Council Regulation (EC) No 1524/2000 of 10 July 2000 imposing a definitive anti-dumping duty on imports of bicycles originating in the People's Republic of China
Date: 2000-07-10
Institutions: Council of the European Union
Subjects: China, anti-dumping duty, import, originating product, two-wheeled vehicle

14.7.2000

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Official Journal of the European Communities

L 175/39

COUNCIL REGULATION (EC) No 1524/2000

of 10 July 2000

imposing a definitive anti-dumping duty on imports of bicycles originating in the People's Republic
of China

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1), and in
particular Articles 9 and 11(2) thereof,

Having regard to the proposal submitted by the Commission
after consulting the Advisory Committee,

Whereas:

(7)

(8)

A. PROCEDURE

1. Measures

subject
People's Republic of China

to review involving

the

In October 1991, the Commission announced the initia-
tion (2) of an anti-dumping investigation (the original
investigation) concerning imports of bicycles originating
in the People's Republic of China (China).

In September 1993, the Council
imposed a definitive
anti-dumping duty of 30,6 % on imports of bicycles
originating in China (Regulation (EEC) No 2474/93 (3)).

(9)

In April 1996, the Commission initiated an investigation
into the circumvention of this duty (Regulation (EC) No
703/96 (4)), as a result of which the duty was extended
in January 1997 to imports of certain bicycle parts
originating in China (Council Regulation (EC) No 71/
97 (5)).

2. Measures in force involving other countries

In March 1998, the Council
imposed definitive anti-
dumping duties on imports of bicycles originating in
Indonesia, Malaysia and Thailand (Regulation (EC) No
648/96 (6)).

In February 1999, the Council imposed definitive anti-
dumping duties on bicycles originating in Taiwan (Regu-
lation (EC) No 397/99 (7)).

3. Request for review

Following the publication of a notice of
expiry of
bicycles originating in China (8),

impending
the anti-dumping measures on imports of
the Commission

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 905/98 (OJ L 128, 30. 4. 1998, p. 18).

(2) OJ C 266, 12.10.1991, p. 6.
(3) OJ L 228, 9.9.1993, p. 1.
(4) OJ L 98, 19.4.1996, p. 3.
(5) OJ L 16, 18.1.1997, p. 55.
(6) OJ L 91, 12.4.1996, p. 1.
(7) OJ L 49, 25.2.1999, p. 1.
(8) OJ C 74, 10.3.1998, p. 4.

received a request for a review pursuant to Article 11(2)
of Regulation (EC) No 384/96 (the Basic Regulation) in
respect of the measures.

The request was lodged in June 1998 by the European
Bicycle Manufacturers Association (EBMA), acting on
behalf of Community bicycle producers whose collective
output
total
constitutes
Community production (the
applicant Community
producers).

a major proportion of

The EBMA argued that expiry of the measures would be
likely to result in the continuation or recurrence of
dumping and injury to the Community industry. Having
determined, after consulting the Advisory Committee,
the Commission
that
initiated an investigation (9) pursuant to Article 11(2) of
the basic Regulation.

the evidence was

sufficient,

4. Investigation

the

advised

applicant
The Commission officially
Community producers, exporting producers, importers
and consumers, as well as the representatives of the
exporting country, of the initiation of the review and
gave the parties directly concerned the opportunity to
make their views known in writing and to request a
hearing.

(10)

The Commission sent questionnaires to the parties
known to be concerned and received replies from ten
applicant Community producers who had participated in
the original investigation (the sample) and 14 exporting
producers in China. Of
the following 11
companies had exported bicycles to the Community
during the investigation period:

the latter,

— Catic Bicycle Co., Ltd

— Giant (China)

— Huiyang Kenton Bicycle Group Ltd

— Liyang Machinery (SZ)

— Merida Bicycles (China)

— Ming Cycle

— Phoenix Co.

— Shenzhen Overlord

— Shenzhen Bao An Bike

— Shun Lu Bicycle Co.

— Universal Cycle Corporation (China).

(9) OJ C 281, 10.9.1998, p. 8.

(1)

(2)

(3)

(4)

(5)

(6)

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Official Journal of the European Communities

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(11)

Investigations were carried out at the premises of the
following companies:

(a) Producers in the analogue country (Mexico):

— Biciclo SA de CV, San Luis Potosi

— Bicileyca SA de CV, Apizaco

— Mercurio SA de CV, San Luis Potosi;

(b) Applicant Community producers (the sample):

— Batavus BV, Heerenveen, The Netherlands

— BH SA, Vitoria, Spain

— Cycleurope
France

international

SA, Romilly/Seine,

— Dawes Cycles Ltd, Birmingham, United Kingdom

— Derby Cycles Werke GmbH, Cloppenburg,

Germany

— Hercules Fahrrad GmbH & Co. KG, Nürnberg,

Germany

— Koninklijke Gazelle BV, Dieren, The Netherlands

— Kynast AG, Quakenbrück, Germany

— Micmo Gitane SA, Machecoul, France

— Raleigh Industries Ltd, Nottingham, United

Kingdom.

(12)

(13)

(14)

The investigation of the likelihood of continuation or
recurrence of dumping and injury covered the period
from 1 September 1997 to 31 August 1998 (the invest-
igation period). Trends between 1995 and 31 August
1998 (the period considered) were examined to deter-
mine the likelihood of continuation or recurrence of
injury.

The review could not be completed within the normal
period of 12 months provided for in Article 11(5) of the
basic Regulation, owing to the complexity of the invest-
igation.

The Commission sought and verified all
information
deemed necessary for determining the likelihood of the
continuation or recurrence of dumping and injury, and
the Community interest.

(15) All the parties concerned were informed of the essential
facts and considerations on which the conclusions of
this review were based and were granted a period within
which to make representations. The representations
received were considered carefully and where appro-
priate the findings have been changed accordingly.

(18)

(19)

(20)

(21)

(A) mountain bicycles or MTBs

(B) touring, trekking and city bicycles

(C) junior action bicycles

(D) other sport and racing bicycles.

The present investigation has used the same categorisa-
tion. However, it should be noted that there are no clear
dividing lines between categories, and the different
product segments overlap. A number of models can be
classified in more than one category.

