Council Regulation (EC) No 1095/2005 of 12 July 2005 imposing a definitive anti-dumping duty on imports of bicycles originating in Vietnam, and amending Regulation (EC) No 1524/2000 imposing a definitive anti-dumping duty on imports of bicycles originating in the People's Republic of China
Date: 2005-07-12
Institutions: Council of the European Union
Subjects: China, Viet Nam, anti-dumping duty, import, originating product, two-wheeled vehicle

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1095/2005

of 12 July 2005

imposing a definitive anti-dumping duty on imports of bicycles originating in Vietnam, and
amending Regulation (EC) No 1524/2000 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 basic Regulation) and in
particular Articles 9 and 11(3) thereof,

the European Community (1)

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

Whereas:

1. Measures in force

A. PROCEDURE

(1)

(2)

(3)

(4)

(5)

The Council, by Regulation (EEC) No 2474/93 (2) imposed a definitive anti-dumping duty of 30,6 %
on imports of bicycles originating in the People's Republic of China (the original measures).
Following an anti-circumvention investigation, this duty was extended by Council Regulation (EC)
No 71/97 (3) to imports of certain bicycle parts originating in the People's Republic of China (PRC).

Following an expiry review pursuant to Article 11(2) of the basic Regulation (the previous investi-
gation), the Council, by Regulation (EC) No 1524/2000 (4), decided that the above mentioned
measures should be maintained.

2. Present investigations

On 29 April 2004, the Commission announced, by a notice published in the Official Journal of the
European Union (5), the initiation of an anti-dumping proceeding with regard to imports into the
Community of bicycles originating in Vietnam.

On the same day, pursuant to Article 11(3) of the basic Regulation, the Commission announced by a
notice published in the Official Journal of the European Union (6), the initiation of an interim review of
the anti-dumping measures applicable to imports into the Community of bicycles originating in the
PRC.

The anti-dumping investigations were initiated following a complaint and a request lodged on 15
March 2004 by the European Bicycles Manufacturers Association (EBMA or the applicant), acting on
behalf of producers representing a major proportion,
in this case more than 35 % of the total
Community production of bicycles. The complaint contained evidence of dumping of the said
injury resulting thereof, which was considered sufficient to justify the
product and of material
initiation of the proceeding concerning imports of bicycles originating in Vietnam. The request
contained sufficient evidence justifying the initiation of an interim review of the measures applicable
to imports of bicycles originating in the PRC.

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).
(2) OJ L 228, 9.9.1993, p. 1.
(3) OJ L 16, 18.1.1997, p. 55.
(4) OJ L 175, 14.7.2000, p. 39.
(5) OJ C 103, 29.4.2004, p. 76.
(6) OJ C 103, 29.4.2004, p. 80.

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(6)

(7)

(8)

(9)

(10)

(11)

(12)

3. Parties concerned by the investigation

the Community producers mentioned in the
The Commission officially advised the applicant,
complaint and the request, any other known Community producers,
the exporting producers,
importers as well as the associations known to be concerned, and the authorities of the PRC and
Vietnam, of the initiation of the investigations. Interested parties were given an opportunity to make
their views known in writing and to request a hearing within the time-limits set in the notices of
initiation.

A number of Community producers represented by the applicant, other cooperating Community
producers, exporting producers, importers, suppliers and user associations made their views known.
All interested parties who so requested were granted a hearing.

4. Sampling

In view of the large number of exporting producers, Community producers and importers involved in
the investigations, the application of sampling techniques was envisaged in both notices of initiation,
in accordance with Article 17 of the basic Regulation.

In order to enable the Commission to decide whether sampling would be necessary and, if so, to
select a sample, exporting producers and representatives acting on their behalf, Community producers
and importers were requested to make themselves known and to provide information as specified in
the notices of initiation. The Commission also contacted known associations of exporting producers
and the authorities of the PRC and Vietnam. These parties raised no objections to the use of
sampling.

In total, 21 exporters/producers in the PRC, 6 exporters/producers in Vietnam, 54 Community
producers and 6 importers replied to the sampling questionnaire within the time-limits and
provided the requested information.

From the 21 Chinese exporting producers that responded to the sampling return, only 17 reported
exports of bicycles to the Community during the investigation period. Given the limited number of
Vietnamese exporting producers which indicated their willingness to cooperate, it was decided that
sampling was not necessary in respect of Vietnamese exporting producers.

The selection of the sample was made in consultation with, and with the consent of the Chinese
cooperating exporting producers and the authorities of the PRC. The sample of the exporting
producers was established on the basis of the largest representative volume of exports to the
Community, which could reasonably be investigated within the time available and on whether the
companies intended to apply for Market Economy Treatment (MET). Only companies that intended
to apply for MET were included in the sample, since in an economy in transition, normal value for
other companies is established on the basis of prices or constructed normal value of an analogue
third country. On this basis, a representative sample of four exporting producers was selected. The
four sampled companies represented, according to the replies to the sampling exercise, 16 % of the
Chinese exports of the product concerned to the Community and 35 % of all cooperating producers'
exports.

(13) As for the Community producers,

in accordance with Article 17(1) of the basic Regulation, the
sample was selected after consultation of the relevant association and with their consent on the basis
of the largest representative volume of sales and production within the Community. As a result, eight
Community producers were selected in the sample. The Commission sent questionnaires to the eight
companies selected, which submitted complete replies.

(14) Given the limited number of importers who replied to the sampling questionnaire and indicated their
willingness to cooperate (six importers), it was decided that sampling was not necessary. However,
subsequently none of the importers cooperated in the review investigation and declined to return a
complete questionnaire reply. Concerning the investigation of imports from Vietnam, three importers
cooperated by submitting complete questionnaire replies.

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(15)

information it deemed necessary for the purpose of a
The Commission sought and verified all
determination of dumping, resulting injury and Community interest. Verification visits were carried
out at the premises of the following companies:

(a) Producers in the Community

— Biria AG, Neukirch, Germany,
— Accell Group N.V., Heerenveen, The Netherlands,
— Cycleurope Industries S.A., Machecoul, France,
— Vivi Bikes srl, Pozzaglio, Italy,
— Denver srl, Dronero, Italy,
— F.lli Masciaghi Spa, Monza, Italy,
— MIFA Mitteldeutsche Fahrradwerke AG, Sangerhausen, Germany,
— Promiles, Villeneuve d'Ascq, France.

(b) Exporting producers in the PRC

— Giant China Co. Ltd, Kunshan Jiangsu Province,
— Shenzhen Xidesheng Bicycle Co. Ltd., Heshuikou Gongming, Shenzhen,
— Guangzhou Viva Bicycle Corporation Limited, Guangzhou,
— Komda Industrial Co. Ltd., Buji, Shenzhen.

(c) Exporting producers in Vietnam

— Always Co., Ltd., Ho Chi Minh City,
— Asama Yu Jiun Intl. Co., Ltd., Di An,
— Dragon Bicycles Co., Ltd., Dong Nai,
— High Ride Bicycle Co., Ltd., Di An,
— Liyang Vietnam Industrial Co., Ltd., Dong Nai,
— Vietnam Sheng Fa Co., Ltd., Ho Chi Minh City.

(d) Unrelated importers

— ZEG, Cologne, Germany,
— Raleigh Univega GmbH, Cloppenburg, Germany,
— Halfords Nederland BV, Veenendal, The Netherlands.

(e) Related companies involved in the production or sales of the product concerned

— Sheng Fa Industries Co., Ltd., Taipei, Taiwan.

(16)

In light of the need to establish a normal value for exporting producers in the PRC and Vietnam to
which MET might not be granted, a verification visit to establish normal value on the basis of data
from an analogue country took place at the premises of the following companies:

— Biciclo SA de CV, San Luis Potosí, México,
— Bicicletas Mercurio SA de CV, San Luis Potosí, México.

(17)

The investigation of dumping and injury in both investigations covered the period from 1 April 2003
to 31 March 2004 (the IP). The examination of trends in the context of the analysis of injury covered
the period from January 2000 to the end of the IP (the period considered).

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(18)

Some interested parties raised the fact that the investigation covered the situation in the EU of fifteen
Member States (EU-15) while measures would be imposed on imports into the enlarged EU of
it must be noted that imports
twenty-five Member States. In regard to imports from Vietnam,
into the ten new Member States of the EU (EU-10) were negligible during the IP. Therefore,
it
was considered that any impact that these imports might have had on the injury or dumping
situation would also be negligible. In regard to imports from the PRC, there were significant quan-
tities of imports into the EU-10 in the IP at prices that were lower than those into the EU-15. In
these circumstances, it is considered that the findings of dumping and the conclusion that there is a
likelihood of continuation of dumping if measures were allowed to expire, would likely be reinforced
by the level and prices of imports from the PRC into the EU-10. As there is significant production of
bicycles in the EU-10, it was also considered that the impact of the level and prices of imports from
the PRC would be such as to confirm the existence of injury to the broader Community industry, i.e.
including producers in the EU-10. In these circumstances, it is considered that enlargement would
not automatically vary the dumping and injury parameters which form the basis of the proposed
measures.

B. PRODUCT CONCERNED AND LIKE PRODUCT

(19)

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

(20)

In the present investigations the bicycles were classified in the following categories:

— (A) ATB (al-terrain bicycles including mountain bicycles 24″ or 26″),

— (B) trekking/city/hybrid/VTC/touring bicycles 26″ or 28″,

— (C) junior action (BMX) and children's bicycles 16″ or 20″,

— (D) other bicycles/cycles.

(21) A similar categorisation was used in the investigation which led to the original measures in the PRC
and in the previous investigation covering the PRC. However, due to the development of new bicycles
types, the classification had to be slightly amended. For instance, in the present investigations, the
category B contains the types hybrid and VTC, which are further developments of previously existing
types.

(22)

(23)

The investigations confirmed that all types of bicycles as defined above have the same basic physical
and technical characteristics. Furthermore, they are sold through similar distribution channels such as
specialised retailers, sport chains and mass merchandisers 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
categories form one single product.

The investigations 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 into the Community market originating in the PRC and Vietnam have the same basic
physical and technical characteristics and the same uses. They are therefore considered to be alike
within the meaning of Article 1(4) of the basic Regulation.

(24) One interested party claimed that, in the framework of the review investigation, the extension of the
scope of the product concerned by Council Regulation (EC) No 71/97 of 10 January 1997, as a result
of an anti-circumvention investigation pursuant to Article 13 of the basic Regulation should be
limited to those parts which have a significant potential to be involved in circumvention operations,

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such as frames and forks. In this respect, it should be noted that the present review was initiated in
order to examine whether the existing measures are no longer sufficient to counteract the injurious
dumping. The scope of the product concerned, i.e. bicycles from the PRC, as extended by the above
mentioned regulation, remains therefore the same and a possible review of the anti-circumvention
measures should be carried out in the context of a separate review investigation, if the conditions
therefore are met.

(25) During the investigation one importer in the Community claimed that unicycles should be exempted
from the scope of the product concerned because they allegedly have different basic physical and
technical characteristics and different uses. The Commission investigated the claim and found that
basic physical and technical differences clearly exist. Unlike bicycles, unicycles have no second wheel,
no handlebar for steering and no breaking system. In addition, there is a clear dividing line between
the uses of unicycles and other cycles. Unicycles are normally not used for transportation or sport,
they are normally considered and used for acrobatic purposes. It was therefore concluded that the
claim was duly justified and that
the product concerned should be adjusted
accordingly.

the definition of

1. Market economy treatment

C. DUMPING

(26)

Pursuant to Article 2(7)(b) of the basic Regulation, in anti-dumping investigations concerning imports
originating in the PRC and/or Vietnam, normal value is to be established in accordance with para-
graphs 1 to 6 of the said Article for those exporting producers which can show that they meet the
criteria laid down in Article 2(7)(c) of that Regulation, i.e. that market economy conditions prevail in
respect of the manufacture and sale of the like product.

(27)

Briefly, and for ease of reference only, the criteria for MET are set out in summarised form below:

1. business decisions and costs are made in response to market signals, and without significant State

interference;

2. firms have one clear set of accounting records which are independently audited in line with

international accounting standards (IAS) and are applied for all purposes;

3. there are no significant distortions carried over from the former non-market economy system;

4.

legal certainty and stability is provided by bankruptcy and property laws;

5. currency exchanges are carried out at market rate.

