Shadow optic: the manufacturing partner paradox

Who really makes your bike? It is a simple enough question. Country of origin has traditionally been a touchy subject for brands that rely on Asia-based ‘manufacturing partners’, let alone revealing who the partners are. Discovering the factory behind the brand is a stubbornly topical pastime amongst bicycle consumers. What’s all the fuss about?

Or, perhaps the first question should be “who cares?” After all, does it really matter where a bicycle is made if it meets a consumer’s definition of value? Why are cyclists – myself included – so fascinated about who stuck the tubes together?

Perhaps it’s because our favourite brands continue to beguile us with origin-based hyperbole, long after migrating to an environment bearing little resemblance to the brand story. After all, what do “heritage” and “prestige” have to do with a factory in China? It’s the question – and image – that shadows every bicycle brand with a hidden-from-public-view manufacturing presence in Asia.

As explained in the ‘vertical limit’ series, bicycle manufacturers can be split into three major categories – Original Brand Manufacturer (OBM), Original Design Manufacturer (ODM) or Original Equipment Manufacturer (OEM). OEM factories produce most of the brands that we see in the Tour de France, and it has been this way for many years. Here’s a condensed (following three-paragraphs) recap:

Original Equipment Manufacturers (OEM’s) are responsible for taking a bicycle brand’s unique design and fabricating it into a finished product. Depending on the client’s requirements, “finished product” can mean different things. It could be:

–        tubesets
–        a raw, unpainted, frame
–        a commercially-ready frameset, boxed in after-market packaging
–        a commercially-ready complete bicycle, boxed in after-market packaging

Relationships between bicycle brands and Taiwanese OEM’s began flourishing in the 1990’s, catalysed by Giant Manufacturing Co Ltd’s capitalistic push into westernized regions not previously troubled by yawning gaps in market price settings. A factory that branded and sold its own product was not a new idea, but the sheer scale of Giant’s operations gave it significant competitive advantage against its much smaller peers.

On the consumption side, emotional connection, status projection, exclusivity, ideals and brand loyalty – to name a few factors – would always prevent Giant’s homogenization of any given market. Naturally, smaller brands (with production in the tens of thousands of units or less) grew curious about the possibility of tapping into scaled-up manufacturing processes – such as Giants – in order to reduce their costs whilst improving upon their hallowed place at an end of the market not regarded as primarily price-influenced.

Today, the outcome of that curiosity is plain to see. Well-known bicycle brands are now effectively sales and marketing departments, with varying degrees of in-house R+D capabilities. Swift progression towards information symmetry – the state whereby a consumer has equal information about a given product – is dissolving brand stories into product-based arguments. Often, the purchase of a high-end bicycle centers around discussion as sophisticated as a pre-school sandpit fight.

And fair enough. Look at what’s happening at the top of the supply chain. Pursuit of all-important market share has distilled consumer feedback into a basic output axiom: create the perception of quality at the lowest possible price. The brands created this mess.

Pushback against road bicycles of Far East origin softened many years ago. Broadly speaking, consumers of high-end road bicycles now accept that the finish quality of Taiwanese-made road bicycles is of the same, or better, standard than the Italian- or US-made products previously accepted as qualitative benchmarks. However, the same consumers generally don’t accept bicycles of Taiwanese or Chinese origin should cost as much as their European or US-made counterparts. Isn’t this simply bigotry?

When Colnago made the decision to partner with Giant Manufacturing in 2005, it was precedent setting. Today, the company produces two-thirds of its annual production (15,000 framesets) in Asia and the rest in Italy – based on value-added origin. Long-term fans of Colnago knew instinctively that a ‘Made in Taiwan’ or ‘Made in China’ sticker could debase “their” hallowed Italian brand. However, Colnago remains a sought after brand which still attracts a premium price. Could this possibly be attributed to Colnago’s openness and modest ambitions, relative to industry peers?