The investigation confirmed that all bicycles are sold
through similar distribution channels on the Community
market. The basic application and use of bicycles being
identical, they are largely interchangeable and models
from different categories therefore compete with each
other. On this basis, it was concluded that all the catego-
ries form one single product.

The investigation also showed that bicycles produced
and sold by the Community industry on the Community
market, those produced and sold by Mexican producers
on the Mexican market and those imported onto the
Community market originating in China are alike and
are therefore like products within the meaning of Article
1(4) of the basic Regulation.

C. LIKELIHOOD OF CONTINUATION OR RECURRENCE

OF DUMPING

1. Preliminary remarks

In accordance with Article 11(2) of the basic Regulation,
the purpose of this type of review is, with regard to
dumping aspects, to determine whether dumping took
place during the investigation period and whether the
expiry of the measures would lead to a continuation or
recurrence of dumping (see Article 11(2) of the basic
Regulation). The findings on dumping set out should be
viewed in the light of the fact that Community imports
of the product concerned fell from a peak of 2,5 million
units in 1991 to less than 14 000 units during the
investigation period. Furthermore, the Chinese exporting
producers who cooperated in the present investigation
accounted for only 30 % of these imports during the
investigation period.

2. Continuation of dumping and likelihood thereof

B. PRODUCT CONCERNED AND LIKE PRODUCT

(16)

The product concerned here is the same as that covered
by the original investigation, namely bicycles and other
(including delivery tricycles), not motorised,
cycles
falling within CN codes 8712 00 10, 8712 00 30 and
8712 00 80.

(17)

In the original investigation, bicycles were classified in
the following categories:

(a) A n a l o g u e c o u n t r y

(22)

The existing measures provide for a single rate of duty
on all bicycle imports originating in China. In accord-
ance with Article 11(9) of the basic Regulation, the
Commission used the same methodology as in the orig-
inal investigation, so normal value was determined on
the basis of information obtained in a market economy
third country (the analogue country).

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(23)

investigation. However,

Taiwan had been taken as an analogue country in the
original
its use in the present
investigation was not considered appropriate in view of
the concurrent anti-dumping concerning its bicycle
exports and the fact that no interested party proposed it.

(24)

The applicant Community producers proposed Mexico
as a suitable analogue country. The notice of initiation
invited interested parties to comment on the appro-
priateness of
this choice. Several Chinese exporting
producers claimed that the applicant Community produ-
cers had not provided sufficient data to show that
Mexico was more appropriate than any other potential
analogue country, but they themselves did not provide
sufficient evidence in support of any alternative.

(25)

Some Chinese exporting producers suggested India as an
analogue country. However, India was found to be inap-
propriate, for two main reasons:

— the bicycles sold in India (rustic bicycles sold to
retailers in kit form) are not comparable with those
exported
the
Community, and

Chinese manufacturers

by

to

— the Indian market is highly protected (high duty
import licensing system, producer subsidies).

rates,

(26)

In view of the above, the following facts and considera-
tions influenced the assessment of whether Mexico was
an appropriate analogue country:

— three major bicycle producers cooperated in the
investigation (Mercurio SA de CV, Biciclo SA de CV
and Bicileyca SA de CV) which in 1998 accounted
for 50 % of sales on the domestic market, where
they competed with at least six other main produ-
cers. These companies are competitive, with modern
manufacturing facilities
including automated or
partially automated steel tube cutting, tungsten inert
gas welding for frames and forks, powder- and
petroleum-based painting, and conveyor assembly
lines. In the light of this and in accordance with
Article 2(7) of
the basic Regulation, Mexico was
considered an appropriate analogue country for
establishing normal value for the product concerned.

(27)

Some exporting producers claimed that establishing
normal value in an analogue country was no longer
appropriate and would distort any forecast of future
dumping. They argued that they were now operating
under market economy conditions, as defined in Article
2(7)(c) of the basic Regulation, and that this constituted
a change of circumstances justifying the use of a
different methodology from that used in the original
investigation (see Article 11(9)).

It should be stressed here that any producer may indeed
claim that market economy conditions prevail
(see
if he can demonstrate such a
Article 2(7)(b) and (c)),
change of circumstances. Given the nature of such a
change, it is considered appropriate to examine this in
the context of an interim review under Article 11(3).
However, no Chinese exporting producer had provided
the Commission to open a
sufficient evidence for
parallel review under Article 11(3) by the time the
present expiry review was initiated.

— bicycles produced in Mexico have the same technical
those produced in China and

characteristics as
exported to the Community,

(28)

In accordance with Article 11(9), therefore, the present
review had to address the dumping aspects using the
same methodology as the original investigation, i.e., inter
alia, by determining normal value in an analogue
country.

Imports of bicycles account

— Mexico can be considered an open and repres-
entative market.
for
13 % of annual sales. Its legal and commercial envir-
onment is favourable to free trade and competition.
Its customs duty rate (20 %) is comparable with the
European Union's ( 15,4 %). There are no quantit-
ative restrictions or licensing. Mexican producers are
free to source components and materials either on
the domestic market (where there is a large number
of suppliers of
tyres,
saddles, etc.), or abroad (for parts such as rims, hubs,
brakes and derailleurs). The fact that Mexico imposed
an anti-dumping duty on Chinese bicycles in 1997 is
not considered relevant in this context,

tubes, metal sheet, plastic,

— Mexican producers' domestic sales volumes are

comparable with China's export volumes,

(b) N o r m a l v a l u e

(29)

First,
it was established, overall and model by model,
that the Mexican producers' domestic sales were equiva-
lent to at least 5 % of the imports originating in China in
terms of volume, i.e. they were representative within the
meaning of Article 2(2) of the basic Regulation.

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(30)

to

producers

It was also found that all relevant domestic sales of
cooperating Mexican
independent
customers could be considered to have been made in the
ordinary course of trade. (The weighted average selling
price of all sales during the investigation period was
above the weighted average unit cost of production, and
the volume of individual sales transactions below unit
cost of production was less than 20 % of the sales being
used to determine normal value).

(31) Normal value was therefore determined on the basis of
the price paid or payable,
in the ordinary course of
trade, by independent domestic customers of the coop-
erating Mexican producers during the investigation
period.

