The Inside Line –

It takes a steady hand to apply decals to frames. made in Taiwan. The sign somewhat irritated Tseng, who The Inside Line – was involved in OEM manufacturing of aluminium parts for the motorcycle industry, so he decided to do something about this perceived lack of Taiwanese quality and went into business in 1972 making bikes for the US OEM market under the Merida Industry Co brand name. In 1988 Tseng took the bold decision to produce and market bikes under his own Merida brand. Testing the water with Scan- dinavia and mountain bikes, the company then spread slowly throughout Europe and China and is now expanding even more into Merida Australia and many other areas of the world Words and photos by Steve Thomas (but not in North America due to historical ack in the early 70s there was OEM client courtesy). a huge shift of direction within Merida has also acquired healthy stakes the bike manufacturing industry, in other bike brands around the world – namely the arrival of Taiwan as a with Specialized being the most notable. It’s only been during the past major and emerging force within Moving into the rapidly expanding high- Bthe bike-building world. end road bike market is something they are couple of years that Merida Production costs in the established US and heavily committed to. We dropped in to European factories had risen considerably, their Yuanlin HQ in Taiwan and spoke to has become a force to be and the Japanese bike building plants were VP William Jeng about all things Merida. rapidly starting to price themselves out of reckoned with in the road the game too. Taiwan was already heav- BA: What does the name Merida actually ily involved in OEM (original equipment mean? bike market, yet they just manufacturing) production for numerous WJ: Merida is a combination of three Japanese motorcycle, electronics and other Chinese characters; Me means beauty, Ri celebrated their 25th year industries, so stepping into the bike market has two meanings – convenience or prot, was an easy and natural step. and Da means arrival. So, Merida means producing bikes under their In 1971 Giant rst went into the bike that we are a company that can help you business and the rest, as they say, is history. reach where you are going, or reach the own name. Steve Thomas Giant went from manufacturing OEM for prot that you are aiming at. numerous major bike brands around the The pronunciation also made it easier to drops in on them to see what world to eventually braving the market in place the brand in the international market their own right and becoming one of the – as it worked in many languages and didn’t they’re all about. biggest bike brands in the world. It also sound Chinese. helped to put Taiwan at the forefront of the It was also a kind of statement and wish bike-building world. from the founder of the company to his Running almost parallel to Giant in many stakeholders. ways was their near geographical neighbour BA: Why did the company go into the Merida. Whilst visiting the USA, Ike Tseng bike business? came across a small bike shop with a sign WJ: Customers (OEM) always seemed to which stated a refusal to service any bikes be coming back for lower and lower prices, 60 Bicycling Australia March • April 2014 often months after agreements were made – and there just wasn’t room to make quality products any cheaper. The founder (Mr Tseng) saw that there was no real future in this and that the only way to be protable was to go into the market directly (eventually). His business was in aluminium and welding technology so it wasn’t big deal to move into bicycles. There was also a lot of opportunity at that time because the Japanese Yen was very strong and it was becoming expensive to produce bicycles there, which is why the industry moved to Taiwan in the early 1970s – so he took the opportunity. BA: Who were your rst major OEM clients? WJ: Initially we focused very much on Ra- leigh (who were a very strong brand at that time), making complete bikes for their global Merida staff cooperate at this brazing station. market, while Giant focused on Schwinn. It was the rst time that Raleigh had out- sourced manufacturing to another country, so we started with a few models, but we also sold Raleigh in Taiwan so actually im- ported high-end bikes from them too. Step by step we started producing higher end ogy and design of bikes, but we didn’t ond not to encroach on their sales territory bikes for them, which is the nature of OEM. really know about what the consumer – we stayed low-key. In some areas we did BA: In the early days of Taiwanese bike demanded, as we were a long way from regional advertising, but not internationally, manufacturing where did the expertise the marketplace, and we had no way to so they realised that we were not threaten- come from? reach the end user – we’d been building ing them. WJ: For us, most of that came from bikes inside our own ivory tower. BA: Did you lose a lot of OEM business Japan, as manufacturing shifted here people For long-term growth we knew that we by this? came with their expertise. We also had to needed to sell direct and nd this link, so we WJ: Not really, not by going direct. We buy a lot of Japanese technology – for weld- decided to have our own adventure. actually lost one of our big buyers in the ing and painting etc, so they had to come to We set about things in a very conserva- early 90s, but we were already a long way teach us. tive way, in Scandinavia. These are small down the line with our own brand by then. We also had people from Raleigh, but that countries and far from everything, and most That loss came about because of an histori- was more for technical checking. American manufacturers don’t really care cal con!ict between two major bike brands BA: How did you set about producing too much about them, so we started there in the US, one of which had just been taken and marketing your own brand bikes with- and step by step came down to Germany over by a rival company; they thought there out upsetting the OEM apple cart? and so on, it took a long time. would be a con!ict of interests as we were WJ: We started making Merida brand Two things we made sure of; rst to use making bikes for both, plus the new owners bikes for export in 1988. Since starting our own technology in development and not of the brand. out in 1972 we’d learned about technol- to copy from them (OEM clients), and sec- BA: Your own brand adventure started Frame builders work secure a frame into a table jig. • www.bicyclingaustralia.com.au 61 around the same time as Giant’s did – how developed with your OEM clients? the global market, around 1.6 million did you get over the perceived lack of Tai- WJ: It seems to be all right; as I think we worldwide. About 30-40,000 of those are wanese quality in the west? are very different. For people who want to sold in Australia. WJ: The company founder was well buy a Porsche they would not want to look In this factory (Taiwan) we make around aware of this image from the start, and so much at a Toyota, and Merida happens 900,000. In Shenzhen (China) we produce very clearly positioned Merida as a mid- to to be that Toyota; we are about cost-ef- around 700,000 (50% for export), and high-end producer. We were also not a huge ciency – reliable and affordable. 700,000 in a factory in the north of China manufacturer like Giant, who have around Some of our partner brands are out there – these are mostly for the domestic Chinese twice our capacity; our facility is restricted like BMW and Porsche, whereas we are market. We have a new factory under con- and mostly our customers are quality Toyota. They are competing with others, but struction near Shanghai, which will produce branded names, so we had the quality set up we are competing with less exclusive, less around 300,000 bikes – mostly for the all along. niche brands. I think with careful brand po- domestic market. It was a wish and statement of the sitioning that we all do better and compli- BA: You also have a facility in Germany, founder that we were to be a quality brand. ment each other – I’m not saying that there what is that for? But he knew that it would be a long and has not been con!ict, especially in the early WJ: It’s a storage facility for our German hard task, but we stuck to that philosophy days, but that has to be managed. company (Merida Europe) and also an as- – even though it meant turning away some By working together we can all get more, sembly line for Merida and Centurion brand brands. We knew that if we went lower which we are learning year by year. It’s very electric bikes. end that the same would happen as it did important to keep our manufacturing tech- Many of our concepts and designs also with Japan, and by the early 90s the factory nologies separate too.

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