In 2022, the world’s biggest bicycle brand Giant broke records for both quarterly revenue and profit. This is the first major victory for Chairperson Bonnie Tu (杜綉珍) and CEO Young Liu (劉湧昌), both of whom officially assumed their mantles in 2017.

Giant turned 50 this year. Tu and Liu, who are cousins, held a conference with senior managers at Sun Moon Lake. The topic under discussion: Giant’s future development strategies. The focus of the meeting was less on how to increase revenue and profit, and more on a joint decision presented by the two leaders: Giant is going to throw its entire weight behind carbon reduction.

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Tu and Liu have joined forces with another bicycle giant—Merida Bikes, led by its second-generation leader Michael Tseng (曾崧柱). They are reproducing the “A-Team” effect created by their predecessors.

At the time, the two original founders—Giant founder King Liu (劉金標) and Merida founder Ike Tseng (曾鼎煌)—helped each other succeed. They introduced the “Toyota Management System” to Taiwanese parts manufacturers and advanced the entire cluster. Due to this, the customized manufacturing capability that created these high-value bicycles was kept within Taiwan.

Now, the new generation of leaders is building the Bicycle Alliance for Sustainability, or BAS. Members of the BAS include Trek, the biggest bicycle brand in North America;, as well as 34 other providers from up and down the supply chain, who produce screws, bicycle seats, and tires. Together, BAS is giving carbon reduction all it has.

Reducing carbon emissions during manufacturing would be the next goal for Giant (Source: Pei-Yin Hsieh)

Why is Giant putting the call out to partners big and small to reduce carbon emissions?

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One reason is because the European Union, which makes up 44% of the market for Taiwanese bicycles, has made it clear that carbon reduction is the way forward.

Last year, the EU announced the Carbon Border Adjustment Mechanism, or CBAM. Beginning in 2027, the import of materials such as concrete and steel will be taxed. Bicycles are farther down the line but will become taxable in 2036.

Parts manufacturers make up 80% of Giant’s carbon emissions. They will be the key to reducing the carbon footprint.

“This topic goes beyond individual companies and industries. We are all in the same boat,” says Merida Senior Vice President and Spokesman William Jeng (鄭文祥) about the importance of BAS.

In the beginning, the original A-Team was about nurturing high-value products and keeping the roots in Taiwan, so the number of members was smaller. But carbon reduction is a team effort that calls for dedication from all the parts manufacturers, including screws and tires. The entire supply chain must move forward as one.

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Chia-wei Hsu (許家偉), CEO of the Corporate Sustainability Impact Center at Tunghai University, points out that, besides the new EU rules, Giant is also facing tremendous pressure from its customers and competitors to reduce its emissions. 

Orders from the bicycle brand Trek make up 18% of Giant’s overall revenue. Last year, Trek disclosed the carbon emissions of 40 of its products in a sustainability report. The report went so far as to reveal the carbon footprint of more than 20 parts of the bicycle. Trek’s goal is to help consumers understand how much carbon is emitted to manufacture a bicycle.

Even though the Trek report stopped short of specifically asking its providers to cut down on carbon emissions, the message to the supply chain was clear. Taiwan’s position in the international bicycle industry meant that it needed to get in on the action sooner rather than later.

Giant is the number one bicycle company in the world in terms of revenue. Because of this, both Tu and Liu feel a sense of purpose in transforming the Taiwanese supply chain to help reduce emissions.

Within BAS, in addition to big names like Giant and Merida, which rank among the world’s top ten bicycle brands and also do outsourcing for major European and American brands, there are also corporations like KMC, which is the world’s biggest provider of chains; and Velo Enterprise, the world’s biggest provider of bicycle saddles. There are also more than 800 players in the bicycle supply chain, hailing from Taichung, Changhua, and Tainan.

Taiwan is one of the few places in the world where there exists such a complete cluster of companies, from brand to research and development to manufacturing. It may be said that the global bicycle market could not make do without Taiwan.

“What we decide to do next will shape the future of bicycles everywhere,” says Tu. On the world stage, Taiwan is irreplaceable in terms of the research and development and the manufacturing of bicycles. Therefore, any effort toward sustainability needs to start from Taiwan. Tu also stresses, “Some people are afraid of the so-called ‘Red Supply Chain’, while others are afraid that we will be replaced by third world countries. But if we put our effort in this direction, our competitiveness will be unmatched.”

In order to be the first to cut down emissions, Giant needs to set a reduction goal for the entire supply chain. In the future, it plans to use BAS to set concrete courses of action that will help the alliance go green.

“We hope that before 2030, we will be able to reduce the carbon footprint of bicycles by 25%,” says Liu. If the average footprint of a bicycle is 160 kilograms, that equals a reduction of 40 kilograms. This must be done without compromising the safety and quality of the product.

