This year’s COVID-19 pandemic—the disaster of the century—has spread fear of infection and death around the world. And in the pandemic’s wake, people’s lives, socializing and livelihoods have been completely overturned. Furthermore, there has been a global surge in country- and city-wide lockdowns, school closures and factory work stoppages. As of mid-October, 41 million people had been infected by the virus, and deaths had exceeded 1.2 million. But although the pandemic has wreaked havoc on many industries, it has spared, and even benefited, the bicycle industry. In order to avoid the risk of infection while taking public transportation, many people have switched to riding bicycles, and governments in the European Union are supporting cycling and using subsidies to encourage members of the public to ride bikes and e-bikes. Because bike sales began recovering in April and May, and retailers began running out of stock in June, manufacturers started receiving a flood of urgent orders around that time. As a result, the cycle industry in Taiwan and China has been working overtime try to fill its orders, and many companies won’t be able to fill their their orders until the middle of next year.
Taiwan export statistics
According to Taiwan customs draft data, Taiwan exported 1,223,583 bicycles during the first 9 months of 2020 - a decrease of 25.3% compared with the same period of 2019. However, the average unit price of US$657.69 represented an increase of 7.25% compared to 2019. The EU and US remained the two largest markets for Taiwanese bicycles in 2020. Taiwan’s fastest-growing product is currently the e-bike, and Taiwan exported 543,395 e-bikes during the first 9 months of 2020, which represented growth of 21.2%. The average unit price of exported e-bikes fell by 2.49%, however, slipping from US$1,317 in 2019 to US$1,285. Europe was the largest market for Taiwan’s e-bike exports, followed by the US. Taiwan has replaced China as the largest source of the EU’s e-bikes imports since 2019. Because e-bikes are currently one of Taiwan’s focal products, a rapidly growing number of companies are developing such key e-bike parts and components as controllers, batteries and motors, including auto, motorcycle, and IT companies. This trend has given tremendous impetus to the development of Taiwan’s e-bike industry. Giant’s Hungarian plant has also begun production, while Merida is expanding its German plant, and these plants will help boost the firms’ e-bike capacity and cope better with their overflowing orders. I hope that everyone will “Think E-Bike, Think Taiwan” in the future.
Taiwan exported 2.12 million bicycles in 2019, which was a drop of 3.85% compared with the 2.21 million exported units in 2018. The EU and US were the two largest nations for Taiwan’s bicycle exports, and the 985,000 units exported to the EU in 2019 represented a drop of 10.7% compared with the roughly 1 million units shipped to the EU in 2018. Britain was the largest importer of bicycles from Taiwan during the year, and was followed by the Netherlands and Germany. In contrast, bicycle exports to the US grew dramatically in 2019, rising to 700,000 units, which represented growth of 34.4% compared with 2018, but the average unit price fell by 20.4% to US$670.
The meteoric rise of e-bikes
Taiwan’s bicycle industry has focused heavily on the development of e-bikes during the last few years, and although such key components as electronic controllers, motors, and batteries are still controlled by international brands including Bosch, Brose and Shimano, Taiwanese companies are vigorously developing their own key components. Taiwan exported over 640,000 e-bikes in 2019, which was a huge 124.96% increase compared with the 286,000 e-bikes exported in 2018. In addition, the average unit price of US$1,339.43 was up by 1.57% compared with 2018. The EU was the largest market for Taiwan’s e-bike exports, and imported 440,000 e-bikes from Taiwan in 2019; this was a whopping 129% increase compared with the 190,000 e-bikes exported to the EU in 2018. The Netherlands was the largest EU market for Taiwan’s e-bikes, and its import of 230,000 units was up by 202% compared with 2018. Germany, Britain, Spain, and Italy were the next largest EU importers of Taiwan’s e-bikes in 2019. In order to prevent the laundering of place of production and maintain the cycle industry’s longstanding reputation in international markets, Taiwan’s Board of Foreign Trade, MOEA has imposed strict controls on exporters’ original place of production certification.
Now that Taiwan’s cycle industry is busy producing, although the surge in orders is a good thing, there are many problems associated with filling rush orders and outsourcing work. One issue is that companies working frantically helping their customers resolve delivery problems seldom have the time to develop new products. The fact that most companies have full order books until at least the end of the year, if not until the middle of next year, reflects the problem that numerous key parts are in short supply, which has caused delivery times to be delayed. In order to fill their urgent orders, many firms are working overtime, or have even outsourced work to contractors. Because of the increased cost of these moves, while companies’ have plenty of orders, their profits have in fact fallen. But in order to serve their customers and make on-time deliveries, there has been no choice but put up with these stopgap measures, and at least these are the problems that the industry is glad to have. As the COVID-19 pandemic is likely to continue to rage through fall and winter, it is incumbent on the industry to perform planning early, make necessary changes promptly and ensure that it can respond properly to circumstances. Let’s hope that by enduring the crisis of the pandemic the global cycle industry will develop even greater toughness, strength, resilience and problem-solving ability.