Perhaps if bicycle brands were to focus on the competencies of their manufacturing partners, they could simultaneously regain the trust of their customers and showcase the qualitative aspects that are hidden behind a veil of secrecy; but which make their products valuable to consumers. Could it work?

Cycling iQ contacted– in all cases, by actually picking up a phone; as opposed to “contacted” in the asynchronous Gen Y sense – the communications departments of Specialized, Pinarello, Scott, Felt and Kona with the view to discuss the above proposition. No voice messages or emails were returned.

Interestingly, the 9am to 5pm, Monday to Friday, availability of the above brands was embarrassed by the 24/7 efficiency of their respective OEM’s in China, Taiwan and Cambodia. All were happy to discuss their relationships, but only to a point. What was their view? [Note: where requested, I’ve chosen to keep the identity of individuals private, out of respect for their trust in me and to guarantee a continued dialogue in future].

ADK Technology (with operations in Taichung, Taiwan and Guangdong province, China), was one of the first factories contacted. ‘ADK’ is an OEM to Felt Bicycles, CSG Group (parent of Cannondale and GT, amongst others), Advanced Sports International (parent of Fuji and Kestrel, amongst others) and “many other OEM customers; there are five main customers whose bike teams have been racing in Tour de France for many years,” according to ADK’s spokesperson.

When asked why bicycle brands were so sensitive about naming their manufacturing partners, ADK’s representative stated it was “because these OEM customers have advised ADK not to mention their information so we need to keep it confidential.” Deducing this was the probable conclusion of the discussion, I moved on.

Ideal Bike Corporation (also with operations in Taichung, Taiwan and Guangdong province, China), is an OEM to Fuji, BMC and Pinnacle (Evan’s Cycles in-house brand), amongst others. A spokesperson confirmed their production lines leading into MY2013 and MY2014 were fully booked by existing clients. Ideal’s Chinese operations produces in excess of 400,000 units annually; the majority of which are for European and US brands. This was all the information given, due to requested “client confidentiality.”

Taipei-based OEM Fairly Bike produces and exports “around 120,000 units” for clients such as Willier and Felt. Fairly’s representative offered to speak to me off the record at Taipei Cycle Show next month.

Advanced International Multitech Co Ltd, OEM for Bianchi, Dedacciai, Look, Decathlon and Specialized (until MY2012) recently featured on Cycling iQ. AIM created headlines – at least in our little industry – by announcing its relocation of bicycle production back to Taiwan. The romantic notion of AIM extending its brand relationships into the public realm was quickly vanquished.

“Cannondale [CiQ: a previous client] and Specialized always want a cheaper price.” said AIM’s representative. “They don’t want to move back to Taiwan (with AIM) but the future will make it all the same. We cannot offer the same price from (our Taiwanese facility), so they need to find another supplier.”

After several more conversations [CiQ: with Hodaka, ATI, A&J, Giant, Merida] similar to these, I grew despondent. Was nobody open to the idea of “coming out” to the market?

Refreshingly, one brand has already embraced a deeper meaning of “manufacturing partner”. Fuji, Advanced Sports International’s (ASI) headline bicycle brand, engages two manufacturing partners in full view. Ideal Bike Corporation owns a majority stake in Fuji, and also acts as the brand’s Chinese distributor. ADK Tech features prominently on Fuji’s 2012 Altamira Geox Team Edition road bike in the form of a logo on the chain stay.

Fuji OEM, ADK Technology, gets some deserved praise for its hand in the creation of Fuji’s 2012 Altamira Geox Team Edition


Though coy about revealing too much, Chris Lintaman, Vice President of Advanced Sports International (ASI), guessed that some brands may be reluctant to openly discuss their OEM relationships “for competitive reasons – perhaps they are working with a vendor to develop future models and the vendor being used might reveal something about the nature of the product.” ASI’s VP went on to say that ASI collaborated with vendors based on their ability to “upgrade production technology meeting our design needs, or focus better on certain product categories which fit our plans.”

