Monthly Archives: May 2013

Bay Area Taiwanese Restaurant

With one of the largest populations of Taiwanese-Americans in the United States, the Bay Area is home to some of the country’s top authentic Taiwanese cuisine restaurants. One of the more notable establishments is the Taiwanese-owned China Bee Restaurant in San Mateo (31 South B Street). From the first sip of its homemade sour plum drink, with its smoky flavor, diners know they have found a place that can satisfy their craving for real Taiwanese food.

When the Bee family first emigrated from Taiwan in 1977, Mrs. Bee quickly earned a reputation for her cooking. Many encouraged her to open a restaurant and she finally did so in 1992. Today, the restaurant continues to be a family-run business. On most days, Nancy, Mrs. Bee’s daughter, is there to welcome customers with a warm smile. About 75 percent of the diners are regulars and many she knows by name or recognizes. Growing up in her parents’ restaurant, Nancy says the customers are drawn to the China Bee because their flavors are stronger, with less oil and salt.

After 21 years, the restaurant continues to be a popular destination for Taiwanese people seeking the familiar comforting taste they grew up with and a new crop of foodies looking to try a good stinky tofu dish. The restaurant is especially crowded on weekends, when diners come from all over the Bay Area for its weekend brunch dishes. Among their popular daily dishes are spicy beef noodle soup, stinky tofu, pork chop rice plate and an assortment of other favorites shown below.








“Can Taiwan pull China toward democracy?” asks Pulitzer Prize winner

On May 12, the San Francisco Chronicle posted a commentary by Pulitzer Prize-winning journalist Joel Brinkley asking, “Can Taiwan pull China toward democracy?” in an article reviewing the current balance of power between Taiwan and mainland China.

Brinkley, the Hearst Visiting Professional in Residence at Stanford University and a former correspondent for the New York Times, attended a recent teleconference at Stanford University in which President Ma Ying-jeou noted that “when he first took office, ‘there were no scheduled flights between Taiwan and the mainland. Now there are 616 scheduled flights per week.’ What’s more, 17,000 mainland Chinese students study at Taiwanese universities each year.”

Although China’s economic clout in Taiwan is tremendous, President Ma is hopeful that every year over 2 million Chinese tourists, students and businessmen visiting Taiwan can see the island as “a shining ray of hope to the 1.3 billion Chinese people on the mainland,” particularly as Beijing continues to face a host of challenges to its authority, including mass protests and complaints from its people.

As a thriving, prosperous, liberal democracy, Taiwan represents what most mainland Chinese actually want. However, “projecting a positive image with the hope of turning China into a democracy is at best a mammoth task,” noted Brinkley. Quoting from a Taiwan official, “It feels like we’re a tugboat trying to pull a big ship.”

“The struggle (between China and Taiwan) has entered an interesting new phase, and it’s not entirely certain who will prevail,” said Brinkley.

To read Brinkley’s entire commentary, please visit the San Francisco Chronicle at: .

From Taichung to Silicon Valley, Taiwan keeps pace with global markets

With over 300 companies, Taichung County in central Taiwan is the largest cluster of machine tool companies on the island. It is also the center of the components supply chain shared by Taiwan’s three major industrial alliances of bicycles, sports equipment and machine tools. Without this clustering of firms, it would be impossible for these important industries to experience their recent stellar growth.

Despite the global financial tsunami (2009-2012), Taiwan saw several of its products maintain export growth of 100 percent. They included special glass, digital cameras, mechanical arms for the machine tool industry, and components for processing machines. Other areas also grew over 50 percent in value, such as garments, knitting and the steel screw industries. According to Taiwan’s Business Weekly, the manufacture of sports equipment, auto parts, hand tool machines and plastic products also experienced over 20 percent growth.

Clustering speeds up development and delivery

The top three global socket set handle brands from Germany, Italy and Japan, use Re-Dai Precision Tools Co. in Taichung as an OEM. These socket handles are essential for repairing and maintaining BMWs, Mercedes-Benz and F1 racing cars.

