China vs. Japan
Report by David McMullan (the Englishman in China) Chief Editor of China Motor Magazine
The ancient rivalry between China and Japan has manifested itself in the motorcycle industry. Since the beginnings of Asian trade these business giants have stood toe to toe in mercantile conflict. From the early development of the silk and silver trade to the current scramble for high-tech supremacy these far eastern nations have endeavoured to better each other. In modern times nowhere has this been more evident than in the motorcycle industry.
When serious Chinese motorcycle production began in the mid-eighties there was little indication that their industry would grow to rival that of their island neighbours let alone surpass it in terms of numbers produced. The early Chinese motorcycle industry had its genesis based firmly in the military and produced motorcycles purely for the domestic market. At that time there was little cause for concern among Japan?s ?big 4? who had successfully continued to dominate the world commuter motorcycle market; nearly 30 years later things have changed markedly.
While Japanese dominance holds firm for now in Europe, Oceania and North America, Chinese motorcycles prevail in most of Latin America and Africa with new battlefields emerging in Brazil, Thailand, India, Vietnam, Indonesia and Malaysia to name but a few. Earlier this year Japan?s devastating earthquake and tsunami severely hindered their motorcycle industry and gave an opportunity to Chinese companies to take the initiative in the competitive markets; much to the chagrin of the Japanese! Xiang Min, export manager of the Kington motorcycle factory in Chongqing, China explained ?we had nothing but sympathy for the Japanese people during those times, especially as we ourselves have been subject to major disasters this decade. But business is evolution, the survival of the fittest and we knew the markets we wanted to enter forcefully to compete with Japan. We also knew they would not be pleased?
China?s motorcycle companies? recent aggressive move in to Vietnam has been countered by the Japanese giants; in particular Yamaha who, according to a recent report by the Vietnam Economic Times, have declared their intention to expand their output in Vietnam. They are planning a 2013 investment of JNY 2 billion in order to expand their Hanoi plant capacity by 50% (1.5 million units per year). Not satisfied with fighting on one front Yamaha have also announced plans to combat the growing Chinese influence in India by investing a further JNY 5 billion to build a new factory there; this will affectively double their annual Indian output capacity to 1 million units.
This muscle flexing from Yamaha is almost certainly due to a marketing reaction caused by their performance report for the 2nd quarter of 2011. Released in early August the report states that due to the natural disasters and the continuing appreciation of the Yen Yamaha?s motorcycle profit saw a drop of 5% selling 1.78 million units (18700 units down year on year). Nowhere was their profit drop bigger that in Europe where they declared a drop of 22%; Chinese motorcycle export to Europe has grown by 9% this year.
The Philippines has long been a country whose motorcycle market has been fought over by China and Japan. A few years ago I was amazed to witness the test ride of a Chinese made 1400cc cruiser destined for the Philippine market. The Philippines has a strong (maybe US influenced) motorcycle culture and the Japanese giants only really faced competition from Harley until relatively recently. In the last two years the Chinese push on to the Philippine market has been relentless, causing TOYOTA of all companies to enter the fray. According to a report in the Philippines Star on the 20th July the Philippines Board of Investment approved a 2.46 billion peso expansion plan designed to enlarge the annual output of the motorcycle plant in the First Philippine Industrial Park in Batangas. This investment will increase the plants output capacity from 400,000 to 600,000 units and will create a further 507 jobs. Expansion is due to begin in April 2012.
It is no secret that the Chinese motorcycle industry?s inexorable march to becoming the biggest producer of two-wheeled vehicles in the world has been aided by their ability to ?clone? Japanese machines and sell them at a much cheaper price than the originals. Although these days are not yet entirely gone it is evident that the larger Chinese companies are investing their profits in advanced research and development projects in an attempt to provide viable competition to the Japanese on ?western? markets. This is not to say that the rival ?giants? do not still clash over intellectual property rights.
On the 10th of August the Chongqing Foreign Economic Relations and Trade Commission revealed to China Motor Magazine that Chongqing Loncin and Honda had reached a compromise over an intellectual property rights dispute. Honda had conducted a 7 year law suit and investigation alleging that Loncin and its South African client Hoffman Company had violated rights over use of their GX160 engines and patents. According to the Chongqing Economic Relations and Trade Commission the two parties have reached a compromise agreement with Honda agreeing that it was okay for Hoffman to continue to sell Loncin?s machines and that they ?would no longer accuse Loncin of patent and intellectual property rights violation in Africa.?
A spokesman for Loncin added that they couldn?t reveal any information regarding this compromise agreement as confidentiality was agreed by both parties, but that it would be good for the sales of Loncin?s general machines in Africa and also for their expansion in to Europe and the USA.
But for all this vying for world domination their remains a large amount of cooperation between the rivals. All 4 Japanese giants are involved in collaborations with Chinese motorcycle companies primarily to secure a percentage of the sales of the huge Chinese domestic motorcycle market. Add to this the strange turn of events at Wuyang, a Chinese motorcycle company with close ties to Honda. At 10 AM on the 4th of August the first 50cc ?business? scooter (the ?Benly? meaning useful or handy) rolled off of the production line. It?s export destination? Japan! This historic event was witnessed by representatives from Honda Shanghai, Honda Guangzhou, Wuyang Honda and experts from the Honda Technical Research Centre in Japan.
In a further collaboration (this time with Shanghai?s ?Sundiro? company) Honda have completed a CKD packaging line of 38.5 by 1.5 metres. Its output capacity is 600 units a day which will be exported to Colombia, Argentina, Peru and Nigeria.
Maybe a case of ?if you can?t beat ?em join ?em!?
