San José, Costa Rica, since 1956

Tico Companies Launching Their Own Brands

In Luis “Güilly” Cubero’s bike shop, rows and rows of new bikes costing up to thousands of dollars crowd the floor, with the latest imported gear covering the walls. There you can get the biggest international brands – Shimano, Cannondale, Trek, Fox Racing.

To that august list will be added a hot new name in September: Güilly Bikes, Cubero’s own brand, designed in-house and manufactured in Taiwan.

“It’s going to be much more accessible” than the more expensive foreign brands, Cubero said at his shop in Santa Ana, southwest of San José.

In launching the brand, Cubero joins a small group of Costa Rican companies that are turning globalization on its head. Instead of being slaves to foreign brands, for these companies globalization means easy access to lowcost, high-tech manufacturing abroad that allows them to build their own local brands.

Another San José company, Cococo (Companía Costarricense de Computación), a wholesale importer, started assembling and selling its own laptops this week alongside Toshiba and HP.

A second technology importer, BTC, is doing the same, adding its own laptops to an already robust line of desktop computers and servers assembled from imported parts in Las Yoses on San José’s east side.

Much of the ability to produce branded, high-end goods in Costa Rica comes from  low production costs for such goods in Asiancountries. Overall trade with that part of the world has been growing substantially, with Costa Rica importing $567 million from China and Taiwan in 2007, according to the Central Bank.

Local brands can give buyers better service and, by cutting out the middleman, better prices.

Cubero’s bike shop Ciclo Güilly – founded in Santa Ana, but with locations in Liberia, Cartago and Limón – has been operating in Costa Rica for more than a quarter of a century.

Cubero started looking at the possibility of manufacturing his own brand of bikes five years ago. The real work of getting the process moving took two years. It wouldn’t have been possible without the low-cost manufacturing found in Taiwan, he said.

“Here the cost of labor is very high,” he said. “If you don’t have (cheap labor in Asia), you can’t fight. You can’t compete.”

Now, production is about to begin on 1,200 of the bikes in May, and Cubero is planning to officially launch the brand in September.

The bikes will range in price from $50 for the most economical children’s bikes, to more than $1,000 for high-end models.

The majority of the bikes, however, will occupy the middle ground.

The most important part of the bikes (and the part to be manufactured on contract in the factory in Taiwan) is the frame.

Cubero said he worked with a local Costa Rican engineer to design the frames, which will weigh about three pounds and be constructed from carbon fiber.

At the moment, Ciclo Güilly sells between 7,000 and 8,000 mountain and road bikes per year. Cubero said that with this new brand, he’s hoping to push annual sales past 12,000.

“Cycling is on its way up” in Costa Rica, he said.

On the other side of San José, two very different businesses are making the same move of marketing an expensive, high-tech product under a local brand.

Cococo, which has assembled and sold desktop computers in Costa Rica since 1989 under the brand FPC, this week began distributing laptops under the brand.

Karla Cordero, the head of Cococo’s sales and marketing department, said the laptops will sell for $500 and up, from 5% to 7% less than the name-brand machines like HP and Toshiba that Cococo also distributes.

The big selling point, however, will not be price but service. Cordero said Cococo is offering local warranties that are easier to  enforce for Costa Rican buyers. Plus, when amachine breaks, it can be fixed in Costa Rica, sometimes in a matter of hours.

Cordero said the laptops have been in the works for two years, and were made possible through certifications and helping hands from Intel and Microsoft. Parts for the laptops come from Asia and the United States.

Cordero said 80% of the 20,000 units it sells each year to 500 distributors are branded FPC. With the laptops, the company is hoping to expand sales by 20% to 30%.

Likewise for BTC. Arnoldo Mora, the company’s service manager, said its line of laptops will be coming out this year.

“What’s happened with the portable market is that the prices have been so good that it didn’t give (us) an incentive” to launch the line of laptops, he said.

But with material costs dropping and demand for laptops increasing, BTC saw an opening in the high-end laptop market for gaming, graphic design and video editing.

Mora said the company expects to increase laptop distribution by a quarter with the new BTC-branded laptops.


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