Reviewing the Year of 2009
by Jiang Lei of CHINAMOTOR
Looking back the year of 2009, what was the focus of attention in the year?Are the leaders of enterprises the focus of attention in 2009? Many business leaders appeared in Chinese economic field, such as Liu Chuanzhi of Lenovo, Ma Yun of Alibaba, Wang Shi of Wanke, Li Shufu of Geely in 2009. Who was the leader of the Chinese motorcycle industry? Was he the Board Chairman of the Dachangjiang Group, which has the highest degree of brand concentration, Wang Dawei? Or is the President of the Zongshen Group Zuo Zongshen who actively entered the environment-friendly electric vehicle industry? Or the Senior Manager of the China Ordnance Equipment Group Corporation Chen Yongqiang who is busy integrating the several famous motorcycle brands of the Group? Or the Head of the Guangzhou Lingken Motorcycle Company, which experienced the fastest development in motorcycle exports, Liu Guojie?
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Key Enterprises?
Several Chinese enterprises undoubtedly make important steps in 2009
Zongshen is undoubtedly visionary in its strategy of taking electric vehicle industry as one of the focuses for its next step. Although many people are suspicious of the immature electric vehicle technology and the battery recycling, this is just a matter of tactics, which time will solve. You will lose the height of your brand in the future electric vehicle industry if you lose the strategic high ground. Enterprises, which are unwilling to invest in motorcycle industry by complaining that it is a sunset industry and dare not to try new energy electric vehicles, have been in a dilemma and missed development opportunities.
The era of electric vehicles is coming inevitably; it is a proof that global major automakers have already embarked on electric car manufacture. The attention-degree of Copenhagen climate summit and China national strategy's support for green energy and environmentally friendly industries confirm once again that green energy industries have already become the focus of this decade.
The China Ordnance Equipment Group Corporation integrated several major brands grandly. Jailing, Jianshe, Qingqi and Dayang etc are old brand representatives of China's motorcycle industry, each of which has its own characteristics, so the energy integration is a long-term project. Taking matching for example, Jialing and Jianshe, both situated in Chongqing, are relatively close to each other in matching system, while Qingqi and Dayang are in totally different matching systems, so it is difficult for integrated purchase. Production and sales are integrated according to geographical advantages, for example, scooters are manufactured in Qingqi. Theoretically, the product advantage of each brand will be maximized, but is it a progress or a backward when each enterprise shifts from complete product line to single product line? In addition, whether is it advantageous that different enterprise cultures conflict?
The China Ordnance Equipment Group Corporation faces such an .jpg)
enterprise proposition "whether can 1+1>2"?
Yuan Qinshan's Dayun made another masterpiece in 2009 by entering car manufacture field following some famous motorcycle enterprises such as Geely and Lifan. The State's support for car industry gives Dayun better opportunity although it is 12 years later for Dayun to enter the car industry than Geely. Dayun first entered automotive heavy truck and light truck field, different from the product lines of Geely and Lifan. It is undoubtedly a nice direction to choose the relatively less competitive light and heavy trucks in the case of the fierce competition of family cars. How to position products well and build main car models are the chief tasks for Dayun after it entered the car industry. It is far from enough for en enterprise to keep a foothold in the car manufacturing industry by solely depending on media. It is hard to tell which car enterprise is better as many of them have abundant funds. So soft-power competition should be the newest focus for Dayun.
Is It the Motorcycle Subsidy Programs in the Rural Areas of China?
As an important measure of stimulating the domestic demands, the motorcycle subsidy programs in the rural areas will undoubtedly bring benefits to the rural consumers, just like the household appliances subsidy programmes in the rural areas did. However, whether can the motorcycle subsidy programme promote the development of the Chinese motorcycle industry in the long term? Up to now, people have not found the answer. In today's motorcycle industry which has a high degree of brand concentration, the motorcycle enterprises that cannot take part in the subsidy programme will face even greater survival pressure. In recent years, the Chinese cities' ban or restriction on the use of motorcycle has greatly influenced motorcycle sales in most large cities and a great number of medium-sized cities in China. Motorcycles were forced to enter the rural markets several years ago. In China, motorcycle has almost departed from the lives of urban dwellers. But people's demands for a means of transport that between car and bicycle still exists, which is the main reason why electric bicycle is so popular in many Chinese cities.
