I. The General Information of the Chinese Motorcycle Industry
Three decades ago, the Chinese motorcycle industry was established by several state-owned enterprises, including Jialing, Jianshe, Jincheng, and Qingqi, which produced small displacement motorcycles for urban and rural residents as a means 
of transport with a small amount of money invested by the government. From 1985 to 1991, the annual output and sales volume had been hovering around 1 million units. After 1992, the Chinese motorcycle industry entered a 16-year period of rapid growth driven by the urban, rural, and overseas markets.
In 1997, the output and sales volume reached 9 million units. Subsequently, since medium and large cities began to ban or limit the use of motorcycle, the main markets of motorcycle shifted to the countryside. Entering the 21st Century, Chinese motorcycles began to be exported to overseas markets in large quantities. Since the mid-nineties, motorcycle has become an indispensable means of transport in the rural areas, driven by which, the production and sales volume of motorcycles reached 12 million units in 2002. In the following six years, the export volume experienced a growth of 30% each year, which brought along the Chinese motorcycle industry.
II. Motorcycle Export Faces Serious Challenges
According to the statistics released by the China Customs, the total export volume of motorcycle during the first 11 months of 2009 was 5,582,400 units, down 39.71% year-on-year; the export value was USD 2.583 billion, down 35.31% year-on-year.
The export volume of the most leading export-oriented enterprises except for a few ones like the Guangzhou Haojin all dropped significantly. The export volume of most of China's traditional export markets, except for Angola, all dropped significantly.
From the orders received by enterprises, we can see that the export of the whole industry is still in the doldrums. Although signs have shown the trend of recovery, the whole industry will still face a series of challenges.
First, the financial crisis leads to the reduction of national income in many countries, which greatly reduced their purchasing power. The majority ofChinese motorcycle enterprises' export destination countries, such as countries in Latin America and Southeast Asia, have been adopting installment payment plans based on the money-lending bank's credit consumption support. The financial crisis has almost hurt all of the money-lending banks, which led to the tightening of credit. Therefore, Chinese motorcycles' major exporting markets, including the Europe, the United States, Latin America, and Southeast Asia, have all been hit.
Second, in recent years, Indian motorcycle enterprises, represented by Bajaj, have been seizing Chinese motorcycle enterprises' major export markets, such as Nigeria, Colombia, Indonesia, etc, based on their advantages of cost, currency devaluation against the U.S. dollar and the financial support from Indian banks.
Third, China's export-oriented enterprises seem cannot adapt to thechanges on the market. Most of theChinese motorcycle enterprises have notestablished their own overseas marketingnetworks, so they mainly rely on foreignimporters. About 80% of Chinese exportproducts are OEM; Chinese motorcycleenterprises have few products that haveindependent intellectual property rightsrequired by competitive differentiation.Moreover, the Chinese motorcycleenterprises are slow in adapting theirproducts, in terms of performancesand structure, to the local markets andgetting certified by the local government.
Fourth, in the context of financial crisis, the Chinese export-oriented enterprises cannot get enough financial support from the Bank of China and China Export & Credit Insurance Corporation. Therefore, it is hard for individual export enterprise to cope with the current high risk in export earnings and the fluctuations in exchange rate; accordingly, they may lose some opportunities of transactions.
III. The Characteristic Development of the Chinese Motorcycle Industry
After three decades of development, the production and sales of the Chinese motorcycle industry, with its distinct features, have been the number one in the world for 14 consecutive years.
1. The Transformation of Market Structure
The market of Chinese motorcycle enterprises has transformed from a single domestic market to both domestic and overseas markets. In 2008, Chinese motorcycle products were exported to 195 countries and regions in the world; the export volumes reached over 10 million units for the first time, an increase of 8.95% year-on-year, which accounted for 41.16% of the total sales volume; the export volume has been the number one in the world for 9 consecutive years; the export value of motorcycles was USD 4.546 billion, up 24.43% year-on-year; the export value of all motorcycle products, including motorcycle, engine, ATV and spare parts, was 6.94 USD billion, up 20% year-on-year. Overseas markets have become an important part of the development of the Chinese motorcycle industry. The Chongqing Loncin company is a good example in marketdevelopment both at home and abroad. Despite the economicdownturn in 2009, Loncin achieved a brilliant success bothin domestic sales and exports with its comprehensive rankingNo.2 in the industry and its export ranking top among Chinesemotorcycle enterprises. What policy tided Loncin through theeconomic difficulties?
