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Taiwan as a consumer goods market
Business environment
Social and cultural factors
• After decades of efforts devoted to economic development, people in Taiwan are now devoting more attention and expense to life-style pursuits. Casual activities, and associated casual wear, are now deemed necessities in Taiwan.
Political and legal factors
• Taiwan has a dynamic capitalist economy with gradually decreasing guidance of investment and foreign trade by government authorities.
• ISO 9002 international quality certification is recommended to promote top-quality product.
Demographics
• Population
22,894,384 (July 2005 est.)
• Age structure
o 0-14 years: 19.7%
(male 2,349,077/female 2,156,755)
o 15-64 years: 70.7%
(male 8,205,933/female 7,980,056)
o 65 years and over: 9.6%
(male 1,107,708/female 1,094,855) (2005 est.)
• Median age
o total: 34.14 years
o male: 33.71 years
o female: 34.57 years (2005 est.)
• Population growth rate
0.63% (2005 est.)
• Birth rate
12.64 births/1,000 population (2005 est.)
• Death rate
6.38 deaths/1,000 population (2005 est.)
• Net migration rate
0 migrant(s)/1,000 population (2005 est.)
• Sex ratio
o at birth: 1.1 male(s)/female
o under 15 years: 1.09 male(s)/female
o 15-64 years: 1.03 male(s)/female
o 65 years and over: 1.01 male(s)/female
o total population: 1.04 male(s)/female (2005 est.)
• GDP (purchasing power parity)
$610.8 billion (2005 est.)
• GDP (official exchange rate)
$334.4 billion (2005 est.)
• Unemployment rate
4.2% (2005 est.)
• Population below poverty line
0.9%
• Household income or consumption by percentage share
o lowest 10%: 6.7%
o highest 10%: 41.1%
(2002 est.)
• Household income or consumption by percentage share
o lowest 10%: 6.7%
o highest 10%: 41.1%
(2002 est.)
• Inflation rate (consumer prices)
1.8% (2005 est.)
• Public debt:
33.3% of GDP (2005 est.)
• Exchange rates
new Taiwan dollars per US dollar - 31.71 (2005), 33.422 (2004), 34.418 (2003), 34.575 (2002), 33.8 (2001)
• Imports - partners
Japan 26%, US 12%, China, including Hong Kong 12%, South Korea 7% (2005)
• Imports
$172.9 billion f.o.b. (2005 est.)
(Source: 2005, C.I.A World Fact Book)
(http://www.cia.gov/cia/publications/factbook/geos/tw.html#Econ)
Economic factors
• Taiwan has recently lifted most of it’s trade restrictions with China, subsequently leading to a flood of cheaper Chinese products (up to 1/5 of the regular local price. This has led to an increase in competition, as China operates under much cheaper wages and salaries.
• There is an increasing support for capping the amounts of cheap (primarily Chinese) imports currently flooding the Taiwanese market. In February this year people took to the streets to protest against the reduction in local livelihoods as a result of the massivie influx of budget Chinese hosiery and haberdashery.
Market analysis
The product market
• With increasing living standards and per capita income, local people are enjoying this new-found casual life and can afford the purchase of comfortable and fashionable casual wear for both leisure and work.
• Because stockings are inexpensive, consumers tend to focus on functionality and fashion rather than price when making purchasing decisions, however there is a growing interest in overseas fashion hosiery labels.
• The Taiwanese market for socks and stockings is fully developed and is characterized by falling prices. Success in this market will depend on competitive pricing and added functionality. Alternatively there is growing interest in top-label imports.
• High production costs in Taiwan have made it difficult for locally made casual wear to remain competitive in the market.
• American style casual wear has long been popular as Taiwanese welcome and enjoy American life style, culture and products. U.S.-branded casual wear enjoys wide recognition among local consumers, leading to strong sales. U.S.-brands took over 30 percent of the total casual wear market in the past two years.
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Market history
• With more than a 40-year history in sock and silk stocking making, Shetou is Taiwan's hosiery capital.
• During its most prosperous time in the 1970's, around 60% to 70% of silk stockings produced in Taiwan came from Shetou.
• In 1996, half of the population employed in manufacturing worked in hosiery, and the living rooms of many residences had been converted into small hosiery workshops.
• These hosiery companies are primarily family owned.
Market characteristics and forecasts
• Imports are on the increase. In particular there is a rising popularity in western fashion, including hosiery and stockings.
• The mass influx of Chinese products into the Taiwanese market will have a dramatic effect on price and competition. Market share will also change as a result.
• In Taiwan, young people are very fashion-conscious. Both American and Japanese casual wear styles are popular.
• Young people in Taiwan usually collect fashion information from fashion magazines and over the Internet. They look to superstars and celebrities for the latest in fashion statements.
• Design, price and brand awareness are additional factors influencing young consumers.
• White-collar working people pay less attention to price and focus on designs, brands, function, fabrics and quality.
