“I’m sorry, many people are now commuting by bicycles due the pandemic, and we have experienced a surge in orders and are rushing to meet deadlines…” the production line bustled nonstop, rushing through orders to Europe and the US as Ms. Lin, in charge of marketing, guided us through our factory tour.
Founded in Fengyuan, Taichung, JoyTech is the market leader of the world’s bicycle hubs. The combined production volume of hubs from its three plants in Taiwan, Shenzhen and Kunshan amount to more than 10 million sets in each year and accounts for 20% of the world’s market share. A pride of Taiwan, JoyTech began in 1971 at a small factory consisting of merely 15 pings and 6 employees, four of whom being the couple that founded the company, their son, and their daughter-in-law. Though Joytech experienced enormous difficulties in the beginning, the firm was stand on its feet during Taiwan’s economic boom and rapidly expanded internationally.
But as its Southeast Asian clients began to manufacture in-house and gradually became competitors, China began to export cheap bicycles in large quantities, and a global price war ensued, Joytech had a tough decision to make.
Striving for Quality and Establishing its Own Brand
1980s were the golden ages of OEM (original equipment manufacturer). However, the quality, employee training and education varied from firm to firm. Becoming aware of this issue during international interviews, the Founder of Joytech launched the same name brand “JOYTECH” in 1981 to comprehensively conceptualize the company’s value chain starting from R&D and production management, to brand benefits.
“Brands are not limited to OBMs (original brand manufacturers); our former CEO thought of how the heaven, the land, and the people are integrated during a flight, and this became our core value. We strive to be people-oriented and to enhancing the quality of our employees while also improving production benefits and customer management. Even OEMs need to introduce brand management skills to set us apart from competition,” said Song-Chun Chen, CMO of JoyTech.
Besides having second and third generation owners starting out at entry-level jobs, all employees are required to intern for 15 days at one of JoyTech’s plants regardless of their position or role. On top of fully comprehending the entire production process, this also allows all employees to achieve hands-on experiences during the production of every product. Therefore, not only is Song-Chun Chen fluent in all management and production processes, but he is also very persuasive when he emphasized repeatedly the importance of “quality”.
In 2004, JoyTech took one step further and joined the A-Team founded by bicycle giants including Giant and Merida. By investing in R&D and production of high-end components and introducing the 3T quality management systems (TPS, TPM and TQM), not only did they fight off the price war from China and successfully positioned Taiwan as an expert in global high-end bicycles, but JoyTech also positioned itself as world leader in bicycle hub productions.
Currently, JoyTech has three plants: Taiwan Factory is focused on manufacturing small-sized, customized orders and high-end products, while the plants in China are dedicated to lower and mid-tiered orders that could be made via automated production. On top of constantly introducing new automated production facilities, JoyTech has also developed fully automated carbon fiber wheel production processes that significantly reduced production schedules. JoyTech’s three production plants make more than 20 million hubs per year and is used by approximately 1 in every 5 bicycles around the world!
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“Though manufacturers are focused on costs and many of them are committed to driving down costs, but your margin also suffers when costs are reduced. This leads to insufficient R&D and recruitment costs, where you cannot hire professional technical talents. Taiwanese industries need to stop focusing on costs and hard work like they did before; they need to differentiate their products in order to compete with the global supply chain.”
In 1989, JoyTech strove to transform and created its own brand “Novatec” to target after-sale maintenance and to provide mid to high-end bearing hubs and wheels. Though JoyTech is already an expert producer, managing a brand is not as easy as it seemed.
Song-Chun Chen admitted, “Managing our own brand wasn’t easy in the beginning. It took 6 or 7 years for NOVATEC to show the slightest signs of revenue when OEM customers began to use our products and we were able to get some market response.” But the market was downright cold when the CMO led a team to attend an exhibition in the US in 2002. “Very few people had heard of NOVATEC!” This cold realization prompted him to reconsider, “What can our products do for the end users? Can they perceive our core values?”
JoyTech began by repositioning all products and establishing a high-end product team, in which NOVATEC is rebranded as a product line of balanced price and value. In addition, the company also began to focus on after-sale support to directly communicate with customers. Subsidiaries in Europe and the United States were also subsequently set up to be in charge of after-sale support and market research. Besides acquiring direct market feedback and making flexible adjustments, the company also expanded its service venues and introduced real-time inventory status management.
“Division of labor is particularly important; Europe and America are the primary markets for bicycles so we can quickly receive the latest updates on market and design trends there and immediately reflect such information on our production line and processes in Taiwan to create the best products.”
“When we returned to the same USA expo, we were greeted with customers with in-depth knowledge to our product serial numbers and prices!” Song-Chun Chen saw the rewards of brand management from these direct consumer feedbacks and became more focused on user experience. Besides enhancing the quality of after-sale services, as an avid cyclist himself, he also participates in a variety of activities. He also answers all questions and comments on NOVATEC’s Facebook page himself. Imagine what surprise it would be for those sending direct messages after midnight to learn that the Facebook manager who never sleeps is in fact the company’s CMO!
Developing High-end Customers to Attain More Revenues from Brand Management Over ODM
Not satisfied with NOVATEC’s success, JoyTech continues to focus on process improvements and R&D. High-end brand “FACTOR”, which focuses on the after-sale market for hubs and handlebars was created for professional, scrupulous athletes. “We sponsor over 20 domestic and foreign cycling teams to be closer to the consumers, so that our design and R&D processes could directly hear the voices of these professional users, allowing us to quickly adjust. This allows us to make even lighter and stronger rims.”
By combining designs that cater to market trends and user needs and existing technical know-how and manufacturing competency, JoyTech’s products have achieved positive market feedback and received numerous domestic and foreign awards, including Golden Pin Design Award, Good Design Award, and iF Design Award.
From children’s bikes to professional bikes, JoyTech’s products are widely applicable to a wide range of bikes, thereby ensuring a wide range of clientele and reduces the risk of concentrated buyers. Though high production volume can bring more revenue, but entry-level markets are also easily replaceable. Taking pride on being the world’s largest hub producer, JoyTech has constantly pursued for “quality” for nearly 50 years and also sees “brand” as the lifeline to corporate image and sustainability.
For nearly 50 years, JoyTech has achieved a steady reputation in OEM. After making a name for itself, JoyTech has gradually integrated design and R&D and enhanced its innovative skills to work toward customized original design manufacturer (ODM) step-by-step. After being committed to brand development for many years, JoyTech began to see constant growth from its original brand manufacture (OBM) brand, NOVATEC. The sales figures from NOVATEC continued to grow, until recently they finally surpassed ODM sales to account for 50% of JoyTech’s revenue!
Though JoyTech’s brand transformation was not easy and did not involve any pioneering marketing strategy, it has earned a reputation as a durable and affordable brand with good quality throughout the industry through its long-term OEM and own-brand development efforts. By studying the latest market demand and trends through its European and US subsidiaries and relying on the material application and processing skills in its Taiwanese factory, its specialized division of labor and coordination have reaped fruitful results.
“We give customers products that are high-quality and affordable. That is what our brand has always been doing,”said Chen.
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