Since this year, Loncin adheres to the user-oriented strategy and new product development strategy on the basis of its actual situations, and fully takes the advantages of its brand advantage and excellent product quality to develop and upgrade the market, which helps to realize a continuous increase in production and sales. Facing the fierce competition on markets, Loncin adheres to the user-oriented strategy and the strategy of new product development on the one hand, which led to the introduction of some popular racing products, and put more efforts on enhancing the corporate image and improving product quality and reputation on the other hand. Moreover, in order to improve the product quality and customers' degree of satisfaction, Loncin carries out a series of activities among its employees, which not only enhanced the product quality but also increased the confidence of Loncin's dealers. 
While Loncin is making efforts to develop the domestic market, it is also taking effective measures to vigorously explore the international market and strive to seek new economic growth point. Its sales staff was working hard to collect information through various channels and did everything possible to get orders. Meanwhile, Loncin adhered to exploiting and upgrading the market based on its brand advantage and excellent product quality. Besides these, it has been recommending its products to customers through emails. Therefore, even in the 'cold winter' for motorcycle industry, Loncin still received good results in those severely afflicted areas by the financial crisis. Though the export volume of Loncin to America and Europe declined, its market share in these areas increased.
2. The Implementation of the Independent Brand Strategy
The Chinese motorcycle industry was transforming from OEM-dominated operation to an integrated situation of OEM, ODM and independent brands. Those foreign-invested enterprises, like Dachangjiang, Wuyang Honda, Xindazhou Honda, mainly export OEM products; while some leading domestic-funded enterprises, such as Loncin and Qingqi, export a great deal of products through ODM operation; and there are some other domestic-funded enterprises, like Jincheng and Qianjiang, which have already developed their independent brands and mainly export their own products. The export of independent brands has already occupied 20% of that of the total industry. A few famous domestic brands even won popularity on overseas markets, such as Jincheng in Nigeria and other independent brands like Jianshe, Jialing, Qianjiang and Qingqi on some certain overseas markets. Jincheng is the pride of the national brands in the Chinese motorcycle industry. Starting its business in aviation, Jincheng began to involve in the motorcycle manufacturing in 1978. Jincheng believes that quality is the first thing. Thefirst education that Jincheng's each employee gets is aboutquality. Jincheng's most popular exporting product the AX100motorcycle became the AQSIA's inspection-free product in2006, which was the best reward for Jincheng people's manyyears of hard work.
The quality of products has to be checked on the racetrack. As the only one domestic motorcycle manufacturer thatparticipates in the Dakar Rally, Jincheng believes that goodmotorcycles should be on the race track. Up to now, Jincheng has enrolled for the Dakar Rally, the world's most difficult event, for three consecutive years. Jincheng believes that the striving spirit, the passion, and the enterprising spirit of Dakar Rally are highly consistent with the connotation of Jincheng's pursuit of high-quality products.
Jincheng's dedication to the independent brand strikes out a line for itself among the Chinese enterprises. In Nigeria, Jincheng is a famous brand which has been the No.1 in sales volume on the local market for many years. In Nigeria, Jincheng AX100 maintains the monopoly status among its similar products. In April 2005, the Nigerian President Olusegun Obasanjo visited China and offered to meet the Board Chairman of Jincheng Group, which became a much-told story in the Chinese motorcycle industry. In the same year, the Jincheng Group, based on its two medium and high-end motorcycle models that have independent intellectual property rights 'Jincheng JC250-6 Prince' and 'JC150T-A Opel', successfully entered the European markets, becoming the firstdomestic motorcycle enterprise that entered the Europeanmarkets based on its independent brands. The price of the two models on the European market is up to over 1000 Euros per unit. So far, Jincheng Group is the only motorcycle producer whose export of independent brand accounts for 95% of its total exports in the Chinese motorcycle industry.
3. Old Enterprise, New Outlook
Qingqi is a well-known brand in the Chinese motorcycle industry. When it produced the first batch of motorcycles in China, its name was destined to be connected with the motorcycle industry. Recently, Qingqi was once again under the spotlight. On 'the 2009 Chongqing Motorcycle Expo', Qingqi not only appeared side by side with the several big brands of the China Ordnance Equipment Group Corporation, but also flashed about at a press conference with the former President and the current CEO of the French Peugeot Daniel Riviere and Pierre-Louis Colin, his cooperative partner.
As one of the world's top 500 enterprises, motorcycle enterprises of the China Ordnance Equipment Group Corporation constantly recombined the strong resources of motorcycle industry, occupying a decisive position in the Chinese motorcycle industry. In December 2006, COEGC took over Jinan Qingqi. French Peugeot, with its long history, advanced technology and high quality, is also one of the world's top 500 enterprises. It is on a par with BMW and Harley-Davidson and other old-line motorcycle manufacturers. At present, Peugeot motorcycles are sold in over 60 countries, but its main markets are still in Europe. So, Peugeot motorcycle has been seeking cooperative partners that are suitable for its global development strategy. In the end, they chose Jinan Qingqi as its partner.
