Team Alliance Aims to Save Taiwan's Bicycle Industry

After more than a year of effort, Taiwan's "A-Team" bicycle development, production, and marketing alliance put the initial fruits of its labors on show in the product museums of the island's two biggest bicycle makers, Giant Manufacturing Co. and Merida Industry Co.

King Liu, the chairman of Giant (Taiwan's biggest bike maker) and a major promoter of the A-Team, expresses delight at the results of the group's teamwork but cautions that more challenges lie ahead in the ever-changing industrial environment.

Liu praises members of the alliance for spending much time and energy to learn and install the Toyota management model in their factories, and for the benefits of this achievement: reduced costs, faster response times, and an overall enhancement of operating efficiency, among other pluses. The results of the effort will not show up immediately on the members' bottom lines, he declares, but will be reflected in long-term competitiveness.

According to Liu, the goals of the A-Team are not aimed at satisfying the business interests of individual companies but to the future development of Taiwan's bicycle industry as a whole. By upgrading the reputation of the island's bicycle makers for quality and design, Liu is confident, more orders for higher-end models will flow in.

With Taiwan's bicycle exports dropping in recent years because of strong competition from mainland China, Giant and Merida brought in 11 parts suppliers and formed the A-Team last year with the aim of strengthening the island's position as a production base for high-end bicycles.

Essential Cooperation

Yen Chin-hsin, Giant's plant manager and the head man for the A-Team, reports that member companies will cooperate through the Giant Production System (GPS) platform on a team-merchandizing ™ basis.

The GPS was set up on the Toyota management model and targets a 100% no-defect ratio in manufacturing, on-time delivery, and minimum product inventory. These goals are pursued through more reasonable production management and an organized information structure.

The 11 parts makers include Tien Hsin Industries Co., Tektro Brake Systems, Wellgo Pedal's Corp., Formula Hubs Co., Velo Enterprise Co., L&K Engineering Co., and VP Components Co. All have a strong desire to enhance their R&D capability and to upgrade their international competitiveness. More companies, including foreign ones, are welcome to join the alliance.

Merida's president, Ike Tsung, notes that the industry's shrinking production volume has triggered worries that Taiwan's bicycle industry might die out entirely, since most producers in the line have moved their facilities to mainland China to take advantage of the lower costs available there. The A-Team wants to counter this trend by upgrading both the quality and quantity of made-in-Taiwan bikes.

The alliance's two makers of finished bicycles engage in the joint procurement of parts from suppliers that are also members of the alliance. This means more business for the parts suppliers, but they will also have to dedicate more effort to the development of the newer and better products needed to upgrade the value of the completed products. The ultimate goal is to build a global quality image similar to that of BMW and Mercedes-Benz.

Expanding Gap

Tsung stresses that the result will be a widening of the quality gap between Taiwan- and mainland China-made bicycles, maintenance of the image and price of Taiwan-made bicycles, and the extension of prosperity for the island's bicycle industry for another 10 to 20 years.

"We're boosting the A-Team because of strong sense of mission, not just for self-interested business interests," notes Giant's Yen. "The world-famous Giant brand would become meaningless if Taiwan's bicycle industry was to lose its dominance in the international market."

Tien Hsin president Jiang Chen-hsun comments that most of the members of the A-Team are proud to be a part of it, and are eager to develop products of ever higher quality and more competitive prices.

Jiang's own company developed a new high-end crank set made of graphite material last year, and the set is claimed to have immediately overwhelmed the competition from such major international brands as Shimano of Japan and Campagnolo of Italy n winning large numbers of orders and being chosen as a parts supplier for the French bicycle racing team Bonjour. That success has bolstered the company's confidence that it can develop into a major supplier to the upper levels of the international market.

At least three big international bicycle-parts brands--Shimano, Rockshox, and Answer--have reportedly expressed interest in setting up warehouses in Taiwan or placing original equipment manufacturer (OEM) orders with local manufacturers. This will push the island another step along the way to becoming a global supply center for high-end bicycles.

The presence of warehouses in Taiwan would shorten the time needed for parts delivery and cut costs at the same time, thereby making Taiwan's bicycles more competitive in the market. Locally made high-end bicycles, Yen notes, still have to rely on foreign suppliers for some of the advanced parts they need.