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Taiwan Bike Companies: Withdrawal from China?

Industry- & Retail Organizations

BIKE EUROPE: TAPEI, Taiwan – According to a recent report of the China Economic News Service, more and more Taiwanese bicycle makers in mainland China are planning to restart their production lines on the island to diversify their operating risks, as the mainland’s advantage of low operating cost is losing steam. Yang Yin-ming, chairman of […]

BIKE EUROPE: TAPEI, Taiwan – According to a recent report of the China Economic News Service, more and more Taiwanese bicycle makers in mainland China are planning to restart their production lines on the island to diversify their operating risks, as the mainland’s advantage of low operating cost is losing steam.

Yang Yin-ming, chairman of Kenda Rubber Ind. Co., Ltd., told the China Economic News Service that an increasing number of Taiwan bicycle makers in mainland China are thinking of renewing production on the island ten years after moving their production lines to the other side of the Taiwan Strait. Yang cited two major reasons for the latest development. First is that both labor and land costs in mainland China are rising rapidly, and second is that anti-dumping charges in Europe and the US on products from China are an additional operating risk for the mainland.
The China Economic News Service report states that Taiwan will keep an annual capacity of four million bikes as land prices and labor costs did not rise significantly in recent years, so that overall production costs in Taiwan and mainland China are getting closer .
Compared with other traditional manufacturing lines, Yang says, the main Taiwan bicycle makers have advantages in brands, sales channels and production, for instance the companies in the ‘A-Team’ alliance.
The A-Team was formed in 2003 by Taiwan’s leading bike and component makers with the goal to stop the ongoing drop in prices. The A-Team alliance currently has 20 members. Latest to join were CST, Kenda, Joy Tech, Truvativ, Jagwire (Chia Cherne), Hsin Lung and Topeak. At this year’s Taipei Show chairman Tony Lo also welcomed new ‘sponsor’ members Specialized, Trek and Scott Europe. Tony Lo mentioned that there is a big interest from other companies to join; among them also European companies. In 2003 the focus of the A-Team was on Just-in-time manufacturing. For 2004 it’s on, what Tony Lo called ‘Collaborative R&D’ with parts makers. For 2005 the A-Team intends to focus on ‘Collaborative Marketing’ in cooperation with IBDs worldwide.
According to the China Economic News Service the Kenda chairman also said that Kenda’s Taiwan headquarters still controls the procurement, R&D and finance of the group’s global operation, and its plant on the island still produces higher value-added tyre products, although the firm’s overseas plants (three in mainland China and one in Vietnam) now account for about two-thirds of its total capacity. Yang claimed that his company’s Taiwan plant still enjoys an annual sales growth of 7% to 8%. Yang added that the A-Team is getting stronger as Giant owns an outstanding international brand, and other alliance members, like Merida and Kenda, are actively expanding their global sales channels via aggressive acquisitions.
Other industry sources in Taiwan said that most Taiwanese makers in other traditional manufacturing sectors likewise face anti-dumping threats or other uncertainties in mainland China, but they have not planned to return to Taiwan. A local textile maker in mainland China explained that the labor-intensive textile line requires 24-hour production, but it is difficult to recruit workers in Taiwan.

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