(c) E x p o r t p r i c e

(d) C o m p a r i s o n

(35)

It should be noted that in some cases differences were
found between the bicycles imported originating in
China and those produced and sold in Mexico — gener-
ally because the Chinese models were more sophisti-
cated. In an investigation initiated pursuant to Article 5
of the Basic Regulation, this would have required an
upward adjustment of normal value (in this case, based
on Mexican domestic sales prices) to reflect the differ-
ence, which in turn would have increased the level of
dumping found. However, such an adjustment was not
considered necessary here in view of the small overall
impact on the level of dumping and the fact that meas-
ures cannot be modified following an expiry review.

(36)

For the purpose of a fair comparison, and in accordance
with Article 2(10) of the basic Regulation, adjustments
were made to allow for differences claimed in respect of
transport, insurance, credit, handling and ancillary costs
which were found to affect prices and price compar-
ability.

(i) Cooperating exporting producers

(e) D u m p i n g m a r g i n

(32)

(33)

(34)

Comprehensive data were received on export prices
from ten Chinese exporting producers. According to
Eurostat figures, however, this data accounted for only
30 % of Chinese exports of bicycles to the Community
during the investigation period (i.e. around 4 200 units).

Export prices for these companies were established on
the basis of the prices actually paid or payable for the
product concerned in accordance with Article 2(8) of the
basic Regulation.

(ii) Non-cooperating producers

For the remaining 70 % of imports originating in China,
for which there was no cooperation, findings had to be
based on the facts available in accordance with Article
18(1) of the basic Regulation. An average export price
for all transactions was thus determined on the basis of
Eurostat figures after deduction of exports by cooper-
figures are not normally
ating producers. Eurostat
considered a suitable source of
information where
cooperation covers only 30 % of imports of the prod-
ucts concerned. They were used here, however, because
in view of the small quantities imported during the
investigation period, the main focus of the analysis is the
question of whether dumping in significant quantities is
likely to recur rather than ensuring that exporters are
not rewarded for not cooperating. Moreover, since an
expiry review can lead only to measures being main-
tained or repealed, but not modified, it is not necessary
here to calculate a dumping margin with absolute preci-
sion.

(37)

(38)

(39)

(40)

In accordance with Article 2(11) of the basic Regulation,
the weighted average normal value on a fob Mexican
border basis was compared to the weighted average
export price (of both cooperating and non-cooperating
producers) on a fob Chinese border basis, at the same
level of trade.

The above comparison showed the existence of very
significant dumping, the dumping margin being equal to
the amount by which the normal value exceeded the
export price. The dumping margin found was higher
than the one found in the original

investigation.

The investigation did not reveal any reason why this
dumping would stop if
the measures were to be
repealed. It is therefore concluded that there is a likeli-
hood of continuation of dumping.

Some Chinese exporting producers claimed that it was
impossible to reach valid conclusions about current or
future dumping on the basis of such a small quantity of
imports. Whilst it is accepted here that concluding that
dumping exists cannot in itself justify maintaining the
measures,
is nonetheless one factor affecting the
decision as to whether they should be repealed or main-
tained.

it

3. Likelihood of recurrence of dumping

(41)

The following factors have been found to be pertinent in
examining whether dumping is likely to recur: the exis-
tence of dumping, the background of circumvention,
production and capacity utilisation trends in China, and
trends in the number of Chinese bicycles being exported
world-wide at dumped prices.

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(a) E x i s t e n c e o f d u m p i n g a n d b a c k g r o u n d o f

c i r c u m v e n t i o n

(42) While the dumping margin established in the original
investigation was high (30,6 %), the present investigation
indicates that far from being eliminated, dumping has
even increased.

(43)

(44)

Furthermore, numerous attempts have been made to
circumvent the anti-dumping measures imposed. Since
1993, a large number of bicycle assemblers have started
to operate in the Community and imports of bicycle
parts have increased dramatically. This development, a
reaction to the original measures, was highlighted in the
findings of the 1996 anti-circumvention investigation.

That
investigation also showed that, as soon as the
anti-dumping measures were imposed in 1993, Chinese
exporting producers collaborated with importers in the
Community to evade the duty by shipping bicycles in
disassembled form. Parts destined for the same assem-
bler were spread across different containers, shipped on
different dates and sometimes unloaded at different
Community ports.

(45) Another form of circumvention was the shipping to the
Community of Chinese bicycles with certificates of
origin, which were later withdrawn, indicating that they
were made in Vietnam (523 000 bicycles from 1992 to
1995).

(46)

(47)

The investigation which led to the extension of the
measures also showed, with regard to the essential
bicycle parts concerned,
there was evidence of
that
dumping in relation to the normal values previously
established.

Some companies denied that the circumvention of the
original measures by means of assembly operations in
the Community constituted a factor to be considered in
the assessment of
recurrence of
dumping. However, this argument cannot be accepted.
The anti-circumvention investigation opened in 1996
showed that the circumvention of the measures was
accompanied by dumping and that the remedial effects
of the measures were being undermined.

the likelihood of

(48) Moreover, the results of the anti-circumvention invest-
igation as well as the current low level of imports origin-
ating in China showed that Chinese exporting producers
have made little attempt to compete on the Community
market at non-dumped price levels.

(b) P r o d u c t i o n a n d c a p a c i t y u t i l i s a t i o n t r e n d s

i n C h i n a

(i) Industry in general

(49) According to the information available (complaint),
production capacity in China is very high (estimated at
around 70 million units). In the last few years, there has
been considerable investment in joint ventures, in partic-
ular from Taiwanese companies, and high tax and duty
rebates are granted to export-oriented producers.

(50)

(51)

(52)

From 1995 up to the investigation period, total bicycle
production decreased, domestic consumption varied
between 25 and 30 million units, and exports fluctuated
between 8 and 16 million bicycles. The rate of capacity
utilisation is thus rather low, at just above 50 %.

Because of
the enormous surplus capacity, Chinese
exporting producers have a very high degree of slack in
both the manufacturing process and the range of prod-
ucts. These producers would therefore be able to
increase production at short notice and direct it to any
export market
including, were the measures to be
repealed, the Community's.

The situation is aggravated by the fact that, despite being
covered by the measures since 1997, imports of essen-
tial bicycle parts have continued to rise, as assemblers
are able to obtain duty exemption if they can show that
the value of parts originating in or coming from China
is less than 60 % of the total value of the parts of the
assembled product, or that
the value added to the
imported parts during the assembly or completion
operation is greater than 25 % of the manufacturing cost
(see Article 13(2)(b) of the basic Regulation).