(28)

Claims for MET pursuant to Article 2(7)(b) of the basic Regulation were received from ten PRC and
seven Vietnamese companies:

Exporting producers in the PRC
— Giant China Co. Ltd,
— Shenzhen Xidesheng Bicycle Co. Ltd,
— Guangzhou Viva Bicycle Corporation Limited,
— Komda Industrial Co. Ltd,
— Universal Cycle Corporation,
— Liyang Machinery (Shenzen) Co Ltd,
— Zheijiang Pujiang Libahuang Bicycle Corporation,
— Merida Bicycle Co. Ltd,
— Huida Bicycle (Shenzhen) Co. Ltd,
— Shenzhen Bo-An Bike Co. Ltd;

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Exporting producers in Vietnam
— Always Co., Ltd (Always),
— Asama Yu Jiun Intl. Co., Ltd. (Asama),
— Dragon Bicycles Co., Ltd (Dragon),
— High Ride Bicycle Co., Ltd (High Ride),
— Liyang Vietnam Industrial Co, Ltd. (Liyang),
— Vietnam Sheng Fa Co., Ltd (Sheng Fa),
— Olympic Pro Manufacturing Co., Ltd.

(29) One of these companies (Komda Industrial Co. Ltd), at a later stage in the investigation, withdrew its
request for MET but maintained its request for individual treatment pursuant to Article 9(5) of the
basic Regulation. In the case of another company (Olympic Pro Manufacturing Co., Ltd) it was found
that it had no exports of the product concerned into the Community during the IP. Therefore, its
request for MET and individual treatment became irrelevant.

(30)

The claims of the fifteen remaining companies were analysed on the basis of the five criteria set out
in Article 2(7)(c) of the basic Regulation.

(31)

(32)

(33)

1.1. M E T d e t e r m i n a t i o n r e g a r d 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 e P R C

For all exporting producers of bicycles in the PRC it was established that they were subject to an
export quota system, in accordance with a Regulation of export permit management of 20.12.2001
approved by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and the customs
authorities. The allocation of the quotas was made by a Committee comprised of members of the
MOFTEC, the relative Chamber of Commerce and the Association of Foreign Funded Enterprises on
the basis of criteria set up by the MOFTEC. The system also included the setting of minimum export
prices per product type and the control of prices and quantities of the exporter sales contract by the
government, before an export licence could be issued.

In view of the above, the companies requesting MET were not able to demonstrate that their
decisions regarding sale prices and quantities were taken in response to market signals and
without significant State interference, as required by the first criterion of Article 2(7)(c) of the
basic Regulation. Consequently, after consulting the Advisory Committee,
it was decided not to
grant MET to the applicant companies, since they did not meet the criteria set in Article 2(7)(c)
of the basic Regulation.

Certain exporting producers and the China Chamber of Commerce for Import and Export of
Machinery and Electronic products (CCCME) argued that the export licence scheme cannot be
considered to affect
the exporters' determination of export quantities and prices and are not
subject to significant State interference within the meaning of Article 2(7)(c) of the basic Regulation.
In this respect, it should be firstly noted that the export licence scheme restricts the companies to
export bicycles beyond a maximum allowed quantity and below the minimum prices set by the State.
This restriction indicates clearly that they are not free to determine their export activities without
significant State interference. Indeed, they are obliged to tender for an annual quantity which may be
accepted as such, or modified on the basis of unspecified grounds or even be rejected by the above
mentioned Committee. Furthermore, a company with less than 5 000 bicycle exports in the previous
year can be totally excluded from the tender procedures, leaving thus to the absolute discretion of
that Committee the continuation of the company's export activities. Moreover, the quantities and
prices are closely monitored by the State, involving MOFTEC and the customs authorities, via the
validation of the actual export sales contracts, on the basis of which the export licence can be issued.
This is considered to be an undeniable State interference in the company's business decisions within
the meaning of Article 2(7)(c) of the basic Regulation. On this basis, the argument was rejected.

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1.2. M E T d e t e r m i n a t i o n r e g a r d i n g e x p o r t i n g p r o d u c e r s i n V i e t n a m

(34)

It was found that five of the companies concerned were situated in a so-called Industrial Zones (IZ)
and one of the companies was situated in a so-called Export Processing Zone (EPZ).

(35)

Regarding companies situated in an IZ, it was established that the Government Decree 24/2000ND-
CP of 31 July 2000 implementing the Law on Foreign Investment of Vietnam, provided for a general
obligation for companies subject to this law to export at least 80 % of their production (export
obligation) in order to obtain an investment licence. It was also found that the export obligation was
included in the investment licences of all five companies situated in an IZ.

(36) Moreover, the investigation showed that the investment licence of the company situated in an EPZ

did not contain the export obligation referred to above.

(37)

The five companies who had the export obligation included in their investment licences alleged that
due to a subsequent change in the applicable Vietnamese legislation which was implemented by
Government decree 27/2003ND-CP (amending decree) the export obligation ceased to exist after
7 May 2003.

(38)

In this regard, it is to be noted that according to the amending decree, the export obligation can only
be removed under the condition that other compelling requirements included in the amending decree
are met. Therefore, the amending decree did not remove the export obligation but rather amended
the requirements which the companies needed to meet for the annulment of their export obligation.

(39)

The companies further alleged that they would have been entitled to have their export obligation
removed from their investment licences had they complied with the supplemental conditions listed in
the amending decree. However, according to the applicable legislation, the investor first has to
request from the investment licence issuing authority an amendment of its licence and, subsequently,
the investment licence issuing authority shall amend the investment licence of the investor so that the
investor can enjoy the repeal of the export obligation.

(40)

The investment licence issuing authorities had not repealed the export obligation in the investment
licences of any of the five companies at any time during the IP. Therefore, the companies also failed
to demonstrate that they would have complied with the additional conditions.

(41)

The same companies also alleged that even if the export obligation were to be considered to be in
force during the IP, the companies' decisions were, nevertheless, made in response to market signals.
However, not only was this export obligation in place during the IP but, moreover, this export
obligation was included in the investment licences and in the articles of association of all five
companies throughout the investigation period. Consequently, it is concluded that the export obli-
gation has to be considered as a significant State interference of such a nature as to effectively
preventing the companies from making their decisions according to market signals.

(42)

It was also concluded that the company, for which it was found that neither the investment licence
nor its articles of association contained the said export obligation, was free to sell the product
concerned both on the domestic and on the export market and was not subject to significant
State interference.

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(43)

Furthermore, it has to be mentioned that in the case of four companies of the five companies referred
to in recital 34 above subject to the export obligation, it could not be concluded that they had one
clear set of accounting records independently audited in line with international accounting standards
and applied for all purposes. It was found that a non-transparent invoicing arrangement was in place
with regard to the invoicing of the product concerned to the Community. This arrangement involved
intermediary companies in tax havens and other locations outside Vietnam and it did not allow an
audit trail to be followed. As a result, the accounting records of the companies in Vietnam did not
represent faithfully the underlying export sales transactions.

(44)

Consequently, after consulting the Advisory Committee, it was decided to grant MET to Always on
the basis that the company met all the criteria set in Article 2(7)(c) of the basic Regulation and to
reject the claims of Asama, Dragon, High Ride, Liyang and Sheng Fa since these companies did not
meet all the above-mentioned criteria.

(45)

(46)

(47)

2. Individual treatment

Pursuant to Article 2(7)(a) of the basic Regulation, a country-wide duty, if any, is established for
countries falling under Article 2(7)(a) of the basic Regulation, except in those cases where companies
are able to demonstrate that they meet all criteria set out in Article 9(5) of the basic Regulation for
individual treatment.

The same PRC and Vietnamese exporting producers, which did not fulfil the MET criteria, as well as
the company referred to in recital 29, alternatively, requested individual treatment (IT) in accordance
the basic Regulation. The Commission consequently verified whether the
with Article 9(5) of
applicant companies enjoyed, both in fact and in law, the necessary degree of independence from
the State for setting their export prices and determining their export quantities of the product
concerned, in accordance with Article 9(5)(b) of the basic Regulation.

In this respect, it was established, that all PRC exporting producers were subject to significant State
control with regard to determining their export prices and quantities of the product concerned as
explained in recital 31 above. It was, therefore, concluded that the Chinese exporting producers
having applied for IT did not meet the necessary requirements for individual treatment as set out
in Article 9(5) of the basic Regulation.

(48)

Regarding the Vietnamese companies, it was established that all the five companies were subject to
significant State control with regard to setting their export quantities of the product concerned as
explained in recitals 34 to 41 above. It was, therefore, concluded that none of the five companies met
the necessary requirements for individual treatment.

3. Normal value

3.1. Analogue country

(49)

Pursuant to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers in the
PRC and Vietnam not granted MET has to be established on the basis of the prices or constructed
value of the analogue country.

(50)

For this purpose, in the notices of initiation the Commission suggested Mexico, which was also the
analogue country used in the previous investigation concerning the PRC.

(51) All interested parties were given the opportunity to comment on the choice of analogue country
envisaged. Comments were received from the cooperating exporting producers suggesting Taiwan or
India as being a more suitable analogue country than Mexico.

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T a i w a n

(52)

Certain exporting producers argued that, since this country had been used in the original investi-
gation, Taiwan is a more appropriate analogue country to be used. They further argued that Taiwan is
one of the largest producers of bicycles in the world and has a developed domestic market where
many domestic producers actively compete. Moreover, there are no restrictions on imports of
bicycles or parts into Taiwan.
In addition, many Chinese and Vietnamese manufacturers are
owned by Taiwanese companies and therefore both the production processes and the final
products are very similar to those of the Chinese and Vietnamese producers. It was also submitted
that several Taiwanese companies were willing to cooperate with the Commission for this purpose.

(53)

In respect of the above arguments, it should be firstly noted that Taiwan is indeed the third largest
producer of bicycles in the world but the industry is heavily export oriented, typically exporting
about 90 % of its output.

(54) On the other hand,

i.e. three fold the Taiwanese market. Moreover,

its domestic market is relatively small and rather stable estimated at about
is estimated at about 2,3
700 000 to 800 000 units, whereas the Mexican domestic market
the Taiwanese market is largely
million units,
supplied by Chinese exporters. In comparison, Taiwan imported in 2003 some 470 000 bicycles
from the PRC, representing thus more than half of its market size. In this respect, it should be noted
that the imports of bicycles into Taiwan were quasi nil before the year 2001. Therefore, whereas
before 2001, the Taiwanese market was principally, if not, exclusively supplied by local producers,
nowadays the PRC bicycles prevail in this market more and more over the local producers whose
market share decreases dramatically. Consequently, the domestic market is highly influenced by
import prices of PRC bicycles, which are subject of the current investigation.

(55) Nevertheless, questionnaires were sent to all known Taiwanese producers. Certain companies replied
that they would be willing to cooperate but they had no domestic sales, as they exported all their
production. Two companies replied to the questionnaire. However, one of them failed to provide a
meaningful questionnaire response and was considered to be non-cooperating. The other company
fully cooperated but it was questionable whether the low volume of its domestic sales could be
considered as sufficiently representative in relation to the Taiwanese market, the total Chinese exports
to the Community and the total Vietnamese exports to the Community. Moreover, given the market
conditions prevailing in the Taiwanese market explained in recital 54, that single company's sales
could not be considered as an appropriate basis for the purpose of establishing a normal value.

I n d i a

(56) One Chinese exporting producer suggested alternatively India as an analogue country. It argued that
the labour costs in India are similar to those in the PRC. In this respect, it should be noted that India
was found to be an inappropriate choice because any comparison between the bicycles sold in India
(rustic bicycles sold to retailers in kit form) and those exported by Chinese manufacturers to the
Community would be very difficult and in any event would require multiple adjustments. Therefore,
and in view of the existence of a more appropriate analogue country, i.e. Mexico, India was not
considered a suitable analogue country.

(57)

Following disclosure, a Vietnamese exporting producer submitted that the Commission failed to
provide any reasonable justification, supported by evidence, as to why India could not be used as
an analogue country. It argued that the Commission had not sent any questionnaires to the producers
in India, whereas this country exports large amounts of good quality bicycles to the Community,
which are like products, in spite of the Commission's findings that they are ‘rustic bicycles sold to
retailers in kit form’.

