THE AUTOMOTIVE INDUSTRY TAIWAN Fact Pack

1
THE AUTOMOTIVE INDUSTRY TAIWANFact Pack

• Swedish Trade Council Taipei
• 2006

2
CONTENT

• Overview Taiwan Manufacturing Industry
• Taiwan Automotive Industry
• Recommendations
• References
• Appendix

3
THE MANUFACTURING INDUSTRY IN TAIWAN IS ALMOST 2
TIMES AS LARGE AS THE SWEDISH MANUFACTURING
INDUSTRY- the automotive industry is growing
steadily in Taiwan

• The total turnover of the Taiwan manufacturing
  industry is SEK 2,538 billion, there of SEK 101
  billion from the automotive industry
• the Swedish manufacturing industrys turnover is
  SEK 1,357 billion
• There are approximately 132,674 companies within
  the manufacturing industry in Taiwan
• 2.7 million employees
• The electronics industry is the largest and
  strongest industry in Taiwan
• The average labor cost for an industry worker in
  Taiwan is SEK 62.13 per hour

5 largest manufacturing industries in Taiwan
Billion SEK
The automotive industry amount 4 of the total
manufacturing industry
Source Ministry of Economic Affairs
4
CONTENT

• Overview Taiwan Manufacturing Industry
• Taiwan Automotive Industry
• Passenger Cars
• Commercial Vehicle
• Suppliers
• Recommendations
• References
• Appendix

5
THE TAIWAN PRODUCTION OF CARS AND COMMERCIAL
VEHICLES TOTALS SEK 101 BILLION- the industry
grew more than 10 2005
Production cars and commercial vehicles industry
in Taiwan
billion SEK
Components and accessories SEK 44,4 billion
Vehicles SEK 57,6 billion
Growth due to higher demand in the domestic market
Source Taiwan Transportation Vehicle
Manufacturers Association
6
445,000 VEHICLES ARE PRODUCED IN TAIWAN- 323,000
passenger cars and 122,000 commercial vehicles
VEHICLE MANUFACTURERS
COMMERCIAL VEHICLES (122,000 vehicles)
LIGHT TRUCKS (117,000 vehicles)
BUSSES (0 vehicles)
HEAVY TRUCKS (5,000 vehicles)
PASSENGER CARS (323,000 vehicles)

• (Weight lt 3.5 t)
• 6 manufacturers
• China Motor (45,000)
• Ford Li Ho Motor (26,000)
• Kuozui Motors (16,000)
• Prince Motors (3,000)
• Yulon Motor (23,000)
• Taiwan Isuzu Motors (4,000)

• Only domestic SKD with a volume of 1400 in 2005

• (Weight gt 3.5 t)
• 3 manufacturers
• China Motor (2,000)
• Kuozui Motors (3,000)
• Taiwan Isuzu Motors (400)

• 8 manufacturers
• Kuozui Motors (124,000)
• Ford Li Ho Motor (54,000)
• Yulon Motor (41,000)
• China Motor (40,000)
• Honda Taiwan (25,000)
• San Yang Industry (22,000)
• Prince Motors (14,000)
• Formosa Auto (3,000)

Source Taiwan Transportation Vehicle
Manufacturers Association
7
CONTENT

• Overview Taiwan Manufacturing Industry
• Taiwan Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Recommendations
• References
• Appendix

8
THE PASSENGER CAR PRODUCTION IN TAIWAN IS
INCREASING STEADILY - Entrance to WTO in 2001
triggered the car sales
Passenger Car Production in Taiwan
Development the last 5 years

• Steady growth of the car production
• Taiwan entrance to WTO in 2001 lowered the import
  tax for key components thereof the cost of
  vehicles which triggered the sales of cars
• In addition, macro economic growth and rising
  wealth are some of the other factors that
  increased the demand of cars
• New requirements on production of safety type
  cars has increase the demand of new cars
• Formosa Auto and San Yang (Hundai) entered the
  market

