Taiwan’s 85°C Bakery Café expands in California

Posted on December 23, 2013 | Leave a comment

On a frigid mid-November morning, over 300 people huddle in an orderly queue awaiting the grand opening of 85°C Bakery Café’s newest store in Newark. Extremely popular in Taiwan, the bakery-coffee house was opening its first northern California location, one of more than 700 retail stores located in Taiwan, China, Australia and the United States. This year alone, the company has opened new stores in Chino Hills, Newark, Gardena and Garden Grove. With the completion of its new central facilities in Brea and Newark, 85°C Bakery Café plans to open at least 10 new stores in the new year.

As the fifth store in California, the Newark store is located in Fremont Plaza, near Ranch 99, a popular Taiwan-owned supermarket chain. Taiwan Insights visited the store on the afternoon of December 18 and saw around 50 people in line, but with five cashiers hard at work in just the Pastries and Breads section, and another two at the Cakes and Drinks section, the customers moved along steadily. The shelves were well stocked by a team of clerks calling out “Fresh Bread, Fresh Bread” as they made their way around the crowd. Judging by the popularity of the store during a weekday afternoon the first northern Californian location has proven to be most successful.

Michelle Wu who lives nearby said that the store had sent out invitations to residents of Newark for a soft opening beforehand. On the actual day of the opening, she tried to go, but was daunted by the line going out of the door. She checked again throughout the week, but saw the same extensive queues. “The following weekend, hoping to beat the crowds, I went at 7:30 am and stilled waited for more than an hour”, she said.

Expanding in California

Stephanie Peng, public relations manager of 85°C Bakery Café in the US, told Taiwan Insights, that the company has local flavors that they try to develop for each country. In fact, “we have a R&D team with chefs that are always creating new bread and cake products and our own drinks team.” Among the most popular drinks are Sea Salt Coffee/Tea and 85°C coffee. They are also known for the Marble Taro, Brioche, Milk Pudding, Berrytale, Cheese Dog, Squid Ink Bread, Coffee Crème Brulee, Mango Crème Brulee, Halfmoon Cakes, Mochi Egg Tarts, and Sponge Rolls.

Since most Taiwanese consumers usually find American pastries too sweet, the bakery tried to find the middle ground. Lillian Liu said one of her favorites at the bakery is the Blueberry Cheesecake and “one of the reasons I like the cakes at 85°C Bakery Café is because the cakes are not too sweet,” she said.

“Before we opened our first store, we did a lot of research and product testing to alter our products so that our customers in the American market would love and enjoy it! 85°C products here compared to Asia have many more flavors. The sweetness is slightly sweeter but not too sweet compared to the American products.”

Founded in 2004 in Taiwan, 85°C Bakery Café was chosen as the name because 85°C is the ideal serving temperature for coffee. The company’s first overseas branch opened in Australia in 2006. When the first retail store in the US opened in 2008, 85°C Bakery Café quickly won a loyal following. According to Peng, the company has been featured by Time, CNN, NPR, the Travel Channel, and the Los Angeles Times. Since then, the company has grown, but not as fast as its fans would like.

In talking to Commonwealth monthly in Taipei, James Hsieh, 85°C Bakery Café’s CEO said, “We could not make further progress before, because we were bounded by some ropes – a lot of unsolved issues.” He noted that the previous model of having a retail space in the front with a factory at the rear prevented the company from entering shopping malls. Therefore, he decided to spend NT$3.1 billion (US$104.7 million) to build a more automated centralized factory in Southern California.

According to Commonwealth, the company built its 71,000 square foot factory in a quiet industrial zone in Brea to serve its southern California growth. It is equipped with a tower capable of holding 66,000 pounds of flour, and a sweeping furnace, equal to 3.5 traditional kilns. This centralized factory can provide baked goods for 30 to 50 retail stores. By undertaking this investment, the company is hoping to reduce its workforce at local stores by 30 percent and also leave more retail space for customers.

Building an international brand

Before starting 85°C Bakery Café, Hsieh was the second in command of over 4,000 7-Elelven convenience stores in Taiwan’s President Chain Store Corp. During his 30-year career, he helped build a kingdom of super retail stores in the island. Now he has his sights set on entering the American market.

Hsieh goes to the US for an inspection tour every three months and holds weekly meetings with managers and top executives in the US. He said, “I feel that the American market is more important than that of China,” adding that China’s market accounts for up to 70 percent of total revenues of 85°C Bakery Café, but Hsieh sees the power of American consumers and the international stage. “Only when you survive in this market, will you be competitive enough, and 85°C Bakery Café will be recognized as an international brand, not a regional brand. This is what I want to achieve.”