Is It the Imminent Practice of the National III Standards?
Since July 1 of 2010, the emissions of three-wheel motorcycles and three-wheel mopeds must meet the requirements of the National III Standards; those that don't meet the requirements will be forced to stop manufacturing, selling and registering.
The implementation of 3C, market access requirements and the National II Standards did make many enterprises upgrade their software facilities and hardware facilities. However, can all the motorcycles on the Chinese markets meet the requirements of the National II Standards? Whether can the current spot checking meet the requirements of the test? In many places of China, there is no relevant testing equipment, so the motorcycles of these places cannot be checked. Similarly, can the imminent National III Standards be truly put into effect? The cost of each .jpg)
motorcycle testing machine for the National III Standards is RMB 150,000.
Can motorcycle enterprises afford such a huge amount of cost?
The Chinese government's goal of reducing emission by 40 percent which was made on the 2009 Copenhagen Climate Conference must be realised, because this is China's promise to the world. Therefore, it is undoubted that the National III Standards will be implemented forcibly, which will bring another round of motorcycle price rise.
Is It the Motorcycle Export in the Context of Economic Crisis?
Even without the economic crisis, there is still a crisis in the Chinese motorcycle's export. The inconsistency between the products for export and the products for domestic market leads to the low quality of Chinese exporting products which have a bad reputation. The increasingly falling export price and the razor-thin profits forced some motorcycle enterprises to reduce the configuration of the products and lowered the quality of the products.
In comparison, the Indian motorcycle enterprises experienced a fast development in the past several years. The stable quality and reasonable price of the Indian motorcycle products attracted a lot of buyers from Middle East and Africa.
Of course, this is not the whole story. The product quality of many old Chinese motorcycle brands, such as Jialing, Jianshe, Zongshen, Loncin, Qingqi, Dayang, Jincheng, and Qianjiang, are very good based on their scientific management and excellent tradition. Also, many other Chinese motorcycle brands, including Shineray, Huansong, Bashan, Xingyue, Wangye, Haojin, Tianma, Sanya, Sanlg, and Senke, have experienced a fast development in exploiting overseas markets and formed their self-owned advantageous brands in some local markets based on the consistency of their domestic products and the export products. For Example, Jincheng formed its self-owned advantageous brand in Nigeria just as Loncin did in Mexico, Qingqi in South America and Sanya in Togo and Benin of Africa.
The economic crisis undoubtedly dealt a heavy blow to the Zhejiang motorcycle enterprises that mainly produce scooters, ATVs and UTVs. But the Guangdong motorcycle enterprises, the main export markets of which are Africa and Middle East that were less influenced by the economic crisis, didn't experience a great decline in export. The sales decline of the Chongqing motorcycle enterprises was caused by the credit crisis of South America. But South America has already showed signs of recovery at the end of 2009. So we are waiting expectantly to see whether South America can fully recover in 2010.
Now, there is not a clear answer whether the economic crisis in Europe and the United States has bottomed out and whether the economy there is fully recovered. However, the purchasers of Chinese origin who returned from Russia proved that if the East Europe can release the credit, motorcycle sales will be sure to rebound in Russia and Ukraine. Many enterprises will still put in more efforts on the markets of Middle East and Africa in 2010 due to their easy access. But the enterprises which have already entered the African markets or are developing the African markets should be reminded that quality assurance is the foundation to enter Africa and get a sustainable development in Africa.
Just as Mr. Li Rongxi of Sanya claimed that, the Chinese motorcycle enterprises should work hard on developing both domestic markets and overseas markets with high-quality products. This is also the common aspiration of many insightful motorcycle entrepreneurs. If a company gave up the domestic market and chose to develop the overseas market and when the overseas market was attacked by the economic crisis, it returned to develop the domestic market, this company will never succeed.
The economic crisis made many people experience death and new birth. So it is believed to make more Chinese enterprises get mature in 2010 with no more turmoil and no more short-sighted decisions.
In the past 10 years, the economic globalisation brought the Chinese motorcycle enterprises to the world, while in the next 10 years, only high-quality products and famous brands can make Chinese motorcycle enterprise achieve more on the world market.
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