Vehicles
9
THE MAJORITY OF PURCHASE DECISIONS ARE MADE IN
TAIWANMOSTLY TOGETHER WITH THEIR CUSTOMERS-
Choice of suppliers are based on global sourcing
for optimal quality and price
Passenger Cars
Source Taiwan Transportation Vehicle
Manufacturers Association interviews
10
THERE ARE 8 CAR MANUFACTURING PLANTS IN TAIWAN -
Kuozui Motors produce the most cars in Taiwan
Taipei City
Chung li
Tucheng
Chung li
Yang mei
Hukou
San Yi
Taichung
Ping Tung
Bold Head office
Source Taiwan Transportation Vehicle
Manufacturers Association
11
FOCUS ON AUTOTRONICS, IMPROVED SUPPLY CHAIN AND
COST DOWN PRODUCTION
Trends within the Taiwan passenger car industry

• Production is moving to mainland China and South
  East Asia
• Due to cost down requirements and price
  competition on the market
• Key components are still imported from US, Europe
  and Japan

Globalization

• Hybrids are entering the Taiwan market
• Hybrids are actively introducing in Taiwan
• Credit card loans for cars has been restricted
  which hit the sales of cars
• OEMs improve ties with their suppliers for better
  efficiency and improved quality

Market movements

• Increase RD spending to produce higher quality
  cars and integration of autotronics
• Increase RD investment in autotronics and
  telematics
• Increase RD in automobile safety
• Increase cooperation with parent companies in
  Japan and US to enhance RD

RD
Source Company interviews and ITRI
12
CONTENT

• Overview Taiwan Manufacturing Industry
• Taiwan Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Recommendations
• References
• Appendix

13
LIGHT TRUCK PRODUCTION IS DECREASING TOWARDS A
MORE STABLE PACE- due to import restriction of
sand from China
Commercial Vehicle Production in Taiwan
Development the last 5 years

• Restriction to import sand from China has reduced
  the light truck sales
• High oil price hit the sales of trucks in 2005
• DAF, Renault, Mercedes Benz have started to
  export to the Taiwan market
• Regualtion change in 2001 for heavy trucks of
  having a combination weight of 43 tonnes instead
  of 35 tonnes required the fleet companies to buy
  3 axel trucks and trailers which spurred the
  sales of heavy trucks

Vehicles
14
THE MAJORITY OF PURCHASE DECISIONS ARE MADE IN
TAIWANMOSTLY TOGETHER WITH THEIR CUSTOMERS-
Choice of suppliers are based on global sourcing
for optimal quality and price
Commercial vehicles
Source Taiwan Transportation Vehicle
Manufacturers Association interviews
15
THE COMMERCIAL VEHICLE INDUSTRY IS CONCENTRATED
IN THE NORTH AND CENTRAL OF TAIWAN
Taipei City
Kuanying
Tucheng
Chung li
Yang mei
San Yi
Taichung
Bold Head office
Source Taiwan Transportation Vehicle
Manufacturers Association
16
FUEL ECONOMY AND NATIONAL SERVICE NETWORK FOR
TRUCKS ARE THE MAIN FOCUSES
Trends within the Taiwan commercial vehicle
industry

• High oil price hit the sales of trucks
• High oil price has reduced the demand of light
  trucks
• Increase of CKD trucks in Taiwan

Market movement

• Several new makers have entered the Taiwan market
  
• New gas emission EURO4 law lead to more European
  maker entering Taiwan
• Renault, Mercedes Benz and DAF has recently
  entered the market
• Service networks are formed to provide better
  service for trucks in Taiwan

Competition

• Demand for commercial vehicles with better fuel
  economy
• Demand for vehicles with low fuel consumption
• Demand for vehicles with higher horse power

