TAIPEI, Taiwan – After January 23, 2012 – Chinese New Year – the free trade agreement between Taiwan and China becomes fully operational. It provides a huge benefit for Taiwan’s bike industry as it offer free entry into the rapidly developing Chinese sports bike market.
The Economic Cooperation Framework Agreement (ECFA) is a preferential trade agreement between the governments of the People's Republic of China (mainland China) and the Republic of China (Taiwan) that aims to reduce tariffs and commercial barriers between the two sides. The pact, signed on June 29, 2010, is seen as the most significant agreement since the two sides split after the Chinese Civil War in 1949. It is expected to boost the current US$110 billion bilateral trade between both sides.
During the initial implementation of ECFA in 2010, tariff for bike products (P&A as well as complete bicycles) stood at 12 percent. By 2011 the tariff was cut to 5 percent, and will be completely waived after January 23, 2012. It offers Taiwan’s bicycle industry free access to the Chinese market, and the big 3 Taiwanese bike manufacturers Giant, Merida, and Ideal Bikes, are optimistic about their future sales in China.
Ideal Bikes indicated that it will be expanding channels for Fuji Bikes in the mainland to 100 stores by the end of 2011. Meanwhile, Merida plans to maximize annual output to one million units. On the other hand, Giant has indicated its Kunshan factory will hit an annual capacity of two million units by 2012.
One of Taiwan’s parts makers – rim manufacturer Alex Global Technology - revealed plans to use the cross-strait Economic Cooperation Framework Agreement (ECFA) to build its business empire in Tainan City, southern Taiwan. Unlike many Taiwan enterprises that have moved factories to China, this company is determined to stay in the country. Asked if the company has already benefited from the inclusion of 17 bicycle components and products in ECFA's early harvest list that took effect in January 2011, Morris Wu, special assistant to the company president, said: “Definitely. Compared with 2010, we've seen turnover in China triple,” Wu said.