Business Weekly reported that in Taiping, Taichung, there is a street lined with all the makers of computer numeric control (CNC) machine tools, and another street where all the electroplating companies operate. These clusters of 30 to 50 small businesses are capable of producing any part for bikes, machine tools or treadmills.

Habor Precise Industries Company, in Dali, Taichung, is the largest manufacturer of high-end temperature control equipment in the world. Seven of the top ten machine tool manufacturers in Japan are customers of Habor. Even the top products of the advanced PCB drilling and routing machine maker Posalux of Switzerland, the leading wafer foundry producer, Taiwan Semiconductor Manufacturing Company, and special makers in the supply chain of Apple’s products, are all made by Habor.

Orange Electronic Co. in the countryside of Tanzih, Taichung, is the only maker of wireless tire pressure monitoring systems to successfully enter the American automobile service market. Orange has beaten large competitors such as Lite-On Technology, Delta Electronics, and Mobiletron Electronics to win over Standard Motor Products (SMP) Inc, a leading distributor and maker of replacement parts for motor vehicles in the US. As a publicly traded company, Standard is so confident with Orange’s potential success they have decided to invest 25 percent in the Taiwanese company, according to Business Weekly.

To Silicon Valley, Taiwan still matters

On April 4, Facebook entered the smartphone market in a joint venture with Taiwan’s HTC to develop software for Facebook Home. In the future, the home page of their smartphones will display active news from FB, in direct competition with the core business of Google, while Google also works with Hon Hai/Foxconn to manufacture the Google glass, a wearable computer with head mounted display.

Taiwan has been a valuable partner for the US high-tech industry. Even though Apple, Google, Facebook and Amazon are squaring off with each other, they all benefit from the contributions of Taiwanese high-tech companies, Commonwealth monthly said in its cover story entitled “Taiwan still matters”. A report on the future of the technology industry in Asia, compiled by the Samsung Economic Research Institute, termed the US-Taiwan partnership as “Taiwan is a king maker for US IT companies.”

Every day there are 480 million visits to Facebook, which takes tens of thousands of servers to support. All these servers are made by Quanta Computer in Taiwan. In 2012, the global server market grew about one percent, but Quanta registered 19 percent growth due to the substantial growth of Facebook and Rackspace, a cloud and management service hosting company based in Texas. One of every seven servers in the world is made and sold by Quanta. It is estimated that sales of servers made by Quanta will overtake those sold by IBM in 2013, Commonwealth reported.

Other Taiwanese companies are also closely tied to top IT companies in the US. Hewlett-Packard is the largest foreign buyer in Taiwan, with a purchase of NT$750 billion (US$25 billion) in 2012. With the supply chain of Taiwanese companies, HP is capable of shipping two computers and two printers every second, the monthly noted.

In June 2012, Google introduced a tablet Nexus 7 in a joint branding exercise with ASUS. Sales soared immediately after launch, even surpassing iPad sales in Japan. And according to Commonwealth, Apple could not expand its empire without the Hon Hai/Foxconn Technology Group. In 2006, when Apple introduced the iPod, Hon Hai’s revenues exceeded over NT$1 trillion (US$33.33 billion) for the first time. With the subsequent introduction of the iPad and iPhone, Hon Hai’s revenues reached NT$3.5 trillion (US$117 billion) in five years, equivalent to the total revenue of the top ten manufacturers in Taiwan.

Recently, Foxconn decided to reduce its reliance on Apple by not focusing on only being solely an outside contractors, but towards developing their own products, with an especially hard push toward designing and producing large, flat screen televisions.

What’s next?

At a time of speeding growth of mobile telecommunications, the original design manufacturer (ODM) which Taiwan was proud of is no longer valuable. ODM is disappearing fast.

Lee Kun-yao, BenQ chairman, understands clearly that Google has done almost everything from the top to the bottom including hardware design, interface between users and smartphones, ergonomic engineering of the products, and even the business model after manufacturing in house. Google’s model leaves little room for Taiwan’s ODM.

In the 2013 Global Competitiveness Report (GCR) published by the World Economic Forum, Taiwan was ranked first in terms of competiveness of industrial clustering development among 144 worldwide economies. Yet despite the clustering resources, Taiwan still lags behind Germany and Japan. Business Weekly attributes the cause to a lack of innovation, as the reason Taiwan came in at 14th place in the GCR.

