Taiwan Bicycle Export Stabilizing
TAIPEI, Taiwan – For a third year in a row Taiwan’s bicycle industry exports declined in volume. Nevertheless statistics from the country’s Bureau of Foreign Trade show the export of bicycles for this year reached its low in the first half of 2014 and is stabilizing in the second half.
Between January and October 2014, the volume of Taiwan’s export of bicycles declined by 7.6% – from 3,321,614 to 3,070,074 units compared to 2013. Europe is still the most important market for Taiwanese bicycle manufacturers, although Europe’s market share has been declining slowly in the past decade. Today around 51% of the total export goes to Europe. But the Taiwan bicycle industry is no longer aimed at high volume production.
Encouraged by industry initiatives like the A-Team and Taiwan Bicycle Association’s (TBA) Chairman Tony Lo, the long-term strategy changed to R&D and high-end products. For the bicycle manufacturers it looks like this strategy is paying off. The average price of exported bikes has been rising in the past years at such a pace that it is compensating for the declining volume, as it still results in a higher turnover. However, Taiwan’s export statistics do not show whether this strategy is also profitable for the parts manufacturers and if they can raise their average price sufficiently to compensate for the lower volumes.
High-end bicycle kingdom
In line with the industry’s strategy, the average price increased by 7.1% to €381.18 per unit. “The bicycle industry in Taiwan has been developing during its history, making the island the ‘high-end bicycle kingdom’ it is today, said Agnes Hwa-Yue Cheng (Taipei Representative Office in Germany) recently. “The integration of the island’s upstream and downstream supply chain, put it at the forefront of the worldwide industry.”
Perhaps sales volumes did not meet expectations, but the increase of the average price suggests a positive outlook for the future. At the Taipei Cycle Show last March, Giant President and Taiwan’s Bicycle Association (TBA) Chairman Tony Lo stated that 2014 would be a promising year. “The global increase in cycling participation means our industry has a huge potential to expand. Look for example at the growing number of women riding sports bikes. Therefore the industry developed female-specific sports bikes. We have to look for opportunities in the market.”
Taiwan bike industry dominating
Thanks to the higher average price, Taiwan’s bicycle export value only saw a minor decline of 1% and stands at €1.170 billion from January to October 2014. The transition from a high volume, low price production base to lower volume and higher priced bikes didn’t come easy. Only six years ago Taiwan was still exporting 5 million bicycles annually. The current export volumes required large-scale reorganizations of manufacturers of bicycles, as well as parts and components producers.
Several companies relocated production to low labour cost areas or founded new subsidiaries in order to be closely located to OEM production bases. As a country Taiwan is losing more and more volume to low cost neighbours like Cambodia. The fact that Cambodia is poised to take-over Taiwan’s leading position for EU exports isn’t worrying the Taiwanese. That’s because of the six bike-making facilities dominating in Cambodia, five are of Taiwanese origin.
Philippines’ export duty free
The same goes for the Philippines. Since December 24, 2014 this country is included in the EU’s Generalized System of Preferences Plus (GSP+). This will make all imports from the Philippines to the EU duty free including bicycles, parts and accessories. In recent years bicycle exports from the Philippines to the EU markets was already growing rapidly. In the first six months of 2014 it expanded by 28% from 338,000 units in the same period in 2013 to 433,000 this year. GPS+ will also have a very positive effect on the bicycle producers in the Philippines.
But again this won’t worry the Taiwanese industry as the Philippines’ has just two big manufacturers owned by, indeed, Taiwanese. Procycle Industrial Inc. is a subsidiary of Taiwanese trader Jumbo Brico Associated Co. Ltd. and Collie Cycle Inc. is a subsidiary of Taiwanese trader Dumar International.
Taiwan’s strong position in Asia’s production base is also reflected by the growing importance of the Taipei Cycle Show. This global event is turning into an industry show where nowadays more is taking place inside the booths and behind the scenes than with fancy presentations and posh products displays. It’s all about discussions about, and showing off, first prototypes of new products for the next model year. All this is further enhancing Taipei Cycle’s objective, which is to be THE hub for all bike related business in Asia. To invigorate this concept, the Asian bike industry alliance came to light last November at the Taichung Bike Week. It was said that this alliance is (among other objectives) being founded in view of the new ISO 4210 – 1:2014 safety standards for (electric) bicycles. These harmonized standards are coming into force on a worldwide scale.