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<b>Taiwan 2008:</b> Local Market Flourishing

Sales & Trends

TAIPEI, Taiwan – As the pre-eminent country in the world for the production of bicycles and bicycle related products, Taiwan is being buffeted by the waves of economic turmoil resulting from the credit crisis. Until now all the signs for bicycle sales in the world are green but this might change overnight. Between January and August last year, the Taiwanese bicycle industry managed to maintain their 2007 double digit sales

<b>Taiwan 2008:</b> Local Market Flourishing

TAIPEI, Taiwan – As the pre-eminent country in the world for the production of bicycles and bicycle related products, Taiwan is being buffeted by the waves of economic turmoil resulting from the credit crisis. Until now all the signs for bicycle sales in the world are green but this might change overnight.

Between January and August last year, the Taiwanese bicycle industry managed to maintain their 2007 double digit sales growth. But the big question is: have they been able to hold in the fourth quarter in 2008.

To look at the investment strategy of several Taiwanese companies, the forecast still seems promising. The bike industry is investing heavily both locally and in China, adding production capacity and upgrading facilities. During Bike Europe’s recent visits to China last October and December, numerous companies announced they are working on new facilities or expanding existing ones. TH Industries/FSA, Axman Enterprise, JD Components, Sunny Wheel, Pacific Cycles and SR Suntour are all building new facilities or expanding existing ones.

Upbeat

In mid-2008 Giant and Merida both reported very positive results for the first half of 2008. Giant Manufacturing registered € 429.9 million (US$ 618.7m) in revenues in the first half of this year, up 25.1% from a year earlier. Net income climbed 14.5%. “I am rather upbeat about the bicycle industry’s sales growth in the long run,” said Giant spokesman Jeffrey Sheu last summer. “And I believe sales will grow at a faster pace if more and more countries attempt to restrict motor vehicles. We expect to ship more than one million units this year.” The company’s average FOB price for Taiwan-exported bicycles was € 236 (US$ 340) last year, and the company expects to see a 10% increase this year.

At the same time, William Jeng, senior vice president of Merida Industry, said that “the company aims to export between 780,000 and 800,000 bicycles this year, up from 755,000 in 2007.” Will the bicycle industry be able to row against the prevailing financial tide? In January the Taiwanese Bureau of Foreign Trade (BOFT) announced that, according to the Monthly Customs Statistics on Exports and Imports issued by the Department of Statistics of the Ministry of Finance, Taiwan’s total foreign trade amount in December 2008, compared with the same period in 2007, plunged 43.2% to € 17.67 billion (US$25.42 billion). Exports and imports plunged by a record 41.9% and 44.6% to € 9.48 billion (US$13.64 billion) and € 8.19 billion (US$11.78 billion), respectively.

The reason for these negative results were export declines to Mainland China (-54%), the US (-23.5%), Japan -21.9%), Europe (-29.4%) and the ASEAN-6 (-46%). Owing to the weaker import demand caused by the declining global consumer purchasing power, Taiwan’s main exports in December 2008 showed a huge decline. In addition to a 19% decrease of IT and communication products, exports of electronic products, basic metal products, machinery, plastics, rubber and articles thereof plunged 43.4%, 32.6%, 30.2% and 37.8%, respectively.

Bike export

Despite all the negative general export figures the Taiwan bicycle industry could still report positive export figures up to November last year. Taiwan’s exports to the United States in the first 11 months of 2008 rose 20.8% year on year to 646,421 units, and those to Canada increased 32.4% to 93,755 units. Meanwhile, exports to Japan increased 19.8% to 221,411 units, and those to Australia rose 17.5% to 140,802 units.

In European markets, exports to the United Kingdom decreased 0.5% to 883,118 units, those to Germany rose 19.9% to 520,600 units, while shipments to Holland increased by 6.9% to 403,525 units, those to Belgium fell slightly by 0.4% to 294,789 units, and exports to France skyrocketed 95.4% to 116,516 units. Meanwhile exports to Sweden, Taiwan’s largest market in Scandinavia, jumped 35.2% to 349,453 units, while those to Finland were up 3.8% to 82,629 units. Shipments to Spain in the first eleven months of 2008 fell 22% to 107,122 units and those to Italy were down 9.8% to 59,859 units. Overall shipments to the EU, making up 67% of total exports, increased 7.9% to 3,286,094 units, and in value rose by 27.8% to € 448.43 million (US$645.29 million).

The outlook for 2009 exports is positive, according to the Taiwanese industry. “I don’t think that the adverse effect of the global economic situation on the bicycle industry are going to be as serious as for other industries”, says Ying Ming Yang, chairman of the Taiwan Bicycle Exporters’ Association. “The situation for our industry will probably worsen with global stock prices continuing to fall and real economies shrinking. However, the Taiwanese industry, headed by the A-Team, has built a base for supplying high quality products and I think we have to approach 2009 with confidence and keep up our continued efforts.”

Bicycle Miracle

Cycling has become a hot topic in Taiwan with a complete change in the image of the bicycle. Up to recently, the bike was seen as a simple product for utilitarian use only, with an average market between 400,000 and 500,000 units annually. Within a few years, the market has more than doubled to 1.08 million in 2007. In 2008 the market is expected to hit 1.2 million units. Upper income people have discovered the bike for recreation as well as utilitarian use, while the number of women riding bicycles has multiplied. It is not without reason that the cycle industry is heavily involved in the promotion campaign of “Cycle Island Taiwan”.

E-Bike Export

The e-Bike and e-Scooter are both commonly used on Taipei’s streets for general transportation. Despite Taiwan’s leading position in the global trade in bicycles, e-Bikes don’t play an important role in exports. Between January and August last year, Taiwan exported just 4,266 units with an average value of € 365.51 (US $ 527.35). The total value of the assembled e-Bike export business is € 1.56 million (US $ 2.25 million). About 90% of the e-Bikes were exported to Europe and North America. The most expensive e-Bikes went to Japan. They had an average value of € 774.69 (US $ 1117.21).

Rising Value of Parts & Accessories Export

The market position of the Taiwan P&A industry is still on a very strong upward trend. The biggest rising stars are mentioned in the index, ranging from 59.04% to 117.22% in value. As the Bureau Of Foreign Trade of Taiwan (BOFT) only specifies the exported quantity in kilograms the increase in value can not be accounted by means of units. The total weight of the exported rims has gone up by 30%, while the value rose by 117%. Bearing in mind that the average weight of a rim is decreasing, you might conclude that the number of exported rims has gone up more than 30%. The total value of the exported bicycle parts and components, including the ones not mentioned in the limited list, has gone up by 30.83% to € 243,1 million (US$ 350,8 million).

Bicycle Parts Export (2008/2007 August)

Item
2008
2007
Increase
 
Value US$
Value US$
 
Wheel rims
11,235,356
5,172,428
117.22%
Wheel spokes
6,276,896
2,997,099
109.43%
Wheel rims and spokes
6,903,722
4,217,763
63.68%
Hubs
10,190,191
6,361,549
60.18%
Free-wheel sprocket-wheels
3,605,931
1,898,085
89.98%
Crank-gear and parts
14,313,471
8,745,111
63.67%
Derailleur of bicycles
6,008,568
2,915,168
106.11%
Seat tube/top tube/down tube
4,113,236
2,586,241
59.04%

Source: BOFT

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