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Bangladesh 2010: Change in GSP Rule Brings Mixed Fortune for Meghna

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DHAKA, Bangladesh - Bicycle manufacturers in Bangladesh are cautiously optimistic about the changes to the GSP Form A regulations, where local content has been reduced to 30% for certain countries.

“This has both negative and positive impact for us, as we have set up production facilities producing various parts, to attain (the) 60% value addition that used to be the standard for GSP Form A. These parts factories will face some challenge from the Chinese components makers,” said a concerned Mr Mizanur Rahman, Managing Director, Meghna Group. “The company has recognized the challenge and prepares to face it with optimism.”

Economy of scale

“We know we have now a challenge for our parts factories to be efficient and cost effective, but we are hopeful,” adds Rahman. “(The) Chinese economy is growing and with that the cheap labour is gradually diminishing. Coupled with this, a strong RMB in (the) near future will also push the Chinese parts prices to rise.”

But Meghna has decided to go ahead with expansion in production facility. Rahman explains, “We will also expand our production to achieve economy of scale and be more efficient in managing our cost of production.” On the other side of this challenge Meghna now has a greater opportunity to make better bikes and offer them with GSP Form A, according to Rahman. “This really does significantly improve our position as we can now offer quality bikes with 27 speeds, branded suspension forks and parts such a hydraulic disc brakes (cost: up to $325 US) with GSP Form A and, therefore, 0% import duty into Europe.”

Meghna Group is Bangladesh's premier bike assembler, making approximately 350,000 bikes for export in their Transworld and Uniglory facilities. These bikes are shipped to all the major bike markets across Europe, to leading brands, importers and distributors. Meghna produces MTBs, Trekking /City, Urban/Cross, Road, Folding, Tandems and BMX bikes and, where required, uses European parts such as Selle Royal saddles, Hesling chain guards and Thun BB sets.

Rahman added, “We offer good quality bikes at good prices. We only work with the well-known leading parts suppliers for guaranteed quality and (our) experience of exporting for more than a decade has taught us not to fight on price, as quality will be affected below a certain level. In these testing economic times we can offer a very good option for buyers that face a tough time protecting the margin expectations of their business.”

Meghna will be at the Taipei Cycle show (booth L-1108) and they will be showcasing new bike models as well as a full range of tyres, tubes, saddles and grips

 

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by Satnam Singh

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