Cambodia’s bicycle industry caught in low-cost competition

Cambodia's bicycle industry caught in low-cost competition

Phnom Penh, Cambodia, once a city made famous by a boom in bicycle manufacturing, but as the global market landscape evolves, Cambodia’s bicycle manufacturing industry, especially the five leading bicycle manufacturers (A and J Cambodia, Speedtech industrial, Smart tech Cambodia, XDS Cambodia and Evergrand bicycle Cambodia), is caught up in the pressures of international competition and their market share is rapidly shrinking.

Read more: top 10 electric bike manufacturers in Cambodia.

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    Sharp decline in export volume and value

    Data from the Cambodian General Administration of Customs showed that the value of bicycle exports in the first five months of this year fell sharply by 37% year-on-year, from $271 million to $169 million, compared to $271 million in the same period in 2023.

    In terms of volume, Cambodia’s bicycle exports to the European Union fell by 69% year-on-year from 375,525 units in January-May 2023 to 116,980 units this year. This decline is not unintentional, but the result of a combination of factors.

    A spokesperson for the Cambodian Secretary of State for the Ministry of Commerce said, “The decline in exports is the result of a significant drop in purchase orders due to the global economic slowdown and market uncertainty.”

    The loss of market share in Cambodia’s bicycle manufacturing industry is related to the decrease in demand in the EU market. However, this does not fully explain why Cambodia’s market share has declined so rapidly.

    Before 2021, Cambodian bicycle manufacturers used to rely on the EU’s Generalized System of Preferences+ (GSP+) policy, enjoying preferential export conditions to the EU27.

    However, this policy was withdrawn after 2021 due to human rights concerns, adding to Cambodia’s bicycle manufacturing industry’s woes.

    Sharp decline in export volume and value

    Global bicycle market becomes more competitive

    At the same time, competition in the global bicycle market has become increasingly intense. Chinese mainland and Taiwan, China dominate the global market with their mature bicycle manufacturing technology and large-scale production capacity.

    China’s bicycle manufacturing industry has long ranked first in the world in terms of production and exports, while Taiwan(China) is known for its high-quality e-bikes and advanced manufacturing processes.

    Emerging economies such as Bangladesh and Sri Lanka have also joined the bicycle manufacturing fray. These countries have attracted buyers with low-cost and flexible production, gradually taking over Cambodia’s market share.

    Most of the EU’s bicycle imports in 2023 come from Cambodia, accounting for nearly a quarter of imports. Anti-dumping measures introduced by the EU in 2019 have reduced bicycle imports into the EU from China, the second largest supplier in 2023, and strengthened their own production.

    Portugal’s bicycle and component manufacturing industry has profited particularly handsomely from the repatriation of bicycle production from the European market to the continent.

    Historically, Germany and Italy were Europe’s largest producers of bicycles, but in recent years they have been replaced by Portugal, which now produces more than a fifth of all bicycles produced in the EU.

    Read more: top 10 electric bike manufacturers in Europe, 2024 top 10 Taiwan electric bike manufacturers.

    Global bicycle market becomes more competitive

    Failure of price competition strategy

    In response to competition and declining market share, Cambodian manufacturers have tried to attract customers by cutting prices, but this strategy has not worked.

    The average price of exported bicycles has fallen sharply to €142 from €377 in 2023, while export volumes have fallen by 69%, and it is no longer sustainable to rely on price competition alone.

    Another shortcoming of Cambodia’s bicycle manufacturing industry is the lack of technology and innovation.

    In the wave of transformation of the global bicycle industry to intelligent and electrified, Cambodian manufacturers have failed to keep pace and lack high-end products that can compete with competitors.

    Failure of price competition strategy

    Final words

    Over the past few years, the Cambodian bicycle manufacturing industry has grown rapidly to become an important link in the global bicycle supply chain due to its cost advantages and export incentives.

    However, with the changes in the global market and consumer demand, especially the rapid development of bicycle manufacturing in countries and regions such as Bangladesh and Sri Lanka, Cambodian manufacturers are facing more intense competition.

    These emerging competitors are gradually changing the landscape of the global bicycle market with their sophisticated production technologies, economies of scale and improved product quality.

    Read more: top 10 electric bike manufacturers in Bangladesh, top 5 electric bike manufacturers in Sri Lanka.

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    Hi, I'm an experienced writer about mechanic and an expert on bike and e-bike tech who appreciates practical, beautifully-engineered things. And of course, I love cycling.
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