Manufacturing Bicycles and E-Bikes in Vietnam and Cambodia
One of the main topics discussed by manufacturers at the 2024 Taichung Bike Week event last month in September was the inevitability of a major shift in bicycle and e-bike production to Vietnam and Cambodia in the year 2025.
Vietnam
The European Union has announced zero (0%) import duty incentives in favor of Vietnam origin bicycles and e-bikes. This EU policy is part of a free trade agreement with Vietnam for the gradual reduction of all import duties for all goods across the board. Both bicycles and e-bikes must conform to Vietnamese or European origin components percentage ratio requirement of 50 percent and a limitation of China origin components percentage ratio requirement of 20 percent. Additionally, the bike frame must be produced in Vietnam. It appears that the United Kingdom will continue to follow this policy set forth by the EU on bicycle and e-bike imports from Vietnam in 2025.
The United States has also implemented zero (0%) import duty incentives in favor of Vietnam origin e-bikes. The policy will require e-bikes to conform with Vietnamese origin components percentage ratio of 35 percent and a limitation of China origin components percentage ratio requirement of 60 percent. Bicycles will not be duty free, subject to a duty of 10.5 percent as long as it conforms with Vietnamese origin components percentage ratio of 35 percent and a limitation of China origin components percentage ratio requirement of 60 percent. Additionally, the bike frame must be produced in Vietnam.
Cambodia
While the EU currently has a 48.5 percent anti-dumping duty on Cambodia origin bicycles on top of the standard 10.5 percent duty, the policy for e-bikes will remain duty free (0%) into 2025. E-bikes must conform to Cambodian or Vietnamese origin components percentage ratio requirement of 50 percent and a limitation of China origin components percentage ratio requirement of 20 percent. Additionally, the bike frame must be produced in Cambodia.
The United States already has a policy of zero (0%) import duty in favor of Cambodia origin bicycles and e-bikes. This policy will require bicycles and e-bikes to conform with Cambodian or Vietnamese origin components percentage ratio of 35 percent and a limitation of China origin components percentage ratio requirement of 60 percent. Additionally, the bike frame must be produced in Vietnam.
Effects
The new EU duties incentivizing bicycle and e-bike production in Vietnam, complemented by the long-standing incentives for e-bike production in Cambodia will significantly impact the production of bikes and components in Taiwan and China. Manufacturers in Taiwan that have been producing e-bikes primarily for the European market will see an immediate drop in demand in favor of producing in Vietnam and Cambodia. Meanwhile, China-based manufacturers who although cannot produce bikes for export to the EU, will see a gradual impact on frame and component shipments to overseas manufacturers including Taiwan and Europe.
Many Taiwanese manufacturers have slowly built production bases in Vietnam for more than a decade, following the lead of other major Taiwanese industries in textiles, footwear, and chemicals. Now, a huge influx of China-based supply chain manufacturers into Vietnam is well underway and expected to increase exponentially in 2025. The bike manufacturing industry in Vietnam is largely based in Ho Chi Minh (previously known as Saigon), which is in the southern region of the country. With the expected huge volumes of bicycles and e-bikes to be manufactured in Vietnam starting in 2025, the Vietnamese government is expected to limit the influx of manufacturers and the ease of export from Vietnam to the EU. Vietnamese customs have increased their inspections of incoming goods and manifests to determine if the origin of goods and value are consistent with bill of materials. Furthermore, assembly manufacturers setting up new factories in Vietnam are now required to build their own in-house frame production facilities as a measure to ensure that Vietnam-origin frames are used for bike production in Vietnam.