The Business-to-Business functions of the internet offer potentially crucial benefits to the bicycle industry, industry specialist Jay Townley emphasized in a seminar for Taiwan bicycle manufacturers on May 10 in Taichung.

By improving communication between manufacturers and their component suppliers, as well as between manufacturers and distributors, "B2B is the surest way to more profits," said Townley. "If B2B is employed properly, inventories will be a thing of the past." The greater efficiencies that can be achieved will markedly reduce the cost of doing business.

Townley, a long-time Schwinn executive who is now executive director of The Bicycle Council and also heads his own consulting company, had kind words for the indispensable place of Taiwan suppliers in the global bicycle market. "Taiwan clearly is the focal point and center of the global bicycle industry," he said. "Because of what you are doing in Taiwan itself as well as in mainland China and Vietnam, you're the heart of this industry. We cannot get along without you."

The seminar, entitled "Strategic Situation Analysis of the Global Bicycle Industry," was co-sponsored by Trade Winds Inc. and the Taiwan Bicycle Exporters Association. The presentation covered the following topics:

• Demographic Trends. The aging of the population in the developed countries will, by mid-century, create an unprecedented population structure in which the elderly outnumber the young. However, a new generation of bicycle-riding youngsters is emerging in the form of "Eco-boomers," the children of the Baby Boomers.
  
  
• The industry in Asia. Taiwan and the strong bicycle industry developed in China as a result of Taiwanese investment and management remain the pillars of the global industry. The April 2000 Taipei Cycle Show confirmed the Taiwan manufacturers' flexibility and ability to continuously reposition themselves. But the Taiwan industry needs to start doing its own market research and strategic planning instead of leaving those functions to its customers.

For Taiwan, offshore investment is necessary to lower costs and overcome manpower constraints at home. Because of political tensions with China and anti-dumping duties in the EU against bicycles made in China, Taiwan investment is now moving to Vietnam. The anti-dumping issue is not likely to disappear.

In the large Japanese import market, which relies on imports for 50% of consumption, alliances between domestic and Taiwan companies - Bridgestone with Merida, National Panasonic with Giant - are becoming important means of doing business.

Indian manufacturers are making gains in selling to South America. But unless a bonded factory or industrial zone system is adopted, India will be unable to become a major factor in the international industry.

• Product category trends. No one category will take the place of the mountain bike as the hot product. Instead, the market is being divided into niches and segments. Although mountain bike sales are declining overall, they are still growing for high-end and full suspension models. The Comfort category, though ill-defined, is now estimated to account for 20% of component sales. For recumbents, the trend is slow, steady acceptance and growth. The Juvenile/Youth category is seeing renewed growth after years of stagnation, but unit prices are falling.
  
  The areas of biggest potential appear to be the folding and electric bike sectors, due to problems of urban traffic congestion. Sales are receiving a boost from the interest of the auto industry in promoting cycles as a solution to motorists' short-distance mobility needs.
  
  
• Component development. The focus is on electronic components to help provide ease of use and operation, comfort, and overall component integration.
  
  
• Distribution trends. The internet's importance cannot be overestimated, but there has been too much focus on retail E-commerce. The "pure plays" - retail businesses operating only on the internet - are in trouble. The biggest advantages are held by "clicks and mortar" operations that combine the traditional business model with the internet. Bicycle dealers can be a vital link in this new distribution chain.
  
  B2B will play a more significant role than e-tailing. As electronic connections reduce lead times and shorten supply lines, the total cost of doing business could fall by as much as 12%.

See Jay Townley's June 2000 column on this website for further details.

(back to top)