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German Tire Company Doubling Down on Vietnam

The leading bicycle tire company in Germany, Schwalbe, is doubling down on its Vietnam manufacturing operations. It has operated in the country since 2014 with the assistance of its Korean JV partner, Hung-A Ltd. The simultaneous closure of the Indonesian manufacturing operations indicates that, at least in this instance, Vietnam had a superior labor offering. Germany is very much focused on growing economic ties with Vietnam as evidenced by a Chancellor visit in November 2023, and a Presidential visit in January 2024.

Schwalbe, a German bicycle tire manufacturer, has decided to shift all production to Vietnam due to the challenges of managing short-term orders across two sites in the competitive bicycle industry. Its other manufacturing presence in Indonesia will be mostly closed but will continue some mould making, mixing operations, research and development, and some administrative functions.

"While we are expanding the team in Vietnam once again, the decision unfortunately also means that we will have to cut staff in Indonesia. That hurts us a lot... After analyzing the development and the current situation in detail, this restructuring was unavoidable. We are retaining the option of resuming production in Indnesia in the future, but are now deliberately concentrating our efforts at our site in Vietnam, where are in an excellent position." - Frank Bohle, CEO of Schwalbe

Schwalbe was founded in 1973 and is known for its high-quality, innovative tires for various cycling disciplines, including road, mountain, touring, and commuting. It has a leading share in the German bicycle tire market and according to several online has consistently held a high reputational ranking as a top bicycle tire brand. It exports to over seventy countries and has manufactured in Vietnam since 2014 when it entered through a long-standing joint venture with a Korean partner Hung-A Ltd. to meet growing demand. It had its best sales year ever in 2022 reporting sales of $359 million, up 20% from the year prior. 204 employees work in the German head office which was newly constructed in 2021, and a further 68 employees work in European subsidiaries in France, the UK, Italy, the Netherlands and North America.

Over 500 German companies operate in Vietnam, a significant growth from only 200 a decade ago. In 2022, German companies invested €2.4 billion, marking a 70% year-on-year growth. German Chancellor Olaf Scholz visited Vietnam in November 2023, where he met with Vietnamese Prime Minister Pham Minh Chinh to discuss ways to further strengthen bilateral trade and cooperation. German President Frank-Walter Steinmeier made a state visit to Vietnam from January 23rd to 24th, 2024 to further encourage trade ties.




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