Competing with Starbucks

Starbucks Coffee Company was founded as a coffee bean roaster and retailer. It caters mainly to coffee drinkers, while 85°C Bakery Café satisfies the broader needs of its customers. In talking to Business Weekly, George Agosto, store manager of 85°C Bakery Café in Newark, and a former Starbucks’ employee, said that coffee is Starbuck’s main commodity, supplemented by breads and pastries, while breads, cakes and drinks are all major products at 85°C Bakery Café, attracting a broader customer base. Aware of its own shortcomings, Starbucks has gradually added more food items and just this April, purchased Bay Bread Group’s La Boulange Café and Bakery to bolster its food selection.

It has been six years since 85°C Bakery Café opened its first bakery in Irvine, southern California and its popularity has not waned. Even now, people still queue up every day. In September, it was chosen as one of the top ten most popular coffee shops in the US by social networking website Foursquare. According to Commonwealth, a single month’s sales at its Irvine bakery exceeds NT$20 million (US$675,675.00), equivalent to the average monthly sales of seven Starbucks shops.

With this level of success, 85°C Bakery Café has to speed up its globalization plans. Furthermore, in the US, the sales turnover at a single store is 15 times that of its counterpart in Taiwan, and 6 to 8 times that in China. Despite this, US revenues account for less than 5 percent of the total 85°C Bakery Café.

Excelling by offering more variety

How did 85°C Bakery Café go about expanding in the US, where bread has been a staple for centuries and readily offered in supermarkets and bakeries? Lin Ming-zhe, US regional CEO of 85°C Bakery Café, said the branches in Taiwan and China are formed by the concept of a “retail store,” while those in the US are more like a “supermarket.” According to Business Weekly, he said people do not come out just to buy an item or two, but to purchase larger quantities, normally over eight to ten items, spending roughly US$13 – 15 per customer.

Hong Ya-ling, secretary general of the Association of Chain and Franchise Promotion, Taiwan, said that American service industries are very good at standard operating procedures (SOP), but Taiwanese brands can excel by virtue of greater differentiation and complexity. So when local Californian stores are simplifying their products and service, 85°C Bakery Café stands out by offering more variety.

To make a store more like a supermarket, it is important to offer enough items in addition to space. The company adopted a policy of more variety and a larger quantity of items in the US. Lin noted that local stores offer one or two dozen items at most. Even local American fast food stores will not offer such a wealth of combinations.

The selection of retail space is also different from Taiwan. In Taiwan and China, the best store location is at the corner or the intersection. But in the US, traffic flow is as important as people flow. Therefore seeking a retail space with enough parking is equally weighted. Currently 85°C Bakery Cafés are all located in plazas with more than 300 parking spaces, making it easier for customers to park.

Another difference is that the bakery’s products are baked throughout the day and frequently. With opening hours from 7 am to 10 pm daily, and to midnight on holidays, fresh baked goods come out of the oven every hour until 9 pm. Local bakeries do not emphasize freshly baked goods, but will bake a product only once a day.

At present, Peng indicated that 85°C Bakery Café will add two more stores in the San Jose area, likely around Spring 2014.

 

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Posted in Special Report

Tagged , Association of Chain and Franchise Promotion, Brea factory, Business Weekly, Commonwealth monthly, Fremont Plaza, , Hong Ya-ling, James Hsieh, Lillian Liu, Michelle Wu, , Sea Salt Coffee and Tea, Starbucks, Stephanie Peng, Taiwanese bakery, World Journal

Newest 85°C Bakery Café

Posted on December 23, 2013 | Leave a comment

Taiwan’s 85°C Bakery Café opened its first store in northern California in November. Over 300 fans of the company waited patiently outside the Newark store for its grand opening despite extremely cold conditions. Long popular in Taiwan, the new location was an instant success.

The pictures below show some of the bakery’s colorful cakes and baked goods and the long lines that are still evident, in both Newark and Taiwan (last two photos). The bakery just completed building centralized kitchens in Brea (Southern California) and Newark (Northern California), so they can open new stores much quicker, allowing them to dedicate more space for seating and less for the kitchen area.

Named 85°C (185 degrees Fahrenheit) because “Coffee holds its flavor best at a steady 85 degrees Celsius” the company wanted its name to reflect its devotion to providing its customers with the highest quality products.

Just this year, the company opened four new locations in California. Next year, 85°C Bakery Café will open at least ten more stores, with two planned for San Jose this coming spring.

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Posted in Photo Gallery

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Social enterprises aim to bring about social change

Posted on December 20, 2013 | Leave a comment

A new wave of social enterprises is enabling Taiwan’s people to develop a greater understanding of those who are marginalized in society, while at the same time helping to improve the quality of life for these people. These entrepreneurs are not solely motivated by profit, but are focused on educating consumers about the ills in society and about ways to resolve these problems.

