Looking to the Future with Mr. Roy Lin of Yow Cherng. --- By David Macdonald


2006-06-30
Yow Cherng Machinery Co., Ltd. was established in 1986 as a professional manufacturer of tenoners for the woodworking machinery industry. Now, the company has entered its twentieth year and now boasts two generations of the family working together. In this report, we report exclusively about one of the second generation, Mr. Roy Lin, General Manager, and how he has steered the company to a new and prosperous stage in its history. Born in the 1970’s, Roy Lin, has been actively running the company for the past ten years. He tries to think back to the difficulties his father faced in establishing the company. Roy Lin said: “In the beginning, when the company was established, we focused on the manufacture of traditional finger jointing machines. But slowly, as the company transformed into a bigger enterprise we also began to manufacture assembly machines for chairs, tenoners and mortizers” When asked about the difficulties in transforming the company, Roy Lin reflected back to when the market was full of machines from Italy. Most buyers could not accept machines from Taiwan. So, when Yow Cherng began to participate in international exhibitions, visitors generally did not have a big interest to buy Taiwanese machines. Roy Lin added that they felt frustrated at that time. However, with continuing gradual efforts, Yow Cherng was able to reach the goal of how the company is today. Speaking of the machines produced by the company, Roy Lin stated confidently that their machines, no matter when talking about quality or precision, are as good as those manufactured in Italy. He emphasized that many of the important machine components and parts are all imported from Europe. Also, that Yow Cherng’s prices are more competitive than machines from Europe. Yow Cherng’s International Markets When asked about international sales, Roy Lin revealed that their main focus remains on Asian countries which account for around 70%. Markets in Europe and North America are at about 15% and 10% respectively and the balance of other international regions is at 15%. Yow Cherng’s preferred international sales practice is to utilize local agents and these sales account for 80% of total sales. Roy Lin added that the company now has agents in 25 countries. The balance of 20% is direct sales to end-users. International Marketing and Potential Markets. Roy Lin stated that he never misses attending any important international woodworking machinery exhibition. He said: “Only by always joining these exhibitions, placing advertisements and continuously promoting our products’ international exposure, can we work well in international markets.” Roy Lin went on to also stress that all these efforts are essential for make the company’s brands internationally famous. When asked about new markets, Roy Lin suggested that India and Turkey both have good potential. As for markets in South-east Asia as well as China, he felt that these are now saturated. The needs of these markets for Taiwanese woodworking machinery in recent years have continued to decrease rather than increase. Roy Lin’s marketing strategy is to focus on the new and developing international markets. International Competition Regarding the competition in international markets, Roy Lin has his own opinions. He thinks that there is more of a threat from Italy and from China, when compared to other countries. Especially in recent years, Italian woodworking machinery companies, have set up manufacturing and assembly facilities in Eastern European countries like Poland. They have done this to save on labor costs. This influences the general market price and now Italian machinery can be priced as cheaply as Taiwan. In the same way, China, the ‘world’s factory’ has also taken advantage of cheap land, labor costs. Taiwanese companies can’t compete on price. However, Roy Lin stated that Taiwan’s strong advantage is that it is unique in that fact many of the materials and parts suppliers are located very close to each other. This means savings on transportation, delivery times and it is always easy to control quality. Other Challenges Roy Lin emphasized that it is not only critical to attend all the international exhibitions, but, before each show, it is crucial to carefully evaluate the needs of the local market for your products and to understand the market direction. You will then get the best results out of the investment of exhibiting at each show. Additionally, Roy Lin went on to state that another mistake that some Taiwanese companies easily make is that when the economy is good, they mass-produce their old models and forget to spend time and effort on research and development. But, Roy Lin stated that he is different. He places a strong emphasis on R&D and never forgets about it. This is reflected in the fact that Yow Cherng release new products every year and Roy Lin believes that this is the only way to stay competitive. Brothers Working in Close Cooperation Another important ‘soul’ in the company is Roy Lin’s younger brother, Mr. Lion Lin. There is an old saying in Chinese: ‘to go to a mountain to hit/battle the tiger, it is the best to go with your own brother’. The meaning loosely translated into English would be that your own brother is the best partner to work with. This point has been proven in Yow Cherng’s case. For many years now, the two brothers have worked together closely. They have their own duties and responsibilities. The younger Lin is mainly responsible for R&D and exploration of opportunities in the market in China. The Future of Taiwan’s Woodworking Machinery Industry As the future of the industry is concerned, Roy Lin said that there is still room for expansion. But, the key to this lies with the owners of each individual company. In the markets nowadays, the machines from China, although cheaper in price, need more time to reach the quality of Taiwan. China has to make a lot of effort in gaining quality materials, such as buying parts from Europe. A lot of expenses for marketing such as for advertisements and exhibitions are very high. In that case, the price of the product would have to be increased. Therefore, Mr. Lin encourages the Taiwan woodworking machinery industry to upgrade itself and not follow the same path as China or other countries. Always look forwards, not backwards, Roy Lin emphasized. Joint Ventures? In Roy Lin’s analysis of the Taiwanese woodworking machinery industry, he felt that too many small- and medium-sized companies produce the same kind of machines. This means that everybody’s costs are high and the quality can be difficult to control. Also, Roy Lin stated that there would always be a lot of competition between many similar manufacturers in Taiwan. He suggested that if there are some companies producing the same machines, that they could consider amalgamations or joint-ventures to thereby decrease manufacturing and marketing costs. These savings would mean increased international marketing budgets as well as cheaper machines with the same or better quality. This idea would cause a big shock in the market. Roy Lin finished with explaining Taiwanese woodworking machinery manufacturing companies have traditionally been family owned and managed. It would take a long time to accept the idea of joint-ventures and put this concept into practice.
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