Thu, Jun 27, 2019 page12

• Bike makers return amid tensions

  • By Jerome Taylor / AFP, TAICHUNG
  • • 
    • 
    • 

  Set to a rhythmic soundtrack of clacking machinery, whirring drills and inflating tires, bikes take shape at a factory run by Giant Manufacturing Co (巨大機械), which is leading the nation’s push to regain its crown as bike maker to the world.

  Key to this push is demand for electric two-wheelers from environmentally conscious European consumers, with surging exports providing support during a China-US trade war.

  At an assembly line near Taichung, workers for Giant — the world’s biggest bike maker — build new electric bikes that boast visibly thicker frames to house rechargeable batteries.

  

  A worker checks electric bicycle parts at a Giant Manufacturing Co — the world’s biggest bicycle manufacturer — factory in Taichung on May 21.

  Photo: Sam Yeh, AFP

  “This is one of the biggest driving forces for the past five years,” Giant chairwoman Bonnie Tu (杜綉珍) said, adding that e-bikes now make up one-fifth of the group’s revenue, “but I think for this year, maybe we’ll be able to reach about 30 percent.”

  The global e-bike market was in 2017 valued at US$16.34 billion, but is expected to reach US$23.83 billion by 2025, according to Allied Market Research.

  Taiwan’s exports of e-bikes last year jumped by more than 50 percent, with each unit costing more than US$1,300 on average, much more than standard bicycles, customs data showed.

  The nation had for years been the world’s No. 1 bike producer until the 1990s, when China’s economic reforms saw firms take advantage of a vast, cheap labor force that absorbed virtually all output of the Taiwan’s bikes.

  While Chinese factories continue to play a dominant role, Taiwanese production is bouncing back.

  In the first quarter of this year, e-bike exports from Taiwan to Europe increased 135 percent year-on-year, while shipments to the US climbed 78 percent.

  There are other increasingly compelling economic reasons to shift manufacturing away from China.

  In January, the EU introduced a series of anti-dumping measures after years of complaints that e-bikes made in China were saturating the market, sold for below production costs thanks to state subsidies.

  Then there are punitive tariffs the US has imposed as part of the trade dispute, which has battered many Taiwanese companies that assemble in China.

  That has led to an even more pronounced surge in exports from Taiwanese factories, with firms across a range of industries increasingly willing to return home or look elsewhere for new factories.

  “The shift was already kind of underway before [US President Donald] Trump was elected, or people were talking about it anyway,” said Shelley Rigger, an expert on Taiwan at Davidson College in North Carolina.

  Even before the trade war, Taiwanese companies were worried about increased labor costs in China and that many of the incentives used to lure them had dried up, she said.

  “They’re not getting special treatment as much and the cost benefit — they can find lower costs elsewhere. It’s been more sort of a diversification rather than a relocation,” Rigger said.

  The trade war has only added to concerns, with Taiwan among Asia’s most vulnerable economies given that China and Hong Kong account for 40 percent of its exports.

  President Tsai Ing-wen (蔡英文) favors being much less economically reliant on China, urging firms to return to Taiwan.

  Some have heeded her call.

  As of April, about 40 companies, including Giant, have committed to investing a combined US$6.7 billion and creating 21,200 jobs.

  However, relocation remains hugely controversial, with business owners fearful of being punished by China and many asking Taipei not to reveal their names or details.

  Still, Tu was adamant that Giant is committed to manufacturing in China, which remains “a very important market.”

  She portrayed the opening of new assembly lines in Taiwan — and a factory in Hungary — as part of a need to be closer to consumers, saying: “We are a global company.”

  However, she agreed that the trade dispute had morphed from initial “jitters” to “a new reality.”

  “I think I suddenly realized maybe it won’t go away,” Tu said. “I think the war is here. And we have got to have a long-term plan.”
• Most Popular

  • 1

    HSR to encircle Taiwan

  • 2

    MOFA welcomes Rubio’s Taiwan remarks

  • 3

    China seeks to divide Okinawa: report

  • 4

    Open letter to Speaker Han Kuo-yu

  • 5

    EDITORIAL: Taiwan’s constitutional moment