These enterprises have re-defined entrepreneurship from “inventing technology” to “reinventing society.” These business owners are not overly concerned about the scale of their enterprises, so they can start with a modest amount of capital. According to a report by Taiwan Panorama, there are five major trends in social enterprises which are in line with Taiwan’s small and medium-sized business tradition.

Social awareness shapes consumer habits

The goal of fair trade is to keep farmers and workers in developing countries from being exploited as a result of globalization, and to ensure they receive a fair wage and decent working conditions. Social enterprises with this focus in mind are developing rapidly in Taiwan.

Fairtrade International (FLO), a non-profit organization based in Bonn, Germany, develops and reviews fair trade standards, assisting producers to gain and maintain fair trade certification and capitalizing on market opportunities. The World Fair Trade Organization (WFTO) is another global organization centered on fair trade producer cooperatives and traders, offers fair trade certification. In Taiwan, the major products certified by FLO are coffee beans and designer crafts branded by WFTO.

When Okogreen, Taiwan’s first fair trade coffee house, was established in 2007, it was Taiwan’s first fair trade venture. Thus far, the two most popular concepts have been “brewing coffee at home” and “using fair trade coffee for the office coffeepot”. For home brewers, their social awareness can shape their consumer habits. And the office coffeepots are a standard expense for most offices, representing an excellent first step for fair-trade coffee dealers to establish a foothold. Twenty-two companies have already committed to using fair-trade coffee, with a potentially enormous untapped market.

Organic farmers take active steps

Agricultural co-operatives helped to provide a sturdy foundation for Taiwan’s postwar economic miracle. They combine many things including, labor, cooperative farming, production, sales and distribution. The practice has allowed Taiwan to keep the culture and practice of small-scale farming alive, which is the most influential element in organic farming today.

Founded in 2008, O-power Social Enterprise Company, took advantage of a small business loan to cooperate with organic farmers in Ali Mountain (central Taiwan), successfully increasing its yield year after year. Breaking even in just four years, the demand for its tea, fruit and vegetables has exceeded supply, making O-power a model of Taiwan’s traditional co-ops. Kaohsiung’s Xiaolin and Jiaxian villages in southern Taiwan, which were devastated by Typhoon Morakat in 2009, are now seeing the formation of many production and sales co-ops. They are taking active steps to rise from the ruins of natural disaster using this type of co-operative pooling.

Public-interest media on the rise

Despite the decline of print media, Taiwan’s public-interest media has been on the rise. Since 2006 the monthly Bao Bon Phuong has released Vietnamese, Thai, Indonesia, Tagalog and Cambodian editions one after another. These serve immigrants and guest workers from Southeast Asia, with a combined press run of 50,000. Although the target audiences are minority groups that are small in number, there is enough demand to stock the papers in convenience stores, which demands a high stocking fee. Readership has steadily increased every time Bao Bon Phuong has released a new language edition, quickly reaching break-even point. This has allowed the company to start more new language editions.

Services provided by disabled people

There are over 100 public interest groups in Taiwan working hard for financial self-sufficiency. Chou Wen-chen, executive director of the Bjorgaas Social Welfare Foundation, said that public interest organizations can use the revenue they receive from their employment facilities to help cover their operating costs. What’s more, they create employment opportunities for mentally and physically disabled groups, and their products may even be more competitive than products made by mainstream workers.

The most successful example is the Victory Potential Development Center for the Disabled. The center prepares the disadvantaged, in accordance with their job capabilities, to work at various job sites, including data entry centers, gas stations, digital printing centers, bakeries and other professions. The services they provide are competitive and need no special marketing. For instance, the caramel puddings disabled bakers make for Mr. Nordic, are hugely popular. Many customers do not even realize Mr. Nordic is from a shelter employment bakery.

Social movement products convey message

In recent years, citizen activism has given rise to special opportunities for “cultural and creative products” focused on social and political movements. For instance, towels and T-shirts with anti-nuclear slogans have been sold online and at demonstrations. Items sold have easily reached the tens of thousands, with impressive profits.

Wu Chung-shen, chair of the sociology department at Fu Jen Catholic University, explained that “movement products” have symbolic meaning for its members, and their price can be set at various multiples of the manufacturing cost, thus giving the organization a greater profit margin. This is very much a social enterprise model.

Taiwan Panorama noted that it is wise for businesses to keep things small since even a small organization can generate big energy. The goal of social enterprises is to help resolve social problems by meeting various needs. It is not necessary that entrepreneurs aim to build up a large corporate structure, but one with social care in mind and in practice.

