Science & Technology

Creativity Sells, for Some

• Byline:OSCAR CHUNG
• Publication Date:12/01/2010

Franz Collection displays porcelain works made with low-carbon production techniques at the ZED Pavilion at the 2010 Shanghai Expo. (Photo by Huang Chung-hsin)

Companies in Taiwan’s cultural creative industry are exploring a comparatively new market on the mainland.

Franz Chen, chief executive officer and founder of Franz Collection Inc., has good reason to give profuse thanks to his mainland customers. Founded at the end of 2001, Franz Collection is a Taiwan-based company that makes and sells high-end porcelain. The company’s revenue has grown an average of 70 percent annually in mainland China since it entered the huge emerging market in 2005, a trajectory that continued rising even during the recent worldwide recession.

While many Taiwanese manufacturers have opened factories in mainland China, cultural creative players from the island such as Franz Collection and Artilize Worldwide Co., a Taipei-based company that mainly produces high-quality decorative plaques, are making inroads in the mainland as well. “Aside from high-tech companies, Taiwan’s cultural creative sector is seeing great opportunities across the strait,” says Chen, who is also the chairman of the Asia-Pacific Cultural Creative Industry Association (CCIA), a Taipei-based organization devoted to facilitating cross-strait interactions in the sector.

“Taiwan is stronger in its creative power and mainland China has a larger market, lower labor costs and skilled workers,” Chen says, adding that products from the island’s businesses are more original and market-oriented than those from the mainland. “We should work together closely to explore regional and then global markets.”

Chen owned and operated a business that manufactured and designed gifts and ornaments for large Western companies for about 25 years before he began developing his own brand. In its first year of operation, Franz Collection won the best gift award at the New York International Gift Fair for its “Papillon” porcelain collection, a series of vases and tableware featuring three-dimensional butterflies. The company first gained a foothold in the West and then began exploring the mainland market. To focus on his fast-growing brand, Chen closed down his contract manufacturing business in October this year.

Previously Chen’s contract manufacturing had long been based in the mainland cities of Xiamen in Fujian province and Shenzhen, which is located just outside Hong Kong. For Franz Collection, however, in 2003 he began building a large production base in the city of Jingdezhen in Jiangxi province. One reason for choosing Jingdezhen is that it has the reputation of being mainland China’s ceramics capital, Chen says. “The town has a cultural feel and it’s easier to find skilled workers there,” he adds. Most of Franz Collection’s products are now made in the Jingdezhen factory, which started operating in 2005.

For its part, Artilize began exploring opportunities in the mainland market in 2008, around the time of the Beijing Olympics. “The world is looking to the Orient and its fashion and arts,” says Tony Tseng, chief executive officer of Artilize. “The mainland is so rich in resources, and you also see so many big events happening here.”

Like Chen, Tseng also is following the model of headquartering his company in Taiwan while making products in the mainland. Artilize performs marketing and design at its Taipei headquarters, although the company is also building its capacity to perform those functions at its Shanghai office. Production is based in Dongguan, Guangdong province.

Artilize Worldwide’s shop in Shanghai. The company tightly regulates the operations of its dealers in order to present a consistent brand image in the complex mainland market. (Photo by Oscar Chung)

Expo Exposure

Initially focused only on markets in the West, Franz Collection and Artilize both gained considerable exposure with their involvement in the 2010 Shanghai Expo, which ran from May through October. Franz Collection exhibited works at the ZED (zero energy development) Pavilion, so named because it focused on low-carbon design and the pavilion’s operation did not produce any carbon emissions. The company’s pieces at the ZED Pavilion were made from clay and glazes that harden at low firing temperatures. The items are then fired using high quality, low-emission natural gas. Artilize, meanwhile, was one of the select few enterprises allowed to both exhibit and sell its wares at the expo, reportedly at the urging of mainland China President Hu Jintao.

At the same time, closer interactions between cultural creative businesses on both sides of the Taiwan Strait are occurring through, for example, the Cross-Strait Cultural Industry Fair, which has been held three times in Xiamen since autumn 2008 through the cooperation of mainland and Taiwanese organizations like the CCIA. At this year’s fair, which was held in June, Taiwanese participants accounted for 30 percent of the total 664 businesses taking part.

While there is huge potential in mainland China’s market, its vastness and complexity pose challenges to Taiwan’s cultural creative businesses, especially those that want to develop a brand in the mainland. “You have to pay special attention to the managerial side and carefully regulate the operations of your dealers,” Tony Tseng says. “You need to make sure that all of them display your products according to a set of standards, so that you build a consistent image. And you’ve got to establish one set of pricing rules for all of your dealers and make sure they comply.” That goes even for shops that decide they do not want to carry the company’s line anymore, Tseng says, as they might otherwise sell the remaining stock at a discount.

Copycat competitors are another challenge in the mainland, particularly in the cultural creative sector, where ideas and concepts can be imitated more easily than many high-tech products. Although Artilize has yet to confront any copycats because its business there is still small in scale, Tseng believes they will emerge sooner or later. Franz Collection does have an established presence in the mainland, however, and has seen more than a few copycats. Still, Chen says that mainland authorities are getting serious about addressing the problem and adds that Taiwan also faced such concerns in the past.

Creating Sales

For Chen, a bigger challenge is that culture does not always sell. Although Franz Collection may be thriving, not all businesses in the mainland’s cultural creative sector are optimistic, at least for now. Taiwanese publishers and movie studios, for example, are well aware that their products are more likely to include concepts that clash with the ideology of mainland authorities. “We need more negotiations with the mainland side over this issue and must think about how to make some breakthroughs,” Chen says.

The cultural creative industry is attracting interest worldwide because it is seen as impacting the environment less than traditional manufacturing and also helps nations to publicize and promote their distinctive characteristics. As Taiwan and mainland China share a common culture, it seems increasingly likely for Taiwanese businesses in the sector to operate on both sides of the strait as they seek to capitalize on the growing international interest in that millennia-old heritage.

Write to Oscar Chung at oscar@mail.gio.gov.tw