Technology
Source Company interviews and ITRI
17
CONTENT

• Overview Taiwan Manufacturing Industry
• Taiwan Automotive Industry
• Passenger Cars
• Commercial Vehicles
• Suppliers
• Recommendations
• References
• Appendix

18
THERE ARE ABOUT 3,000 AUTOMOTIVE SUPPLIERS IN
TAIWAN- Small family-owned companies with strong
financial resources
Geographical concentration of automotive
suppliers
Taiwan automotive suppliers

• There are approx. 3,000 suppliers for the
  automotive industry in Taiwan
• There his a very high concentration of automotive
  suppliers in north and central Taiwan
• Many of the companies have less than 100
  employees and are family owned (70) with strong
  financial resources
• Traditional strong segments are engine parts,
  body parts (lamps), and rubber and plastics for
  interior
• Most T1 Headquarters are located in Taipei City

Taipei
Tao yuan
Taipei County
Hsinchu
Miao li
Taichung
Chang wha
Tainan
Tainan County
Kaohsiung County
Kaohsiung
Source ITRI and company interviews
19
ALMOST ALL LARGE T1 SUPPLIERS ARE LOCATED IN
TAIWAN
T1 SUPPLIERS
Electrical systems
Interior equipment
Propulsion
Body
Running gear

• Cables, bus systems, embedded systems
• Shihlin Electric Engineering
• Taiwan Yuasa Battery
• Ztong Yee Industrial
• Taigene Electric Machinery
• Safety Control Cable

• Power train, exhaust systems, engines
• Uni Auto Parts Manufacture
• Kaifa Industry
• Shinfu
• Taiway
• Taiwan Nittan Industrial

• Cockpit, seats, dash-board, air conditioning
• Matsushita Electric (Taiwan)
• Hsin Chong Machinery Works
• Uni Auto Parts Manufacture
• Proton Electronic Industrial
• E-Lead Electronic

• Body, roof, glass, doors, lighting etc.
• Hsin Chong Machinery Works
• GSK
• Ta Yih Industrial
• 3M Taiwan
• Tai Yue Elelctric

• Suspension, brakes, axles, steering, tires
• Cheng Shin Rubber
• Tong Yang Industrial
• Lioho Machine Works
• Elite Sewing Machine
• Federal

Ranked by the size of the employees and
recommendation from ITRI and industry sources
Other major T1 suppliers are listed in the
appendix
Source Taiwan Transportation Vehicle
Manufacturers Association, ITRI and industry
sources
20
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T1 Suppliers - Electrical systems
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
21
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T1 Suppliers - Interior equipment
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
22
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T1 Suppliers - Propulsion
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
23
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T1 Suppliers - Body
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
24
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T1 Suppliers - Running gear
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
25
T1 SUPPLIERS ARE CLUSTERED IN MAJOR CITIES CLOSED
TO THE VEHICLE OEMs- Most HQs are located in
Taipei City
Taoyuan
Hsin Chong Machinery Works
Taiwan Nittan Industrial
Taoyuan
Taipei City
Hsinchu
Uni Auto Parts Manufacture
Taichung
Hsin Chong Machinery Works
Changhua
Chia Yi
Tainan
Kaohsiui
Bold Head office
Source Company Websites
26
ALMOST ALL LARGE T2 SUPPLIERS ARE LOCATED IN
TAIWAN
T2 SUPPLIERS
Electrical systems
Interior equipment
Propulsion
Body
Running gear

• Cables, bus systems, embedded systems
• Taigene electric machinery
• Denso Taiwan
• Man zai industrial
• Safety control cable
• Rainbow trust industrial

• Power train, exhaust systems, engines
• Porite Taiwan
• Right Way
• China terminals electric
• Fine blanking tool
• Taiwan Riken

• Cockpit, seats, dash-board, air conditioning
• Hsin chong machinery works
• Jui li enterprise
• Uni auto parts manufacture
• Sentec EF
• San long industrial

