The Bangladeshi bicycle industry is poised for a thrilling ride.
Fuelled by surging global demand, the industry is rapidly growing and positioning itself as a significant player in the international market. Embracing a dynamic manufacturing landscape, Bangladesh is ready to seize a wave of opportunities and build a promising future.
However, the path to success is not without its bumps. The industry faces challenges like dependence on imported parts, infrastructure limitations and a need for greater product diversification.
Experts have recommended substantial policy reforms to decrease business costs and boost competitiveness.
Within the global bicycle production network, Bangladesh currently excels in assembling a high volume of parts, benefitting from a less energy-intensive manufacturing process. However, there is still room for further growth.
According to a policy brief by the Centre for Policy Dialogue, leading global producers such as China, Indonesia, India, and Japan are now dominating the sector. However, Bangladesh is rapidly making its mark.
To maintain this growing trend, Bangladesh needs to attract substantial foreign direct investment (FDI), particularly from Japan, to further integrate into the regional and global value chains.
Export oriented industry
Bicycle exports significantly contribute to Bangladesh's light engineering sector, representing 7.5 per cent of all exports.
As mentioned in the ITC Trade Map 2022 from the policy brief, bicycle exports increased from $45.2 million in 2004 to $192.6 million in 2022, representing exponential growth over 18 years.
Between 2020 and 2021 alone, there was a notable increase of approximately 62 per cent in bicycle exports from $97.8 million to $159.2 million, highlighting the sector's expanding potential.
According to the Export Promotion Bureau, also mentioned in the brief, Germany was the leading export destination in fiscal year 2023, taking 43.7 per cent of exports, followed by Austria with 23.1 per cent, and the UK with 16.7 per cent.
Bicycle manufacturing firms in Bangladesh assemble various parts into finished products, primarily importing components from China, Singapore, Taiwan, Hong Kong, Malaysia, and Thailand.
Investment opportunities have expanded, particularly in the European market, following the EU's anti-dumping duties on Chinese bicycle exports, which have opened new markets for Bangladesh, as noted in the brief.
Relies on imported parts
It is important to highlight that imported components or parts significantly dominate the bicycle value chain in Bangladesh, with the final assembly stage accounting for the bulk of the production costs.
Several crucial bicycle parts and components, including derailleurs, chain sets, freewheels and hubs, brake sets, bearings, saddles, racks, steering columns, mudguards, pedals, handlebars, tubes and forks, rims and spokes, tyres and tubes, are not readily available in Bangladesh’s local market.
The absence of these components presents significant challenges for bicycle manufacturers, repair shops, and enthusiasts in sourcing parts domestically.
This leads to a reliance on imports or limited availability, which hinders the development of the local bicycle industry.
However, certain parts and components, such as grips, seat posts, and chain covers, are available in the local market and cater to sectors where the quality requirements are less strict.
Aids in export diversification
Bangladesh is set to graduate from LDC status in 2026, after which it will no longer benefit from international support mechanisms, potentially reducing the competitiveness of its exports in the global market.
Given the nation’s heavy reliance on apparel exports, there is a pressing need for Bangladesh to diversify its export base and make significant changes to enhance its position within the global value chain.
Additionally, skilled manpower is essential to meet these expectations.
The main types of bicycles produced include utility, hybrid, mountain, motocross or BMX, touring, and racing models.
Bangladesh can manufacture a wide range of bicycles for the international market.
However, while local manufacturers have developed the expertise to assemble a variety of bicycle models, they still lack the resources to become leaders in manufacturing competitive racing bicycles.
Manufacturers need to invest in advanced equipment, such as semi-automated and automated precision tools, to specialise in the parts and components industry of the bicycle value chain.
This investment will not only increase production but also improve the quality of the parts and components produced.
Policy support a must
Bangladesh’s competitiveness in bicycle production is also hindered by redundant public policies and bureaucratic inefficiencies, including issues with importing welding gases, hiring skilled welders, inadequate electricity supply, and limited financial accessibility for SMEs.
In this regard, Bangladesh Bicycle and Parts Manufacturers and Exporters Association Secretary General Md Luthful Bari said, “There was a time when Bangladesh positioned 8th globally in bicycle export but today we are down to 18th.
“Because earlier there was a 15 per cent cash incentive in the production of bicycle components. At that time we were exporting to 18 countries. But in 2021 it was reduced to 4 per cent. As a result, many have left this business.
He continued, “Our bicycles are still going to the European market but if the EU withdraws China's anti-dumping duties, we will lose the entire European market.
“We still cannot catch the country's market properly because 60-70 per cent of bicycles are Chinese. Some commercial importers are making and selling bicycles with separate parts imported from China, thus taking over our market.”
“We urge the government to increase the duty on imported painted frames and forks. Besides, if the 15 per cent cash incentive for bicycle parts production is reinstated, uninterrupted gas and electricity supply will help this industry spread across the world like the apparel industry,” he added.
Electric bicycles
Electric bicycles are garnering global attention as an environmentally friendly mode of transport. The market for electric bicycles is expected to grow at a compound annual growth rate of 8.2 per cent, with sales reaching 6.8 million units by 2025.
This growth presents an opportunity for Bangladesh to diversify its production lines and tap into the expanding market for electric bicycles.
However, electric bicycles have not yet become prominent in Bangladesh’s bicycle manufacturing industry.
In February, the PRAN-RFL Group pioneered the manufacturing of Bangladesh's first electric bicycle, destined for export to Germany.
By improving education, and skill development, and providing technical and financial support to SMEs, Bangladesh aims to strengthen its bicycle industry.
With better infrastructure, compliance and investments in advanced machinery, the nation seeks to enhance its brand recognition and compete more effectively on the global stage.
