‘100% Made in China’ Bicycle Industry Supply Shortage Prolonged

Production and Supply Disruptions Continue Due to Soaring Global Demand from COVID-19
High Dependence on Local Firms with All Production in China

Due to the recent shortage of ships and the surge in maritime freight rates, the supply difficulties of domestic bicycle companies, whose entire production is based in China, are becoming prolonged. The photo shows bicycles being produced on a manufacturing line at a factory within the Tianjin Bicycle Industrial Park in China.

[Asia Economy Reporter Kim Heeyoon] Recently, due to a shortage of ships and a sharp rise in maritime freight rates, the supply difficulties of domestic bicycle companies, whose entire production is based in China, have been prolonged. According to the bicycle industry, Alton Sports, which owns its own factory in the Tianjin Bicycle Industrial Park in China, has seen a noticeable decrease in production volume compared to previous years.

Additionally, with rising raw material prices and a surge in bicycle demand from the US and Europe, securing bicycle quantities produced in China is becoming increasingly difficult, intensifying the supply shortage centered around local Original Equipment Manufacturer (OEM) companies. Domestic bicycle companies moved their production bases to China early on to secure price competitiveness, and currently, all bicycles distributed domestically are produced locally. As a result, the supply and procurement of bicycles by domestic companies are determined by the situation in China, accelerating dependency.

The situation is even more difficult for small and medium-sized bicycle companies that outsource manufacturing to local Chinese OEMs. A representative from a small bicycle company, Company A, said, "Since last year, due to the impact of COVID-19, global bicycle demand has surged, causing a large portion of production in China to be shipped to the US, Europe, and other regions. Local manufacturers notify us that it is difficult to meet order volumes, and even the quantities we barely secure cannot be brought into the country due to a shortage of ships, putting us in a difficult position."

As a result, when searching for popular bicycle models on online shopping malls, most are confirmed to be out of stock. Offline dealerships also respond to product availability inquiries with answers like "You will have to wait several months to receive the product."

Securing quantities due to the surge in demand is problematic, but rising maritime freight rates are making domestic transportation increasingly difficult. Even if companies manage to handle the quantities, they face double hardships as they must pay freight rates that have nearly quadrupled just to bring products into the country.

According to market research firm Counterpoint Research, the global electric bicycle market size is expected to grow from 17 million units in 2020 to 33.5 million units in 2025, with an average annual growth rate of 42%. Riding the wave of market prosperity due to increased demand, Samchuly Bicycle recorded sales of 120.8 billion KRW last year, showing a 38% growth compared to the previous year, and Alton Sports also succeeded in returning to profitability after six years, escaping from the management watchlist. However, despite the long-awaited boom, supply issues are holding back bicycle companies, deepening their concerns.