EU Import Figures Indicate Hard Drop in Trekking, Road and MTB Sales
BRUSSELS, Belgium – Booming e-bike sales in many EU markets is proving to have a major downside. Heavy pressure on sales of conventional bicycles. This is clearly reflected in the EU import. Eurostat figures for the first three quarters of 2017 show that big shifts per country are taking place. They indicate a hard drop in higher-priced trekking, road and mountain bikes sales.
At first sight the EU import of conventional bicycles (of all categories) shows a not remarkably hard drop. It’s limited to close to 5%. However, when taking a closer look, a more disturbing fact comes to light. In particular when looking at the EU import of conventional bicycles from Taiwan.
Import from Taiwan
Such conventional bicycles imported from Taiwan are of higher quality and with that higher-priced, as they come from Giant, Merida, Ideal, Axman, as well as various other quality makers. What they export to Europe are conventional bicycles of all categories except kids’ bikes, as it is commercially more sensible to produce these in countries like the Philippines. It means that the drop in the EU import from Taiwan of conventional bicycles reflects a drop in the EU market for such higher-priced trekking, road, and mountain bikes. This is confirmed by the Market Reports from lots of EU member states published by this trade journal in 2017. Almost all reports point to a major drop in sales of conventional bicycles.
Production shift out of Taiwan?
The EU imports from Taiwan dropped a big 23% during the first three quarters of 2017. It follows a trend from 2016 that showed the Taiwan export of conventional bicycles dropping by over 20% in that year. It raises the question whether bicycle production in Taiwan is shifting to other Asian countries; especially those countries that benefit from the European Union’s Generalized System of Preferences (GSP)?
GSP+ import duty free status
This GSP system grants import duty benefits to countries with underdeveloped economies and in particular to these countries that do not have a weapons (exporting) industry. Cambodia, Philippines and Bangladesh, all major bicycle exporters to Europe – see table, benefit from EU’s GSP. These countries are even granted the highest ‘preferential import’ level as the three have the GSP+ status. It means that when importing conventional bicycles from Cambodia, Philippines, and Bangladesh there’s no import duty levied. Instead of EU’s regular 14% import duty the imported bicycles from the three countries can enter the markets from the 28 member states without any import duty. The GSP+ grants them import duty free status.
Cambodia is the major beneficiary of its GSP+ status. On the bicycle import from this country the Eurostat data covering the first nine months of 2017 compared to the same period of 2016 shows a remarkably stable picture. The import from Cambodia dropped by only a half percent to over one million units. Due to the big drop in the EU import from Taiwan Cambodia ranks now as EU’s number one import country for conventional bicycles.
In that ranking Taiwan has dropped to the second place with a EU import of 963,000 bicycles; down 23% on the 1,255,000 the country exported in the first nine months of 2016.
Also remarkable is that the import from Bangladesh shows exactly the same development as Cambodia; a very stable figure of about 535,000 conventional bicycles; down less than one percent on the 2017 total for the first nine months. Bangladesh ranked third in the Top Five of EU bicycle import countries, but has been passed by Philippines during the first nine months of 2017. The EU import from this country was up substantially in this period; from 485,000 to 603,000 units resulting in a big 24% gain. It raises the question – has production been shifting from Taiwan to Philippines or are Taiwan’s customers from Europe now opting for the duty free bicycle import from the Philippines?
At the end of 2014 the Philippines got GSP+ status. Almost at the same time Shimano opened a bicycle components producing facility based on the Philippines island of Luzon. It’s not a small facility either – as the new factory on a 106,000 square metre plot required an investment of some € 25 million.
Beginning of 2015 it was already noted by this trade journal that the Philippines’ GSP+ status in combination with Shimano’s new facility in the country would create new dynamics for EU’s bicycle import from Asia. That seems to be now taking place. Apart from a drop in demand for conventional bicycles from Europe it looks like that there’s also a shift taking place, from Taiwan to the Philippines, in the same way as happened with Cambodia.
Taiwan operated bike production
Today there two larger bike producers with three factories in the Philippines. Like Shimano they are all located on the island of Luzon. Procycle Industrial Inc. has two Philippines factories and is a subsidiary of Taiwanese trader Jumbo Brico Associated Co. Ltd.
The second large producer is Collie Cycle Inc. This is a subsidiary of Taiwanese trader Dumar International. However, Collie Cycle was in June 2015 convicted for circumventing the anti-dumping regulations on bikes imported from China. On its export to the EU member states there’s now an anti-dumping duty of 48.5% levied.
Remarkably, the fifth country named in the Top 5 of bicycle supplying countries to the EU is China. The bicycle import from this country – which is heavily burdened with the 48.5% anti-dumping duty – showed a 39% growth to 446,000 units. What triggered this growth is at this moment unknown.