Whatever the case for other brands, ASI’s collaboration is a rare exception to the bicycle industry’s “manufacturing partner” paradox – ie, an OEM being good enough to make products that provide a brand’s livelihood, but not good enough for said brand to co-operate with publicly. Potentially, this is damaging to brand image as consumers are not able to understand what “it” is that they are investing in. Will any more brands step out from behind the shadow?

  • Shannon

    Here is the REALLY interesting thing. I worked for one of the “big four” and after years working at the retail level, I was incredibly surprised that this brand’s Comp, Expert, Pro and X-@#&%$ frames were made separately in four different factories. Same mold, different “claimed” level of carbon fiber, different paint, vastly different price ranges. From a quality control standpoint, I was surprised that each of the major manufacturers had this mold. No wonder they have problem with “gray-market” counterfeits.

    • Hi Shannon,

      Thanks for your insight. Indeed, a major brand’s production – in a given model year – can be spread across multiple OEM factories. Additionally, those factories may also sub-contract to other makers.

      A fabrication process this fragmented doesn’t immediately present itself as part of a good “partnership” product story. Instead, it takes on a clinical “production line” aura. Obviously, that may not be so important for consumers who are value oriented.

      An OEM partnership/origin that is more concentrated and long-term, potentially can assist a high-end brand’s image. I’d be interested to learn if Fuji’s partnership with ADK Tech has actually gained any traction with observant consumers at all.

    • Anon

      Theory: Factories are scored by the anonymous “this brand’s”…which sounds like S to me because I think they’re the only people who use Comp, Expert, Pro? Where the best factories make the best stuff?

      Also, by keeping multiple factories they can put price pressure on them. I can demote you to Comp and promote your rival if you don’t keep quality high and prices low.

  • Ben

    Good article. It’s great to see some cycling journalism that goes well beyond repackaged press releases…

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  • Nice piece, thanks! I was not surprised that FUJI was the only one not trying to hide origin. Of all the brands mentioned, they probably have the least to lose. The brand was stagnant in the USA for many years and never really traded much on history, passion for the sport, etc. As for Colnago, in Italian cycling magazines the advertising for the “100% Made in Italy” frames prominently features this fact while the ads for the rest of them don’t say anything about where the they are made. To me this is fooling nobody, and I’d make a small wager that the respective values/selling prices of the Made in Italy Colnago’s vs the Asian ones are very different, not only at original retail but also in sales via ebay, etc. If this scheme truly works long-term, it won’t be long before Ferrari makes some of their cheaper cars in China while keeping production of the top-of-the-line models in Maranello. I wouldn’t bet on anyone paying much for a Chinese-made Ferrari but who knows?

    • Thanks Larry T., the irony is there would no doubt be immense pushback from Chinese consumers if Ferrari (or any Italian supercar marque) was to make its cars in China!

      • Jose Jones

        There is already a substantial population of very low-paid Chinese workers employed in Italy in other areas of manufacturing, such as textiles, clothing and footware. Go off the tourist track in Tuscany if you want to see this. It would surprise me if other areas of Italian manufacturing were not doing the same thing.

      • Really a reply to Jose – yes, we’ve seen this Chinese labor in Italy thing first-hand. There’s a cycling clothing maker in that region who is alleged to be using this cheap labor to produce his products. And a well-known direct marketer of bikes and components (almost all from Asia) recently noted that he thought it was OK for him to apply “Made-in-Italy” stickers to his products if it would help sales, even if that was untrue. I don’t care so much about where the stuff is actually made as it’s up to each consumer to make his/her choice, but DO care about deception, lies and outright fraud. How can the consumer make the choice if the origin of the product is concealed?

  • Trey

    The move back to custom has ‘almost’ become as cheap as an asian ‘name brand’ it seems.
    Give your local builder the money and let him/she build the frame for the roads you ride.

    • TG

      I like this comment. Many years ago, I read Zen and the Art of Motorcycle Maintenance. As I recall, he goes wacky trying to define the concept of quality. In the end, I think he settles on…quality = the relationship of the item being made and the person who makes it. For me, that is what it is all about. Asian factories don’t breathe soul into a product, but Waterford, Richard Sachs, and Dario Pegoretti sure do.

