Follow David McMullan's experiences in the Chinese motorcycle industry at http://www.englishmaninchina.org/
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.
By David McMullan and Zoe Fu of ChinaMotor Magazine
China has seen slowing economic growth and growing export pressure since the beginning of 2012. The Chinese motorcycle industry was greatly affected. In the first half of 2012, the Chinese motorcycle industry manufactured 11.6291 million and sold 11.7381 million motorcycles, down 11.41% year-on-year and 10.82% year-on-year respectively. Domestic motorcycle sales were 7.236 million units, down 12.04% from a year ago. The output and sales of the Chinese motorcycle industry plunged, and domestic demands were low. Motorcycle output and sales of the Chinese motorcycle industry have hit a 6 year low, and the situation is worsening. The industry exported a total of 4.4859 million motorcycles between January and June, down 8.9% from 2011.
Average Monthly Motorcycle Output Falls by 10% in the First Half of 2012
The output and sales of the Chinese motorcycle industry kept declining over the first six months; the average monthly output drop was about 9.97%; April saw the biggest drop of 10.85%.
The output and sales of the Chinese motorcycle industry in June were 2.0111 million units and 2.0119 million units, down 3.17% month-on-month and 4.75% month-on-month respectively, and down 12.31% from 2011 and 13.31% from a year ago. The domestic sales in June were 1.1635 million units, down 5.43% month-on-month, and down 12.22% year-on-year, decreasing amplitude increased by 2 percentage points.
The output and sales of two-wheeled motorcycles in June were 1.8056 million units and 1.8044 million units respectively, down 4.27% and 6.00% month-on-month, down 13.29% and 14.67% year-on-year; the output and sales of motor-tricycles were 205,500 units and 207,500 units, up 7.70% month-on-month and 7.75% month-on-month; output down 2.66% year-on-year, and sales up 0.61% year-on-year.
The output and sales of scooters in the first half of 2012 were 1.6182 million units and 1.6436 million units, down 4.25% year-on-year and 2.75% year-on-year. The output and sales of scooters in June were 278,700 units and 285,000 units, down 10.92% and 9.09% month-on-month respectively, down 11.38% and 12.11% year-on-year respectively.
The output and sales of standard motorcycles between January and June were 6.5441 million units and 6.5962 million units, down 13.78% and 12.99% year-on-year respectively. The output and sales of standard motorcycles in June were 1.153 million units and 1.1433 million units, down 2.31% and 5.30% month-on-month respectively, and down 12.89% and 14.23% year-on-year, decreasing amplitude was expanded.
The output and sales of cubs between January and June were 2.3421 million units and 2.3685 million units, down 12.60% and 13.46% year-on-year respectively. The output and sales of cubs in June were 374,000 units and 376,100 units, down 4.86% and 5.71% month-on-month respectively, down 15.83% and 17.75% from 2011.
The output and sales of 150cc motorcycles have been rising since the beginning of 2012 despite the fact that those of other motorcycles keep declining. The total output and sales of the 150cc motorcycles between January and June were 2.0216 million units and 2.0442 million units, up 4.25% and 6.36% year-on-year respectively.
The output and sales of 50cc motorcycles between January and May remained the same in the first five months as the same period last year. However, the output and sales of 50cc motorcycles declined greatly in May, and accumulative output and sales of 50cc motorcycles have dropped. The total output and sales of 50cc motorcycles between January and June were 972,800 units and 968,600 units, down 1.37% and 3.03% year-on-year respectively. Its output and sales in June were 169,300 units and 169,000 units, down 13.59% and 14.64% month-on-month, and down 18.07% and 18.60% year-on-year respectively.
The output and sales of 250cc motorcycles between January and June were 313,700 units and 315,100 units, down 4.26% and 3.17% year-on-year respectively, and decreasing amplitude shrank as compared with last month. Its total output and sales in June were 66,200 units and 67,800 units, up 17.27% and 21.79% month-on-month, and up 0.64% and 2.70% year-on-year respectively.
The 125cc motorcycles still enjoy the most output and sales. The total output and sales between January and June were 4.2505 million units and 4.2921 million units, down 17.04% and 16.25% year-on-year respectively. The output and sales of the 125cc motorcycles in June were 678,300 units and 681,600 units, down 9.58% and 11.03% month-on-month respectively, and down 19.15% and 19.86% year-on-year respectively. The 125cc motorcycles had the biggest fall in June.