• People living in northern Taiwan tend to prefer subtle colors, while in the south consumers enjoy bright colors with logos. Female consumers account for over 70 percent of the total consumption of casual wear, thus having a much bigger impact than their male counterparts.
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Source: http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr109687e.html
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Distribution, production and pricing trends
• Metropolitan areas will continue to have the greatest sales potential for casual wear in Taiwan due to their increasing living standards and high disposable incomes.
• While department stores, apparel chain stores, hypermarkets, and individual boutiques are the major sales channels for this type of wear, domestic consumers frequent the street vendors for lower-priced apparel. These vendors are usually located near popular shopping malls, department stores, theaters, transportation centers and traditional markets.
• Advertising and promotional activities are important methods to stimulate sales in Taiwan
• The major retail channels for casual wear in Taiwan are boutiques, department stores, shopping malls, inexpensive casual wear chain stores, hypermarkets and street vendors. There are over 55 department stores and over 500 casual wear chain stores around the island.
• Over 65 percent of retail stores are located in metropolitan areas. Taipei, Taichung and Kaohsiung are the top three metropolitan areas in Taiwan with the highest living standards and greatest consumption of casual wear. In Taipei, the eastern district of the city is the haven for fashion shoppers.
• In the past decade, most of Taiwan’s apparel manufacturers have moved offshore due to the high cost of land, labor and operations in Taiwan. Mainland China, Latin American countries such as Mexico, El Salvador and Nicaragua and Africa are preferred locations for Taiwanese producers relocating in search of lower production cost or free quota for exporting to the U.S.
• The large-scale market in Mainland China has been an additional factor in drawing transfer of production from Taiwan. In the past, about 80 percent of local production of apparel was for export on an OEM or ODM basis.
• In recent years, the production portion of exports has decreased by about 50 percent. The export of casual wear produced in Taiwan is estimated to be valued at US$510 million in 2003, a decrease of 3 percent from US$525 million in 2002.
• To market casual wear, U.S. firms should consider using local agent(s) or distributor(s) with strong capabilities in marketing, handling of import procedures, distribution, inventory management, and promotions. Those working on brand licensing with Taiwan partners should consider the firms¡_ business experience and reputation.
• The ability to provide consumers instant access to trendy collections of casual wear is also important.
• Fashion shows and promotional activities are helpful in penetrating the local market and building up brand awareness. Many Taiwan importers of casual wear are interested in visiting the annual apparel shows in the U.S.
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Source: http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr109687e.html
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Positioning
• Imports from the United States and European countries such as Italy are generally medium to high-priced brand-name items.
• U.S. brands, as well as brands from European countries and Japan, are considered high-end products with medium to high pricing, thus attracting sales by white-collar office workers.
Market segments and Opportunities
• Japanese products, with their sophisticated manufacturing and excellent functionality, dominate the stocking market. Because stockings are inexpensive, consumers tend to focus on functionality and fashion rather than price when making purchasing decisions.
• The competitive pressure of China and other emerging countries is weak on brand products, and wth a strong identity in the upper-middle bracket of the market, the prestigious brand-orientated fashion industry products (e.g.Italian) continue to preside in the market quite well.
Competitor Analysis
• Hsiaotex distinguishes itself from other Shetou hosiery companies by being the first to receive ISO 9002 certification.
• Hsiaotex has cooperated with a hi-tech company to come up with a series of value-added hosiery. Adopting new materials and nanotechnology, the new products include socks and gloves that can help to keep feet and hands soft by relieving dryness and cracking. Bamboo fibers woven into socks have proven to be anti-bacterial. These new series of products are expected to meet market demands for cost-effective and continuous skin care.
• To achieve effective marketing and brand imaging Hsiaotex is also emphasizing attractive packaging for its new products.
Market Share
• Japanese products, with their sophisticated manufacturing and excellent functionality, dominate the stocking market. Because stockings are inexpensive, consumers tend to focus on functionality and fashion rather than price when making purchasing decisions.
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Source: http://72.14.203.104/search?q=cache:5QneFjzAplYJ:www.pic.or.jp/en/market/socks.htm+Distribution+and+pricing+trends+hosiery+china&hl=en&ct=clnk&cd=7&client=safari
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• Shetou Township, located in Changhua County, has long been an important hosiery production center. In fact, one out of two people in Taiwan are wearing hosiery manufactured in Shetou at any one time.
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Source:
http://72.14.203.104/search?q=cache:dtoLQ6AQ_Y0J:eweb.moeasmea.gov.tw/ct.asp%3FxItem%3D12%26ctNode%3D58%26mp%3D1+socks+stockings+and+hosiery+imports+taiwan+market&hl=en&ct=clnk&cd=12&client=explorer
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• China is set to hold the primary market share given that the hosiery market has been primary function-driven and China is importing large volumes of low-cost hosiery.
Per Country
• China now becoming the world's major hosiery manufacturer. In 2001, with a world hosiery production of 21 billion pairs, China manufactured 4.5 billion pairs
while;
• Italy, which was once a leader in this sector, produced just 1.8 billion. China is also the leading exporter.