  • The reason you don’t hear about which OEs build for which brands, is that there’s no reason for the brands to do so, and a litany of reasons not to. People are becoming interested in ‘where stuff comes from’ because there is a general feeling of removal, disenfranchisement, and desensitization that’s growing IMHO in the western world. This is also being fueled by the economic environment, where people feel they could save money and be ‘smart’ if they bought closer to the source (and if they knew the difference between production cost and RRP they’d be largely justified). However, I see this largely as a novelty, and people are still heavily invested in the myth of capitalism, brand identity, and the consumer experience, so I don’t see this fascination becoming pervasive or mainstream anytime in the future. If anything, it will help with the marketing of the intermediate profile brands, but aside from that, I don’t see this phenomenon having any benefit or impact for the big brands.

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  • Is the question not better centred on the delivery of product rather than perception of the quality. In Back to the Future the 1950’s Professor dude blames the problems of the car on future made Japanese components… I have a number of different brands in my stable including so called “niche” brands as well as three different bikes from the Big 4. Now according to the critics one of these, from a “large” manufacturer, Reigns at the top of the tree in its sector, so where is the problem? Some people deride the Big 4’s products but rarely do you hear complaints about them on the fourms. Personally I look for gaurantees, does my frame that I am about to spend a large sum of money on come with a lifetime warranty? Do I beleive this will be backed up? Is it good value for money? If yes to these three, then do I care where it was made? No.

    • Bruce, I have no doubt your sentiment is shared by others.

      Major brands dominate the market in part due to after-sales service (which includes warranty/guarantee) as a component of overall value proposition.

      To project their point of difference – as competing on price:specification terms is not an option – smaller brands often rely on product-based arguments or imagery to captivate an audience. Either we, as consumers, accept these as truth or search for more background. In this case, the questions “who makes it?” and “how it is made?” may arise. The answers to both of these questions will help some consumers assess the value proposition, beyond the physical bike they can actually see.

      It’s interesting that you own multiple bicycles from different brands, including “niche” brands. I wonder if you consider each one “value for money?”.

  • Great post! Its nice to hear someone is talking about this and I really like how you broke it down for people.

    • Thanks Aram, I thought there might be some interest in this article but the actual volume of feedback has genuinely surprised me. I look forward to providing more industry coverage and background into the future.

      • Paul

        I was lost to cycling in the late 80s~mid 90s, (kids/work… all that stuff). Ironically, it’s this era I now regard as having some of the loveliest CroMoly frames, replete with BioPace cranks and indexed down-tube shifters. This does not stop me, however, having my head turned by people heading the opposite way on +K$2.5 carbon fibre-framed bicycles, emblazoned with a ‘name’. The general topic covered above gently needles at the sensitive intersect of brand snobbery and, I take it, a desire by some to be seen to own ‘upmarket’ bicycles. No wonder there’s a reluctance to talk, on the part of some OEM spokes-people. It’s a rickety structure.
        Shall be following further posts. Thanks, CiQ.

        • Paul, it’s a pleasure to write about the backend of the bicycle industry. Brand representatives can be reluctant to discuss their company’s business structure and partnerships for very good reasons, but it’s the “deception” Larry T. refers to that understandably upsets a lot of consumers. Thanks for offering your thoughts.

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  • Thylacine

    Honestly, Consumerism IS mass deception – I find it weird that people are just discovering this, and focussing all their negative energy on where products are made. It’s like the soft underbelly – ill buy into all the other marketing bullshit that a company inflicts upon me, as long as it’s made in the US! Let’s not worry about the fact that the marketing quotient of the product is more then the cost of manufacture, or the fact you believe all the glowing endorsements by people paid to give them, or the myth of past victories like they had anything to do with the product anyway.

