China is the largest manufacturer of bicycles in the world, accounting for 80 percent of global output. The country produced 78 million bicycles in 2004, of which 51 million units worth US$1.6 billion were exported.
Although export sales grew by a healthy 14.5 percent last year, growth in terms of volume was only 2.4 percent, a sharp decline from the 11 percent increase registered in 2003. The higher growth rate in value terms last year can be attributed to a rise in export prices and to an increase in shipments of electric bikes, which are more expensive than other types of bicycles. From January to April 2004, the average price of a bicycle exported from China was US$32, and it climbed to US$34 over the same period in 2005. Export volume growth, on the other hand, was lower in part due to a dip in shipments to Japan, the country's second-largest market.
The following are some of the trends we see in China's bicycle export industry:
• Overseas shipments will continue to grow modestly in the next 12 months. While export volume is expected to increase by up to 5 percent, the escalating demand for electric bikes will result in a much higher rise in total export sales.
• The output of electric bikes will rise substantially, with new companies joining the line and many existing suppliers increasing focus on the product.
• A number of makers will also increase R&D on folding and chainless bikes, two of the newer product lines with export growth potential.
• Product safety and quality will gradually improve as makers in China strive to meet standards set by their second largest market, Japan.
• Most suppliers will focus on exports to the US and explore other markets, as the EU raises antidumping duties on China-made bicycles.
Mountain bikes account for about 40 percent of bicycle exports from China. In 2004, the country exported 16.7 million mountain bikes valued at US$682 million. Dirt bikes are the second largest category, with 12 million units worth US$266 million exported last year, while children's bikes were at 9 million units valued at US$136 million. Shipments of racing bikes remain low at 12,000 units, since very few suppliers in China are capable of the precision engineering required for the product. Electric bike exports are estimated at about 2 million units. China makers also manufacture city, folding, tandem and recumbent bikes, the first of which is a large export category.
This report focuses on bicycles that comprise most of China's exports including mountain, dirt, children's, city, electric and folding bikes.
The Products & Prices section discusses the features and prices of these major bicycle types. The R&D/ Design module details suppliers' research plans including development of components, while the Manufacturing section explains production and QC testing procedures.
This report also includes an overview of Taiwan's bicycle industry highlighting the factors that differentiate it from mainland China's industry.
Industry Overview
China's US$1.6-billion dollar bicycle industry is headed for a rough ride as some of its key export markets are in the process of adopting stricter quality standards or imposing higher tariffs on imported bicycles. Nevertheless, most suppliers are positive of an increase in export sales in coming months, particularly in view of the rapidly rising demand for electric bikes.
One of the major concerns among bicycle makers in China is the September 2004 directive of the Japan Bicycle Association that requires all bicycles entering the country to have the Bicycle Association Approved (BAA) mark, which places strong emphasis on safety. However, since more than 80 percent of the bicycles made in China do not meet this standard, exports are being adversely affected.
While overall bicycle shipments to Japan increased by a modest 12 percent to US$371 million last year mainly due to increased sales of electric bikes, exports of other bicycle types declined, some dramatically. For instance, shipments of mountain bikes dropped 25 percent from US$33.2 million in 2003 to US$24.9 million last year, while racing bikes plunged 82 percent from US$20,300 to only US$3,700.
In an effort to revive exports to Japan, many China suppliers are now making their bicycles safer by shifting from the use of locally made brakes and transmission systems to components made by well-known international companies such as Shimano. Many are also constructing bicycle frames with more durable materials such as aluminum alloy, chromoly or high-tensile steel.
Another issue concerning bicycle makers is the increased anti-dumping duty that the European Commission has imposed on bicycles imported from China. Effective July of this year, the current penalty tariff of 30.6 percent will be raised to 48.5 percent. Many suppliers will pass on the added cost to buyers rather than absorbing it themselves. Although higher export prices will affect exports to the European Union, the decline will only be minimal, since bicycle demand from the EU is still expected to remain high.
Likewise, Canada is presently investigating the proliferation of 15-inch and bigger bicycles, and bicycle frames imported from China. If this anti-dumping case pushes through, it may lead to increased duties or restrictions on imports as early as August.
Aside from the pressures from importing countries, bicycle suppliers have also had to deal with escalating production expenses resulting from volatile raw material costs, and the labor and power shortages that have been affecting almost all industries in China. The price of steel has increased 15 to 20 percent from last year, and many companies have had to invest in generators to keep production running during power cuts. As a result, a large number of suppliers will raise export prices by up to 10 percent in the next 12 months.
Despite all the challenges ahead, most China bicycle makers are optimistic of export growth in the next 12 months. This is primarily because of the steadily rising demand for mountain and electric bikes, especially from the country's main export market, the United States.
Supplier Profile
Beijing Shengdayuan Electric Equipment (Tianjin) Co. Ltd
Established in 2000, Beijing Shengdayuan specializes in electric bikes. While most of its products have been sold domestically for the past four years, it plans to export its upscale models to Asia and the EU this year.
The company aims to produce 300,000 units for export within the year. To support this venture, it has invested in technology for manufacturing electric bikes in foldable versions. Among its long-term plans is to expand annual production capacity of electric models to 600,000 units by 2008.
Products
Beijing Shengdayuan focuses on midrange and high-end electric bikes. It also offers folding models, which are about half the size of regular electric models when unfolded.
The company's first electric bike model was the Loading King, which has a loading capacity of 100kg. It was soon followed by the Long-distance King model, which has a cruising range of 80 to 90km.
Electric components such as motors, batteries, controllers and chargers, account for 70 percent of the total cost of a bicycle, while the frame, handlebars, brakes and wheels make up the rest.
Motors are sourced from Xin Da Yang and Sanlight, and sealed leada-cid batteries are from Anhui-based Wang Ma. The capacity of 12Ah batteries used in Beijing Shengdayuan's bicycles is said to be 10 percent more than those used in models from other makers.
The company uses Taiwan-made Cheng Shin tires, which cost about 30 to 40 percent more than locally sourced models, but are more durable. ABS frames are procured from Zhejiang province and chains are from KMC Transmission of Tianjin.
Investing US$1 million in R&D yearly, Beijing Shengdayuan currently works with technical partners to create components exclusively for its own use. Among the company's R&D projects are to increase battery charging time from 300 to 400 cycles and increase the range per charge to 50km.
Manufacturing
The maker outsources all components, and does assembly and QC testing in-house. Molding is subcontracted to factories in Zhejiang. In the factory, the electric parts and wheels are assembled prior to bicycle assembly.
The wheel assembly section is equipped with two feeding and locking, and an automatic tightening machines. The latter has four mechanical arms to hold the rim and tighten it so the wheels do not sway. Wheel truing is done manually by three workers.
In a separate workshop, the electric parts including the motor, controller, throttle and batteries are tested before they are installed on the bicycle. The batteries are checked for voltage, charging and discharging with a multimeter. All components are tested again during FQC.
The company has two assembly lines where the mudguards, seats, wheels, chains and taillights are attached to the frame. After final assembly, each bicycle is given a ride test, and units that pass are dismantled and packed in boxes. The company's defect rate is about 12 percent, or one in every eight units.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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