Bike-makers wobble along after duties blow

Many of the firms are struggling to get back on their bikes after suffering spectacular falls

Locally-owned Tin Thang Company said it was hard resuming production after the duties of 34.5 per cent on average were lifted in mid-July, 2010 after five years of enforcement.

Tin Thang was among companies hit by the duties which include foreign-backed firms like the Always Co. Ltd. and Vietnam Dheng Fa Company in Ho Chi Minh City, the Asama Yuh Jiun Int’l Vietnam and High Ride Bicycle in Binh Duong province and the Dragon Bicycles Vietnam and Liyang Vietnam Industry in Dong Nai province

Before 2005, there were no duties and Tin Thang could export 500,000 bicycles to the EU. However, the company’s director Ngo Vi Hung said, since the duties were imposed, Tin Thang had to reduce the number of workers 10-fold.

The company is now finding it hard to recruit new workers because former workers have already found other jobs. “We have been able to recruit only 10 workers since mid-July but we want 500 new workers,” he said.

It is calculated that between 1995 to mid-July, 2010, bicycle-makers in Vietnam exporting their products to the EU experienced a 50-fold fall in exports, down from more than one million units in 2005 to more than 21,000 units last year. In 2007 and 2008, Vietnam’s bikes accounted for only 0.6 per cent and 0.4 per cent, respectively, of the EU’s total bike imports.

Chau Vi Chi, director of Binh Duong province-based Asama Yuh Jiun, said before 2005, his company could churn out 300,000 bicycles per year, of which 200,000 were exported to the EU. “We had to remarkably reduce employees when suffering from the duties. Now, it is hard for us to call them back and recruit new ones,” Chi said.

Vietnam Auto Motorcycle Bicycle Association (Vamoba) reported that before 2005, the bicycle industry's total number of employees was 210,000 and had reduced to only 5,000.

Hung said that difficulties would continue facing local bicycle-makers in the coming time. “It would take at least one year for them to export bicycles. But, it is likely that made-in-Vietnam bicycles will have to face competition from Chinese ones.”

He said after five years, EU consumers’ habits and bicycle model trends had changed. “The EU’s standard requirements have also become more stringent. The allowed ratio of imported equipment used for production is now 30 per cent, down from 40 per cent as previously. This means localisation pressure is increasingly higher while we possess old technologies.”