A Match Made In Heaven...or Taichung: Taichung Bike Week and Eurobike Sitting in a Tree

Last month the increasingly obsolete Taipei Cycle groaned to a close-- a dinosaur of a show in an industry that has created more bottom bracket standards in the past ten years than I have changed flats. 

Taipei Cycle has been increasingly directed toward the retailers and the emerging markets with many of the major players sleepwalking into town for an expensed drink...if they even bother coming at all. 

The real action in the bicycle industry heats up during Taichung Bike Week in October, when industry managers converge on Taichung to finalize the specifications on the products and their prices that will be coming out the following year or two. As opposed to Taipei Cycle, Taichung Bike Week is entirely about looking into the future. 

With the current state of the bicycle industry when even the Giant mega-empire has lost a quarter of its value over the past year, getting a jump on manufacturing has become essential as it can allow brands to implement new technologies they hope will invigorate stagnating sales, or to nail down the production details (prices) for an extended model run for more than a single season. Production errors and unforeseen market problems in the past have led to far too much overhead failing to sell in the premium market with brands hoping to break even elsewhere in smaller markets past the model's expiration date. 

Taichung's central location plays an essential role in allowing 90% of the top OEMs to be within 40min. of the city. Representatives from the OEMs and brands can hustle off to iron out the details immediately following a presentation. 

One of the advantages of Taichung Bike Week is that it is a closed convention by invitation only, organized by industry volunteers for the industry without having to play ball with the local government or the Taiwan External Trade Development Council (TAITRA). It also caters to Taiwanese OEMs and their supply chain, keeping the center fixed in Taiwan for the time being. 

This year Pro-Lite CEO, Steve Fenton, who also serves as the chief organizer of Taichung Bike Week, has reached out to Stefan Reisigner, a board member of Eurobike, to help with the organization and logistics of the event aimed at putting more brands in contact with their OEM counterparts more efficiently. Taichung Bike Week, which has often struggled with Taichung's limited exhibition space, has also procured space at the Lin Garden Hotel as a 4th location to host presentations and visitors.

Bicycle Retailer Reports: 

The seventh edition of  Taichung Bike Week will be Oct. 18-21 this year. Eurobike is working with TBW to provide attendees with a new "matchmaking tool."  The matchmaking tool will enable exhibitors and visitors to show off what they have to offer and what they are interested in before the event starts. Using their accounts, they will be able to make appointments and receive contact suggestions customized to fit their profile.

According to Fenton: 

It is all important that we use the 4^th location to bring in even more brands that need bigger space to present their ideas and products and the 4^th hotel will do this. The hotel is Called The Lin [Garden]and is about the same distance from Evergreen Hotel that Splendor is but in the opposite direction. It’s easy for us to arrange a shuttle bus every 30 minutes and as you know it’s never hard to get a taxi in Taiwan as they are everywhere. The location offers a huge amount of space for brands who need either large presentation rooms down to a small booth of say 3 x 3 mts. Best of all its got a huge space for the TBW party which we have struggled with over the last 2 years due to no space left in the three venues we use now. We decided to go ahead with a 4^th venue after asking many exhibitors about whether they feel we should talk to the City Government about using the exhibition centre they are building and the answer was a very clear no. As you know the event is run by the industry for the industry and we are a team of volunteers who do not get paid or take anything out of the event for free.

With the dual pressures of a dim forecast for the entire bicycle industry through 2018, and the rise of the direct sales model for branding online (the Canyon model), what happens in Taichung and how it happens only increases the importance Taichung Bike Week plays as the linchpin of the entire industry and possibly the most important week of the cycling calendar.  

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Also:

Don't miss the this Sunday's 2016 running of the Paris-Roubaix and Taiwan's Feng Chun-kai as he supports Lampre-Merida. Feng scored as DNF last year and also failed to finish last weekend's iconic Tour of Flanders.

The China Posts reports on an up and coming cyclist. 

               

Bike Trade Group Calls For FTAs and Protection In Wake of ECFA

In the wake of all the crowing and cursing ECFA, the new economic agreement between Taiwan and China, this little news story crossed the wire courtesy of CENS. This particular story caught my eye for its message, which I can only describe as being bizarre in the least, leaving me to speculate as to the actual message contained within.

TBEA Urges Gov`t to Sign FTAs with Other Nations, Regions
2010/07/09

Taipei, July 9, 2010 (CENS)--Taiwan Bicycle Exporters` Association (TBEA), the largest bicycle and parts exporters` association in Taiwan, recently sent letters to government authorities to ask for faster signing of free trade agreements (FTAs) with European Union (EU), the United States, and other Southeast Asia nations.