The increase in imports of bicycle parts can be seen
from the table below.

Community imports of main
bicycle parts originating in
China (in units)

1991

1992

1993

1994

1995

1996

1997

1998

IP

Frames

Forks

Source: Eurostat.

122 579

359 396

1 049 657

1 169 226

1 456 691

1 893 237

1 926 896

2 445 528

2 272 651

Index

100

293

856

954

1 188

1 545

1 572

1 995

1 854

37 321

644 926

1 352 814

1 672 070

3 283 292

3 507 635

3 600 818

3 494 433

3 529 895

Index

100

1 728

3 625

4 480

8 797

9 399

9 648

9 363

9 458

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(53)

These parts are produced by companies which also have
the capacity to produce complete bicycles. If the meas-
ures were be to be repealed, it is likely that imports of
complete bicycles originating in China would resume
very rapidly, replacing the current imports of bicycle
parts.

(ii) Cooperating producers

(54) Whereas the production figures for 1995 until the end
of the investigation period are relatively stable, the fore-
casts for 1999 from the cooperating Chinese companies
reflect an intention to increase production by 16 % to
10,6 million units.

(55)

(56)

Furthermore, the capacity utilisation data show signifi-
cant surplus capacity between 1995 and the end of the
investigation period. In addition, the increase in produc-
tion foreseen for 1999 would still
leave sufficient
capacity for another 5,8 million units.

Some companies claimed that the Commission's conclu-
sions on production capacity and its utilisation in China
were not supported by reliable evidence. In this context,
they referred to findings of the US International Trade
Commission. This could not be accepted. First of all,
these findings relate to a period different from the IP. It
should also be noted that
the
Commission and the Council are based on data
submitted by the cooperating Chinese exporting produ-
cers themselves. Moreover, the existence of large produc-
tion capacities implied by the low utilisation rate of
around 50 % found for the cooperating companies is

the conclusions of

confirmed by information on the Chinese bicycle
production sector as set out in the complaint. In this
context, the simple assertion made by the cooperating
companies that a distinction should be drawn between
production capacity for export sales and production
capacity for sales on the Chinese domestic market was
not found to be convincing. No evidence was submitted
in support of this. Finally, it should be borne in mind
that, should the Commission's conclusion be considered
as drawn on too narrow a basis, this is entirely due to
the considerable reluctance of Chinese exporting produ-
cers to cooperate.

(c) T r e n d s i n C h i n e s e e x p o r t s t o t h i r d c o u n -

t r i e s

(i) General

increase

(57)

(58)

Comext figures, which had to be relied on due to the
low level of cooperation by Chinese exporting produ-
cers, showed that Chinese exports world-wide increased
from 12,8 million units in 1995 to 14,6 million units in
1997 (+14 %).
In the first half of 1998, exports
amounted to 8,0 million units — an increase of 22 %
over the same period in 1997.

This trend is illustrated by the situation in the USA,
where bicycles originating in China were not subject to
anti-dumping measures. These imports increased from 4
million units in 1995 to 8,4 million units in 1998.
Details are given in the table below.

1995

1996

1997

1998

IP

Exports from
China to

Quantity

Average unit
price
(USD)

Quantity

Average unit
price
(USD)

Quantity

Average unit
price
(USD)

Quantity

Average unit
price
(USD)

Quantity

Average unit
price
(USD)

World

USA

12 822 722

4 074 554

42

52

12 239 224

3 902 483

38

39

14 617 906

5 734 027

35

38

—

8 400 000

—

—

—

7 511 342

—

—

Source: Comext

(59)

in prices was observed.
Furthermore, a significant fall
Between 1995 and 1997, Chinese export prices world-
wide fell on average by 17 % per unit and, for exports to
the USA, by 27 %.

Community repeal the current anti-dumping measures,
its market would be very attractive for these producers.

(iii) Chinese exports to other third countries

(ii) Possible deflection of Chinese exports due to the introduc-
tion of anti-dumping measures and quantitative restric-
tions in third countries

(61)

It is important to note that, after the Council imposed
anti-dumping duties in 1993, exporting producers in
China easily penetrated other export markets such as
Australia and South Korea.

(60) According to the available information, several countries
have recently adopted commercial defence measures on
Chinese bicycles because of the injury caused to their
domestic
and Mexico
imposed anti-dumping duties, whilst South Korea and
Vietnam decided to impose emergency import restric-
tions. Chinese exporting producers are therefore under
pressure to find alternative export markets. Should the

In 1997, Canada

industry.

(d) D u m p i n g b y c o o p e r a t i n g e x p o r t i n g p r o d u -

c e r s i n t h i r d c o u n t r i e s

(62)

Exports by the Chinese cooperating exporting producers
to third countries (USA, Australia and Japan in partic-
ular) are generally very representative of total Chinese

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bicycle exports, accounting for 70 % of total Chinese
exports to the USA in 1996 and 1997, and 20 % and
50 % respectively of total exports to Japan and Australia
during the same period.

(69)

In summary, it is highly likely that, should the measures
be repealed, Community imports originating in China
would resume in significant quantities and at signifi-
cantly dumped prices.

(63)

(64)

(65)

(66)

(67)

For the purpose of this investigation and on the basis of
the cooperating exporting producers' replies to the ques-
tionnaire, the analysis focused on those categories for
which there were also exports to the Community: cate-
gories A and C. For each category, a weighted average
export price was determined per country of destination
for all Chinese cooperating exporting producers.

For the purpose of this dumping calculation, a weighted
average normal value for these models was then deter-
mined for each category and compared to the relevant
export price.

(70)

(71)

D. COMMUNITY INDUSTRY

Community producers included in the definition of the
‘Community industry’
investigation
constituted around 54 % of
the total Community
production of bicycles.

the original

for

The applicant Community producers here were found to
constitute around 58 % of total Community production
during the investigation period. They therefore are ‘the
Community industry’ within the meaning of Article 4(1)
of the basic Regulation and are hereafter referred to as
such.

