<b>Taiwan 2009: </b>Exports under pressure
One year ago the Taiwanese bicycle industry still foresaw growth figures. Now its looking back at what is arguably its most difficult year ever. Although the idea of the bicycle as an alternative means of transport is gaining ground worldwide, it did not translate into more sales during 2009, in Europe or on the American continent.
TAIPEI, Taiwan – One year ago the Taiwanese bicycle industry still foresaw growth figures. Now it’s looking back at what is arguably its most difficult year ever. Although the idea of the bicycle as an alternative means of transport is gaining ground worldwide, it did not translate into more sales during 2009, in Europe or on the American continent.
The figures of the Taiwan Bureau of Foreign Trade speak for themselves. Between January and September 2009, the number of exported bikes decreased by more than 19%, from 4.2 million units in 2008 to 3.4 million in 2009. The industry was saved by the ongoing trend of rising prices per unit, despite dropping raw material prices. Fluctuating exchange rates proved to be a big factor in the price hike. Export value reached € 624 million (US$ 990 mn), or 4.75% less than in 2008. This is due to a 15.14% hike (!) in unit prices that averaged € 175 (US$ 277) per exported bike.
Last Summer TBEA Chairman Ying Ming Yang said that the rising trend in unit prices reflected the obvious advantages of Taiwan’s bike producers in the high-end segment. Yang believed that the A-Team, an industry alliance consisting of more than 30 Taiwanese manufacturers of bicycles and components, was the driving force that enabled Taiwan’s bike industry to evolve toward the high-end segment and transformed the country into a global leader in premium bicycles. According to Merida Industry Co. Ltd president Michael Tseng, who also serves as chairman of A-Team, Europe and the United States have always been the major markets for Merida’s high-end bikes. Tseng expects to see sales of the company’s premium bikes remain stable or register slight growth this year.
Global leader Giant Manufacturing Co. Ltd., also a member of the A-Team, spares no efforts in marketing its high-end bikes. The company spends about 8% of its annual revenues promoting its premium bikes and building its brand image by sponsoring professional racing teams in international tournaments such as the Tour de France. Giant CEO Tony Lo acknowledged his company holds excess inventory in the United States although Europe has fared much better.
Statistics from the start of 2009 show a downturn in the offing. During the first quarter the bike exporters were still able to maintain substantial growth in turn-over. In February 2009 the export value is a remarkable 39.2% higher than in February 2008. But after March the high tide is definitely over and the export value starts to drop by double digits, month after month. Taiwan’s exports to the United States in the first 9 months of 2009 decline 4.68% year on year to 491,119 units. Those to Canada increased 12.48% to 79,579 units. Meanwhile, exports to Japan increased with a stunning 23.9% to 108,136 units, while those to Australia dropped by 1.7% to 76,006 units.
Overall shipments to the EU, making up 67% of Taiwan’s total bike exports, decreased 25.75% to 1,994,819 units and declined in value by 14.5% to € 273.6 million (US$ 434 mn). The biggest drop was recorded in the export to France and Belgium. To Belgium, with its warehouses where bikes that arrive through the port of Antwerp from Decathlon, Giant and Scott are stocked; export more than halved. 115, 505 bikes from Taiwan were imported into this EU member state; down 52.9% on the 2008 total. Bike export from Taiwan to France even dropped bigger; France declined with 64.93% to 35,574 units.
With regard to other European markets; exports to the United Kingdom decreased by 32.58% to 476,351 units, those to Germany decreased by 18.16% to 331,972 units, and shipments to Holland fell 9.65% to 320.546 units.
Meanwhile exports to Sweden, Taiwan’s largest market in Scandinavia, fell by 29.93% to 223,825 units, while those to Finland were down 1.86% to 65.993 units. Shipments to Spain in the first eleven months of 2008 increased 6.72% to 89.629 units and those to Italy were down 33.65% to 33.270 units.
The global declining bicycle market caused even more problems for Taiwan’s exporting manufacturers of parts and accessories. Exporters had to face a drop of 22%. From the official statistics of the Taiwan Bureau of Foreign Trade it is unclear if the Taiwanese manufacturers of parts and components were also able to compensate for their declining business by increasing their prices, as the bicycle manufacturers did last year. From January to September the total value of all exported parts and components decreased from € 331 million (US$ 525 mn) in 2008 to € 257 million (US$ 409.7 mn US) in 2009.
In previous years Taiwanese P&A exporters have enjoyed major growth results. In 2008 the parts and accessories export business was still expanding by 29.95% related to 2007. The difference in export values between the product categories is substantial. For example, the export value of wheel sets increased by 12%, while the export value of pedals dropped by nearly 44%. The most important and the largest product category by far, frames and forks, was firmly hit by the declining export. The official figures show a decrease in value of 15.5% from € 123 million (US$ 195.2 mn) in January – September 2008 to € 103.9 million (US$ 164.9 mn) in 2009. As profit and turn-over in this category are under pressure, several manufacturers will introduce e-Bike specific components in an attempt to catch up with this worldwide booming segment.
E-Bike Export Slowly Growing
Despite Taiwan’s leading position in the global trade in bicycles, e-Bikes don’t play such an important role in exports. There’s an obvious reason for this fact. It is caused by the anti-dumping duties of 48.5% which apply to regular bicycles made in China and exported to Europe. These extra duties have stimulated bike production and export from Taiwan to Europe. However, there’s no anti-dumping duty on e-Bikes made in China which are exported to Europe. This causes the fact that e-Bikes desitined for export to Europe are for the biggest part made in China.
Taiwan’s export of e-Bikes made a very slow start last year, but picked up again as of March. Between January and September last year, Taiwan exported just 9,562 units with an average value of € 384 (US$ 609). Nevertheless, that’s double the number of units compared to 2008.