The output and sales of the 110cc motorcycles are second only to those of the 125cc motorcycles. Its total output and sales were 1.9998 million units and 2.0395 million units, down 9.59% and 9.70% year-on-year respectively. Its output and sales in June were 330,000 units and 335,300 units, down 4.02% and 3.76% month-on-month, down 8.74% and 11.31% from 2011 respectively.
Motorcycle Exports Decrease & Export Value Increase in the First Half of 2012
China exported 4.4859 million motorcycles between January and June, down 8.86% from a year ago; the export value was USD 2.39 billion, up 4.14% year-on-year. Motorcycle engine exports were 1.0023 million units, down 34.87% from 2011, and the export value was USD 154 million, down 18.76% from a year ago. The exports of ATVs were 43,500 units, up 7.73% year-on-year; export value was USD 99 million, up 25.23% year-on-year.
Motor-tricycle exports increased greatly from the beginning of 2012. The motor-tricycle exports were 116,800 units between January and June, up 40.95% year-on-year; export value was USD 93 million, up 55.69% from a year ago.
The top displacement motorcycles in exports between January and June were the 125 series (110ml<displacement≤125ml), the 150 series (125ml<displacement≤l50ml), the 110 series (100ml<displacement≤110ml), and the 50 series (displacement≤50ml), and their respective exports were 1.5907 million units, 948,000 units, 638,000 units, and 572,300 units. The total exports of the above four major displacement motorcycles between January and May were 3.7491 million units, accounting for 83.57% of the total motorcycle exports.
China's motorcycle exports in June declined a bit from May. Motorcycle exports were 848,300 units, down 3.78% month-on-month, and down 14.79% year-on-year. Chinese motorcycle export still faces harsh challenges in consideration of the complicated international economic situation, and the far-reaching influence of the European debt crisis.
The top 10 motorcycle manufacturers in exports in the first half of 2012 were as follows: Loncin, Lifan, Yinxiang, Guangzhou Dayun, Sundiro Honda, Dachangjiang, Qianjiang, Guangzhou Haojin, Zongshen and Aeronautic Bashan; their respective exports were 383,900 units, 300,100 units, 286,700 units, 233,300 units, 229,400 units, 217,800 units, 179,400 units, 175,500 units, 164,300 units, and 160,600 units. The export increase all exceeded 50% for Sundiro Honda and Qianjiang from a year ago. The total exports of the above 10 motorcycle manufacturers in the first half of 2012 were 2.331 million units, accounting for 51.96% of the total motorcycle exports.
The Chinese motorcycle industry achieved operation revenue of RMB 61.164 billion between January and June, down 0.44% month-on-month. The operating costs were RMB 53.787 billion, down 0.55% year-on-year. The total profit was RMB 1.363 billion, down 16.01% from a year earlier. The profit ratio of sales was 2.23%, down 15.53% year-on-year. The management fee was RMB 2.917 billion, up 8.89% from 2011. The financial fee was RMB 466 million, up 27.40% year-on-year; of which the interest expenditure was RMB 434 million, up 40.84% year-on-year.
The inventory of Chinese motorcycle manufacturers between January and June was RMB 10.063 billion, down 3.24% year-on-year; the inventory of finished products was RMB 3.949 billion, up 1.79% year-on-year.
Output Data of Top 10 Motorcycle Manufacturers in June
Output in June (Unit)
M-o-M Increase (%)
Y-o-Year Increase (%)
Accumulated Output Till June (Unit)
Cumulative Increase Y-o-Y (%)
June Output Accumulation Contrast Total Output (%)
Luoyang Northern Ek Chor
Exports on the Wane, Chinese Motorcycle Industry Seeks Transformation
"The Chinese motorcycle industry has entered a dead end as the sales competition on overseas markets are fierce and Chinese cities ban the use of motorcycles," said Mr. An Zineng, the Secretary General of China Industrial Product Brand Promotion Committee, at the Chongqing 2012 China Motorcycle Innovation Summit.