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(58)

In this respect, it should be firstly noted that, shortly after the initiation of the proceeding, only one
exporting producer in the PRC suggested India as an analogue country but this claim was not
sufficiently substantiated, as the only argument submitted was the similar labour costs in the PRC
and in India. Furthermore, the Indian exports of bicycles to the Community are not a relevant factor
in determining the suitability of India as an analogue country. It is not disputed that the bicycles sold
on the Indian domestic market are like products to those exported into the Community by the
countries concerned. However, the available information indicated that the types of bicycles sold on
the Indian domestic market would require multiple adjustments, which would thus make any
comparison unreliable. In view of this, and in the absence of other more substantiated information,
the option of India was not further examined since data concerning a more appropriate analogue
country, i.e. Mexico, was available. On this basis, the above argument was rejected.

M e x i c o

(59) Questionnaires were sent to all known Mexican producers. Two companies fully cooperated by
their premises.
replying to the questionnaire and accepting a verification of
These two producers had domestic sales representing about one third of the Mexican market,
estimated at about 2,3 million units. A large number of producers and some 20 major importers
were found to operate in a competitive environment. The imports of bicycles in 2003 were origi-
nating principally in Taiwan (more than 50 %), Uruguay (20 %), United States and South Korea. These
imports represented some 5 % of the domestic market. To this percentage, should be added the
bicycles sold on the domestic market by importers assembling bicycle parts.

their response at

(60)

(61)

(62)

In this respect, it should be noted that in 2003, some 465 000 bicycle parts with a value of EUR 79
million were imported into Mexico, out of which one third in value was imported by twelve major
importers/assemblers (source: annual report of ANAFABI, the Mexican association of bicycle manu-
facturers). On the other hand, the exports of bicycles from Mexico represented in 2003 about 60 %
in value of the imports into Mexico (source: official Mexican statistics), i.e. estimated to represent
around 50 to 70 thousand units. Therefore, it seems that a major part of the imported bicycle parts
has been used either for the after sales (repair) market or for assembling and selling bicycles on the
domestic market.

Certain exporting producers submitted that there are import registration procedures in Mexico which
are cumbersome and increase the costs of goods imported into that country. They also argued that
this registration system causes market distortions in the Mexican bicycle sector. They further argued
that the domestic competition in Mexico is limited given that eight major producers, members of the
ANAFABI, the Mexican association of bicycle manufacturers, account for more than 75 % of local
output enjoying thus a significant power in setting the domestic prices. Furthermore, it was argued
that the Mexican bicycle producers are limited as regards the quantities they can sell on their
domestic market, since the Mexican law on the so called Maquiladora programs allegedly requires
the domestic producers to meet certain performance requirements. In accordance with this program,
if a company wishes to obtain duty free imports of raw materials for subsequent exports, it must
export at least 30 % of its total production on an annual basis.

Regarding the import registration procedures, it should be firstly noted that although such procedures
might make imports to some extent more cumbersome and time consuming, it was found that there
are in any event significant imports of bicycles and bicycle parts into the Mexican market, ensuring
impact on the market of such
thus a competitive market situation. Therefore,
procedures,
if any, which is in any event not directly measurable, cannot be considered as
relevant in this respect. In contrast, with regard to the domestic competition, it should be noted
that there are some twelve major producers, a large number of smaller producers and/or assemblers
and a large number of importers/assemblers of bicycles and bicycle parts. All of these operators
compete with each other and confirm a strong competitive environment prevailing in the Mexican

the potential

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market. As for the power of large producers, members of ANAFABI, in setting the domestic prices,
this was not substantiated and the investigation did not reveal any elements which could support this
allegation. The fact that a number of large producers retain a major part of the domestic market does
not constitute, as such, evidence of power in setting prices. In this context, it should be further noted
that the two investigated Mexican producers, which represented about one third of the total Mexican
production, were found to realise in average low profits (lower than the normal profit claimed by the
applicant
injurious dumping from the countries
in the absence of
concerned)
from their bicycles activity rather than high profits as could have been expected
should the Mexican market be controlled by them.

in the Community market

(63)

In respect of the Maquiladora programs,
it should be noted that the two cooperating Mexican
producers were not found to pay any anti-dumping duty on imports of bicycle parts, which repre-
sented up to 60 % of their total needs for their bicycle production and were mainly originating in the
PRC and Taiwan. However, both sold the major part of their production on the domestic market.
Only one Mexican producer had exports, representing not more than 10 % of its total sales. As a
matter of fact, since the year 2000, the bicycle sector is included within the so-called ‘Mexican
Sectorial Promotion Programs’ (PROSEC) established by a decree published on 30 October 2000
by the Mexican Government. The PROSEC applies to firms that produce finished goods covered in a
specific sector promotion program and imported inputs listed under this program. The decree does
not explicitly link the tariff exemption/reduction to exports. All authorised producers may import the
raw materials and machinery listed in the decree as far as they are used in the manufacture of certain
specified products. No distinction is made based on the final destination of the imported goods
(domestic or export markets). In this respect, it should be noted that the two cooperating producers
were not found to pay any duty other than the customs duty for the imports of raw materials
incorporated in final products destined for the domestic market.

(64) One cooperating importer submitted that the labour costs in Mexico are three times the Vietnamese
labour costs. As a result, the cost of production and selling prices of the end product in Mexico are
higher than those in Vietnam. Consequently, Mexico is not an appropriate analogue country. In this
respect, it should be noted that Vietnam is considered to be a country with an economy in transition.
The labour costs of the Vietnamese producers not granted market economy status are not free market
prices, i.e. these prices are not the result of the play of market forces. The very purpose of using an
analogue country is to eliminate the effect of such non-market prices on companies costs. On this
basis, the argument was rejected.

(65)

Finally, it was submitted that there are significant differences between the Mexican bicycle sector and
that of the PRC which were mainly due to the raw materials used and to the conditions of access to
raw materials. In respect of the raw materials used, it was argued that the Mexican manufacturers
produce only rigid frames, while the Chinese manufacture also produce suspension frames. As for the
conditions of access to raw materials, it was alleged that they are not comparable to those in the
PRC, since the bicycle parts supplied on the domestic market are manufactured with outdated
technology. Furthermore, the bicycle parts imported from the PRC, are subject to a 144 % anti-
dumping duty, thus leading to an inflated cost.

(66)

Regarding the differences in the raw materials used and the conditions of access to the raw materials,
it should be noted that the investigation did not show that there were differences between the
bicycles produced by Mexican, Chinese or Vietnamese manufacturers. The Mexican manufacturers
produce also bicycles with suspension frames and are mainly supplied with bicycle parts from the
PRC and Taiwan. As for the anti-dumping duty on imports of bicycle parts, as mentioned in recital
63 above, such duty it is not levied to imports of bicycle parts. Therefore, this argument was rejected.

(67)

In view of the above, the Mexican market can be considered to be representative and competitive. It
was therefore concluded that Mexico was an appropriate analogue country.

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3.2. Determination of normal value in the analogue country

(68)

Following the choice of Mexico as an analogue country, normal value was calculated on the basis of
the data verified at the premises of the two cooperating Mexican producers. Pursuant to Article
2(7)(a) of the basic Regulation, normal value for the Chinese and Vietnamese producers not granted
MET was established on the basis of verified information received from the producers in the analogue
country, i.e. on the basis of prices paid or payable on the domestic market of Mexico for comparable
product types or constructed value in Mexico for comparable product types.

(69)

The domestic sales of the two Mexican producers of the like product were found to be representative
as they represented a major percentage in relation to the product concerned exported to the
Community by the exporting producers in the PRC and in Vietnam.

(70) An examination was also made as to whether the domestic sales of each product type could be
regarded as having been made in the ordinary course of trade, by establishing the proportion of
profitable sales to independent customers of the type in question. In cases where the sales volume of
a product type, sold at a net sales price equal to or above the unit cost, represented more than 80 %
of the total sales volume of that type, and where the weighted average price of that type was equal to
or above the unit cost, normal value was based on the actual domestic price, calculated as a weighted
average of the prices of all domestic sales of that product type made during the IP, irrespective of
whether these sales were profitable or not.

(71)

(72)

In the case where the volume of profitable sales of a product type represented 80 % or less but at
least 10 % of the total sales volume of that type, or where the weighted average price of such sales
was below the unit cost, normal value was based on the actual domestic price, calculated as a
weighted average of profitable sales of those types only.

For those product types, where the volume of profitable sales represented less than 10 % of the total
sales volume of that type on the domestic market, it was considered that the product type concerned
was not sold in the ordinary course of trade and therefore, normal value could not be based on
domestic prices in Mexico.

(73)

For the exported product types, which were either not made in the ordinary course of trade in
Mexico or not sold by the Mexican producers on their domestic market, constructed normal values
were used.

(74)

For exported product types, without corresponding types sold in the ordinary course of trade on the
domestic market of Mexico, normal value was constructed, pursuant to Article 2(3) of the basic
Regulation, on the basis of the weighted average of each producer's own manufacturing costs plus a
reasonable amount for selling, general and administrative (SG&A) costs and for profit. The SG&A
costs and profit were determined on the basis of the weighted average of SG&A costs incurred and of
profit realised by each of the cooperating Mexican producers on their domestic sales of the like
product, in the ordinary course of trade. For exported product types, without sales on the domestic
market of Mexico, the manufacturing costs of similar product types were used in the construction of
normal values, appropriately adjusted in order to take into account the differences in physical
characteristics with the exported types.

3.3. Determination of normal value for the exporting producer to which MET was granted

(75)

In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the
domestic sales of the like product to independent customers by Always were representative,
i.e.
whether the total volume of such sales was equal to or greater than 5 % of the total volume of
the corresponding export sales to the Community.

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(76)

It was found that Always did not have any sales of the like product on the domestic market of
Vietnam. Therefore, in the absence of domestic sales, normal value was established in accordance
with Article 2(3) of the basic Regulation, on the basis of the cost of production in the country of
origin plus a reasonable amount for SG&A costs and for profits.

(77)

Since Always did not have any sales on the domestic market for the product concerned nor for the
same category of product in Vietnam, the amounts of SG&A and profits to be added to the cost of
production of Always were established in accordance with Article 2(6)(c) of the basic Regulation.
These amounts were therefore based on the weighted average SG&A costs and the weighted average
profits incurred in the ordinary course of trade by the producers in Mexico. This method was
considered to be reasonable in this situation as the Mexican market was considered to be represen-
tative and competitive.

(78) Always claimed that, in the absence of domestic sales, normal values should be determined on the
basis of information concerning export sales to third countries. In this respect, it should be noted that
the construction of normal values on the basis of the cost of production in the country of origin is
the first alternative listed in Article 2(3) of the basic Regulation for cases where there are no domestic
sales. The use of constructed normal value, instead of export prices to third countries, as the basis for
the determination of normal value is also the consistent practice of the Community in the absence of
representative domestic sales. It is also noted that the export sales to third countries could be equally
dumped. Moreover, the company did not provide complete information concerning its sales to third
countries at any stage of the investigation resulting in no information being available for establishing
the normal values on this basis. Consequently, this claim was rejected and normal values were
constructed in accordance with the first alternative set out in Article 2(3) of the basic Regulation.

(79) Always further claimed that the sales not made in the ordinary course of trade in the analogue
country should not have been excluded when establishing the reasonable profit for its normal value
determination. This claim however, could not be accepted since by analogy of the chapeau of Article
2(6), had the company realised sales on its domestic market, then the profits for constructing normal
values would have been based on the company's data pertaining to production and sales in the
ordinary course of trade. Therefore, it was only reasonable for the institutions to use the profits of
the Mexican producers incurred by their domestic sales in the ordinary course of trade when applying
Article 2(6)(c) of the basic Regulation.

E x p o r t p r i c e

3.4. PRC

(80)

The investigation showed that the exports of the sampled PRC exporting producers were made both
to unrelated and to related customers in the Community.

(81)

For the exports made by the sampled exporting producers directly to independent customers in the
Community, the export prices were established on the basis of the prices paid or payable for the
product concerned, in accordance with Article 2(8) of the basic Regulation.