• Body, roof, glass, doors, lighting etc.
• Universal scientific industrial
• Hamg Shing Technology
• Toyooki (Taiwan)
• Shin chin industrial
• Kau hua industries

• Suspension, brakes, axles, steering, tires
• Cheng shin rubber
• Lioho machine works
• Tung pei indsutrial
• Elite sewing machine
• Tiger steel

Ranked by the size of the employees and
recommendation from ITRI and industry sources
Other major T2 suppliers are listed in the
appendix
Source Taiwan Transportation Vehicle
Manufacturers Association, ITRI and industry
sources
27
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T2 Suppliers - Electrical systems
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
28
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T2 Suppliers - Interior equipment
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
29
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T2 Suppliers - Propulsion
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
30
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T2 Suppliers - Body
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
31
ALMOST ALL PURCHASE DECISIONS ARE MADE IN
TAIWAN- Some makers outsource the purchase
decisions to their factories in China
T2 Suppliers - Running gear
Source Taiwan Transportation Vehicle
Manufacturers Association and company interviews
32
THE T2 SUPPLIERS ARE LOCATED NEAR THE VEHICLE
OEMs - Most Headquarters has the same location
as the factory
Yang mei
Keelung
Toyooki (taiwan)
Tao yuan
Tao yuan
Taipei
Hsin chong machinery works
Miao li
Taichung
Changhua
Nan tou
Kau hua industries
Tainan
Kaohsiung
Bold Head office
Source Company Websites
33
THE TAIWAN SUPPLIERS ENHANCE ITS COMPETITIVENESS
ON THE GLOBAL MARKET
Trends within the Taiwan automotive supplier
industry

• Increase in production of parts due to higher
  global demand
• Moving the production to China and South East
  Asia to lower production costs and expansion of
  capacity
• Make Taiwan tier 1 suppliers to become global
  tier 1 suppliers
• Seeking to enter the North American market

Globalization

• Focuses on small scale production of a wide range
  of products
• Focus to enhance competitiveness in sales/
• after sales service/maintenance system with hubs
  in US, Europe and Japan
• Creating a national central support system to
  enhace operations for export of parts

Competition

• Government invest in RD for engine and engine
  parts
• 54 of the suppliers have their own RD
• 24 of the suppliers have technology transfer
  from foreign automakers
• Taiwan IT companies have joint RD with
  automakers in autotronics and telematics
• Focus on improved quality, lighther weight and
  environmental friendly parts

RD
Source ITRI, Company interview
34
CONTENT

• Overview Taiwan Manufacturing Industry
• Taiwan Automotive Industry
• Recommendations
• References
• Appendix

35
VENTURES WITH THE OEMs TO ACCESS ASIA MARKETS AS
WELL AS HIGH QUALITY SOURCING
Recommendations for making business with the
Taiwan automotive industry
Country specific
Lucrative government incentives in business
ventures, including substantial tax breaks
and preferential loans for key component products
such as engine/engine parts
1.
Geographically positioned close to markets in
Eastern Asia. Cultural ties to many countries in
the region, especially Japan and China, make
Taiwan an excellent spring-board to penetrate the
markets in Asia
2.
3.
A large well-trained, hard working and low-cost
workforce as well as excellent capability to
offer advanced technology with cost-efficient
and high quality OEM manufacturing
Industry specific
Team up with the authorized international
Taiwanese suppliers to access the local
and foreign automotive makers in Taiwan as well
as their operations in other markets
1.
2.
Use well-established distributor in marketing and
sales for the domestic market
3.
Transfer technology for OEM production of
automotives and parts
Source STC
36
CONTENT

• Overview Taiwan industry
• Taiwan Automotive industry
• Recommendations
• References
• Appendix