Giant worked with Taiwan’s Industrial Technology Research Institute (ITRI) and its Material and Chemical Research Laboratories (MCL) to inject new materials and engineering know-how into the production process. For example, the aluminum alloy used in the frame may be reused, carbon fibers may be recycled, the finishing process of metal parts can be more efficient, and the percentage of reclaimed materials in tires can be increased. These four methods go a long way toward turning revolutionary tech into reality and building a solid foundation for carbon reduction.

“Suppliers get pretty excited when we tell them about our ideas,” says Liu. Carbon reduction starts at the drawing board. The rule of thumb is “do less for more”.

Giant played a leading role in the blobal bicycle industry (Source: Pei-Yin Hsieh)

For example, the finishing process of the aluminum alloy frames involves many layers of paint, like a person applying makeup. One film serves as 

the foundation to help the paint bond with the metal. A second coat is then added to fix any miniscule imperfections in the frame. Only then can the final coat of paint and oils be applied to give the frame color.

The new materials developed by ITRI may be used as both the film and the second layer of paint. In other words, one step of the finishing process is removed. The aluminum alloy maintains the same quality, but carbon emissions are decreased by 30%.

As for the carbon fiber material used in high-end bicycles, Liu says: “Many people ask how we will recycle carbon fiber in the future. We could not come up with an answer.”

This is because the carbon fiber material is actually a composite made from carbon fiber and resin. Reclaimed carbon fiber loses its strength and cannot be used to make new bicycles.

ITRI is working with Giant to develop a new way of sorting carbon fiber material so that reclaimed carbon fiber will not lose any of its original durability.

H. S. Chu (朱旭山), deputy director of the research team at ITRI’s MCL, is the lead on the collaborative project with Giant. He says four different materials and technologies have already been successfully tested in laboratories. The next step is mass production. The target is to run trials on producing three of the materials starting next year.

In the meantime, Giant’s annual revenue is growing steadily. Experts say it will soon hit the NT$100 billion milestone.

But the fact of the matter is, Tu and Liu faced a crisis of plummeting revenue the moment they were handed the baton.

In 2017—the first year the duo assumed leadership—Giant was rocked by the wave of ride-sharing services that swept through the Chinese market. Annual revenue fell to NT$55.2 billion, and profits fell to the lowest since 2008. Before this, China used to be Giant’s largest market, contributing nearly 30% of total revenue.

In 2014, China’s first ride-sharing service was established. Giant’s revenue in the Chinese market began a four-year slide. “After becoming CEO, I discovered the effect that ride-sharing services had on our business. It’s difficult to expect that the Chinese market would bounce back,” says Liu.

Because of this, Giant shifted its focus to the European market, where it has always had an advantage. For six years, Giant worked with Japan’s Yamaha to develop an electric motor system that would solve the problem of electric bicycle batteries being too cumbersome. In 2018, they produced the electric bicycle E-bike, with batteries small enough to fit inside the frame.

The ratio changes of Giant's revenue in Europe(red) and China(grey) (Source: Commonwealth Magazine)

In addition, the E-bike went from being used by senior citizens to knocking on the door of the high-end market, which covers mountain bikes and road bikes. It quickly became one of the more popular products on the market.

In 2018, Giant invested NT$2.2 billion to set up its European logistics center in the Netherlands and a factory in Hungary. Its aim was to shorten the supply chain to Europe. “The profit from selling a single E-bike in Europe is three times that of a traditional bicycle,” says Liu.

In the midst of the global pandemic, American consumers are also growing more receptive to electric mountain bikes. In the last five years, the European and American markets have grown by 43% and 30%, respectively. In the Chinese market, Giant’s Suzhou-based subsidiary Giant Alloy has also made great strides. Its light alloy has made its way into the production lines of other bicycle brands, motor vehicles, and even the railway industry. Five years ago, its revenue was less than NT$1 billion. By last year, it had grown to NT$7.8 billion. 

In the first three quarters of this year, Giant’s revenue has already reached NT$70.8 billion. It is not far from the goal of 100 billion.

As for the future, Tu and Liu have an even greater challenge ahead of them. They want Giant to become an enterprise that “engages in dialogue with consumers”. For example, during the pandemic, Giant noted the new demand for indoor cycling. It founded AIPS Technology Co. to create products for indoor cycling, such as a software and hardware-integrated smart training platform.

Giant launched intelligent training bicycles on the indoor riding trends (Source: Pei-Yin Hsieh)

“We are working on making both indoor and outdoor cycling more enjoyable,” says Tu. This July, she used the training platform together with augmented reality to complete two indoor “field exercises” that enabled her to experience “Tour de France Femmes avec Zwift ProAm”, which featured a route that was 66 kilometers in length.

AIPS Technology has only been established for a little more than a year. Last year, it made NT$1.5 billion in revenue and 60 million in profits.

It’s much harder to innovate than to just sit on your laurels. Carbon reduction and sustainability are the future. Giant is taking the lead and boldly going in a new direction to face important new challenges.

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Translated by   Jack Chou
Edited by TC Lin
Uploaded by Ian Huang