Import duties and limits, as well as rising wages in neighbouring countries, made Cambodia the second largest exporter of bicycles to the European Union after Taiwan, an industry newsletter reports.
According to Bike-EU.com, which quoted data from Eurostat, Cambodia exported 519,389 units to EU countries between January and June of 2012, compared to 139,988 units during the same period in 2011.
According to those data, bicycle exports to the EU almost tripled. Taiwan exported 1.3 million, 16.5 per cent less than in 2011.
The Kingdom’s three Taiwanese-owned bicycle manufacturers are located in Svay Rieng province − Atlantic Cycle in the Manhattan special economic zone (SEZ) and Smart Tech (Cambodia), as well as A&J (Cambodia) in the Tai Seng Bavet SEZ. Worldtec Cycles (Cambodia), a bicycle assembly plant, is in Sihanoukville SEZ 2, the Council for the Development of Cambodia’s (CDC) website states.
While Atlantic Cycle Co and its subsidiary A&J have been manufacturing in the Kingdom for seven years, Smart Tech moved here from Vietnam two years ago. According to Manhattan SEZ’s managing director, Larry Kao, Atlantic Cycle has been operating in Cambodia since 2006.
Ly Hua, an official at Tai Seng Bavet SEZ, said the companies are of a similar size.
“There is another Taiwanese investor interested in setting up a factory here, but no contract was signed yet,” he added.
Hor Chenda, deputy director of the Bavet International Checkpoint in Svay Rieng province, said yesterday: “These factories [in Svay Rieng] import the parts from Vietnam, then they assemble the finished product here. After that, they will be exported to Vietnam and other countries.”
According to Bike-EU.com a unit produced in Cambodia cost €191 ($258) in the first half of 2012, an increase of 34 per cent on the same period in 2011. “Cambodia is turning even more towards high-end bikes, which is reflected in the average value per unit.”
Ambassador Jean-François Cautain, head of the EU Delegation to the Kingdom of Cambodia, said the expansion in bicycle exports from Cambodia to the EU “can be traced to the fact that investment relocation has taken place, partly as a result of an EU decision to impose anti-dumping duties on bicycles originating from Vietnam.”
“Dumping” occurs when a product is exported and sold at a price that undercuts the price of that product in the home market.
Sok Chenda, secretary general of the CDC, said: “Cambodia is attracting all types of labour-intensive activity thanks to its relatively low labour costs.”
“Secondly, access to the market is an important factor to bring in investors; thanks to the EU’s Everything But Arms arrangement, Cambodia can export goods to the EU duty and quota free. The same goods produced elsewhere would be subject to import taxes when they enter the EU.”
He said prior to coming to Cambodia the bicycle plants were in Vietnam. At a certain level countries as Europe, US and Canada “have considered to limit their import of bicycles from Vietnam.
Thus, some producers decided to relocate in Cambodia, producing the same goods and selling to the same clients,” he explained.
Bike-EU.com, however, reported in October 2012 that “Cambodia’s bike production in 2012 also increased because A&J expanded its capacity”.
The factories and the Ministry of Commerce could not be reached for comments.
Taiwan-based A&J chief executive officer Jon Edwards declined to comment.
To contact the reporter on this story: Sarah Thust at [email protected]
To contact the reporter on this story: May Kunmakara at [email protected]