Textile Makers in Taiwan Create a High-Tech Niche

TAIPEI — Jason Chen knows what it feels like for globalization to threaten his family business.

In 1992, he went to mainland China to find inexpensive raw materials for his garment and blanket business in Taiwan, following his competitors in the textile industry as they rushed to the mainland for free land, inexpensive labor and loose environmental regulations.

But when a shipment of cloth he bought proved defective, his client rejected his garments, and he lost about $100,000. It was enough to push him to take matters into his own hands, and he founded Singtex Industrial to focus on developing higher-value, waterproof synthetic cloth.

“When you go cheap, you have no good quality control,” he said. “Many of us went to China for a new, sweet beginning but tasted only bitterness in the end.”

Singtex’s story parallels the transformation of the textile industry in Taiwan over the last two decades. Once the main pillar of Taiwan’s economic development, textiles have given way to high-technology gadgets and components. Fabric mills and garment factories moved offshore during the last 20 years to focus on lower costs and higher volumes.

Yet the industry has re-emerged over the past 15 years, with companies spinning out a plethora of high-technology fabrics that are being snapped up by European and North American brands. Those materials are used in products like ski jackets, sports jerseys, outdoor furniture and firefighters’ protective gear.

“These fabrics have special production, coating and lamination processes, and we want to keep those patents here,” said Robert Jou, a director at the state-funded Taiwan Textile Research Institute.

Data from the Taiwan Stock Exchange for 2010, the most recent year for which figures are available, show the average net margin at textile companies was 12.7 percent, compared with 7.6 percent for companies producing electronic products like semiconductors, computers and communication components.

Singtex owns 34 patents, including one for S.Cafe, a polyester cloth with coffee grounds mixed into it. The coffee grounds, recycled from local 7-Eleven convenience stores and Starbucks cafes, absorb odors, giving the fabric added value for athletic clothing. Singtex counts the Timberland and Hugo Boss brands as its customers, and has even landed a deal to supply fabric for the Liverpool soccer club’s uniforms.

Mr. Chen’s company survived the industry’s exodus to China, but many others did not. Exports dropped by 44 percent in dollar terms from 1997 to 2009, according to data from the Taiwan Ministry of Finance. Mills that did not do research and development, or have the ability to invest in innovation, could not compete and went out of business.

There were 7,752 textile companies in 1997, but by 2010, only 4,299 were left, according to the textile institute’s data.

“The ones that survived focused on innovative products to serve higher-value demand in Europe and United States,” said Chen Lee-in, a senior economist at the state-funded Chung-Hua Institute for Economic Research. “It really turned the notion that textiles was a low-tech industry on its head.”

This new business environment spawned companies like Hyperbola Textile, whose 24 employees work in a chic loft office in Neihu, a high-technology hub in Taipei.

Hyperbola found its niche in designing high-performance outdoor clothing, like ski jackets and raincoats, and supplies brands like Canada Goose, Lululemon and Patagonia. It also produces fade-resistant outdoor cushions.

The company has no factory. Instead, it finds mills in Taiwan to make the fabrics.

Tina Wang, Hyperbola’s founder, said that although her clients made smaller orders in Taiwan than they would in China, they needed fabrics that could withstand harsh weather conditions and demanding environments, which Chinese mills often lack the technology to produce.

In 2011, Ms. Wang’s company and its partner mills produced 350 types of fabrics to satisfy that demand.

Article source: http://www.nytimes.com/2012/12/13/business/global/textile-makers-in-taiwan-create-a-high-tech-niche.html?partner=rss&emc=rss