Live Daily Coverage From Taipei Cycle Show Nangang Exhibition Hall Heard

The Floor Issue Three March 19, 2010 Dahon By Any Other Name. No one knows when or where lightning will strike, but a 2008 recall of some defective Yang Presses for Labor Overhaul handlebar posts on its ubiq- Taiwanese manufacturers predict that ’s “one uitous folders sent a bolt of child” policy among other issues is driving Chinese inspiration into Dahon man- labor rates higher, forcing factory managers there to agement. A quick drop-in to develop new strategies to meet labor demands. check out the Dahon line had Ying-Ming Yang, chairman of the led to a rambling conversa- Exporters’ Association and president of Kenda, told tion about all things Dahon. members of Taiwan’s A-Team Thursday that labor And then Steve Boyd, direc- costs are on the rise. “There’s no doubt about it,” he tor of U.S. operations, casual- said. ly mentioned that the compa- Several factors are driving pay hikes, and among ny had changed its corporate them is a new generation of workers—many raised name. Huh? Henceforth, Da- as a single child—who want jobs near home and hon is known as Dahon who expect to enjoy a greater share in the country’s North America or DNA for economic growth. Workers are also more reluctant short. Clever, isn’t it. So what to travel thousands of miles to work at a low-wage prompted that? Boyd was factory job in coastal cities where the cost of living asked. Seems when the com- is high. pany issued its recall, a couple While the one-child policy has been in effect for of consumers—let’s think of decades, the global recession brought labor issues to them as retired and living in a . There is also new interest on the part of the Florida—called the Southern Chinese government to improve business conditions Photos by Nicole Formosa company to inform TBEA head and Kenda president Ying- in its interior provinces, in part to keep men at home them that they lived no where Ming Yang talks about labor shortages in with their families. As a result, the Chinese are build- near the Golden State and China at yesterday’s A-Team meeting. Continued on page 3 weren’t about to drive there to get their bikes fixed. Dahon’s 30-year-old corporate name Merida to Expand Taiwan Factory had been Dahon of California Merida, Taiwan’s No. 2 bike more middle to high-end pro- The company started 2010 on and they thought…well, you manufacturer and primary sup- duction back to Taiwan due to a positive note with sales up 26 get it. So now with the name plier to Specialized, will invest rising wages in Chi- percent in Janu- change consumers can get $3 million to expand capacity na combined with a ary, but revenue their DNA altered anywhere. at its Changhua factory, Merida labor shortage and in February fell 25 president Michael Tseng said environmental is- percent. A Tip of the Hat. Steve Cuo- on Thursday. sues. As of the end mo has been a roving fixture The company will build three “We feel we can of February, sales in the industry for years. And additional levels by the end of control all the pro- were off 5.43 -per he’s currently handling PR 2010. The expansion will boost duction much bet- cent compared to for any number of brands, production capacity by 15 per- ter than in China,” the same period including Dahon. So while cent, Tseng said, following the Tseng said. last year. Merida president chatting with Steve Boyd, Mr. annual A-team meeting of 22 Merida finished But, Tseng said Michael Tseng C popped in to join the gab- Taiwanese manufacturers. 2009 down 6 percent 2011 orders are fest. He was stoked and he was Merida also runs two facto- in Taiwan, with rev- stronger than 2010. Continued on page 3 ries in China, but aims to shift enue of about NT$11.5 billion. He’s hopeful that business will Continued on page 3 Answer BMX Lives Again Under New Owners Since Ryan Birk took over the “People are excited again ran Kuwahara in the U.S., but could have 15 percent owner- flagging Answer BMX brand about Answer,” he said. But it’s the Japanese brand pulled out ship in the company. last May, he’s had many of what been a long, often frustrating of the U.S. market after the up- But with the ink barely dry on he calls “pistol or bottle” mo- road to get there. dated Consumer Product Safety the deal, former U.S. distribu- ments. Birk spent more than a de- Commission law passed, due to tors, Asian suppliers and con- But he hit a low point last In- cade working for Sun Rims. concern over costly testing. sumers began calling looking terbike when a former customer At the same time, Answer was for repayment of bad debt from grabbed him as he walked on poised for major changes. In Answer’s time under Licata’s the Vegas strip and demanded 2004, then-owner Manitou split management. money owed to him by the up the Answer BMX and Moto After $125,000 in legal fees brand’s former owner. divisions with Joey Licata tak- and months of negotiating with “It was like buying a house ing ownership of Answer BMX angry customers, Birk was able you think is great then ripping under a licensing agreement. to use his industry relationships up the carpet and finding ter- When Hayes bought Manitou a to broker new distribution deals mites, rats, everything,” Birk couple years later, it offered Li- and supplier agreements. said. cata a chance to buy the brand. With product in place, he Birk, 36, and his wife Natar- But he missed the deadline due could finally start selling. Red- sha have invested their time, to financial troubles, and Luke line spec’d some parts on its money and sanity to rebuild Wilson, a BMX fan and Canadi- 2010 line and despite some ini- the 16-year-old BMX brand, an oil industry worker, stepped tial delivery problems, business and are finally making headway. in to buy the brand. has been picking up ever since. They debuted the brand with “He never wanted to be in- He’s working on marketing a booth here at Taipei Cycle Photo by Nicole Formosa volved in the day-to-day op- plans and new product and through their Taiwan agent, Ryan Birk erations. It was an investment,” hopes to soon hire a couple Source Solutions, and are pick- He left in late 2008 after new Birk said. employees. “After a long seven ing up new OE business. management at Hayes changed So Wilson called Birk, who months of problems, hiccups Birk aims to sell 7,000 to his position, which would have was at one time sponsored by and unforeseen disasters, we’re 10,000ACT taiwan of Answer’s ad hh.qxd signature 3/15/10 forced 12:35 him PM to leavePage his1 native Answer, and offered him the looking pretty good,” Birk said. carbon fiber forks. Indiana. At the time, Natarsha job. Birk said yes, so long as he —Nicole Formosa

