Hope for bicycle makers

SOFIA (SeeNews) – Cheap Bulgarian bicycle brands, such as Sprint and Cross, will continue to dominate the domestic market after the country joins the European Union and will also be attractive exports because of their low prices, the CEO of one of Bulgaria’s leading cycle firms said on Thursday. «I believe that domestic companies will not abandon their brands [after EU entry], as the low purchasing power of the population will long restrict the domestic market to the low price segment, where we are strong,» said Maksim Mitkov, CEO of Maxcom, a company that accounts for nearly 25 percent of the workforce in the sector and for 30 percent of domestic sales. Exports under own brands would also not be affected significantly, as sales in the low-price sector are not influenced by trademarks, as distinctive names exist only in the high-price segment, he added. Bulgarian bicycle assemblers can count on exports to the European Union in the long-term, as the low costs of production are distributed into the retail network and face no Chinese competition because the EU has introduced an anti-dumping tax of 48.5 percent plus customs duty of 10 percent on bicycles assembled in China, said Mitkov. European Union hopeful Bulgaria, with a population of 7.8 million, has five bicycle firms, employing some 2,000 workers, and the domestic market stands at between 100,000 and 120,000 bicycles, sold at an average price of 120 leva. Bulgarian bicycle firms assemble bicycles mainly for export under own brands, of which Maxcom’s Sprint, as well as Cross, Drag, Balkan and Leader are well-known domestically. Up to 90 percent of the bicycles assembled in Bulgaria are exported under own brands, said Mitev. The total domestic annual output ranges between 420,000 and 450,000 units, he added. Maxcom is currently facing the dilemma of whether to lose face or earn twice as many sales and revenues for its current capacity but under a foreign brand, said Mitev. The company is holding negotiations with French Decathlon, which has pledged to secure minimum sales of 500,000 units per year, he added. Maxcom is investing 20 million leva in a new plant with an expected annual capacity of 500,000 units. «We fulfilled our capacity of 200,000 bicycles and that forced us to go for a new investment which will improve technology, quality and labour conditions, along with output,» said Mitev. In a business which is divided into specialized manufacturers of parts and assemblers, Bulgarian companies can only assemble bicycles, as they lack the resources and craft to develop specialized production of parts, he said. Maxcom hopes to increase its output to at least 250,000 units by 2007 after the new plant is completed. The company posted sales of 25.5 million leva for 2005, but Mitkov refused to disclose profit figures.

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