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 per cent 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.
Tariffs are adding US$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.