For the USA, Canada, Australia, Japan, and for all other
large importers, this produced clear evidence of signifi-
cant dumping (29 % to 96 %) for both categories. It is
not unreasonable to assume that, should the Communi-
ty's measures be lifted, the Chinese exporting producers
would sell similar volumes at similar prices in the
Community.

(72)

The remaining producers in the Community (consti-
tuting around 42 % of total Community production) are
hereinafter referred to as the ‘non-applicant producers’.

E. ANALYSIS OF THE COMMUNITY MARKET

4. Conclusion

1. Preliminary remarks

(73)

The Community industry's situation was assessed on the
basis of two categories of data:

The investigation has shown clearly that
the (albeit
small) quantity imported into the Community origin-
ating in China during the investigation period was
dumped. The level of dumping found was well above
that found in the original

investigation.

The investigation has also shown that the volume of
Chinese bicycle exports to the Community would in all
probability be considerable if the current measures were
to be repealed. This conclusion was arrived at in view of
the substantial spare capacity available in China and the
history of
the
continuing strong interest of Chinese exporting produ-
cers in selling to the Community. The likelihood of
import volumes rising to significant levels is increased
by the risk of deflection of trade to the Community due
to the adoption of commercial defence measures by
South Korea, Mexico, Canada and Vietnam.

circumvention. All

illustrates

this

(i) global injury indicators for the Community industry
as defined in section D above (production, produc-
sales,
tion capacity, capacity utilisation,
from
investment
national bicycle associations in the Community.

stocks,
collected

employment),

and

The data from the Community industry was cross-
checked, as far as possible, with other available
information (statistical data, data from previous anti-
dumping investigations, etc.);

(ii) certain performance-related injury indicators (profit-
ability, prices, price evolution and price undercut-
ting) collected and verified at the level of the sample.
These companies replied to the Commission ques-
tionnaire and fully cooperated in the review invest-
igation. They represent around 40 % of the produc-
tion volume of the Community industry.

(68)

It is also concluded that substantially increased volumes
would most likely be exported to the Community at
dumped prices. This is supported by the high dumping
margins found for Chinese exports to other main third
country markets. It is unlikely that Chinese exporting
producers would resume significant exports
to the
Community without similar low, dumped export prices.

2. Consumption in the Community

(74)

Community consumption was calculated by combining
the total volume of sales on the Community market by
all Community producers (Community industry and
non-applicant producers) and total
imports (Eurostat
figures).

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from 17 401 000 units

Consumption declined by 11 % during the period
considered,
in 1995 to
15 452 000 units in the investigation period. At the
the value of consumption was stable at
same time,
around EUR 2,3 million,
indicating that average sales
prices on the Community market increased.

investigation should therefore never have been initiated,
as imports originating in China were below 1 % of total
consumption in both volume and value terms during the
investigation period, i.e. below the de minimis threshold.

(82) Article 11(2) of the basic Regulation states that:

(75)

(76)

The negative trend in consumption (in units) can partly
be explained by the continued decline of two major
products in the bicycle sector since the early 1990s:
sales of BMX bicycles
‘moto-cross’ —
category C) have decreased significantly since 1991 and
category A bicycles (MTBs, mountain bicycles) have
become much less popular since 1992. Falling sales of
these two types have not been compensated for by sales
of other types or categories.

(children's

(77)

Some exporting producers claimed that BMX and MTBs
were China's principal export products. Accordingly,
there cannot be a recurrence of injury if, as recognised
by the Commission itself, there is no longer significant
demand for these products in the Community.

(78) Although demand on the Community market for BMXs
and MTBs declined during the period considered, it is
still considerable. On the information available, several
million MTBs were still sold on the Community market
during the investigation period. Moreover, Community
producers and exporting producers have
launched
several new kinds of BMX, which is still one of the main
types of bicycle for children.

(79)

The argument raised by Chinese exporting producers is
therefore considered unfounded.

3. Imports of dumped bicycles originating in China

(a) V o l u m e

p r i c e
a n d
o r i g i n a t i n g i n C h i n a

o f

b i c y c l e

i m p o r t s

‘A definitive anti-dumping measure shall expire after five
years from its imposition (…), unless it is determined in
a review that the expiry would be likely to lead to a
continuation or recurrence of dumping and injury. (…)’

It follows from the above that the purpose of an expiry
review, regardless of the level of imports from a given
country concerned, is to determine whether the expiry
of anti-dumping measures is likely to lead to a continua-
tion or recurrence of dumping and injury. It is not a
determination of material injury as referred to in Article
3(2) of the basic Regulation.

Consequently, the claim that the current investigation
was unduly initiated cannot be accepted.

figures in recital 80,

it could be
From the import
concluded that
the anti-dumping duties on Chinese
bicycles since 1993 have had an immediate and radical
effect on import volumes, which had reached 2,5
million bicycles in 1991. However, these figures do not
reflect the following two further developments, which
alter the picture somewhat.

Following the imposition of definitive anti-dumping
duties in 1993, Chinese exporting producers exported
bicycles to the Community using false declarations of
origin (see recitals 44 and 45). They were also found to
be circumventing the duties in force. Until the beginning
of 1997 (1), the volume pressure from bicycles origin-
ating in China was
than
suggested by the figures.

therefore much higher

The average price of bicycles originating in China
increased considerably during the period considered
(+ 80 %), especially between 1997 and the investigation
period (+ 51 %). However, given the limited import
quantities, which fell significantly (– 79 %) during the
period considered, no reliable conclusion on prices and
price evolution could be drawn from this, especially as
no information is available on possible changes in the
product mix.

(83)

(84)

(85)

(86)

(80)

The number of bicycles originating in, and imported
from, China fell between 1995 (when a total of 65 408
was imported) and the investigation period. After a 29 %
increase in 1996, the figure dropped from 1997 and
only 13 651 bicycles were imported during the invest-
igation period.

(81) One interested party claimed that, since under Article
11(5) of the basic Regulation review investigations must
be covered by the same rules as other investigations,
Article 5(7) of the basic Regulation applies to expiry
the present review
reviews also.

It was argued that

(b) P r i c e b e h a v i o u r o f

e x p o r t i n g p r o d u c e r s

(87) Despite the very limited quantities imported during the
the exporting producers' price
investigation period,
behaviour was analysed on the basis of the price infor-
mation submitted. This analysis took into account actual
export prices of exporting producers (cif Community
frontier), both with and without anti-dumping duty, as
well as the ex-factory prices charged by the Community
industry to independent customers at the same level of
trade.