(82)

For sales made via their related importers in the Community, the export price was constructed on the
basis of the resale prices to the first independent customers. Adjustments were made for all costs
incurred between importation and resale by those importers,
including SG&A and duties, and
assuming a reasonable profit margin,
in accordance with Article 2(9) of the basic Regulation. A
profit margin of 5 % was considered to be reasonable for this type of market and was also found to
be in line with the profit of unrelated importers.

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(83) One cooperating exporting producer claimed that the current anti-dumping duty should not be
deducted as a cost between importation and resale when constructing its export price, in accordance
with Article 11(10) of the basic Regulation. It argued that when deducting from its resale prices all
costs incurred between importation and resale, other than the anti-dumping duty, the reconstructed
export prices remained considerably above normal value and therefore, the anti-dumping duty was
duly reflected in the resale price. Moreover, the resale prices are negotiated on the basis of the
recommended retail prices minus the applicable dealer mark-up, and therefore the anti-dumping
duty is duly reflected in the subsequent selling prices.

(84)

In this respect, it should be noted that the claim of the company regarding the reflection of the anti-
dumping duty in its resale prices by reference to the normal value is considered irrelevant since what
matters in the application of Article 11(10) is not changes of export prices by comparison with the
normal value, but how the duty has been reflected in an increase of resale prices and subsequent
selling prices in the Community. As the company did not provide any evidence of movements in the
resale or in subsequent prices by reference to its export prices established in the previous investi-
gations, which would conclusively prove that the amount of anti-dumping duties paid has been
indeed reflected in the resale prices, the claim had to be rejected.

3.5. Vietnam

(85) All export sales of the company to which MET was granted were made via related traders in third
countries to independent customers in the Community. Therefore, the export price was established
on the basis of the resale prices to independent customers in the Community.

(86)

For the exporting producers not granted MET the export price had to be established on the basis of
facts available since the export prices of some producers were not found reliable. Therefore the
export prices of the exporting producers referred to in recital 43 above were not taken into
consideration when establishing the export price, and only the export prices of
the producer
whose export prices were considered reliable were used for this purpose.

4. Comparison

(87)

(88)

For the purpose of ensuring a fair comparison between the normal value and the export price, due
allowance in the form of adjustments was made for differences affecting price comparability in
the basic Regulation. On this basis, adjustments were made
accordance with Article 2(10) of
where appropriate with regard to indirect
(including
level of
handling costs), ocean freight and insurance costs, packing and credit costs. The adjustments in
the export price in respect of inland freight in the exporting country and credit costs were made
based on the costs established in the analogue country with regard to companies to which MET was
not granted. Adjustments were also made where the export sales were made via a related company
located in a country other than the country concerned or the Community, pursuant to Article
2(10)(i) of the basic Regulation.

taxes, discounts,

transport

trade,

The CCCME and exporting producers in the PRC argued that adjustments made for inland transport
and interest rate linked to credit costs established in the analogue country were not justified, since the
absence of market economy conditions for these costs incurred by the cooperating exporting
producers had not been demonstrated by the investigation. In this respect, it should be noted that
all the MET claims of cooperating exporting producers in the PRC were rejected, i.e. it was found that
these companies do not operate under market economy conditions. Therefore, the costs incurred by
these companies could not be used since they did not arise from a situation where market economy
conditions prevail. On this basis, the argument was rejected.

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(89)

(90)

(91)

The Vietnamese companies claimed that the adjustment made for commissions pursuant to Article
2(10)(i) was unwarranted. The companies explained that the related traders situated in third countries
were mere ‘paper companies’ (i.e. companies with no personnel that do not carry any function and
activity) and should be considered as single economic entities with the exporting producers in
Vietnam. In this regard, it is to be noted that invoices were issued by these traders to customers
in the Community and payments were received by these traders from the customers in the
Community. Furthermore, it is to be noted that the sales made by these related traders included a
mark-up. Where these related traders had audited accounts, it could be established that this mark-up
was even higher than the amount of the adjustment. Therefore, this claim was rejected and the
adjustment was retained at the level of 5 % since this level was considered reasonable to reflect
commissions paid to independent agents involved in the trade of the product concerned.

5. Dumping margin

5.1. PRC

In accordance with Article 2(11) of the basic Regulation, the dumping margin was established on the
basis of a comparison of the weighted average normal value with the weighted average export prices
per product type. A comparison of the normal value and the export price of the sampled PRC
exporting producers showed a dumping margin of 36,8 % during the IP. This dumping margin was
attributed to all cooperating companies, i.e. sampled and non-sampled.

The comparison of the data concerning exports to the Community provided by the cooperating PRC
exporting producers (sampled and non-sampled) and the total volume of imports as derived from the
Eurostat import statistics,
indicated that the level of cooperation was low, since these exports
represented 54 % of total Community imports from the PRC during the IP. Therefore, for the
export volumes of non-cooperating Chinese exporting producers,
the level of dumping was
determined on the basis of the two product categories of the product concerned (see recital 20)
with the highest margins established for the sampled exporting producers. This approach was deemed
appropriate since no indication was found that any of the non-cooperating producers dumped the
product at a lower level than that of the sampled exporting producers.

(92)

Finally, a country-wide average dumping margin was calculated using as a weighing factor, the CIF
value of each group of exporters, i.e. cooperators and non-cooperators. The established country-wide
dumping margin, expressed as a percentage of the CIF Community frontier price duty unpaid, was
48,5 %.

(93)

The CCCME argued that the approach followed for the determination of the dumping margin of non-
cooperating exporting producers is inconsistent with the methodology followed by the Commission
in the previous expiry review investigation concerning imports of bicycles from China, and this could
lead to unreasonably artificial results in the framework of a single proceeding. The methodology used
to calculate the dumping margin of non-cooperating exporting producers in the previous expiry
review investigation was the average export price for all transactions on the basis of Eurostat figures,
after deduction of exports by cooperating producers. It further argued that in determining the overall
dumping on the basis of the assumption that the non-cooperating companies did not dump the
product concerned at a lower level than cooperating exporting producers, the Commission had failed
to take into account the specific types exported by non-cooperating exporting producers, whereas
available information should be used with special circumspection, in accordance with Articles 18(6)
and 6(8) of the basic Regulation and paragraph 7 of Annex II of the WTO Anti-dumping Agreement.

(94)

In this respect, it should be firstly noted that the methodology used in the previous expiry review
investigation was considered to be appropriate in view of determining whether dumping was likely to
recur. In this respect, the institutions considered that the dumping margin could be determined

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without absolute precision as this margin was not going to be applied in practice. In the framework
it was necessary to calculate a dumping margin on a more precise
of the present investigation,
manner. For
the export volumes of non-cooperating Chinese producers were
this purpose,
determined using Eurostat figures. As for the export price, Eurostat figures were not considered a
suitable source of information since the specific types exported by the non-cooperating companies
were not known and therefore any comparison with the weighted average normal value established
in the analogue country could not necessarily reasonably reflect the dumping margin of these
exporters. Moreover, by applying the methodology as suggested by the CCCME,
the overall
dumping margin would have been significantly higher, i.e. more than double. The use of the two
product categories of the product concerned with the highest margins established for the sampled
exporting producers was therefore deemed to be more appropriate, in accordance with Articles 18(6)
and 6(8) of the basic Regulation as well as with paragraph 7 of Annex II of the WTO Anti-dumping
Agreement. On the basis of the above, the argument was rejected.

5.2. Vietnam

(95)

In accordance with Article 2(11) of the basic Regulation, the dumping margin was established on the
basis of a comparison of the weighted average normal value with the weighted average export prices
per product type. A comparison of the normal value and the export price of the Vietnamese
exporting producer with MET showed a dumping margin of 15,8 % during the IP.

(96)

The comparison of the data concerning exports to the Community provided by the Vietnamese
exporting producers and the total volume of imports originating in Vietnam indicated that the level
of cooperation was high, since these exports represented more than 95 % of total Community
imports from Vietnam during the IP.

(97)

Since, as described in recital 96, the level of cooperation was high, the countrywide average dumping
margin was determined on the basis of the weighted average dumping margin of those cooperating
exporting producer which were not granted MET or IT and whose information regarding export
prices could be considered reliable as referred to in recital 85. Therefore, a country wide dumping
margin of 34,5 %, expressed as a percentage of the CIF Community frontier price duty unpaid, was
attributed to all other exporting producers in Vietnam.

1. Impact of anti-competitive conduct

D. INJURY

(98) During the investigation it was found that two subsidiaries, Batavus N.V. and Koga N.V., of one of
the sampled Community producers, Accell Group N.V., were fined for involvement in anti-compe-
titive behaviour by the Dutch competition authorities (1). The infringement concerned an agreement
between the two subsidiaries with two other Community producers (non-sampled) and Giant Europe
B.V., a company related to a Chinese exporter, Giant China Co. Ltd., in regard to common minimum
price lists (price cartel) for bicycles which was applied in the retailer channels on the Dutch bicycle
market. It should be noted that Accell Group N.V. has appealed to the Dutch competition authorities
against their decision regarding the price cartel.

(99)

The price cartel took place for the bicycle season 2001 (1 September 2000 to 31 August 2001). The
period for the examination of dumping and injury in the current investigations is 1 April 2003 to
31 March 2004, whereas the examination of trends relevant for the injury assessment covers the
period from January 2000 to the end of the IP. Consequently, there is an overlap between the
occurrence of the anti-competitive conduct and the period considered.

(1) Decision by the Nederlandse Mededingingsautoritet No 1615/691 of 21 April 2004.

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(100)

In view of the above, it cannot be excluded that the impact of the anti-competitive conduct has had
some effect on part of the Community market,
i.e. the Dutch market, during part of the period
considered and consequently on the injury indicators of the Community producers involved in the
cartel. It has been common practice in cases where decisions concerning price cartels have been taken
by public authorities that a particularly prudent approach be adopted even when such decisions are
still under appeal.
In order to avoid any doubts that the overall performance of the sampled
Community producer, Accell Group N.V., could have been influenced by the anti-competitive
conduct of some its subsidiaries,
it has been decided to exclude this producer from the injury
analysis, although it was found that only some of the companies in the group were involved in
the anti-competitive conduct. Regarding the anti-competitive conduct of the other two Community
producers that also participated in the cartel, it is noted that they were not part of the sample of
Community producers. For these two producers, considering that the cartel was based on common
minimum price lists, the likely impact of the cartel on these producers' performance would be
reflected in prices and profit levels. Since no assessment of trends in prices and profitability for
the non-sampled Community producers has been made, the participation in the cartel of these two
companies has no impact on the injury analysis. It has also been considered whether the anti-
competitive behaviour in part of the Community market may have had an impact also on the
performance of the other sampled Community producers. However, it has been found that these
producers' operations on the Dutch market have been of an extremely limited nature during the
period considered (less than 1 % of total units sold). Furthermore, the consumption on the Dutch
market only represents 7 % of the total consumption in the Community and,
in addition, the
duration of the cartel was very limited in time. It is therefore not considered necessary to make
any adjustments to the injury findings concerning the performance of these other producers.

(101) Furthermore,

it was also considered whether the injury picture would have been substantially
different if Accell Group N.V. had been included in the injury analysis. However, even if the
Accell Group N.V.'s data had been taken into consideration, the injury trends would overall have
remained the same as concluded below.

(102) As the cartel took place during the 2001 bicycle season, the participation of Giant Europe B.V.
therein had no impact on the related exporter's findings for the investigation period of the current
anti-dumping proceeding.

2. Community production

(103)

In the course of the present investigation it was found that bicycles have been manufactured by:

— 8 sampled producers,

— 12 other complainant Community producers,

— 39 other Community producers supporting the complaint.

3. Definition of the Community industry

(104) The complainant Community producers (both the sampled and non-sampled) together with other
Community producers supporting the complaint (both sampled and non-sampled) which responded
to the sampling exercise and declared themselves ready to cooperate in the investigation, accounted
for more than 80 % of Community production of the product concerned. They were therefore
deemed to constitute the Community industry within the meaning of Article 4(1) of the basic
Regulation. The remaining non-complainant Community producers did not oppose the investi-
gations. The sampled Community producers in the investigations, after the exclusion of one of
the producers (as explained in recitals 98 to 101 above),
(hereafter referred to as sampled
producers) accounted for around 37 % of the total Community production of bicycles during the IP.

