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“Made in China” era over says Giant, the world’s biggest bike maker – and blames Donald Trump's trade war

Taiwanese company's chairwoman says US tariffs mean it is no longer viable to run factories in China...

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.”

Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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20 comments

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Rick_Rude | 4 years ago
1 like

Raleigh only bike shops were one of the wonders of my childhood. Seems strange today but shops were literally a one brand outlet and still sold enough to stay open for years. I guess the American invasion killed Raleigh after MTB and BMX came with the birth of new brands spreading from over the sea. That's what I always find funny about brands like Specialized moaning now, they used to be new kid on the block and then killed off other brands. Round and round it goes. 

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BehindTheBikesheds | 4 years ago
2 likes

Meanwhile, millions of BSO are thrown into the tip in the Western world every year, unloved or left rotting in sheds/garages. Also the propensity for many of the modern day 'sports' cyclist to discard and upgrade every year/two years does have an environmental impact though it can help people like myself who would rather buy a second hand mint condition bike that someone is discarding/doesn't want.

The last time I bought a new whole bike was 1990, I've bought one new KTM framset in 2014 (unused team frame), exactly where it was made I don't know. Most if not all of the bikes are assembled in Austria but the coompany is half owned by an Indian co so the manufacture of the frames there is not surprising. they used to use a lot of Ritchey components which are made in Taiwan (boxes are marked R.O.C.)

It says a lot about how good the British Bicycles were (including many of the lower end ones) that so many of them are not just still surviving but in daily use., it's just a shame that too many of them are taken down the dump when they could so easily be serviced/updated and made usable, I've rescued hundreds over the years and sold/given away hoping that they get another few years of use.

Think we all have a responsibility to really think hard about the eco impact over 'saving'  a few quid when making our bike purchases ad how often we do that. 

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ConcordeCX replied to BehindTheBikesheds | 4 years ago
1 like

BehindTheBikesheds wrote:

It says a lot about how good the British Bicycles were (including many of the lower end ones) that so many of them are not just still surviving but in daily use.,

that's because Albert Finney made them all.

https://youtu.be/zJAeb0wiQjA

 

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Drinfinity | 4 years ago
1 like

I’m no expert on imports from China, but I do have to deal with commodity codes and duties for work. The anti-dumping duty rules require that Chinese companies exporting should declare a proper market value on their invoice. Depending on the company, if they do this, then they are not dumping and not subject to ADD. If they don’t provide a proper invoice, or are not on the long list of companies HMRC have specified, then they are liable.

It is hugely complex, so please don’t rely on my thoughts here if you are intending to import complete bicycles from China - get advice from a specialist.

Bicycle parts are generally subject to much lower rates, which is one reason many companies import the bits, then build them local to the market. 

https://www.trade-tariff.service.gov.uk/commodities/8712003090?currency=EUR&day=19&month=6&year=2019#import

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ktache | 4 years ago
3 likes

pushthis, Giant are a Taiwanese company, why would they want to build anything in the States?

You seem confused.

 

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velo-nh | 4 years ago
4 likes

"A punch in the gut" is the feeling that workers must have had when all this production was moved to China in the first place.  Also laughing about the "level playing field".  If the playing field was truly level, it wouldn't make sense for so much of the world's manufacturing to be done in one country.  Considering the massive pollution problem China has, and considering that cyclists tend to be more environmentally aware, we should all be cheering this.  

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Rick_Rude replied to velo-nh | 4 years ago
2 likes
velo-nh wrote:

"Considering the massive pollution problem China has, and considering that cyclists tend to be more environmentally aware, we should all be cheering this.  

.

Yes, people seem happy to forget their bike could have been produced in a more eco friendly fashion had it been produced in a country with a few more regulations. This would of course put the price up...

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Jem PT replied to Rick_Rude | 4 years ago
0 likes

Rick_Rude wrote:
velo-nh wrote:

"Considering the massive pollution problem China has, and considering that cyclists tend to be more environmentally aware, we should all be cheering this.  

. Yes, people seem happy to forget their bike could have been produced in a more eco friendly fashion had it been produced in a country with a few more regulations. This would of course put the price up...

Prices shouldn't necessarily rise - for example if the 48.5% anti-dumping levy on Chinese bikes no longer applies.

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Xena | 4 years ago
6 likes

They make huge profits and so do their shareholders. I have no sympathy whatsoever. 

