Taiwan-based machine maker Victor Taichung Machinery Works has coped with waning competitiveness in prices for the export markets by offering customized manufacturing services to create product differentiations, with around 70% of orders associated with customization, according to company chairman MH Huang.
Huang said that Taiwan machine tool makers used to see their quotes some 30-40% lower than those offered by their biggest competitors from Japan, but such a price competitiveness has been significantly undermined by the sharp depreciation of the Japanese yen. As a result, international customers have turned to Japan machine tool brands, directly squeezing the survival space for Taiwan makers.
Huang said that since 2013, Victor Taichung has maintained a customer value-creating application center, gathering the firm’s experienced sales staff and engineers to directly face customers and respond to their actual needs. This way, Victor Taichung can agilely adjust its product development strategies based on direct responses from customers, thus effectively boosting product values and customer loyalty through customized production services.
Huang stressed that Taiwan machine tool makers cannot compete well with China and Korea rivals in terms of production volume of low- to medium-tier models or with Japan makers in the market for high-end products. Accordingly, he indicated, it will be a major challenge for business transformation of Taiwan machine tool builders as to how they can work out differentiations to highlight corporate values and even develop the market for higher-end products.