Bicycle King Sets Succession in Motion for New Leader in '17by
Giant chairman looks to plan succession while healthy
Chairman's son, head of China business, may become leader
King Liu, Giant Group’s 81-year-old founder and chairman, will retire in 2017 from the world’s biggest bicycle empire he founded more than four decades ago.
In an hourlong interview on Oct. 22 Giant’s plant in central Taiwan, Liu said the company would have a new chairman and CEO when he steps down and plans will be finalized in 2016. “There is internal consensus on the succession plan and the candidates are set,” he said. After the discussion, he said during a tour of his Taichung, Taiwan-based headquarters that he expects his son, China President Young Liu, to be in the next generation of leadership, without specifying which position he might take up.
Giant Manufacturing Co. shares rose 1 percent to NT$245.5 in Taipei trading, the most since October 26. Taiwan’s benchmark Taiex index was down 0.2 percent.
The baton-passing would be the first since 1988 for Giant, which makes a third of its sales in China, a quarter in Europe, and a fifth in North America. Analysts estimate year-on-year sales growth to be 5.1 percent in 2015, compared to a 10.4 percent rise last year, primarily due to the slowing Chinese economy and the rise of smaller local competitors. Giant’s products range from high-end racing bikes to starter wheels for kids.
Company spokesman Ken Li declined to elaborate on the succession plans and said any change in management must be approved by the company’s board.
“Planning for my succession is to give the young people a chance,” said Liu, who, along with his family, owns a 19 percent stake in the company. The octogenarian said the new leadership would need to know the ins and outs of the company, he said.
Liu founded the firm in 1972 and built it up from a supplier for U.S.-based Schwinn Bicycles into a standalone brand that, according to CIMB Securities analyst Jack Lin, ships more bikes around the world than any other maker.
“I have to make these plans while I’m healthy,” said Liu, who still rides his bike 2 1/2 hours to or from work each day. “Otherwise we won’t be able to keep up with time.”
When Schwinn pulled its orders, Giant was confronted with the challenge of quickly promoting its own brand to international markets, and the company maintains its dual business strategy today. According to JPMorgan analyst Dan Lu, Giant is the market leader with as much as 10 percent market share of global sales.
Giant Manufacturing Co. shares have risen almost 20 times in the past two decades and its market capitalization is NT$91 billion ($2.8 billion).
As for future operations, Liu said while he hoped the dual strategy of own-brand and manufacturing for other brands would remain in place, he hoped the new leader would pursue new ideas and not just continue with existing ways of running the business.
According to public statements, Young Liu, the chairman’s son, brought the company to the China market in 1992 and was in charge of setting up factories. He also led the effort to build Giant’s brand into a leader in China’s domestic market. On Sept. 1, he was named to the newly created job of chief operating officer. In a 2012 interview with Bloomberg, he said rising Chinese incomes coupled with increasing health-awareness are helping Giant sell more high-end bikes there.
The elder Liu says he will continue as an adviser for a period of time after a new leader takes over. He will also look after a Taiwan bicycle-sharing program, called “Youbike,” to support the spread of cycling culture on the island. Giant, he says, is hoping to operate similar programs in China and Japan.