Peloton (PTON) - made in Taiwan

I didn’t realize Peloton bikes were Made in Taiwan

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My friend is a software engineer there and says their sales have skyrocketed during the pandemic. He was saying that if things really really really got bad in the states, he would apply for a work visa to work in Taiwan.

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In October 2019, Peloton acquired Tonic Fitness Technology (MAGTONIC 期美科技股份有限公司) , a Taiwanese manufacturing company for $47.4 million

The factory is located in Tainan

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Production line

sources and more info



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I wonder if they’d let him keep his engineering job and work remotely from Taiwan at the same salary as he has in the states. Highly unlikely.

Peloton is also an interesting case study in missed opportunity for Taiwan. Taiwan has been making really good bikes for decades. Tonic Fitness Technology was founded in 1985. Sells for under $50 million 34 years later.

Meanwhile, Peloton was founded in 2012, went on Kickstarter in 2013, and is currently valued at $47 billion.

Product innovation driven by consumer insights, consumer branding and marketing, hardware-software integration, and D2C sales savvy are places where Taiwan companies are missing out. Literally hundreds of billions of dollars of wealth is arguably being left on the table.

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And that opportunity is there for us :slight_smile:

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It is, although I have to admit that the more time I spend here, the less hopeful I am that it will be exploited on a meaningful scale.

Taiwan is a great place to have stuff manufactured but I don’t see much innovation mojo when it comes to businesses that target (or are capable of targeting) consumers directly. The mindset of most business owners also tends to be highly conservative and risk-averse.

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I meant it’s a great place to start a manufacturing company if you have the innovation mojo.

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Perhaps. Just doesn’t seem to be happening though. If you’re an American company, it’s easier to outsource your manufacturing. The risk of your supplier having the ability to compete with you in major markets is minimal in most cases and if you pull a Peloton, you can easily buy out your manufacturer (or a different one) after the fact.

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They use Mediatek-designed chips.

In December 2020, Peloton acquired Precor, a maker of home and commercial-grade workout machines, for $420 million from Amer Sports which is Chinese owned ( Anta Sports)

Precor has been around since the 80s. It’s a US based company that has changed hands several times. Amer Sports bought it in 2002. Amer Sports was a Finnish company that a Chinese company bought in 2019.

And yeah, a $420 million acquisition of one of the largest home and commercial fitness equipment makers is easy when your company is valued at $47 billion and you’re having trouble meeting all the demand you have.

Very very good point.

Many existing Taiwanese companies could do a step change in value if they were willing and able to embrace global marketing and branding.

Instead they cashed out . At least the manufacturing is still here.

Tapping into the power of US financial markets and influencer type marketing at the same time.
So many companies in the US can dominate through this advantage.

But this begs the question, what companies in Taiwan are out there that could be turned into billion dollar operations with some next generation internet capability and marketing buzz ?

I’m pretty sure tea from Taiwan could get a multiple boost if they worked with the right influencers in the US.

Or if they’re not in a position to do that in-house they could still negotiate manufacturing deals that come with equity kickers, or invest in some of their customers directly.

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There’s some quite big and successful local companies here that are clever enough.
Maxxis tires is one.
I also know a glucose test manufacturer that licenses GE brand name to sell their tests in US, and they also sell with their own brand name too.

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Taiwanese companies are also quite shit at consumer products. BenQ got rid of a lot of their consumer divisions and focused on their core competencies like business monitors. They are a lot better off for it. It’s good to know what you are good at

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this is due to longstanding cultural reasons. marketing will start fighting with engineering and then dysfunction…

Everyone knows this, Taiwan’s DNA isn’t really geared towards consumer products

Manufacturing something and branding/marketing/selling something are completely different things. My (Taiwanese) wife seems so proud of things that are made in Taiwan and I’m like, meh…

There are a handful of Taiwanese brands out on the global stage, but not many and can’t really think of any that would be considered “elite” or “leaders”… I suppose the closest would be nVidia? (Taiwanese CEO/founder)

Personally, I think it’s because of the small/family business mentality which makes it difficult for any enterprise to truly go big. I suppose those Korean chaebols would be a counter-argument. Maybe the Taiwanese just aren’t as cutthroat as the Koreans.

Home field advantage is another big factor I think. US, Europe, China, Japan are all huge domestic markets and obviously it’s easier for the home team to win there… ie. Magtonic had a near zero chance of developing a Peloton product on its own. Peloton could’ve bought/found a manufacturing partner anywhere… Magtonic brings very little added value to the table. And once you’ve gone big, you can start encroaching on other people’s turf…

Again, think it’s sort of interesting to compare to Korea which HAS managed to create many large global brands. And while I personally think the English proficiency in Korea is slightly better in Korea, I don’t think it’s significantly so. So I suppose it comes down to either (a) the Korean families got REALLY big or (b) Taiwan getting squeezed politically on the global stage

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But it’s equally good to see opportunities to get better at what you’re not good at so that you can become more successful.

Literally trillions of dollars of new wealth has been created in the past 20 years, and there’s no indication that the this technology-driven trend will cease any time soon. If Taiwan could cultivate even a dozen winners, it could have a meaningful impact for the island and the people here.

Just look at what TSMC has done for Taiwan. The issue now is that most of the biggest opportunities require you to go to the consumer. Even enterprise tech has become consumer-ized in the past decade/15 years.

Politics has something to do with it but it’s also about the local culture, mindset and population. Unfortunately, the environment really isn’t conducive to entrepreneurship, especially for young people. Risk aversion is high and the domestic market is too small to use as a jumping off point.

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