submission bhbikes europe s.l. making imports of electric

REF AD643 – AS646 Open version

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Mr Harald SCHMID

Mr Francois DAURIAT

Mr Michal STRUK

Ms Daniela ZANGOBBO

European Commission

Directorate General for Trade

Directorate H, CHAR – office 04/039

B-1049 Brussels, BELGIUM

AD643 – AS646

SUBMISSION

by

BHBIKES EUROPE S.L.

to the Commission Implementing Regulation (EU) 2018/671 of 2 May 2018

making imports of electric bicycles originating in the People's Republic of

China subject to registration

May 24, 2018

Save nb: t18.005731 - Save Date: 24/05/2018 - of 16 - TDI.For parties


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SUBMISSION TO THE COMMISSION IMPLEMENTING REGULATION (EU)

2018/671 OF 2 MAY 2018 MAKING IMPORTS OF ELECTRIC BICYCLES

ORIGINATING IN THE PEOPLE'S REPUBLIC OF CHINA SUBJECT TO

REGISTRATION

1. The present submission is filed on behalf of BHBIKES EUROPE S.L. (“BH

BIKES”) in response to the Commission Implementing Regulation (EU) 2018/671 of

2 May 2018 making imports of electric bicycles originating in the People's Republic of

China subject to registration (“the Implementing Regulation”)1.

I. Background

2. On 20 October 2017, the European Commission (“the Commission”)

announced, by a notice published in the Official Journal of the European Union2 (“‘the

AD notice of initiation”), the initiation of an antidumping proceeding (“the

antidumping proceeding”) with regard to imports into the Union of electric bicycles

originating in the People's Republic of China (“PRC”) following a complaint lodged on

8 September 2017 by the European Bicycle Manufacturers Association (“EBMA’”) on

behalf of producers representing more than 25 % of the total Union production of

electric bicycles (we will refer to the affected product as “electric bicycles” or “e-

bikes”).

3. On 21 December 2017, the Commission announced, by a notice published in

the Official Journal of the European Union3 (“the AS notice of initiation”), the initiation

of an anti-subsidy proceeding (“the anti-subsidy proceeding”) with regard to imports

into the Union of electric bicycles originating in the PRC following a complaint lodged

on 8 November 2017 by EBMA on behalf of producers representing more than 25 %

of the total Union production of electric bicycles.

4. By letter from the Commission of 30 November 2017, BH BIKES was informed

that it had been selected for the sample of unrelated importers; BH BIKES submitted

the questionnaire for importers on 4 January 2018. [LIMITED].

1 OJ L 113, 3.5.2018, p. 4–9. 2 OJ C 353, 20.10.2017, p. 19. 3 OJ C 440, 21.12.2017, p. 22.



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5. EBMA’s complaint included a request to register imports4 pursuant to Article

14(5) of the basic antidumping Regulation and Article 24(5) of the basic anti-subsidy

Regulation. EBMA insisted on the request on 31 January 2018 and 5 March 2018.

6. In accordance with paragraph 42 of the Implementing Regulation, the

Commission concluded that there was sufficient evidence to justify making the

imports of the product concerned subject to registration in accordance with Article

14(5) of the basic antidumping Regulation and with Article 24(5) of the basic anti-

subsidy Regulation.

7. Pursuant to paragraph 43 of the Implementing Regulation, interested parties

were invited to make their views known in writing and to provide supporting

evidence. The Implementing Regulation also envisaged the possibility of holding a

hearing with the Commission.

8. BH BIKES requested to be heard by e-mail of 27 April 2018, to which the

Commission agreed by e-mail of 2 May 2018. The hearing was held on 15 May 2018

in Brussels.

9. In line with the views expressed in the hearing of 15 May 2018, BH BIKES

would like to make in writing the following comments to the Implementing

Regulation.

II. BH BIKES – Company overview and its position in the proceedings

10. BH BIKES is a company dedicated to the design, development, marketing,

sales, distribution and service of conventional bikes, electric bikes and related parts

and accessories.

11. BH BIKES is an importer and a manufacturer. The company imports its own

customized products from third countries and acts as a manufacturer through its

related factory in Portugal (Alubike Bicicletas, S.L.). Its turnover for the product

under investigation is [LIMITED].

12. With regard to the imported products, these are manufactured by [LIMITED],

the only Chinese exporting producer with which BH BIKES works. These products are

invoiced and exported to the EU through [LIMITED].

