Wed, Aug 30, 2006 page11

• Feature: From barbells to fitness empire

  TARGET MARKETS Peter Lo started with his wife and a partner and a desire to make something of himself. Now he heads an aggressive operation that ranks fifth globally

  • By Jason Tan / STAFF REPORTER
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  Thirty-one years ago, when then 34-year-old Peter Lo (羅崑泉) accepted his first order to produce barbells for US-based client Ivanko, he could have hardly thought that it would later pave the way for a world-class fitness equipment empire.

  It was a US$400 order for 400 pieces of barbells, and the company demanded Lo charge only NT$15 (US$0.50) per kilogram, half of the price in the US.

  The order did not come very easily.

  

  Peter Lo, chairman of Johnson Health Tech Co, poses with a treadmill in the staff gym at the company's head office in Taichung on Tuesday last week.

  PHOTO: JASON TAN, TAIPEI TIMES

  He and his wife had handwritten letters to more than 1,000 US companies, inviting them to work together in any form of business.

  Lo, who was born to a poor farming family and sold fluorescent lamps on the side of the street in earlier days, had no idea what a barbell was, but he jumped at the chance because it was his first business opportunity in six months after quitting his two-year job with customs.

  "I didn't have anything at that time but a body full of energy, which was my biggest capital," said Lo during a media tour on Aug. 22.

  In that year, Lo established Johnson Metal Industry (喬山金屬) to produce weightlifting equipment for other brands.

  The company's name was later changed to Johnson Health Tech Co (JHT, 喬山健康科技) in 2002.

  The partnership with Ivanko made JHT the world's largest barbell original equipment manufacturer in three years.

  The early days of JHT were not a bed of roses. Lo only had his wife and a partner on board and started everything from scratch, but the desire to leave behind his cash-strapped plight saw him gradually expand the business.

  He began recruiting research and development (R&D) staff in 1980 to design cardiovascular fitness products for leading brands such as Ross, Universal, Tunturi and Schwinn.

  After carrying out original design manufacturing for another 15 years, Lo realized that the time was ripe to venture into the own-brand business to take the company, of which he is chairman, onto the world stage.

  This ambition gave birth to the company's first brand, Vision Fitness, in 1996, with North America the first target market for fitness equipment.

  Three years after that, the brand Horizon Fitness was launched for the home user market, and "Matrix Fitness" followed two years after that for the commercial market, including fitness companies, clubs, hotels and corporations.

  With a solid foundation in North America, JHT planned to replicate its success in Taiwan in 2003 by opening retail stores to sell Johnson-branded equipment.

  The company was listed in Taiwan the same year.

  "North America is the largest fitness market; it adopted the fitness concept very early. The Asian markets, especially China and Southeast Asia, have been gaining momentum in recent years," Lo said.

  The global fitness equipment industry is valued at US$6 billion a year, with North America accounting for US$4 billion of that figure and growing at 4 percent a year, according to William Poon (潘炳志), JHT's sales and marketing manager.

  Other regions, including Asia, are expected to grow at 7 percent a year, he said.

  With aggressive expansion, JHT has become the world's No. 5 fitness equipment firm, behind major US rivals Icon Health & Fitness Inc, Nautilus Inc, Life Fitness and Precor Inc.

  Over the past five years, JHT has been seeing in excess of 30 percent revenue growth annually. It has become an empire of 21 global subsidiaries, two factories and more than 6,500 staff.

  In Asia, it has 45 outlets in Taiwan, 80 in China, 102 in Thailand and 11 in Malaysia.

  Last year, JHT raked in sales of US$267 million, a rise of 32.8 percent from a year ago.

  The figure was the highest among the top-five firms, with No. 4 Precor seeing 20.3 percent growth, and No. 1 Icon reporting a decline of 5.3 percent.

  For the first half of the year, JHT's sales hit US$127 million -- amounting to annual growth of 15.2 percent -- and saw a 20 percent increase in after-tax net profit at US$15 million.

  Last month, the company sealed new deals totaling US$42 million to supply equipment to the largest department-store company in the US, Sears Holdings Corp, as well as to Canadian Tire Corp, Canada's largest auto parts and household goods retailer.

  JHT is poised to overtake Icon to become the world's leader in the fitness equipment industry by 2008, Lo said.

  With this ambitious goal in mind, the company will be opening a second Chinese factory in November.

  Spanning around 150,000m2, the plant is the result of a US$20 million investment to produce strength machines, such as plate loads and free weights.

  Lo is busy catching up to his company's global peers, but he has also laid out plans for JHT after 2010.

  He has gathered a team of staff to study potential opportunities relating to health, especially health supplements, which will take the firm's business to new heights.

  "To enjoy a long life, we need to live healthily by exercising and eating healthy food," he said.

  "Fitness is my long-term job. I am not only working for the sake of money, but also calling out to others for a healthy lifestyle," he added.
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