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Giant Bicycle: Bike-Sharing in Taipei

Giant Bicycle: Bike-Sharing in Taipei

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Response to YouBike, Taipei, Taiwan's bike-sharing program, had been extremely lackluster in its trial period. In a city of 2.6 million residents, the program registered a scant 23 users a day in 2009. The results were disappointing not only to the city government, but also to Giant Bicycle, the world's largest bicycle manufacturer and YouBike’ s sponsor. The city had hoped to emulate successful programs like the Velib in Paris. Giant had given 1,000 bicycles to pilot the program, and its non-profit arm – the Cycling Lifestyle Foundation – ran the program under a BOT (build-operate-transfer) contract. Despite an initial investment of NT$50 million (about US$1.7 million), the program had failed to sustain itself through rental fees and continued to lose money.

King Liu founded Giant in 1972. In the company's early years, Giant, like other bicycle companies in Taiwan, served as an OEM for various western brands. When rising labor costs forced companies to relocate manufacturing to Mainland China, Taiwanese companies, especially Giant, moved to launch their own, branded, high-end bicycles. The tight-knit community of bicycle parts manufacturers banded together to emphasize innovation and quality. With Giant in the forefront, Taiwanese companies exported their wares throughout the world.

Despite Taiwan's role as an exporter of bicycles, interest in bicycling had waned on the island. Since the 1980s, motorbikes and automobiles had become the dominant form of individual transport. The local Taipei government had hoped to reestablish bicycling to alleviate some of the congestion in the city's byways as well as benefit from the health and environmental benefits that might accrue. Bicycle-sharing programs had worked in various global cities and the government hoped that Taipei could follow their lead. However, the initial program did not excite the populace. Proponents of the program argued that there were too few pick-up and drop-off points to make the program a popular complement to other modes of transport. An expanded program, they argued, could be successful and they hoped Giant would help out.

However, people inside and outside the company wondered if the program was a good fit with Giant's business. The expanded YouBike program was hardly a lock to succeed. Even if the program managed to take off, the program's relevance to Giant's main lines of business seemed tangential. Rental bikes needed to be sturdy, basic vehicles, rather than the high-end, high-tech bicycles for which Giant was known. Furthermore, Giant's domestic market was small, and the bike share program seemed to threaten to cannibalize the small amount of sales the company had on the island.

Faced with competing arguments, Liu needed to decide. He wanted to reintroduce bicycling to his country and believed that it was part of Giant's corporate social responsibility to do so. But was the YouBike program the right vehicle? 

Citation:  Nikki Springer and Jason Dana, "Giant Bicycle: Bike-Sharing in Taipei", Yale SOM Case Study 20-036, February 18, 2021