The overseas motorcycle market has become the last straw for mitigating Chinese motorcycles sales decline since the motorcycle sales plunge in China in 2010. However, export data of quarter one 2012 showed that Chinese motorcycle exports encountered a decline after many years' of increase. According to insiders, the situation will not improve in the latter half of 2012.
According to the statistics of China Association of Automobile Manufacturers, the output and sales of the Chinese motorcycle industry in Q1 2012 were 5.5412 million units and 5.6299 million unitsrespectively, down 8.81% and 8.82% .
Overseas Market Encounters a Turning Point
According to the statistics of China Association of Automobile Manufacturers, Chinese motorcycle exports in Quarter 1 2012 were reduced to 2.0073 million units from 2.2301 million units of last year, down 4.8% year-on-year. Chinese motorcycle exports were increased by 14.36% in 2011 from 2010. Many participating representatives were pessimistic about Chinese motorcycle exports in latter 2012.
Overseas markets play a vital role for Chinese motorcycle sales as motorcycle sales in China keep declining. Chinese motorcycle exports reached 10.74 million units last year, accounting for 40% of the total motorcycle sales.
Usual Chinese motorcycle export destinations include countries in Africa, South America and Southeast Asia. However, the price advantage of Chinese motorcycle products is disappearing along with the rise of production costs and the appreciation of RMB. "Chinese motorcycle products have encountered apparent impacts from local products in Vietnam and other countries," said Mr. An Zineng.
Mr. An Zineng held that it is an inevitable consequence of the Chinese motorcycle industry which has only focused on low end products. "The development way of Chinese motorcycle industry is always to transfer to low-end markets. Motorcycle sales have been transferred from urban areas to rural areas and then to developing countries. Small engine displacement motorcycles are key products of the Chinese motorcycle industry."
Motorcycles with engine displacement less than 150ml take up the majority of Chinese motorcycle exports. "Small displacement, low additional value, and limited markets, Chinese motorcycle export has reached an end," said Mr. An Zineng.
Small displacement motorcycles have been losing their price advantage in China with the ban on the use of motorcycles in cities, the implementation of National III emission standards and the increasing population of electric vehicles. "The age of giving away TVs, fridges have gone, now we give away BMWs for the purchase of motorcycles," Mr. Chen Yinlin from Wuyang-Honda said at the summit.
Chinese Motorcycle Industry Faces Many Troubles during Transformation
The future of small displacement motorcycle is dim whereas the future of imported large displacement motorcycle is bright in China. Harley-Davidson saw sales double last year and Ducati's sales last year was 8 times that of 2010 in China.
So, making large displacement motorcycle has become a common sense in the Chinese motorcycle industry. Many Chinese motorcycle manufacturers including Dachangjiang, Lifan, Loncin, Zongshen, and CF Moto released large displacement (over 250ml) motorcycles last year, including 600ml and 650ml super large displacement motorcycles.
However, technical bottleneck is the key restraining the upgrade of the Chinese motorcycle industry. Chinese large displacement motorcycles still need overseas technologies. The CF Moto 650TR which was praised as the innovative product at the summit uses Italian technology. Zongshen's representative reported to our reporter that their 450ml and 650ml large displacement motorcycles which are under development will adopt Korean engines.
The ban on the use of motorcycles has left small displacement motorcycles with no market in China's urban areas, and also affected the transformation of the Chinese motorcycle industry to make large displacement motorcycles.
Even though there are no definite laws and regulations banning the use of motorcycles in cities, there are more than 200 Chinese cities ban the use of motorcycles with some of the cities placing the ban for over 10 years.
Mr. An Zineng expressed that large displacement motorcycle has a bright future in China. But the transformation of the Chinese motorcycle industry will be restrained as long as the ban on the use of motorcycles in Chinese cities exists. "On one hand, large displacement motorcycles are liked by China's urban consumers; on the other hand big Chinese cities ban the use of motorcycles. How can this contradiction be solved?" Mr. An asked himself.
Harley-Davidson, BMW and other motorcycle exporters revealed in their company reports that the ban on the use of motorcycles in big Chinese cities has greatly hindered their business expansion in China.
Mr. An Zineng thought that the number of Chinese motorcycle manufacturers will be reduced and integrated to about 10 in three or five years from the current number of more than 200 seeing that the Chinese motorcycle industry is facing internal and external troubles.
