TAIPEI (Taiwan News) – Taiwan's Giant Manufacturing Co. (捷安特), the world's largest producer of bicycles is moving manufacturing away from China and setting up a new manufacturing hub in Europe.
Giant is building a US$72 million (NT$2.201 billion) manufacturing hub in Hungary and the Netherlands to reduce reliance on its China manufacturing base and to better service the European market.
Giant currently has manufacturing bases in China, Taiwan and the Netherlands. Bicycle manufacturing in China is becoming increasingly problematic, especially for the rapidly growing market of electric bikes (e-bikes).
Tariffs on Chinese-made e-bikes are set to increase as the China-U.S. trade war heats up, and new tariffs from the European Union enter into force, as well as structural problems surrounding manufacturing in China led to Giant's European expansion.
The new factory will also decrease transport costs and taxes, reported Bike Europe.
Giant will set up a factory in Gyongyos, Hungary and a distribution in Lelystad, the Netherlands. The Gyongyos factory is expected to open next year, with the factory having the potential to produce one million bikes a year.
At the CommonWealth Economic Forum in Taipei on July 19, Giant Chair Bonnie Tu (杜綉珍) said that the company initially thought that their six factories in China could supply the world, but localization is an emerging trend in bicycle manufacturing, reported CNA.
At the factory breaking ground ceremony in Hungary earlier this month, Tu said "with the ever-changing global landscape, having a production facility located close to the market, which can be quick to respond to market demands, is an inevitable trend in the modern business world,” reported Bike Europe.
In an interview with the Asian Nikkei Review, Tu said that the company had no intention to relocate manufacturing to either Southeast Asia to save on labor costs, or the U.S. to shield itself from high tariffs from the China-U.S. trade war.
Tu added that it did not make much sense to set up a new manufacturing base for tax reasons, because politicians and policies change over time, and there are significant challenges with a reorientation of Giant's supply chains.
Tu told the Asian Nikkei Review that that she expects the e-bike market in Europe and South Korea to expand, and for the Chinese bicycle market in general to decline. The China market faces challenges in pollution and competition from bike-sharing companies.