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SRAM Stops Production in China

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KUNSHAN, China – Next June SRAM stops its production in China. The parts maker will then start moving its production from Kunshan, China to Taichung, Taiwan. The stop in China is due to the slowdown in global demand for bike parts.

SRAM Stops Production in China
SRAM relocates production from China to Taichung, Taiwan where the parts maker also has its Asia Development Center. – Photo Jo Beckendorff

According to David Zimberoff, SRAM’s Vice President of Marketing, the Kunshan facility is targeting OEMs producing for the domestic Chinese market. Among them close by Giant and Merida. “Here mostly suspension units, mechanical disc brakes and other parts are produced.”

Depressed situation

In 2013 SRAM opened the Kunshan factory to supply China’s sports bike market which was, at that time, rapidly growing. This growth slowed down hard last year, with an over 30% decline. That depressed situation continued this year.

Market situation in China

The big drop in sports bike sales in China resulted in the fact that the Kunshan facility was operating at only 20% of its capacity. There’s also no immediate expectation that the market situation in China will improve the next year’s.

EU anti-dumping & trade preference rules

Moving the production to Taiwan is also because of the European anti-dumping and trade preference regulations. They favour Taiwan produced parts over the ones that are produced in China. The EU levies an anti-dumping duty of 48.5% on in China produced parts that are exported to Europe for OEMs. However, there’s an exemption regulation applied here. Bicycles assembled with Taiwan made parts in Cambodia and Bangladesh and exported to Europe are making use of the Generalized System of Preferences of the EU which grants them duty-free import into the European Union.

Sales, marketing, service and warranty center

According to David Zimberoff SRAM is not closing its base in Kunshan completely. He says, “We are maintaining a sales, marketing, service and warranty center. Just our manufacturing/assembly operations are being relocated.”

In Taichung, Taiwan SRAM operates, next to its production facility, also the company’s Asia Development Center which was opened in March 2014.

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