David McMullan talks to Vito Ippolito President of FIM about the future of Chinese motorcycle sports
The Fédération Internationale de Motocyclisme (FIM) is the worldwide governing/sanctioning body of all types of motorcycle racing. The organisation currently represents 103 national motorcycle federations that are divided into six regional continental unions. FIM is also involved in many non-racing activities that promote motorcycle riding and safety and was the first international sporting federation to publish an Environmental Code, in 1994
Vito Ippolito is the President of FIM. A former racing team manager (of Venemotos whose rider Carlos Lavado became 250 Grand Prix World Champion in 1983 and 1986) President Ippolito has been involved with motorcycles his entire life and became the first non-European (he is Venezuelan) elected President of the FIM since its foundation in 1904.
Here President Ippolito shares his thought about the future of motorcycling and motorcycle sports in China with ChinaMotor Magazine’s International Editor David McMullan.
David McMullan: Besides satisfying the requirements of motorcycle racing enthusiasts what is the FIM’s role in pushing the motorcycle industry forward?
President Vito Ippolito: Today in the modern FIM we have a structured approach to our work. As well as our sporting responsibilities we seek to be a global advocate for motorcycling. A top priority within this approach is working with the motorcycle industry on matters of mutual interest - of which of course there are many.
Everything, from better harmonisation of sporting rules to make the sport easier and better for all partners, right through to the mobility agenda promoting the use of powered two wheelers for leisure and transport use.
To do this work I meet regularly at a strategic level with the leadership of the various industry associations across the world. Our administration meets with them frequently at an operational level also, particularly with IMMA and ACEM. With IMMA in Geneva because of our joint interest in the United Nations work on global technical standards, and with ACEM because of the influence of European Union law on the motorcycle industry.
We want to reach out further to the industry in China. I am certain the best way forward for this is through IMMA and I am delighted to hear that the Chinese industry is now engaging fully with them.
Now that Chinese motorcycle technology has started to produce bigger “superbikes”, do you think it likely that a Chinese motorcycle will qualify to race in MotoGP?
Why not? Ever since motorcycle racing began manufacturers have had a variety of motives for participating. It can be to increase market awareness for the brand. It may be to speed technological development, and it can be to instill pride among the engineers in the company itself.
Or it can be a mixture of all these motives.
MotoGP is still an unfamiliar event for many Chinese sports fans. What strategy are you going to employ to increase awareness of it here?
Our promoter (Dorna) is working to have more broadcasts on Chinese TV channels and at the same time we want to help the Chinese Federation to increase its activities.
How long do you expect it to be before FIM racing gains public acceptance in China?
With good groundwork, I'm sure at the end of this decade we will have very positive results.
Will we see the likes of Rossi, Lorenzo and Stoner riding for a Chinese team one day?
If we develop national motorcycle racing and continental races in Asia, seeing high-level Chinese riders will be a natural consequence.
As this is your 2nd term as president of the FIM you must enjoy the trust of your members. What reforms have you instituted since becoming president?
We have completely changed our way of working. Now we have a far more responsive system.
As with any body of this kind we have to have regular annual meetings to govern ourselves, elect people to positions etc. Our General Assembly remains the supreme authority of the FIM.
In the past, however, our more operational arms – our commissions of experts – were locked into this process. It was inefficient and wasteful. Today commission directors working with the CEO can arrange meetings in a flexible way – for example in connection with a sporting event. The same is true in the non-sports arena as our specialists (for example in road safety work and public policy) can link a meeting to a conference or event if they choose to do so. Or they can meet in a “political” place like the city of Brussels.
We have also instituted a proper recognition of our champions with the annual FIM Gala which is televised. This event also gives us the opportunity to give publicity to other good work in motorcycling, and we recognise road safety work with our new award.
Immediately on taking office, in my first term, I set the FIM to work in the field of alternative energy with a working group headed by Vice President Robert Rasor. We need to plan for the future of motorcycling with new and sustainable energy sources.
You have been one of the driving forces behind the campaign to allow production based engines in MotoGP. Do you think this could be beneficial in encouraging Chinese companies to join?
I have no doubt. Starting from mass production engines and then going on to develop their performances will make it much easier for Chinese industries to participate. Now in Road Racing we have new types of motorcycles and new classes, like Moto2 and Moto3, which are very useful for starting to develop one’s own technologies. The same can be done in the Superbike and Supersport 600.
