Regulations Trigger Massive Production Relocation to Cambodia
PHNOM PENH, Cambodia – The bicycle industry in the South East Asian nation Cambodia is on the brink of a major hike in production volumes. Preparations have been taking place for a while, but might get a push depending on the outcome of the G20 meeting later this week in Japan.
At Taipei Cycle show 2019, it was already obvious that production relocation was triggered by EU dumping actions and U.S. tariffs, as Bike Europe reported.
But the outcome of a meeting, if any, between Chinese President Xi Jinping and US President Donald Trump at the G20 in Japan will be decisive how quickly the relocation takes place. In the Strait Times, chairman of US bicycle company Kent International Inc. Arnold Kamler explained the considerations taken by his Chinese bicycle supplier Shanghai General Sports Co Ltd., “If the meeting goes very well, they will go ahead at one pace. If not, they will go into warp speed.” Shanghai General Sports Co Ltd is currently building a new factory in Phnom Penh as a part of a plan to shift the production of millions of bicycles from China to Cambodia.
The relocation plan stretches out over three to four years
50,000 bicycles a month
“In case of the speed scenario, Shanghai General Sports can build 50,000 bicycle a month next year,” said Kamler in the interview. “The relocation plan stretches out over three to four years during which 50 to 60 percent of the capacity of the Chinese factory will be moved to Cambodia.” He also added that Kent is one of the main customers of Shanghai General Sports ordering millions of bicycles a year.
Cambodia’s special economic zones
While Taiwan and Vietnam are the main alternative locations for production relocation of Taiwanese companies, Cambodia is seeing great interest from Chinese companies firms trying to relocate their operations to get around punitive US tariffs and European dumping duties. The small South East Asian country enjoys tariff-free access to both the US and the EU. According to the Strait Times report, “factories in Cambodia’s special economic zones produced 1.4 million bicycles worth $287 million last year. The production is mainly targeted for the European market and only a small percentage is bound for the US.” With the arrival of new Chinese manufacturers in the country this ratio will change soon.
The report also mentioned that, “according to Cambodia’s Ministry of Commerce at least two new Chinese bicycle firms registered recently. These are Evergrand Bicycle (Cambodia) Co Ltd and XDS Bicycle (Cambodia) Co Ltd.”
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