By Mr. Li Bin, the Secretary General of China Association of Automobile Manufacturers Motorcycle Section
Even
though the output and sales of the Chinese motorcycle industry has been
remained number one for 18 consecutive years, the comprehensive
competitiveness of the Chinese motorcycle industry is not strong nor is
the overall development level of the industrial chain. There has been no
constant production R & D in the industry over the past 30 years.
Motorcycle manufacturers have applied insufficient innovative abilities,
and their products are the same. The phenomenon of low-price
competition and insufficient release of first-class products existed in
the industry. The industry was in shortage of international first-class
manufacturers and brands.
The Chinese motorcycle
industry is a vital part of Chinese people's livelihood. The industry
will play an increasingly significant role in expanding domestic demand
and exports, constantly improving urban transportation and people's
sense of well-being. Meanwhile, the world motorcycle industry is in the
middle of a period in which motorcycle technologies are constantly
upgrading, market demand structure, market pattern and competition
pattern are all changing greatly; Chinese motorcycle industry is facing
greater challenges. The Chinese motorcycle industry is the industry
which had the earliest marketisation, and is fully marketised. The
industry is now at the key stage for significant structural adjustment
and industrial upgrade. No progress simply means regression.
Since
the beginning of 2012, China's economic growth slowed down and exports
faced more pressure. The Chinese motorcycle industry was greatly
affected. China mostly exports its motorcycles to countries in Africa,
the Middle East and South America. Since the beginning of 2012, the
influence of worsening European debt crisis, the appreciation of RMB and
the rising production costs have been taking effect on Chinese
motorcycle exports which experienced a significant slump. The current
global economic climate is complicated, the unemployment rate in the US
is rising again, and the influence of the European debt crisis is
far-reaching. The Chinese motorcycle industry whas harsh export
prospects.
Reasons of motorcycle output and sales decline and the existing problems
China's
economic growth slowed down due to the influence of macroeconomic
policies. China's PMI (released by HSBC), which had been decreasing
continuously since the beginning of 2011, dropped to 47.8, hitting a
record low over the past 10 months, showing that China's domestic demand
was low and its manufacturing industry was gloomy. From another point
of view, China's CPI has remained at a record high since the end of
2009, and consumer goods prices soared. The overall level of CPI in
China between January and August was up 2.9% from a year ago. According
to the latest survey by People's Bank of China, 65.7% of people held
that 'consumer goods prices were too high to be accepted', and the
people's confidence index for their future income was only 53.2%, the
lowest level since 1999 when the survey first began. Motorcycle
consumers in China are mostly low-income people, and soaring consumer
goods prices have greater affect on their lives.
The
competition on the Chinese car market is fierce. Chinese car
manufacturers are turning to the rural markets which are the traditional
markets of Chinese motorcycles. The ban on the use or limit the use of
motorcycles in Chinese cities has fostered the development of improper
vehicles including 'illegal power assisted vehicles' and 'non-standard
electric bicycles'. Meanwhile, the climate of the Chinese motorcycle
market is dull, counterfeit and shoddy products are prevalent, and the
illegal power-assisted vehicles and non-standard electric bicycles are
not controlled for sales. All these vehicles have taken up the market
shares of motorcycles, and severely affected the sales of conventional
motorcycle products.
The progress of urbanisation
and the flow of young and strong migrant workers into Chinese cities
have 'hollowed' rural Chinese regions. So, motorcycle markets in rural
areas are shrinking. The number of Chinese cities that 'ban the use or
limit the use of motorcycles' is increasing every year, making
motorcycle market shares shrink and affect motorcycle sales.
Since
the implementation of the National III emission standards, Chinese
motorcycle manufacturers have been busy dealing with it and have been
slow in releasing new products. They lack technological innovation
abilities. The average number of new products declared each month
between January and August 2012 was only 40, the figure for the same
period 2011 was over 100.
All regional governments
implement land fiscal policies which lead to the price rise of land and
property rent. Meanwhile, the product mixes of many Chinese motorcycle
manufacturers were not reasonable. Most of their products were low-end
products. Their distributors made little profit to maintain their normal
business operation. Finally, they just quit the motorcycle business.
Forecast on the development trend of the Chinese motorcycle industry
The
'Twelfth Five-Year' period is the period of change and revolution for
the Chinese motorcycle manufacturers to survive and develop. Not to
change is to go backwards. Innovation is a necessity for the development
of the Chinese motorcycle industry. Accelerating the transformation and
upgrade of Chinese motorcycle enterprises and accelerating product
upgrading has great significance for the sustainable development of the
Chinese motorcycle industry.
Meanwhile, the
influences that the European debt crisis and the slowdown of China's
economic growth have on industries are continuously spreading. Along
with the bursting of the fictitious economic bubbles, governments are
gradually abandoning their excessive preferences for 'financial
witchcraft'. Developed countries are rethinking the importance of the
real economy. The roles that the manufacturing industry plays in helping
economic balanced development and sustainable development are being
revalued and reassessed. America puts forward the idea of revitalising
high-tech manufacturing industry. Germany puts the stress of its
economic construction on revitalising industries. The real economy will
have development opportunities in the future.
In
the short run, the European debt crisis and China's economic development
will touch bottom next year. With the sudden change in the development
preference of the European and American economic development, the
'golden decade' that China experienced in the past in foreign trade
development will become history. The global and domestic motorcycle
markets will be dull. The estimated total motorcycle output in China is
about 25 million units in 2012, motorcycle exports will be about 9
million units, and domestic sales will reach about 14 million units,
down 10% in the whole.
There are internal reasons,
general economic climate and national policy reasons for the current
gloomy motorcycle market. It is expected that the annual motorcycle
demands for the coming few years will remain at about 3,000 units.
