The liveliest activity in Taiwan's bookstores is invariably in the stationery and novelty section. The stores are designed to encourage browsing, and customers eagerly take advantage of the facilities. Adults, students, and young children linger in front of shelves crammed with an extensive selection of pens, notebooks, letter pads, diaries, and photo albums. The displays of every conceivable gewgaw and gadget for school and the office desk make shoppers' fingers tingle with the urge to pick up, examine, and purchase. Most of the items are made in Japan, with the rest coming from the U.S., Germany, and Taiwan.
More than variety is available. Lively colors, innovative product designs, and creative packaging catch the eye and stir the interest of potential customers. For example, they might be tempted to buy a stationery set with ballpoint pen and sixty sheet of writing paper, held together by a giant, brightly colored paper clip and packaged in a transparent pouch decorated with ice cream cones, muffin cups, and flowers.
Common design motifs on product from pen holders to writing tablets include rainbows, hearts, lovesick messages, and themes from fairy tale land. Buyers are not in short supply. It is common to find a long line of children, teens, and adults in front of the cashier's counter.
Despite the popularity of stationery and novelty items, Taiwan manufacturers are finding that overseas markets are easier to penetrate than the home market for these products. When it comes to a choice between Made-in-Japan or Made-in-Taiwan items, consumers still prefer the imports.
Market-tested in Taiwan, sold internationally—70 percent of Fashion Line's products are exported. Local sales should increase because "consumers are growing in sophistication."
Ho Teng-lu, general manager of Wen Chyang Enterprise Co., Ltd., a manufacturer of stationery and gift products, knows the odds are against him in the local market, but this has not stopped him from building a successful business. The beginnings of the company date back to 1980, when Ho took a trip to Japan. He was astonished at the range of stationery and gift items in the stores. "The quality and style of their products were ten to twenty years ahead of Taiwan's," he says. The following year, Ho set up Wen Chyang as a distributor of stationery and novelty items imported from Japan. With US$8,000 he bought two hundred pencil boxes, three hundred plastic boards (placed underneath a notebook page to prevent handwriting impressions on the next sheet), and a few hundred novelty items. He distributed them to department stores and gift shops, and they immediately sold out.
After three years, Ho decided to make the shift from distribution to manufacturing. "The items were so popular that I had to keep importing them. My sources also kept raising their prices because I was always coming back for more. I felt my business was under their control, and if I remained a distributor, we would not be able to develop our own style in Taiwan and take the market away from the Japanese. I wanted to prove that Made-in-Taiwan products are not the cheap things people think they are."
Wen Chyang's first product was a pencil box for which Ho has a patent. Ho noticed that children often hunched over their books, and so he designed a pencil box with a lid that flips up to serve as a bookstand. Today, Wen Chyang has over 250 products, ranging from pencil boxes and colored pen sets to castle-shaped pencil sharpeners and desk organizers. The prices are lower than Japanese prices for comparable products. For example, a Wen Chyang pencil box built in the style of a Swiss army knife, with compartments that contain things such as tape, scissors, magnifying glass, and ruler, sells for US$7. The price for a Japanese pencil box of the same design ranges from US$15 to US$40.
Ho is pleased that he bit the hand that supplied him. As a distributor, his gross income more than doubled each year, rising from US$147,000 in 1981 to US$1.09 million in 1983. The figure continued to climb even after he shifted to manufacturing in 1984. Wen Chyang's gross income for 1989 was US$11 million. Forty-five percent of the company's products are sold in Taiwan, and the rest are exported to Europe, Japan, Southeast Asia, and Central and South America.
For that idle moment—pleasing to the eye and to the hand, the growing popularity of collectibles worldwide is an indication that "consumers want to buy finer items and brand names."
Although Ho considers both the local and foreign markets equally important he concedes that it is easier for him to sell overseas. Upgrading the image that people in Taiwan have of locally made products has been an uphill battle. He also has to contend with the rapid growth in the popularity of foreign comic strip and cartoon characters plastered on many stationery and gift items sold in the department stores and gift shops. From the U.S. come the Peanuts gang, Mickey Mouse, Garfield, and Fido Dido; and from Japan, Little Twin Stars and Hello Kitty. These are only some of the world-renowned characters that Wen Chyang's Melody and Pat & Tit compete against.
