Just like the About Us page says, Bespoke Bicycle Club is interested in stories. It was created so consumers can find out how some of these unique and wonderful brands came into existence and so the founders of those companies can tell the story behind how their products came to be.
A lot of items available through the Club are handmade, a word which immediately evokes a sense of quality and craftsmanship. The phrase “made in China” however, can sometimes remain a little prickly, but why?
China is a country of incredible economic strength and consumption. Not only is it the world’s biggest manufacturer, it is also the world’s biggest market. And while well known as an export powerhouse, the growing wealth of the country’s 1.3 billion inhabitants is making it a huge importer of goods as well. To this end, many well known international brands, especially those in the luxury sector are moving into China to take advantage of its economic strength and increasing appetite for consumption.
Neighbouring Taiwan is home to the world’s leading bicycle manufacturer, Giant, which sold 6.3 million bicycles globally in 2012. In fact, Taiwan is where most of the industry’s leading high end brands turn to for their frames and components and between them, Giant and close competitor Merida are the original equipment manufacturers (OEMs) for many leading brands including Specialized, Trek, Scott, Schwinn and even some Colnago frames. Many brands can claim North American engineering, or European design, but the actual manufacturing most likely takes place in Taiwan, or increasingly, China, where companies like Giant maintain manufacturing facilities to produce all but their most high end models.
In terms of volume, China is already the world’s leading manufacturer of bicycles. According to statistics from industry researcher Bike Taiwan, China produced a total of 82.78 million bicycles in 2012, with almost 60 million of those produced by 396 fairly large local firms. Over 57 million of those bicycles were exported, with the US, Japan and Indonesia consuming almost 54 per cent of those exports. Interestingly, the average unit price of those exports was $56, while the average price of a Taiwan-made export bicycle was $426, which goes to show that the global demand for low to mid range bicycles is being fed by China, while high end, high technology and high performance bicycles, that will retail for several thousand dollars, are still largely being produced in Taiwan.
But China is following Taiwan’s lead and has been actively promoting cycling internally since 2010, with bicycles evolving from a mode of transportation to a recreational, fitness and lifestyle product.
As a result, Bike Taiwan notes that Chinese manufacturers are no longer relying on low prices as their competitive differentiator and companies are instead looking to quality, innovation, talent and effective business strategies as their unique selling points instead. Many domestic cycle manufacturers are now looking to brand partnerships in other parts of the world to develop new markets and increase their corporate strength and presence.
According to market research firm Ibis World, in the five years through 2014, revenue for the bicycle manufacturing industry in China has been growing at an annualised rate of 8.6 per cent to reach an estimated $12.2 billion, driven by increasing domestic demand, particularly in China’s rural regions, and export growth. In 2014, exports are expected to account for 50.1 per cent of total revenue.
This is good news for the global stage. According to Credit Suisse, the global bicycle market is expected to grow from $51 billion in 2014 to $65 billion in 2019, partly due to an improving global economy but also because demand for two-wheeled transportation is on the rise due to higher road congestion, higher fuel prices and higher awareness of environmentally friendly initiatives.
Going forward, China will continue to claim the lion’s share, producing 67 per cent of the world’s bicycles but with the focus remaining on the entry level to mid-range with wholesale units selling for less than $100 apiece, while Taiwan remains the powerhouse for $2,000-plus bicycle production.
But what is important to remember is that while there are countless brands on the international circuit flooding the markets with sub-£300 fixed gear bikes that they buy wholesale in a box for $100 from the Far East, the manufacturing element is just one small part of a brand’s offering.
For the same reason Apple can print “Designed in California” on the back of its iPhone, while a significant chunk of the manufacturing is done in China, many bicycle brands differentiate themselves on the full build and the combination of technologies in the finished product. Instead, the global supply chain is responsible for the delivery of the product and the design is the bit that is carried out on the company’s home turf.
But that’s not to say that outsourcing manufacturing to China is a no brainer. The country has courted plenty of controversy over labour rights and environmental standards, which not even Apple has managed to distance itself from completely. Choosing a production partner in China can be a tricky business but not an impossible one.
8Ball Bicycles all bear a sticker that says “Designed and assembled in Britain”. The full build product is designed in a workshop in East London, but the frames and components come from China and Taiwan respectively. For the frames, after sampling goods from various factories, 8Ball decided to work with a small operation that sub-let part of the state of the art bicycle factory owned by Dahon in Tianjin, north China.
Dahon is an industry powerhouse in its own right and is the world’s leading manufacturer of folding bicycles, selling 300,000 units in 2012. The company also celebrated 30 years of operation the same year, after initially being founded in the US before opening its first factories in Taiwan and the Netherlands. Then in 1995, the company established a factory in Shenzhen with the intent of producing folding bikes exclusively for international export, but as domestic interest grew, the company began to also produce bikes for the Chinese market and in order to meet demand, opened its second factory in Tianjin.
Without a significant R&D budget or large volume buying power for high end, high technology bicycles, 8Ball decided to focus on the bicycle as a means of stylish transportation. More of an everyday lifestyle brand than as a serious sports brand. That said, the frames the company uses come in at almost double the $100 average export unit price commanded by Chinese manufacturers, setting them firmly in the high end of the Chinese export market.
This is due to several reasons: the steel used is CrMo 4130 aircraft grade steel alloy, so called because it is often used in airplanes where steel is required. A higher strength material means less is required, so it saves on weight without sacrificing strength. 8Ball decided on steel because it’s affordable, reliable, comfortable and easily repairable. The frame design is lugged for a classic aesthetic appeal, although this adds to the manufacturing price, and each piece is hand brazed, rather than machine welded to maintain quality and attention to detail, setting it apart from lower end models.
In terms of components, the wheels are a hand built special order made in the UK around Sturmey Archer drum brake hubs. A more time consuming and expensive process but the company chose the unusual drum brake design because it wanted the entire braking system to be encased in the hub, making it almost maintenance free. No slipping in the wet, no brake pads to change and nothing to go out of alignment on the wheel rim.
Sturmey Archer was originally founded in 1902 in Nottingham, England but is these days owned by Sun Race of Taiwan, where all the Sturmey products are manufactured (Sun Race entry level parts are made in China). The company’s 100 years of experience has generated some interesting technologies and it is still widely regarded as producer of some of the best hub gears on the market, even with Japanese and German engineered competition from the likes of Shimano and Rohloff respectively, the first of which also maintains a number of factories in China.
Indeed, if a bicycle industry powerhouse like Shimano is focusing its production capabilities in China, then it shouldn’t be surprising to find that as time goes by, technological developments will filter down the value chain and increasingly higher end products will be produced on Chinese soil. In some cases it’s already happening. It’s become a fairly well known fact that the three original winners on the 2008 Tour de France podium (before the doping investigations) all rode different branded bikes that came from a composite materials specialist in China, Dongguan Taihe, under licence from a Taiwanese firm, TenTech Composites. The three brands in question were Cervélo, Ridley and Specialized, but the source of the frames was the same.
As we mentioned earlier, Chinese firms are increasingly relying on talent and innovation, rather than cheaper production costs to differentiate themselves, while the global supply chain is playing an increasingly important role in product creation. However China, in tandem with Taiwan, will be a formidable player in all aspects of the bicycle industry today, and in the future. For many companies working with Chinese producers and for the Chinese producers themselves, it’s looking about time “made in China” became “proudly made in China”.