The booming bicycle industry in Bangladesh

Wafiur Rahman
Wednesday, April 19th, 2017


 

Global demand helping export growth, while European investors show interest

 

Bangladesh started exporting bicycles to the European market in 1999. The following year, the value of the country’s bicycle export stood US$10 million, the figure of a new item in the export basket that only indicated growth potential. A decade later, the annual export of bicycle rose to $105 million. Despite higher growth in export performance in terms of percentage, Dhaka has captured only an insignificant portion of the global bicycle market of $60-plus billion a year.

 

And rising costs of bicycle manufacturing pushed by wage increase in China has shifted the focus of sourcing of bicycle making to countries like Bangladesh which also has a favourable market access to the European Union (EU).Bangladesh is Europe’s 5th biggest bike supplying country after Taiwan, Cambodia, Philippines and Thailand.

 

Entrepreneurs say Bangladesh can easily increase its market share in the global bicycle exports by taking domestic preparations given the scope in the Western market. The investors need supports, especially conducive environment for the growth of the sector.

 

Some European investors are willing to make investments in Bangladesh’s bicycle industry. Sales of bicycles, many of which are imported, in the local market are also on the rise, thanks to an increase in the number of bicycle riders in the country. So, this is high time Bangladesh made its bicycle industry sustainable banking on market prospects at home and abroad.

 

It was Meghna Group which began exporting bicycle. Now, there are 20 companies that are engaged in making bicycle targeting for the export market and local market. “New investments are coming and even foreigners are interested in setting up plants here,” said Mustafa Ahmed Tanvir, general secretary of Bangladesh Bicycles and Parts Manufacturers and Exporters Association and also managing director of Trans-World Bicycles Limited.

 

Bangladesh now exports 1.5 million pieces of bicycles every year. ‘Of course, the demand in the global market is much higher and we can take advantage of the market opportunities,’ he added.

 

Pran-RFL bike is also joining the market. The EU’s new Generalised Scheme of Preferences (GSP) facility which went into force on January 1, 2014, and runs up to December 31, 2016, is ‘the driving force behind’ such initiatives, according to the latest report of the BIKE europe.

 

Under certain conditions, GSP allows Bangladesh (and Cambodia) to export bicycles, parts & accessories to the EU’s 28 member states without the regular 14% import duty on complete bicycles and 4.7% duty on imported parts and accessories.

 

Bangladesh is already for some years benefitting from the EU trade incentives that boosted the country’s bicycle and bike products export to the EU market. In the first 10 months of 2013, Bangladesh exported 435,530 bikes to the EU, 7.4% up compared to the same period in 2012.

 

According to Export Promotion Bureau, the target for exporting bicycle for the current fiscal year has been fixed at Tk 1081 crore as against the previous year’s achievement of exports worth Tk 865 crore.

 

Following the footsteps of Meghna Group’s plant in Gazipur, four other companies set up factories for manufacturing bicycles targeting the export market.

 

H Bicycles Ltd, Trans-World Bicycles, Siraj Bicycles and a German-Bangladesh joint venture plant were there in the race. They are engaged in producing mountain bike, city bike, freestyle, trekking, folding, beach cruiser and children’s bike. The prices of these varieties of bicycles range between US$80-85 a piece, which is considered highly competitive in the European market and America.

 

Those who import made-in-Bangladesh bicycles include Relay of England, PMC, Motor and Sports, Aldi of Holland, Bestencritch of Germany, Inter-Bike, M and F of Belgium, C Maker and Formula Cycling Company. China was once, and is still, the dominant player in the global bicycle market as it supplied almost 60% of the bicycles sold worldwide.

 

However, Beijing is gradually its competitiveness due to rise in wage and other costs of living, many factories including bicycle factories have been closed or relocated to elsewhere. As a result, some of the Western manufacturers got back certain edge over China and they are looking at Bangladesh as a sourcing country.

 

Accordingly, some European investors expressed their willingness to invest in bicycle industry to take advantage of the market vacuum and GSP facilities in the EU market. This is where Bangladesh has a comparative advantage to raise its market share. With growing exports and sales in the domestic market, Bangladeshi entrepreneurs have the scope to make the bicycle industry more vibrant.

 

Infrastructure development a priority: Mizanur Rahman

 

Availability of labour with reasonably low wage and of the latest technology has given Bangladesh a competitive edge over other countries such as China, Taiwan, and Europe in manufacturing bicycles, according to Mizanur Rahman, a former president of Bangladesh Bicycles and Parts Manufacturers and Exporters Association and chairman of Meghna Group.

 

“This is clearly an opportunity for us and we should try to exploit the potential by taking necessary preparations and steps,” he said.

 

In this context, the entrepreneur emphasised the importance of the role of the government in providing infrastructures and land. “We need political stability and policy consistency. Foreigners are ready to join us to make bigger and more plants of bicycles and we can earn higher amount of foreign currency from this growing sector,’ he said. ‘What we need most is the environment, congenial environment for investments and doing business.”

 

He referred to China’s loss of market and GSP facilities and pointed out that Bangladesh could emerge as a major player in the global bicycle market if necessary steps are taken right now. Local companies are also interested in setting up bicycle plants, he added. Currently, more than 5000 workers are employed in the bicycle factories that export bicycles to different countries. ‘We from Meghna Group started exporting bicycles and others joined us. More can come to the industry and contribute to national development.’

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