Here are a few more things to consider about Chinese motorcycle exports:
China now makes half of all motorcycles produced worldwide. In export markets, Chinese motorcycle manufacturers have been rapidly gaining share, especially in emerging markets in Southeast Asia and Africa.
Chinese companies have also grabbed market share from their Japanese competitors. For example, in Vietnam, Honda of Japan has seen its market share decline from nearly 90% to only 30% in the five years since Chinese manufacturers began selling to that country.
Also interesting is that it seems motorcycle companies trying to sell into the Chinese market have to “partner” with Zongshen or some other company in order to do so. Last June, Harley Davidson signed a letter of understanding with Zongshen and Piaggio has also “partnered” with Zongshen. Just exactly what does it mean to “partner” with Zongshen?
Here is an excerpt from the Harley press release last June (couldn’t find it on Harley’s site):
“We do not believe it will be necessary for Harley-Davidson to manufacture its motorcycles in China in order to be able to sell them there,” he said.
Under the contemplated relationship, Harley-Davidson would work with Zongshen to gain a better understanding of the business practices, markets and distribution channels it will encounter in China. Zongshen is a recognized leader in the Chinese motorcycle industry. “We believe there is a lot we can learn from working with a company that has intimate market and industry knowledge in China,” said Bleustein.
Harley-Davidson would share certain technology of a non-competing nature, as well as marketing philosophies and practices with Zongshen, under the contemplated agreement.
Hmm… business practices, markets and distribution channels it will encounter. You can interpret that however you wish. And of course, “share certain technology.” I wonder how important that part of the agreement was.
If a foreign company wants to produce or sell products in the U.S., they are able to do that without any partnerships. In China, that doesn’t seem to be the case. Although I am focusing on motorcycle companies here, all industries face the same hurdles. This is big and any company not paying attention is in for a shock.