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Posted in Society

Tagged Bao Bon Phuong, Bjorgaas Social Welfare Foundation, Chou Wen-chen, , Fairtrade International (FLO), Fu Jen Catholic University, Kaohsiung's Kiaolin and Jianxian villages, Mr. Nordic, O-power Social Enterprised Company, , vegetable co-ops, Victory Potential Development Center for the Disabled, World Fair Trade Organization (WFTO), Wu Chung-shen

Rally in Taiwan opposing same sex marriage amendment

Posted on December 20, 2013 | Leave a comment

On November 30, several groups in opposition to the “Marriage Equality Bill,” legalizing same-sex marriage protested on Ketagalan Boulevard in front of the presidential office. Led by the Coalition for the Happiness of Our Next Generation, over 150,000 people participated, shouting slogans in defense of heterosexual marriage. Many of them carried signs supporting marriage and children “Made by Daddy + Mommy” and “Against revision of Article 972 of the Civil Code” which would allow same-sex marriage.

The Coalition, one of the organizers of the event, said that allowing same-sex couples to marry and adopt children would encourage “sexual liberation”, undermine traditional family values and confuse gender roles for children. The Coalition stressed that any change to marriage and the family structure must be approved by a nationwide referendum.

Meanwhile, about 500 people in support of legalizing same-sex marriage gathered a few blocks away in front of the Legislative Yuan. Organized by the Taiwan Alliance to Promote Civil Partnership Rights (TAPCPR), they countered with signage on “freedom in love, equality in forming a family”.

Victoria Hsu, director of TAPCPR, said that the groups against the bill distort the meaning of marriage equality. Their fear of same sex union leaves little room for rational discussion, causing many citizens to misunderstand homosexuality, she told the United Evening News.

The amendment drafted by TAPCPR, includes three bills on marriage equality, partnership and family system. Under the name of the “Bill Package for Diverse Family Formation”, these three bills were independently drafted. Among them, the bill on marriage equality has collected a million supporting signatures up to September 10. It was submitted to the Legislative Yuan and passed the first reading on October 25.

TAPCPR took three years to complete the revision on Article 972 of the Civil Code, and drafted the new bill with the purpose of meeting the needs and complexity of Taiwan society. The amendment rewrites the definition of family, while deregulating the traditional family structure based on marriage and sexual relations.

If passed, the “Marriage Equality Bill” will rewrite the existing civil law on marriage and the family, changing the specific gender indication of male and female to a gender neutral description. References to “husband and wife” would be changed to “spouses” and “father and mother” would be substituted by “parents”, so that the legal recognition and protection of marital relationship of men and women are extended to include gays and lesbians.

Under the partnership system, “family” is redefined, allowing gays and lesbians to spend the rest of their lives together in a legal relationship. The definition of “family” in the Civil Code is rewritten under the new amendment, with the word “kinship” removed from the law. Instead, it would read, “a couple living together for the purpose of permanent living.” It is therefore not necessary to have kinship in a family.

The Global Views monthly noted the battles to pass the bill package will begin by addressing same-sex marriages, but the more challenging battles will be centered on the partnership system and the family system, especially the latter.

Because these two bills do not build upon the premise of marriage and sexual relations, and won’t be punished with the crime of adultery because there is no marriage bondage. For the religious conservatives, they see this as a breakdown of “monogamy”, the core of family ethics.

The Coalition of Protecting Family, the strongest opposition against the bill, believes that the new partnership system is considered as a one to one relationship, without the obligations of loyalty and easily revocable. Their fear is that partnership legalizes mistress status, while the new family system allows people without kinship to form a family, planting the seed of incest and sexual liberation.

The United Daily News reported that President Ma Ying-jeou called for more dialogue, communication and discussion to reach a consensus because this involves the social foundation of marriage and family. It will create more opposition and backfire if done in haste without social consensus. On the other hand, he hopes that the Taiwanese people will be more tolerant and respectful in this regard. Ma said that homosexuality is a human rights issue, a cultural issue, and also a generational issue in our society, “because young people are more receptive to homosexual rights”, he said.

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Posted in Society

Tagged Bill package for diverse family formation, Coalition for the Happiness of Our Next Generation, Marriage Equality Bill, same sex marriage, Taiwan Alliance to Promote Civil Partnership Rights (TAPCPR), Victoria Hsu

For the first time, women outnumber men in Taiwan

Posted on December 20, 2013 | Leave a comment

Last month, Taiwan’s male-dominated society became a thing of the past, when for the first time women out-numbered men. According to the Interior Ministry, the male population stood at 11,683,187 while the number of females reached 11,684,133, about a thousand more than males. The Interior Ministry predicted that this trend will only become more pronounced over time.

