TAIPEI, Taiwan - The slow economic situation in Europe, in combination with a rainy summer, has forced the Taiwanese bicycle industry to start looking seriously for new markets. Market conditions in Europe have been very uncertain in the past years. 2009 showed double digit declines while in 2010 everybody was exuberant again with sales rising.
Early 2011 saw everyone still very positive, although the harsh winter conditions in Europe were already tempering sales forecasts for this part of the world. Due to declining sales in Europe the Taiwanese bicycle industry had to do its utmost to maintain their export position worldwide. In the end they could not find enough new markets to compensate for their losses in Europe, although they still managed to grow their export value considerably.
At Taipei Cycle Show 2011 the chairman of the Taiwan Bicycle Exporters Association (TBEA), Anthony Lo pointed out that the total export value of Taiwan’s bicycles could grow 10% or more in 2011. He proved to be right as the statistic of the Taiwan Bureau of Foreign Trade (BOFT) clearly show an increase in export value of 13.1% between January and the end of October.
Compared with the same period in 2010 the export value went up from US$ 1.18 billion to US$1.33 billion. At the same time, the export in units dropped drastically, by no less than 14.6% to 3,539,485 bicycles worldwide. For TBEA chairman Anthony Lo, this is a clear indication that Taiwan is no longer a supplier of low and mid-end bicycles, but is focusing strongly on high end products, new designs, and product innovation.
Big differences in export markets
The fluctuations in the bicycle exports of Taiwan can be subdivided into three areas. The export in units changed significantly, although the differences per country are remarkable. The total figures for the EU-27 countries look pretty drastic. In decline total export in value was limited to just 2.7%. Between January and October 2011 the Taiwanese exported bicycles with a total value of US$607 million. That is US$17 million less than in the same period in 2010. In units the turn down was considerably bigger as the Taiwanese companies shipped over 2.2 million bicycles to Europe last year, or 22% less than in 2010.
The most important down fall was the UK, importing 37.7% fewer bicycles from Taiwan. Between January and October 2010 the UK still imported 933,682 bicycles while this number dropped to 581,317 in 2011. Although the decline in value shows less severe figures, it is still significant, amounting to US$161 million in 2010 and US$132 million in 2011. Other major European countries in which the Taiwanese lost markets are the Netherlands (-9.5%), Germany (- 8.9%), Denmark (- 39%) and Spain (- 16.6%).
However the Taiwanese companies were able to avoid heavy losses and to keep their export value to European countries more or less on the same level as in previous years. For example the export value to the Netherlands showed a small increase of 1.5%, to Germany 7% and a 2% drop for Spain.
Double digit growth to North America
The second main market for the Taiwanese bicycle industry is North America (NAFTA). Exports remained stable at around 625,000 units while the value showed a huge increase. The total turn over the export went up from US$288 million to US$369 million, a 28% increase from January to October. In the first half of 2011 export statistics to North America were even more spectacular as the volume went up by 13.3% to 371,000 units and value shot up 42.5% to US$212 million.
Big differences appear when breaking up the North American market into the United States, Canada, and Mexico. In value the export to all three countries went up by double digits, increasing 25% to the US, 50% to Canada and 113% to Mexico. Even more important are the differences in units exported to three countries.
Taiwan’s most important market in America, the US showed a small decline of nearly 3% from 560,941 units between January and October 2010, to 544,511 units in the same period in 2011. You could conclude that the TBEA chairman’s conclusion that Taiwan is no longer a supplier of low and mid end bicycles directly applies to the North American market.
Free trade with China
Last December Merida reported a strong growth in its export from Taiwan to China. According to Merida its factories in Taiwan have been running at full capacity since October. The company is also expanding the capacity of its factory in China from the current 50,000 units per month to 60,000 this winter. As well, Merida is investing some €22.6 million in a third factory in China, the company’s biggest one yet. In the past months the average unit price of Merida bikes on the Chinese market increased by 13%.
“Our future lies in China and one of our goals is to develop this rapidly expanding market”, said TBEA chairman Anthony Lo, at the press conference hosted by the Taiwan External Trade Development Council (TAITRA) at Eurobike last September. The export statistics over January till October makes clear what he was talking about.
Trade between Taiwan and China is changing rapidly thanks to the Economic Cooperation Framework Agreement (ECFA). It is a preferential trade agreement between the governments of the People's Republic of China (mainland China) and the Republic of China (Taiwan) that aims to reduce tariffs and commercial barriers between the two sides.
As a result of this trade agreement the import tariff for bike products (P&A as well as complete bicycles) which stood at 12%, was cut to 5% in 2011 and has been waived completely as of January 23, 2012. It offers Taiwan’s bicycle industry free access to the Chinese market. Not surprisingly, the big 3 Taiwanese bike manufacturers Giant, Merida, and Ideal Bikes, are optimistic about their future sales in China.
Although in volume and value the exports to China are not that big, the growth percentages are impressive. The export volume increased from 10 to 18 million units, while the export value grew from US$4.5 million to just under US$10 million. The Taiwanese also saw their export grow to several other countries in the Pacific Rim. For example the bicycle business with Japan went up no less than 37% from US$ 62 million between January and October 2010 to more than US$85 million in the same period last year.