I’m sure our Chinese readers will want to know if you enjoyed Macau at the 125th FIM Congress.
For me it was a fascinating experience. I didn’t know Macau, but above all I was able to meet the management team composed of very intelligent and enthusiastic people who are proud of what they achieved.
I know that you have a master’s degree in philosophy, does it in anyway influence your running of FIM? Are you a utilitarian or a deontologist?
I do not know if this had any influence on my management of the FIM. When I was younger I was very intrigued by the human mind applied to explaining the world. Perhaps it is true that it allowed me to approach all cultures and also to prize both ethical codes and pragmatism. Both these visions have to co-exist in a state of balance.
What benefits could Chinese producers obtain from joining FIM races?
Because of television coverage F1 is huge in China; MotoGP does not enjoy the same coverage, is this something you would like to explore?
We are working – again as a priority this time within our marketing strategy – to increase awareness of our sport via the media. We have done well in many areas in recent times, particularly in parts of Asia and the Middle East, with greatly increased television audiences.
We hear that after the Shanghai MotoGP was stopped, the FIM cancelled racing in China. Will the Shanghai circuit once again be hosting races for the FIM?
The Shanghai circuit is one of the most complete in the world and is homologated for our races.
As you know, China has a massive electric motorcycle industry. What measures is the FIM taking to promote e-bike racing?
Does the sluggish motorcycle industry in Europe impact the popularity of FIM races?
I do not see any evidence of this. Motorcycle sales may be down but motorcycle use is healthy.
A lot of this is down to individual families and their confidence in the economic situation. There is a natural reluctance to go out and buy that new motorcycle. But this is a generalisation. In some parts of the market, sales are showing an upward trend and some families are replacing the second car and getting a motorcycle or scooter instead. We have excellent media coverage of the sport in Europe and it attracts a real following.
Of course the FIM is not just about racing. What else does the organisation do for motorcyclists?
Where do I start? We have a huge range of activities. Let me give one example that I think is of great interest to everyone in developing markets where the Chinese industry is already strong.
Motorcycles are widely used in many parts of the world for transport. Often this is the only transport a family has.
We want this to be safer. It really is important that riders and passengers wear helmets – just as we do in motorcycle sports. This is why we give support to the work of the AIP Foundation that is well known in Vietnam and is now spreading the message to other countries. Last year we in instituted the FIM Road Safety award and the first edition was presented to Grieg Craft of the AIP Foundation.
Thanks to President Appolito for his frank and honest interview. ChinaMotor Magazine will do everything in its power to ensure that FIM has the support of the Chinese motorcycle industry in its endeavours.
Special thanks to John Chatterton-Ross of FIM for arranging the interview.
An introduction to the Chinese industry
A report on the evolution of Chinese motorcycles by David McMullan the Chief Foreign Editor of China Motor Magazine
David McMullan aka the ‘Englishman in China’ has worked with the Chinese motorcycle industry for 9 years as a journalist and marketing consultant. In these years he has seen the highs lows and rebirth of the Chinese industry. He currently resides in the city of Chongqing the unofficial capital of the motorcycling world.
China has recently leapfrogged Japan to become the 2nd biggest economic power in the world, with no small help from its thriving motorcycle industry. China’s motorcycle factories currently produce just over half of all the motorcycles ridden in the world having manufactured 25 million complete units from January to November 2010 generating a staggering $4.032 billion US dollars in revenue. It is then no surprise that China is the world’s biggest producer of motorcycles with over 400 exporting enterprises (including over 200 factories) employing in excess of 3 million workers; this is no mean feat considering that the total number of exported motorcycles from China in 1980 was a paltry 43000 units.
Chongqing city in China is (according to a recent BBC documentary) the ‘fastest growing city in the world.’ It is as a result of this growth, mainly due to migrant workers providing labour for the production lines, that Chongqing has become one of the global centres of motorcycle production producing an estimated 15% of all two wheeled vehicles ridden in the world. A better known fact is that the Chinese industry mainly caters for the ‘lower’ end of the market, producing lesser quality and cheaper machines.