Compared with other countries, Taiwan was indexed at 100.6 among countries with a higher sex ratio in 2011, meaning there are 100.6 males for every 100 females. Currently, male dominated countries include India (107.8), Malaysia (106.1), mainland China (105.2), Norway (100.5) and South Korea (100.4). Countries where women outnumber men include Italy (93.7), France (93.9), Japan (94.8), Austria (95.1) and Mexico (95.6).

Hsiao Chia-chi, deputy minister of the Interior Ministry, pointed out that Taiwan’s population was previously male-dominated since it is traditionally a patriarchal society, and also because the relocation of Chiang Kai-shek’s government to Taiwan in 1949 brought with it a large number of male military personnel, according to the Taipei-based China Times.

With the passing of those veterans over the past decade, along with an influx of nearly 440,000 foreign brides, the sex ratio has gradually shifted. At the end of last month, women for the first time outnumbered men. The cabinet-level Council of Economic Planning and Development estimates that the sex ratio will reduce even further to 93.1 after 47 years, that is, for  every100 females there will be 93.1 males.

The average life expectancy in Taiwan is 83 years for women and 76.2 years for men. In younger age groups, there are more males than females, but this ratio shifts in the older population, since women typically live longer than men.

The United Daily News reported that, although Taiwan’s society is now made up of more women than men, studies by the Examination Yuan which is in charge of validating the qualification of civil servants, found that higher level positions are still dominated by men. Women account for 58 percent of all junior civil servants, 55 percent at middle levels, and 28 percent in executive positions. Tsai Bih-hwang, chairman of the Civil Service Protection and Training Commission of the Examination Yuan, believes that it may take another 15 years for the ratio of male and female executives to become more equal.

Translated into earnings potential, the average hourly rate for a Taiwanese man last year was NT$278 (US$9.30), while it was about NT$232 (US$7.70) for a woman, or 16.6 percent less than a man’s wages. The Council of Labor Affairs noted that although inequality of earnings between women and men is a global problem, the gap in Taiwan is not so wide. In Japan, female workers on average earn 34 percent less per hour than their male counterparts. South Korean women make 32.7 percent less than men, and in the United States, women make 19 percent less than men.

In-roads are being made not just in reducing the income gap between men and women, but also in shortening the lines at ladies’ restrooms on the island. The Liberty Times pointed out that due to a scarcity of women’s restrooms, females queue for longer. Taiwan’s Construction Law was amended at the end of 2010 to require the ratio of men’s restrooms to women’s to be 1:5 in public places where restrooms are jointly set up. The situation is expected to improve within five years, according to the report.

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Posted in Society

Tagged Council of Economic Planning and Development, Council of Labor Affairs, Cvil Service Prtoection and Training Commission, Examination Yuan, Hsiao Chia-chi, Interior Ministry, male-female income gap, male-female ratio, Taiwan's population, Tsai Bih-hwang

Taiwanese farmers cope with bad weather with help of new technology

Posted on December 20, 2013 | Leave a comment

An agricultural shift is underway, led by Taiwan’s hi-tech manufacturing companies such as Delta Electronics, Foxconn and Kinpo Group, who are all entering into the agricultural industry. They are bringing their technological knowhow to improve light system and automated equipment used in factories. Though, it is not just the big firms that are incorporating new technology to improve traditional farming. Recently, the Industrial Technology Research Institute (ITRI) has promoted the use of technological methods to small farms with some success.

The 99feng Organic Farm is the only Taiwanese farm using LED lights to improve the quality and yield of its organic asparagus. Farm owner Chiu Sun-nan led Global Views reporters on a tour of the organic asparagus field in the countryside of Caotun Township, Nantou County (central Taiwan), where a variety of green asparagus, commonly found in spring and summer, and also purple asparagus, which is better in winter, were growing.

Chiu’s asparagus on average sells for US$10 per kilogram (2.2 pounds) and are sold to 5-star hotels which appreciate quality. Over the past decade, he has invested US$1.1 million, in addition to selling two townhouses (US$200,000) and taking out a US$333,000 loan. The biggest challenge for the farm is unpredictable weather. On cloudy and rainy days, production drops by half and the crop also becomes less tasty, so a steady profit margin is hard to maintain.

Chiu researched theses and agricultural documents to improve his odds and to increase his asparagus production, but to no avail. That was until three years ago, when Chiu met Hu Hong-lie. Hu, the deputy chief of Electronics and Optoelectronics Research Laboratories, ITRI, and Chiu began collaborating, reported Global Views.

In the beginning and given Hu’s engineering background, the project team did not understand the natural balance needed by asparagus in order to thrive. Since then, they have increased the farm’s production by 25 percent by taking advantage of LED lighting, experimenting to find which light sources would spur the best growth, and hopefully transfer this knowledge to the bio-medical industry as well.

