HAVING learned to speak Japanese as a child while Taiwan was under Japanese occupation, he traveled to Japan and studied what was then the premier bike manufacturing economy. A major breakthrough came in 1977 when Giant’s chief executive, Tony Lo, negotiated a deal with Schwinn to begin manufacturing bikes for the iconic American brand.
Schwinn became both Giant’s strength and weakness. Bike sales leapt in the United States during the oil crisis, and after workers at the Schwinn plant in Chicago went on strike in 1980, Giant became a key supplier, making more than two-thirds of Schwinn’s bikes by the mid-1980s.
Then Schwinn decided to find a new source, and in 1987 signed a contract with China Bicycle Company to make bikes in Shenzhen, near Hong Kong. “We were terrified,” Mr. Liu said. Giant relied on Schwinn for 75 percent of its orders, and its survival was at risk.
Giant began focusing on building its own brand, setting up operations in Europe and the United States. Gradually sales of Giant-brand bicycles grew. At the same time Schwinn’s fortunes declined, and it filed for bankruptcy in 1992. The American company was never able to get cheaper production from its China Bicycle investment, said Jay Townley, an industry consultant who was an executive at Schwinn and later Giant’s American arm.