Taiwan's textile makers reap high-tech rewards
Taiwan's focus on high-tech textiles appears to be paying off
Facing a fragile global economy, rival South Korea's aggressive free trade agreement (FTA) strategy, as well as an appreciating local currency, Taiwan's textile and apparel manufacturers have placed their bets on innovation.
And indeed, their strong focus on upgraded and functional textiles appears to be paying off.
The industry's export earnings in 2011 came to US$12.7bn, up from 2010's US$11.3bn; for 2012, overall production value is expected to grow by 2% to 3% to more than US$17.1bn. These figures are ten-year highs for the Taiwan industry.
The technology and resulting products from the island's roughly 400 textile mills were on display at the 2012 Taipei Innovative Textile Application Show in October, which its supporters claim is the most important innovative textile exhibition in Asia.
"The trend goes toward multifunctional textiles," said Justin Huang, secretary general of the Taiwan Textile Federation (TTF). "For example, heat-storing features are now combined with anti-bacterial ones and quick-drying."
Huang added that Formosa Textile, Taiwan's largest mill, released a super-light 7-denier fabric (two years ago it was still 15), and that woven fabric mills Far Eastern New Century, Shinkong Textile and Everest Textile all displayed fabrics made of recycled PET bottles.
"Consumers can express environmental consciousness while enjoying multi-functionality if such materials are combined," Huang told just-style.
Taiwan's about-turn to functional came in 2002. This was during the FIFA football World Cup in Japan and South Korea, when Nike, Adidas and others worked with the island's textile makers to develop functional jerseys for the players.
This work has been developed in an environment-friendly way. Leading Taiwan textile company Singtex is particularly innovative, combining plastic bottles and coffee grounds to create an odour-absorbing fabric that Adidas, Boss, Puma, Nike, The North Face, Timberland, and other international brands (along with Liverpool football club) have bought and used.
"[When we were still producers of cheap fabrics and bedding products], we realised that every time we tried to follow into a new fabric, southeast Asian manufacturers would copy us and do it cheaper," said Jason Chen, Singtex's president.
"Then, three PhDs [sic] and myself spent four years in research and development to extract and transform waste coffee grounds into nano-sized structures to be put into S.Cafe yarn, which we then turned into many styles of knitted and woven fabrics."
The Singtex success story did its share in stimulating Taiwan's textile industry to upgrade.
This became evident again during the 2010 FIFA Football World Cup in South Africa, where Nike collaborated with Taiwanese manufacturers to outfit nine of the 32 competing teams with functional jerseys. The London 2012 Olympics, too, were seen as a major success for Taiwan's textile mills.
Countering the competition
But nonetheless, a continued upward trajectory can hardly be taken for granted.
Following the implementation of the EU-South Korea Free Trade Agreement last year, Taiwan's exports to the EU dropped by 10% year-on-year in the first nine months of this year, squeezing the textile sector hard.
Adding insult to injury, the US-South Korea FTA came into effect in March, which could replace 5% of Taiwan's textile exports to the US with products from South Korea. And a 5-7% decline in Taiwanese textile shipments to China last year is attributed to the trend to online shopping.
The TTF's Huang holds that as long as R&D is strengthened, these Korean competitors can be countered.
This is firstly because big international retailers don't easily swap suppliers once they have enjoyed good innovative service, according to him. "But a concrete danger is that customers play the Korea card in order to push down the price," he said.
It is also noteworthy that South Korea and Taiwan are not directly competing in mainland China's retail market, Huang said, as "the Koreans emphasise fashion design, not function."
Also gnawing away at profit margins is the current strength of the Taiwan New Dollar (TWD). The local currency has risen steadily for much of the year, recently reaching its highest level in 14 months against its US counterpart.
Another issue is the protection of R&D. Putting this into perspective, Singtex says it spent around one-third of its capital to develop its S.Cafe coffee grounds yarn. R&D for multi-functional textiles involves the chemical and biotech industries, and what works out in the laboratories can run into problems in mass production.
So it is particularly galling if companies outside Taiwan copy and exploit such innovation. Hu Sheng-Cheng, a former chairman of the island's Council for Economic Planning and Development, has complained about mainland Chinese companies potentially reaping the benefits of others' R&D.
"Taiwan and mainland China signed an IPR agreement in June 2010, but the mainland side doesn't implement it in earnest," Hu said. "What's not beneficial for them isn't enforced by mainland authorities."
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