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4. Community consumption

(105) The Community producers' sales were assessed on the basis of data collected from producers in the
reply to the sampling questionnaire and data reported in the complaint lodged by the applicant. The
data in the complaint were collected from various bicycle-manufacturing associations in the
Community.

(106) The apparent Community consumption was established on the basis of the sales of all Community
producers on the Community market, as estimated per above, plus imports from all countries as
reported by Eurostat.

(107) The Community consumption declined by 10 % at the beginning of the period considered, from
17 348 000 units in the year 2000 to 15 695 000 units in the year 2002. Thereafter the
consumption gradually increased,
the period
considered the consumption increased by 4 %. Detailed data, expressed in units, are as follows:

to 18 037 000 units during the IP. Throughout

Consumption

2000

2001

2002

2003

IP

Units

Index

17 348 000

15 236 000

15 695 000

17 336 000

18 037 000

100

87

90

100

104

5. Imports of bicycles from the PRC and Vietnam

5.1. Cumulation

(108) The Commission considered further whether the effects of imports of bicycles originating in the PRC
and Vietnam (the countries concerned) should be assessed cumulatively in accordance with Article
3(4) of the basic Regulation.

(109) This provision stipulates that the effects of imports from two or more countries simultaneously
subject to the same investigation shall be cumulatively assessed when (i) the margin of dumping
established in relation to the imports from each country is more than de minimis as defined in Article
9(3) of the basic Regulation; (ii) the volume of imports of each country is not negligible; and (iii) the
conditions of competition between the imported products and the conditions of competition
between the imported products and the like Community product make such an assessment appro-
priate.

(110) As indicated above, the present investigations have shown that the dumping margins established for
the PRC and Vietnam are well above the de minimis level, and the volume of imports from said
countries is not negligible in the sense of Article 5(7) of the basic Regulation (their market shares
attaining respectively 4,07 % and 8,70 % in the IP).

(111)

In order to determine the appropriateness of a cumulative assessment in view of the conditions of
competition between the imported products and the like Community product, the Commission has
analysed the exporters' market behaviour in terms of export prices and volumes based on Eurostat
data.

(112) Similar market behaviour of PRC and Vietnamese producers in terms of export prices was found. In
fact, said countries have decreased their respective average unit selling prices of bicycles by 22 % and
52 % throughout the period considered.

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(113) As stated in recital 110, both countries hold significant market shares in the Community market.

(114) Furthermore, as explained above (see recitals 19 and following) it has been found that the product
concerned imported from the PRC and Vietnam and produced by the Community industry are to be
considered alike in terms of interchangeability and substitutability, thus competing with each other
on a type by type basis.

(115) Thus, it was established that exports of the product concerned from the countries concerned compete

with bicycles manufactured by the Community industry.

(116) Further to the disclosure of definitive findings, some interested parties argued that cumulation was
not justified since the models of the PRC and Vietnamese imports of bicycles are different. However,
when comparing the imports on model by models basis it has been found that not only there is a
substantial matching between the imports of the PRC and Vietnamese bicycles with those produced
by the sampled Community producers, but that there is also a substantial matching between the
models imported from the PRC and those imported from Vietnam. It was also claimed that the
market segments, in which the Vietnamese exporters were selling their bicycles, were different from
those served by the PRC exporters and the Community producers, thereby justifying a different price.
This allegation was however not supported by any evidence. Moreover, it appears that in certain
Member States, where Vietnamese imports have an important market share, bicycles from Vietnam
are present in the various market segments. Therefore, both claims were rejected.

(117) On the basis of the above, it was concluded that all conditions justifying the cumulation of imports

of bicycles originating in the PRC and Vietnam were met.

5.2. Volume of the dumped imports and market share of bicycles originating in the PRC and the Vietnam

(118) The volume of imports of the product concerned was established on the basis of statistical infor-
mation provided by Eurostat. The number of bicycles originating in, and imported from, the PRC
increased between 2000 and the investigation period by 472 %. The imports of bicycles from the
PRC during the IP are more than 55 times higher than the quantity of 13 651 bicycles imported
during the IP of the previous investigation (1 September 1997 to 31 August 1998). Between 2000
and the IP, imports of bicycles originating in Vietnam increased by 413 %. At cumulated level, the
imports of the two countries have increased between 2000 and the IP from 435 373 units to
2 311 638, an increase of 431 %.

(119) Since the consumption during the period considered has only increased by 4 %, the market share
held by imports of the product concerned originating in the PRC has increased from 0,73 % in 2000
to 4,07 % in the IP and the Vietnamese share has increased from 1,77 % in 2000 to 8,70 % in the IP.
Consequently the cumulated market share has increased from 2,50 % in 2000 to 12,77 % in the IP.

(120) The developments of imports and market share of bicycles originating in the PRC and Vietnam

during the period considered is shown in the following tables:

Imports PRC

2000

2001

2002

2003

IP

Volumes (units)

128 091

257 728

561 706

707 351

733 901

Index

Market share %

Imports Vietnam

100

0,73

2000

201

1,68

2001

438

3,58

2002

552

4,08

2003

572

4,07

IP

Volumes (units)

307 282

586 051

766 680

1 457 245

1 577 737

Index

Market share %

100

1,77

191

3,84

250

4,88

474

8,40

513

8,70

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Official Journal of the European Union

14.7.2005

Imports Cumulated

2000

2001

2002

2003

IP

Volumes (units)

435 373

843 779

1 328 386

2 164 596

2 311 638

Index

Market share %

Index

100

2,50

100

194

5,52

220

305

8,46

338

497

12,48

499

531

12,77

510

6. Prices of the imports concerned

(a) Evolution of prices

(121) Eurostat data could only be used to a limited extent for establishing the price trends of dumped

imports for the period between 2000 and the IP for the following reasons:

It has been found that the import prices based on Eurostat data do not take into account the various
product types and the substantial price differences among the various types of the product concerned.
The average prices per country are strongly influenced by the product mix of each country. The
investigation has shown, when comparing model by model of
imports from the cooperating
exporters that even within the same product types and models there exist substantial price differences
depending on the components of the bicycles. Furthermore, it was found that the import prices based
on the product types identified among the cooperating exporters truly reflect the price differences
between bicycles originating in the PRC and Vietnam and the Community industry. Consequently, the
prices found in Eurostat are inconclusive for the purpose of this investigation. The import prices of
Eurostat for the PRC and Vietnam can only serve as an indicator of price trends per country basis,
but are not useful when comparing sales prices between various countries and the Community.

(122) According to Eurostat data, the weighted average import prices, hereafter indicated by index, from the
PRC and Vietnam declined by 22 % and 52 % respectively between the year 2000 and the IP. On a
cumulated level, the average sales prices declined by 50 %. Detailed information is as follows:

Import Prices

2000

2001

2002

2003

(PRC)

Index

(Vietnam)

Index

(cumulated)

Index

100

100

100

83

82

81

70

71

62

75

49

50

IP

78

48

50

(b) Price undercutting

(123) For the determination of the price undercutting of bicycles originating in the PRC and Vietnam, the
Commission based its analysis on the information submitted in the course of the investigation by the
sampled exporting producers and the sampled Community producers. This analysis took into account
actual export prices of exporting producers (CIF Community frontier), and for the PRC, both with
and without anti-dumping duty. The relevant sales prices of the Community industry where those to
independent customers, adjusted when necessary to ex-works level. During the IP, based on different
product types defined in the questionnaire, there was an undercutting margin of 53 % without the
anti-dumping duty for the PRC and 39 % with the duty. For Vietnam, there was an undercutting
margin between 25 and 60 %. In this regard, it should be noted that the weighted average sales prices
from the PRC and Vietnam are, based on product type, substantially higher than the import prices
based on Eurostat data. This reinforces the conclusion above in recital 121 that the product mix
clearly affects the sales prices between countries.

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L 183/21

7. Situation of the Community industry

(124) Pursuant to Article 3(5) of the basic Regulation, the Commission examined all relevant economic
factors and indices having a bearing on the state of the Community industry. This analysis was
carried out for the sampled companies as mentioned in recital 15, with the exception of the company
referred to in recital 100 above. However, in order to provide a complete picture of the situation of
the Community industry, for those indicators for which reliable information was available for the
Community industry as a whole, this information has also been provided below. On this basis, the
industry's performances as measured by factors such as prices, wages, investments, profits, return on
investment, cash flow and ability to raise capital have been established on the basis of information
from the sampled companies. The injury factors such as market share, sales volume and production
have been established for the full Community industry.

(125) Some of the interested parties have argued that when analysing the injury indicators, only the
sampled companies should be taken into account. It is normal practice in anti-dumping proceedings
to analyse injury factors for the full Community industry. However,
in cases where the industry
consists of a high number of producers, resort is made to sampling. The purpose of sampling is to
provide that detailed data can be collected and verified from a limited number of producers within
the time available. This data concerns factors such as prices, wages, investments, profit, return on
investment, cash flow and ability to raise capital, where it would be unfeasible to verify the data for
the full industry within the time available. For other factors such as market share, sales volume and
production, data is usually readily available for the full industry. To base the injury analysis merely on
data from sampled producers would ignore usable data from other producers, thereby leading to an
incomplete assessment. Therefore, in the interests of having as complete an assessment as possible
within the time available in this case, data received and verified for trends in all injury factors from
the sampled producers was complemented by information relating to the full industry.

(a) Production, production capacity and capacity utilisation

(126) Between 2000 and the IP, the production of the like product by the sampled producers increased by
17 %. The production capacity increased throughout the period considered by a total of 18 %.

(127) Capacity utilisation was stable throughout the period considered. The detailed data is as follows:

Production

2000

2001

2002

2003

IP

Production

Index

3 231 842

3 193 497

3 222 858

3 718 918

3 788 660

100

99

100

115

117

Production capacity

4 033 737

4 125 649

4 339 273

4 613 939

4 779 632

Index

Capacity utilisation

Index

100

80,1 %

100

102

77,4 %

97

108

74,3 %

93

114

80,6 %

101

118

79,3 %

99

(128) The investigation revealed that the general

increase in the production capacity was the result of
investments in new production lines and of restructuring operations within the company groups. The
fact that the sampled producers have in general increased their production is also the result of several
other Community producers going out of business or reducing their capacity. However, the trend of
an increase in production and production capacity for the sampled companies should be seen in the
light of
the overall
production of all Community producers, the trend indicates a decrease in the production. The
detailed data is as follows:

the performance of all Community producers. When taking into account

L 183/22

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Official Journal of the European Union

14.7.2005

Production

2000

2001

2002

2003

IP

12 700 000

11 028 000

10 083 000

10 165 000

10 160 000

100

87

79

80

80

Production

Index

(b) Stocks

(129) One producer could not provide consistent information on stocks for the years 2000 and 2001 due
to internal re-organisations. Accordingly, data from this company had to be excluded when carrying
out the analysis of stocks for the period considered.

(130) Stocks of bicycles increased over the analysis period from 219 370 units in 2000 to 362 095 units
in the IP, an increase of 65 %. The main build up occurred during 2003 and the IP and was due to
the fact that one of the sampled producers had to satisfy a very big delivery immediately after end of
the IP. Therefore, the increase of level of stock does not necessarily show a deterioration of the
situation of the sampled producers in this particular aspect. Detailed data is shown below:

Stocks

2000

2001

2002

2003

IP

Units

Index

219 370

206 854

210 968

317 345

362 095

100

94

96

145

165

(c) Sales volume and market share

(131) The sales on the Community market of bicycles produced by the sampled producers increased
steadily during the period considered from 3 156 451 units in 2000 to 3 683 176 units in the
IP, an overall increase of 17 %. Similarly the sampled producers increased their market share from
18 % in 2000 to 20 % in the IP. Detailed data is shown below:

Sampled producers sales
(units)

Index

Sampled producers market
share

2000

2001

2002

2003

IP

3 156 451

3 241 830

3 203 020

3 600 670

3 683 176

100

18 %

103

21 %

101

20 %

114

20 %

117

20 %

(132) However, this trend should be seen in the light of the performance of all Community producers.
When taking into account the sales of all Community producers, there is a decrease in the sales. The
detailed data is as follows:

Sales of all Community
producers

Index

Market share

2000

2001

2002

2003

IP

11 718 000

10 035 000

9 175 000

9 100 000

9 300 000

100

67 %

86

66 %

78

58 %

78

52 %

79

51 %

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L 183/23

(d) Sales prices and costs

(133) The investigation has shown that the sampled producers have maintained their product mix, mainly
in categories A, B and C. Furthermore, they have expanded their sales activities to mass-merchandiser
and supermarkets, but less so with the dealers/retailers, where the sampled producers were already
highly present with their high-end products. The mass-merchandisers have increased their presence
on the bicycle market. This has had an effect on the end-consumers since the sales through mass
merchandisers are normally at lower prices than through retailers. In order for the sampled producers
to maintain their presence on the mass-market, they had to compensate the lower prices with higher
volumes.