In the GCR’s overall rankings, Taiwan is placed No. 13, a little higher than South Korea, but far behind Switzerland, Singapore, Finland, Sweden, the Netherlands, Germany and Japan. This means merely clustering development is not sufficient. Taiwan must continue innovating to remain competitive.

At the end of 2012, Dr. Victor Tsan at the Institute for Information Industry in Taipei, warned the Economics Ministry that, if Taiwan’s ODM and OEM industries do not transform or upgrade, they will be left with the manufacturing service only, lower added value and lower unit price. This is what Dr. Tsan is worried by when contemplating the electronics and technology industries of Taiwan, according to Commonwealth.

However, Dr. Wang Ting-an, director of the Science Division of the Taipei Economic and Cultural Office in San Francisco, is confident and optimistic. He told Taiwan Insights, if Silicon Valley is the new rocket of global technology innovation, Taiwan will be working as the rocket propellant. For Apple, Google, Facebook and Amazon, Taiwanese companies have always been a necessary partner in realizing technology innovation.

Dr. Wang believes, in the face of Silicon Valley’s technology innovation, Taiwanese industry must get rid of the mentality of making only marginal profit and start industrial transformation, so as to create added value, for buyers, for consumers, and even to contribute to environmental protection. Only when the performance of Taiwan’s products and services exceeds the expectation of its customers can Taiwanese companies enjoy the benefits of high gross profits and brand recognition. “This is the only way to survive for Taiwanese industries,” stressed Wang.

Taiwan’s Victor gaining ground on Japan’s Yonex

Taiwan’s Victor Sports, the second largest badminton brand in the world, raked in NT$3 billion (US$100 million) in revenues last year, and is quickly gaining on the world leading Japanese brand Yonex, reported Commonwealth monthly.

Established by Chen Deng-li in 1968, Victor Sports started as a family business with five employees. Chen founded the company in part because of his fondness for the game and also because Taiwan served as a major exporter of badminton materials at the time.  In 2002, Chen Shu-yuan became the general manager, and the leadership passed from father to son.

At present, badminton rackets account for 30 percent of Victor’s products, the remaining being clothing and shoes. Victor keeps high-end racket manufacturing in Taichung (central Taiwan) while contracting out its middle- and low-end rackets to Chinese factories. The family maintains a close eye on the manufacturing of high-end rackets so they can better control the R&D, said the younger Chen.

In Taipei, Victor maintains a small lab. Each newly developed racket must pass eight to ten tests, including tests on its swing, weight, and how it performs under pressure. The R&D team is made up of a talented group, specializing in materials, process and structure. The firm’s racket R&D expenditure accounts for two percent of the total revenue earned.

Five years ago, the sales ratio of high-end rackets of Yonex versus Victor was 8:2 and today it is about 6:4. With more brand recognition of its product line, Victor replaced Yonex as a sponsor of the South Korea’s national badminton team in 2009, securing the spot as the second largest global badminton brand, according to Commonwealth.

China is the largest badminton market in the world. Although Victor dominates in the Taiwan market, it still lags behind Yonex and Li-Ning brand rackets in China. For Victor to take the lead in all markets, more investment in marketing is still required.

“At least we are capable of posing a threat to Yonex now,” Chen Shu-yuan said. Before taking over the family business, Chen graduated from National Taiwan University and completed an MBA in the US. He is excited to see what the company’s R&D will develop next and determined to spread the Victor logo to every badminton game in the world, reported Commonwealth.

Taiwanese-American Cultural Festival on May 11

San Francisco’s largest gathering of Taiwanese-Americans will take place again this Saturday at Union Square. The 21st Taiwanese-American Cultural Festival seeks to create a “night market” atmosphere, including Taiwanese food, games and activities throughout the day.

