Bicycle exporters reopen with hopes high
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SUNDAY, FEBRUARY 05, 2023
Bicycle exporters reopen with hopes high

Industry

Mahfuz Ullah Babu
30 April, 2020, 10:00 am
Last modified: 03 May, 2020, 04:09 pm

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Bicycle exporters reopen with hopes high

Global importers have hinted at a potential surge in the demand for bicycles after the Covid-19 pandemic

Mahfuz Ullah Babu
30 April, 2020, 10:00 am
Last modified: 03 May, 2020, 04:09 pm

It is summer in Europe – the main market for Bangladeshi bicycle exporters. 

Countries like Germany, the Netherlands and Britain have already opened most of their bicycle shops to help people avoid using public transportation. 

Bangladeshi bicycle exporters, after a month-long hibernation, are now returning to factory floors with an increasing flow of orders. At the same time, the Bangladesh government is also allowing factories to reopen gradually. 

Global importers have hinted at a potential surge in the demand for bicycles after the Covid-19 pandemic, say Bangladeshi exporters. 

Bicycle exporters, like other export-oriented factories, are not subject to the ongoing shutdown as per government orders. 

"However, we kept our plants closed to cooperate with the government's effort to control the spread of the novel coronavirus in our country," said Md Lutful Bari, operations director of Meghna Group, the bicycle export leader.  

"Now our buyers in Europe are knocking for the next shipments as they are forecasting higher demand there. The season is on. We need to resume operations soon with administrative support," Bari added. 

He said bicycle plants are not very crowded by nature, and they are fully-prepared to ensure anti-pandemic measures at factories. 

The group – from its three parts-manufacturing and three assembly plants at Gazipur – is exporting around four lakh units a year, which is around half of the country's total annual exports. 

The company also entered into a joint venture with German bike giant Cube in 2018 to manufacture high-end bicycles for export – including carbon-body and electric ones. 

Taiwanese venture Alita Bangladesh Limited, that pioneered bicycle exports from Bangladesh in the mid-1990s, has also kept its plant at Chattogram EPZ closed during the nationwide shutdown. 

Alita officials went to the office on Monday with a plan to resume the plant's operations as early as possible – most likely with limited manpower, initially. 

AHM Ferdous, general manager of the company, told The Business Standard, "Bangladesh is in a good position in Europe and market dynamics are likely to favour Bangladeshi exporters who are capable of shipping affordable but high-quality bicycles."

He said a number of European mass market importers are seemingly optimistic about the demand for bicycles Bangladesh caters with a moderate price tag.

To avoid public transportation, an increased number of people in the west are likely to use bikes for city commuting in the coming days, believes Ferdous. 

"However, if our exporters face any disruptions to keep up the pace with European importers, in terms of lead time or costing, it will not be impossible that some of them look at our East Asian competitors," said Bari, also secretary general of Bangladesh Bicycle and Parts Manufacturer and Exporters Association.  

For the industry, seven to eight weeks until mid-March was a period of disruption to the raw material supply chain which is mostly dependent on East and South-East Asian suppliers. 

As soon as those countries came back to plant level normalcy, Bangladesh went into a shutdown and at the same time western importers were also going careful before ordering a lot. 

There had been some paused delivery to cautious buyers in April, but not all the importers were conservative.  

RFL Group's bicycle venture Rangpur Metal Industries had some shipment deadlines to meet and it could not afford to keep its plant at Habiganj Industrial Park completely shut. 

Joynal Abedin, chief operating officer of the company, told The Business Standard, "Successful manufacturing involves a chain of activities in full tune. No disruption is allowable at any point if a manufacturer intends to keep up the pace and stay ahead." 

His company had sufficient raw materials and parts for the immediate consignments. The frame welding plant needs Argon gas, which is supplied by only one company in the country and during the shutdown the company was not able to continue the supply. Stored Argon helped the factory run at just 10-20 percent of its capacity. 

"We cannot but stop work and wait for Argon to come if the supplier fails to resume its operation soon," said Abedin. 

The company began sending bicycles abroad six years ago, and has already surpassed the milestone of exporting one lakh bikes a year. 

Abedin is also optimistic about the European market, where Bangladeshi exporters enjoy the Generalised System of Preferences facility. Currently over 95 percent of the country's exported bicycles go there – which was around 80 percent a few years ago. 

According to last year's data, Bangladesh is the third-largest source, other than European Union countries, for importers on the common market. 

The antidumping duties since the 1990s did not allow China to remain on the top in Europe, where EU manufacturers cater 60 percent of Europe's demand. 

Taiwan and Cambodia are ahead of Bangladesh there, while the Philippines – along with some Eastern European countries – is trying to beat Bangladesh in the EU market. 

Abedin is also hopeful about markets other than Europe, especially in North America where customers seem more price-sensitive compared to Europe. 

He said, "European bicycle customers are extremely quality-conscious, and we are catering to them successfully. Now it is our turn to look at the US and Canada again – the bigger markets." 

"In recent months, a number of North American buyers have knocked us as they are trying to diversify their sourcing. I see the full potential of bicycle exports in the coming days. If we can handle North American buyers, Bangladesh will significantly add to its annual exports of around 8 lakh bicycles," Abedin added. 

The number of bicycles exported annually has doubled in a decade. 

The government is supporting bicycle exporters with no duty on imports of raw materials and semi finished raw materials – alongside some tax breaks for new investments. Local market manufacturers or assemblers are paying net duties against imports of bicycle parts ranging from 57-89 percent. 

Most of the Bangladeshi manufacturers are capable of making almost all the parts of a bicycle. 

Due to buyers' criteria or scale factor, they are relying on imports of some specialised parts mainly concentrated in areas of suspension, transmission and electronics. 

Export Promotion Bureau data shows the country earned over $84 million in the 2018-19 fiscal year from bicycle exports – which once topped $126 million in fiscal year 2014-15. 

Over the July-March period of the current fiscal year, bicycle exports surpassed the strategic target by 6.21 percent. Over the first nine months of the fiscal year, the export earnings of $67.25 million were 4.57 percent higher than such earnings from the same period of the previous fiscal year. 

A Persistence Market Research report, a few years ago, estimated that the global market for bicycles would expand by 37.5 percent between 2016-24 and the market size would reach $62billion by 2024. 

Top News / Trade

bicycle / export

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