Product design, once scorned by manufacturers of cheap knockoffs, has found new admirers among the high-tech manufacturers at the helm of Taiwan's information-technology industry. And designing products locally is proving to be a very lucrative advance.
It all started in those humid, dimly lit factories. Given a sample or a design, diligent workers excelled in reproducing goods at lower costs, and they guaranteed delivery time. That kind of efficiency over the last fifty years in original equipment manufacture (OEM) led Taiwan to become the behind-the-scenes production center for established foreign brands, and the manufacturing of toys, calculators, computers, and a myriad of other commonly used products fuelled Taiwan's stunning economic growth, often referred to as an "economic miracle."
Along the way, however, Taiwanese realized that by designing their own products the profits could increase drastically, and slowly a domestic product-design industry took shape. In today's information-based economy, Taiwan still leads the world in manufacturing microchips and some other high-tech goods. Products are designed by Taiwan's highly educated workforce and often assembled in factories in countries where manufacturing costs are cheaper. The journey from unskilled manufacturing to state-of-the-art product design has been made in fits and starts.
Industrial design concepts were first introduced to Taiwan in the early years of the manufacturing boom. The China Productivity Center, a quasi-governmental organization aiming to assist industries enhance productivity, set up a product enhancement division in 1961. The China Industrial Design Association, a nonprofit private organization formed by designers and academics in the field, was established in 1967. Several universities and vocational colleges also set up their industrial design departments around this time. And foreign professionals arrived in Taiwan to give lectures or short-term training camps.
The timing, however, just was not right. Manufacturers still relied on foreign orders. "Our factories simply needed to follow designs from foreign companies, who made all the decisions about market strategies," says Kuan Cheng-neng, dean of the College of Design and chairman of the Institute of Industrial Design at Shih Chien University. "The government and some academics perhaps saw the importance of industrial design, but the industry just didn't need it."
The industry was not yet ready to design its own products, Taiwanese manufacturers were still searching for a way to boost profits, which seemed a little too thin compared with the retail prices of the foreign brands they were manufacturing. So with their maturing manufacturing skills, they began to copycat existing designs. In the 1960s and 1970s, Taiwan grew into one of the four tigers in Asia--economies that year after year posted startling rates of growth. The unscrupulous methods used by some manufacturers, however, earned Taiwan another distinctive epithet. It became known as the Pirate Kingdom.
Yet, for many local manufacturers, a bad reputation was perhaps not as much of a problem as rising production costs. Starting in the 1980s, the manufacturing sector began to lose its advantage over other countries because of the sharp appreciation of the New Taiwan Dollar and soaring land and labor costs. Manufacturers on the island were faced with three choices. They could get out of the industry altogether. They could move to places with lower costs and continue to make those five -dollar umbrellas. Or they could stay competitive by making more expensive, value-added products. Many of the manufacturers in Taiwan today opted for the last choice and began to make products with a higher price tag.
Kuan Cheng-neng thinks that it was actually not a difficult leap for Taiwan's manufacturers since they had experience with sophisticated manufacturing and were accustomed to meeting international standards. "After years of partnerships with foreign companies, local manufacturers no longer needed a concrete sample but could provide their own designs that satisfied the standards of foreign brands," he says. "The designs were mostly limited to the surface, however, concentrating on the shaping of a product's appearance, while final decisions were made by the foreign companies. Nevertheless, local manufacturers learned the ropes of original design manufacture [ODM]."
As Taiwan's product designers brought a new independence to manufacturing in Taiwan, the industry ran into a sticky problem--Taiwan's reputation for making cheap goods. To address the image problem, the China External Trade Development Council (CETRA), a quasi-governmental trade promotion organization, launched an image-enhancement plan in 1990. One of the most successful aspects of CETRA's campaign was the creation of the Awards of Excellence for industrial design. The awards, begun in 1993, generated excitement and brought together a group of independent foreign and local judges. These industry experts assessed a new product's design, innovation, market position, and brand awareness. The judges were especially interested in products that displayed the combined qualities of innovation and value, or "innovalue" as CETRA calls it. And judges preferred many of the high-tech industrial designs that have helped transform Taiwan's economy.