Young consumers are especially fond of Japanese products, and this has encouraged many manufacturers to follow trends and styles in Japan. Stationery and novelty manufacturers consider the local market too small, and they complain that the low sales volume cannot cover design, molding, and production costs. For example, molding costs alone for the utility globe, one of Wen Chyang's desk organizers released in late 1989, totaled US$440,000. Ho estimates that he would have to sell 100,000 of the globes to turn a profit. So far he has sold only 6,000 in Taiwan, but his sales in Europe have more than covered production costs. The six-inch-high globe comes in red and black which, according to Ho, is a popular color combination in Europe. The upper half of the globe flips up to uncover compartments filled with miniature desk accessories such as a stapler, ruler, and paper clips. The stand has a drawer for notepads.
For many small manufacturers, who can look forward to selling only 5,000 to 10,000 pieces of an item on the Taiwan market, it is more profitable to import, fill OEM (original equipment manufacturing) orders for foreign companies, or simply produce copies of Japanese products. As it turns out, an increasing number of foreign brands, especially Japanese, are crowding the market because local manufacturers are making them.
Consumers are drawn to Japanese stationery and novelty items not only because of their high quality and attractive packaging, but also because they share with the Japanese a fascination for gadgets and miniatures, and the penchant for cute and whimsical themes. For example, a best-selling desk set, which includes among many things a ruler, stapler, pen, and tape measure, fits into a 4" x 5" box. The item is purchased by grownup women as well as university students and children, who carry the red and green Hello Kitty tote bags and put their pens in pink Little Twin Stars pencil pouches. An equally "cute" item is a recent and already immensely popular arrival from Japan: a lime-green, bug-eyed frog called Kerokerokeroppi that can be found on cups, piggy banks, backpacks, and lunch boxes.
"The living standard in both countries rose while the prices of goods soared," says Ho. "The younger generations, which have never known hard times, are lucky to have more than enough to eat and wear. They have no worries, and the money in their hands is for buying something new." It is not unusual to find a Japanese stationery item with a sticker price of 1,000 yen (US$7.30) selling for NT$1,000 (US$36.60).
A taste for elegance—more disposable income has brought rising consumer expectations, an expensive stationery and writing accessories have become major sales items.
May Shen, manager of the overseas trade department of Flomo Plastics Industrial Co., Ltd., the largest manufacturer of stationery items on the island, agrees that the Taiwan market pays little attention to price tags. "People are more willing to spare money for kids," she says. "Look how much pocket money children have these days. This is because many families now choose to have fewer kids, instead of the five or six in the past. So the money that had to be distributed among many children is now concentrated on one or two. So, there you have it—a richer market for stationery and novelties. Especially in the case of career women. They make up for being away from home all day by buying their children gifts."
It would seem that the Taiwan market itself presents local manufacturers with many advantages, but Flomo, like Wen Chyang, faces disheartening competition from Japan. Set up in 1974, Flomo has 350 employees in Taipei and Kaohsiung. It manufactures school and office supplies under it patented trademark, Flomo. The company has distributorships in Southeast Asia, the Middle East, Europe, and North and South America. Its branch offices are in Hong Kong, New Jersey, and California. Each year, the R&D department develops four to five new products. One of Flomo's latest market entries is the Radio Look Pencil Box. Shaped like a cassette tape player, the pencil box is equipped with several push buttons that when hit, eject compartments for everything imaginable such as pencil sharpener, erasers, pencil refills, and even a thermometer.
Overseas, Flomo's products, which are decorated with characters such as Amigo and Pi Pi & Ber Ber, and with messages like Fun & Flavor and Sweet Honey, sell for one-fourth the price of Hello Kitty items from Japan's Sanrio. But even Sanrio, the world's largest manufacturer of children's stationery and gift items, appreciates Flomo products. Four years ago, the Japanese company began negotiations with Flomo for OEM. The cooperative venture began in 1988, and today, Flomo makes all of Sanrio's pencil cases.
As rapid as Flomo's overseas growth has been, and despite its large export trade volume of US$17.5 million, Flomo remains cautious about the local market. As a matter of policy, the company does only 1 percent of its business in Taiwan. Shen explains: "We play a leading role in creating and developing brand products in the local school and office supplies industry. During the past decade, we have developed over two thousand gift and stationery items, and some fifteen lines, each based on a different character. They have generally been well-received overseas, but up to now not one of our items has met with similar success in Taiwan. It has not been easy to promote our characters and give each of them an image that endears them to consumers. We are up against comic strip stars like Snoopy and Garfield who have their own unique qualities. They're immediately recognizable, and their comic strips are syndicated worldwide. We lack these advantages."
