Made in Taiwan: Re-Positioning a Behind the Scenes Business Success Story

Made in Taiwan: Re-Positioning a Behind the Scenes Business Success Story

What you need to know

With production for top brands like Nike, Adidas, Under Armour and Lululemon, Taiwan already accounts for 70% of the world’s output of functional fabrics, but can the country's textile industry take a bold step forward?

By Joseph Judd

Taiwan’s textile industry, in particular functional textiles, is one of the country’s biggest export success stories. In the face of strong competition from other Asian competitors and increasing production costs, Taiwan has carved out a niche for itself in functional textiles, including functional apparel, home textiles and industrial applications. Thanks to investment in R&D, advancements in manufacturing capabilities and cross-industry collaboration, Taiwan has developed an integrated supply chain, with different companies across the island specializing in areas such as man-made fiber manufacturing, weaving, spinning, dyeing and finishing, among others. Taiwan now accounts for 70% of the world’s output of functional fabrics, and is the sixth largest textile exporter globally.

Though most of this effort has taken place behind the scenes — most consumers don’t know where or how their performance apparel products are made — Taiwan’s strengths in functional textiles are widely recognized in the industry. For many years, Taiwanese suppliers have excelled at offering efficient, friendly service and a wide range of high-quality fabrics at competitive prices. While brands like Adidas, Patagonia and North Face have built the consumer culture and demand for their products through branding and marketing, Taiwanese companies have done the back-end work: getting the products made and shipped.

‘Fast (sports) fashion’

This model has worked well for Taiwan. As yoga and Cross-Fit caught on, branded gym clothing became ubiquitous. Active-wear turned trendy, even attracting consumers who could not be described as “active." The performance apparel sector boomed, product lines expanded, and a raft of new brands were born. At the same time as fast-fashion became entrenched — driven by the remarkable rise of brands like Zara and Uniqlo — so did "fast sports fashion." This has been great news for Taiwan’s textile industry, which has directly benefited from the growth of brands like Under Armour and Lululemon, and the steady sales of giants like Nike and Adidas.

Yet much like other component and manufacturing-based industries in Taiwan, competition is fierce. Japan and Korea, which boast large conglomerates and vertically-integrated manufacturers, offer economies of scale, advanced R&D facilities and well-marketed ingredient brands. The signing of the China-Korea Free Trade Agreement in 2015 is putting further pressure on Taiwan’s textile industry, which relies on China as its biggest export market. As Korean firms look to expand their investments in China, there’s a risk of Taiwan’s products being pushed out. And with Vietnam’s inclusion (and Taiwan’s unfortunate exclusion) in the Trans Pacific Partnership Agreement (TPPA), there’s a danger that significant portions of business will shift to South East Asia, chasing lower tariffs, cheaper labor and improving manufacturing capabilities. To hedge against these risks, Taiwan should consider how it can differentiate from the competition by developing a more focused and strategic position in the market.

A three-layered approach to branding

To build a higher-value position for itself in functional textiles, Taiwan should take a three-layered approach.

The first is up to individual manufacturers. Global-facing companies across the textile supply-chain in Taiwan need to consider and understand what their real value is in the world of functional textiles. They need to understand their competitive advantages, how to enhance and build on those, and how to communicate them to the marketplace; letting the world know they exist, and that they have the technology, products and knowledge that can help brands meet their consumers’ changing demands, is critical.

The second approach concerns the functional textile industry as a whole. Although efforts have been made by local government departments to boost R&D, innovation and cross-industry collaboration, the industry as a whole is still perceived as primarily price-driven: a supermarket where foreign brands can come to buy decent quality fabrics for a good price. Taiwan still lacks the associations of industry-leading quality, innovation and sustainability, particularly when compared with manufacturers from Europe, Japan and the US. The textile industry in Taiwan needs a rebrand, focused on a set of strategic messages and supporting marketing communications that can change Taiwan’s perception as a destination for lower-value textiles.

The third approach touches on a deeper question about Taiwan’s role in the world, and the kind of future the country wants to build for itself. To drive Taiwan’s textile industry toward a higher-value position requires support from the government and a rethinking about what kind of global image Taiwan wants to establish. As a country, Taiwan is seen a leader in cost-down manufacturing – developing good quality products at competitive prices. But with growing competition from China and Southeast Asia, it’s unlikely this will remain sustainable into the future.

There are many examples of successful country branding which Taiwan could learn from. Switzerland has built a reputation for its design prowess. Germany is widely recognized for advanced engineering and manufacturing. New Zealand, with its strategic 100% Pure NZ campaign, has managed to craft a position for itself as "clean and green" — branding the country as a leading destination for adventure tourism and a country rich in natural produce. Of course, the success of these country brands is closely tied to their resources and competitive industries — such as Germany’s advanced automakers, Switzerland’s high-end watchmakers, and New Zealand’s stunning landscapes. Nonetheless, each country has managed to build a positive global image and reputation for itself based on leveraging and enhancing those advantages.

A bold step forward

Clearly, executing these three layers of branding — across individual companies, the textile industry, and Taiwan — is an ambitious proposition. But ambition, combined with clarity of purpose, is exactly what Taiwan needs to take the next step in its economic development. Once initial companies see the financial fruits of building more strategic, market-focused B2B brands, this could create a snowball effect with other manufacturers following suit. Taiwan’s textile industry representatives can then build a marketing platform based on driving and promoting these new B2B brands. The Taiwan government can then use the textile industry’s success story to rally other local industries, and gradually build a higher-value position for Taiwan and its companies.

Taiwan’s eco opportunity

One of the major trends in the textiles industry today is a greater demand for environmentally sustainable and socially responsible products. As more consumers demand evidence of sustainable sourcing, new brands are being launched — many online, through communities or crowdfunding platforms — to meet those demands. To target these new brands, along with established brands in the market, a smart approach for Taiwan’s textile industry could be to position itself as the world’s leader in eco-friendly and socially responsible functional textiles. Complemented by its existing cost-down know-how and advantages, such a position would provide brands and their consumers with a clear choice: choose Taiwan for textiles with the lowest possible environmental footprint. For any brands serious about being sustainable, Taiwan should become their default option. Taiwan should also make an effort to prove that its workforce are treated and paid fairly — allaying any potential social concerns consumers or brands might have about workers’ rights or workplace environments. The collapse of a Bangladeshi textiles factory in 2013, which killed over 1000 workers, brought significant attention to the poor working conditions and worker’s rights commonly associated with the textile industry. Taiwan could show that it takes these responsibilities seriously and by promoting its own high standards become a leading example in Asia for others to follow.

Of course becoming recognized as the world’s leader in eco-friendly and socially responsible functional textiles would also require advancements in innovation, since leading brands would still demand industry-leading performance. But with focused and continued investment in R&D and strategic branding, there’s no reason why Taiwan couldn’t own this position. From a broader perspective, if Taiwan’s textile industry can own this space, there’s no reason why other technology-focused industries couldn’t follow suit. Global warming poses arguably the greatest threat to humanity.

What better brand message could there be than positioning Taiwan as resolved to alleviate this threat by making sustainable and socially responsible products affordable for the world?

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