Mon, Sep 04, 2006 page12

• Thunder Tiger makes dreams of flight come true

  NEW VENTURE Following its success in manufacturing own-brand radio control models, the company is now moving into the precision medical equipment business

  • By Jason Tan / STAFF REPORTER
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  For 57-year-old Aling Lai (賴春霖), flying radio control airplanes has been a favorite pastime since childhood.

  He loves the thrill of watching the planes soar in the air, and being able to control their movements and direction with a remote control in his hand.

  Lai said he was lucky guy because his passion is what he does now for a living.

  

  Aling Lai, chairman of Thunder Tiger Corp, gestures in front of a radio control submarine model during a recent interview at the company's headquarters in Taichung.

  PHOTO: JASON TAN, TAIPEI TIMES

  "Radio control planes allow people to realize their dreams, as not every one of us can afford to buy a real jet," said Lai, chairman of Thunder Tiger Corp (雷虎科技), during a recent media tour.

  Founded in 1979 by Lai, Thunder Tiger is currently the world's No. 3 player in the radio control model industry.

  The company produces high-end toys such as airplanes, submarines, race cars and helicopters, whose price tags can easily reach around US$500.

  The model industry is a niche market estimated at only US$1.7 billion a year -- an amount less than the quarterly revenues made by Taiwan Semiconductor Manufacturing Co (台積電), the world's biggest contract chipmaker, company spokesman Jack Liou (劉朝清) said in a recent interview in Taichung.

  "But we use innovation to make people's dreams come true," he said.

  Taking a different tack from other contract manufacturers in the country at the time, Thunder Tiger started in the business by doing own-brand manufacturing from its first day of operation.

  The company was founded in an era when local firms were rushing into toy production, pushing toy exports to all-time highs during the late 1980s to early 1990s.

  In the midst of these challenges, Thunder Tiger is one of the few local companies that have survived and proudly represents the country in the global toy industry.

  "We have been using a `blue ocean strategy' to stay ahead," Liou said, referring to the strategy of creating new or untapped business areas with promising opportunities and little competition.

  Revolutionary

  Eight years ago, when the radio control model industry was still focused on promoting do-it-yourself (DIY) products that allow buyers to assemble the model components themselves, Thunder Tiger dared to be different.

  The firm revolutionized the industry by introducing finished models that buyers can take home and play with right away.

  "Buyers are busy, they do not necessarily have the time to put the pieces together one by one," said Lai, explaining the rationale behind the strategy, which has successfully boosted Thunder Tiger's average annual revenue by about 20 percent since 1998.

  Thunder Tiger saw brisk sales last year, raking in NT$1.3 billion (US$39.6 million), compared with NT$1.1 billion a year earlier. Revenues in the first half of this year grew 12 percent over the same period last year, according to Liou.

  But part of the company's increased sales can be attributed to a strategy it adopted in 2003 -- another industry first -- by working with a French media group to sell DIY model kits, Liou said.

  Targeted at European DIY users, Thunder Tiger teamed up with top magazine publisher Hachette Filipacchi Medias to release parts of a DIY kit in various "issues" sold through its traditional media channel.

  This allowed hobbyists to purchase the weekly "copies" at newsstands or on the Internet, and assemble them over a period of time.

  The tactic worked well. Last year alone, it contributed more than 30 percent to Thunder Tiger's overall sales, or more than NT$390 million, according to Liou.

  In July last year, the company embarked on yet another aggressive move by spending US$9.5 million to acquire the US-based Associated Electrics Inc, the leading global brand in radio control race cars.

  With the acquisition, Thunder Tiger successfully moved up to third spot among the world's radio control model manufacturers, behind Japan's Kyosho Corp and Tamiya Inc.

  Last year Europe accounted for 66 percent of Thunder Tiger's total revenues, while the US took up 23 percent and Taiwan contributed 4 percent.

  The domestic market commanded only a small portion of its revenue, as people here are not that fond of outdoor activities, Lai said, adding that the company plans to hold more large scale radio control model fairs to attract youngsters.

  Still, for this year, Lai expects the revenue breakdown from each region to stay largely unchanged from last year, although rising temperatures in Europe this summer have hindered sports enthusiasts from venturing outdoors, affecting model sales to a certain extent.

  Medical equipment

  Encouraged by its success in the model business, Thunder Tiger is venturing into a new field -- developing medical equipment.

  Leveraging off its skill in rotor technology, Thunder Tiger has started manufacturing dental drills that are capable of spinning 500,000 revolutions per minute, one of the fastest speeds in the industry.

  These dental hand pieces made their debut in Taiwan, and the company plans to market them in emerging markets like India, China and Russia, Lai said, adding that they were the result of a six-year, US$3 million investment and joint research with a local institution.

  "It doesn't matter if we do not make a quick return on investment on this medical equipment, but we want to be prepared in case there is exponential growth in demand for this product in the future," Liou added.

  Three years from now, Taiwan's factories will be the base for sophisticated medical equipment, while all radio control models will be churned out across the Strait, according to Lai.

  Average monthly employee salaries will probably rise to NT$80,000 over the next three years, up from NT$60,000 at present, as the company dips into other sophisticated areas for growth, he said.

  "We are running a high-tech business here," Lai said with a proud smile.
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