The festival will kick off when Three Princes Rock takes the stage at 10:15am offering a modernized version of a traditional temple folk art performance. Nezha Prince, a temple deity and guaranteed crowd pleaser, are life-sized puppets that dance to choreographed techno and hip hop music. Taipei Folk Dance Theatre will also be performing at 12:30 and 4:00pm. The Taiwan-based group is the first professional ethnic dance company on the island. The troupe combines traditional Taiwanese dance influenced by the island’s aboriginal tribes. The company has performed in more than 40 countries around the world.

A rich line-up of groups and solo performers include 408, The Ritards, Johnny Hi-Fi, the Fremont Taiwan School Kids, Rosendale (aka Brian Wang) and Cynthia Lin. Be sure to visit the different booths for a taste of traditional Taiwanese delicacies, live performances of Taiwanese glove puppets, Taiwan’s orchids, photo exhibition Why Taiwan Matters and to learn more about Taiwan’s many tourist attractions.

To learn more about the festival activities visit .

Taiwanese film screenings at Berryessa Branch Library in San Jose

On the next two Fridays, the San Jose Public Library and the Taipei Economic and Cultural Office in San Francisco will co-host free screenings of two Taiwan-made films at the Berryessa Branch Library (3355 Noble Avenue, San Jose). The first film, Go Grandriders, will be shown on May 10 at 3:30pm in the Community Room. The second film, The Soul of Bread, will be screened a week later (May 17) at the same time and location.

Selected for San Francisco’s CAAMFest 2013, the documentary Go Grandriders follows a group of octogenarians as they motorcycle around Taiwan on a 13-day journey. Defying society’s expectations, these 17 senior Taiwanese motorcyclists’ journey will inspire and delight audiences whether they are young or just young at heart.

Directed by Hua Tien-hao and produced by Ben Tsiang’s CNEX, Go Grandriders was released in Taiwan in October 2012. It quickly topped Taiwan’s documentary box office.

The film is in Mandarin Chinese and Taiwanese dialect with English subtitles. The running time is 90 minutes. Please see the Berryessa Branch Library’s website for more information,

The Soul of Bread, is a romantic comedy set in the scenic countryside of Kaohsiung County (southern Taiwan). It pits an internationally renowned baker against a local bread maker for the love of a local girl. Which of these dueling bakers will come up with the best recipe for love? Released in 2012, the film is directed by Kao Pin-chuang and Lin Chun-yang. It is 114 minutes long in Mandarin Chinese and Taiwanese dialect with English subtitles. Please visit the library’s website for more information,

Economics Vice Minister encourages Bay Area to invest in Taiwan

On April 16, Taiwan’s Vice Minister of Economic Affairs Cho Shih-chao led a delegation to Milpitas, California, home to numerous high-tech firms, including Cisco Systems, to hold an investment and trade seminar. Members of the delegation included officials of the Economics Ministry, the Department of Economic Development of Taipei City Government, and representatives of the Southern Taiwan Science Park. At the seminar, the delegates presented details of Taiwan’s investment environment by introducing business opportunities in the manufacturing and service sectors, the investment environment of the Southern Taiwan Science Park and Taipei City, along with measures to promote bilateral trade between Taiwan and the United States.

Cho pointed out that Taiwan is an important trade and investment partner of the US. Since 1952 to this past February, American companies have invested in over 5,000 projects in Taiwan, totaling over US$23.3 billion. This makes US the country with the largest investment in Taiwan. During the same period, Taiwan invested in similar numbers of projects in the US, totaling US$13.2 billion. He said that Taiwan was the 11th largest importer and the 16th largest exporter to the US in 2012.

And relations continue to improve. In November 2012, Taiwan joined the US Visa Waiver Program, becoming the 37th country to get this privilege, and the only country without diplomatic relations with the United States. Every year, Taiwanese travelers make over 400,000 visits to the US.

Cho stressed that Taiwan signed the FTA-like Economic Cooperation Framework Agreement (ECFA) with the mainland in 2010 to increase the services and commodities trade between the two sides, as well as to promote bilateral exchanges and cooperation in education and culture, which helps to make Taiwan a springboard to China. In March of this year, the United States Trade Representative visited Taiwan to resume talks on a Trade and Investment Framework Agreement (TIFA), and set up a “Working Group on Investment” to further explore the issues for a bilateral investment agreement (BIA).