13. [LIMITED] is not merely an exporting producer, but also an engineering

developer for the frame construction, drive and control systems of e-bikes. [LIMITED]

4 Pages 39 and 40.



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also develops BH BIKES’ new technologies and types of electric types. Moreover,

[LIMITED] holds several patents for the design of e-bikes (including patents for

frames, batteries, electric control and aesthetics).

14. Accordingly, [LIMITED] is not simply an assembler. It carries out a complete

production process, meaning that it produces electric control components in house,

paints and assembles complete electric bicycles. For this production process, it uses

parts that are mostly imported from outside PRC (e.g., Japan and Europe, namely

the engines), since these meet the needs of high-end products with higher

performance. On the other hand, each model of high-end e-bikes is based on specific

components designed for each model (for instance, the battery)5.

15. It must be said that e-bikes based on Chinese technology are becoming less

relevant in comparison with European and Japanese technologies. This is because

central engines –which are progressively imposing in the market and were first

developed by European and Japanese technologies- overcome the problems of

skidding encountered by engines based on Chinese technology6.

16. For the reasons stated above, the prices of [LIMITED]’s products are more

expensive than those of other Chinese companies, which are mainly dedicated to

merely assembling mid to low-end products.

17. Since 2010, BH BIKES has a special relationship of partnership with

[LIMITED]. The commercial relationship with [LIMITED] is totally transparent in

terms of costs, margins and prices. The main reason why BH BIKES keeps importing

the e-bikes manufactured by [LIMITED] is that it is deeply integrated into BH BIKES’

development process, providing ideas and knowledge. Moreover, BH BIKES’ factory

in Portugal –which was affected by the fires of 2017 and had to be entirely rebuilt-

does not represent a significant production capacity.

18. BH BIKES’ R&D department works closely with the engineers of [LIMITED], to

the extent that joint trainings are organised. This collaboration has achieved a high

degree of success, ensuring flexibility and the joining of innovation forces during the

development and launch of new products. In fact, this relationship has been one of

the key factors to determine the duplication of sales in the last three years.

19. In this regard, BH BIKES does not envisage the possibility of switching to other

sources of supply, which it deems could not guarantee or match the quality and

5 These components and their different characteristics are thoroughly explained in pages 14 to 17 of the form for importers filed by BH BIKES on 4 January 2018. 6 Presentation (Meeting of 15 May) – limited version – slide 19.



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service provided by [LIMITED]. As already mentioned, BH BIKES and [LIMITED] have

been working together since 2010, which has resulted in a strong and reliable

commercial relationship. This relationship, underpinned by copious implemented

quality protocols and service standards, provides high value to the market for electric

bikes.

20. BH BIKES only manufactures and imports electric bikes in the mid to high-end

segment7. Its prices, both at wholesale and retail levels, are significantly higher than

those reported by the complainant8; on the other hand, BH BIKES’ prices are almost

in all cases above the prices of its main competitor manufacturing in Europe

[LIMITED]9. In addition to this, BH BIKES is also in a different position to other

importers, as it produces for other EU producers.

21. Based on the above, BH BIKES is against the application of antidumping or

antisubsidy measures to its products or [LIMITED]. In particular, as it will be

discussed below, there are no economic advantages deriving from BH BIKES’s

imported high-end e-bikes and, therefore, the requirements to impose antidumping

or antisubsidy duties are not fulfilled for this segment.

III. Opposition to a possible imposition of definitive antidumping

measures

22. BH BIKES is fully aware of the fact that the measures outlined in the

Implementing Regulation making imports subject to registration will only crystallise

should the Commission decide to pursue the case and implement definitive

antidumping measures.

23. In this regard, BH BIKES would like to state that it opposes to the imposition

of antidumping or antisubsidy duties in the terms set out in the complaint and

reproduced in the Implementing Regulation. The reasons supporting this stance,

structured into three categories of arguments, are indicated below.

7 The reasons for which mid- and high-end e-bikes must be regarded as a different product will be thoroughly explained in detail in the next section. 8 Complaint of 8 September 2017, Annex 20 (page 6 of the pdf). 9 Presentation (Meeting of 15 May) – limited version – slides 6 to 18.



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Product scope

24. Firstly, the products imported by BH BIKES from the PRC are not comparable

to the ones that are being imported by other companies.

25. In this regard, BH BIKES does not agree with the imposition of antidumping

or antisubsidy measures covering all e-bikes, regardless of quality and performance.