Hu said the biggest difference between industrial experiments and agricultural experiments is that the experiment objects are alive in the latter. Plants keep on growing, whereas with industrial experiments – if today’s data is not right, you can redo it tomorrow. “But for agriculture, if your experiment is wrong this time, you have to wait another season or another year to redo it.”

Global Views reported that now Chiu’s asparagus farm is littered with tiny blue, red, purple and white sparkling lights, appearing more like a night club in the dark. Actually, the assorted colors are another experiment to find out which light source is best for asparagus growing, and which wave length can generate the nutrition for asparagus and reduce the purine elements of metabolic arthritis in asparagus.

Since the collaboration, Chiu has turned a small profit for the past three years. With supplementary LED lights, even on cloudy and rainy days, the farm can still produce 75 percent of its peak production. This makes Chiu very grateful to the industrial experts, since using LED lights has helped his crop become less vulnerable to bad weather.

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Posted in Economy

Tagged 99feng Organic Farm, Chiu Sun-nan, Delta Electronics, , green asparagus, greenhouse farming, Hu Hong-lie, Industrial Technology Research Institute (ITRI), Kinpo Group, LED light, purple asparagus

Taiwan’s faucet kingdom nestles by rice paddies

Posted on December 20, 2013 | Leave a comment

Dingfanpo is a village in Changhua County (central Taiwan) and is little known even in Taiwan. But despite it rural location, it is Taiwan’s faucet kingdom, with the distinction of creating 2,500 jobs and generating almost NTS10 billion (US$33.8 million) per square kilometer.

Business Weekly reported that if you peel back the cheap galvanized huts which dot the area, you’ll see the manufacturing of high end sanitary fittings, including popular worldwide faucet brands, such as top Japanese toilet maker Toto, expensive American commercial faucet maker T&S Brass, and Germany’s Hansa Metallwerke AG. Almost 1,000 small and medium sized hardware companies cluster here at the core of this village. Only covering six square kilometers, it nevertheless has an annual production yield of NT$55 billion (US$1.86 billion). It is an important manufacturing center for mid to high end faucets worldwide.

Working together to rebuild kingdom

In the face of competition from low cost Chinese and Southeast Asian manufacturers, many big Taiwanese faucet firms started to migrate overseas 20 years ago. Before that, in the heyday of Taiwanese faucet production, half of all faucets worldwide were made here, said Jason Chen, manager in charge of industrial clustering and innovation at the Industrial Technology Research Institute.

At that time, companies in Dingfanpo invested to improve quality, to emphasize research and development so they could compete against Chinese and Southeast Asian competitors. The investment paid off, renewing Taiwan’s faucet kingdom.

Business Weekly stressed that none of the firms clustered in Dingfanpo undertake to complete the whole process from the beginning to the end. They do what they excel at, with upstream firms working together with the downstream. They cooperate with each other and complement each other so that everyone works in the niche they are best at.

It is different with the Chinese companies. They cover everything from the beginning to the end, thus incurring higher costs in developing a new product. They are not as flexible as the Taiwanese companies, so their normal lead time is one month after placing the order, while those in the Dingfanpo industrial cluster can deliver in just two weeks, allowing Taiwan a market advantage.

In Dingfanpo, you can find subcontracting firms to meet your needs within 10 kilometers, while in China you have to drive at least 200 to 300 kilometers to do so. This saves Taiwanese firms a lot of time and money since they do not need to make the initial investment, but share only a part of the expenses incurred.

Profits 10 times higher than Foxconn

Managing Technology Company (MTC) used to do low end surface treatments and plating on sanitary and bathroom products. Ten years ago, Chang Chia-lie, president of MTC, worked with the Nuclear Energy Research Institute of the Atomic Energy Council to customize machinery by using plasma discharge, transforming the company to a high end company.

Business Weekly reported that MTC invested almost NT$100 million (USD$3.38 million) to build six sets of high end machinery with the help of the Institute. This has enabled them to provide treatment coating for physical vapor deposition (PVD) for up to 80 percent of the market’s high end sanitary hardware products in Taiwan. MTC has also branched out to include the commodity business of computer, communication and consumer electronics.

“A faucet with PVD sells for 30 percent higher than one with regular plating,” said Chang, noting that his company’s current revenues have reached over USD$3.38 million, with 40 percent net profit, about 10 times higher than that of Foxconn, Taiwan’s electronics conglomerate.

No sunset industry, only sunset thinking

Dingfanpo also is home to Chang Yi Shin, the only foreign supplier of American top commercial brand of touch faucet T&S. This company provides T&S with 30,000 sets of touch faucets a year. Wang Siang-hong, president of Chang Yi Shin, is a prolific inventor. He can develop at least 30 patents from a single faucet. Many of the touch faucets at 5-star hotels in the US are made in the village, but the company persisted for at least five years, at a cost of USD$378,000 to finally enter the US market.

