Bicycles from China Investigation No. 731-TA-731 (Final) Publication 2968 June 1996 · . U.S. International Trade Commission Washington. DC 20436 U.S. International 1,rade Commission COMMISSIONERS Peter S. Watson, Chairman Janet A. Nuzum, Vice Chairman David B. Rohr Don E. Newquist Carol T. Crawford Lynn M. Bragg Robert A. Rogowsky Director of Operations Staff assigned: Brad Hudgens, Investigator Joshua Levy, Economist Cindy Cohen, Economist Gerry Benedick, Economist John Ascienzo, Accountant Carl Seastrum, Industry Analyst Andrea Casson, Attorney Bob Carpenter, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 Bicycles from China Publication 2968 June 1996 CONTENTS Page Determination . 1 Views of the Commission . 3 Additional and dissenting views of Commissioner Newquist . 23 Separate and dissenting views of Commissioner Lynn M. Bragg . 33 Part I: Introduction . I-1 Background . I-1 Summary data . I-2 The product . I-2 Channels of distribution . I-3 Physical characteristics and uses . I-6 Common manufacturing facilities and production employees . I-8 Interchangeability . I-9 Price........................................................................... I-9 Part II: Conditions of competition in the U.S. market . Il-1 Business cycles . .. ·. Il-1 Market segments and channels of distribution . Il-1 Supplying the mass merchant market . II-1 Supplying the IBD market . II-2 Supply and demand considerations . Il-2 U.S. supply . Il-2 Domestic production . II-2 Industry capacity . II-2 Inventory levels . Il-3 Exportmarkets . II-3 Subject imports . Il-3 Industry capacity . II-3 Inventory levels . II-3 Export markets . Il-4 Nonsubject imports . II-4 U.S. demand . II-4 Substitutability issues ............................. : ..... ~ . .. Il-4 F actors affecting retailers' purchase decisions . II-4 Comparison of domestic bicycles and imported Chinese bicycles . II-5 Retailer sourcing patterns . II-5 Purchase factors . II-6 Comparison of domestic bicycles and imported Chinese bicycles to bicycles imported from nonsubject countries .............................. , . II-6 Elasticity estimates . II-7 U.S. supply elasticity . Il-7 U.S. demand elasticity . II-7 Substitution elasticity . Il-7 Partill: ConditioiloftheU.S.industry ................................................... ill-1 U.S. producers ..................................................................... ill-1 Mass merchandiser producers . ill-1 Huffy ....................................................................... ill-1 Murray ...................................................................... ill-2 Roadmaster ................................................................... ill-3 I Page Part ill: Condition of the U.S. industry--Continued U.S. producers--Continued IBD producers . ill-3 Cannondale . ill-3 GT ......................................................................... ID-4 Raleigh . ID-4 Trek ........................................................................ ID-5 U.S. production, capacity, and capacity utilization . ID-5 U.S. producers' shipments . ID-5 U.S. producers' inventories ........................................................... ID-7 U.S. eiµployment, wages, and productivity . ID-7 Part IV: U.S. imports, apparent consumption, and market shares . IV-1 U.S. importers ..................................................................... IV-1 Mass merchandiser importers . IV-1 IBD importers . IV-I U.S. imports . IV-2 Imports from China . IV-4 U.S. importers' orders ............................................................. IV-4 Apparent U.S. consumption ........................................................... IV-5 Shipments by bicycle type . IV-5 U.S. market shares . IV-5 U.S. market shares by channels of distribution . IV-7 Part V: Pricing and related data . V-I Factors affecting pricing . V-1 Raw material costs . ..