Qingqi formed its unique technical advantages during the 45 years of ups and downs. Qingqi is the only one enterprise in the industry that has two major technical resources in the world, Suzuki and Peugeot. Based on the advanced technologies borrowed from Japan and Europe, Jinan Qingqi established itself as a leading enterprise both in popular products and in entertainment products. It also formed its core technology of GS125 and scooter power system, which are in the leading level in the industry and a sound basis for Qingqi's brand enhancement. Being purchased by the China Ordnance Equipment Group Corporation and forming a cooperative relationship with Peugeot greatly increased the brand influence of Qingqi. With the construction of the new industrial park, Jinan Qingqi will accelerate its development toward a high-end professional motorcycle manufacturer which boasts the advanced technology, reasonable layout, scientific logistics, and lean production.
The development of an old enterprise relies on its desire for development, its pursuit to constantly perfect itself and its great ambition to revitalize the Chinese motorcycle industry.
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4. Cultural Elements
The product technologies of the Chinese motorcycle have experienced a process from simply copying to learning new technologies and jointly designing as well as developing independently. Meanwhile, some Chinese motorcycle makers began to create a brand feature of their own and tried to add the cultural elements into their products. The Shineray motorcycle, which was established in the Chinese motorcycle capital Chongqing, soon rose on the markets with its unique dirt bike development road after its establishment. It has its own racing bike clubs and professional racing circuit. Its rise made people revere and believe that motorcycle can carry culture in China. The Chongqing Shineray Motorcycle Co., Ltd is established in 1997; it belongs to the East Shineray Holding Co., Ltd. It headquarters in Chongqing. Its production bases are in Chongqing of China and Vientiane of Laos; its international motorcycle racing team is in Brussels of Belgium. 'Shineray' is a famous brand in China; it's a new and high technology enterprise in China. It has state level labs. 
Shineray sticks to the new industrial road, takes the 'creating the leading Chinese dirt bike brand' asits strategic orientation, holds the newviews of healthy life---'Sport is right',deals with the R & D, manufacturing,marketing, stationary development ofthe cross country motorcycles, which iscalled the 'the sports for brave people',and also engages in the organising ofcross country events. Shineray hasa cross country racing team whichis the only cross country team thatrepresents China in the World Cross
Country Championships, the Shineray International Cross Country Racing Team. Shineray also holds the highest level people's motorcycle cross country grand prix in China every year. Shineray has independent R & D systems and has many independently owned intellectual properties including over 100 national patents in the field of cross country motorcycle. The technologies of its below 250cc cross country motorcycles are up to the world's advanced technologies; the output and sales of its dirt bikes are leading in China.
Shineray built the first innovative industrial park in China in September of 2007---the first industrial park that has its own international motorcycle cross country circuit among the Chinese motorcycle makers. It made its debut to the Chinese riders and the media by holding the 'Shineray Cup First National Amateur Motorcycle Cross Country Championship'.
Its purpose was to declare to the world by holding the game that motorcycle sport can be a culture and motorcycle is also a luxury. In the future, this circuit will be made into a comprehensive base which will include motorcycle manufacturing platform, dirt bike riding and experiencing centre, rider training base, cross country circuit, new dirt bike testing base, and overseas communication as an important part of the 'cross country theme park'. Shineray will form an innovative industrial operation mode which will combine dirt bike network sales, personalized order, circuit test, rider training, cross country riding skills training, and business activities into one so as to constantly rich and develop the motorcycle innovative industry, popularise the motorcycle sports culture, continuously release the motorcycle sports enthusiasm, build a beautiful spiritual home for all people on the motorcycle value chain, and try to achieve its strategic goal of 'establishing the leading Chinese dirt bike brand'. After twelve year's development, Shineray has been recognized by the public as a leading motorcycle maker in the field of cross country motorcycle and in the field of motorcycle cultural sports.
5. Developing with Differentiation
Along-last disadvantage of the Chinese motorcycle products is homogeneity. In developing new products, motorcycle enterprises' enthusiasm of copying the bestsellers is far more than that of independent development. But there are some enterprises which have been dedicating to their own products and have won the market by taking the road of differentiation.There is a saying in the Chinese motorcycle industry, 'the best scooters of China are in Taizhou, and the best scooter of Taizhou is made by Wangye.' Obviously, scooter has already become the name card of Wangye.