Wang told Business Weekly that there is no sunset industry, only sunset thinking. There will always be businesses that close, while others launch new businesses. Sunset thinking means you do not innovate or make progress. There is always a chance of success as long as one is willing to transform.

Now Wang makes his millions by just selling touch faucets. He also designed a faucet that synchronizes auto mode, manual mode, hot/cold water, and can be dissembled and replaced by your average DIY enthusiast, even without turning off the water.  In addition, Wang has developed a touch faucet that needs no extra electricity, and works through hydraulic power. He spent USD$67,000 a year on license, certification and patents, and is number one in the Dingfanpo industrial cluster.

With almost 1,000 small to medium-sized firms, Dingfanpo is a microcosm of Taiwan’s industrial cluster strength, like a colony of ants fighting against an elephant of Chinese conglomerates. Dingfanpo has created 15,000 job opportunities in Taiwan, and has been doing so for a decade. Signs of hiring are always there in Dingfanpo, never a slump said Business Weekly.

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Posted in Economy

Tagged Chang Chia-lie, Chang Yi Shin, Changhua County, Dingfanpo, Faucet Kingdom, Hansa Metallwerke AG, Industrial Technology Research Institute, Jason Chen, Managing Technology Company (MTC), T&S Brass, Toto, Wang Siang-hong

Taiwan renders disaster relief to Philippines

Posted on December 20, 2013 | Leave a comment

The Taiwanese people and government continued donating funds and relief supplies to the Philippines following the disaster caused by super Typhoon Haiyan. The storm devastated the central Philippines on November 8, causing more than 6,000 deaths and wreaking havoc among 10 million people.

As of December 5, money and material donations made by Taiwan’s government, civic groups and individual citizens have reached NT$358.5 million (US$11.09 million). In addition, within days of the disaster, a 35-person team organized by the Taiwan Root Medical Peace Corps arrived in the affected areas to provide free medical assistance.

In accordance with President Ma Ying-jeou’s vision of Taiwan as a humanitarian aid provider, the Ministry of Foreign Affairs has worked closely with non-governmental organizations to provide prompt relief and assistance in rebuilding the hardest hit areas.

Late November, Sun Wen-hsien, president of the Chiu Chang Mathematics Education Foundation, took a group of 27 schoolchildren to the Philippines to participate in the International Mathematics and Science Olympiad for Primary School Students. Through the organizing committee, the participating students also carried 10 kilograms of rice, noodles, biscuits or canned food to be donated to storm victims.

These efforts follow the airlifting of more than 150 metric tons of aid in 18 flights by Taiwan’s Air Force C-130 Hercules cargo planes, as well as the transport of 530 metric tons of relief goods to Cebu Port aboard its naval vessel.

Supplies included prefabricated homes, solar generators, tents, rice, clothing, ready-to-eat food and potable water, donated by private citizens and a wide range of civic organizations and charity groups, including Taiwan’s Red Cross Society, Buddhist Compassion Relief Tzu Chi Foundation, Bliss and Wisdom Foundation, Namchou Chemical Industrial Co. Ltd., I-mei Foods Co. Ltd., I-Kuan Tao Association, and National Fishermen’s Association.

The goods were distributed with the assistance of volunteers working for Taiwan’s charity groups in the Philippines, joined by over 16,000 Filipinos affected by the typhoon who were employed by the Buddhist Compassion Relief Tzu Chi Foundation.

Early December, while leading a trade delegation to the Philippines, Wang Chih-kang, chairman of the Taiwan External Trade Development Council (TAITRA), donated US$120,000 collected by the organization.

Taiwan’s government agencies, coordinated by Minister without Portfolio Lin Junq-tzer, have worked closely with the  Ministry of Health and Welfare which promptly established a special bank account for monetary donations, while MOFA and the Ministry of National Defense (MND) designated two aid supply collection centers, one in northern Taiwan and one in the south. As mentioned before, the MND also dispatched aircraft and a ship to transport relief supplies, as well as mobilizing soldiers to help collect, sort, pack, load and ship the goods.

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Tagged Buddhist Compassion Relief Tzu Chi Foundation, Chiu Chang Mathematics Education Foundation, International Mathematics and Science Olympiad, Lin Junq-tzer, , Su Wen-hsien, Taiwan's Red Cross Society, Taiwan's relief work, The Philippines, Typhoon Haiyan, Wang Chih-kang

UC Berkeley scholar traces Taiwan’s journey since martial law

Posted on December 20, 2013 | Leave a comment

In November, Professor Thomas Gold gave a talk at Stanford University about “The changing field of power in post-martial law Taiwan.” Taiwan Insights caught up with Gold to ask him more about his research for his next book Remaking Taiwan: Society and the State Since the End of Martial Law.

