Germany’s Cube teams up with Meghna to make high-end bicycles
Europe’s biggest bicycle manufacturer, Cube, has teamed up with Meghna Group to produce high-quality cycles in Bangladesh.
In June, the two companies formed a joint venture company named Hana System Ltd. with investments totaling around Tk 100 crore.
70 percent stake of Germany’s Cube and 30 percent of Meghna in the new entity, which is expected to start exporting from next year.
“Cube is renowned for manufacturing high-quality bicycles and their entry into Bangladesh will attract many foreign buyers,” said Mizanur Rahman, chairman of Meghna Group that manufactures and exports bicycles.
Industry people are hopeful that Bangladesh’s exports to the European Union will jump significantly now that Cube has entered the market. For nearly a decade, exports have been stuck at around $100 million per year, but with China facing a 48.5% anti-dumping duty from the EU, Bangladesh is well-positioned to take advantage of the situation and increase its shipments to European countries.
Presently, Bangladesh produces low-end bikes that are sold at $60 to $150 a piece in the export destinations. But the bikes that will be produced at the joint venture company will be sold at a minimum $231 (200 euros), according to Rahman.
In phases, carbon and electric bikes will be produced at the factory and will be priced $1,500 and $1,000 a unit respectively, he said.
Bangladesh has long been trying to diversify its export basket in order to cut the country’s overreliance on the apparel sector and the success has been limited largely because of its inability to produce value-added items.
The country shipped goods worth $36.66 billion in 2017-18, of which garment exports accounted for more than 80 percent, data from the Export Promotion Bureau showed.
Bicycle exports fetched nearly $86 million last fiscal year, down from $126 million in 2014-15. The government has set a target to earn $91 million by exporting the item in the current fiscal year.
Rahman stated that bicycle exports would reach $500 million in the next five years. Meghna Group, the leading bicycle exporter of Bangladesh, sent 400,000 units to the 28-nation bloc last year. Alita and Pran-RFL are the other two exports. Starting next year, the joint venture plans to ship another 240,000 units per year. Backward linkage industries of bicycle will also grow as the joint venture will buy half of its necessary materials from the local market, Rahman said.
The European Union imported more than 6.8 million bicycles in 2017, up 1.32 percent from the previous year, according to Eurostat. Cambodia was the top supplier, sending 1.4 million units, followed by Taiwan (1.31 million units), the Philippines (0.83 million units), Bangladesh (0.8 million units) and China (0.63 million units).
The EU trade rules allow Bangladesh and Cambodia to export bicycles, parts and accessories to the EU without having to pay 14 percent duty on bicycles and 4.7 percent duty on accessories. The global bicycle market is expected to grow to $35 billion by 2022, up from $30 billion now.
