LUDHIANA-BASEDcycle industry has managed to douse Dragon fire. Cycle companies like Hero, Avon, Eastman Industries Limited, Deepak International SADEM industries, August Industries, TI cycles are planning to set up manufacturing facilities in China to enhance exports. These companies will be exporting mainly to the South African and Asian countries. Rising input cost is considered to be the main reason for this paradigm shift.
Hero Cycles is evaluating the options for joint venture with some Chinese company. Though the company officials’ last visit to Shanghai in this regard did not bear any fruits, it would be no surprise if the company sets up a manufacturing unit there in the near future.
Availability of inputs at a low cost is the main reason for this. For instance, London Metal Exchange prices for one metric tonne of Aluminium is $2,600 where as one can get the finished product at the same price in China.
Companies like EASTMAN industries are getting only those inputs from China that are not manufactured in India.
At the same time, few entrepreneurs are apprehensive about this. And it is being seen as a stop gap arrangement as most of the entrepreneurs from there are selling in a buyer friendly manner.
On the other hand domestic industry here is suffering because of this.
“Business is suffering due to Chinese goods. It has almost declined by 15-20 per cent in last two years because of imports of cycle inputs.”says Rajan Gupta, CEO, J K cycles. Besides the availability of inputs at a lower cost over there, labour unrest in the cycle industry is also seen as one of the major reason for this.
Though the major groups can afford to open the units but it’s again the SSIs that are facing the music.
“Many companies are opening up offices in China. Numbers can be quite high. Normally people keep this secret.” Says S C Ralhan, regional chairman, Engineering Exports promotion Council