Sun Sentinel Palm Beach Edition
World’s top bike maker faces challenges to meet demand
TAICHUNG, Taiwan — Because gyms are closed and we could all use a little more exercise; because we are avoiding buses and trains; because we are in need of outdoor group activities or perhaps just because the pandemic has made us crave simple pleasures like the wind against our faces, bicycle sales are soaring around the world.
The result has been an international bike shortage. And the world’s largest bike maker, Giant, expects its supplies to remain tight for a some time to come.
After President Donald Trump started his trade war with China in 2018, Giant moved some of its manufacturing for the U.S. market from China to the company’s home base in Taiwan to avoid added tariffs. The following year, the European Union imposed anti-dumping duties on electric bikes from China, so Giant began making those in Taiwan too.
But when the pandemic caused demand for bikes to jump, Giant needed to reverse course. With its Taiwan facility under strain, the company had little choice but to crank up production in China, even if it meant bearing the extra cost of tariffs.
“There’s nowhere else in the world that can go like China from zero to 100 in an instant, like a sports car,” said Giant’s chairwoman, Bonnie Tu.
The Trump administration this year temporarily lifted tariffs on a variety of Chinese-made goods deemed strategically unimportant. Bicycles made the list, which made it easier for Giant to go back to producing some of its bikes for the U.S. market in China.
But the tariff pause for certain types of bikes expired this month, meaning Giant may need to adjust its supply arrangements again.
The trade pact the United States and China signed in January has held up even as the two powers clash on other issues. That has hardly made planning less complicated for companies and industries that are stuck in the middle.
“It’s not that I want to leave China. Not at all,” Tu said. “It’s that there’s nothing that can be done. There are too many trade barriers.”
Giant rose to prominence decades ago making bikes for the iconic American brand Schwinn before gradually becoming a powerhouse. As China began displacing Taiwan as a manufacturing hub, Giant opened factories there while keeping a plant near Taichung, Taiwan — the city where bubble tea is said to have been invented.
Today, the company runs five factories in China, accounting for 70% of its output.
Giant shuttered its Chinese plants after coronavirus infections first started spreading quickly in the country, and it kept them closed for a month and a half. Then, when Europe and the United States began locking down, importers canceled orders.
U.S. sales started picking up again in March, Tu said, and today all of Giant’s factories are running nearly at full steam to make up for the lost production.
Despite the rush of firsttime bike buyers, she does not plan to “blindly” invest in new manufacturing capacity. She is not yet convinced the world’s newfound love for two-wheelers will outlast the pandemic.
“Every boom ends someday,” she said. “It’s just a question of whether it ends quickly or slowly.”
Giant recently opened a factory in Hungary and aims to produce 300,000 bikes there next year. Many manufacturers have set up in Vietnam, but Southeast Asia doesn’t make sense for Giant, Tu said. Not enough of a local market for its bikes.
Might Giant manufacture in the United States someday?
“I think you shouldn’t say there isn’t this possibility,” Tu said, a little cryptically. Ever since the trade war began, she said, “I’ve thought that everything is possible.”
Still, it would be “very, very tough,” she said. What would help, she said, is robots.
“If we can do more automation, then there will be a greater opportunity,” she said. “Under today’s automation, I think there’s absolutely no opportunity.”