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2 Bicycle Retailer & Industry News • Taipei Special www.bicycleretailer.com Labor Overhaul... Continued from page 1 Heard . . . Continued from page 1 ing new infrastructure to attract well run, ethical manufacturers. factory investment. “We obey the labor and tax going to tell us why. The April REI’s brand manager, But the Chinese government laws and that doesn’t seem to af- issue of Men’s Health had just to set up a meeting at the fifth is also fostering labor-rate un- fect us too much,” he said. “But hit the newsstand and Dahon’s floor Press Center in Nangang certainty, Yang said, by making new laws and greater scrutiny Ios XL had gotten some very Exhibition Hall. No particular decisions on minimum wage will affect those who don’t play positive ink in the magazine. As issue spurred the meeting, just rates, benefits and pensions with by the rules.” the folks who pedal PR would a chance to catch up and chat little warning, surprising factory Still, Chinese manufacturing is say, “You can’t pay for that kind about the industry, sales, the of editorial.” (Well you can; it’s future—you know, the regular called bribery and, frankly it’s stuff. Soon, in walked Markus frowned upon.) Nonetheless, Fritsch, ’s expert on Steve was eager to show off his all issues affecting suppliers and editorial coup ’cause buying retailers. Markus and his part- an ad in Men’s Health requires ner run a well-received Web knowledge of hedge funds and site that folks in Germany actu- CDOs. But I digress. A quick ally pay to read everyday. (Now walk over to one of his other cli- there’s a novel concept—paying ents, where he had stashed the for news.) At any rate, intro- issue, prompted him to pull out ductions were made: Steve this his editorial “gotcha” binder. is Markus; Markus this is Steve. Not bad: Most of the bike mags Once the formalities were over, were in there along with titles Markus asked if REI still had a that included MacWorld, Popu- consumer-friendly policy on

