06/28/2006
THE ASAHI SHIMBUN

KAOHSIUNG, Taiwan--A secretive project to develop a scooter with an engine displacement of 700 cc is under way at a Taiwanese company that started out as an assembler of Japanese motorcycles more than 40 years ago.
If successful, Kwang Yang Motor Co. (KYMCO) will become the manufacturer of a scooter with the world's largest engine, surpassing models with 650-cc and 600-cc engines made by Suzuki Motor Corp. and Honda Motor Co., respectively.
”We are putting the utmost importance on research and development,” said KYMCO President Wang Son-chien, 59, speaking in fluent Japanese. ”We want to soon narrow the gap in technology between us and Japanese and European manufacturers.”
The company, whose head office and factory are near the Love River in Kaohsiung where Taiwan's largest port of entry is located, owes much to Honda for its growth as a manufacturer of scooters and motorcycles.
In 1964, Honda started exporting core motorcycle parts to Taiwan, which was then regulating the import of finished products.
At the same time, the Japanese manufacturer dispatched engineers to KYMCO, which was established the previous year, to oversee the assembly process.
Honda was seeking an efficient way to advance into overseas markets, while KYMCO was eager to absorb advanced technology.
The interest of the two companies coincided, and they formed a transnational ”master-pupil” relationship.
A turning point for the Taiwanese manufacturer came in the early 1990s.
At the time, demand for 125-cc Honda scooters assembled by KYMCO was so strong in Taiwan that parts supply was falling behind.
Wang proposed that larger 150-cc models would also sell well, but Honda was unable to provide 150-cc engines for the Taiwanese market.
The situation prompted Wang to instruct a team of four engineers under the direction of Chen Chung-ying, then a mid-level engineer, to develop a design for a 150-cc engine based on Honda's specifications for 125cc engines.
The team members appropriated an office of the factory, drawing and erasing penciled plans and repeatedly revising calculations.
Chen now heads a research and development division.
Theoretically, 150-cc engines are more powerful than 125-cc ones. But once engine speeds exceeded 6,000 revolutions per minute, heat can cause horsepower to drop.
After 20 months of trial and error, the team completed an engine in 1992. A scooter equipped with the engine soon debuted.
When the team of engineers visited Japan to present the finished engine, a Honda executive told them： ”Congratulations. Now you are ready to become independent.”
KYMCO engineers were baffled at the unexpected remark.
Actually, Honda had been waiting for a chance to pull out because the Taiwanese market had matured.
Honda stopped supplying KYMCO with technical know-how in 1994 and ended capital ties in 2003.
In 2005, 790,000 scooters were sold in Taiwan. The market has shrunk to two-thirds of its peak.
Still, the manager of the largest distributor of KYMCO motorcycles in Taiwan is confident that the market has a potential for growth.
”KYMCO's strength is its ability to quickly bring new models to market,” he said.
Some models undergo a full redesign in about 18 months.
Although dealers have the risk of being stuck with old models, the introduction of new designs reduces pressure to discount prices.
In 2001, KYMCO started exporting scooters to Japan and found a niche in the intensely competitive market.
The manufacturer chose the Tokyo Motor Show in October 2005 to make its presence felt. Luckily for KYMCO, it was able to acquire booth space originally assigned to a company that pulled out of the exhibition.
The space was only 40 square meters, 1/25th the size of the largest booth allotted to Honda motorcycles. Still, the occasion marked the Taiwanese manufacturer's international debut.
Once the show opened, the booth attracted an unexpected segment of visitors--young wo