This opening paragraph caught my eye as it appears to be a direct challenge to the Ma administration to follow up their rhetoric with deeds. In the lead up to signing the ECFA agreement, administration officials cited ECFA as a prerequisite to signing other FTAs with other nations. The overarching theme in the press seemed to be, "Don't let Taiwan fall behind other Asian nations, sign ECFA or Taiwan will be isolated like North Korea." Of course this was a ridiculous and hyperbolic line from desperate officials as Taiwan could sign FTAs with any country it likes, but those take time. The issue was further obscured by Chinese officials who declared that there would be no FTAs with other countries for Taiwan under ECFA as that could be read as an assertion of sovereignty, which would undermine China's own goals of integrating Taiwan's economy as a regional subordinate to the PRC's.

TBEA pointed out that the South Korean government has been aggressively promoting its bicycle industry and has signed FTAs with the EU and other nations, which will serious threaten Taiwan`s bicycle exports.

This second paragraph comes way out from left field. South Korea? Are they serious? Taiwan has spent decades building facilities, technical skills and relationships within the industry that has resulted in cementing Taiwan's reputation as the county that produces the best bicycle frames and components in the world. Now, "Made in Taiwan" is not viewed as a negative in the bicycle industry.

In addition to asking the government to pay more attention to the development of bicycle industry in Taiwan and other nations, TBEA also urged companies in Taiwan not to share know-how and core techniques to rivals in other nations to keep core competitiveness on the island.

The third paragraph is striking in its call for the government to take actions to protect trade secrets by, I presume, not allowing certain bicycle manufacturers from transporting proprietary technology overseas... to South Korea? Yeah... I guess. A few years ago several companies in the semiconductor industry rallied around similar cries regarding exporting 12" wafer production to China and only allowing Taiwanese firms to set up 8" wafer facilities outside Taiwan. Regardless of the furor Taiwanese companies transported 12" wafer facilities to China where they were copied by domestic firms.

James Liu, secretary-general of TBEA, pointed out that both the government and the bicycle industry in Taiwan have to prepare for the threats from S. Korean counterparts to minimize impacts, though the EU has not formally approved the FTA with S. Korea.

Michael Tseng, president of major assembled-bike maker Merida Industry Co., Ltd. and also the steering chairman of the A-Team high-end bicycle/parts industry alliance, pointed out the A-Team has been pivotal to shape Taiwan into the world`s key supply center of top-end bicycles and key parts by integrating dozens of world-class players in the alliance. The successful business model can hardly be copied by overseas rivals in a short period.

The final two paragraphs sum up the call to mitigate the impact of South Korean FTAs with Merida President, Michael Tseng, a major backer of ECFA, coming out to assert calm and confidence in Taiwan's domination of bicycle manufacturing.

If you are reading what I am reading you may be thinking something just doesn't sound right. I have come up with three basic scenarios behind the TBEA's calls for FTAs:

1. As a long time student of Taiwan and Taiwanese politics I have gotten myself thinking too much and the article is what it says; a call for FTAs to compete against South Korea. With its system of established and far reaching quasi-national conglomerates South Korea may have an organizational advantage over Taiwan's SMEs, which seem to be represented by TBEA.

2. South Korea has traditionally played the role as a diversionary foe when Taiwanese governments face domestic problems. It was no mistake that ties between South Korea and the ROC government reached an all time low in the late 80's as the KMT was trying to cope with civil unrest along with international and domestic calls for democratic freedoms. South Korea also has traditionally played into some Chinese nationalistic friction regarding "traditional Chinese territory". It could be that South Korea has been dragged out as a convenient "threat" to divert public attention from China, which is currently regarded as the real economic threat to Taiwan to better facilitate economic integration. The TBEA is actually running interference. When Taiwanese are not watching Korean soaps or listening to the Wonder Girls, there is a type of conditioned undercurrent of baseless Korean hatred.

3. The TBEA is calling out the Ma administration to make good on its promises to pursue FTAs with other countries and assert Taiwanese sovereignty and economic clout in an industry it owns... for the time being. It is a challenge to Ma's economic policies from an industry which fears it will face the same fate as the footwear industry and soon be forced to relocate to China where domestic Chinese companies will copy the processes and undermine the Taiwanese companies. The themes and language may be using "South Korea" as a proxy for "China", but in the current political climate where loyalty is rewarded with favors, and more concerning, dissent is punished, the members of the TBEA do not wish to go on record opposing an economic policy which may lead to a rapid deterioration in Taiwan's advantage in the bicycle industry. Some of the calls to diversify Taiwan's economic interests echoes Lee and Chen administration plans to "Go South" and not put all of Taiwan's eggs in one basket.

The Merida line is the administration calling on the TBEA to "be rational" as "irrationality" is often cited to brush aside calls for transparency and oversight.

What's This Elephant Doing Here?

I don't know... what do you think?

