China vs. India
A report on a new rivalry
It seems unthinkable now that it was just over a year ago that I reported on the growing influence of Chinese motorcycles on markets typically dominated by the Japanese. The devastating earthquake/ tsunami and subsequent rotating power-cuts that followed severely damaged the production capabilities of the Japanese industry; but less that one year on rather than looking to further usurp Japanese market shares the Chinese motorcycle industry is anxiously looking in its rear view mirror- at India!
Indian motorcycle companies are queuing up to compete with the Chinese on many of China’s ‘safe’ markets. With superior design and technology the likes of Hero Moto (the biggest producer of 2-wheelers in the world) and Bajaj (3rd on the same list) are becoming a thorn in the side of the Chinese industry.
There are big differences between the Chinese and the Indian motorcycle industry. India has a huge growing domestic motorcycle market which helps to facilitate their push on to the export market whereupon the Chinese government has banned fossil fuel two wheelers in all but a handful of urban centres. India has 5 major motorcycle manufacturers who tend to compete on quality and style issues compared to the 50+ sizable motorcycle export factories in China vying for a reducing export market by undercutting the opposition leading to decreased profits.
The ambitious Bajaj have collaborated with Kawasaki for 8 years. Kawasaki has not previously looked to enter in to collaboration with a Chinese manufacturer but has recently joined with them to enter into competition in the world’s 3rd biggest motorcycle market in Indonesia. Bajaj/ Kawasaki had previously enjoyed great success on beginning a campaign in the Philippines effectively ending all hopes of serious Chinese involvement and they are looking to do the same in Indonesia.
American motorcycle designer Terry Linebarger resident in China had developed new Chinese models for the Indonesian market and commented “The Japanese pretty much had Indonesia sewn up with the Chinese snapping away on the fringes. We got to a stage where our new designs (Terry designed models specifically for Indonesia to some success) were staring to make inroads there but the entry of Bajaj/ Kawasaki is a real spanner in the works as we can no longer justify our slightly inflated bespoke prices. Bajaj/ Kawasaki models are the same price as ours and of course include the KAWASAKI name on them.”
Wang Jingyu GM of Keeway Motor (who also own Benelli) reacted to the assertion that Indian brands are also taking over in China’s safe haven of Latin America in the following way “Yes, Indian bikes are very popular in some markets such as Colombia, where they occupy one third of the whole market. Actually the technologies of the Indian brands are not as good as are alleged. Their process for engine iron is inferior for one. One of the characteristics in India is that their domestic and export markets are dominated by just 5 big brands and there is not enough competition between them. In addition to this the competition has reached a certain level which has become a kind of benign competition between the different brands and companies through the improvement of design, performance and market requirements whereas most Chinese motorcycle manufacturers choose only to compete in price competition.
Indian brands have developed some very successful markets including Colombia as I have mentioned and most of their success is down to the employment of top level distributors. The marketing strategy for these distributors is very important and they have worked out some very persuasive selling points for Indian bikes as well as offering an excellent after-sales service. If the Chinese want to share or stem the Indian success they must also employ these kind of distributors and effect a policy of designing new products for the South American markets, by this I mean high displacement, high configuration and beautiful design.”
At a recent meeting of the Chongqing Motorcycle Exporters Council Brazilian motorcycle importer stationed in Chongqing remarked “my bosses are always on the look out for new models and it’s my job to source them. I travel to many factories and have been in Chongqing for 2 years but I know that my company is looking at a change in strategy. It now looks very likely that I will be going to have a look in India at opportunities there. The Japanese pretty much dominate Brazil, especially Honda, but Chinese motorcycles were beginning to make inroads in to the market although it’s quite difficult to get the correct COC without strict testing; unless the bike is under 50cc that is. Now I will maybe have to look at India for new models, there are not many factories there and the ones that are operating are huge and would think nothing of the investment necessary for producing a motorcycle model suitable for Brazil.”
Argentinean motorcycle importer Christian Reyes echoed this opinion. “There was a time when the poor people bought Chinese motorcycles and the better off people bought Japanese. Now it could be the case that the poorer people might try Indian models. Because there are relatively few Indian factories it’s much easier to arrange and organise the parts supply chain for each model. We know that in Colombia this organisation has been done to great affect and I think it’s only a matter of time before Indian motorcycle dealerships spring up all over Latin America.”