Giant’s global brand awareness and flexible manufacturing are key to avoiding tariff risks, Daiwa analysts Helen Chien and Anita Li wrote in a June 5 report, in which they initiated coverage of Giant with an outperform rating.
Tariffs are adding $100 on average to the price of bicycles made in China and exported to the U.S., compared with those made in zero-tariff areas, Tu said, explaining the rationale for the switch to the Taiwanese site.
The switch, however, comes with higher costs for employee payouts, automation and no China-like economy of scale for suppliers. Tu declined to peg the relocation costs beyond saying the company’s “bottom line would be better without the U.S.-China trade war.”
That’s why Giant is open to reverting production to its Chinese plants if the U.S. and China are able to hammer out a trade deal. If America “decides to remove the 25% tariff, we will move the production back to China right away,” Tu said.