Vietnam’s Bike Makers on Verge of Bankruptcy

On July 14, 2005, the EU decided to impose anti-dumping duty on Vietnamese bicycles coded HS 8712 00 10 (racing bikes), 8712 00 80 and 8712 00 30 (other types). Tariff rates on Vietnamese bikes were 15.8 % (on Always Co., Ltd) and 34.5 % (all other companies).

 

After five years with the new tax regime, many Vietnamese bicycle producers had gone bankrupt or had to shift into other businesses. Besides, the volume of Vietnamese bikes exported to Europe sank steeply.

 

In detail, in 2005, Vietnam exported more than 1 million to the EU but the number sank to 21,400 units in 2009. Before the antidumping tax took effect, exports accounted for 80 % of the country’s output and the domestic demand made up only 20 %. But, exported bikes accounted for 60 % in 2005, 45 % in 2006, 30 % in 2007, 20 % in 2008 and 15 % in 2009.

 

In 2007 and 2008, Vietnam’s bikes accounted for only 0.61 % and 0.40 % of the EU’s total bike import, respectively. These rates are insignificant market shares in accordance with the antidumping regulations of the World Trade Organization (WTO) and the EU.

Mr Chau Vinh Chi, a representative of Asama Yuh Jiun Int'l Vietnam Company, said: His company exported over 200,000 bikes in 2005 but could not export anything from late 2006 due to too high anti-dumping duty on Vietnamese bikes. The firm had to cut off staffs from over 1,200 workers to 560. Worse still, parts suppliers for the company were also seriously affected by his decision.

 

Ride High Bicycle Company had to lay off 90 % of its workers. Remaining employees are doing outwork for other bikes producers.

 

Dragon Dong Nai, a big bike manufacturer, has collapsed and a number of other companies are on the verge of bankruptcy because a bike producer requires at least 30 parts suppliers. A domino effect is unavoidable.

 

According to data from the Ministry of Industry and Trade, the bike industry created 210,000 jobs in 2005 but the number was just about 5,000 workers in early 2010. As a result, EU’s antidumping tax has eaten up the Vietnamese bicycle industry.

Before the aforementioned difficulties, the European Bicycle Manufacturers' Association (EBMA) has sent a request for final review on Vietnamese bicycles to the European Commission (EC). Accordingly, the EC’s decision on the review is very important to Vietnamese bike manufacturers. If the EC dismissed EBMA’s request, the antidumping tax will automatically expire on July 15. In case the EC accepts to review, the tax policy will be extended another 12 months until the final conclusion is made.

 

Before this matter, Mr Vu Ba Phu, Deputy Director of the Vietnam Competition Authority under the Ministry of Industry and Trade, said: “Most of Vietnamese bike exporters are small and medium enterprises, even very small, and they do not have powerful financial capacity to dump any market, let alone the EU. Thus, Vietnamese exporters have not dumped bicycles in the EU in the past time and will not do it in the coming time.”