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news
2022 Giant TCR Advanced 2.jpgGiant postpones payments to suppliers due to falling demand, rising inventory levels, and market “headwinds”
The news that Giant Group, the world’s largest bicycle manufacturer, has sought to postpone payments to its suppliers amidst concerns over falling demand and rising inventory levels has provoked consternation within the bike industry, though fellow Taiwanese brand Merida has insisted that its cash flow remains “normal”.
Just last month Giant reported that, despite challenges such as an increase in the cost of raw materials, logistics, and labour, as well as shortage in performance-level products, sales were up 14 percent in the first three quarters of 2022 compared with last year.
Addressing concerns that the demand for bicycles may have slowed since the Covid-19 pandemic, Giant admitted in November that “[market demand] has cooled down compared to the past two years”, but noted that the company “sees great potential for the cycling industry” as world governments prioritise environmental and health-focused policies.
> Giant sales up 14% compared to last year but shortage of high-end products remains
However, just over a month after that optimistic report, local media in Taiwan claimed that Yen Ching-hsin, the head of Giant’s global manufacturing centre, had sent a letter to suppliers asking for a 45-day payment extension. According to Focus Taiwan, the payment postponement will affect suppliers due to ship their products to Giant between December 2022 and March 2023.
In a subsequent statement, Giant – while noting that nondisclosure agreements prevented it from discussing the details of the letter sent to suppliers – said that as the global bike industry returns to normal following the lockdown-related boom of the past two years, demand for low-priced models has weakened, in turn causing an increase in inventory levels and leading to considerable supply chain issues.
“Due to the key markets currently entering into the winter slow season, inventory of entry-level bicycles has increased and its supply chain continues to face challenges,” a spokesperson for Giant said.
“Considering all the headwinds in the current market environment, Giant Group has decided to manage this challenging situation with our supply chain partners by mitigating risks and conducting a proactive inventory control, with the goal to return supply chain conditions back to normal over the next few months.”
The company also told Bike Europe that “this is the first time we requested our supply chain partners to assist us by extending their invoicing periods so that we can endure this off-season together.
“Inventory levels should return to normal during the first half of the next year. Many action plans are underway, but we can’t provide further details. We still believe the future of the cycling market continues to be bright.”
Despite the payment postponement, Giant maintains that the company’s operations and working capital remain normal, and have pointed to the sale of convertible bonds in June and the completion of a rights issue in late November – both of which raised a total of NT$6.75 billion (New Taiwan dollar) – as evidence of its continued strong financial position.
“After prioritised repayment of bank loans, Giant Group currently has ample cash and credit line with banks, and cash flows remain normal,” the company added.
When news of the delayed payments was leaked, Giant’s shares listed on the Taiwan Stock Exchange plunged by 8.04 percent (though the share value remains above pre-Covid levels).
Giant’s reliance on its suppliers to endure the often-turbulent off-season has certainly raised eyebrows within the bike industry, forcing some of the brand’s rivals to deny that they are facing similar problems this winter.
Speaking to Channel NewsAsia, an executive from Merida – another major Taiwanese manufacturer – claimed that low and mid-end bikes, the demand for which has plummeted in the post-pandemic landscape, only account for a small fraction of the company’s product portfolio.
According to the executive, Merida has not sought to delay payments to its suppliers.
> Canyon pauses shipments to UK customers, blaming Brexit uncertainty
Nevertheless, Giant certainly isn’t the only bike manufacturer to experience supply chain issues in recent weeks.
German brand Rose Bikes – who in 2020 said that it would no longer accept any orders from the UK – currently has 45,000 bikes in stock that cannot be assembled due to unreceived parts from China.
According to Rose Bikes’ director Thorsten Heckrath-Rose, the missing parts will be delivered in the next few months.
Last month Rose Bikes dropped the sale prices of its bicycles by 15 percent, presumably to allow sales to grow to pay for the increased stock, though the company said at the time that the drop was due to lower costs for raw materials and freight and a switch to more efficient production techniques.