“Taiwan attaches great importance to intellectual property rights, and all industries have their convenient supply chains in Taiwan,” Cho said. With the formation of the industrial chain of technology industries, Taiwan is the best place for research and development and for innovation. The vice minister urged overseas manufacturers, technology companies, and other enterprises to invest in Taiwan, treating it as a partner and as their regional base.

President Ma gives video address to Stanford University

During a video conference chaired by former US Secretary of State Condoleezza Rice on April 16, President Ma Ying-jeou said his administration plans to bolster exchanges with the US based on its closer cross-strait ties with mainland China and Taiwan’s growing role as an international peacemaker.

“We are deeply appreciative of Taiwan-US relations and ongoing arms sales from Washington,” President Ma said. “The mutual trust that has been restored between the two sides is giving Taiwan confidence and allowing us to engage with mainland China from a position of strength.” The president made the remarks at an academic event hosted by Stanford University’s Center on Democracy, Development and the Rule of Law (CDDRL).

The event’s other panelists at the Stanford University Bechtel Conference Center included Larry Diamond, director of the CDDRL; Francis Fukuyama, senior fellow at the Freeman Spogli Institute for International Studies; and Gary Roughead, a former chief of operations with the US Navy.

President Ma said his administration’s commitment to further liberalizing Taiwan-US trade is evidenced by the resolution of problems surrounding US beef imports last July. In March, the two sides also concluded talks under the Taiwan-US Trade and Investment Framework Agreement (TIFA) in Taipei, President Ma added that this development is in line with his building blocks approach to expanding bilateral economic exchanges. This undertaking also lays the foundation for Taiwan to join trade pacts such as the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP).

“We have been left behind, very much left behind,” he said. “We need to catch up, and catch up fast. Becoming a free trade island is the only way to survive.” The TPP is a proposed trade agreement comprising negotiating partners Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the US. Other nations such as Japan and South Korea are also joining in discussions on this emerging pact.

Driven by the Association of Southeast Asian Nations, the RCEP comprises 16 economies, including Australia, India, Japan and mainland China. If realized, the trading bloc will permit a greater flow of goods and services and encompass a combined economic output of US$20 trillion, or almost one-third of the global economy.

Speaking on Taipei-Beijing exchanges, President Ma said both sides enjoy “special relations” as set out under the Republic of China (Taiwan) Constitution, which does not acknowledge each other’s sovereignty but recognizes the respective governing authority. “Most people in Taiwan want to maintain the cross-strait status quo based on the principle of ‘no unification, no independence and no use of force,’ as well as the Constitution and 1992 Consensus. This is the will of the people and the best way of furthering cross-strait relations.”

The 1992 Consensus is an informal understanding that there exists only one China, inclusive of Taiwan and mainland China, with both sides agreeing to differ on the precise political definition of “China.” It has served as the basis for Taipei’s dialogue with Beijing since President Ma took office in May 2008.

President Ma said Taiwan’s robust democracy is impacting mainland Chinese visitors by allowing them to see the difference between the two sides and clearing up misunderstandings stemming from the cross-strait political divide. “Our democracy and increased people-to-people exchanges will sow the seeds for a consensus on the future direction of cross-strait relations. This represents the virtuous cycle of improving Taipei-Beijing ties.”

On issues of regional security, President Ma said recent headway made between Taiwan and Japan over the Diaoyutai Islets speaks well for a peaceful resolution of territorial disputes in the East and South China seas. An uninhabited archipelago located roughly 102 nautical miles northeast of Taiwan proper, the Diaoyutais are historically attached to the ROC and include Diaoyutai Island and four other islets.

“The fisheries pact inked by Taipei and Tokyo in the last six days is a milestone development in bilateral ties. It safeguards the security of fishermen from both sides in the zone, and further enhances regional peace.” President Ma added that the agreement illustrates the viability of his East China Sea Peace Initiative and the willingness of both sides to set aside differences without undermining maritime and sovereignty claims.

Proposed by the president last August, the five-point initiative urges all parties to refrain from antagonistic actions; not abandon dialogue; observe international law; resolve disputes through peaceful means; and form a mechanism for exploring and developing resources on a cooperative basis.