It could be imagined then that Chinese motorcycle companies have found a winning formula, one that involves low cost labour, materials and limited research and development but this is certainly no longer the case! Not content with producing budget, small engine motorcycles, cubs and scooters for ‘developing nations,’ the industry is now turning its attention to securing a market share in the Western world. Of course Chinese motorcycles have been around for years in developed countries but unfortunately their reputation as ‘low cost, low quality’ products has tarnished them in the eyes of many a would-be motorcycle purchaser. This may all be about to change.
Top Chinese motorcycle factories are now investing vast sums on original research and development and also forming cooperative alliances with many of the world’s ‘big guns.’ In recent years BMW, Honda, Peugeot, Harley Davidson, MV Agusta, Piaggio, Yamaha and Suzuki have all committed to long term collaborations with leading Chinese companies. It is mainly due to this influx of foreign motorcycle culture and expertise that the Chinese industry has begun to rethink its strategy, choosing to concentrate its efforts on improving quality to a standard that would be generally accepted by a western motorcycling public and thus breaking in to the mainstream market. On the style front (Chinese motorcycles may not have been the first choice of the fashion conscious) many top level Chinese factories are now engaging renowned motorcycle designers from Europe.
A typical example of this is the Qingqi motorcycle company, they employ the Milan based Marabese Design company who boast Triumph, Yamaha and Piaggio among their customers. This is a welcome deviation from the all too ‘homogenous’ Japanese copies which have flooded the market in recent years and is representative of the wish of many Chinese motorcycle companies to attempt to discard the negative reputation previously attached to them.
It may come as a surprise to the western rider that many Chinese factories are collaborating with such renowned motorcycle companies as the ones mentioned above, but the simple truth is that left to its own devices the Chinese industry will not progress on to the next level. This next level will see top Chinese motorcycle brands featuring among the more recognisable brands in North American, Australasian and European showrooms and forecourts.
One of the primary considerations of the Chinese industry is to convince western consumers that the days of poor quality Chinese machines (almost considered a ‘throwaway’ product) are over. Top factories now boast of the ‘2nd wave’ of Chinese motorcycles; products that utilise state of the art technologies imported from countries with a more established motorcycle culture. One of the biggest stumbling blocks of promoting this new improved wave of motorcycles is that up to now Chinese motorcycles have been subject to ‘re-branding’ by foreign dealerships as opposed to promoting the factory name. The top Chinese motorcycle factories have long term plans to make their brands as publicly recognisable as their competitors from Japan, Europe and America. As Kevin Kong an ex-employee of Chinese giant Loncin puts it “if you asked a member of the public in most countries to name a Chinese motorcycle brand they would not be able to name one. They would however be able to name all of the Japanese brands. If you asked a motorcycle enthusiast to name a Chinese brand he or she may be able to name one or two, but that’s only may be able to! We have had a persistent problem with foreign dealers re-branding our products and in the past we have even encouraged it in an effort to increase sales. Those days are over now as Chinese companies look to make their names count in the top North American, Australian and European markets. My ex-company Loncin has been able to run a motorcycle in the 125cc moto GP. Competing against Ducati, Yamaha, Suzuki, Kawasaki and Honda has afforded the company more respect in the motorcycle world. Also the Shineray Company competes at the highest level in Belgian motocross. It is this kind of dedication to furthering technology and marketing that will see Chinese companies break through in western markets. I will always remember attending a marketing meeting in which it was mentioned that in the early 70’s the Honda brand was unknown in the UK and Europe. After a successful run at the Isle of Man TT they gradually gained a place in motorcycle culture as we have seen…the rest is history!”
As brand marketing became the name of the game for the top factories measures were taken to give brands maximum exposure. In recent years anyone attending the major motorcycle exhibitions in the world (Indianapolis, Cologne, and Milan etc) would have noticed a considerable influx of Chinese exhibitors and China itself is not without it own exhibitions. The Canton Fair in Guangzhou is an export exhibition that has its roots in ancient Chinese history. These days it is the largest and most modern export fair in the world and boasts a considerable motorcycle exhibition section; but to really appreciate the growth of the industry it is essential to take in the ‘CIMA’.