BH BIKES submits that a differentiation must be made between mid and high-end

models and low-end models. As previously mentioned, BH BIKES only imports e-

bikes in the mid and high-end segment, fully comparable with the models

manufactured in the EU.

26. As it has been explained ut supra, [LIMITED] is an engineering developer who

develops and produces on the basis of a number of patents held by its parent

company, [LIMITED]. [LIMITED] carries out a complete production process, for which

it uses materials mostly imported from outside PRC (e.g., the EU or Japan), focused

on the needs of high-end e-bikes and, thus, more expensive. It does also develop a

series of R&D projects for BH BIKES, which offer added value to the final products.

27. BH BIKES already explained and elaborated this position when submitting the

form for importers on 4 January 201810.

28. Against this background, the Implementing Regulation omits any reference to

these allegations concerning the existence of differentiated products and disregards

providing any description that could take into account their technical differences.

29. Ignoring the differences between products distorts any analysis carried out on

price-comparison, which could in turn result in the application of unfair measures

that do not correspond to the structures of the market nor help satisfy its needs. In

this regard, BH BIKES considers that the application of antidumping or antisubsidy

measures would only be eventually justified in respect of the low-end segment of e-

bikes.

30. There are indeed huge differences between the low-end segment of e-bikes

and the mid- and high-end one, which are ultimately translated to price differences:

the price for e-bikes in the low-end segment is around EUR 60011, whereas the prices

for high-end e-bikes can go up to around EUR 6,000. These price structures are

determined by the technical differences of components such as motors and sensors,

10 See page 20 of the form for importers filed by BH BIKES on 4 January 2018. 11 As pointed out by EBMA in its complaint of 8 September 2017, Annex 20 (page 6 of the pdf) – prices are around EUR 600.



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batteries, frame types, brake and suspension systems, wheelsets and tires, etc12. In

addition, high-end e-bikes are more complex and require stricter and optimized

quality protocols and aftersales processes.

31. From the competition perspective, the high-end e-bikes imported by BH BIKES

do not compete in the same product market as the ones included in the complaint,

considering both supply- and demand-side perspectives. Indeed, the characteristic

of its components lead manufacturers to specialize in different segments13; and

because of their technical features, different quality and performance, and significant

price differences, customers do not regard them as belonging to the same product.

In addition, each category of e-bikes is distributed through different channels: low

segment is distributed through supermarkets and hypermarkets, whereas mid- and

high-level are distributed through specialized stores.

32. With this in mind, a product scope that encompasses both low-end and high-

end e-bikes and defines them as a single category can only be considered as

inaccurate and inappropriate. High-end e-bikes imported from the PRC, as it will be

demonstrated through the data and arguments put forward in this submission, are

perfectly comparable to high-end e-bikes manufactured in the EU. On the contrary,

low-end e-bikes show significant differences in quality and price range, which

prevents from including them in the same product definition, either from a supply-

side or from a demand-side perspective.

33. The Commission must conduct an investigation based on genuinely

comparable products. Doing otherwise could seriously undermine the findings of the

investigation and lead to the adoption of unfair antidumping or antisubsidy measures,

which could in turn cause irreversible damage to the market.

Prices and costs

34. In line with the above, BH BIKES’ prices and costs constitute sound evidence

that there is no dumping with regard to the high-end segment of e-bikes.

12 See pages 14 to 17 of the form for importers filed by BH BIKES on 4 January 2018. 13 For instance, some brands are specialized in mountain e-bikes or city e-bikes, while BH BIKES focuses on the segment for high-end sports e-bikes.



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35. At the hearing held with the Commission on 15 May 2018, BH BIKES explained

in detail the cost composition of the e-bikes imported from the PRC with [LIMITED]’s

technology14.

36. This proved that production costs do in fact constitute a –sometimes

insurmountable- obstacle to offer moderate prices. This does not only refer to the

costs of components depending on the origin of the technology, but also includes

data on the purchase value from suppliers15 for each country, which shows that the

costs in the PRC are very high (starting from a minimum of 25% difference). In

addition to this, other costs have to be taken into account, such as R&D and freight

costs16. On the basis of these costs, it is impossible to conclude that there is any

dumping.

37. In this regard, [LIMITED] does not enjoy any advantage in comparison with

manufacturers from the EU or from other countries (i.e. Japan or Taiwan). Their

prices are in line with those of other producers, and the small savings in assembling

costs that could result from the lower salaries in the PRC are absorbed by the duties

imposed on the e-bikes. As explained, the reason why BH BIKES chooses to

manufacture high-end e-bikes with [LIMITED] in the PRC is the integration of both

companies in their development processes, and because of the added value they

offer.