However, market consumption structure will gradually change. High-end
leisure motorcycle products will see fast growth. The market shares of
traditional motorcycles will drop. Consumers will have better awareness
for brand popularity. The competition on the Chinese motorcycle market
will be further internationalised.
Countermeasures for the development of the Chinese motorcycle industry
The
fast development of motorcycle markets in 2009 in China made Chinese motorcycle manufacturers develop by expanding their output capacities
and competing by low production costs and low price sales. They lacked
the technological accumulation for product R & D, lacked of
differential product development strategies and product planning. Their
products were more or less the same, and their R & D is restrained
by market development. This led to the problem of rich product variety,
so these motorcycle manufacturers didn't have a clear direction for
product specialty. This severely affected their production management,
sales and after-sales services. The facts that motorcycle manufacturers
only expanded their output capacity and the governments banned the use
of motorcycles contain the development of the Chinese motorcycle
industry.
Improving technical content and promoting
innovation are the only ways for Chinese motorcycle manufacturers and
the Chinese motorcycle industry to survive and develop, deal with the
current situation.
Characteristic enterprise development strategy
It
is an important step for the motorcycle manufacturers to be certain of
their development directions and targets and make definite differential
development strategies if they want to achieve sustainable development.
Here, the so-called differentiation is the characteristic development of
motorcycle manufacturers. In today's 'energy-saving & environmental
protection, and harmonious development' themed social environment,
developing 'environmental-friendly, energy-saving friendly and social
friendly' motorcycle products and achieving the transformation from
'labour intensive and scale merit industry' to 'quality merit' industry
are great facts to determine whether the Chinese motorcycle industry
will be able to carry on its development.
Differential product development planning
It
is the actual implementation of enterprise development strategy and the
basic guarantee of realising the enterprise's brand strategy to do a
good job in making product development planning. An enterprise should
make differential product planning which is suitable for itself based on
the analysis and integration of its qualification, development
direction, brand characters, and resources potentials. We have been
stressing the 'crosswise development' of products, and all products are
manufactured and sold within the same timeframe.
The
enterprise should make product development planning in accordance to
the characteristics of the enterprise. The enterprise carries out minor
changes every year and big changes every two years based on the product
planning, and then form the distinct product specialties of its own. The
enterprise will achieve technical accumulation and technical advantages
by international cooperation, sub-contract development, joint
development and independent development. Then, the enterprise will
achieve the interaction between product development and market demand.
The previous product development strategy, 'producing one generation of
products, researching & developing a new generation, and
pre-researching a generation', of Chinese military industrial
enterprises is still applicable. Many overseas motorcycle manufacturers
are researching or have already developed engines suitable for phase-IV
emission standards, and they can save fuel by 35%.
Establishing Chinese motorcycle key parts & components innovation system
Motorcycle
parts and components are the basic things for product innovation. Due
to substandard parts quality or poor parts production consistency, some
newly-developed large-displacement motorcycles by some Chinese
motorcycle manufacturers cannot be mass-produced, or have problems after
mass production. Establishing key parts & components innovation
& guarantee system is the basis and assurance for motorcycle product
technical innovation, advanced performance and stable quality.
The
Chinese motorcycle industry is planning to gathering popular,
technically-advanced and strong parts and components makers to set up a
'China Motorcycle Key Parts & Components Industry Alliance' with the
hope of strengthening planning, coordination, help and guidance for
product R & D, technology introduction, production management and
quality assurance system in the motorcycle key parts and components
industry, achieving the comprehensive upgrade of technology, quality and
management in the industry, establishing Chinese motorcycle key parts
& components innovation systems. Then, the key parts &
components guarantee that the system will be participated by many
outstanding parts and components R & D enterprises. Meanwhile, the
scale effect of in-advance parts & components R & D, performance
and quality stable guarantee, costs and risk sharing will be
successfully achieved.
Establishing 'motorcycle industry key parts and components innovation system' in the Chinese
motorcycle industry is a great push for motorcycle product innovation
and development, and a great measure to achieve mutual benefits and
common development between motorcycle manufacturers and motorcycle parts
makers.
Marketing strategies that can be adapted to new situation
Marketing
strategies are an important part of enterprise development. Modern
marketing is not only about 'selling products', but also about showing
brand image to the society, providing services, leading cultural trend,
and promoting taste and quality. Guiding consumers and developing
markets while providing products and services, making these fuses with
corporate culture and brand image, so that the enterprise and its brand
can both be developed while society is progressing.
Rural
areas are the most important part of Chinese motorcycle market, but not
the only places for Chinese motorcycle products. China's rural
motorcycle markets should never become the nicknames for places where
shoddy quality and cheap motorcycle products are sold. Making marketing
strategies suitable for new situations are the important part of the
transformation and upgrade of a Chinese motorcycle manufacturer.
The
traditional motorcycle marketing mode in China is the multiple
distributing mode from province level to cities and then to towns. We
adopted this kind of mode because rural areas are the major markets for
motorcycles. Along with the changes of market demands and product mix,
we must set up the multiple-marketing mode dominated by motorcycle
culture, services and motorcycle activities.
The
marketing mode should transform from singly selling motorcycles to
selling motorcycle culture and services, and then expanding business in
areas of motorcycle accessories, motorcycle apparel, motorcycle
modification, motorcycle leisure and recreation. Motorcycle
manufacturers should put in more effort in developing medium and big
cities as well as their surrounding markets for the sales of leisure and
recreational motorcycle products. They should set up the new
multiple-marketing mode with rural markets as its foundation, medium and
high-end motorcycle markets as its growth points, and set up the profit
model of making product technology as its foundation, culture and
services as its additional value creators.
( Source chinamotorcyclenews.com )
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