Started with the power business, Wangye's successful experience has its uniqueness. Wangye's research and development group has spent two years in analysing the power system and finally solved seven technical barriers, including the removal of noises in the cylinder head, crankshaft, engaged wheel, motor, straps, driven wheel and driving system. At the same time, Wangye has also realized the power target and the economical target by adopting the world advanced technology that is unique in China. Meanwhile, Wangye also prolonged the life-span of engine. By then, Wangye has already closelyconnected to 'power'.
The excellent performance of Wangye's power products was guaranteed by a huge amount of investment in technical research. The Company has established an engine research centre which has three CAD/CAM machines, a motorcycle technical development center, a petrol engine developing centre, a testing lab that contains the testing machines suitable for all kinds of Wangye engines, dynamometer machines for
motorcycle sites and ASM emissions monitoring system, as well as nine factories that are respectively responsible for the motorcycle assembly, motorcycle frame, painting, motorcycle cable, motorcycle engine, electric motor, the assembly of general motor, the making of engine tank and cylinder head. Now, the annual output of Wangye has reached 350,000 engines and 200,000 motorcycles. Its products have been sold to over 10 countries, including the USA, South Korea, Mexico, Paraguay and etc, for their high quality.
After its power products have been affirmed by the industry, Wangye began to focus on the production of scooter. With constant innovation and study, Wangye scooter has reached the advanced level on the domestic market in terms of appearance, paint and the quality of engine. Wangye scooter was even called
'the fashionable motorcycle' by some people, which show the popularity of Wangye scooter products on the markets.
Only if more and more Chinese motorcycle enterprises find their own way of differentiation can the Chinese motorcycle industry get rid of the bad image of copying each other, low product quality and low price.
6. The Small & Medium Displacement — Self Independent & Self Sufficient
The engines and all key parts of the exporting Chinese motorcycles are all made in China apart from that of the large displacement motorcycles (above 400cc displacement) after thirty years development of the Chinese motorcycle industry. So to speak, China has mastered the core technologies of the medium and small displacement motorcycles and is not constrained technically by overseas companies.There is an especially eye-catching black horse among the Chinese medium and small displacement motorcycle producers--- Guangzhou Haojin. How did it become an enterprise the exports of which increased the fastest under the 2009 economic climate?
Products Strategy--- Integration
Marketing strategy is the foundation of tactics strategy; the essence of marketing strategy is to evaluate the targeted market and products. Whether choosing targeted markets or the market orientation, we should be clear that: any brand can only meet the needs of a certain group of people, and these needs can form a promising market. But Haojin's products are various after a dozen of years development. In terms of motorcycle models, it has scooters, street bikes; in terms of displacement, its products range from 70cc motorcycles to 250cc motorcycles; there are altogether 36 brands under Haojin. So, how to integrate? Which vehicle model can represent Haojin on the market? Street bike or scooter? Which displacement should be the major displacement? And how about their prices?
Haojin made the product strategy of 'all around developing and key product developing' by a thorough research on major competitive brands and the domestic as well as overseas markets. Haojin motorcycle intends to convey the traditional features and advantages of the Chinese medium and high class motorcycles; Haojin intends to reflect its unique and different brand features to form special cost performance; and keeps its service and quality promises for its consumers. Haojin wins the market mostly by its medium displacement four stroke engine motorcycles along with the high-end and low-end products. Haojin will create a brand combination which can represent the features of motorcycles made in Guangdong on the basis of medium class practical motorcycles and takes high class motorcycles as its future models. Haojin will form a motorcycle type combination of various models and colors so as to keep a high level of free choice.Promotion Strategy--- Outstanding Performance
Haojin is successful in product integration and orientation; it is also very constructive and insightful in its promotion strategy and innovation mode:
Haojin launched the 'beautiful color, Haojin motorcycle' rainbow chapter theme advertisement in February 2002 and asked a famous actress from Taiwan to be the representative person for Haojin motorcycle. This was the first time in over 40 years in the Chinese motorcycle industry that an actress was asked to represent for a motorcycle brand.
At the time when Haojin's new product (male street bike) was launched between April 2002 and August 2002, Haojin seized the great opportunity of the 2002 Korea Japan World Cup and became the special sponsor for the China football team. Haojin carried out a series of advertisements; its products and enterprise image were promoted at the same time, so Haojin's market share was greatly expanded and its popularity was also greatly improved.
Haojin spent a fortune to ask the super football stars Ronaldo Luis Nazario de Lima and Rivaldo to represent Haojin motorcycle in February 2003. This act greatly improved Haojin's popularity again and laid a solid foundation for Haojin products to enter the world markets including the European, American, Middle Eastern and South East Asian markets.
