The chairwoman of Giant Bicycles, the world’s biggest bike manufacturer, says that the “made in China” era is over due to the punitive tariffs imposed by US president Donald Trump.
The Taiwan-based company, which sells more than 6 million bicycles annually, has already closed one factory in China and, after Trump raised tariffs to 25 per cent last month, is continuing to move production of bikes destined for the US market out of the country.
Chairwoman Bonnie Tu told Bloomberg that the company’s factory in Taiwan is now operating double shifts to satisfy demand and said that "the era of Made In China and supplying globally is over."
According to Tu, increasingly companies are "moving production close to your market," which in Giant’s case means building a factory in Gyongyos, Hungary for the European market as well as seeking a partner in Southeast Asia where Vietnam, for example, is a major bicycle exporter.
She said that differing tariffs between countries mean that "the world as a level playing field in terms of commerce" no longer holds true.
The tariffs imposed by the US have added an average of $100 to Giant bikes sold there that have been made in China, however Tu added that the company will maintain factories there in case Trump – or an eventual successor – change trade policy.
An article in the Chinese state-owned newspaper Global Times highlights the effects of the tariffs on the US bicycle industry, with China a major source not only of frames but also components and accessories.
Arnold Kamler, the CEO and chairman of the country’s second largest bike manufacturer, New Jersey-based Kent International, described the increased tariffs as being “like a punch in the gut."
He said that the previously-imposed additional tariff of 10 per cent had increased the company’s costs by 7.5 per cent and led to a fall in sales of 5 per cent last autumn. The new tariff of 25 per cent mean the company has had to raise prices again.
“We feel it's unfair on us and on many other companies," added Kamler, whose company produces 350,00 bicycles annually but plans to increase its output at its South Carolina factory to 1 million bikes a year.
"While there are disputes that need to be resolved between our countries on trade, I'm wondering why our company is the one having to pay the price for this."
Bob Megvicius, a director of the Bicycle Product Suppliers Association and vice-president of Specialized, also sounded a warning about the impact of the tariffs.
He said: "We are concerned coming into the Christmas and the holiday season that this can hurt business.”
He continued: "I find that the Chinese companies have done an excellent job in making capital investments in automation and new technologies and in finding ways to improve the efficiency and the productivity of the products that they're producing. It's very hard for us to look at other places and replicating it."
He said that 90 per cent of the bicycles imported to the US each year originate from China for a total of 14-15 million each year, but the tariffs have led to a fall of 450,000 bicycles imported in the first quarter of this year alone.
Like Giant, US companies are looking to source from southeastern Asian countries, but Margevicius cautioned that it was impossible to do that overnight, as well as highlighting that relationships with suppliers can take years to forge.
"It would be very difficult for them to transit and move out. And a lot of that just has to do with the sheer volume,” he said. “There's a broad availability of labour. The manufacturing cluster is located in China.”
Born in Scotland, Simon moved to London aged seven and now lives in the Oxfordshire Cotswolds with his miniature schnauzer, Elodie. He fell in love with cycling one Saturday morning in 1994 while living in Italy when Milan-San Remo went past his front door. A daily cycle commuter in London back before riding to work started to boom, he's been news editor at road.cc since 2009. Handily for work, he speaks French and Italian. He doesn't get to ride his Colnago as often as he'd like, and freely admits he's much more adept at cooking than fettling with bikes.