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Hons at Center of Folding Bike Controversy

Published July 15, 2011

By Nicole Formosa

TAIPEI, Taiwan—It’s been a difficult road full of uncertainty for Joshua Hon and his mother Florence Shen, as they launch a new folding bike brand that competes with Dahon, a family company they both spent decades championing.

“There were times when I thought, ‘Hey, do I want to stick this out? Do I want to be in a bad mood going home and being short-tempered with the kids?’” Hon said. He weighed other job options and wrestled with whether the potential long-term outcome was worth the short-term stress.

In the end, his executive team, most of who left Dahon to support Hon and Shen’s effort, provided the extra nudge to push forward.

“It’s really been discussions with the team, everybody saying, ‘Let’s go do this new thing’ that gave me personally the confidence and drive to say let’s go do this,” said Hon, who spent his entire career building Dahon and was often the face of the brand in the industry.

The result is Tern, a folding bike and accessories brand focused on urban transportation. It debuted a month ago in front of international media and Taiwan’s industry leaders at a party in Taipei City. The Tern team will also market and sell BioLogic, a brand of accessories launched by Dahon North America in 2002.

Hon and Shen began working on the brand about a year ago after experiencing limitations with the development of
Dahon.

“There are things we wanted to do with product, organizationally with philanthropy, being able to take the brand a lot further, and the issues we had within Dahon weren’t allowing us to do those things,” Hon said.

Dahon, which was co-founded by Dr. David Hon, Joshua Hon’s father and Shen’s husband, has built up its defense as a result of the competition. It has hired a new executive management team, established a new manufacturing partnership in Europe and announced plans for construction of a new 700,000 unit capacity factory in Central China. Dr. David Hon continues as CEO of Dahon International and Dahon North America. His brother and Dahon co-founder Henry Hon has returned as vice president.

But, the changes aren’t so cut and dry. There are outstanding issues over intellectual property rights that will limit where Dahon can sell some of its models. In addition, all of Dahon’s global marketing, sales and product development staff in Taiwan left to work on Tern, and Tern’s 35 international distributors are all based on relationships built during Hon’s Dahon tenure. Eventually, these distributors will likely have to choose whether to continue carrying both brands.

All of Dahon’s assembly factories are now working exclusively with Tern, and Dahon’s former contract manufacturers in the Czech Republic, Macau and Taiwan are also onboard with Tern.

“We chose a hard road. They also will have a hard road,” Hon said.

Hon and Shen still own Dahon Global and hold the Dahon trademarks for bike products in many markets, and all global trademarks for bike accessories. As such, it will still handle the Dahon brand in those markets. Since Dahon will have to be careful to avoid violating those marks, the bikes will likely look very different in certain markets, including the U.S., Hon said.

But, Dahon was quick to assure its customers that it’s the same company, led by the same man with the same great bikes it’s been known for since 1979.

In a letter sent to the media by Dr. David Hon and Henry Hon following reports questioning Dahon’s viability after Tern debuted, the elder Hons said the principal companies, Dahon North America and Dahon International, Inc., hold the copyright to the Dahon brand for major markets such as Europe, the U.S., Japan and China.

Also, Dahon will launch a new accessories brand under the Dahon label and will continue to equip its bikes with the Andros stem and Valos light, as well as selling bikes under the Vector and IOS model names.

Dahon welcomes competition, the letter stated, but warns that competition should be fair and legal. The Hon brothers dispute Joshua and Florence’s ongoing involvement with Dahon.

“Since they have started a new company to compete with Dahon, they have clearly left our company and should return all assets and resources to Dahon. This point is under dispute,” the letter said.

Joshua Hon acknowledged it would be simpler to have parted ways entirely with Dahon in order to start Tern.

“Since we actually own the company, cutting ties is a more lengthy process. It would make sense to have the unified brand handled by a single entity, and it’s something we are open to,” he said.

Until that solution is agreed upon, presumably both brands will co-exist in the specialty market. For Tern, that means bringing its new 21 model line of 20-inch, 24-inch and 26-inch folding bikes—priced between $400 and $3,500—and unique accessories to market this fall through distributors in more than 30 countries. Steve Boyd, former COO of Dahon North America, will head up distribution of Tern in the U.S.

Meanwhile, Dahon will re-focus its energy on advancing its brand, and is in a better position to do so now than any time during the past two years, said Steve Cuomo, PR manager for Dahon North America.

“There’s a lot of excitement at Dahon and more than 1,200 Dahon employees and partners look forward to a very bright future,” he added.

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