The initiative also features a two-phase implementation: dialogue and talks, then cooperation on exploring and sharing natural resources. Under this framework, Taipei, Tokyo and Beijing can conduct bilateral discussions before progressing to trilateral negotiation, essential steps in realizing peace and cooperation in the region, President Ma said.

Despite challenges, Taiwan’s pop music market remains dominant

I am a singer, a Chinese singing competition, was recently broadcast live for five straight hours by a television station in Taiwan, while three major Taiwanese newspapers devoted over half a page to covering the show. Interest in the contest picked up especially after Terry Lin, a Taiwanese pop singer, took part in the February 15 show. Since then, there have been over a hundred messages daily circulating in the Taiwanese media. In the following week, over 200 discussion articles appeared on Taiwan’s largest bulletin board system, PTT.

Innovation allows more Chinese to be in touch with Taiwanese

I am a singer is not just a singing program, but a once in a lifetime opportunity. The competition, a franchise of the original South Korean show, represents hope and offers a chance for mainland Chinese singers to get ahead in a highly competitive world. Achieving fame with just one shot is resonating with the Chinese audience. Although many people in China have risen from poverty to affluence in recent years, China is still a country where over 70 percent of the fortune is concentrated in the hands of 0.4 percent, according to the United Nations’ Economic and Social Council in 2012. The income gap is viewed by many with alarm, reported Taiwan’s Business Weekly.

Although many Taiwanese music fans are crazy about this singing program, it should not be viewed as a Chinese “invasion” of Taiwan, but rather as evidence that China is getting closer to an international standard. “Chinese innovation (in the program) is appealing more to the heart of the Taiwanese people,” noted the weekly.

Taiwanese take pride in “soft power”

Globalization has linked every part of the world together. “If we are not afraid of Hollywood’s invasion of Taiwanese movies with a by-product from Ang Lee, why would we be afraid that Taiwan will be completely covered by Chinese culture?” remarked Jai Beng-ray, a professor at Feng Chia University in Taichung (central Taiwan), to the Business Weekly. “Taiwanese should not look down upon themselves,” he said.

Joseph Nye’s “soft power” is best expressively realized by the free, democratic and pluralistic lifestyle enjoyed by people in Taiwan, which is ahead of China by at least 20 years. The street corners of every Taiwanese city are curiosities for Chinese tourists, such as the coffee shops lining Yongkang Street in Taipei, the 24-hour Eslite Bookstores or the cycling routes around Sun Moon Lake.

Business Weekly commented that the Taiwanese people’s pursuit of a quality lifestyle is exactly what the growing numbers of white-collar citizens in China strive for as they seek a respite from the severe competition in the workplace.

Taiwan music has been imprinted on the Chinese

The Commercial Times said in an editorial that Taiwan supplies 80 percent of the pop music for the global Chinese market, and does not need to have a program like I am a singer, to prove its standing in the Chinese music scene. From Teresa Teng during the last decade of the Cold War to Taiwan’s current crop of singers, the island’s pop music continues to exert its far-flung influences on mainlanders. Taiwan’s dominance includes such singers as A-Mei, Emil Wakin Chau, Chyi Chin, Jay Chou, Jolin Tsai, Jam Hsiao, Aska Yang, and Terry Lin, all celebrities and extremely popular in the China market.

Like leading Taiwanese businesses in China, such as Want Want and Master Kong in the food industry, Hon Hai/Foxconn and ASUS in the electronics manufacturing industry, Taiwan takes pride in their singing idols and creative cultural industry as well, said the paper.

Hong Tao, general director of I am a singer, said, “Taiwan’s music has influenced the mainland since the 1980s. Undeniably, Taiwan music has been imprinted on the Chinese people born in the 1980s and 1990s,” the Global Views magazine reported. Lung Ying-tai, Taiwan’s Culture Minister, said, “Many songs sung in I am a singer were created by Taiwanese. However, will Taiwan still be the abundant source of inspirations of the Chinese pop music 30 years from now?”