The quality and service provided by Taiwan’s bicycle industry has earned a favorable reputation around the world. Apart from offering mature production technology, the industry has long been very active and enthusiastic at promoting cycling, and has successfully created a cycling culture in Taiwan. In addition, the establishment of bicycle museums has lent even more energy to the development of bicycles in Taiwan. Pacific Cycles was the first company to establish a bicycle museum, Giant’s Cycling Culture Museum formally opened in July of this year, and KHS quickly followed suit by opening its own bike museum. The establishment of so many bicycle museums is sure to have a positive impact on the development of bicycles and bicycle culture in Taiwan.
According to data from the China Bicycle Association (CBA), China’s bicycle output of 65 million units in 2019 was down by roughly 20% from 80 million-unit annual output reached in some past years. In addition, China’s 2019 exports of 52 million bicycles was down by 5-6%, while its top 5 export markets consisted of the US, Japan, Russia, Indonesia, and Korea. China produced 36 million e-bikes in 2019, and 97% of these were sold on the domestic market. Due to this year’s COVID-19 pandemic, there was a sharp drop in China’s bicycle and e-bike output during the first half of the year, but production has been gradually picking up since May. It is expected that China’s final production figures for 2020 will be pretty much the same as in 2019, but exports (such as to the US) will be less than in 2019 due to work stoppages and city-wide lockdowns during the first half of the year. Facing the US-China trade war and punishing EU anti-subsidies and anti-dumping tariffs, the Chinese bicycle industry is under great pressure. These hardships come on top of steadily increasing production costs and falling competitiveness in China. This has prompted numerous companies to establish plants and offices overseas.
In 2020, apart from the devastation done to the global economy, cross-strait relations have also grown increasingly tense. As far as business people are concerned, peace and political stability are the most important things. I hope that the leaders of Taiwan and China will have the wisdom to defuse any crises that may occur.
Vietnam & Cambodia
More than 30 Taiwanese firms have been establishing plants in Vietnam, and now Chinese bicycle and electric vehicle parts manufacturers are also opting to move production there. Those companies that have made this move are enjoying excellent business. However, because Vietnam has become a new investment magnet in the past 5 years, the price of land has been soaring.
Cambodia has become the leading source of bicycles imported by the EU, and produced close to 1.5 million bikes during both 2019 and 2018. The EU conducted a human rights, democracy, and rule of law investigation of Cambodia in February 2019, and announced that it would revoke the “Everything but Arms” (EBA) import privileges of some Cambodian products after the results of its investigation were published during February 2020. Fortunately, the preferential import of bicycle products remained untouched, which will preserve the advantage of Cambodian bicycles in the EU market. A steadily growing number of Chinese and Taiwanese firms have established plants in Vietnam in recent years, but these companies must remain aware that the rapid increase in Vietnamese bicycle exports to Europe may attract the attention of the European Committee (EC).
Due to the ongoing lack of low-price bicycles in the US, customers are often forced to purchase a bicycle with a higher price level. This has given a particular boost to the sale of bicycles in the US$1,000 price range, and sales of these bikes soared by 63% during the first half of 2020. Because of the likely continuation of the pandemic, EU consumers are expected to buy more e-bikes, e-cargo bikes, and electric scooters, and Taiwan has already become the largest source of the EU’s e-bike imports. While the competitiveness of Taiwan’s e-bikes is undeniable, companies must speed up integration of motor, battery and electrical control systems in order to boost their competitive advantage further. Apart from Taiwan, the bicycle industries of Vietnam and Cambodia also cannot keep up with demand. Due to their booming business, many bicycle firms in China are working day and night trying to catch up with order backlogs extending into the first half of 2021.
Because of pandemic control issues and the fact that Taiwan’s border controls on entering international visitors have not yet been withdrawn, this year’s Taichung Bike Week was postponed until next year in a last-minute decision, which forced companies with new product announcement needs to hold their own activities. With the new COVID-19 spike in Europe, many countries have imposed new lockdowns to curb the pandemic’s spread. While the original plans were for the Eurobike show to be held at the end of November, the show was cancelled in October during the virus’s resurgence. As a result, many people are very concerned about whether the Taipei International Cycle Show will be held as scheduled during the first quarter of next year. According to TAITRA, although Taiwan’s border controls have not yet been loosened, the 2021 Taipei show will still be held at the scheduled time, and coordinated online and offline exhibitions are planned to let buyers get new product information in real-time without coming to Taiwan. The Shanghai cycle show has announced that it will move to a venue in Pudong in 2021, but we will have to wait and see how effective the show will be. If the pandemic continues to rage during fall and winter, and no effective vaccine has gone on the market, everyone will have to keep taking precautions and not take the risk lightly.
While high-tech industry leaders fill out close to one-half of individuals selected in the 2020 “Top-100 CEOs in Taiwan” issued by the Harvard Business Review, the bicycle industry also did well, and two cycle industry bosses made the top-100 ranking: Merida President, Michael Tseng ranked 77th and Kenda Group CEO, Ying Ming Yang ranked 84th.
Green production & circular economy
Responding to global warming and the greenhouse effect, the development of a circular economy has become a global industrial development trend. Many international brands and channels have announced plans for reducing CO2 emissions, reducing waste, and using green energy, and are even requiring their vendors to disclose their CO2 emissions and comply with environmental protection standards. The bicycle industry is a green industry, and should therefore place even more emphasis on green production; by positioning itself ahead of time and entering green supply chains, the industry can lay the foundation for its sustainable development.