Taiwan
Introduction
The development of Taiwan’s motorcycle industry is unique. As one of the first of the late industrializing nations, it entered the motorcycle industry with Japan’s assistance, but was able to partially free itself from Japanese domination and develop its own identity.
Motorcycle industry background
The Taiwanese government took measures to promote industrialization in strategic industries and protect that of motorcycles from foreign domination by effectively blocking imports, but such measures cannot guarantee a favorable outcome. SYM (Sanyang) was founded in 1947 and became Sanyang Electrics in 1954 and Sanyang Industrial Co. Ltd. in 1961. In 1962 a joint venture with Honda was formed for the assembly of motorcycles in Taiwan. In 1963, Honda established a joint venture with Kymco (Kwang Yang) to oversee motorcycle assembly. Sanyang and Kymco were formed for the production and sale of Honda products in Taiwan. Honda’s intention was to manage the Taiwan market through these JV partners.
Both Yamaha and Suzuki entered the market with dramatically different results. Yamaha was working with Kung Hsue She. In 1976 KHS halted technical assistance in an attempt to separate. Yamaha took up with Wanshan Industry and allowed it to use the Yamaha brand name with some success. KHS was forced to return to the fold. Following poor performance, in 1986 Yamaha formed Yamaha Motor Taiwan with Kung Hsue She holding 51%. KHS withdrew and Wanshan closed leaving the entire operation to Yamaha. In 1984 Suzuki Motor Corp formed a JV with Tai Lung Machinery called Tai Ling Engineering. Tai Ling took over Suzuki Industrial in 1990 and Suzuki held 20% of Tailing.
Due to its geography, Taiwan’s population is concentrated in coastal areas and this favored the use of motorcycles in congested urban areas at a time when public transport was insufficient. This large home market meant that successful firms would enjoy economy of scale.
The new Yamaha Motor was an innovator. In 1987 it overhauled sales channels and targeted sales to young people and women. Kymco and Sanyang quickly followed. Market share began to concentrate on these 3 firms and an oligopoly formed.
Evolution of domestic manufacturers
Kymco and Sanyang had contractually traded the right to export in exchange for technical support from Honda but as the home market reached saturation, growth depended on the freedom to export. They knew that ending the relationship with Honda would also mean taking on Yamaha Motor head to head, knowing that KHS had tried and failed to break away from Yamaha 15 years earlier. However, by then motorcycle technology was fairly stable. Honda’s leverage was purely technology based. Their aim was to share just enough technology to control the Taiwanese market and manage external markets directly themselves. As they had a minority shareholding in both firms Honda could not prevent them from accelerating internal R&D in the late 80s.
This represented a period of high risk for both SYM and Kymco as it could have provoked an immediate termination of support from Honda. Also, one of the two may have gone it alone and failed, handing the market to the other or on the other hand establish an important head start. They prepared for this step by developing their own internal capability for product development and by finding alternative sources of technology.
By 1974 90% of motorcycles manufactured in Taiwan had to be home grown. Most of the suppliers were Taiwanese and not foreign firms operating in Taiwan. The success of the suppliers was closely linked with the success of Kymco and Sanyang and explains their willingness to support them in this phase as overseas expansion represented an opportunity for them too.
Following negotiations, in 1991 the export restriction was lifted but they were compelled to pay a royalty to Honda. A further revision in 1994 foresaw royalties for the use of Honda patents. This expired in 1997 and was not renewed. The relationship between SYM and Honda was terminated in 2002 and Honda ended capital ties with Kymco in 2003.
Growth in motorcycle exports
In the early 90s export success was dramatic, partially because it coincided with growth in the Chinese mainland motorcycle market and SYM’s early entry into Vietnam was a conspicuous success. The pair set-up operations in China, Vietnam and Indonesia with the support of their network of suppliers. Yamaha Motors in Taiwan did not follow suit, but in 2002 Yamaha made Taiwan the centre of small scooter development and exports increased sharply.
Traffic management
With 715 people per sq km, Taiwan is second only to Singapore in terms of population density in the region. The topography of the island has also contributed to a relatively high level of urbanization. However, the most striking fact is the number of 2-wheelers per 1000 people.
In order to manage the congestion and reduce the risk of traffic accidents, the Taiwanese government have instituted special measures to manage the traffic flow. Some examples are shown below. Fortunately, cities like Taipei were well planned with wide boulevards that lend themselves to creative solutions.
To reduce the risks associated with 2-wheelers making left turns across major junctions, the left-turn is prohibited. Instead, 2-wheelers are provided with a collection area in which to gather at the head of the oncoming lane on the right, so that they have precedence when the traffic lights change in their favor.
2-wheeler only collection areas at traffic light controlled junctions, which allow 2-wheelers to filter through to the front of the lane.
2-wheeler only traffic lanes
Pollution management
Faced with a concentration of 2-wheelers in urban areas, the Taiwanese government has become a pioneer in the adoption of practical solutions to contain pollution. This included the introduction of catalytic converters, secondary air systems and electronic fuel injection. Sample vehicles are tested as new and then again after 15,000 km. Emissions are only allowed to increase within strict parameters. Although the absolute test limits are not particularly severe, the ongoing enforcement is strict. The exhaust emissions of each scooter are carefully monitored not only during the required annual renewal of registration but also during its scheduled maintenance service. Scooter repair shops are connected to the government monitoring agencies through the use of modern closed circuit televisions (CCTV) and through the internet. If they do not meet the required standards the owners have one month in which to make repairs and have the motorbike retested. If the vehicle is not tested within the stated time period or fails to meet the required standards on retesting, registration of the vehicle will not be renewed. Over 1.6 million vehicles were tested in 2010 with a penalty rate of 2.3%.
The government is also encouraging manufacturers to explore other environment friendly technologies like electro-mechanical hybrids, fuel cells and other potential combinations to power two-wheeled vehicles. Encouragement takes the form of financial incentives to accelerate adoption of new clean-air technology, to face what is a very real problem in Taiwan. However, as environmental technology becomes more important globally, the improved scale efficiency generated by government incentives will help position Taiwan to compete in the field.
Conclusion
Both SYM and Kymco managed to skillfully free themselves from Honda's control. They maintained their position in the home market and achieved moderate success overseas. They were able to establish an internal R&D capability, specializing in small displacement motorcycles and scooters and together with other makers have also developed a niche market for the development and production of ATV vehicles.
Many countries have enforced severe gas emission limits on their vehicle populations, but the popularity of motorcycles and scooters in Taiwan has forced the government to pioneer advanced technology inspection control systems and apply innovative measures to improve traffic flow and mitigate the impact of pollution.