New frontiers for Taiwan
From solar panels to cars and mobility products for the elderly, Taiwanese producers seek new markets in Asean. By Nareerat Wiriyapong in Taipei and Taichung
Growing business opportunities in Southeast Asian nations have captured interest from leading Taiwanese firms that are entering these new markets.
Tatung Co, a leading Taiwanese conglomerate, is looking to expand its presence in Myanmar where it has installed solar panels in two villages to help increase agricultural productivity, said president Lin Kuo Wen-Yen.
“Myanmar is in a tropical area and has lots of sunshine but our survey showed that Myanmar has only one harvest per year while in Taiwan we have two to three. One of the key reasons is that they don’t have enough water for irrigation,” she told journalists at the company’s headquarters in Taipei.
With Tatung’s solar panels, villages can power pumps and have two or even three harvests yearly. Agriculture accounts for 70% of Myanmar’s GDP and improved farm productivity will benefit the economy overall, Ms Lin Kuo noted.
“We believe solar will generate our new business in Myanmar,” she said. “Myanmar is in the early stages of opening up sectors such as energy, agriculture, industry and housing and the country has a severe electricity shortage, nearly 30% on average.”
Tatung offers both solar rooftop installations and larger-scale solar farms, but financing and finding a partner in Myanmar remain as challenges.
“A solar system is a long-term commitment. Usually, the customer requires a 20% or even 25% warranty on a solar system. We don’t think we can do that from Taiwan so we do need a local partner to do that,” said Ms Lin Kuo.
Tatung is also studying business opportunities in other Asean countries where electricity supply is spotty, such as the Philippines and Indonesia.
Tatung used to have a subsidiary in Indonesia in the 1990s, she said, but anti-Chinese sentiment at the time made operations difficult. “If we can find a partner, we will be interested (in entering Indonesia again) because the country has high GDP growth.
“We hope we can penetrate these markets in two to three years, most likely in energy-related products or systems, for example, solar systems and energy infrastructure such as generators, transformers and power cables.”
The 99-year-old company, best known for home appliances, is also seeking opportunities in Singapore and Malaysia. It has a small subsidiary in Singapore selling air-conditioners, motors and cables. In Thailand, where Tatung makes home appliances in Amata Nakorn Industrial Estate, solar and other green energy products represent opportunities.
Luxgen Motor Co, Taiwan’s first automobile brand, has also studied market opportunities in Southeast Asia countries, including Vietnam, and is now “looking for the right products to enter this area”, said Jeffrey Chan, general manager for international business department.
After establishing its presence in Saudi Arabia, the UAE and Oman, Luxgen is now looking at Asean.
“We are looking at the possibility of setting up an assembly facility in Asean. We have to look at the availability of parts suppliers before we make the decision but basically these markets are important because they are located near us,” said Mr Chen.
Currently, Luxgen operates a manufacturing facility in the Philippines, producing Nissan cars only for the domestic market. “One possibility is to use our current facility in the Philippines or probably cooperate with our partner Nissan (to set up factories) in other countries,” he said.
Other potential markets in Asia are Indonesia, Thailand and Malaysia, while Australia and New Zealand also have potential. In all these countries, cars drive on the left side of the road while in Taiwan they drive on the right.
To set up a production base in Asean, Mr Chen said, Luxgen first needs clarity on import duties. For example, vehicles exported from Malaysia to Indonesia face import duty of 20-60% but for exports from Taiwan to Indonesia, the duty is around 10-50%. Exports from Taiwan to China are subject to 10% duty but there is no tax on vehicles exported from Indonesia to Malaysia.
Under the Asean free trade agreement, import duties on automobiles are to be eliminated in 2018 but some countries have yet to comply.
“Asean countries are supposed to enjoy low import duty,” Mr Chen said. “Taiwan is not part of the agreement, so we have to pay import duties at a very high rate. For Vietnam, where we have distributed products, for instance, we have to pay 77% import duty but from 2018, all duty in Southeast Asian countries will be zero.”
He also noted that Myanmar has been restricting imports of right-hand-drive used cars, with a full ban effective this year, in a bid to spur local production and draw foreign investment into carmaking. Almost all of the cars on Myanmar’s roads are second-hand and 90% are from Japan, even though the two nations drive on different sides of the road.
Used-car imports surged after the government liberalised restrictions in 2012, the year after breaking from half a century of military rule, during which driving was shifted from the left side of the road to the right. But until recently Western trade sanctions blocked imports of left-hand-drive cars from Europe and the US, forcing motorists to turn to Japanese vehicles despite the obvious difficulties they presented.
“They hope that within two years’ time, all the vehicles in Myanmar have to be left-hand drive,” said Mr Chen. “This is a growing market where we see potential. But at the same time, the import duty is very high at over 100%. But we believe that for some, purchasing power is very high so we are looking at this market.”
At present, Luxgen sells vehicles in its domestic market only. With a market share in of around 10%, it sold 17,000 units in 2016 and projects 20,000 sales this year.
Heartway Medical Products, a manufacturer of scooters and wheelchairs, aims to expand its exports to Asian countries with Thailand and India among the main targets.
Heartway exports 99% of its products, which include manual and electric wheelchairs and scooters. The United Kingdom, United States and Germany are its top export destinations while Japan, Korea, Singapore and Malaysia are major markets in Asia. Its manufacturing facility in Taichung Industrial Park, in central-western Taiwan, rolls out about 2,000 units a month, of which 75% are scooters, 20% powered wheelchairs and 5% manual wheelchairs.
“The UK and other western countries are advanced economies that have well developed social welfare,” Thomas Ho, Heartway’s marketing and sales representative, told Asia Focus.
In most markets, the government subsidises some if not all of the price of a wheelchair.
“We have begun to export to Thailand and are looking for bigger volume in the years to come. Other potential markets are India and the Philippines,” he said.
As Asia continues to age rapidly, Step2Gold Co sees rich potential for one of its innovative products — the Ta-Da chair, a mobility aid combining a walking stick and a seat. It was among the Silver Award winners at the 2017 Taiwan Excellence Awards.
Designed exclusively for people aged 60 or over, the Ta-Da chair focuses on safety and easy operation and weighs only 900 grammes. A rotary switch lets the user deploy the seat from the stick automatically to immediately offer a sitting rest.
According to Andre Hung, a sales representative at Step2Gold, around 70% of the global population takes part in outdoor activities. Encouraging the elderly to go outdoors will help them stay healthier, thus lowering medical expenses and social costs.
Last year, the Ta-Da chair was unveiled to the world with Japan as its first export market. Aronkasei, a leader in daily life products for the elderly in Japan, is handling distribution and response has been good. Step2Gold now has many more countries in its sights.
“We are putting our focus on promoting our sales in Southeast Asian countries including Singapore and Thailand,” said Mr Hung.
He believes the Ta-Da chair might also appeal to younger and heathier consumers who are active in the outdoors, so there is potential for a crossover market in outdoor activity and mobility aids. These are the targeted markets for the Ta-Da chair, he said.
“We are looking at the possibility of setting up an assembly facility in Asean. We have to look at the availability of parts suppliers before we make the decision but basically these markets are important because they are located near us” JEFFREY CHAN Luxgen Motor Co