Yang Tu, a Taiwanese columnist, wrote in the Taipei-based China Times, that Taiwanese singers participating in the competition represent talent cultivated in Taiwan, but they have a harder time rising to fame in Taiwan. Due to the island’s smaller market, it can only accommodate a certain type of taste with a limited audience to develop more styles. In contrast, China’s market is huge. Even if merely one percent of its population were to pursue a certain type of music, it would be a market with 10 million consumers.

According to Yang, the musicians in Taiwan should not envy the success of I am a singer, nor be thrilled over its influence, but rather, face the challenges. They need to work harder to blend universal notions of music with Taiwan’s soft power and traditional values to create and enter the 1.3-billion Chinese market at a time when China’s creative cultural industry is ripening. Taiwan has an advantage in developing this area, since this niche is not based on economic factors, but rather, is strengthened by a nurturing environment with more freedom, humanity and creativity. Taiwanese people should not limit themselves, said Yang.

Taiwan’s SRAM challenges competitors with one-day turnaround

What does Peter Sagan, the Tour de France winner and Jaroslav Kulhavy, the 2012 Olympic gold medalist mountain bikers have in common? They both use bikes with a drive train system made by SRAM, a Taiwanese cycling component maker. According to Taiwan’s Business Weekly, SRAM Taiwan is now the second largest cycling component maker in the world, breaking the dominance of drivetrain king – Shimano of Japan. Taiwan is now a pivotal country in the manufacturing of high-end global cycling components.

Starting with just 12 employees in 1991, SRAM Taiwan now employs over a thousand people, including a 160-member R&D team based in Taichung. In addition to making drivetrain systems, SRAM also makes components for ZIPP, the largest wheel set brand maker with over 50 percent of the global market, Avid, the largest hydraulic disc brakes maker, and Sachs, a high-end automobile components maker, according to the weekly.

Drivetrain systems are the highest precision and most valuable parts of any bike, accounting for at least 20 percent of the manufacturing cost.

In the past, the shipping quantity of Taiwan’s brand bikes depended entirely on the supply of drivetrains from Japan’s Shimano, the largest global cycling parts maker. This meant that Taiwan’s leading bike brands, like Giant and Merida Bikes survived at the mercy of Shimano, and faced possible bottlenecks because of this over-reliance. Now both manufacturers are free from Shimano’s monopoly.

Established in Chicago, Illinois in 1987, SRAM started overseas operations in 1991. Stanley R. Day, president of SRAM, decided to pick Taichung to open his first overseas factory. Together with his brother, they stayed in Shengang, Taichung (central Taiwan). Day worked with the 12 original employees, with one of them, Hank Kao, becoming the regional president of SRAM Taiwan.

Kao said that SRAM Taiwan joined the A-Team, an alliance of Taiwanese bike makers, and cut its lead time from 30 days to six, and occasionally, even a turnaround of one day, while Shimano still maintained a 30-day lead time, reported Business Weekly.

The A-Team was originally formed by Giant and Merida Bikes in 2003 to promote Taiwanese bikes. In the past ten years, the export of Taiwanese cycling components has doubled to US$900 million. With robust growth, SRAM Taiwan’s revenue in 2005 was about US$66.7 million, and in 2011, it surpassed US$334 million.

One advantage of SRAM’s quick growth is attributed to the industrial cluster of precision tool machining companies located in Taichung. The convenient location dramatically cuts supply time for steel materials used in the flywheel, from 3 kilograms of metal piece down to 170 grams after experimenting with different processes to perfect the unibody process. Most importantly is that all this is done by Taiwanese tool machines, Business Weekly noted.

Another forte enjoyed by SRAM is its Asian R&D center in Taichung, where team members developing products from the specifications and designs of American and European members, before sending them to the factory for mass production. It takes two months for the US to develop products from concepts while the process is reduced to just two weeks in Taiwan.

In 2012, SRAM shut down its German factory and moved entirely to Taiwan, citing its confidence in the island’s precision and technical capability. Taiwan is a excellent manufacturing base, and “We won’t worry about being caught up by Chinese or southeastern Asian counterparts for at least ten years,” Kao told Business Weekly with pride.