38. Furthermore, in most of the cases (imported e-bikes incorporating European

engines), the customs value of e-bikes does not include the price of the engine, which

is exported under outward processing. This could give a misleading impression of the

actual importation prices of [LIMITED], as they do not incorporate the cost of the

engine, commonly the most expensive component. In any event, the costs are much

higher than those declared by the claimant as import prices in its complaint to the

Commission17.

39. In the same vein, as indicated, BH BIKES provided the Commission with data

to carry out a price comparison between their high-end e-bikes imported from the

PRC and a comparable product with European technology18. The data on prices

14 Presentation (Meeting of 15 May) – limited version – slides 19 to 26 refer to cost composition. As explained during the meeting, there could be differences on prices per model depending on the day the price is calculated (this is due to the impact of the exchange rates). 15 Ibidem, slide 20. 16 Ibidem, slide 22. 17 Complaint of 8 September 2017, Annex 20 (page 6 of the pdf). 18 Presentation – limited version - slides 6 to 18. [LIMITED]



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provided by BH BIKES included a price comparison in both the retail and wholesale

levels.

40. This data showed that high-end e-bikes imported from the PRC are

comparable to those manufactured in Europe as, for both products, the technology

of their components comes either from the EU (i.e. Bosch, Brose) or from Japan (i.e.

Shimano, Yamaha). A full explanation was offered at the hearing with the

Commission for any significant price variations –which were in fact rare-, with a

breakdown of the different components used and their particular characteristics19.

Profit margin

41. Finally, it is paramount to state that the profit margin of BH BIKES [LIMITED].

42. Indeed, during the investigation period, manufactured e-bikes in Portugal

[LIMITED]20.

43. It must be added that the factory in Portugal [LIMITED] was entirely rebuilt

and operating in 15 December 2017 after being destroyed by the fire in October of

that year.

IV. Opposition to a possible retroactive imposition of definitive

antidumping measures from the 4 May 2017

44. BH BIKES is against the possible retroactive imposition of definitive

antidumping measures from the 4 May 2017, as (i) there is no evidence of stockpiling

and (ii) the last orders were placed before the start date of the investigation.

45. On the first point, while it is true that BH BIKES imports have increased during

the investigation period and beyond, this is not related to the imports coming from

China, but to the increasing success this product has experienced in Southern

European markets. In fact, the evolution of demand in Spain has seen an increase of

approximately 79%21. Nonetheless, it is in fact virtually impossible for [LIMITED] to

stockpile. This is because it fully depends on the supply of components from third

parties, and because all e-bikes are produced and imported upon order. We

respectfully submit that the Commission has not proved to the requisite standard

19 Some examples were used during the presentation: BH BIKES provided pictures of their Rebel Lynx model and of a comparable model (slide 15 of the limited version of the presentation) to illustrate how some components can introduce significant price variations. 20 [LIMITED] 21 See Annex I to this submission, CONEBI Report of May 2018 for Spain, page 4.



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that the conditions to apply any antidumping or antisubsidy measure retroactively

are met.

46. On the second point, production and shipment of high-end e-bikes to the EU

takes, on average, eight to nine months22. As BH BIKES informed the Commission at

the hearing of 15 May 2018 [LIMITED]23,24.

47. [LIMITED]25.

48. Therefore, when importing those e-bikes, BH BIKES could not have foreseen

the initiation of an investigation and that a registration would eventually take place.

Therefore, it is impossible to conclude that its purport was to counteract the impact

of the investigation.

49. Accordingly, BH BIKES formally requests the Commission to provide for an

exception to the retroactive imposition of antidumping measures (in case definitive

duties are imposed), in such a manner that e-bikes ordered before the date of the

AD notice of initiation was published in the Official Journal remain free of any

antidumping or antisubsidy measure.

V. Conclusion and plea

50. In light of the above, BH BIKES respectfully requests the Commission:

(i) to consider the comments put forward in this document and to, in

accordance with the views expressed in it, resolve that the product

differentiation is relevant for the purposes of these proceedings and,

accordingly, limit the scope of the investigation;

(ii) to take BH BIKES and its supplier [LIMITED] into special consideration

when dealing with [LIMITED]’s request for individual treatment.