Haojin took a successful road of itself by constantly perfecting its medium and low displacement motorcycle products and timely launching marketing and promotion strategies.
7. Large Displacement—From Dream to Reality
The large displacement motorcycles have always been a distant dream for the Chinese enterprises, but this high-input and high-output industry has seen its progress in China. These ambitious enterprises including Jialing, Jianshe and Loncin are now developing above 400cc motorcycles and engines either by independent developing or by cooperating with international institutions. The good performance of the Jialing 600 and Huansong's big displacement ATV encourage more motorcycle enterprises to put in efforts in this field. But here, the writer wishes to mention a private motorcycle enterprise: the Xingyue Group. Although Xingyue's foundation is not as strong as those of the state-owned enterprises, Xingyue has made a solid step towards the large displacement technology:The Chinese motorcycle industry was in a gloomy state from 2003 to 2007 because of lacking core technologies andlow product added value. At that time Xingyue's minimummotorcycle output was only less than a hundred units, it wasin difficulty. What should be done? Along with many people'sconfusion, Hu Jirong, the President of Xingyue Group declaredthat the Xingyue's entering an adjustment phase and invested agreat sum of money in developing large displacement enginesand motorcycles which are competitive internationally so as toimprove products' technical content.
The Chinese motorcycle enterprises are dreaming of developing large displacement motorcycles, but it also takes great courage to enter this field. Due to China's regulations, the large displacement motorcycles are not street legal. A Chinese enterprise must be prepared to deal with the financial and technical difficulties if it wants to enter the large displacement engine field as only several overseas big motorcycle makers have mastered the advanced large displacement engine technologies. But Xingyue chose to meet these difficulties.
The Xingyue R & D Centre shouldered most of the motorcycle engine and complete motorcycle design responsibilities. Li Bojun, head of this centre, expressed that Xingyue spent over RMB 60 million in R & D, which broke its record in expenditure, during its four years of gloomy state and developed over 20 types of large displacement motorcycles of which Xingyue has independent intellectual properties. It successfully developed the 'Xingyue No. 6' fuel efficient motorcycle engine which consumes only 1.29 litres petrol per 100 kilometres; its emission standards reached that of the Euro II. The gradual mature power technology provided great help for Xingyue's new round of self-innovation. Xingyue first launched the high added value 400cc motorcycle, which became popular on the European and American markets instantly, in the latter half of 2007.
Japanese motorcycle enterprises have been monopolising the large displacement motorcycles on the European and American markets. Xingyue entered the large displacement field all alone, but Xingyue decided that the large displacement motorcycle is its differential way of development. The 300cc, 500cc and 800cc motorcycles which Xingyue are now being developed will inherit Xingyue's characteristics--- all core parts including engine are all independently produced by Xingyue.
These leading Chinese motorcycle producers have all taken a developing road suits for themselves in accordance with their reality by seizing market opportunities. Every new attempt of theirs is a valuable treasure for the Chinese motorcycle industry in the process of developing.
IV. The Future of the Chinese Motorcycle Industry
The output and sales of the Chinese motorcycle industry have been the world's No.1 for fourteen consecutive years after thirty years of development. The medium and small displacement power technologies of the Chinese enterprises have gradually getting mature, at least up to the standards of that of the international advanced technologies. In terms of large displacement products, their progress is obvious.
The advantages of the cost performance of the Chinese products will exist for a long time; people from the mass developing countries are in need of motorcycles, and there's a great market potential. The global motorcycle market will recover as soon as the global financial crisis is gone and the global economy turns up. Nobody would ever thought that Nigeria of Africa would become the biggest importer of Chinese products five years ago; over 1.2 million units of Chinese motorcycles are exported to Nigeria each year; it's impossible to image that the Angolans market increased dramatically under the financial crisis last year.
In fact China's rapid growth in motorcycle exports in the last ten years was brought about by China's constant development of medium and small markets in developing countries. China hasn't really entered the high-end European, American and Japanese markets by now. China hasn't taken over any market shares occupied by the Japanese and Taiwanese enterprises; but this is our opportunity. In order to enter the markets of developed countries, China's key motorcycle enterprises including Qianjiang, Qingqi did a lot of work on products development, network construction and the establishment of independent brands in the past few years and achieved some results. The current difficulty is only temporary; we should be confident and do well in adjusting structures while maintaining growth; and continue to work on development to prosper the overseas business of the Chinese motorcycle industry; it's possible to achieve an annual growth of around ten percent in exports in the future five to ten years.
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