Like most big company’s they are just greedy and shareholder centric.  They can reduce the price of their bikes no problem and still be profitable but they are just another greedy company . 

I know exactly how much profit they make on some of these high end road bikes , it’s ridiculous. 

Same goes for all company’s , they just basically looking for the cheapest labour and  parts. You see perfectly profitable companies move to the Far East just to keep their shareholders happy . It’s pure greed  and these companies  moving  can have a devastating effect on a towns economy when they take their production elsewhere . They don’t care though . So fu (( em . 

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fbhidy replied to Xena | 4 years ago
1 like

Xena wrote:

I know exactly how much profit they make on some of these high end road bikes , it’s ridiculous. 

You do realize that the high end bicycle market has terrible profit margins at the bike shop? Most shops make their profit from accessories and service, not from actually selling bicycles ...

 

These tariffs are simply passed on to the end consumer, so we're actually the ones being hurt.

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handlebarcam | 4 years ago
7 likes

They aren't going to re-open the former bicycle factories in Waterloo in Wisconsin, or Nottingham in England, so it ain't exactly a victory for MAGA, or Brexit.

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Rich_cb replied to handlebarcam | 4 years ago
2 likes
handlebarcam wrote:

They aren't going to re-open the former bicycle factories in Waterloo in Wisconsin, or Nottingham in England, so it ain't exactly a victory for MAGA, or Brexit.

What are the EU tariffs on bicycles?

What were the proposed Brexit tariffs?

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Shannyla replied to Rich_cb | 4 years ago
2 likes

Rich_cb wrote:
handlebarcam wrote:

They aren't going to re-open the former bicycle factories in Waterloo in Wisconsin, or Nottingham in England, so it ain't exactly a victory for MAGA, or Brexit.

What are the EU tariffs on bicycles? What were the proposed Brexit tariffs?

 

48.5 % EU anti-dumping levy on Chinese manufactured bicycles. Not sure about after Brexit, depends which half-wits are in charge.

 

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Rich_cb replied to Shannyla | 4 years ago
2 likes
Shannyla wrote:

48.5 % EU anti-dumping levy on Chinese manufactured bicycles. Not sure about after Brexit, depends which half-wits are in charge.

 

The leaked post Brexit proposed tariffs were 0%.

Obviously that can change depending on the halfwits in charge as you said but the OP's point was nonsense.

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Organon replied to Rich_cb | 4 years ago
7 likes

Rich_cb wrote:

 What were the proposed Brexit tariffs?

Two chloriated chickens and a top hat.

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Harmanhead replied to handlebarcam | 4 years ago
0 likes

Trek and Raleigh factories closed well before MAGA and brexit

handlebarcam wrote:

They aren't going to re-open the former bicycle factories in Waterloo in Wisconsin, or Nottingham in England, so it ain't exactly a victory for MAGA, or Brexit.

Avatar
racyrich | 4 years ago
1 like

Surprising that a Taiwan based company has anything to do with China at all really.

Most of the world's carbon fibre comes from China. Wonder how that's affecting US aerospace companies. 

Do the tariffs only apply depending on where the end product is made or is a Hungary-made Giant made of Chinese carbon fibre still affected?

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Bmblbzzz replied to racyrich | 4 years ago
0 likes

racyrich wrote:

Surprising that a Taiwan based company has anything to do with China at all really.

Most of the world's carbon fibre comes from China. Wonder how that's affecting US aerospace companies. 

Do the tariffs only apply depending on where the end product is made or is a Hungary-made Giant made of Chinese carbon fibre still affected?

Lots of Taiwanese companies have factories in PRC. Investment for China, lower costs for RoC, win win!

AIUI these are punitive tariffs levied on bicycles not carbon fibre (there might well be punitive tariffs on carbon fibre as a material too) so if the bike is made in Hungary from Chinese cf, it would be imported to US at whatever the duty is for EU-made bicycles. 

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Bmblbzzz | 4 years ago
0 likes

They're keeping the factories on just transferring some production, so it sounds like they reckon on reopening them in a post-Trump era. With more diversified production: separate factories for separate markets – what will happen to model availability and quality standards? Will they be allowed (by manufacturers) to diverge further?

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Rick_Rude | 4 years ago
16 likes

Surprised the Americans are importing that many bikes looking at the state of them. Maybe they are eating them?

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