(1) Publication of Regulation (EC) No 71/97 extending the anti-

dumping duty to certain bicycle parts originating in China.

(89)

(90)

(91)

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(88)

The analysis showed that export prices were significantly
lower than those of the Community industry both with
and without the applicable anti-dumping duty.

(94) Despite the significant cut in capacity, the capacity utili-
sation rate increased by only 2 percentage points
between 1995 and the investigation period. The actual
rate of utilisation during the investigation period (58 %)
should be viewed alongside the rate needed in this type
of industry for economic viability (70 %).

4. Economic situation of the Community industry

(d) S a l e s b y t h e C o m m u n i t y i n d u s t r y

(a) P r e l i m i n a r y r e m a r k

In assessing the situation of the Community industry it
should be noted that, since the imposition of anti-
dumping measures on imports of bicycles originating in
China,
imports from other third countries have also
been subject to anti-dumping investigations. In 1996,
anti-dumping measures were
imposed on bicycles
originating in Indonesia, Malaysia and Thailand and, in
1999, on those originating in Taiwan.

(95) During the period considered, volumes sold fell by 24 %,
or 1,9 million units. The decrease was most marked in
categories A (– 35 %) and C (– 13 %) — precisely those
categories in which Chinese exporting producers were
found to be very strong during the original investigation.
The decrease can be explained at
least partially by
imports circumventing the anti-dumping measures on
Chinese bicycles and by imports of parts, exempted
following the introduction of anti-circumvention meas-
ures.

(b) P r o d u c t i o n

From 1995 up to the
the
Community industry's production fell by 25 % or more
than 2 million units (from 8 842 500 to 6 400 000).

investigation period,

The investigation revealed that this decrease was the
result of several companies going out of business and
reduced production by major Community producers. It
should also be mentioned that, in order to survive, some
Community producers included in the definition of the
Community industry in the original
investigation
switched from the complete cycle of production (i.e.
including manufacture of the frames) to simple assembly
or sub-assembly operations using imported parts (frame,
forks, complete wheels, crank gears, freewheels, brakes,
etc.).

(c) P r o d u c t i o n c a p a c i t y a n d c a p a c i t y u t i l i s a -

t i o n

(92) As bicycles are produced on a seasonal basis in the
Community, demand for production capacity is very
high in certain months.
In most Member States, the
season starts in March and finishes in September. Bicycle
collections for the next season are presented to the trade
(dealers, agents, retailers, mass merchandisers, etc.) each
September.

(93)

investigation period,

From 1995 up to the
the
Community industry's production capacity was reduced
by 27 %, from 15 to 11 million units, as a result of the
factors that led to the drop in production, and certain
Community producers restructuring (see recital 91).

(96)

Sales value fell by 8 %. This was much less than the
decrease
the
terms,
Community industry's average sales prices went up in
the period considered.

indicating

volume

that

in

(e) M a r k e t s h a r e

(97) As a result of overall losses in sales volume and sales
value, the Community industry lost 15 % of its market
share (in volume terms) between 1995 and the invest-
igation period, mainly in categories A and C (see
remarks in recital 95).

(f) A v e r a g e

s a l e s p r i c e

a n d p r i c e

e v o l u t i o n

(98)

(99)

shown that

The weighted average price of bicycles sold by the
Community
industry on the Community market
increased by 10 % during the period considered. The
investigation has
the main producers
included in the definition of the Community industry
have
changed their product mix and moved to
higher-end products. This also required them to concen-
trate their sales activities on dealers/retailers whose resale
prices are more stable and more attractive as compared
to the other major sales channels such as mass-merchan-
disers and supermarkets.

It emerged from the category-by-category analysis that
prices in categories A and C (which accounted for most
Chinese bicycle imports in the original
investigation)
increased overall by 13 % during the period considered,
although the pattern of the increase was not the same
for both types;
for instance, prices for category C
increased by up to 20 % between 1995 and 1997.

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(100) By contrast, in category B, the strongest segment of the
Community industry, sales prices remained very stable
during the period considered.

(j) G e n e r a l

e c o n o m i c
i n d u s t r y

c o m m e n t s
s i t u a t i o n

r e c e i v e d

t h e
o n
t h e C o m m u n i t y

o f

(g) P r o f i t a b i l i t y

(101) Although the average profitability of the Community
industry improved slightly from – 2,3 % to – 0,6 %
during the period considered,
remained negative
throughout. In 1995 and 1996, losses incurred by the
Community industry were stable (2,2 % in 1996). They
were reduced by 1,9 percentage points in 1997 (– 0,3 %
of net sales) but increased again during the investigation
period (– 0,6 % of net sales).

it

circumventing the

(102) The investigation showed that the worst results were
achieved in the period 1995 to 1996, when Chinese
anti-
exporting producers were
dumping measures (see recitals 44 to 45). In order to
stop this practice measures were extended to bicycle
parts in the beginning of 1997. In 1997, as a result of a
7 % price increase over 1995, the profitability of the
Community industry improved slightly. It then dropped
a little during the investigation period, despite a further
3 % price increase.

(103) The above trend clearly indicates that the Community
industry's financial situation has not recovered suffi-
ciently during the period considered. The investigation
has shown that profitability has remained negative
despite the fact that the Community industry undertook
significant restructuring, reduced the amount of certain
fixed costs of production and increased sales prices.

(104) The profitability achieved during the period considered
should be compared with the level considered to be the
minimum for the industry in the absence of dumped
imports originating in China,

i.e. 8 %.

(105) This deterioration can be explained mainly by a reduc-
tion in production volume (which led to a higher unit
cost of production) and by the restructuring in the
bicycle industry.

(h) I n v e s t m e n t s

(106) The Community industry's

investment

in buildings,
plant and machinery was rather low during the period
considered. It represented only 1,7 % to 2,5 % of the
value of Community sales on the Community market.
Investment was made mainly in machinery to improve
production efficiency (welding robots) and the quality of
bicycle frames.

