Inside Guide: Giant China s new Kunshan factory

From its roots as a Taiwanese Original Equipment Manufacturer (OEM) in 1972, Giant Manufacturing Co., Ltd broke ground in China 20 years later, when it opened its first manufacturing facility in Kunshan, Jiangsu province, on October 8, 1992.

Today, Giant s mainland operations comprise six factories across Kunshan, Chengdu (Sichuan province) and Tianjin (municipality). Giant s newest manufacturing facility can be found 90 kilometres west of Shanghai Pudong International Airport, in Kunshan City s Economic and Technological Development Zone.

Though the new facility opened in 2010, it will take almost five years for the planned specification to be completed in its entirety. Of the production lines currently in operation, four are dedicated to aluminium bicycles, whilst one each is reserved for composite frames and steel frames. Four additional production lines will eventually be rolled out alongside the existing six over the next two years.

Much of the current 350,000-unit capacity is for domestic consumption (there are no 29ers made in Kunshan at this stage), though it is expected 1,000,000 units will be produced annually once the plant is fully complete in 2014. Apart from its Giant-branded bicycles, OEM clients still form a considerable part of the business; Trek being the biggest OEM customer for Giant in China.

Within the sprawling campus-style grounds, buildings are divided into four colours: blue (offices and spare parts), green (assembly), yellow (fabrication and welding) and orange (painting).

More employees work in assembly than any other department, due to the bottleneck potential of this time-consuming process. At one end of the assembly area hangs a large chart with 30 processes on the Y-axis and a list of employees on the X-axis. Linking each employee to a process is a circle with four quarters; a fully shaded circle means the employee is fully competent in a given process. Next to this stands a long table, which employees sit at each day to go over issues and processes. There is an aura of constant education.

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Each of the 1,000 personnel employed at Giant s Kunshan factory receive two weeks intensive training in each department and a monthly wage of CNY3,000 (USD475) once they complete their three-month internship. [Note: as of February 2011, minimum monthly wages in Jiangsu province s cities increased an average of 18%. First tier cities increased to CNY1,140 (previously CNY960); second tier cities to CNY930 (previously CNY790); third tier cities to CNY800 (previously CNY670)]

Due to commercial sensitivities, Cycling iQ was not able to take photographs inside Giant s Kunshan operations. Giant has been perfecting a number of breakthrough processes in the new facility and did not want to risk these being seen by competitors. However, the main reason for the visit was to sit with Giant China s General Manager of domestic marketing, Kevin Zhu, for insight to the domestic market. The full interview was recorded, translated and will be split into two separate articles; look out for these later this week.

KEY POINTS Giant reported global consolidated revenue of USD1.56Bn in 2011 Giant sold 5.77 million bicycles in 2011; three times more than rival Merida Giant sold 1,870,000 units in China last year; a 8.5% market share annual domestic growth (units) is between 20-30% Giant owns and develops three brands: Giant, Momentum and Liv

Giant also has an unspecified stake in Taiwanese OEM Hodaka

The two-hour bus journey between SPIA and Kunshan costs CNY76/USD12. Alternatively, if your meeting has run overtime and you have to negotiate with the only available taxi driver in Kunshan to get back to SPIA in time for your 19:15 flight (when it s already 16:15 in Kunshan) the same distance can be covered in 90 minutes for a mere CNY550/USD85. Apparently.

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Next: Interview with Kevin Zhu Giant China s GM of domestic marketing

Special thanks to Ted Zhu and Vico Han from Giant China s planning and strategy department for being such excellent hosts.

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