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Pressure Rising on Cambodia’s Duty Free EU Export

Laws & Regulations

TAIPEI, Taiwan – The rapidly expanding bike exports from Cambodia to the European Union by 55% in the first ten months of 2013 did not pass unnoticed. At last week’s Taipei Cycle Show industry insiders pointed at indications for fraud while changes in the local content regulations, required for obtaining the GSP Plus status, could also hamper Cambodia’s bike exports to the EU.

Pressure Rising on Cambodia’s Duty Free EU Export
Pressure building on Cambodia’s duty free EU bike export could affect the supply of bicycles to its buyers in the Europe. The most prominent among them is dealer cooperative ZEG. – Photo Bike Europe

At this year’s Taipei Cycle Show, which took place last week from March 5- 8, the increase of Cambodia’s export to Europe to 1.2 million bicycles was a much discussed issue.

Re-packaging

It is said that of Cambodia’s six factories only three are really painting and assembling bicycles. These three are, Asama, Strongman and A&J. The other three are, according to various sources, no more than empty halls where re-packaging is taking place. Also one of the three is said to have left Cambodia recently and moved to Pakistan as this country also has GSP Plus duty free status for Europe.

Changes in local content regulations

Along with the said signs of fraud, changes in the local content regulations that came into force at the start of this year, required for obtaining EU’s GSP Plus status, might also hamper Cambodia’s bike exports to the EU. That is caused by the fact that components used in the Cambodian export bikes which are sourced from Singapore and Malaysia are no longer considered to be local content since January 1, 2014.

Shimano Singapore and Malaysia

The Cambodian bike makers source components from Shimano Singapore and Malaysia, which contributes significantly to the 30% local content. As Shimano is now out of the local content, Cambodian bike makers are looking for others to fill the gap. They turned to (probably among others) SRAM. In his A-Team presentation President Stan Day said this, “SRAM will not set up production in Cambodia. We are and will stay committed to Taiwan.”

Supply to ZEG

All this could affect the supply of bicycles to its buyers in the EU. The most prominent among them is the German-based organization ZEG. This dealer cooperative with 1,000 plus affiliated dealer/members sources several hundred thousand bikes from Strongman in Cambodia.

More on this topic is in the March issue of Bike Europe.

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