Chinese bicycle manufacturer Shanghai General Sports will relocate some of its production to Cambodia to circumvent punishing US tariffs resulting from the trade war with China.
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The Chinese firm has chosen Cambodia because the Kingdom enjoys tariff-free access to both the United States and the European Union, according to Straits Times.
The new factory will be built on a 50-acre plot in Phnom Penh, it said.
If construction work on the Cambodian plant proceeds at “full speed”, the Chinese manufacturer could be producing 50,000 bicycles a month by the middle of next year, Arnold Kamler, chairman of US bicycle brand Kent International said.
Most of the bicycles made by Shanghai General Sports are produced for Kent, which sells some three million sets to retailers, such as Walmart and Target, every year.
Shanghai General Sports produces 3 million bicycles each year, 2.4 million of which are exported to the US.
Two other Chinese bicycle makers have recently entered the local market. XDS Bicycle (Cambodia) registered as a business in the Kingdom in March, while Evergrand Bicycle (Cambodia) did so in November. Both are located in special economic zones in Svay Rieng province.
Analysts believe that countries with cheap labour like Cambodia are benefitting from US-China trade tensions and predict that a sizable number of companies based in China will choose to relocate to Cambodia to avoid US tariffs.
Last year, Cambodia exported 1.5 million bicycles, worth a combined $331 million, according to a World Bank report released in May.
In 2017, Cambodia became the largest bicycle supplier to the EU, overtaking Taiwan. That year the Kingdom supplied 1.4 million bicycles to the bloc.