TAISPO show REPORTS Wednesday, March 20, 2013

Pact boosts Taiwan sporting goods exports to mainland

The Taiwanese sporting goods industry is upbeat because exports have received a boost due to the Economic Cooperation Framework Agreement (ECFA). The trade agreement, signed by China and Taiwan nearly three years ago, reduces or eliminates duties on several export categories.

by Barbara Smit

The Taiwan Sporting Goods Manufacturers Association (TSMA) has high expectations for future growth because of the agreement, which saw some export duties from Taiwan to China reduced last year. More reductions go into effect this year.

TSMA officials say the ECFA undoubtedly contributed to a boost in sporting goods exports for 2012, which rose more than 5 percent to the equivalent of about $1.6 billion.

Golfing equipment was one of the biggest beneficiaries. Exports rose more than 32 percent to $355 million. Golf is the second-largest export category for Taiwanese sporting goods equipment after fitness equipment, which reported almost flat exports in 2012 of $627.5 million, down by 0.8 percent. Officials say some fitness equipment categories were not included in the ECFA. Suppliers are seeking to broaden the agreement to cover a wider range of fitness products. A new round of negotiations on the ECFA are expected to consider these and other export categories. Skiing equipment exports also fared well in 2012, rising 13.7 percent, while racquet sports exports climbed 19 percent. On the other hand, skate exports fell by more than 30 percent. The relatively small category is not part of the ECFA.

Exports to the United States, which is easily the largest export market for Taiwanese sporting goods manufacturers, grew by 1.9 percent to $599 million. However, China accounted for the biggest percentage increase, as exports swelled by 73 percent to $173.5 million last year.

This was partly offset by a decline of 39 percent in exports to Hong Kong. Other countries that imported fewer Taiwanese sports products were Italy and Spain, two of the markets most affected by the European financial crisis. TSMA officials believe the free trade agreement will have a stronger impact on the industry going forward. “If everybody was on the same level, competition could turn to other things, such as innovation and technology, which are the strong points of the Taiwanese manufacturers,” said Catherine Wang, chair of the TSMA. This approach is a strong motivation for the TSMA to support the S-Team, the partnership between some of the leading Taiwanese fitness equipment manufacturers and their suppliers, to make the supply chain more efficient (see related story in yesterday’s TaiSPO Show Daily). Wang says the S-Team project takes up much of her time at the TSMA, due to the complexities of getting suppliers to work together. However, she regards the partnership as the most important development plan for Taiwan’s specialist fitness industry in the coming years. “This is the way for us to become a high-end hub for fitness equipment manufacturing in Asia,” she said. Increased efficiencies are essential at a time when the industry is coping with lower profit margins in the OEM business. Some suppliers have tried to emphasize their own brands to compensate for the tougher OEM climate, but are sometimes taken aback by the cost of building a global brand. “This is a struggle point,” Wang said. “Our manufacturers want to do branding to increase their margin but they find that it costs a lot. They have to be careful and to try and learn from specialists in other industries.” The TSMA has also been striving to help its members boost their exports to emerging markets, particularly in the Americas. It started by focusing on Brazil but was taken aback by the country’s high import duties. The TSMA instead has begun recommending Panama as a regional hub for Central and South America. Such discussions and investigations are among the many widely-appreciated services delivered by the TSMA, along with its support for Taiwan’s sporting goods industry at international trade fairs as well as its sponsorship of the annual TaiSPO show in Taiwan.