After obtaining a PhD, lecturing, and hosting a history podcast at Queen’s University Belfast, Ryan joined road.cc in December 2021 and since then has kept the site’s readers and listeners informed and enthralled (well at least occasionally) on news, the live blog, and the road.cc Podcast. After boarding a wrong bus at the world championships and ruining a good pair of jeans at the cyclocross, he now serves as road.cc’s senior news writer. Before his foray into cycling journalism, he wallowed in the equally pitiless world of academia, where he wrote a book about Victorian politics and droned on about cycling and bikes to classes of bored students (while taking every chance he could get to talk about cycling in print or on the radio). He can be found riding his bike very slowly around the narrow, scenic country lanes of Co. Down.
Latest Comments
- slc 1 sec ago
There are tens of thousands of students attending university in every major UK city. Not all of them are young, many have to balance work, family,...
- stonojnr 9 min 11 sec ago
crazy that his own brief describes it as "his long suffering partner" also how come the two blokes he collected from the snooker club to assist in...
- stonojnr 17 min 19 sec ago
but in cases where you report other cyclists close passes, you literally are the witness to it, not the victim ?...
- S.E. 20 min 37 sec ago
1. It's obviously more aerodynamic, even a small backpack or hydration pack can help, there are studies about this....
- stonojnr 25 min 27 sec ago
theres an attitude I encounter alot locally, and demonstrated in bucket loads by drivers on my commute home tonight, that cyclists shouldnt be on...
- Keesvant 1 hour 44 min ago
If the chains snap that is lack of build quality or material.....
- Hirsute 2 hours 40 min ago
"Wisdom is better than weapons of war, but one sinner destroys much good."
- Jaijai 3 hours 5 min ago
His life was only worth shy of 7 years ,that's too lenient in every book .Let alone drugged up and leaving him to die
- webbierwrex 3 hours 10 min ago
I came here to basically write the same thing, the floating bus stop near me has a very narrow cycling lane between a very narrow pavement and a...
- AS52 3 hours 33 min ago
It wasn't an official consultation meeting - see my comment above.
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17 comments
Currently in the process of buying a Revolt Advanced so have been paying attention to stock levels across the range. They've got a '21/'22 model year sale on at the moment and seem to be drip-feeding bikes into specific dealers. For example, the bike I bought went out of stock for a few hours following purchase and then appeared again (same spec, same retailer) overnight. I've seen that repeated on a lot of other bikes, particularly at the 2/3 level which for the Defy and Revolt are priced under £2k. They're offering 0% finance on current year bikes over 2/3 years depending on price. That doesn't apply to sale bikes (12.9% APR I think).
If you buy online from Giant you have two options - direct ship from Giant's warehouse or shipping via retailer. Bike can be shipped to your home or local dealer. If you need to return you can return within 30 days to any Giant dealer if you've had home delivery (or post it back).
I've found the whole process to be quite smooth and very personal - I had to phone in to check some details and the guy immediately knew which bike I'd just ordered. That might just mean they're not selling many!
Hopefully NBD=tomorrow but wondering if the weather will put the kibosh on that.
As usual, it will be the smaller outfits that suffer most, not the big boys. Many suppliers will be entirely reliant on their relationship with Giant, and so any delay could tip them over the edge.
Hopefully the start of the bubble bursting. Cyclingbis wuickly turning into an unattainable rich man's sport. No way an entry level bike should be around £2k!
What are we classing as "entry level"? Tredz currently has the Giant Contend 2 at £659, aluminium frame with composite fork and Claris 2x8 drivetrain (Mrs H has Claris on one of her bikes, if there's a difference in smoothness between it and 105 I can't feel it), a perfectly good entry level ride (probably nicer than something that would have costs thousands fifteen years ago). If you're not bothered about a big brand name there are brilliant bikes available for even less, e.g. the Triban RC120, £450 for disc and a ridiculous £350 for rim brake. I've had a ride on a mate's RC120 disc and honestly, if I was told I had to exchange my full carbon Ultegra Di2 road bike for it I wouldn't be that disgruntled. Of course loads of bikes are overpriced, especially at the top end, but let's not put people off by saying that you need £2K for an "entry level" bike, you just don't.