ECFA, Bikes, and the Mythology of the Chinese Toothbrush

Gift Horse

For well over a decade the news media, foreign business communities, Chambers of Commerce and governments from the local to the federal levels, have been whipping themselves into a lather over the potential of the elusive "China Market". The analogy has been put to me many a time by Taiwanese and expat business types alike, that if I could sell a toothbrush to every Chinese... blah, blah, blah.... And Oh, how we just need to use the power of our superior system to make them come around to "our way" of doing things. All these guys are standing around with blue-balls over the elusive China market and can't seem to get any play despite the promises.

Here is the rosy picture being promoted by the Chinese side of things for the Taiwanese bicycle industry out of CIIP.COM:

According to reports from Taiwan media, appreciating the huge potential of the mainland market after the signing of the ECFA, Taiwan Giant Global Group plans to strengthen the capability and competitiveness of the mainland headquarters this year by launching a new investment plan to invest an initial RMB 1.16 billion for the establishment of the Bicycle Industrial Park in Kunshan, Jiangsu Province.

Reports disclosed that with the expansion of the market, Giant Global Group will increase its investment to raise its market share in the mainland bicycle market. Based on its original SUV brand GIANT, the Group will vigorously develop a new brand MOMENTUM to raise the market share of passenger vehicles. The medium-priced brand will be aggressively promoted through about 2,000 distribution channels.

Giant Global Group plans to increase its investment to build a bicycle plant in Kunshan, which has gained great support from the mayor of Kunshan Guan Aiguo. The 40-hectare new plant will consist of plants for bicycles, frames, carbon fiber and electrical vehicles. Besides, the cycle track & bicycle theme park plan will also be pushed forward. The investment in the initial stage amounts to USD 36 million (NTD 1.16 billion).

Sources revealed Giant Global Group currently possesses a bicycle plant in Kunshan with an annual output of 2.5 million. As the Group's largest manufacturing base in the mainland, the plant boasts about 50% of the products meeting the domestic market demands. After being put into operation, the new plant will meet the market demands for both GIANT and MOMENTUM and the plant will trade with Taiwan bicycle plants after the signing of ECFA.

Of course, the latest negotiations on the "early harvest list" have broken down and all these grand plans the benefit China, a few wealthy industrialists and a few connected politicians are still up in the air. Moreover, the promise of greater capital outflows to China is stalled so Taiwanese will have to keep showing up for work to receive the same salary they received 10 years ago despite rising inflation. Michael Turton has a wonderful analysis on the matter on his blog here.

In the 1960s the KMT government was desperately seeking foreign investors in the burgeoning electronics sector and all but killed off Taiwanese textiles and footwear in the process. Taiwanese recovered from the early waves of capital outflow and the replacement of traditional industries. Much of this resilience was based upon the small to medium sized enterprise and the the ability to exploit local relationship networks.

Still, politics has never been too far from the agenda. In Ian Skoggard's excellent book, The Indigenous Dynamic in Taiwan's Postwar Development: The Religious and Historical Roots of Entrepreneurship, one Taipei based informant declares in a manner we often hear from ideologues on both sides of the Taiwan Strait:

The U.S. doesn't care about the appreciation of the NT dollar. They just want their price.They don't care if we are starving. The U.S. market is getting very cruel. We are such a small country. We are being mistreated by the U.S. No matter how rich we are, we are still Taiwan and not the R.O.C. The U.S. forces us to take their farm products when we have everything here we need, and our farmers complain. Maybe some day when we go back to China, we'll stand on level ground to talk. p. 123

The myth that Taiwan is too small was dispelled in the 1990's, when Taiwan, while allowing investment in China, also sought to diversify its centers of production by courting Southeast Asian nations as well. This also coincided with Lee Teng-hui's Taiwan-centered economic framework that sought negotiations from a position of strength than the more conciliatory approach of demure weakness. That approach is gone in the name of unbalanced, unchecked, economic and political annexation by China.

It should be important to note that Giant Founder, King Liu, is currently working for the Ma Administration as a consultant for transportation, tourism and the economy. No doubt there is a pretty penny in it for him.

This wouldn't be the first time government economic schemes have resulted in major outflow of capital from Taiwan, but it would be the first economic project where the economic benefit and the interests of the Taiwanese people have been placed on the back burner for politics and ideology.

The bicycle industry is a major part of Taiwan's economy and national identity... and not to forget JOBS... and needs to be promoted and protected at home.

All of this comes hot on the heels of recent Ministry of Economic Affairs moves to quietly bring Taiwanese firms back home. The great pancea of the "China Market" to heal Taiwan's economic woes is proving to be elusive as a reality. So while ECFA is being trumpeted as an economic necessity, China is proving to be a sour investment for many at the cost of quality, safety, security, and jobs.