But Flomo intends to succeed in the local market. To protect against imitators, the company is secretive about the new character they will unveil next year, which they hope Taiwan consumers will find especially likeable. Flomo is also planning to set up chain stores that will sell Flomo products as well as other locally made stationery and novelty items.
While Wen Chyang and Flomo promote the quality of their products overseas and at home by constantly upgrading their original product lines, the Fashion Line Industrial Corporation has chosen a different direction. Up until a year ago, Fashion Line was a trading company for stationery and novelty items which were true to the image of Taiwan manufacturers as producers of low-end gift items. In its fifth year, Fashion Line decided to produce crystal miniature figurines and desk accessories with crystal trimmings for the local and export market. Similar to many start-ups in Taiwan, Fashion Line has a small factory of only seven employees, but it contracts equally small satellite factories to manufacture its products.
Tony Lai, managing director of Fashion Line, feels that the time is right for a change. Consumers the world over are buying finer items and name-brand goods, and inexpensive gift items are steadily losing their appeal. Crystal miniatures are also becoming highly popular collectibles. He says: "Crystal has a very long history in the West, but not in Taiwan. By producing crystal gift items, we hope to bring Made-in-Taiwan products into the high-quality end of the world market. Crystal was a good choice for us because there are few crystal manufacturers here, and Taiwan consumers are growing in sophistication. In the long run, crystal miniatures will have a market in Taiwan. We will also use the local market as our testing ground." Seventy percent of Fashion Line's products are exported to Japan, Singapore, Canada, the United States, and Italy. The company also sells its products to independent distributors.
So far, most of the crystal miniatures sold in Taiwan are imports. Introduced into the market about four years ago, they have yet to make money on the island. There has been a general lack of interest in collecting crystal miniatures. According to a survey conducted by Giftware World Monthly, a magazine published by the Taiwan Gifts & Housewares Exporters Association, the buyers of crystal miniatures are a small, select group, most of whom are university degree holders. The survey also points out that the higher the educational level, the greater the appreciation for crystal.
Fashion Line's crystal gift items are actually not pure crystal, but glass mixed with 10 to 30 percent oxidized lead. Lai claims that with 30 percent oxidized lead, the glass will be hard enough to withstand cutting and will produce a sparkle similar to that of a diamond. To lower production costs, Fashion Line incorporates brass into its designs. The result is affordable and elegant.
It's a dog-eat-frog market—Flomo Plastics faces tough competition from Snoopy and Kerokerokeroppi (how Japanese imitate a croaking frog) in novelty item sales.
"Foreigners are interested in brass items," Lai says, "because they have a classic feel. But if you put a brass letter holder on a desk, it looks ordinary. Add crystal, and the letter holder looks outstanding." Fashion Line's product include a decorative brass ruler with a cut crystal knob midway down its length, and a letter holder with a brass tennis racket and a cut crystal ball.
The brass-and-crystal combination is an innovative idea that works. Sales are strong because Fashion Line's products are quality gift items without the prohibitive price of imported cut crystal. Prices begin at below US$20, while imported crystal in department stores and gift shops cost over US$35 for the smallest and simplest pieces. Lai hopes to appeal to the taste of the young people who crowd stationery and novelty gift shops. "Even students can afford to give them as gifts to their friends," he says.
Fashion Line also emphasizes the religious significance of crystal. "Buddhists believe that crystal wards off evil spirits," Lai says. "It is also used in geomancy and fortune telling." Among Fashion Line's products are a candlestick with a crystal lotus, a brass laughing Buddha with a round crystal belly, and crystal balls hand-polished in mainland China. But Lai does not have to look into a crystal ball to build confidence. "Whether in the local or foreign market, our future looks bright," he says. "For the first half of 1990 our export volume has already reached nearly US$370,000, and local sales volume is close to US$150,000."
Taiwan's stationery and gift manufacturers exhibit the optimism, vitality, and patience that should eventually win over local consumers. Meanwhile, the orders from foreign buyers continue to pour in, indicating that Made-in-Taiwan products are gaining a reputation for originality and quality.