World's Largest Bicycle Manufacturer Giant Reports 28% Increase in Q2 Sales, 'Record High'
June US Bicycle Sales Up 63%... Demand Also Rises in Europe, China, Japan, and Southeast Asia
[Asia Economy Reporter Jeong Hyunjin] Giant, the world's largest bicycle manufacturer, is truly reaping the benefits of the COVID-19 boom. The company started producing products for export to the U.S. and Europe, which were previously made in Taiwan, at its manufacturing plant in China. After U.S. President Donald Trump launched a trade war with China in 2018, Giant moved its production line for the U.S. market from China to Taiwan to avoid tariffs, and last year, when Europe imposed tariffs on China, it also relocated some production lines to Taiwan to evade these tariffs.
However, with demand surging sharply after the COVID-19 outbreak, the company decided to increase supply by using its Chinese factories despite the tariff costs. Bonnie Tu, Chairwoman of Giant, said in an interview with a foreign media outlet last month that based on their experience during the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak, they had partially prepared for COVID-19, but "did not expect demand to be this high." According to Bloomberg and others on the 8th, Giant's sales in the second quarter of this year reached a record high of $658.94 million, a 28% increase compared to the same period last year.
While the global economy has been hit by COVID-19, the bicycle industry is experiencing a boom comparable to the untact (contactless) industry. Market research firm NPD reported that bicycle sales in the U.S. in June increased by 63% compared to the same period last year. Although sales surged by 75% in April and then somewhat eased, they remain at a high level. In the U.S., known as the kingdom of automobiles, media reports have even stated that it will be difficult to find two-wheeled bicycles until early next year. Dirk Sorensen, Executive Director and Sports Industry Analyst at NPD, said, "The U.S. bicycle market has grown significantly due to COVID-19," adding, "Sales in the first quarter of this year reached $1.3 billion, a 31% increase compared to last year." He further noted, "Half of this occurred in March, when social distancing measures were implemented due to COVID-19."
Europe, where bicycle demand is even higher than in the U.S., has also seen a steep rise in demand curves after COVID-19. Halfords, the largest bicycle chain in the UK, reported that bicycle and related sales increased by 57% over 13 weeks until July 3 compared to the previous year. Japanese bicycle brand Asahi also reported a 43% increase in sales in June compared to the previous year, with foreign media noting that the situation is similar among global bicycle retailers. Bicycle demand has also significantly increased in China and Southeast Asia.
The reasons are varied. More people are using bicycles instead of public transportation for commuting, and since group facilities like gyms are unavailable, demand for outdoor exercise using bicycles has increased. The World Health Organization (WHO) has recommended walking and cycling as physical activities that can be maintained during telecommuting, which may reduce physical activity. In the early stages of the COVID-19 outbreak, demand for family-friendly bicycles such as children's bikes was high, but since June, the proportion of bicycles for hobbies, such as mountain bikes, has gradually increased.
Chad Brown, Chief Financial Officer (CFO) of global bicycle brand Trek, said in April that demand surged like a spaceship right after Easter week, and even after several months, demand for bicycles remains strong. He added, "We are shipping tens of thousands of bicycles every week," and "We are producing more bicycles."
This atmosphere has also helped bring the bicycle industry, which had been out of investors' focus, into the capital market. Related companies' stock prices have generally been on the rise. Giant's stock price fell to 116 Taiwan dollars (about 4,700 won) in March but rose to 327 Taiwan dollars (13,200 won) in July. It is currently moving around 300 Taiwan dollars. The stock price of Shimano, the world's largest bicycle parts manufacturer from Japan, has also surpassed 20,000 yen from 13,240 yen in March. Phoenix, the oldest bicycle manufacturer in China, saw its sales in the first half of this year increase by more than 50% compared to the same period last year.
At the beginning of the COVID-19 outbreak, the bicycle industry was not expected to benefit this much. On the contrary, factories had to stop operations due to lockdown measures in various countries. According to The New York Times (NYT), Giant was unable to operate its factory in China for about a month and a half when COVID-19 broke out there. After that, overseas orders began to increase from March, when social distancing measures and other restrictions on daily life started. Currently, Giant is operating all its factories, including those in China, Taiwan, and Hungary, at full capacity.
Despite the surge in demand, the outlook remains bright. There is optimism that consumers using bicycles will create new demand, such as for electric bicycles.
Governments around the world are also introducing policies related to bicycles as much as the demand for them. The UK government announced it will invest funds to double bicycle-only roads and pedestrian paths by 2025. Italy and France have decided to provide subsidies for bicycle purchases. France plans to expand bicycle parking spaces and build infrastructure to partially support bicycle repair costs.
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