In the past decade, Taiwan has made considerable progress in improving its image. Instead of the "made in Taiwan" cheap stuff, high-end products from bicycles to computers have successfully become money makers for local manufacturers. Some larger enterprises, such as Acer, set up their own design departments, and have gone on to win awards in international design contests. Chen Wen-long, president of Nova Design, points out that the concept of industrial design was introduced to Taiwan comparatively late, but it does not necessarily mean that Taiwan is bound to stay in the backseat. "It has a lot to do with the development of specific industries," he explains. "In the industries where Taiwan plays a leading role in the world, such as the information industry, we have the chance to come up with designs that lead the industry."
Nova Design, established in 1988 and one of Taiwan's largest companies, has designed motorcycles, automobiles, housewares, and products for the 3C (computer, communication, and consumer electronics) industries. Chen notes that the definition of industrial design is simply transforming demands into drawings or prototypes, but the process is much more complicated because it requires a knowledge of engineering, scientific skills, and a sense of artistic flair--not to mention the need to effectively communicate with clients. "A design team is like a basketball team," Chen says. "Winning a game takes good players of all positions specializing in different skills."
Winning in the industry also takes a good game plan, and Nova Design has relied on an innovative integration system that gives them an edge in management. "Basically, the system is a network linking the whole process from concept to pre -production and providing the information needed in this process," Chen says. "It quickens the process and decreases trial-and-error possibilities, thus reducing mistakes and risks."
Nova Design's clients include international brands such as Motorola, Lucent, RCA, Honda, and Ford. But why would such prominent companies want to use a Taiwanese design company that has a shorter history and less experience compared with many established international design companies or workshops? Kuan Cheng-neng explains that an important reason is Taiwan's long-time relationships with these foreign brands. "Maybe we're not good enough to predict the future market, but we're certainly very familiar with how the current system works and how to communicate with foreign clients," he says. "And our designs meet the demands of the clients and are backed up by sophisticated skills in putting the designs into products."
Taiwan also has the advantage of an educational environment that is quickly adapting to meet the demands of the industry. Although Taiwan established industrial design departments four decades ago, they were mostly in schools of engineering and did not emphasize product design. It was not until 1992, when Kuan set up the Industrial Design Department under Shih Chien University's College of Design that Taiwan had its first industrial design department outside of an engineering school.
Kuan believes the basic difference between an industrial department in an engineering school and one in a design school is the environment. "An industrial designer is somewhere in between an engineer and an artist," he says. "You don't get a designer by just giving some classes on color or drawing to students in an engineering environment, and you don't get a designer by giving a couple of hours of engineering class to students of fine arts." Judging from Shih Chien students' outstanding performance in international design contests and the many famous enterprises such as Acer, Sampo, and Alcatel that have worked or are seeking possibilities to work with the department, the change of environment seems to make a difference. "We plant the seeds for the industrial sector," Kuan says. "When it rains, these seeds sprout and grow."
The "rain" depends mostly on the attitude of the industrial sector rather than the efforts of the educational system. And according to Tony Chang, director of CETRA's Design Promotion Center, a large part of Taiwan's industrial sector still does not have a good understanding of what value-added industrial design can bring to manufacturers or what market prices good designs can fetch. Chen Wen-long also believes that the domestic environment is just beginning to value product design, but that foreign brands still have a greater respect for designers.
Whether designing for local or foreign companies, Taiwan's progress in industrial design is still pretty much unknown to consumers. Perhaps this is the nature of ODM that the glory and reputation belong to the brand name and not to the designer behind the scenes. The way out of this trap is to create domestic brand names through original brand manufacture (OBM), which would build a reputation for high-end products for both local manufacturers and designers.
Currently, many Taiwanese industries generate their profits by doing both manufacturing for other companies and making products under their own brand names, with the latter limited to products with a price range or level different from foreign brands. "Both OEM and ODM represent partnerships between Taiwanese and foreign companies, but the competition begins when it comes to OBM," Kuan says. "As a competitor, a foreign brand can simply terminate existing OEM or ODM contracts, and that's enough to kick many local companies out of business." But he also notes that Taiwanese manufacturers and designers are highly competitive in the information-related industries.
If Taiwan leads with its strongest suit, the product-design sector has a bright future. It has the potential to supplement high-tech manufacturing, which has also come a long way from those humid, dimly lit factories. For Kuan Cheng-neng, domestic design products are not just a source of hope for the future, they are also objects of beauty. "Many successful industrial leaders like to display works of art in the office to show their taste," Kuan says. "But to me, the best work of art is the company's own product, created by the minds of its own industrial designers."