By the 1980s, when Taiwan's footwear industry was at its peak, it was responsible for 46 percent of all shoes imported into the United States, with similar quantities heading to all corners of the earth. Taiwan's economy has undergone a number of metamorphoses since then, such that today 61.8 percent of the island's exports are technology-related products. Taiwan's role as king of shoemaking has long since been usurped by the likes of India, Brazil, Indonesia and, more than all others combined, by China, which alone produces more than half the shoes bought in the world and wears more than one-fifth of them.
While the above-mentioned high-tech transformation is often credited as having enabled Taiwan to experience an "economic miracle" on a national scale, few commentators bother to inquire after the fate of Taiwan's shoemakers. In fact, their tale is similar to those of many other sectors of Taiwan's light industry. Just as Taiwan's bike manufacturers have dealt with China's domination of the cycle market by shifting to more expensive high-end models, and its textile manufacturers are targeting haute couture rather than competing with China on bras and T-shirts, the island's cobblers have also adopted the "Taiwan way" and are now focusing on quality footwear. Moreover, not content with claiming a stake of the OEM and ODM market to make shoes for other better-known companies, an increasing number of local firms are tagging high-value shoes with their own brand names.
One example of this trend is Shui-Mu International Company Ltd., Taiwan's second-largest footwear manufacturer. Founded in 1952 by Lo Shui-mu, it markets its own shoes under the brand name Amiable Stylish Outlook, but is known to most local people simply as "A.S.O."
"My father, in a sense, started his own business from the service sector, since he was a bootblack to begin with, polishing customer's shoes on the street to earn enough to start his business," said Joseph Lo, the founder's eldest son and current company president. "Polishing hundreds of shoes every day at that time let him realize what mattered was how to make shoes suitable for different customers' feet, from which he went on to open the first A.S.O. shop in Taipei," said Lo, adding that actually the store's name was derived from his father's nickname of A-shou, meaning skinny. "I call this the transformation of a nickname into a company name and ultimately into a brand name."
Another example is Ever Rite International, which, according to marketing and planning director Nicole Tsai, took the more familiar route of starting as an OEM manufacturer. Only in 2001, after garnering 30 years of experience, did it launch its own brand company, S-Fashion Taiwan Co. Ltd., which produces shoes under the Miss Sofi label. Under S-Fashion General Manager Wang Hsiao-ping, the company has changed its focus away from merely manufacturing shoes and toward the complex mix of designing, marketing and brand-building, said Tsai, claiming that "after just a few years of emphasizing our brand name, many local customers even regard Miss Sofi shoes as imported products."
Ironically, Taiwan's largest shoe manufacturer, La New International Corp., is one of the most recently established. It was founded by Liu Bao-you, whose original business was toy manufacturing, from which he expanded into electric fans and stationery, and it was only in 1996, when he took over a friend's shoe business that had debts in Vietnam, that he entered the footwear sector, according to the company's press materials.
La New's Web site explains that, from the outset, the company focused on health-oriented shoes with air cushions inside the heel as a major attraction. These included special shoes made specifically for nurses, diabetes patients and disabled people. At the end of 2001, La New set up an institute to carry out research on foot health, customized special shapes of shoes and gave advice on treating podiatric diseases. Moreover, based on its quality assurance, La New adopted the fixed pricing policy that did not vary seasonally, while attempting, as the company explained in an Aug. 6 local news report, to educate customers in the concept of "the higher the price, the better the quality."
In direct contrast to this policy, Shui-Mu launched a promotional campaign last year to celebrate production of its 10-millionth pair of shoes, in which it offered a second pair of shoes for US$3 with each pair bought. Lasting only 11 days, sales topped US$20 million. "Nevertheless," Lo claimed, "the intention behind the campaign was not to make money in a short time but to celebrate a milestone that means a lot to our company, while giving something back to our fellow Taiwanese." Perhaps more important to the company in the long run will be the fact that around 80 percent of customers during the campaign period had not purchased Shui-Mu's shoes before.
For its marketing, S-Fashion spends 5 percent of its total revenue marketing quality ladies' shoes every year, said Tsai. This includes advertisements on the sides of buses and organization of an annual fashion show.
In 2003, La New took an unusual approach to expanding its name recognition by sponsoring a team in Taiwan's Chinese Professional Baseball League. This move took the company's brand name to sports fans--as well as onto TV and the newspaper sports pages--who might otherwise be unaware of the company's 307 chains islandwide.
Furthermore, to broaden its customer base, La New launched the brands Playa in 2004 and La New Ladies in 2005, targeting consumers aged 16 to 28 and younger women, respectively. S-Fashion and Shui-Mu adopted similar strategies, with the former launching colorful, trendy and modern shoes for young female customers in its Sonia line in 2004, and, starting this year, ballet-style shoes called Ophelie. Shui-Mu, meanwhile, launched its Beso and Freno labels in 2005.
In 2002, Shui-Mu dipped a toe into the overseas retail market by opening six stores in Brisbane, Australia. Four years on, it is currently evaluating the possibility of cooperating with the Australia-based Westfield Group, which has more than 120 shopping malls worldwide, as a means of tapping more directly into the Western shoe market.
"Having a brand name is only the beginning," said Lo. "A clear strategy of management is equally important." As a consequence, A.S.O. initially focused on business districts in metropolitan areas where the concentration of shoppers was higher, only later expanding to second phase areas. By 2002, Shui-Mu still only had 43 A.S.O. shops islandwide and annual revenue of US$18.2 million. Following aggressive expansion, in 2005 its revenue from 147 shops was up to US$75.8 million, and, according to Lo, is expected to reach US$90.9 million from 165 shops. "I estimate the saturation number of shoe shops in the local market is around 250, so there's still much room for further expansion," he said.
In addition to these directly-run chain stores, Shui-Mu has fought to break into the highly competitive arena of first-floor sales areas in Taiwan's rapidly expanding department stores, noted Lo, explaining the company's third management strategy of seeking opportunities to collaborate with other businesses by offering special discounts to their employees. "For example," he claimed, "we've been offering specially customized shoes to flight attendants in Taiwan's China Airlines and Eva Airways Corp. for the last seven and nine years."
In order to better target female customers, S-Fashion organized its own teams of young designers who were responsible for every step of the process from conceptualization, drawing of sketches, exterior design and selection of materials, said Tsai. In addition to local designers, others come from as far as Spain and Italy to form what Tsai called a "cultural coalition."
With all this activity, while some industry analysts still maintain that the market trend towards low-priced shoes made in China and similar countries offers a pessimistic outlook for Taiwan's footwear sector, others are more hopeful. "I'm very confident of the future, because the potential value of the local market alone is, in my opinion, worth US$1.82 billion," said Lo with a grin. "This means we still have a lot of space to keep moving forward."