(134) The weighted average sales price of bicycles expressed per unit fell from EUR 124 in 2000 to
EUR 115 in the year 2003, a decrease of 7 %. However, during the IP the average price increased
to EUR 122. Over the period considered there was a decrease of 2 %.

Sales Price

Sales price (EUR per unit)

Index

2000

124

100

2001

127

103

2002

120

97

2003

115

93

IP

122

98

(135) The cost of production was calculated on the basis of the weighted average of all types of the like

product produced by the sampled producers.

(136) Between 2000 and 2001 the cost of production increased from EUR 119 to EUR 122, a total
increase of 2 %. Thereafter, the cost of production decreased to EUR 110 in the year 2003, a decrease
by 9 % since 2001. During the IP, the cost of production increased to EUR 117. Consequently, the
cost of production throughout the period decreased by 2 %. This decrease is mainly due to more
effective assembling lines and parts produced by the sampled producers themselves, such as frames,
have been replaced by cheaper imports.

Costs

Cost of production (EUR
per unit)

Index

2000

119

100

2001

122

102

2002

115

97

2003

110

92

IP

117

98

(e) Profitability

(137) The overall profitability of the sampled producers in respect of the product concerned during the first
year of the period considered was 3,26 % and increased to 4,08 % in 2003. The profitability
thereafter decreased to 3,58 % during the IP. On an overall basis, the profit increased by a mere
0,32 percentage points during the period considered.

(138) Although the above trend indicates that the industry's financial situation has partially recovered
during the period considered, the profitability achieved should be looked at in the light of the
level considered to be the minimum the industry could achieve in the absence of dumped
imports originating in the PRC and Vietnam, i.e. 8 % of the turnover of sales of bicycles, which
was also used in the previous investigation. As the characteristics of the market have remained
substantially the same as in the previous investigation, it is considered that 8 % still represents the
minimum profitability that could be achieved by producers in the Community market.

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Profitability

Profitability (EC sales)

Index

2000

3,26 %

100

2001

3,89 %

119

2002

3,50 %

107

2003

4,08 %

125

IP

3,58 %

110

(139) Several parties in the PRC argued that the Community industry has improved its situation since the IP
of the previous investigation, where the Community industry was facing a loss of – 0,6 %, and that
the Community industry should therefore be considered as not being in an injurious situation in the
current investigation. As explained above in recital 137, the profit has improved since the previous
investigation, but it still remains very far from what would be considered a normal level of profit-
ability.

(140) Further to the disclosure of definitive findings, some interested parties argued that the profit level of
8 % indicated above in recital 138 is too high and that the sampled producers are already performing
sufficiently well, with a stable profit level. However, these parties did not provide any indication of
the reasons why the level of 8 % would not be reasonable, nor did they provide any indication of
which level of profit would instead be appropriate and why. As stated in recital 195 below, the profit
level of 8 % is the minimum profit that could be achieved by the Community industry in the absence
of dumped imports. Although the profit level of the sampled producers has improved to some extent,
this is still very far from being sufficient for the complete recovery of the Community industry from
injurious dumping.

(f) Investments and return on investments

(141)

in the business of

Investment
the product concerned significantly increased during the period
considered, from EUR 1 938 556 in 2000 to 3 950 636 during the IP. It has to be noted that
this substantial increase in investments was mainly due to the increase in the production capacity of
one of the sampled producers, which accounts for more than 60 % of all investments during the
period. Detailed data is shown below:

Investments

Investments (EUR '000)

Index

Return on investment

2000

1 938

100

15 %

2001

4 820

249

30 %

2002

1 645

85

12 %

2003

3 901

201

23 %

IP

3 950

204

24 %

(142) Return on investment increased from the year 2000 to the year 2001 by 15 percentage points. From
the year 2002 the return on investment decreased, but increased again during the year 2003 and
remained positive during the IP at 24 %.

(g) Cash flow and ability to raise capital

(143) Cash flow of the sampled producers increased significantly over the period considered, both in

absolute values, as well as expressed as a percentage of sales turnover.

Cash flow

2000

2001

2002

2003

IP

Cash flow (EUR '000)

10 005 000

20 557 000

13 425 000

20 541 000

20 541 000

Index

Cash flow expressed as
percentage of turnover

100

2,5 %

205

4,9 %

134

3,5 %

205

4,9 %

205

4,6 %

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L 183/25

(144) The sampled producers raise capital either internally when they belong to a group of companies, or
by bank loans. In other cases, cash flow generated by the company is used as a source of financing.
None of the sampled producers have shown any major difficulties to raise capital.

(h) Employment, productivity and wages

(145) Employment decreased by 6 % during the period considered. Given that production increased
substantially over the period considered, the decrease in employment is explained by the fact that
productivity, as measured by output per worker, has significantly increased by 24 % during the period
considered.

Employment

Number of employees

Index

Wage costs per employee
(in EUR)

Index

Production per employee
(units/year)

2000

1 981

100

2001

1 871

94

2002

1 784

90

2003

1 838

93

IP

1 871

94

23 575

25 846

27 130

27 593

28 153

100

1 631

110

1 707

115

1 807

117

2 023

119

2 025

Index

100

105

111

124

124

(146) When taking into account the employment of all the Community producers the trend is similar as
per above, i.e. there is a decrease, but at a more pronounced level. The detailed data is as follows:

Employment

2000

2001

2002

2003

IP

Number of employees

14 300

12 670

11 860

11 500

11 500

Index

100

88

83

80

80

(i) Growth

(147) Overall, it has to be noted that the market share of all Community producers fell by 16 percentage
points while the level of consumption increased by 4 %, which indicates clearly that they have not
been able to grow.

(j) Magnitude of dumping and recovery from past dumping

(148) As concerns the impact on the Community industry of the magnitude of the actual margin of
dumping found in the IP (48,5 % for the PRC and between 15,8 and 34,5 % for Vietnam), given
the volume and prices of imports from these two countries, this impact cannot be considered to be
negligible. It should be noted that the margin for the PRC is higher than that which was found in the
original investigation. It should also be noted that the volume of dumped imports from the PRC has
increased since the previous investigation.

(149) The expected recovery of the Community industry from the effects of past dumping has not
happened to the extent anticipated as in particular shown by the decrease of sales prices,
low
profitability and decrease in the capacity utilisation. The industry has in recent years been faced
with increased dumping of imports from the PRC and Vietnam which has hampered its expected
recovery.

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8. Conclusion on injury

(150)

It should be noted that measures are already in force with regard to one of the countries concerned.
These measures have clearly had an effect on the injury indicators, in particular for the sampled
producers. Despite the overall decrease of the Community production, the sampled producers have
managed to maintain and even increase their production. The sampled producers have managed to
some extent to benefit from the existence of the measures, but any possibilities for further growth
has been undermined by the dumped imports. In addition, since the imposition of the measures on
imports from the PRC, the imports from Vietnam have now become a substantial negative factor for
the Community industry. In the period following the imposition of the existing measures on imports
from the PRC, the economic situation of the sampled producers has improved in terms of produc-
tivity, production, production capacity, sales and market share. This must be viewed in the light of
the existence of measures. However, sales prices have decreased and the profit levels have remained at
low levels despite the increase in sales. In addition, the stock levels have increased and employment
has decreased. However, the positive developments, as per above, do not put into question the overall
injurious picture which would have been even worse without the existing measures. This is reinforced
by the fact
the Community producers is negative. The total
Community production had decreased by 20 %, the overall sales have decreased by 21 % and the
market share of the total Community industry has fallen by 16 %.

the overall performance of

that

(151)

Import volumes from the PRC and Vietnam have increased considerably, both in absolute terms and
in terms of market share. Indeed, during the period considered they gained 10,3 percentage points in
market share. Moreover, the weighted average prices of imports have decreased considerably over the
period considered, resulting in significant levels of price undercutting in the IP.

(152) On this basis, it is concluded that the Community industry, as a whole, remains in a vulnerable
economic situation and has suffered material injury within the meaning of Article 3 of the basic
Regulation.

(153) As have been concluded above, the injury picture of the sampled Community producers differs to
some extent from the injury picture of the Community producers as a whole. However, this should
be viewed against the fact that the producers selected for the sample are those producers which have
the highest volume of production and sales of bicycles and because of the economy of scale, these
producers have managed to partly recover from the dumped imports. Despite these advantages, the
sampled producers are still in a vulnerable situation which reflects the situation for the Community
industry as a whole.

E. LASTING NATURE OF CHANGED CIRCUMSTANCES AND LIKELIHOOD OF CONTINUATION OF
DUMPING AND INJURY

(154)

In regard to imports from the PRC, it was analysed in accordance with Article 11(3) of the basic
Regulation, whether the circumstances with regard to dumping and injury have changed significantly,
and if this change could reasonably be said to be of a lasting nature.

(155) By comparing the normal values and export prices found between the previous and the current
investigation,
it has been established that, account being taken of comparable models, whereas
average normal value has slightly increased, the average export price has significantly decreased
leading to the increased levels of dumping. As for the PRC export prices to other markets, they
have been found to generally be in line with exports to the EU market. No evidence was found to
indicate that exports from the PRC would not continue to be made at these low dumped prices.
Given all of the above, it is considered that there is no reason to doubt that the new higher level of
dumping found is of lasting nature.

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L 183/27

(156) Despite the fact that the sampled producers recovered to a certain extent from past dumping of
imports originating in the PRC, it was also found that the sampled producers still suffered material
injury within the meaning of Article 3 of the basic Regulation. This conclusion is reinforced when
looking at the picture of the Community industry as a whole (see above recitals 150 to 153). The
injury margins found in this investigation have increased as compared to the original investigation
because the dumped imports have continued to substantially undercut the Community industry's
prices. It has been established through detailed analysis of the distribution network that the majority
of
the sampled producers mostly produce for sales to mass-merchandisers. As the exporting
producers from the PRC mainly compete in these same high volume sales channels, pressure on
the Community industry is strong there. No evidence was found to indicate that exporters in the PRC
would not continue to sell through these sales channels, if the measures were allowed to expire, and
less in the dealer/retailer sales channels (which account for around 22 % of the total sales of the
sampled producers). Considering the lasting nature of the dumping findings and the effects of the
dumped imports on profitability, it is concluded that the circumstances leading to injury are of a
lasting nature and that the expiry of the original measures would be likely to lead to the continuation
of the injury.

(157)

(158)

It was also examined to what extent there was a likelihood that there would be a continuation of
dumping should the measures on imports from the PRC be allowed to expire. Based on the
complaint and the information provided by exporters in the PRC, it has been established that the
production capacity in the PRC is over 80 000 000 bicycles per year. The PRC producers are
producing around 66 000 000 bicycles per year and their internal demand is around 22 000 000
bicycles. Bicycles originating in the PRC are present on the main markets worldwide and around
96 % of the USA consumption consists of bicycles originating in the PRC. This demonstrates the
export-oriented nature of
likelihood of
continued exports to the Community.

the bicycles industry in the PRC with the consequent

It was found that the product concerned was still dumped on the Community market during the IP
(recitals 90 to 97). In this regard, the dumping margins for the product concerned were significantly
higher than the dumping margins found in the original
investigation. Since the imposition of
the PRC has continued to sell bicycles to the
measures following the previous investigation,
Community at dumped prices. During the period considered,
the volume of dumped imports
increased by 472 % and the prices of dumped imports from the PRC decreased by 22 %. As seen
above (recital 157), exporters in the PRC have a spare production capacity which is almost at the
same level as total Community consumption. It should also be recalled that before the imposition of
the original anti-dumping duties, the level of dumped imports from the PRC was around 2,5 million
bicycles which represented at that time around 15 % market share in the Community. This indicates
the likelihood that in the absence of anti-dumping measures, the PRC imports would again return to
the market at these or even higher levels. These imports would likely be at dumped prices given that
the high levels of dumping found in the current investigation are considered to be of a lasting nature.

