World’s top bicycle maker says the era of ‘Made in China’ is over

Bloomberg

Giant Manufacturing Co saw the writing on the wall early on. The world’s biggest bicycle maker started moving production of US-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 percent 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 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 US orders out of the country.
Giant announced 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.
“The world is no longer flat,” said Tu, borrowing from Thomas Friedman’s book “The World Is Flat,” whose title in a metaphor for viewing the world as a level playing field for companies and trade.
“The concept is no longer affordable in every place.”
Li & Fung’s chief executive officer echoed Tu’s sentiments, saying China became the factory to the world because it is so efficient in producing goods. Sourcing became very easy, CEO Spencer Fung said in a presentation in Hong Kong.
“They just put all their eggs in the China basket because the Chinese are very capable,” said Fung. Now, “the trade war is basically forcing people to rethink their entire global sourcing strategy and to diversify away from China.”
Giant’s willingness to quickly steer orders away from China — long regarded as the world’s low-cost workshop — has been noticed by investors and analysts.