Bicycle industry will recover, anti-dumping duties removed

Directorate H – Trade Defence of the European Commission (EC) has informed Vietnam that anti-dumping duties on bicycles will be removed as of July 1, 2010. This is good news for the bicycle industry.

Prior to July 2005, bicycles were one of the important industrial export items of Vietnam. At its peak, the number of bicycles exported to EU markets reached nearly 1.1 million annually, accounting for 11.69 percent of the EU’s import market share.

Since July 1, 2005, the EC imposed an anti-dumping duty on Vietnamese bicycles, with an average tax rate of 34.5 percent. Bicycle exports to the EU decreased rapidly. In 2009, only 21,400 bicycles were exported, and Vietnam-made bicycles accounted for only 0.1 percent of the market share in the EU.

Many of bicycle and bicycle part manufacturers shut down their factories, and hundreds of thousands of workers lost their jobs. The EC decision on anti-dumping duties brought Vietnam’s bicycle industry to a halt.

Many believe the recent decision to remove the duties will revive the bicycle industry.

Vu Ba Phu, Deputy Director of the Competition Administration Department (CAD) under the Ministry of Industry and Trade, maintained: “I can say for sure that Vietnam’s bicycle industry will recover, but it is not clear how far.”

Phu noted that the ministry‘s officials will travel south this week to work with bicycle manufacturers to learn more about production capability and difficulties, to assist them in re-developing production.

Bicycle manufacturers received the news on the anti-dumping duties removal with optimism. Chau Vinh Chi, a senior executive of Asama Yu Jiun, one of the leading bicycle manufacturers in Vietnam, remarked: “Over the last many years, we have kept in contact with our European clients, and now is the right time for the company to seek orders.”

Chi believes that they will be able to receive their first orders by the end of July and it is very likely that, by October, the number of EU export contracts will be equal to 65 percent of the number five years ago.

Dragon Company is also trying to contact old clients to seek export contracts, and is considering recruiting workers to upgrade production capacity.

According to Vu Ba Phu, once Vietnam bicycles no longer bear anti-dumping duties, its products will be more price competitive than Thailand and Indonesia.

“Now Vietnamese enterprises can make ¾ of the total bicycle parts needed, while labour costs are much cheaper than other countries, so the prices of Vietnam-made products will be good,” he observed.

China-made bicycles still bear anti-dumping duties in Europe, so this is a big opportunity for Vietnam’s bicycle industry to recover.

As a business, Chi believes that Vietnamese enterprises can resume production at any time, because production lines remain untouched. However, this does not mean that production capacity can return to the high levels of pre-2005.

He argued that the biggest problem for bicycle manufacturers is recruiting and training workers. Over the last five years, firms had to lay off thousands of skilled workers. Now workers must be retrained, which will cost a lot of money and time.

“It will be not easy to recruit workers now,” Chi admitted. “There are only 5000 workers in the bicycle industry, and it will take many years to have 200,000 workers, the number that Vietnam once had.”

Tags: Vietnam Bicycle industry