Photo by Nicole Formosa lar Science, Popular Mechanics returns. Seems Markus had SRAM chief executive officer Stan Day addresses the state of and other assorted print flavors. bought a pair of pants some the European bicycle market during the A-Team meeting. Nice work, Steve. time ago at an REI while on a visit to the U.S. and could he management. Business hates un- tightly tied to the bicycle indus- Pressing Flesh in the Press still return them? They just certainty, he said. “I worry that try and companies will need to Room. It took a couple of text didn’t fit properly. Without the situation could get worse,” respond quickly to remain com- messages between a BRAIN batting an eye, Gluckman said he added. petitive, Yang said. He urged A- reporter and Steve Gluckman, bring ’em in. For example, one province Team members, many of whom announced last week that mini- also have factories in China, to mum wages would go up 28 improve their work environ- percent effective April 1. It later ment, increase factory efficiency Merida to Expand... made the date retroactive to and build a strong brand image Continued from page 1 March 1. in China to better penetrate the turn around, particularly based think consumers in the U.S. Still, OE pricing has remained local market. on reports from Specialized and are in a different relatively steady and consumers SRAM’s Stan Day, however, and SRAM. place than they were at the start have yet to feel any upward price said Taiwanese companies Stan Day, chief executive of- of the season,” Day said, speak- pressure from Chinese goods. should remain focused on their ficer of SRAM, fresh off a trip ing at Thursday’s A-team meet- The question, Yang said, is how operations in Taiwan. SRAM, like to visit European dealers, said ing. long can manufacturers absorb other companies, has invested optimism there is strong and SRAM is up 40 percent for cost increases? heavily over the years in Taiwan he left with a sense that deal- the quarter ending in March, Kenda has moved some pro- manufacturing. China’s low-cost ers have become more profes- but because SRAM does 80 duction back to Taiwan from labor can be offset by more effi- sional. percent of its business with its Chinese operation as the pay cient factory production, better He said that sales are trend- OEMs, the numbers are not so gap tightens between Taiwan and training and pay which leads to ing away from the mass market impressive since performance Chinese workers, Yang said. At lower staff turnover. toward specialty dealers, all of was so poor during the same its Chinese operations Kenda And no matter how the Tai- which bodes well for the indus- quarter in 2009, Day said. has bumped up salaries and now wanese manage their Chinese try. That increase puts SRAM pays for food at the dormitories it factories, everyone faces the But, he said the biggest wild about even with where it was at operates to house workers. risk posed by currency re-evalu- card would be spring weather. the same point in 2008, he add- Dr. David Hon, president of ations. “Currency will go up and “It’s not the economy. It’s re- ed. “I consider that to be a good Dahon, said the current situa- it will be a surprise,” Day said. ally going to be if we can get accomplishment at this point,” tion is “quite manageable” for —Marc Sani some sunshine because I really Day said. —Nicole Formosa

3 Bicycle Retailer & Industry News • Taipei Special www.bicycleretailer.com ShotsShots FromFrom thethe SecondSecond DayDay Photos by Nicole Formosa

Lobster Stare Down: Eat- ing in Taiwan can be such Welcome to the A-Team: a treat. Sometimes your Jagwire’s Jerry Huang food even stares back at (left) chats with Hayes’ GM you, like this lobster. Kendrew Sua, director of business development Sean McNally and VP Darren Campbell. Hayes and JD Ramp It Up: BMX Components joined the A- riders put on a show Team in 2009. outside the Nangang Exhibition Hall. Rockin’ Out: A live band played tunes atop the Tai- pei 101 tower where Kind Shock hosted a traditional Tawainese meal featuring South African abalone and boiled shark fin soup.

Industry Powwow: A group from Bikes Belong, TBEA and the BPSA gather for an advocacy and sustainability meeting.

Send your Taipei Cycle Show news to: Taipei Cycle Show Marc Sani, Publisher Nicole Formosa, Staff Reporter [email protected] [email protected] +1.949.322.8392