Jandi’s International founder Jerry M.J. Huang has proposed “manufacturing brands” as a new way forward for Taiwan’s SMEs.
 

Taiwan’s economy underwent a transformation in the 1960s as light industry began replacing agriculture and paved the way for small and medium-sized enterprises (SMEs) to play a leading role in our economy. The White Paper on Small and Medium Enterprises in Taiwan, 2021 shows that in 2020 Taiwan’s 1,548,835 SMEs accounted for 98.93% of our businesses, employed a total of 9,311,000 people (80.94% of our workforce), and generated revenues of NT$23.55 trillion (more than 50% of total corporate revenues). The report makes it very clear that SMEs remain a pillar of our economy. 

In recent years, many experts have proposed blue-ocean strategies such as “cross-domain innovation” and the “circular economy” to help SMEs overcome the challenges that can make them less competitive than larger companies. For example, Jerry M.J. Huang, the general manager of Jandi’s Industrial, has suggested that Taiwanese manufacturers should develop a “manu­facturing brand.” He hopes that the approach will thrust the “Made in Taiwan” label back into the international spotlight and propel it into the ranks of internationally recognized brands.
 

Sandy Kuo, general manager of Jumbo Steel Machinery, has a wealth of sales experience that enables her to offer comprehensive solutions to her customers’ needs.
 

A difficult start

After studying international trade at university, Huang began working in sales for a company that made plastic-bag machines. Six years with the company left him feeling confident in his understanding of the business and he decided to start his own company. But after founding Jandi’s in 1991, he quickly discovered that his lack of hands-on manufacturing experience was creating problems. For example, at that time his machinists often had to work from hand-drawn sketches when building machines, which frequently led to manu­facturing errors. After fixing that problem by teaching himself to use computer-aided design (CAD) software that produced drawings with the necessary accuracy, he began shadowing his machinists to gain a better understanding of how his machines were built and how they worked. Meanwhile, he was also visiting customers to ensure that their needs were fully met. He says that it took all of that to grow the company’s operations. 

But Huang felt he had still more to learn, and enrolled in the executive MBA program offered by National Sun Yat-sen University’s College of Management in hopes of leading his company to even greater heights.

Here to solve problems

Huang encountered the concept of branding while pursuing his MBA studies. His whole class dove deep into the question of how to create a brand, leading to many spirited discussions on the topic. But Huang himself felt that the conventional concept of branding didn’t really apply to the machine making companies that he was familiar with because it was typically consumer facing. Promoting a business-to-consumer (B2C) brand requires making the public aware of the brand, whether via the media or consumer word of mouth. But machine makers are business-to-business (B2B) enterprises whose customers are themselves manufacturers. These customers don’t want their competitors to know where they source their equipment, especially not key items. Some even go so far as to remove the labels from their machines to keep the information from their rivals. 

Moreover, whereas consumer purchases in the B2C market are driven by emotions, the manufacturer to manufacturer (M2M) market is oriented around ra­tional, technological problem solving. Conversations between producers and customers in this space focus on tangible, quantifiable topics such as price, delivery dates, expertise, technology, equipment, experience, and service. Huang says that his “manufacturing brand” concept therefore centers on rational thinking and decision making. 

He adds that whereas consumer products are warranted for only a couple of years at most, manufacturing machinery has a useful life of ten or 20 years and is the customer’s liveli­hood. He explains, “When you sell machinery, you have to be very attentive both to the sales process and to taking care of your customer after the sale. If the customer runs into a problem, you have to propose a solution quickly. You have to provide post-sales service year round.” 

These kinds of issues made Huang want to develop an upgrade path specific to machine manufacturers. 

He began visiting his fellow machine makers and collecting information to get a better handle on the thinking of his peers. Over time, he realized that highly regarded machine makers had some characteristics in common. First, nearly all of them were founded by people who started off as machinists and so had a deep understanding both of their own products and of their customers’ needs. Second, they provided prompt, high-quality service, giving customers peace of mind. Finally, and most importantly, they delivered products of consistently high quality, so customers were willing to buy them again. Jumbo Steel Machinery provides an example of one of these highly regarded machine makers.
 