A Brief Analysis on the Output, Sales, & Export of the Chinese Motorcycle Industry in July 2011
According to a survey on the export situation of 91 Chinese motorcycle producers conducted by the China Association of Automobile Manufacturers motorcycle output and sales in July enjoyed an increase year on year. Motorcycle output and sales both exceeded 15 million units from January to July.
The output and sales of the Chinese motorcycle industry in July were 2.2076 million units and 2.1783 million units respectively, up 11.32% and 10.65% year-on-year respectively. Of these, the output and sales of two-wheeled motorcycles were 2.0222 million units and 1.9939 million units, up 11.34% and 10.23% from a year earlier. The output and sales of motor-tricycles were 185,500 units and 184,500 units up 11.14% and 15.36% as compared with last year.
A total number of 15.3465 million units of motorcycles were produced and sold from January to July 2011, down 8.84% year on year. The output and sales of motor-tricycles were 1.3532 million units, up 10.5% from a year earlier.
Export Ranking of the Five Major Displacement Motorcycles in July
The exports of 125 series (110ml?displacement?125ml), 150 series (125ml?displacement?150ml), 110 series (100ml?displacement?110ml), 50 series (displacement?50ml), and 100 series (90ml?displacement?100ml) motorcycles in July of 2011 were 371,400 units, 230,300 units, 141,900 units, 110,600 units and 95,000 units respectively, a slight decrease month on month. The total exports of the above five major displacement motorcycles in July were 949,200 units, accounting for 90% of the total motorcycle exports in July.
A Brief Analysis of the Output & Sales of Chinese Motorcycle Makers in July
Among all two-wheeled motorcycle models in July of 2011, the output and sales of street bikes were 1.2748 million units and 1.2784 million units respectively, up 9.25% year-on-year. The output and sales of cubs were 474,600 units and 456,000 units respectively, up 19.78% on last year. The output and sales of scooters were 272,700 units and 259,500 units respectively up 32.73% and 22.67% from a year earlier.
Among all three-wheeled motorcycle models in July 2011, the output and sales of motor-tricycles took up the majority with 184,900 units sold, down 12.23% up 15.67% from a year ago. Of these, the output and sales of ordinary freight motor-tricycles were 105,100 units and 105,900 units respectively, accounting for 56.86% and 57.58% of the output and sales of motor-tricycles. The output and sales of passenger motor-tricycles were 79,100 units and 77,400 units respectively, taking up 42.80% and 42.07% of the total motor-tricycle output and sales.
Export Ranking of Five Major Displacement Motorcycles from January to July
The top five major displacement motorcycles in terms of exports from January to July of 2011 are as follows: 125 series, 150 series, 50 series, 110 series and 100 series, with their respective exports of 2.1410 million units, 1.1430 million units, 754,200 units, 752,600 units and 653,900 units, up 29.23%, 36.15%, 40.56%, 23.28%, and 15.24% year-on-year respectively. The total numbers of the above five major displacement motorcycles exported from January to July were 5.4447 million units, 91% of the total number of motorcycles exported.
A Brief Analysis of the Output & Sales of Major Displacement Motorcycles from January to July
According to statistics provided by the China Association of Automobile Manufacturers, among all the two-wheeled motorcycle models, the output and sales of street motorcycles were 8.8697 million units and 8.8649 million units respectively from January to July of 2011, down 7.40% and 4.01% from a year earlier. The output and sales of 125 series, 150 series and 50 series motorcycles ranked top three, with the 50 series motorcycles enjoying the fastest growth. The total numbers of the above three models made and sold from January to July were 7.4897 million units and 7.4931 million units respectively, accounting for 84.44% and 84.53% of the total output and sales of street bikes.
The output and sales of cubs from January to July were 3.1544 million units and 3.1928 million units respectively, down 11.57% and 8.95% year-on-year respectively, The output and sales of scooters were 1.9629 million units and 1.9497 million units from January to July, down 12.61% and 11.74% year-on-year respectively, of which the 125 series, 50 series and 100 series were top three models in terms of output and sales decline, the 100 series enjoyed a slight increase in output and sales. Among all three-wheeled motorcycle models, the output and sales of ordinary freight motor-tricycles were 792,400 units and 783,800 units respectively from January to July, up 13.88% and 13.12% year-on-year. The output and sales of freight motor-tricycles with displacements ranging between 100ml? and ?150ml were 542,500 units and 543,000 units respectively, taking up 68.47% and 69.28% of the total freight motor-tricycle output and sales. The output and sales of the ordinary passenger motor-tricycles were 555,400 units and 550,200 units respectively, up 41.30% and 41.73% from a year earlier. The output and sales of passenger motor-tricycles with displacements ranging between 100ml? and ?150ml were 350,700 units and 350,400 units respectively, accounting for 63.14% and 63.69% of the total passenger motor-tricycle output and sales.
Export Value Ranking of Five Major Motorcycle Models in July 2011
The top five motorcycle models in terms of export value in July of 2011 were 125 series, 150 series, 110 series, 50 series and 100 series, the export value of which were USD 179 million, USD 120million, USD 63 million, USD 44million, and USD 36 million. The total export value of the above five motorcycle models was USD 442 million in July, accounting for 87 percent of the total motorcycle export value.
Export Value Ranking of Five Major Motorcycle Models from Jan to Jul of 2011
The top five motorcycle models in terms of export value from January to July of 2011 were as follows: 125 series, 150 series, 50 series, 110 series and 100 series, the export value of which were USD 1.02 billion, USD 581million, USD 318 million, USD 312million, and USD 242 million respectively, up 32.24 percent, 41.70 percent, 22.27 percent, 31.49 percent and 23.09 percent year-on-year respectively. The total export value of the above five motorcycle models was USD 2.473 billion in the first seven months, accounting for 88 percent of the total motorcycle export value.