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THURSDAY, JULY 24, 2025
Bicycle makers face crisis as war, global economic slowdown hit export

Industry

Jobaer Chowdhury
15 July, 2023, 01:25 pm
Last modified: 16 July, 2023, 12:16 pm

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Bicycle makers face crisis as war, global economic slowdown hit export

Some companies have shuttered factories because of export order suspension

Jobaer Chowdhury
15 July, 2023, 01:25 pm
Last modified: 16 July, 2023, 12:16 pm

Corvo Bicycle Limited has been manufacturing bicycles in Karnaphuli Export Processing Zone, Chattogram for over a decade, relying on Trident Cycles Company Limited's factory in the same EPZ for parts production. Corvo usually produces 350,000 to 400,000 units of bicycles annually. However, both the Taiwanese companies' factories have been closed for three months due to a decline in purchase orders.

AKM Tanvir Uddin, manager (commercial) of the two companies, said, "The export markets for bicycles produced in Bangladesh are mainly in Europe. Purchase orders have come to a halt due to the post-pandemic global economic crisis and the Russia-Ukraine war. Our European buyers still have surplus stocks of bicycles, which has led to the closure of our factories since April this year."

Despite this, over 300 workers are being paid 50% of their basic salary as per the layoff policy of Bangladesh Export Processing Zone Authority (Bepza), he added.

The challenges faced by Corvo Bicycle Limited are not unique, as the bicycle export sector in Bangladesh as a whole has been affected. 

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Alita BD Limited, a Malaysia-based company that pioneered bicycle exports from Bangladesh over two decades ago, also has faced a layoff of approximately three and a half months in two phases within the past eight months.

AHM Ferdous, general manager of the company, shared that production at the factory, which used to manufacture around 150,000 units annually, has significantly decreased of late. 

The suspension of purchase orders has forced Alita BD Limited to halt production for a total of three and a half months within the past eight months. This disruption has resulted in an expected decline in their annual production to 40,000-50,000 units in the current fiscal year.

Industry insiders have said the bicycle sector emerged as a beacon of hope during the challenging time of the Covid pandemic when most other industries experienced a downturn in business. However, the post-pandemic economic crisis, the Russia-Ukraine war, and global inflation have taken a toll on bicycle exports, they added. 

In FY23, the export income sector decreased by 15.31% year-on-year, and currently, most companies have their export orders suspended, further exacerbating the situation.

According to the Export Promotion Bureau (EPB), bicycle and non-motorised two-wheeler exports from Bangladesh generated $142.24 million last fiscal year, down from $167.95 million a year ago. 

Exporters fear that the decline in export income may continue in the current financial year.

Industry insiders said since entering the bicycle export market in 1995, Bangladesh has made significant progress. Initially, foreign companies were the sole exporters, labeling their bicycles as "Made in Bangladesh". 

However, local conglomerates Meghna Group and Pran-RFL Group joined the list of exporters in 2003, and 2015, respectively, gradually expanding the industry's reach. Currently, bicycles are exported to 29 countries, including Europe, America, and India, with 80% of these exports destined for European Union countries.

The global demand for bicycles saw an uptick during the pandemic due to heightened health awareness, according to sector insiders.

They added that while many countries halted production during the pandemic, Bangladesh continued its operations, resulting in the sector's growth to $130.11 million in FY21 from $82.84 million in FY20. The growth continued in FY22. 

However, surplus stocks at stores and the economic crisis faced by major bicycle export markets of Bangladesh in the wake of the Ukraine war caused a decline in bicycle sales. 

The global bicycle market is valued at approximately $35 billion.

Local exporters reduce production

Lutful Bari, general secretary of Bangladesh Bicycle and Parts Manufacturers and Exporters Association and director of Meghna Group, told TBS, "Foreign buyers have been unable to sell their excess bicycle stocks, leading to a lack of purchase orders. Consequently, we have reduced production by 20%-25%. Additionally, the gas and electricity crisis has further disrupted production."

Meghna Group usually manufactures around nine lakh units of bicycles while PRAN-RFL produces seven lakh units of bicycles annually, according to company sources.

Kamruzzaman Kamal, director of the marketing department at PRAN-RFL Group, mentioned that while the domestic market is performing well, there have been no foreign purchase orders in the past two months. 

Buyers hope to sell the inventory before the end of the year, potentially ending the deadlock, he mentioned.

Downturn in European markets

This crisis faced by Bangladeshi bicycle exporters aligns with the global trend of declining bicycle sales. 

According to a Forbes report published this February, there was a global boom in cycle sales during the pandemic. Since then, however, sales have softened. 

The Bicycle Association now says annual cycle sales in the UK dipped to 1.88 million units in 2022, a 20-year low.

The membership organisation's Annual Market Data Report for 2022, titled Riding out the Storm and published today, reveals that non-electric bike volumes fell 22% in 2022. This was 27% below pre-Covid levels in 2019.

"The [bike] market faces a turbulent and challenging year ahead," said John Worthington, author of the BA's report and the organization's head of insights.

"Once overall supply and demand return to a better equilibrium, and the economic environment improves, longer-term prospects for the cycling market are positive," he soothed, but warned that "for the next 12 months the industry will need to weather a difficult storm."

Citing a report by news agency AFP, France-based news agency News In France reported last month that 14.7 million non-e-bikes were sold in 2022 in the EU and UK, down 9.1% from 2021. In 2022, electric bicycles (VAE) reached a record figure of 5.5 million units in Europe. One in four bikes sold on the continent is therefore electric. Bicycle sales slowed sharply in Europe in 2022 after strong growth in the midst of the pandemic, but electric bikes continued to explode.

Economy / Infograph / Top News

bicycle / Economic slowdown / Bangladesh / Bicycle manufacturing industry

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