Giant expects further production delays after temporarily shutting four plants in Kunshan, China, to comply with local lockdown measures, according to a report from Bloomberg.
Giant Bicycle Group Chairperson Bonnie Tu is reported as saying, “No one knows what the China government will do” with its zero-Covid policy, although allowing workers to live at factories during lockdown periods – a tactic that has been employed in China during previous lockdowns – will help ease disruption.
China’s zero-Covid strategy involves strict lockdowns in some areas designed to eliminate new infections before resuming normal economic and social activities.
Restrictions in China mean that containers of components can’t be brought into Giant’s plants and the company can’t ship built up bicycles.
We reported nearly three years ago that Bonnie Tu had said the “made in China” era was over due to the punitive tariffs imposed by US president Donald Trump, but Giant still has five manufacturing centres in that country, which make about 3.5 million bikes a year. That’s more than half of Giant’s total capacity.
We’ve outlined many times how interruptions to the supply chain – caused by lockdowns, scarcity of raw materials, shipping delays, and high prices – plus increased demand has led to shortages of bikes and components. The war in Ukraine and inflation make the future even more unpredictable.
Bonnie Tu said that some bicycle parts currently have a lead time of two years and even simple components can take six months rather than the usual one or two. This is in line with many other reports we’ve heard from the bike industry.
“We understand we can’t put all our eggs in one basket,” Tu told Bloomberg, with Giant moving some production out of China. It has plants in Taiwan – where the company is based – the Netherlands and Hungary.
Giant also aims to begin production at its new factory in Vietnam by the end of 2022, benefiting from a free-trade agreement between that country and the European Union – a market responsible for nearly 40% of Giant’s global sales.
Parts for high-end bikes are in shortest supply, but Tu believes this will begin to ease by the end of this year.
Bloomberg says, “Tu estimates Giant will post high-single digit to low-teens revenue growth in 2022, after reporting a record NT$81.8 billion ($2.8 billion) in sales last year, in part due to rising demand for e-bikes, according to Tu. The sector may account for 40% of Giant’s total sales in three years, compared with 31% in 2021.”
However, Tu warned that Giant’s performance will depend on supply conditions, particularly in China.
Mat has been in cycling media since 1996, on titles including BikeRadar, Total Bike, Total Mountain Bike, What Mountain Bike and Mountain Biking UK, and he has been editor of 220 Triathlon and Cycling Plus. Mat has been road.cc technical editor for over a decade, testing bikes, fettling the latest kit, and trying out the most up-to-the-minute clothing. We send him off around the world to get all the news from launches and shows too. He has won his category in Ironman UK 70.3 and finished on the podium in both marathons he has run. Mat is a Cambridge graduate who did a post-grad in magazine journalism, and he is a winner of the Cycling Media Award for Specialist Online Writer. Now over 50, he's riding road and gravel bikes most days for fun and fitness rather than training for competitions.