After repetitive analysis of the gather data using SWOT approach, we construct the following SWOT table (Table 1). From the opinions of all the experienced professionals, we choose the internal and external factors which were mentioned repeatedly by the experts and which were prioritized over other relatively low importance factors.
SWOT analysis of the bicycle industry of Bangladesh
• Strong relationship with European buyers
• Cheaper labor cost compared to the competitors
• Strong product diversification capability
• Most affordable personal vehicle in the country
• Infrastructure barriers of local market growth
• Technological barriers of production
• Lack of foreign investment
• Increasing awareness of climate change
• Booming e-commerce related last-mile delivery
• Increasing health concerns among youths
• Potential of bicycle sharing services in the country
• Growing demand due to COVID-19 awareness
• Foreign competitors’ dominance in local market
• High import duties on imported raw materials, and high VAT on production and trading
4.1 Strengths Analysis
Strong relationship with European buyers
The experts mentioned that the Bangladeshi bicycle manufacturer companies maintain tight relationship with the European buyers. This close relationship provides the manufacturers flexibility concerning lead time and some duty exemptions. However, the industry experts stated that the buyers generally do not compromise with product quality. This always drives the Bangladeshi manufacturers to focus on improving quality with time.
Cheaper labor cost compared to the competitors
In Bangladesh, the labor price is relatively cheaper than most of its Asian competitors in the global market – India, Sri Lanka, China, Thailand, and the Philippines. Besides, the experts believe that Bangladesh can offer skilled labor and work force in manufacturing bicycles. They also agree undisputedly to the point that the country’s education system is producing better engineers and technicians now. This is helping the country to stay competitive in the global market providing superior cost-quality trade-off.
Strong product diversification capability
Most of the experts believe that the bicycle industry is capable of product diversification both in the local market and global. To gain majority market share of the local market, the companies have already started producing low-price bicycles. These are easily affordable to the country’s low income people. Duranta Bikes, a venture by Pran-RFL group has gained popularity among local customers as a cost-efficient choice over foreign products. In terms of global market, Bangladesh is eyeing on the opportunity to win foreign markets besides Europe such as USA and Australia. Some of the experts urged that this would be challenging and ambitious. However, if the companies can achieve manufacturing flexibility, the goal is not unachievable.
Most affordable personal vehicle in the country
According to the experts, the market demographic shows that the majority of the customers are young people aged between 16 to 28 years. This is because bicycle is the most affordable personal vehicle for them. The customers are mostly school, college, and university going students as well as the young people trying to earn their bread by joining home delivery based online business. Motorbike is the second most affordable personal vehicle and that too is more than ten times costly than a bicycle. This indicates that there is no close competitor of other vehicles in the market. They experts claimed that even the low income parents can now afford a bicycle for their children.
4.2 Weaknesses Analysis
Infrastructure barriers of local market growth
The experts point out two infrastructure related barriers that impede the local market growth. Those are – lack of dedicated lanes for bicycles on the roads and lack of parking facilities. If these weaknesses could be eliminated, more people would consider using bicycles during their daily life. It is no secret that the country’s capital city of Dhaka and some other big cities such as Rajshahi and Chattogram, are suffering from their poorly planned traffic. The megacity of Dhaka is where the country’s majority of the bicycle users and potential customers live. However, there are no dedicated lanes for bicycle riding on the roads. The experts expressed their concerns noting that riding bicycles on the same lanes with motorized vehicles such as bike, car, leguna, bus, and truck, has substantial risk of accidents. The experts doubt that implementing dedicated bicycle lanes in Dhaka could be highly unfavorable. However, this should not be challenging to implement in other major cities of country (Zafri et al., 2021). The parking facilities for bicycle in the major cities are inadequate. Often the users would not take their bicycles to places where they need to park the vehicle of hours. While the motorized vehicles can avail parking facilities, the bicycles do not. According to the experts, bicycle parking facilities can be easily developed since hundreds of bicycles can be parked in a compact space.
Technological barriers of production
Over the world, the developed countries are leveraging automation and artificial intelligence in production. This results in reduced human labor, higher production volume, low unit product cost, and most importantly higher product quality. However, in developing countries like Bangladesh, the production facilities do not have proper access to smart manufacturing. The experts believe that if Bangladeshi bicycle manufacturers use state-of-the-art technology in their production facilities, their products will be more competitive in the foreign market. They experts are, however, optimistic about this progress soon.
Lack of foreign investment
Capital investment from foreign investors is a vital prerequisite in developing new production facilities in a developing country like Bangladesh. In 2018, Cube Bikes, one of the biggest manufacturers of bicycles in Europe, invested approximately $12 million to Meghna Group to make high-quality bicycles (The Daily Star, 2018). Investment as such is what Bangladesh needs to look for. Bangladesh needs to attract the investors from countries with green investors. The government body needs to facilitate the investment process by removing bureaucratic complexities and by reducing tax on the investors. The same should be done for the local investors as well. The local investment can create new start-up companies capable of meeting local market demand.