Never underestimate Taiwan’s SMEs! Working together, they can leverage the “manufacturing brand” strategy to transform “Made in Taiwan” into a global brand.­
 

Quality plus service equals success

Jumbo Steel Machinery was established in 1986. Its current general manager, Sandy Kuo, began her career with the company as a sales assistant and general factotum. Kuo’s consistently outstanding work caught the eye of the company’s founder, who eventually put her in charge of the company. When she worked in sales, Kuo was always ready for her customers’ questions, immediately providing them with reams of information, and sometimes even answering questions they hadn’t yet gotten around to asking. She made a strong impression on customers, who then naturally thought of her the next time they needed machinery. 

Jumbo sold all kinds of equipment in its early days. When the company later began to get large numbers of orders for drinking-straw machines, it shifted its focus, eventually covering every aspect of the drinking-straw field. 

“When our sales took off, we started thinking about developing new technologies to highlight our com­pany’s value.” Kuo mentions a customer in Chicago that supplied drinking straws to McDonald’s and ordered both straw-making and packaging machines. Jumbo developed a transfer system that linked the two machines, which gave it a competitive advantage. 

Jumbo’s straw-making system now produces 1,000 straws per minute and packages them automatically, saving the buyer the cost of employing two workers and the floorspace required by four packaging machines. “The set costs about US$80,000, versus US$50,000 for just the straw maker alone. When you consider that the straw maker from a big-name manufacturer that they were already using cost US$290,000, it’s very clear why customers choose Jumbo.”

With North American and European environmental policies beginning to limit the use of plastics, Jumbo implemented a sustainability program. Four years ago, it also began working with a Taiwanese manufacturer that had developed an environmentally friendly straw. In addition to tweaking its machines to work with the sugarcane bagasse fibers used to make the new straws, Jumbo upped their production speed to their current level of 1,000 straws per minute. The company has made further contributions to conservation by helping upgrade the machines used by American and Jap­anese firms that manufacture environmentally friendly marine-­biodegradable PHA and PHBH straws.

Kuo insists on careful quality checks on each machine Jumbo makes, repeatedly testing each unit to minimize post-sales service requirements. She also asks employees to look for ways to increase the operating speed and ease of use of the company’s machines. 

Taiwan’s manufacturers have built customer loyalty into their manufacturing brands with their high-­quality products and their quick, 24/7 after-sales service. In Kuo’s view, this is the foundation of their success. Jumbo therefore keeps frequently replaced parts in inventory to ensure that it can deliver them to customers as soon as they are needed. 

The “Made in Taiwan” vision: A powerhouse brand

After reviewing the development of the machine building industry, Huang felt that the machine ­manufacturers’ accumulated experience, the reliable quality of their products, their investments in R&D, their understanding of products and client needs, and their quick and comprehensive service should be sufficient to establish “manufacturing brands,” that is, to create a strong image for themselves as capable manu­facturers. “More, the core values of a manufacturing brand include its interdepartmental cooperation and the mutual dependency that exists between the manu­facturer and its customer—the manufacturer applies its capabilities to create a product in partnership with its customer.”

Huang mentions a friend who bought a new pair of sneakers and was disappointed to discover that the shoes weren’t made in Taiwan, even though Taiwan is a shoemaking powerhouse. This made Huang think that perhaps government promotions could help bring the “Made in Taiwan” image into better ­focus by first tying it to the idea of “original equipment manu­facturing.” This would encourage consumers at home and abroad in the market for particular items to identify Taiwan-­designed or Taiwan-made goods, regardless of the brand that they are sold under, gradu­ally giving rise to the idea of “Made in Taiwan” as a “manu­facturing brand.” “The Taiwan Excellent Brand Association already promotes Taiwanese [consumer] brands inter­nationally, but ‘manufacturing brands’ are also brands, and both kinds of brands are stand-ins for the national brand.” Huang hopes that someday there will also be a Taiwanese manufacturing brand association that promotes the branding of industrial machinery makers. He believes that Taiwan’s SMEs, which are already powerful players in their own fields, can utilize a “manu­facturing brand” strategy to further distinguish themselves from competitors, and make “made in Taiwan” a powerful global brand in its own right.

For more pictures, please click 《The Way Ahead for Taiwan’s SMEs?—A Strong Manufacturing Brand》