A November 24 article from The Economist reported that “Multinational firms are finding it hard to let go of China.” The subhead asked “Should companies divest, decouple – or double-down?”

It is no surprise that companies and brands that have sourced their global supply chains in China for decades, and more recently selling their products to the emerging Chinese consumers, are having difficulty moving away from China as the geopolitical situation makes it harder to continue to stay there. But what does this have to do with the American bicycle supply chain?

Forty-years ago Sears was the largest retailer of bicycles in the U.S. I ran into their bicycle buyer at a restaurant in Shanghai in 1984. Over the next 10 years every retailer and brand associated with the American bicycle supply chain established sourcing in China.

Giant manufactured for Trek. Giant established bike shops in China. Giant, we understand, helped Trek establish bike shops in China as well. Merida manufactured for Specialized and, we understand, also helped Specialized establish bike shops in China.

Over the next the next three decades all three, Giant, Trek and Specialized, became billion-dollar companies with world-wide distribution including China. This also means all three are multinational.

We can only speculate about the dollar volume of the business the two American brand companies are doing annually in China. Assuming it is appreciable, we are also assuming they, along with publicly-traded Giant, find themselves in the same situation as The Economist describes, finding it hard to let go of China for several reasons, including sourcing from a well-established supply chain, in addition to the revenue from doing business with Chinese consumers.

The bicycle business isn’t high-tech, but from the U.S. bicycle business standpoint, it has been dependent on the combination of Taiwanese and Chinese manufacturing, engineering and supply chain expertise for three decades. American bicycle and e-bike brands can design and engineer products, but they rely on Original Equipment Manufacturers (OEMs) for manufacturing, engineering and expertise. Leaving China means figuring out how to maintain the level of quality manufacturing that is available from Chinese OEM sourcing.

Part of the equation is that the majority of Chinese exporters to the U.S. market, including Giant and Merida, are owned or controlled by Taiwanese companies.

The American bicycle business, including the supply chain, grew-up with this conundrum and learned to live with it pre-Covid and pre-pandemic, and before the geopolitical situation grew into the current situation where multinationals, including the leading brands in the American bicycle business, have to decide to “divest, decouple – or double-down” relative to business in and with China.

Contact Jay Townley: jay@jayhumanpoweredsolutions.com