(108) On the basis of press releases and extracts from non-
confidential replies to the Commission's questionnaire,
some exporting producers claimed that the economic
situation of certain Community producers had improved
over the period considered,
in particular in terms of
sales volume, production volume and profitability. This,
it was claimed, contradicted the conclusion that
the
Community industry had been in a weak and vulnerable
economic position since the imposition in 1993 of the
anti-dumping duties against bicycles originating in
China.

(109)

it should be underlined that

In this respect,
these
exporting producers provided information relating
mainly to some individual producers included in the
definition of the Community industry whose situation is
not representative for the Community industry as a
whole. It is considered that this does not invalidate the
the situation for the
findings, which reflect
overall
product concerned and for all
individual companies
included in the definition of the Community industry.

(110) On this basis, the conclusion that the economic situation
of the Community industry had improved is considered
to be unfounded.

5. Conclusion

(111) The analysis of

the Community industry's economic
situation has revealed that most economic indicators
continued to show negative trends during the period
considered: production fell by 25 %, production capacity
by 27 %, sales volume and sales value by 24 % and 8 %
respectively and the value and volume of market share
by 8 % and 15 % respectively. Although prices increased
by 10 % during the investigation period as compared to
1995,
the Community industry continued to make
losses and employment was reduced by 12 %.

(112) On this basis,

it was concluded that the Community
industry has
remained in a weak and vulnerable
economic position since the imposition in 1993 of the
anti-dumping duties against imports of bicycles origin-
ating in China.

F. LIKELIHOOD OF RECURRENCE OF INJURY

(i) E m p l o y m e n t

1. Preliminary comments

(107) Employment in the Community industry fell steadily
from 1995 to the investigation period. In total 1 800
people (12 % of the workforce in 1995) were laid off
during the period considered.

(113)

In addition to the economic situation of the Community
industry, the Commission examined the likelihood of
recurrence of injury should the anti-dumping measures
applicable to imports originating in China be removed.

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(114) This analysis covered the situation of the Community
market in the light of past circumvention by Chinese
exporting producers, the situation of the bicycle industry
in China and the likely consequences for the Community
market of repealing the anti-dumping measures.

(122) On this basis, with no new supporting evidence, the
claims of the exporting producers could not be accepted.

2. Situation of the bicycle industry in China and

future export volume

3. Likely situation on the Community market
anti-dumping measures on imports

without

originating in China

(115) As mentioned in recital 50, the Chinese bicycle industry
is using only about 50 % of its huge production capacity
and Chinese bicycles are present on the main markets
worldwide, particularly in the USA and Japan.

(116) The investigation also showed that, after a two-year
absence from the US market following the imposition of
anti-dumping duties, Chinese
exporting producers
financed massive sales campaigns when the duties were
repealed and were able to re-establish their presence
almost immediately. Large numbers of Chinese bicycles
were sold, in particular via supermarkets and department
stores, one of the major distribution channels in the
USA (as well as in the Community). As a result, around
8 million bicycles originating in China were exported to
the USA during the investigation period.

(117) Finally,

it is also recalled that several countries have
recently applied commercial defence instruments to
imports of Chinese bicycles (see recital 60).

(118) Some exporting producers claimed that, due to the large
domestic market in China and exports to third countries
with large and stable markets (e.g.
Japan and USA),
injury is not likely to recur.

(119) They also claimed that the Chinese bicycle industry does
not have such a huge excess production capacity at its
disposal as to allow a significant increased or rapid
penetration of the Community market in such a manner
as to threaten the Community industry. In their opinion,
no reliable evidence was provided to support the conclu-
sions on production capacity and capacity utilisation in
China. The capacity utilisation rate in China,
it was
claimed, was much higher (around 87 %).

(120)

is true, as indicated in recital 116,

It
that Chinese
exporting producers are present in third countries with
large and stable markets. However, they have shown that
they are able quickly to redirect exports and penetrate
new markets.

(121)

It should also be noted that the findings on production
capacity and capacity utilisation in China are based on
the complaint and the information provided by the
Chinese exporting producers themselves (see recitals 54
and 55).

(123) As mentioned, Chinese exporting producers have the
potential to penetrate the Community market quickly.
Without anti-dumping duties and given the spare
low-priced dumped
production capacity, volumes of
imports originating in China could be expected in the
near future to reach a level comparable to that in 1991
(around 2,5 million bicycles). This would give Chinese
the
exporting producers a share of around 15 % of
Community market.

(124) This scenario also appeared highly likely on the basis of
price quotations given by Chinese exporting producers
to Community-based operators, and offers during major
bicycle exhibitions in the Community. These prices,
which were not conditional on the removal or mainte-
nance of the anti-dumping measures, were comparable
to those charged by Chinese exporting producers in their
main export markets.

(125) The present analysis showed that average prices of
Chinese imports were likely to increase slightly as
compared to the original investigation since bicycles at
the lower end of the market were found to be better
equipped during the investigation period. Nevertheless,
these prices or price quotations, using the price compar-
ison methodology described in recitals 87 and 88, were
significantly below those for comparable models sold by
the Community industry. Indeed, without anti-dumping
duties, selling prices for Chinese bicycles would be
between 40 % and 55 % below the Community indus-
try's average.

(126) This finding indicates that injurious pricing by exporting
producers in China would resume at serious levels
should measures be allowed to lapse. It is to be expected
that, without anti-dumping duties, Community produ-
cers would lose sales volume and market share. More
precisely, the Community industry's sales and produc-
tion volumes could both be expected to fall by around 1
to 5 million and around 5,4 million
million units,
bicycles
is also highly likely that
Community producers would concentrate on producing
more expensive bicycles.

respectively.

It

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Official Journal of the European Communities

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(127)

It has been established through detailed analysis of the
distribution network that:

(133)

— the Community industry is prominent in the dealer/
retailer sales channel (60 % to 65 % of total sales)
selling mainly in the medium and high end of the
market,

— some Community producers, however,

(mainly in
France, Germany and the United Kingdom) mostly
produce for the lower end of the market and specia-
lise in sales to supermarkets, mass-merchandisers
and OEM customers (up to 80 % of their sales or 2
million overall).

(128) As Chinese exporting producers would mainly compete
in the high volume sales channels, pressure on the
Community industry would be strong there and less
acute in the dealer/retailer sales channels.