Every year the city of Chongqing hosts the CIMA, (China International Motorcycle Trade Exhibition) which is the largest motorcycle exhibition in Asia, and the fastest growing show of its type in the world. The success of CIMA prompted leading Chinese motorcycle publication China Motor Magazine to report- ‘News from the CIMA Organising Committee reports that as well as 90% of Chinese motorcycle factories, many of the world’s most famous motorcycle brands will attend the tenth CIMA exhibition. These companies will include Ducati, BMW, Honda, Suzuki, Harley-Davidson, Kawasaki, Peugeot, Piaggio, Paim, and Benelli. There are also many motorcycle parts and components enterprises coming to exhibit their products from countries with advanced motorcycle technology, including Germany, USA, Spain, the UK, Thailand, and Taiwan of China.
It is expected that over 800 purchasers, with a purchase capacity of over USD 100 million, from more than 20 countries, including USA, Germany, India, the UK, and France, will visit the tenth CIMA, an increase of 60% from the same period last year; the number of visitors is expected to exceed 100,000, up 42.86% from a year earlier.’
I have noticed over the last couple of years that the amount of foreigners visiting CIMA has increased exponentially. As Doug Stabler, a motorcycle dealer from California USA commented “it has become a necessity to keep a check on the Chinese motorcycle industry. Many of us in the industry have noticed a marked improvement in the quality and design of the machines and I now stock many different models of dirt-bike and ATV. They are proving very popular. In previous years the main problem with importing from China was not just the matter of quality. One of the biggest negative factors was the availability of spare parts, or should I say lack of them! I’m pleased to say that in the recent past the Chinese motorcycle industry has redoubled its efforts in improving the ‘supply chain’ and it is no longer a problem to find suitable quality parts either by direct delivery from the factory or online.”
Doug is typical of the foreign dealers/importers that I met at last October’s CIMA. Tristan Benson a motorcycle enthusiast from Cardiff, Wales added “it’s good to see that the Chinese factories are now producing models big enough to keep my fat *rse comfortable. In the past I tried a few Chinese bikes and used to look like a circus bear on a bicycle!”
Tristan’s derrière notwithstanding there has been a concerted effort to design bikes for the more ‘robust’ North Americans, Aussies, Kiwis, Brits and Europeans. Another objection to Chinese motorcycles has been lack of power due to smaller engine sizes. This is also being addressed in China as three of the top ten ‘giants’ of the Chinese motorcycle industry are collaborating to produce three separate models each with a displacement of 650cc (there is also a 600cc inline 4 in the pipeline!), a development that I will keep you up to date with in the future. This is a striking transformation from previous displacement policies, with Chinese factories previously more comfortable producing much smaller engines; a fact that is shown by the most recent China Motor Magazine statistics who reported-
‘According to the statistics of the China Association of Automobile Manufacturers, the top five Chinese motorcycle models (displacement) in exports from January to May of 2011 were 125cc, 150cc, 50cc,110cc and 100cc, with their respective exports of 1.3954 million units, 689,900 units, 504,300 units, 500,300 units, and 446,000 units, up 25.59%, 24.41%, 29.82%, 17.43%, and 15.89% year-on-year respectively. The total number of the above five major motorcycle models (displacements) exports from January to May was 3.5359 million units, taking up 91% of the total motorcycle exports in China.’
For me the surprising statistic is that 9% of the motorcycle companies have chosen to research develop and market motorcycles with a displacement of over 150cc! The same statistics reviewed 5 years ago would have revealed that 98% of Chinese made motorcycles had a displacement of 125cc or under; a clear indication of the changing production trends.
All this, of course, is a far cry from Chinese motorcycles being commonplace in showrooms and on motorways, but as more attention (as well as money) is being paid to how best to please the western motorcycling public and to tempt them in to a dalliance with a Chinese machine we may yet be witnessing the beginnings of a motorcycling revolution, the likes of which has now been seen since the Japanese burst on to the scene in the 1970’s.
In the words of famous motorcyclist Bob Dylan…The times they are a changin’!
An Analysis of the Economic Performance of the
By David McMullan the Englishman in
According to statistics provided by the China Association of Automobile Manufacturers (CAAM) and China Motor Magazine, the Chinese motorcycle industry enjoyed export development in 2011. The full implementation of the national emission standards III for motorcycles boosted the technical progress of the export industry as manufacturers developed new international markets and experienced growth. Here’s an overview of the year.