1. Introduction

F. CAUSATION

(159)

In accordance with Article 3(6) and (7) of the basic Regulation it was examined whether the material
injury suffered by the Community industry had been caused by the dumped imports concerned.
Known factors other than the dumped imports, which could at the same time have injured the
Community industry, were also examined to ensure that the possible injury caused by these factors
was not attributed to the dumped imports.

2. Effect of the dumped imports

(160) Despite the measures in force on imports from the PRC, the exporting producers in the PRC have
increased their market share significantly from 0,73 % to 4,07 %. The combined market share in the
Community of imports from the PRC and Vietnam has increased from 2,50 % to 12,77 % during the
period considered. Even with an overall stable consumption between the year 2000 and the IP, they
saw an increase of their market share of more than 10 percentage points.

L 183/28

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Official Journal of the European Union

14.7.2005

(161) At the same time, although the sampled Community producers have managed to increase their
production, the total Community production has decreased by 20 %. As stated in recital 128, this
resulted of several other Community producers either going out of business or decreasing their
production. The total sales of all Community producers have decreased by 21 % (or 16 percentage
points) between the year 2000 and the IP, even if the sampled producers have somewhat managed to
increase their market share by 2 percentage points. Moreover, as can be seen from the table in recital
166 below, the market share of the imports from countries other than the PRC and Vietnam has
increased, but only by 7 percentage points.

(162) Therefore, although the sampled Community producers have managed to continue operating and
even to slightly increase their market share, it is the remaining Community producers who have lost
market share and have gone out of business in recent years or have been forced to drastically reduce
their production due to the pressure exerted by the dumped imports. Such pressure has been twofold:
(i) from the point of view of volumes, where as said in recital 160 above, the dumped imports have
increased their market share by more than 10 percentage points; while, (ii) the sales prices have
continuously decreased and significantly undercut the Community industry's prices.

(163) The profit of the sampled producers increased slightly due to relatively stable prices (which decreased
slightly in line with costs) but not to the extent expected after the imposition of measures. The profit
that could be achieved in the absence of dumped imports was not achieved because of the increased
dumping of imports from the PRC and the occurrence of dumped imports from Vietnam.

(164)

It is therefore concluded that the pressure exerted by the imports concerned, which increased their
volume and market share from 2000 onwards, and which were made at very low and dumped prices,
played a determining role in vulnerable economic situation in which the Community industry
currently finds itself.

3. Effect of other factors

Imports from other countries

(165)

Imports originating in other third countries could also have contributed to the injury suffered by the
Community industry. Several parties in the PRC and Vietnam also argued that the imports from other
third countries have increased substantially and at prices that undercut the Community industry
prices.

(166) Based on Eurostat data, imports from other third countries increased from 5 193 000 units in 2000
to 6 423 000 units in the IP, for an overall increase of 24 %. The market share of these imports
increased from 29 % to 36 % during the period considered. However as stated in recital 121, the
prices in Eurostat do not take into consideration the various product mixes from each country and
therefore only indexes are used to indicate the price trends. Since the product mix of the imports
from other third countries is unknown, it is not meaningful to compare prices of the imports below
with those of the Community industry. Nevertheless, some additional information was sought and
obtained regarding imports from those countries that account for most other imports of bicycles.
Detailed data is shown below:

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Official Journal of the European Union

L 183/29

%
6
1
1

,

6
0
1
2

%
8
1
1

,

2
5
0
2

%
4
3
1

,

6
0
1
2

%
4
2
1

,

4
9
8
1

%
5
4
1

,

0
2
5
2

e
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i
r
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i
n
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i
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L 183/30

EN

Official Journal of the European Union

14.7.2005

T a i w a n

(167) The imports from Taiwan represent 11,6 % of the market share during the IP which is more than
2 000 000 units. In volumes, the imports from Taiwan are far bigger than from any of the other
import sources. However, during the period considered their market share declined by 20 %.
Moreover, the imports of bicycles from Taiwan are aimed for the high-end market. On the basis
of evidence submitted by the complainant it has been demonstrated, applying model comparison,
that imports from Taiwan are sold at a higher prices than the similar models produced by the
Community industry.

T h a i l a n d

(168)

Imports originating in Thailand have increased during the period considered and their market share
has increased to reach 2,0 % in the IP. However considering that they (i) started from a very low
import level, and (ii) that their market share still remains very low in comparison to that of the PRC
and Vietnam it is concluded that these exports cannot be considered as a cause of injury to the
Community industry.

P h i l i p p i n e s

(169)

Imports originating in the Philippines have increased by 41 % during the period considered. Their
market share during the IP was 3,7 %. However, the imports from the Philippines are currently the
subject of an investigation by OLAF (European Anti-Fraud Office) to examine possible misdeclaration
of the origin of the goods. In these circumstances, it is not possible to conclude on whether imports
reported as originating from the Philippines are contributing to the injury suffered by the Community
industry.

B a n g l a d e s h

(170)

Imports originating in Bangladesh have increased by 170 % during the period considered and their
market share during the IP was 2,3 %. However considering that (i) they started from a very low
import level, and (ii) that their market share still remains very low in comparison to the PRC and
Vietnam it is concluded that
injury to the
Community industry.

these exports cannot be considered as a cause of

(171) After disclosure of definitive findings, some interested parties argued that the imports from certain
third countries (namely Bangladesh, Philippines and Thailand) had increased substantially, in a way
similar to the increase of imports from Vietnam and that their market share was not negligible. They
argued that for these reasons these countries also should have been subject to the proceeding and, by
not doing so, the Council would operate in a discriminatory manner. In this regard, and in addition
to what is already mentioned in recitals 168 to 170 above, it should be noted that imports from
these three countries have increased at a much lower rate than that of imports originating in the PRC
and Vietnam. For this reason, and the reasons already mentioned in recitals 168 to 170, the claim
was rejected.

T r a d e w i t h a c c e s s i o n c o u n t r i e s

(172)

Imports originating in Poland and Lithuania, which are meanwhile members of the European Union
since 1 May 2004, increased by 54 % and 42 % respectively during the period considered. However,
it should be noted that the prices of imports from Poland increased by 13 % through the period
considered. Poland was one of the two countries (the other being the Czech Republic) to show an
increase in prices. The imports from Lithuania have remained at a very low level compared to those
of the PRC and Vietnam. It is concluded that, given the prices and volumes of these imports, they
cannot be considered as having had a significant negative impact on the injurious situation of the
Community industry.

4. Development of consumption.

(173) As mentioned in recital 107, from 2000 to the IP the consumption increased by 4 %. Thus, this

cannot be a source of injury.

14.7.2005

EN

Official Journal of the European Union

L 183/31

5. Community producers other than the sampled producers

(174) As has been seen from recitals 128 and 132 above, the overall production and sales of the
Community producers have decreased. This suggests that they are in a similar, or even worse,
situation to the sampled producers, i.e. that they have suffered injury from the dumped imports.
Therefore, it cannot be concluded that other Community producers may have caused material injury
to the sampled producers.

6. Currency fluctuations

(175) One Chinese exporting producer argued after disclosure of the definitive findings, that an adjustment
should have been made for exchange rate developments since the CNY is linked to the USD rate, and
the latter had depreciated substantially against the euro during the IP. However, although prima facie it
cannot be excluded that the appreciation of the euro vis-à-vis the USD might have favoured the
imports of the product concerned, the fact that currency fluctuations did not have an effect on
imports from other countries, into the Community, indicates that it cannot be considered as a causal
factor in this case. It is also noted that the benchmark for the causal link analysis is whether the
dumped imports, i.e. the volumes and prices of these imports, have caused injury. The argument of
the Chinese exporters tries rather to explain why the dumped imports are at a certain price level.
However, in the causal link context, the question as to why the prices of these dumped imports were
at a given level is irrelevant.

7. Conclusion

(176) The dumped imports from the PRC and Vietnam were found to be substantially undercutting the
prices of the Community industry in the IP. The increased presence of these imports on the market,
as seen in their increased market share, coincides with a period of continued economic vulnerability
of the Community industry (see recitals 150 to 153 above). It is concluded, therefore, that there is a
causal link between the imports from these two countries and the injury suffered by the Community
industry. As regards imports from other countries, they have also increased their presence on the
market, but at a significantly lesser rate than imports from the PRC and Vietnam. From among those
other countries that export bicycles to the Community, imports from Taiwan were the biggest during
the IP. However, their share of the market has been decreasing and prices in the IP were found not to
be undercutting those of the Community industry. Imports from Taiwan cannot, therefore, have
contributed to the injury suffered by the Community industry. As regards imports from all other
countries excluding Taiwan, these have also seen their market share grow, but to a lesser extent than
the imports from the PRC and Vietnam. While it has not been possible to establish whether the
prices of these imports undercut the Community industry prices as explained in recital 166 above, it
in particular given their
was found that the impact of these imports from other third countries,
volumes and market share, could not in any significant way contribute to the injury suffered by the
Community industry.

1. General considerations

G. COMMUNITY INTEREST

(177)

In accordance with Article 21(1) of the basic Regulation, it has been examined whether, despite the
conclusion on injurious dumping, compelling reasons existed that could lead to the conclusion that it
would not be in the Community interest to maintain the anti-dumping measures against imports
from the PRC or to adopt anti-dumping measures on imports from Vietnam. The impact of possible
measures on all parties involved in the proceeding and also the consequences of not taking or
maintaining measures were considered.
in the
In this respect,
previous investigation concerning imports from the PRC the adoption of measures was considered
not to be against the Community interest.

it should also be recalled that

(178) The Commission sent questionnaires to importers, but no questionnaire replies were received
concerning the initiation of the review on measures applicable to imports from the PRC. For the
proceedings concerning Vietnam, the Commission received replies from 3 importers.

L 183/32

EN

Official Journal of the European Union

14.7.2005

2. Interest of the Community industry

(179)

It is recalled that the Community industry has suffered material injury as set out in recitals 150 and
following. After the imposition of measures on imports from the PRC, the Community industry has
been able to partially recover. However,
the continuation of dumped imports from the PRC
combined with the additional surge of dumped imports from Vietnam, which were not a cause of
injury in the previous investigation, prevented the Community industry from reaching a satisfying
financial situation and fully recovering from the injurious situation.

(180) The imposition of anti-dumping measures would allow the Community industry to increase its sales,
markets shares, and in certain segments of the market also the prices. In that way, the Community
industry can be expected to reach the levels of profitability which it would have been able to achieve
in the absence of dumped imports. Considering that new bicycle models are to a high extent
developed by the industry in the Community, they would also fully benefit from such developments,
in terms of sales volumes and prices, if the pressure of dumped imports ceased. The Community
bicycle industry has shown that it is viable and competitive,
fair market conditions prevail.
Therefore, effective competitive conditions need to be restored on the Community market.

if

the PRC,

in the recover process of

that measures are in place against

imports that existed before the imposition of

(181) However, without measures on imports from the PRC and Vietnam, there will be further trade
the Community
distortions which would inevitably lead to a halt
industry. Despite the fact
imports have steadily
increased and the import prices have decreased. Considering the production capacity of the PRC,
the original anti-dumping
the high volumes of
measures, the substantial
increase of imports and gain of substantial market shares of imports
it is clear that without the continuation of measures on imports from the PRC
from Vietnam,
if not
and the imposition of measures on imports from Vietnam,
impossible,
the
Community industry is likely to further deteriorate, which may lead to further Community
producers going out of business or reducing their capacity. As examples of recent bicycle production
going out of business, the following companies could be noted Kynast (Germany), Merkers-Rad
(Germany), Confersil Portugal and Ceasare Rizzato (Italy). It is therefore clear that anti-dumping
measures are in the interest of the Community industry.

for the Community industry to recover. Otherwise,

it would be very difficult,

the injurious situation of

3. Interest of unrelated importers

(182) No questionnaire reply or comments were received from unrelated importers concerning the imports
from the PRC. As regards Vietnam, one of the importers (representing around 14 % of the total
imports) alleged that any import duties on bicycles from Vietnam would be detrimental to customers
in EU since it would result in a sharp decline of Vietnamese imports. Another importer also argued
that the imported bicycles are mostly children bicycles which the Community producers are not
producing.

