Tour de Taiwan helps promote world's third-largest bike show

This article was written by Allen Hsu and published by the Taiwan Journal on March 21, 2006. It features the International Tour de Taiwan 2006, which took place in March in order to promote the 19th Taipei International Cycle Show 2006, the world's third-largest international bike show. More than 100 world-class cyclists from 13 countries competed in 825-kilometer-long race, which is normally held in October.

The Taipei International Cycle Show is organized by the Taiwan External Trade Development Council and the Taiwan Bicycle Exporters' Association. In 2006, more than 650 exhibitors occupied 2,179 booths at the Taipei World Trade Center to display their latest products and services, which attracted thousands of buyers from all over the world. In addition to the bicycle race, the show also featured the 10th International Bicycle Design Competition, in which a French-made multifunctional tricycle designed for easy pedalling won the top award.

In the 1980s, Taiwan was nicknamed the Bicycle Kingdom because it used to export up to 10 million bicycles per year. However, in recent years, China and India have become strong competitors and are undercutting Taiwan's bicycle industry in terms of volume and revenues. According to the Taiwan Bicycle Exporters' Association, Taiwanese bike manufacturers experienced a 30-percent drop in sales in 2001, as a result of Chinese companies making bikes faster and cheaper and capturing the global market.

Nonetheless, Taiwan's bicycle manufacturers have refused to compete with China on cheap, low-end bikes. Instead, they have set their sights on the high-end market, and the result is amazing. According to the Taiwan Bicycle Exporters' Association, in 2005, Taiwanese companies exported 4.6 million bicycles, up from 4.3 million in 2004 and 3.9 million in 2003. Meanwhile, their total export value hit a record US$918 million in 2005, a significant improvement from US$720 million in 2004 and US$582 million in 2003.

Finally, their average retail price per unit was US$199 in 2005, compared to US$164 in 2004 and US$150 in 2003. The theme of the 19th Taipei International Cycle Show was "Think Bicycle, Think Taiwan". It was designed to inspire Taiwan's bicycle manufacturers to expand their brand strengths in order to better penetrate the world market. Indeed, one of the strategies used by Taiwan's manufacturers in recent years is to produce high-end products under their own brand names. Another strategy is to adopt the "3N concept" in production - new materials, new applications and new functionality.

In 2003, two of Taiwan's top bicycle manufacturers - Giant Manufacturing Co. Ltd and Merida Industry Co. Ltd. - and 11 suppliers of bicycle parts joined together to form the "A-Team alliance". This new group has thoroughly altered Taiwan's bicycle industry and again positioned Taiwan in the world as a major production base for high-end bicycles. More significantly, the Toyota Production System was introduced into the alliance recently. The system came from the Japanese company's successful management model and includes such goals such as defect-free manufacturing, on-time delivery and minimum product inventory.

The A-Team alliance now has 22 members. In addition to the Toyota Production System, the alliance has implemented a Just In Time system, which not only improves production and management efficiency but also tightens inventory control. Both systems serve to integrate the alliance's member companies with the "1-1-10" principle, in which one component factory takes one daily order and delivers in 10 days. Both systems have also help the member companies to focus on raising both the quantity and quality of their products. Statistics show that thanks to these two systems, each of the member companies has raised it production volume by 25 percent, lowered inventory by 40 percent, and saved 30 percent more space.

In 2004, the A-Team alliance has enjoyed a 30-percent growth in exports of finished units by Giant and Merida, as well as a 44-percent increase in the first three quarters of 2005. The export value of the alliance's component suppliers have also rose by 27 percent in the same period of time. The alliance's ultimate goal is to add in Total Quality Management as another fundamental goal and strengthen the marketing and other operations of all member companies.

Most significantly, the A-Team model has been applied to other local industries, including the powered-two-wheeler (PTW) manufacturers and the all-terrain vehicles (ATV) makers. Both industries are expected to double their total annual production volumes and improve their global sales.

Industry analysts predict that global demand for bicycles has amounted to about 100 million units per year. In 2004, China hit the global market with a record of 79.7 million units and became the world's biggest bike-manufacturing country. Meanwhile, India sold 14.3 million units, mostly for its domestic market. In these terms, Taiwan's 4.3 million exported bicycles may not seem much. But in terms of retail price per unit, Taiwan's bicycles are exported at US$164 per unit, compared to an average of US$32 per unit for the Chinese bikes.

This wide gap in per-unit price has been created by Taiwanese manufacturers who focus on upgrading the value of their products. They are trying to reach out to a different and more affluent client base, by offering lightweight, innovative and more expensive products. Meanwhile, Taiwan's bicycle manufacturers are also working on brand building. For example, Giant launched its own brand name in as early as 1981, and has since become one of the world's leading bicycle brands. Merida began manufacturing under its own brand name in 1987 and has also earned international recognition.

Finally, Taiwanese bicycle manufacturers are working on developing the domestic market for high-end bikes. At present, there are only 56 bicycle paths in Taiwan, with an estimated total length of 197 kilometers. This suggests that the people in Taiwan have not yet really embraced the bicycle as a viable form of transportation and recreation. The Cycling Lifestyle Foundation, for instance, wishes to continue its "Cycling Island of Taiwan" promotional campaign in order to get people to include bicycles in their lifestyles.