Motorcycle Output & Sales Maintain High Levels, Both show Increases from 2010.
Chinese motorcycle producers redoubled their efforts in expanding the export market in a bid to make up for domestic sales losses. A total number of over 10 million motorcycles were exported in 2011. Motorcycle exports greatly contributed to the further development of the Chinese motorcycle industry which produced 27.0052 million units and sold 26.9277 million units respectively, up 1.21% and1.32%year-on-year.
Motorcycle Exports Exceeded 10 MLN, and continue to grow
Motorcycle exports experienced growth with over 10 million units exported, hitting an historic high. A total number of 10.7447 million motorcycles were exported in 2011, up 27.67% from a year earlier; export value was USD 5.106 billion, up 35.24% year-on-year. Motorcycle exports accounted for 39.90% of the total motorcycle sales, an increase of 8.24% from 2010.
Economic Benefits of the Industry Declined, Total Profits Close to Those of 2007, 2008
Even though motorcycle output and sales were increased slightly in 2011, the soaring raw material (steel, fuel) prices along with rising labour costs made the operational costs for Chinese motorcycle manufacturers higher than the growth of profit.. According to the monthly economic indicators report on 104 Chinese motorcycle producers, the total operating income of the Chinese motorcycle industry was RMB 11.7835 billion, up 8.77% year-on-year in the first 11 months of 2011. Of which, operating costs were RMB 10.4126 billion, up 9.69% year-on-year. The total profit of the Chinese motorcycle industry was RMB 2.665 billion in the first 11 months of 2011, down 18.87% year-on-year. It was expected that the annual total profits were close to those of 2007, 2008.
Sales & Earnings of the top Chinese Motorcycle Producers were disappointing.
The operating performance of top Chinese motorcycle manufacturers was disappointing in 2011. Seven out the top 10 producers experienced a decline the exceptions being- Lifan, Guangzhou Dayun and Yinxiang who enjoyed increased profit. The total sales of the top 10 Chinese motorcycle manufacturers reached 14.3622 million units, down 3.31% year-on-year; the total profits of the top 10 motorcycle producers between January and November was RMB 1.753 billion, down 24.06% from a year earlier.
Exports of the Chinese Motorcycle Producers in 2011
According to a China Motor Magazine export survey on the 91 Chinese motorcycle manufacturers with export licenses, the total exports and export value of Chinese motorcycle manufacturers achieved a record high in 2011, with exports exceeding 10 million units.
. In 2011, the total motorcycle export value reached USD 5.89 billion, up 31.96% year-on-year, a 2.86% higher than 2010. 2011 saw total motorcycle exports of 10.7447 million units, up 27.67% year-on-year; the motorcycle export value was USD 5.106 billion in 2011, up 35.24% from a year earlier.
As with previous years, the 125 series (110ml＜displacement≤125ml), the 150 series (125ml＜displacement≤150ml), the 110 series (100ml＜displacement≤110ml), the 100 series (90ml＜displacement≤100ml), and the 50 series (displacement≤50ml) were the dominant motorcycle models in 2011. The total exports of these motorcycle models were 9.7357 million units, accounting for 90.61% of the total number of motorcycles exported; their total export value was USD 4.488 billion, taking up 87.90% of the total motorcycle export value in 2011.
In terms of their respective export performance: the 125 series ranked number one with 3.8238 million units exported, up 30.13% year-on-year, accounting for 35.59% of the total motorcycle exports; its export value reached USD 1.85 billion, up 34.83% from a year earlier, taking up 36.23% of the total motorcycle export value. The exports of 150 series motorcycles exceeded 2 million units for the first time ever to reach 2.1964 million units, up 40.52% year-on-year; its export value was USD 1.125 billion, up 47.23% from a year ago. The exports of 110 series came third with 1.4044 million units exported, up 20.07% year-on-year, and its export value reached USD 590 million, up 30.95% year-on-year. The export performance of the 50 series improved on 2010 with 1.236 million units exported, up 30.72% year-on-year; its export value reached USD 515 million, up 24.27% from a year ago. Exports of the 100 series experienced a slight drop in 2011 with a total of 1.0751 million units exported, down 3.76% year-on-year; its export value was USD 408 million, up 5.74% from 2010.