Hi, everyone. Good afternoon.
Thank you for giving us the chance to speak on this committee. I'm here today to present a situation that we think is unfair regarding customs tariffs in Canada.
To give a bit of our background, we are Devinci Cycles, a proud Canadian bicycle manufacturer. In fact, I'm pretty sure we are one of the last big manufacturers in North America in terms of units made every year. We make over 20,000 bicycles per year here in Saguenay, Quebec. The biggest growth opportunity in our industry is the electrification of the bicycles. To give you an idea, they are actually around 10% to 15% of our sales this year, but in two or three years they will represent around 40% to 50% of our sales. The trend is clearly visible in Europe.
For your information, a company that buys a complete bicycle made in a foreign country will pay import duties of about 13%, as planned in the Canadian harmonized system, which is the business model most of our competitors use and that we use, as well, for entry-level bicycles in order to stay competitive.
However, we do more than that. We import bicycle parts and components that are used to make bicycles, like the brakes, wheels and carbon frames. We pay the duty on every single component according to the CBSA regulations, and we assemble these bicycles here in Quebec.
We even go further. We buy aluminum extrusions from local providers in Canada or import some more complex hydroform extrusions. We make the bicycles from these raw tubes to an aluminum frame and then assemble it. If you've ever ridden a BIXI in Montreal, you've had a ride on a product that is 100% made in Quebec.
Until now, all is a good and fair, but when we are making electric bicycles, the game changes. The company I spoke about, which only imports full bicycles from overseas, benefits from the preferential tariff of 0%, as stated in the harmonized system. On our side, we pay the duties on every single component we import, but because of some sentence constructions, we also pay duties on the second-most expensive part of our bicycle, which is the battery. We pay tariffs on it.
For every other person or company, importing bicycles is duty-free, but for us, as we want to promote quality jobs in our area—and that is an important mission for us—we have to pay the duty on those batteries, which are benefiting from the preferential tariff as full bicycles. This situation is upon us because our main battery provider is Shimano, which is a company based in Japan, but they do make their bicycle batteries in those countries we are talking about today in southern Asia.
Because we cannot have a certificate of origin, we cannot benefit from the preferential tariff. That directly impacts us. We think this kind of grey area between the preferential, the HS code and certification of origin is impacting us.
I'm happy to answer your questions.