51. Furthermore, BH BIKES respectfully requests the Commission to provide for

an exception to the retroactive imposition of antidumping measures in case that

definite antidumping or antisubsidy measures are adopted. To this regard, BH BIKES

requests that e-bikes imported upon orders issued before the notices of investigation

be exempted of any antidumping or antisubsidy measure.

22 Presentation (Meeting of 15 May) – limited version – slide 27. 23 [LIMITED] 24 [LIMITED] 25 [LIMITED]



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52. BH BIKES remain at the Commission’s full disposal to provide any information

supporting the data provided in this document, including, if need be, inspections at

any BH BIKES’ sites.

Place and Date:

Madrid, May 24, 2018

Signatures:

Cani Fernández

Irene Moreno-Tapia

Representatives of BH Bikes


A N N E X 1


INITIATIVES

2017 it was a year in which we create three new initiatives and we consolidat-ed the work to develop the State wide Bi-cycle Plan.

HIGHLIGHTSAMBE Awards

Introduction

State Wide Bicycle Plan

E-bike days

Cycle Tourism Public-Private Forum


1

A lot of action groups ask for financial support from our side and we decided to reward their action to promote bicycle riding creating an an-nual AMBE Award with 2 prizewinners who re-ceive a 3,000€ prize:

• Ciclosfera, an urban magazine• Cycling without age

On the other hand, we hace created an hon-orary category of these prizes aimed to a big Company or Public Institution who were promoting cycling in a particular way which deserve especial mention.

• Liberty Ensurance Company Bike2Work Campaing

AMBE AwardsTo gain prominenceTo reward action groups

• Cycling without age

As you probably know there is a singular project which pre-tend to help senior who lives in retirement homes to feel alive taking a ride in a cuadricycle drived by cyclists volunteers.

This excellent project is run-ning also in Spain and the jury of the awards decided to re-ward them with the first prize of 3,000€ to help them to be-come a reality.

• Ciclosfera

Ciclosfera is an incredible suc-cessed urban cycling magazine which is making stronger the urban cycling culture with a lot of good reports.

Also they participate in unco-nuntable initiatives spreading the urban cycling values and both personal and collective benefits.

They receive a 3,000€ prize.

• Liberty Bike2Work

Liberty Ensurance Company in Spain hace developed an in-ternal campaing to encourage their employees to leave the particular car and take a bike to go deaily to the office for work-ing.

They receive an commenmora-tive statuette to recognize their action to promote cycling.

The 2 prizes and the Commenmorative Stattuete were given by Juan Pablo Riesgo, the Span-ish Secretary of State for Employment who use to go riding daily to the Minister.


2

We have created an event excluvely dediated to PEDE-LECs. In 2017 two Editions were held. Fisrt of them in Ma-drid and the second one in Bilbao.

Just 4 days ago we have held the third Edition in Valencia and the next one will be held in Barcelona, probably on September. It’s an event totally aimed to let non cyclists know the benefits of ebikes for dailly journeys.

During 2017 and 2018 we have started to intensily work with National, Regional and Local Au-thorities to draft the National Bicycle Plan which pretend to promote bicycle from all prespectives, such as way of transport, sports, leisure and tourism.

We are working in 11 Working Groups where all national specialists are invited to participate to contribute with their expertise. AMBE is participating in all of them bacause we are the voice of the National Bicycle Board.

We pretend to get all the initial work done by the end of 2018.

e-bike daysa Six-monthly event to promote ebikes

State-wide Bicycle Plan

AMBE have promote the First National public-private Cycle Tourism Forum in order to help all stakeholders to cre-ate the necessary networking between then.

Spain is far away from other European countries in cycle tourism promotion and we think we have an strong op-portunity to contribute to generate cy-cle tourism product, services and net-works in both public and private sides.

First public-private Tourism Forum


3

Flat market

As you could see on the fig-ures the total market is flat and just urban and ebikes are the two uniques catego-ries growing.

Ebikes are the unique cat-egory which is strongly growing.

+79% ebikes

National bicycle sales

In Spain are growing mainly mountain pedelecs just as much as regular mountain bikes are decreasing.

Deserve special mention that because of the transformation of the regular mountainbike mar-ket into an electric assisted mountainbike market the average price has also grew up to € 602, obviouslly because regular mountainbikes price is € 679 meanwhile pedelec mountain aver-age price is over € 2,107


submission bhbikes europe s.l. making imports of electric

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