• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » The Era of ‘Made in China’ Is Over, Says World’s Top Bicycle Maker

The Era of ‘Made in China’ Is Over, Says World’s Top Bicycle Maker

The Era of ‘Made in China’
Source: Bloomberg
June 20, 2019
Bloomberg

Giant Manufacturing Co. saw the writing on the wall early on. The world’s biggest bicycle maker started moving production of U.S.-bound orders out of its China facilities to its home base in Taiwan as soon as it heard Donald Trump threaten tariff action in September.

“When Trump announced the plan of 25-percent tariffs, we took it seriously,” Chairwoman Bonnie Tu said in an interview at Giant’s Taichung City headquarters in Taiwan. “We started moving before he shut his mouth.”

Giant is part of a growing number of global firms that are pivoting production out of China in reaction to the increasingly hostile trade relations between the two superpowers. Intel Corp. this week became the latest to say it’s reviewing its global supply chain, while Li & Fung Ltd., the world’s largest supplier of consumer goods, said the trade war is spurring it to diversify away from China.

“Last year, I noticed that the era of Made In China and supplying globally is over,” Tu said. The maker of mountain and racing bicycles closed one plant in China at the end of 2018 and shifted most U.S. orders out of the country. Giant announced last July it is setting up a factory in Hungary “as moving production close to your market is a trend.”

Giant currently has one plant each in Taiwan and the Netherlands, and still has five remaining in China. The Taiwanese site will be working double shifts to keep up with the relocated orders. The company said it is seeking a partner in Southeast Asia.

Not Level

“The world is no longer flat,” said Tu, borrowing from Thomas Friedman’s book “The World Is Flat,” whose title in a metaphor for viewing the world as a level playing field for companies and trade. “The concept is no longer affordable in every place.”

Li & Fung’s chief executive officer echoed Tu’s sentiments, saying China became the factory to the world because it is so efficient in producing goods. Sourcing became very easy, CEO Spencer Fung said in a presentation in Hong Kong on Monday.

“They just put all their eggs in the China basket because the Chinese are very capable,” said Fung. Now, “the trade war is basically forcing people to rethink their entire global sourcing strategy and to diversify away from China.”

Giant’s willingness to quickly steer orders away from China — long regarded as the world’s low-cost workshop — has been noticed by investors and analysts. The stock, which doesn’t carry a single sell rating from brokerages tracked by Bloomberg, has climbed more than 70 percent this year to the highest level since 2015, after four straight years of declines.

Giant’s global brand awareness and flexible manufacturing are key to avoiding tariff risks, Daiwa analysts Helen Chien and Anita Li wrote in a June 5 report, in which they initiated coverage of Giant with an outperform rating.

Tariffs are adding $100 on average to the price of bicycles made in China and exported to the U.S., compared with those made in zero-tariff areas, Tu said, explaining the rationale for the switch to the Taiwanese site.

The switch, however, comes with higher costs for employee payouts, automation and no China-like economy of scale for suppliers. Tu declined to peg the relocation costs beyond saying the company’s “bottom line would be better without the U.S.-China trade war.”

That’s why Giant is open to reverting production to its Chinese plants if the U.S. and China are able to hammer out a trade deal. If America “decides to remove the 25-percent tariff, we will move the production back to China right away,” Tu said.

RELATED CONTENT

RELATED VIDEOS

Logistics Facility Location Planning Global Logistics Global Trade Management SC Planning & Optimization Business Strategy Alignment Global Supply Chain Management Global Trade & Economics Regulation & Compliance SC Security & Risk Mgmt Industrial Manufacturing Asia Pacific China
KEYWORDS Global Trade & Economics Global Trade Management Industrial Manufacturing
  • Related Articles

    China’s Automakers Want to Dominate World’s Next Era of Driving

    What’s Inside Made-in-China Electronics Should Worry Federal Customers, Study Says

    In U.S.-China Spat, Vietnam Is Coming Out on Top

  • Related Events

    Driving Supply Chain Sustainability: The Role of Real-Time Visibility Using Vehicle and Location Data

Bloomberg

As Retail Sales Improved, Inventories Rose Less in February Than Expected

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Biden Seeks $1.9 Trillion for Relief Bill; India to Supply Millions of Vaccine Doses to Neighbors

    Coronavirus
  • U.S. and China Trade

    How China Won Trump’s Trade War and Got Americans to Foot the Bill

    Global Supply Chain Management
  • Obtaining Adequate Supplies of PPE in the Pandemic

    Watch: Obtaining Adequate Supplies of PPE in the Pandemic

    Coronavirus
  • AT&T

    How the Pandemic Has Altered AT&T’s Global Sourcing Strategy

    Coronavirus
  • Chip Shortage Hits Global Automakers

    Chip Shortage Hits Global Automakers

    Coronavirus

Digital Edition

Scb home issue 27

2020 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

  • LSP Wows Global Client, Quickly Advances to Become End-to-End Provider

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact GEP Honeywell Intelligrated
Infor Logility Magnitude Software
MPO Old Dominion Oliver Wight
OpenSky Ports America Purolator
QAD Precision Red Classic Riskmethods
TGW Systems Transportation Insights Watson Land Company
Westfalia Technologies Workjam Yang Ming
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright © 2016 - 2018 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing