Loaction: Home > Special Reports

Confidence is As Valuable As Gold in 2010 Author: Dolly and Gorden of CHINAMOTOR - Source:CHINAMOTOR     Font size: A A A The year of 2010 is a new starting point for motorcycle enterprises in which they will face the challenges from market transition, product upgrade as well as fierce competition. Accompanied by uncertainties and changes, the Chinese motorcycle industry will develop during the changing process and advance with pain. The whole motorcycle industry still faces a difficult external environment with changeable industrial policies. In terms of motorcycle enterprises, the superior enterprises will get an opportunity of fast development and promotion; the inferior enterprises still need to hang in there, while enterprises with a declining tendency need to change in order to survive. They have the same opportunities but different destinies. The economic crisis gives enterprises the confidence for their development while bringing destruction to them at the same time.   Grim Economic Situation with Unfavourable Policies 2009 was a year of policy readjustment under the climate of the financial crisis, during which the Chinese government provided a huge amount of financial support and issued a series of policies aiming at stimulating investment and consumption in some important fields and key industries. However, the motorcycle industry still didn’t get blessing in the current policy mix, not to mention financial support. Even 'the government subsidy program for the purchase of motorcycles in rural areas' and the adjustment of export rebate rate in 2009 were policies that got some extra profits by sharing the benefits of the relative policies aiming at other industries. There is still uncertainty for the release of the consumption tax reduction & exemption policy this year due to the influence of many factors. As a branch of the manufacturing industry, the motorcycle industry has always been underappreciated by the Chinese government. Therefore, it can be expected that the Chinese motorcycle industry will still face an unpromising policy environment in 2010, especially when the government is planning to adjust the standards on electric bicycles. But even though, the Chinese motorcycle industry has today's achievements even in such unfavourable environmental conditions since long. So it should drop its illusion on the national policy environment and mind its business steadily and surely. The Chinese motorcycle industry should take advantage of the stable macro-economic environment at home in the coming year and grasp the opportunity of global economic recovery to consolidate and expand the domestic market by putting more efforts on product R & D, quality as well as after-sales service.   The Product Transformation is Inevitable with a Changing Consumption Structure The Chinese motorcycle industry is becoming mature after years of development. This can be seen in the constant improvement in the motorcycle products' quality, the improving management concept of motorcycle enterprises and the gradually mature and rational consumer groups. The motorcycle industry has experienced an extensive mode of development out of nothing; motorcycle enterprises have made a great progress in both size and number. Consumption patterns have changed a lot now with the fast development of social economy and the increasing maturity of consumers. It has the following characteristics: first, the brand-name products and high-quality consumption dominate the market. Motorcycle enterprises' concentration degree is becoming higher and higher; joint-venture brands and mainstream domestic brands have more and more obvious advantages on the market and their market share increases continually. Brand-name products, quality service, and rational consumption will dominate the consumption trend on the market in 2010 and in the future. Second, the mainstream consumption groups have been changing. The consumption groups that resort to motorcycle products for sport, culture and entertainment gradually dominate the market. Of those consumption groups, the youngsters born in 1980s or 1990s, who emphasise brand awareness, product quality, after-sale service and other factors which can better embody the product value and status, become the main consumption subject. Their requirements on products and brands include not only quality, service, and reputation but also energy, dynamic and entertainment of the brand. These burgeoning consumption groups buy motorcycles out of spiritual needs, such as travelling, entertainment and sports more than out of the needs for transportation or making a living. Therefore, the transformation and upgrade of motorcycle consumption is not only a challenge but also an opportunity for motorcycle enterprises. Enterprises need to probe deeply into the consumption groups and launch products and services that can meet the requirements of customers under new situations; win the market and get progress by adapting to the changes in consumption groups, transforming the product position and form, and persisting in the value concept.   The National III Standards Boost Product Upgrade, But Its Enforcement Faces Difficulty After an intense discussion on the just-concluded Copenhagen Climate Talks, the countries of the world formed a common view on global warming and the great pressure on reducing emissions. At the beginning of the Copenhagen Climate Talks, China declared that China would reduce the emissions by 40 percent to 45 percent per GDP in 2020 in comparison with that of 2005. So, China's pressure from emission reduction and its determination in the future ten years is evident. Though the enforcement of the National III Standards has been delayed, it is inevitable that the Standards will be implemented as scheduled in 2010 considering the current severe emission-reducing situation. By then, the Standards will have an unprecedented influence on the domestic motorcycle industry. On the one hand, the implementation of the Standards will destroy some weak enterprises that have weak technology and small production scale in the motorcycle industry, leading to the differentiation and recombination in the whole industry. On the other hand, those strong and large-scale enterprises in the industry have to drop the outdated technology and compete for development; they will have to adopt the EFI technology that meets the requirements of the Standards. Therefore, the implementation of the Standards will drive motorcycle enterprises to improve their technology and upgrade their products, so it is favourable to the healthy development of the whole industry. Meanwhile, the Chinese motorcycle enterprises have to meet the requirements of the much harsher emission standards in the developed countries of Europe and America if they want to increase their exports. So, the Chinese motorcycle enterprises have to put more efforts on technology R&D and product upgrade in order to enter the high-end markets of these countries. The introduction and implementation of the National III Standards are the urgent needs of environment protection and emission reduction; it raises the technical threshold in the industry at the same time, so those inferior enterprises will be washed out. However, the National III Standards may become a game that everyone can successfully finish according to the implementation effects of the previous policies. It is up to the enforcement force of the relative departments.   Regrouping is Accelerated in the Industry; Pattern of the Industry is Changing Though the economic crisis came as a strike for the social economy, it's also an opportunity for some strong enterprises which can become more powerful through purchasing, recombination and integration. At the same time, those enterprises can build a strong body, cut the expenditures, and increase efficiency by restructuring the internal structure, controlling the cost and upgrading the technology. As for the motorcycle industry, it should re-examine the importance of value-manufacture and lean-manufacture to the sustainable and healthy development of enterprises; it should get rid of the traditional extensive-mode of development and large-scale development standards, and grasp the opportunity brought by the economic crisis to realise a sustainable and healthy development, building China into a true powerful motorcycle manufacturer. Though there is always a cry for restructure and integration in the Chinese motorcycle industry, the actual performance always begins with thunder and ends with a drizzle. One reason is that there are many private enterprises in the industry so it is difficult to reorganise, but another important reason that restricts the recombination of motorcycle enterprises in or out of the industry includes the bleak outlook of the industry, the repetition of enterprises' capital structure, as well as the limited brand value. Stroked by the economic crisis, many medium- and small-sized enterprises got into trouble; being recombined passively became an unavoidable choice for those troubled enterprises. Under the circumstances when Yamaha unified the marketing and integrated the factories located in three places, Dachangjiang carried out an overall arrangement over the Zhejiang and Jiangsu market and Chongqing market, and the China Ordnance Equipment Group Corporation (COEGC) recombined its three listed motorcycle enterprises, the strong enterprises in motorcycle industry became even more powerful. The Suzuki series of products like Haojue Suzuki and Qingqi Suzuki, Honda series like Wuyang Honda and Xindazhou Honda, Yamaha series, Haojue series such as Jiangmen Haojue, Changzhou Haojue and Chongqing Haojue, and the COEGC series like Jialing, Jianshe and Qingqi, will become the dominant powers in Chinese motorcycle industry for a period of time in the future. Furthermore, the competition and recombination among these series will develop into the final pattern of the Chinese motorcycle industry. As for those medium-and-small-sized enterprises, whether they can survive or not is still uncertain. They have three options: initiatively retreating from the industry, being recombined passively or finding another way out.