daunting as it might seem. Think of it like assembling a puzzle. The upper part of the shoe, what wraps around your feet, and the outsole, which touches the ground, are the two main pieces. When these come together, you have a pair of shoes. But if you dissect the upper, you'll find it's composed of various components like leather, fabric, and colors. If you break it all down, it resembles a puzzle. Making a shoe involves piecing together this puzzle for the upper, stitching it, and attaching it to the bottom.

While we often associate Italian handmade shoes with luxury and high prices, every pair of shoes, regardless of its origin, is essentially handmade. In a factory, numerous skilled hands are involved in various stages of the production process, from assembling the pieces to gluing them together. This is just within our factory; there are additional suppliers for materials and bottom components before we complete the final assembly.

CW: How many suppliers would be involved in making a pair of shoes? 

Bang: Probably close to 50 suppliers. 

CW: That's quite a number. So, in essence, the shoe industry is highly intricate. Making shoes can be even more intricate than manufacturing a Tesla. 

Elon Musk has always emphasized Tesla's self-contained production in one factory - a giga factory. They do their own stamping and have everything in-house. However, in shoemaking, collaboration with numerous factories and partners is essential.

Bang: Absolutely. In some ways, we consider ourselves producers of the most intricate products when compared to automobiles or the high-tech electronics industry. Shoemaking remains labor-intensive, with limited automation. While there is automation, it mostly involves component-level production. When it comes to assembling the shoe, excessive automation can hinder the creation of intricate designs. Manual labor allows for more detailed and delicate craftsmanship, as hands are more agile. Automation is a significant driving force in manufacturing innovation, but it has its limitations.

CW: Surprisingly, over 70% of Nikes and over 90% of New Balance shoes are made by Taiwanese companies. 

People may wonder why Taiwanese companies play such a dominant role in the supply chain for numerous major footwear brands. What's their secret?

Bang: Taiwanese companies have become preferred partners for major global brands due to their agility and reliability over the years. In the footwear industry, the ability to produce at the right cost, adapt to changing global trade dynamics, and swiftly mobilize resources is crucial. Taiwanese companies consistently deliver the best cost, value, quality, delivery, compliance, and sustainability, regardless of location or circumstances.

CW: A noteworthy anecdote my colleague shared was about how quickly Taiwanese suppliers can produce samples. Representatives from Nike or New Balance visited a factory in Taiwan, had lunch, played golf, and were presented with samples after their game.

Why are Taiwanese companies so efficient at producing samples and meeting customer demands?

Bang: This efficiency is a characteristic of Taiwan. There's a constant drive to prove our capabilities and outperform others, which includes speed. This pace is now accelerating further. For instance, we've transitioned from physical to digital samples and have virtual sampling centers in multiple countries. We can allocate projects to different teams based on workload, expediting the process wherever there's available capacity. This proactive approach defines how Taiwanese businesses operate and why brands choose to work with us; we can perform "magic tricks" for them.

Read: Lifting the veil on top Nike supplier, Feng Tay

CW: Are you feeling undervalued by consumers in Europe or the US?

Bang: No, quite the opposite. More of our customers now recognize the need for Taiwanese partners, and manufacturers who can bring their design ideas to life. We have a deeper understanding of the process compared to our customers, especially in the IC and semiconductor industry. This has led to a closer, more equal collaboration.

CW: So customers still rely on Taiwanese companies because of their expertise, machinery, and management skills. How many employees do you have globally?

Bang: Currently, we have 22,000 employees worldwide.

CW: What sets Taiwanese companies apart from Korean competitors like Samsung and LG, who also have vertical integration?

Louis: Unlike Korean companies, Taiwanese shoemakers believe in vertical cooperation rather than full integration. This approach gives us two significant advantages: agility and flexibility. Speed is key, both in decision-making and entrepreneurship. Taiwanese companies have a unique entrepreneurial spirit, which is hard to find in large corporations. This spirit gives us an edge over our South Korean counterparts.

CW: I believe this advantage goes beyond the shoemaking industry and applies to various other sectors. For instance, there was a remarkable example in a coworker's cover story about Fengtay's boss. An employee at Fengtay noticed the absence of accessible toilets for physically disabled workers in a factory. He mentioned it in the afternoon, and it was fixed the next day. This rapid response, Taiwan's agility, is something I can't envision in large Japanese, Korean, European, or American corporations.