(129) The removal of the anti-dumping duties against Chinese

bicycles would thus lead to:

— further restructuring of the Community industry and

company closures,

— reduced employment in the Community industry,

— losses in sales volume entailing a reduction in
production volume and thus inevitably increases in
fixed costs per unit and factory break-even levels,

— losses of economies of scale leading to higher vari-

able unit costs.

4. Conclusion on recurrence of injurious dumping

(130) Analysis of the likelihood of the recurrence of injurious
dumping indicates that injurious dumping would recur
in the absence of anti-dumping measures against
bicycles originating in China.

(131) As is clear from their behaviour in the period considered
and their performance on export markets, Chinese
exporting producers have a high capacity and enormous
potential
for producing both finished bicycles and
bicycle parts. These producers have the technical and
financial means to return to the Community market
quickly and gain significant market share, as they did
recently in the USA. Given notably the existence of
dumping and the weak economic situation of
the
Community industry, it is concluded that the removal of
the anti-dumping duty would inevitably lead to a recur-
injury to the Community industry.
rence of material

G. COMMUNITY INTEREST

1. Introduction

this review,

it was examined
In the framework of
whether there were compelling reasons to conclude that
it is not in the Community interest to maintain measures
in this particular case, despite the conclusions on
dumping,
injurious
injury and likely recurrence of
to Article
dumping. For this purpose, and pursuant
21(1) of the basic Regulation, the Commission consid-
ered the impact of existing measures for all parties
involved in the proceeding, and also the consequences of
not maintaining measures against China.

2. Interest of the Community industry

the Community industry
(134) The economic situation of
clearly indicates that,
in the interest of that industry,
effective competitive conditions need to be maintained
and that prices reflecting these conditions should prevail
on the Community market.

(135) Some parties

claimed that anti-dumping measures
should not shield the Community industry from inter-
national competition and that the industry should have
fully recovered after five years of anti-dumping meas-
ures.

(136)

It should be noted here that Community producers,
mostly small and medium-sized enterprises, faced signifi-
cant competition from low-priced dumped imports
originating in China from 1988 to the end of 1996.
Between 1993 and 1996, the injury was particularly
severe given the circumvention by Chinese exporting
producers and injurious dumping from other sources.

(137) The industry has made considerable efforts to improve
its efficiency and productivity in recent years in an
to lower its production costs and improve
attempt
quality and competitiveness
in this price-sensitive
market. As shown by the decreasing production capaci-
ties, several Community producers have shut down or
reduced the size of their production facilities. This has
favoured the emergence of a few groups which have
purchased small, well-known brands and production
facilities or merged with other companies in order to
restructure and reorganise their activities. This indicates
the industry's adaptability, competitiveness, viability and
determination to survive.

(132)

It should be recalled that in original investigations the
adoption of measures was considered not to be against
the Community interest.

(138) With anti-dumping measures on all identified sources of
dumping, the Community industry could now benefit
from effective trade conditions on the market and finally
recover financially.

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Official Journal of the European Communities

L 175/51

(139) However, without measures on Chinese imports, the
precarious financial situation of the Community industry
would deteriorate further, leading inevitably to further
company closures and therefore jeopardising thousands
of other
in the Community. The negative
consequences for the industry will be amplified by reper-
cussions in the Community parts industry and other
activities, both upstream and downstream.

jobs

3. Interests of

the other producers

in the

Community

the non-applicant producers

(140) During the period considered both sales and production
in the
volume of
Community decreased by 10 % (sales from 4,6 to 4,1
million units, production from 5,1 to 4,6 million units).
The information available would indicate that
the
bicycles sold by the non-applicant producers compete
mainly with bicycles originating in China (same range
and similar customers). Consequently, the loss in market
share would also be at the expense of these producers.
The removal of the anti-dumping duties on bicycles
originating in China would thus not serve their best
interests.

4. Impact on consumers

(141) The Commission did not receive comments concerning
this review from Community consumers' associations,
indicating that there is no real concern about the impact
of the continued imposition of anti-dumping measures.

(142) Nevertheless, an analysis was carried out to establish the
likely consequences of both removing and maintaining
the measures.

(143) Some parties claimed that consumers have a sufficient
choice from a wide variety of bicycles in all segments
thanks to competition from non-Community producers
and that
this competition should be increased by
repealing the measures.

(144) The

showed

investigation

that
the
reacted to lower

remaining
Community producers
sales and
production volumes and higher unit production costs by
increasing prices in the medium and high end of the
market. This would again be the case if anti-dumping
measures were to be repealed. It should be noted that
these market segments represent around 60 % of the
Community market in volume terms.

(145) Consumers have a wide range to choose from in all
segments, even without bicycles originating in China.
The Community industry contributes significantly to the
exhaustive product range on offer and the investigation
has not brought to light any supply problems.

(146) Without anti-dumping measures prices would therefore
increase in the medium and high end of the market and
decrease at the lower end. Consumer choice would not
be affected significantly. On this basis, the continued
imposition of anti-dumping measures against China is
not contrary to the interests of consumers.

5. Conclusion

(147) On the basis of the above facts and considerations, and
having examined all the arguments submitted by inter-
ested parties, it is concluded that there are no compel-
ling reasons for not maintaining the measures in force
on imports originating in China. As the anti-dumping
duty in force in respect of complete bicycles has been
extended by Regulation (EC) No 71/97 to cover in addi-
tion imports of certain bicycle parts originating in
China, the duty shall be maintained as extended by that
Regulation.

H. DEFINITIVE MEASURES

(148)

It follows that, as provided for by Article 11(2) and
11(6) of the basic Regulation, the anti-dumping duty on
imports of bicycles originating in China imposed by
Regulation (EEC) No 2474/93, as extended by Regula-
tion (EC) No 71/97, should be maintained,

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on
1.
imports of bicycles and other cycles
(including delivery
tricycles), not motorised, currently classifiable within CN codes
8712 00 10, 8712 00 30 and 8712 00 80, originating in the
People's Republic of China.

2.
The rate of the definitive duty applicable to the net,
free-at-Community-frontier price, before duty, shall be 30,6 %.

3.
Unless otherwise specified,
concerning customs duties shall apply.

the provisions

in force

Article 2

This Regulation shall enter into force on the day following that
of its publication in the Official Journal of the European Communi-
ties.

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This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 10 July 2000.

For the Council

The President

H. VÉDRINE