4.3 Opportunities Analysis
Increasing awareness of climate change
Bicycles are the greenest mode of transportation which does not carbon emission when in use. Adopting bicycles over motorized transports can significantly reduce total carbon emission. A study conducted in Bangladesh by Roy et al. (2019) reveals that “53% of carbon dioxide emission can be reduced if only 40% of people use bicycles instead of using private transport for short distance”. The authors also found that bicycle production in Bangladesh is more environment friendly in Bangladesh than in Europe. The increase in climate awareness demands for clean production and sustainable use of energy and resources. With this prospect, bicycle industries are getting attention over the last decade. Climate activists and the government are inspiring people to replace personal motorized vehicles with bicycles. The number of bicycle users in Bangladesh and also almost everywhere in the world is increasing. This implies a bright future scope for expansion of the bicycle industry in Bangladesh. The climate awareness is even more profound among the target customers, i.e., young people. The experts believe that this is the biggest opportunity for the bicycle industry to thrive.
Booming e-commerce related last-mile delivery
The widespread adoption of internet has facilitated the rapid development and growth of internet based businesses, colloquially called e-commerce. These businesses are focused on good customer experience and thus provide home delivery for their products. The best way for making such last-mile delivery is using bicycles in the big cities like Dhaka and Chattogram. Also, bicycles being cheapest mode of transport significantly increase the profit of the business. The experts reckon that the booming e-commerce will expand even more in the upcoming years and this will accelerate the need for bicycle production in high volume.
Increasing health concerns among youths
In Bangladesh, people are becoming health conscious now. The youth are adopting healthy lifestyle that includes doing regular physical exercise. Bicycling being an affordable exercise option is thus getting popularity among youths. According to Harvard Health Publishing (2016), cycling is good for health and muscles, and it improves how a person walks, balance, and climb stairs. Besides health benefits, it comes with economic benefits in terms reduced healthcare costs and fewer sick days of the employees (Handy et al., 2014). The experts believe that the growing health awareness among the youth is a big opportunity for the growth of bicycle industries in Bangladesh.
Potential of bicycle sharing services in the country
Public bicycle sharing scheme is getting popularity since the introduction of this in Bangladesh in 2018. JoBike, the country’s first bicycle rental service was launched in June 18, 2018 (The Daily Star, 2018). Since then the system is serving the cities of Dhaka, Chattogram, and Cox’s Bazar. Inside Dhaka they are available in Gulshan, Banani, and Mirpur DOHS area. The use and popularity are growing in various university campuses as well. The investors of JoBike are optimistic about the venture’s future despite the pandemic hit (The Business Standard, 2020). A study conducted by Rahman (2020) revealed that the bicycle sharing scheme has a good potential to increase bicycle use in Dhaka and other big cities of Bangladesh. Also, the users’ environmental concern are positively affecting their intentions to adopt bicycle-sharing (Zhu et al., 2020). The experts believe that in the next five years, there will be number of bicycle sharing services will be launched by the entrepreneurs. Moreover, the experts claim that foreign bicycle sharing companies such as Mobike and Ofo will shortly be interested in starting their business in Bangladesh.
Growing demand due to COVID-19 awareness
The COVID-19 pandemic has led people to adopt bicycles for transportation for some definite reasons. First, to fight the disease boosting one’s immunity is a vital prevention approach. Since cycling everyday boosts immunity, people are considering riding bicycles for personal commute. Second, during the COVID-19 epidemic there has been a significant shift in travel mode choice (from public transport to personal vehicle) due to the risk perception among people (Bhaduri et al., 2020; De Vos, 2020). Due to social distancing and other coronavirus related safety protocols, public transports have seen decline in number of passengers to travel. The cars and the motorcycles are among the widespread personal vehicle options. However, people in developing countries are struggling to get either of them. Therefore, they are considering bicycle as an affordable personal transport mode. This trend is prevalent in Bangladesh and similar developing countries. According to experts, this growing practice will most likely result in increased bicycle demand for the years to come.
4.4 Threats Analysis
Foreign competitors’ dominance in the local market
The major threat for the growth of bicycle industry in Bangladesh is the fierce market competition with the foreign companies in the local market. Two biggest competitors are India and China, who supply vast majority (nearly 70%) of the local market demand (Dhaka Tribune, 2021). One big reason for their dominance in the local market is the lower unit price than that of locally produced bicycles. Since the customers’ bargaining power is growing, they tend to choose relatively cheaper foreign bicycles of comparable quality. Reducing the unit product cost that will be more affordable to the local customers remains a big challenge to overcome. Since most of the raw materials are imported at high price, reducing the unit cost to the competitors’ level is difficult for the local manufacturers. The experts suggest that if the government can impose anti-dumping duty or other protective tariffs on the foreign companies, the local industry will see rapid growth in this business.
High import duties on imported raw materials and high VAT on production and trading
The local companies import most of the raw materials and spare parts for bicycle from various countries. Recently, the import duty has been increased from 10–25% on raw materials (DATABD.CO, 2020). Moreover, an average duty of 55% on the bicycle spare parts is a big barrier to overcome. Not only the high import duties are affecting the growth of the industry, poorly structured administrative issues at the ports often cause high lead time of the imported items. This eventually hampers the productivity and makes the local companies vulnerable to their competitors at both home and abroad. The experts believe that for the bicycle industry, the government should rethink the ‘VAT act 2012’ that imposes 15% VAT on production and 5% VAT on trading. A sizeable reduction in VAT can make the Bangladeshi bicycle companies highly competitive in both local and international market.