Can one innovative idea increase sales by 60 percent while opening the door to international clients and collaboration? This is the story of Mei Jer International Group (hereafter Mei Jer), the leader in plastic floor tiles in Taiwan and how out of the box thinking can transform the destiny of a company.
“Mei Jer is the clear leader of plastic tiling in Taiwan,” says Hsu Yen-ming, who has been Director of Ta-chia Building Materials for over two decades.
In recent years, Mei Jer has maintained profit margins of around 25 percent, a figure at least five percent higher than its competitors in the sector. Even though this is the case, its name may not be well known to the average customer because it sells directly to other companies under the business-to-business (B2B) model. Nevertheless, the company’s footprint is ubiquitous: Mei Jer’s products can be found anywhere from the Taipei 101, Eslite, and the E-DA Theme Park, but also far beyond the confines of Taiwan itself.
“Mixing the spurious with the genuine”
An idea opening doors to the Japanese and European market
In 2015, Taiwan accounted only for 5 percent (approximately NT$150 million) of Mei Jer’s total global revenue of NT$34 billion. To get an idea of the company’s sales prowess, try to visualize the 16.5 million square meters (approximately 5 million ping) of plastic tile flooring it sold last year worldwide. The surface area would cover more than 800 Taipei Arenas. Mei Jer’s products have been used in airports in Manchester and Rome, as well as more recently in mainland China’s pavilion in Milan’s cutting edge Expo 2015.
The key to the 34-year-old company’s success lies in an innovative idea formulated by CEO Chen Pen-yuan in 1999 that has allowed it to clearly differentiate its products from others in the field.
From the onset, the global plastic tiling market used only flat pattern designs. Then an idea flashed into Chen’s mind: why couldn’t the designs be three-dimensional? And why stop there: one could make artificial wood paneling and marble floor tiles as well. The idea would not only be a bargain for consumers and allow them to easily craft new interior atmospheres, where using genuine wood and stone materials come at higher costs and access to materials may be difficult.
The skills needed for such an endeavor were not nearly as high compared to the difficulty in making the artificial surfaces look genuine. Collaborating with Mei Jer General Manager Chiang Tzu-hwa, Chen set off to find suitable samples to base designs off of. They drove a truck to New Taipei’s Shanjia Station to haul abandoned railroad ties, replicating the minute surface details onto the artificial designs, giving the plastic tiles a distinct tactile quality.
A year later, the company became the first in the world to produce floor tiles with three-dimensional design patterns.
Chen happily recalls taking sample products to a trade expo in Las Vegas when a Japanese client having stared at a artificial stone surface turned to him worryingly and said: “Chen-san, won’t the stones fall off?” He laughed heartily in response, telling the client that the surface was made entirely of plastic and there was nothing to worry about.
“Because of this three-dimensional design, we became popular overnight!” Chen reveals, as the product made Mei Jer the new darling of the industry.
A ten million dollar lesson - leads to a 97 percent product defect-free rate
But it is not enough to produce an eye-catching product since they can, and will be quickly replicated by other competitors in the industry. In this respect, Mei Jer’s 97 percent product defect-free rate becomes the glue that binds it to clients.
Plastic floor tiling easily expands in the heat and constricts in colder temperatures. If product quality is subpar, gaps will appear between tiles. One can choose to skimp on quality and pay dearly when it comes to customer dissatisfaction. Mei Jer learned this mistake the hard way, when it ended up paying a client in England more than ten million dollars – from which it took the issue of product quality with newfound earnestness.
In order to solve the problem, Chen fielded advice everywhere he could. Finally, a Japanese supplier recommended a change in manufacturing procedure. For example, by immersing the product first in high temperature water and then placing it at room temperature for 48 hours can increase its overall stability. Chen has continued to make adjustments to the manufacturing process, upping the rate of non-defective products to 97 percent. Not just that, the space between two tiles has been reduced to a razor-thin 0.12 millimeters, two-times as thin as international standards of 0.25 millimeters.
Hsu Yen-ming believes that the quality and reliability of Mei-Jer’s products give it significant word-of-mouth and credibility throughout the industry.
In the past, carpets and wood paneling were the mainstream materials in floor surfacing. Taking the U.S. as an example, plastic floor tiling only makes up 12 percent of total market share. But with the rise of technological innovation and the advantages of multiple design possibilities, Hsu believes that plastic tile manufactures could see compound growth per annum of two percent – translating into a long-lasting growth curve for Mei-Jer in the years to come.
Standing in Mei-Jer’s Dongguan factory, one sees automated machinery speedily applying wax and folding plastic tiles. In a few days the packaged products will be shipped to destinations worldwide, spreading themselves across buildings across many lands.
Utilizing product design and differentiation, Mei-Jer has made a place for itself in the market and has become the leading Taiwanese enterprise in plastic tiling and will become a traded company on Taiwan’s stock market in November. Once it has acquired more talent and capital, the next question will be whether Chen can lead the company successfully to transform it from a manufacturer to a brand, and to overcome more difficult challenges in business model differentiation.
[By Chia-hui Hwang / tr. by Russ Chiao]