When Gold first visited Taiwan in 1969, the power structure was clear and centralized under martial law. It rested on Chiang Kai-shek and his Kuomintang (KMT). However, with the ending of martial law in 1987, a different set of rules, positions and players on the field began to emerge. “After lifting martial law, every power tried to get their voices heard,” said Gold. The shift meant that the status quo and emerging parties struggled to figure out the relevance of their forms of capital.

The lifting of martial law was a game changer since results were no longer predictable. Instead of a centralized form of government, the fields were more autonomous and horizontal, Gold commented. For so many years, people in Taiwan knew the rules and the “punishment” under martial law. However, starting from the 1970s, the punishment became unknown, leaving more uncertainty about how to strategize behavior to achieve desired results.

In the mid-1970s, Chiang Kai-shek passed away, and his son, Chiang Ching-kuo, assumed the leadership. Many have credited Chiang Ching-kuo for being a wise leader who abolished martial law because he realized that the system his father had built could not be sustained or reproduced by his successors. Others believed that the lifting of martial law was a direct result of the socio-political movements mobilized by the Dangwai (outside the party), the forerunner of the Democratic Progressive Party, which prompted Chiang Ching-kuo’s actions. Most agreed it was a little of both, concurring that if not for Chiang Ching-kuo, the transition would not have been peaceful and smooth.

Gold credits Taiwan’s institutions as the reason for no one saying they wanted martial law back. “One of the strong things is the institutions that have taken shape since the end of martial law.” He referred to Egypt’s recent multi-party elections and its quick change of leadership, only for some of the same protesters to overthrow its own elected president and turn its back on the newly established system. The consequence is violent civil uprisings, with neither side acknowledging the legitimacy of the other side.

Also, the reality of the cross-strait relationship is different. The China factor was cautiously controlled by the KMT in domestic politics before the lifting of martial law. China used to be an outsider in Taiwan. Nowadays, people from the mainland, from government officials, business people to tourists, interact with Taiwanese citizens directly or indirectly. And given that Chinese President Xi Jinping is still fairly new, there is still uncertainty about how much the China factor will further affect Taiwan’s domestic politics, according to Gold.

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Posted in Local News

Tagged Chiang Ching-kuo, Chiang Kai-shek, , Prof. Thomas Gold, Taiwan's martial law

The Gambia severs diplomatic ties with Taiwan

Posted on November 18, 2013 | Leave a comment

A senior Ministry of Foreign Affairs (MOFA) official has announced that China was not involved in Gambian President Yahya Jammeh’s decision to cut diplomatic ties with Taiwan, according to the Central News Agency. On November 18, David Wang, director-general of the MOFA’s Department of West Asian and African Affairs, made the comment after local media reported on Jammeh’s November 15 Facebook posting declaring that the People’s Republic of China will be recognized diplomatically by The Gambia in the future.

According to Wang, the Facebook post was dated a day after Jammeh informed President Ma Ying-jeou in a personal letter of his decision to end diplomatic ties with Taiwan, effective immediately. “The post did not mean Jammeh would immediately establish diplomatic ties with Beijing,” he noted, adding that he believes the Facebook message was mainly aimed at justifying Jammeh’s choice to sever diplomatic ties with the Republic of China (Taiwan).

The MOFA said in a statement that the ROC Embassy in the West African state will be shut down, its technical mission will be withdrawn and all cooperative programs will be terminated.

Jammeh on November 15 unilaterally announced the decision to terminate the 18-year-long diplomatic relations between his country, officially known as the Republic of the Gambia, and Taiwan. Given that the West African nation did not have ties with the People’s Republic of China at the same time, reported the United Daily News, the decision may be based on Jammeh’s personal choice, who is known to be unpredictable. Last month, Jammeh withdrew his country from the British Commonwealth and three years ago, he unexpectedly severed relations with Iran.

Whatever the reason, The Gambia’s move has posed a huge challenge to the “diplomatic truce” or “flexible diplomacy” policy of President Ma. The policy is aimed at putting an end to the “checkbook diplomacy” competition between the two sides of the Taiwan Strait. Over the past five years, both sides have refrained from luring away each other’s diplomatic allies with monetary incentives, noted the United Daily News.

The Gambia was the first country to sever official relations with Taiwan since President Ma began implementing his diplomatic truce policy five years ago. Without The Gambia, Taiwan still maintains diplomatic relations with 22 countries.

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Posted in Politics

Tagged David Wang, diplomatic tie severed, diplomatic truce, flexible diplomacy, , President Yahya Jammeh, The Gambia