37
HOW CAN STC TAIPEI SUPPORT COMPANIES TO DO
BUSINESS IN TAIWAN
Country specific
Market Check and analysis
Customized market check/analysis to understand
the market condition and business opportunities
Distributor search
Customized distributor search based on
requirements set by our client including a
initial visit to the potential distributors in
Taiwan
Supplier seach
Customized supplier search based on requirements
set by our client including a initial visit to
the potential suppliers in Taiwan
IPO service
Customized IPO (International Purchase Office)
service in Taiwan for vehicle parts,
machinery/machine tools, plastic/rubber products,
metals as well as other products
Busienss Support Office (BSO)
1. BSO service in order to set up and run a legal
entity in Taiwan in a flexible, low cost and
quick way 2. A STC consultant can spend X of its
time for our clients marketing and sales support
in Taiwan
Legal service/ tender service
Services in patent/trade mark registration,
IPR-infringement and other legal/trade dispute
matters as well as support in public tenders,
employment and tax issues
Investment service
Find private and corporate investors to invest in
Swedish busienss ventures
38
STC TAIPEI HAS HELPED NUMEROUS SWEDISH COMPANIES
TO DO BUSINESS WITH THE TAIWAN AUTOMOTIVE INDUSTRY
39
STC CARRIED OUT A DISTRIBUTOR SEARCH FOR ABA OF
SWEDEN
Goal
Outline of project
The main objective of the project was to support
ABA of Sweden in finding a distributor and
initiate sales
Step1 Distributor search
STC role and contribution
Kick-Off

• Distributor analysis
• Face 2 face business discussion with potential
  distributors

• A market and distributor segment analysis
• Evaluated the market potential and recommended
  interesting segments and distributors to initiate
  business discussions with
• In-depth distributor analysis within recommended
  segments
• Carried out of business meetings with potential
  distributors
• Development of a recommendation plan for further
  business development with the potential
  distributors and follow up support

Step 2 Add sales support
Workshop
Workshop I

• In depth business discussions with selected
  distributor and follow up support in sales

Results

• At the kick- off, the team from the Swedish Trade
  Council was educated and the project outline was
  discussed
• At workshop 1, the Swedish Trade Council
  presented the results from step 1 and gave
  recommendation for how to approach the potential
  distributors

• Found out that ABA of Sweden's market potential
  is in the car and truck segments
• ABA of Sweden assigned one distributor in Taiwan
  and had profitable sales since start in 2004
• Other distributors are in business discussion
  with ABA of Sweden for other niche markets in
  Taiwan

40
STC CARRIED OUT A TRADE POLICY ISSUE WITH
NEGOTIATIONS AND LOBBYING TOWARDS THE AUTHORITIES
AND EU OFFICE FOR VOLVO
Goal
Outline of project
To assist Volvo Bus (herein after, Volvo) in a
trade policy issue with negotiations and lobbying
towards the authorities as well as EU office for
formal negotiations
Extensive negotiation and lobbying with the
authorities and EU office

Research and understanding of the trade policy
for bus height and emission
STC role and contribution
Revised trade policy favorable for Volvo

• Give Volvo a solid understanding of the Taiwan
  government regulation for bus height and
  emission.
• Act as Swedish government official in
  negotiations and lobbying the trade policy issue
  towards the Taiwan authorities and EU office
  during 2003-2005
• Negotiated and carried out lobbying efforts
  together with several Swedish government
  officials on major trade events between Taiwan
  and Sweden

Revised trade policy
Policy analysis
Negotiation and lobbying activities
Results

• Taiwan authorities revised the trade policy for
  the bus height and emisson favourble for the
  standards Volvo is using

41
STC CARRIED OUT A TRADE POLICY ISSUE WITH
NEGOTIATIONS AND LOBBYING TOWARDS THE AUTHORITIES
AND EU OFFICE FOR SCANIA
Goal
Outline of project
To assist Scania Bus (herein after, SCANIA) in a
trade policy issue with negotiations and lobbying
towards the authorities as well as EU office for
formal negotiations
Extensive negotiation and lobbying with the
authorities and EU office

