So many times in the past, we’ve commented on all of the companies charging into China in the hopes of selling to the vast numbers of new, up and coming motorcycle buyers. If sales are flat or rising slowly elsewhere, surely, setting up shop in China will solve that problem. Harley Davidson most recently and BMW, too, have high hopes of selling motorcycles into this huge market.
But, besides the fact that the overwhelming majority of motorcycles sold in China, as most everywhere else in Asia, tend to be small displacement models H-D and BMW don’t offer, what happens when you are a Japanese company like Honda or Yamaha with lots of small bikes already in production, surely you can step in and gain a foothold where the big bikes don’t fit, right?
An interesting article in Business Week, makes it appear the Japanese makers fare no better when going to China:
mainland motorcycles enjoy a huge and loyal following. Chinese players such as Guangzhou Motors, Zongshen Motorcycle, Shanghai Feiling Motorcycle, and scores of smaller bike makers control more than two-thirds of the domestic market. In the mass market segment for midsize street bikes Chinese rivals can undercut Japanese rivals, in some cases, by about 30% on price.
“The number one problem for Japanese motorcycle makers in China is that there are too many local makers who churn out cheap bikes, setting quality aside, and they sell well,” says Noriyuki Matsushima, an analyst at Nikko Citi Securities in Tokyo.
They continue by pointing out the other huge problem of counterfeits:
At the start of the decade, about five out every six bikes with the Yamaha brand in China were actually fakes pumped out by unscrupulous Chinese manufacturers, according to Masayuki Hosokawa, the company’s chief representative in Beijing.
This is the market where Harley and BMW are going to expand their sales? Even the Japanese are moving to India and other countries, looking for opportunities there while the Chinese market either matures or cleans up. Harley’s move into Vietnam may actually be a smarter plan, where the country seems more oriented to establishing a real business environment and where the foreign companies can survive and make a profit. Harley is moving to India, as well, another smart move.
The sheer size of China’s market beckons foreign companies to their shores, but like the sirens of ancient myth, sailors followed only to be dashed on the rocks, and the Chinese motorcycle market may turn out to be the same for some time to come. I hope Harley Davidson keeps a wary eye as they approach and aggressively explores other markets. China may be an opportunity, but it may come at a high price.
Link: Business Week