TAOYUAN COUNTY, Taiwan — Here at Pacific Cycles, which sits in an industrial park an hour's train ride from Taipei, the factory floor buzzes with activity.  Taiwanese and Filipino employees are busy spot welding, aligning parts, applying decals, sorting wheels, polishing and painting.

 

Marketing manager Max Yeh guides me around the floor, showing off different wares. Pacific Cycles specializes in high-end, hand-crafted bikes, with an average price of $1,200.

 

These days, business is good. The firm expects its domestic sales to double this year, led by sales of fashionable “folding bikes.”

 

But what about the global downturn — won’t Pacific Cycles have to slash staff, like so many other firms?

 

Yeh shakes his head. “I don’t think any Taiwan bike companies will be laying off employees,” he says.

 

The global economic crisis that started in the U.S. hasn’t spared Taiwan. The stock market here is down sharply, growth is flat-lining and more firms are flirting with bankruptcy.

 

But bicycle exports in the third quarter of this year grew 38 percent from the same period last year, to $324 million, according to the Taiwan Bicycle Exporters’ Association. Domestic sales have seen a sharp increase, too: Taiwan itself is in the throes of a love affair with the bicycle.

 

Sitting in his Taipei office, James Liu, the association’s secretary, explained the boom. He said foreign markets for high-end bikes are growing, especially in Europe, while improvements in the process have paid off. “The quality of Taiwan bikes is improving,” he said, citing mountain and racing bikes as examples.

 

Just compare Taiwan to China, the world’s number one bike manufacturer (India is second, with Taiwan third). Taiwan shipped 5.45 million units last year, compared to China’s whopping 87.13 million.

 

But Taiwan’s focus on quality, rather than quantity, is apparent in the gap between average selling prices: $213 for a Taiwan-made bike, compared to $37 for a China-made one.

 

That focus on quality pays. When it comes to bike manufacturing, Taiwan made about one-third the revenues that China made, while shipping only 6 percent as many bikes.

 

Taiwan has also benefited from China-phobia, Liu explains. In a backlash against cheap Chinese imports, Europe has slapped “anti-dumping” tariffs on Chinese-made bikes that add more than 40 percent to the price.

 

Similar barriers for Taiwan-made bikes crumbled several years ago. “So Taiwan’s competitive ability has increased,” said Liu.

 

The island’s domestic bike-buying boom is helping, too. Taiwan’s number two bike manufacturer, Merida, expects 18 percent growth in sales for 2008, and credits the home market for much of that. It says domestic sales have tripled this year and now make up about 8 percent of total revenue. 

 

“Taiwan is now one of the hottest markets for bicycles in the world,” said Merida spokesman William Jeng. “No one in the world has such a huge demand increase.”

 

What’s fueling the island’s bike craze?

 

Much of the it is rooted in Taiwan’s rising standard of living, said Jeng. “When you have enough money for basic living, you can start to care more about your health and the environment, and bicycling becomes part of your lifestyle,” said Jeng.  “So we’ve become ‘Cycle Island.’”

 

Merida and other companies have promoted bicycling with mass rides and other events around the island. And the government has also played a key role. In recent years it’s built numerous biking trails, urban bike racks and other two-wheeled infrastructure.

 

Now, any weekend when the weather is good, urbanites young and old flock to the bike paths along Xindian Stream, part of a system of inter-locking trails that stretch more than 100 kilometers (about 62 miles) around Taipei.  Giant Bicycle — the world’s largest bike company — runs centers along the paths where you can rent a bicycle for an afternoon ride.  Across the country, such paths are now packed with riders.

 

“More people are using bikes for sports and recreation,” said Giant spokesman Jeffrey Sheu. Giant, the world’s largest bicycle manufacturer, is also riding high. The firm hopes to export more than 1 million units this year, 10 percent more than last year — with a 10 percent rise in their average bike prices helping to increase profits.

 

That’s sent Taiwan’s media abuzz with rumors of massive bonuses for all Giant employees. Like most Taiwan firms, Giant gives bonuses to all employees for Chinese New Year, which this year falls on Jan. 26.

 

But those reports were somewhat exaggerated, said Giant spokeswoman Irene Chen with a laugh. The company won’t calculate the bonuses until they know their full-year profits.

 

Back at Pacific Cycles, Yeh said that some of Taiwan’s bicycle-buying is just a fashion, and the fad can’t go on forever.

 

“It’s kind of like a fever — people who don’t even ride are also buying bikes,” he said. “So next year we expect growth to slow down.”

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