Research and understanding of the trade policy
for bus width and emission
STC role and contribution
Revised trade policy favorable for Scania

• Give Scania a solid understanding of the Taiwan
  government regulation for bus width and emission.
• Act as Swedish government official in
  negotiations and lobbying the trade policy issue
  towards the Taiwan authorities and EU office
  during 2003-2005
• Negotiated and carried out lobbying efforts with
  several Swedish government officials on major
  trade events between Taiwan and Sweden

Revised trade policy
Policy analysis
Negotiation and lobbying activities
Results

• Taiwan authorities revised the trade policy for
  the bus width and emisson favourble for the
  standards Scania is using

42
STC CARRIED OUT A DISTRIBUTOR SEARCH FOR HALDEX
Goal
Outline of project
The main objective of the project was to support
Haldex in finding a distributor and initiate sales
Step1 Distributor search
STC role and contribution
Kick-Off

• Distributor analysis
• Face 2 face business discussion with potential
  distributors

• A market and distributor segment analysis
• Evaluated the market potential and recommended
  interesting segments and distributors to initiate
  business discussions with
• In-depth distributor analysis within recommended
  segments
• Carried out of business meetings with potential
  distributors
• Development of a recommendation plan for further
  business development with the potential
  distributors

Step 2 Add sales support
Workshop
Workshop I

• In depth business discussions with selected
  distributor and follow up support in sales

Results

• At the kick- off, the team from the Swedish Trade
  Council was educated and the project outline was
  discussed
• At workshop 1, the Swedish Trade Council
  presented the results from step 1 and gave
  recommendation for how to approach the potential
  distributors

• Haldex assigned one distributor in Taiwan for the
  automotive market and had profitable sales since
  start in 1994

43
STC CARRIED OUT PROMOTION ACTIVITES AND
MATCHMAKING FOR MECEL TOWARDS TAIWAN TELEMATICS
COMPANIES
Goal
Outline of project
To assist Mecel in promotion activites and
matchmaking with potential customers and partners
from Taiwan

STC role and contribution
Support in seminar and exhibition arrangements
Support for business establishment in Taiwan
Promotion activity at Sweden Taiwan Joint
Business Council

• Give Mecel opportunity to promote its company and
  technology to Taiwanese corporations and
  government organizations in Sweden
• In addition assisted Mecel in seminar arrangement
  as well as support in an telematics exhibition in
  Taiwan

Establishment activity
Promotion activity
Event promotion
Results

• Mecel has an agent in Taiwan to supports its
  sales

44
CONTENT

• Overview Taiwan industry
• Taiwan Automotive industry
• Recommendations
• References
• Appendix

45
APPENDIX TIER 1 ELECTRICAL SYSTEMS
46
APPENDIX TIER 1 INTERIOR EQUIPMENT (1/2)
47
APPENDIX TIER 1 INTERIOR EQUIPMENT (2/2)
48
APPENDIX TIER 1 PROPULSION
49
APPENDIX TIER 1 BODY (1/4)
50
APPENDIX TIER 1 BODY (2/4)
51
APPENDIX TIER 1 BODY (3/4)
52
APPENDIX TIER 1 BODY (4/4)
53
APPENDIX TIER 1 RUNNING GEAR (1/2)
54
APPENDIX TIER 1 RUNNING GEAR (2/2)
55
APPENDIX TIER 2 ELECTRICAL SYSTEMS (1/2)
56
APPENDIX TIER 2 ELECTRICAL SYSTEMS (2/2)
57
APPENDIX TIER 2 INTERIOR EQUIPMENT (1/2)
58
APPENDIX TIER 2 INTERIOR EQUIPMENT (2/2)
59
APPENDIX TIER 2 PROPULSION (1/2)
60
APPENDIX TIER 2 PROPULSION (2/2)
61
APPENDIX TIER 2 BODY
62
APPENDIX TIER 2 RUNNING GEAR