(183)

It should be noted first of all that in view of the low level of cooperation of importers,
it was
impossible to make a proper full assessment of the possible effects of taking or not taking measures.
It should also be recalled that the purpose of the anti-dumping measures is not to prevent imports,
but to restore fair trade and ensure that imports are not made at injuriously dumped prices. As fairly-
priced imports will still be allowed to enter into the Community market, and as imports from third
countries will also continue,
importers will not be
substantially affected.
It is also clear that the Community producers have sufficient capacity to
supply a possible increase in demand of bicycles. Moreover, as seen from table in recital 166,
imports from other third countries indicate that there is a substantial capacity to produce bicycles
in these countries. It is therefore highly unlikely that a shortage of bicycles would occur. Furthermore,
when analysing the imports from Vietnam it has been established that the imports cover all cate-
gories of bikes, not only children bicycles. It should also be added that part of the sampled producers
are in fact also producing children bicycles.

it is likely that the traditional business of

14.7.2005

EN

Official Journal of the European Union

L 183/33

(184) As fairly-priced imports will still be allowed to enter into the Community market, it is likely that the
traditional business of the importers will continue even if anti-dumping measures against dumped
imports are maintained on the PRC and imposed on imports from Vietnam. The low cooperation by
unrelated importers and the fact that after the imposition of measures on the PRC, importers do not
seem to have experienced particular difficulties further underscores this conclusion.

4. Interest of retailers

(185) One of the importers of bicycles from Vietnam also functions as a bicycle retailer organisation which
consists, according to the annual account of the year 2003, of 720 members. These members form
part of a retailer network under the umbrella of the importer and the importer supplies, amongst
others, bicycles imported from Vietnam. The 720 members are claimed to employ 4 900 people in
the year 2003. The Commission also received signed declarations from 1 287 retailers (consequently
not all of them members of the retailer network) indicating that they are supporting the submissions
filed by the importer. As stated in recital 182, they claim that if measures would be imposed against
bicycles from Vietnam, there would be a decline in imports, decreased sales of bicycles and conse-
quently also a loss of jobs among the retailers. In this regard, it should be noted that, as stated in
recital 183, there is no risk of shortage of bicycles nor a decline of sales, since retailers can be
expected to be able to switch their supply of bicycles to other sources than Vietnam, if needed.

(186) Following disclosure of the definitive findings, some interested parties claimed that the availability of
fairly priced bicycles is not the only issue at stake when looking at the interests of retailers in respect
of bicycles originating in Vietnam. These interested parties also claimed that they cannot switch from
one brand to another easily because of the quality aspects. However, no further evidence was
submitted in this regard to show that the bicycles imported from Vietnam are of some particular
type or quality which is not produced elsewhere. On the contrary, when comparing the Vietnamese
imports with bicycles produced by the sampled Community producers for purposes of calculating the
price undercutting margin (see recital 123 above) it was found that there is a substantial matching
between the various models. These claims were therefore rejected.

(187) The Commission also received comments from another retailer association representing more than
6 000 retailers, supporting the measures against imports from the PRC, but objecting against the
the imports from Vietnam were neither
current proceeding concerning Vietnam, claiming that
dumped nor causing any injury. However, as it was set out in recitals 95 to 97, the imports of
bicycles from Vietnam were found to be dumped and causing injury to the Community industry.

(188) Given the above, it was found that the anti-dumping measures against imports of bicycles from the

PRC and Vietnam are not contrary to the interests of the retailers.

5. Interest of suppliers

(189) One Italian supplier (and its association) made themselves known during the investigation. They
argued that in Italy there exist more than 200 factories which are supplying components to the
bicycle producers and that the further existence of the supplier industry was therefore inevitably
depending on the continuation of the bicycle production in Europe. In this respect, it was found that
without the existence of the measures, it is to be expected that further closures of bicycle production
in Europe will occur, which would have negative consequences for the Community parts industry and
would jeopardise employment in the supplier industry. It is therefore concluded that the imposition
of anti-dumping measures would be in the interest of the suppliers.

6. Impact on consumers

(190) The Commission did not

from Community consumers' associations,
concerning the measures on PRC or the possibility of imposition of measures on imports from
Vietnam. It should be noted, in any event, that the consumers have a wide range to choose from in
all segments, even without bicycles originating in the PRC or the Vietnam. The Community industry

receive any comments

L 183/34

EN

Official Journal of the European Union

14.7.2005

contributes significantly to the exhaustive product range on offer. The investigation has not brought
to light any supply problems. In this regard, it should also be noted that the Commission received
comments from the same association as mentioned in recital 185 above. The retailers represented by
the association purchase the major part of their bicycles from European producers and they have lost
a considerable part of their market share to other distribution channels, notably the mass-merchan-
disers market. Although they claim that the imported bicycles from the PRC do not appear in the
retailer chain, the low prices in the mass-merchandisers market affect the end consumers preferences
despite the quality differences between the bicycles available with the retailers compared with the
mass-merchandisers. For all these reasons,
it was found that, any of the anti-dumping measures
against the PRC and Vietnam is not contrary to the interests of the consumers.

7. Conclusion on Community interest

(191) The continuation of measures on imports of bicycles originating in the PRC and the imposition of
measures on imports of bicycles originating in Vietnam would clearly be in the interest of the
Community industry and in the interest of the Community suppliers of bicycle parts. It will allow
the Community industry to grow and fully recover from the injury caused by the dumped imports. If,
however, measures are not imposed, it is likely that the Community production will continue to
decline and more operators will go out of business. Furthermore, the importers and the retailers will
not be substantially affected since fairly priced bicycles will still be available in the market. As regards
consumers, the Commission did not receive any comments from these parties.

(192)

In view of the above,
dumping duties against imports of bicycles originating in the PRC and Vietnam.

it is concluded that there are no compelling reasons not to impose anti-

H. PROPOSED DUTIES

(193)

In view of the conclusions reached with regard to dumping, resulting injury and Community interest,
measures on imports from Vietnam should be imposed in order to prevent further injury being
caused to the Community industry by the dumped imports. As regards imports from the PRC, the
existing measures, as maintained by Council Regulation (EC) No 1524/2000, should be modified in
order to take account of the findings in this interim review. Pursuant to Article 11(2) of the basic
Regulation, the modified measures should be imposed for a new period of five years.

(194) The measures should be imposed at a level sufficient to eliminate the injury caused by these imports
without exceeding the dumping margin found. When calculating the amount of duty necessary to
remove the effects of the injurious dumping, it was considered that any measures should allow the
Community industry to cover its costs of production an to obtain overall a profit before tax that
could be reasonable achieved by an industry of this type in the sector under normal conditions of
competition,
in the
Community. The pre-tax profit margin used for this calculation was 8 % of turnover of the sales
of bicycles. It is the same as in the previous investigation since there was no indication found that
this rate should be changed.

in the absence of dumped imports, on the sales of

the like product

i.e.

(195) Several cooperating exporters in the PRC and Vietnam argued that 8 % is very high and referred to
the percentage indicated in the complaint, 3,3 %, as a profit attributable to a healthy industry. In
addition they made reference to the previous investigation where it was found that the Community
industry was suffering losses of – 0,6 %. It was considered however, that the profitability found
(3,5 %) during the IP of this investigation, only indicates that the Community industry has partly
recovered from past dumping, and cannot be considered as a profit level that could be achieved in
the absence of dumped imports. In this regard, it is noted that, despite the existence of measures on
imports from the PRC, imports from the PRC have increased considerably over the period considered
while there has been a huge growth in imports from Vietnam at dumped prices. In these circum-
stances, a profit level of 8 %, as used in the previous investigation, is considered appropriate since
there was no indication found that this rate should be changed. On this basis, a non-injurious price
was calculated for the Community industry of the like product.

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(196) The necessary price increase was then determined on the basis of a comparison of the weighted
average import price, as established for the undercutting calculations, with the weighted average total
cost of production of the sampled producers, increased by a profit margin of 8 %.

(197) Since the injury margins are higher than the dumping margins found, the anti-dumping duties should
be based on the dumping margins in accordance with the provisions of Article 7(2) of the basic
Regulation.

(198) The CCCME expressed its willingness to offer an undertaking together with cooperating exporting
producers in the PRC. In this respect, it should be noted that the acceptance of undertakings for
consumer products has historically, not usually been accepted due inter alia, to the complexity of the
models, the number of different types and the variety and the regularity with which they are
upgraded or otherwise modified. This makes it practically impossible to establish meaningful
minimum import prices. In addition, these considerations lead to virtually insurmountable difficulties
in monitoring, which render acceptance of such undertakings impracticable. These general consid-
erations also apply to the present case. It was therefore considered by the Commission that the
acceptance of an undertaking was not appropriate in this particular investigation and the offer had to
be rejected. The Commission informed the CCCME accordingly.

(199) The individual company anti-dumping duty rates specified in this Regulation were established on the
basis of the findings of the present investigation. Therefore, they reflect the situation found during
that investigation with respect to these companies. These duty rates (as opposed to the countrywide
duty applicable to all other companies) are thus exclusively applicable to imports of products
originating in the country concerned and produced by the companies and thus by the specific
Imported products produced by any other company not specifically
legal entities mentioned.
mentioned in the operative part of this Regulation with its name and address,
including entities
related to those specifically mentioned, cannot benefit from these rates and shall be subject to the
duty rate applicable to ‘all other companies’.

(200) Any claim requesting the application of these individual company anti-dumping duty rates (e.g.
following a change of name of the entity or following the setting-up of new production or sales
entities) should be addressed to the Commission (1)
in
particular any modification in the company's activities linked to production, domestic and export
sales associated with e.g. that name change or that change in the production and sales entities. If
appropriate, the Regulation will accordingly be amended by updating the list of companies benefiting
from individual duty rates.

forthwith with all relevant information,

(201)

In view of the findings above, the anti-dumping duty rates are as follows:

Country

Company

Anti-dumping duty (%)

People's Republic of China

All companies

Vietnam

Always Co., Ltd.
Tan Thuan Export processing
Zone,
District 7,
Ho Chi Minh City, Vietnam

All other companies

48,5

15,8

34,5

(1) European Commission

Directorate-General for Trade
Direction B
Office J-79 5/16
B-1049 Brussels.

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Official Journal of the European Union

14.7.2005

(202)

In accordance with Article 20 of the basic Regulation, all parties concerned were informed of the
essential facts and considerations, on the basis of which it was intended to propose amendment of
the level of the existing measures in the PRC and to impose measures on imports of bicycles from
Vietnam. They were given the opportunity to comment and to request a hearing. Comments were
received and taken into consideration where appropriate,

HAS ADOPTED THIS REGULATION:

Article 1

1.
A definitive anti-dumping duty is hereby imposed on imports of bicycles and other cycles (including
delivery tricycles, but excluding unicycles), not motorised, falling within CN codes ex 8712 00 10 (TARIC
code 8712 00 10 90), 8712 00 30 and ex 8712 00 80 (TARIC code 8712 00 80 90), originating in
Vietnam.

The rate of duty applicable to the net free-at-Community-frontier price, before duty, for products

2.
produced by the following companies shall be as follows:

Country

Company

Vietnam

Always Co., Ltd., Tan Thuan Export processing Zone,
District 7, Ho Chi Minh City, Vietnam

All other companies

Anti-dumping
duty (%)

Taric additional
code

15,8

34,5

A667

A999

3.

Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 1(1) and (2) of Council Regulation (EC) No 1524/2000 shall be replaced by the following:

Article 2

‘Article 1

A definitive anti-dumping duty is hereby imposed on imports of bicycles and other cycles
1.
(including delivery tricycles, but excluding unicycles), not motorised,
falling within CN codes
ex 8712 00 10 (TARIC code 8712 00 10 90), 8712 00 30 and ex 8712 00 80 (TARIC code
8712 00 80 90), originating in the People's Republic of China.

The rate of the definitive duty applicable to the net, free-at-Community-frontier price, before duty,

2.
shall be 48,5 %’.

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

Article 3

Done at Brussels, 12 July 2005.

For the Council
The President

G. BROWN