The Claris RD is outstanding value and I can't discern any difference between it and 105 either..
Time to sit back until Easter then it'll be price cuts and 0% finance deals..... Service/Upgrades will still be the money maker....if you can get the spares...lol
who knew people wouldn't buy entry level bikes when they're priced at £2000? If only someone could have foreseen this..?..
you can try and keep increasing your revenue by increasing your prices but it's going to bite you in the ass
Elsewhere on this site today there's a glowing review of a near 10kg steel endurance bike with second tier SRAM groupset...for north of £5k.
Meanwhile Chinese manufacturers are using YT influencers to get similarly glowing reviews of lightweight carbon frames, aero wheels and homegrown groupsets - all in the £3k - £3.5k bracket.
Remember a time before JVC, Sony, Technics, Samsung became trusted brands in the West? Yeah, that.
I felt much the same reading that review. Sure, the frame is made in Italy. But the price is still absolutely insane. You can buy a brand new motorbike for that.
So when are these wonderful Chinese brands going to be stocked in bricks-and-mortar shops in the way those mainstream TV/audio brands were in the 1980s?
People still bought Amstrad stereos solely because they were cheap, even though they were rubbish.
And what mug trusts frigging YT influencers anyway? It's a very cheap form of advertising: "Pay me / give me and I'll say whatever you want".
If you don't like the Mason SLR then don't buy it (frameset is £2150, hardly a king's ransom) but would you say the same about expensive bikes from Giant, Specialized, Cannondale, Scott etc etc that are often sold with cheap rims and budget tyres? Or is the fact that they are ridden in the pro peloton (by 'influencers') therefore the silly RRPs can be justified?
They won't. Bricks & mortar bike shops in the format we know today and historically are on their way out. The future will be made up of LBS providing technician services, bikefits and consumables, and of those, only the ones offering good customer service will prevail. The big brands will sell direct to consumer, or deliver to LBS/brand partner for PDI/setup/fitting for a small margin, as indeed Canyon have done, and Giant & Specialized are starting to do. Smaller brands will either fold or go to sell-through model via Wiggle/CRC etc. The boutique brands such as Enigma, Mason, Van Nic, etc will continue to do what they do via niche marketing and a brand loyal customer base, using the service-only LBS to provide the setup & fit etc.
I feel very sorry for poor Giant.
They only made a net profit after tax of €187.94 million in 2021, nearly 20% up on the previous year.
I say as long as the banks and shareholders continue to get their money for the vital part they play in making bikes, screw the suppliers.
The bike industry is going through the most turbulent period in 30 Years.
The first half of 2023 will see bankruptcies amongst distributors and some brands will go.
There's a strong industry rumour that one supplier in particular has a LOT of bikes sitting at a port in the UK.
Sounds intriguing...
As long as those environmentally friendly bikes don't head to the crusher we should benefit
Definitely tight for dizzies and few of the 2nd tier retailers (i.e. not Wiggle/CRC). There's a monumental shakeup coming.
Thing is, it's not just bikes, I see it professionally in my work with other industries where there's been a post-COVID overshoot on ambitions and investment which has run into the buffers of rising inflation and interest rates. Venture capital is getting more costly because of that and that will mean company failures (why, hello, Peloton)
For example, I just had a look for a Revolt (Giant's gravel bike for those who don't follow the brand). Every single '23 model in most sizes is in stock. And that's for a gravel bike which marketers would have you believe is all that anyone is buying these days. Then again, the cheapest version costs £1300 which gets you an ally frame and Sora.