  • Anon

    Trek doesn’t hide the fact that some of its frames are made in Taiwan. My cheaper Trek says “Made in Taiwan”; and I secretly suspect it comes out of a Giant factory.

    I give props to GIANT for saying “we won’t be subservient forever. We can make frames. Let’s make our own”. It’ll give companies an incentive to stop and think about whether or not outsourcing is sustainable. It may simply push American manufacturers to seek true global manufacturing, rather than centralizing in China or Malaysia or Indonesia, depending on industry.

    • SgtB

      I’ve been told by the Trek rep at the LBS that Giant manufactures all of their frames on bikes costing less than $5K.

      • Trek is Giant China’s biggest OEM customer.

    • The Trek “Made in America” rumor persists. Unless you’re getting a top of the line Madone or Fuel, your bike was made in the same building as the $400 Treks, somewhere in Taiwan or mainland China.

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  • I don’t really care where my frame is produced, as long as it is of high quality and meets my expectations.

  • Paul66

    Interestingly I’ve been seeing billboard ads promoting Taiwan’s excellence in (OEM) manufacturing appearing around London. One features a rather fetching picture of a bike.
    I get the strong impression that Taiwan wants to position itself apart from China as a ‘premium’ economy that is centred on excellence and not just knocking out units as cheaply as possible.
    Certainly they have been developing their process for a while now and that kind of ambition is not unreasonable. Japan achieved it to the point where ‘Made in Japan’ really means quality and in certain areas is as coveted as any other ‘Made in’ brand.
    It’s implied as well in the response of the AIM source when he talks about the possibility of losing clients like Specialized, that are wholly ficused on cost, as a consequence of their relocating operations to Taiwan.
    Personally I warm to the idea of Taiwan being regarded as a high end partner. They’ve paid their dues in terms of building their base and they seem to be committed to quality as a component of their culture just like the Italians. Good on them.
    China on the other hand has a long way to go. Having done business in China for two decades I would be very cautious about taking the same view there. There are just too many competing pressures in China that undermine the trust you can have in their processes and commitment to quality. You are never going to get the holy grail of an artisanal commitment to the product there. It’s just not a part of their manufacturing culture. Maybe in 20 years things will change but for now I would not set the same store by Made in China as I would Made in Taiwan.

    • Thanks for posting your thoughts Paul66. I agree that an artisanal commitment to fabrication may not be pervasive in the Chinese manufacturing culture, but I would not rule out the possibility that Chinese individuals, or China-based manufacturing outliers, could one day surface in the “innovalue” segment that Taiwan comfortably owns.

      • Paul66

        I agree on that. It’s certainly true that on an individual level Chinese enthusiasts are likely to be as committed as the rest of us. You can certainly see it in other areas. It bodes well for the future.
        My personal view is that China as a whole is where Japan and Taiwan were a generation or two back. That is at the stage of building capacity. The general culture reflects that. It will take China some time to throw up manufacturers that inspire confidence and in terms of bikes some time more to establish the kind of reputation that would make traditionalists happy to ride Made in China.
        By that time though Chinese wages may be creeping up and a new generation of competitive OEMs in countries like Vietnam may emerge.

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  • Peter Gerlach

    Great comments. Thank you so much. So what are the most high quality frames and by which firm are they made?

    • Giant. They make the most bikes each year and even make their own carbon sheets.

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  • Francesco

    Hi All, I see it has been a while since this conversation was dropped but I’m wondering if someone is still keen to pick it up again. I’m not an expert cyclist and I’m evaluating the chance of buying a Wilier GTR Team which sells around the £2K mark. For that price, I was giving it for granted that the bike would have been made in Italy and I was honestly disappointed when I started investigating the topic.

    But now I’ve a question for you: what about Bromptons? They are made in one of the most expensive cities in the world, they are expensive and they have been constantly growing for many years now. How does that fit in all the considerations made in this thread?

    A very good quality product sold at a price tag that is for sure not for everybody. Competition is speeding up but still there is no comparison. Couldn’t the various historical brands follow on the same path of innovation and reliability?

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