An open letter to the big four (4) Japanese motorcycle manufacturers--Please Read--

So increasingly overseas motorcycle manufacturers are setting up shop inside the middle kingdoOm. Most if not all are doing so with a local based manufacturer creating a JV company. Aside from some of the local companies having gone and acquired overseas/international brands to leverage the local company up the totem pole.

Kawasaki with Loncin, Loncin with BMW, Suzuki, Yamaha, and Honda all with their JV partners variants here too. All very well and good, but will one of the big four (4) Japanese motorcycle manufacturers offer a more suitable product fit for purpose. The majority of the roads are not sealed, and even the ones that are, are often in a sorry state, with little to no maintenance being the usual mantra. Well sealed roads are often subjected to incessant overloaded trucks, that pound away at roads not designed for it. More full fairing model motorcycles is not what is needed in mainland China IMO (after 13 years living and riding here).

A mid displacement DS or ADV type product with center stand AND ABS, with the ability to fit a top box, are the order of the day and with a suitably loud set of horns, which is what the locals respond to. How about a Versys-KLE650, DL650, even a KLR650 (with EFI please). A CB500X would do very well here and be more suited to the local conditions as I discovered riding one in Northen Thailand for 2 months (Jan & Feb '14) - very versatile bike both on and off the beaten track. Yet, despite this not one overseas designed DS or ADV ride from any of the big four (4) are represented legally through official distribution channels, though there are lots of grey market/smuggled in models, often stolen from locales close by and shipped through the Southern borders of the mainland. Often the latter are running with illegal plates, no insurance, or worse.

BMW on the other hand have the G650GS single thumper, F700GS/F800GS as well as the R1200GS models available here, but all of them are still nearly double the MSRP compared to most developed countries MSRP's e.g. F700GS cny127,000 + 9% tax = ~145K (additional costs excluded).

It's great that there are now an increasing number of models coming into China after completing the CCC certification (quality certification) formalities, through official distributors and distribution channels, CB500F, CBR500R, CTX700, ER-6N, ER-6F, to name just a few, but not one (aside from BMW) are making their respective DS/ADV models available, KLE650, CB500X. Why?

For any motorcycle manufacturer, please send a rep who is prepared to roll up ones sleeves and get down to the grass roots level and really take a look around, travel widely, off of the expressways which motorcycles are forbidden to use by some local politics (another sore point that needs some active campaigning on), to more accurately determine what is most suited to the local market conditions... a Hayabusa @ cny200,000 (or similar) is not it!

YMMV.

Bikerdoc

Bikerdoc. Lets say Sundiro or Wuyang Honda make a CB500X in China for let's say 40,000RMB. What will happen? Everyone who has a brain and likes to ride would buy it. This would kill the entire Chinese big bike industry overnight. Then what will the Chinese government do? Ban all bikes, the equivalent of playing a board game with a 7 year old sociopath. 'I can't win? Then I ain't playing!'.

The government wants to support its 'fledgeling industries' with tariffs and other advantages. The rest of the world should apparently support this policy or be 'driven out of China'.Also the ridiculous 'I only bought it to show-off and do 200 kms a year' or as an 'uber-cheap commuter' Chinese riders 99% don't demand common sense mid sized bikes that suit touring as they are incredibly city bound. So asking for bikes like that is like saying 'why don't you import bikes I like?'.

They (the big 4) don't need to make it here, but at least import (what I and many, including yourself consider - if my assumptions are correct, having read some of your threads ZMC888) the appropriate models for the market, alongside the sport tourers. The CB500X and KLE650 are both made in Thailand, as are the previously aforementioned models from both manufacturer, so it begs the question, why only export from Thailand the more road orientated models? The least that could be done is export the CB500X/KLE650 which would market at around similar pricing as the more road going variants, not the 40K mark... which is unrealistic IMHO even if the CB500X were made here.

I appreciate the mantra, of the CCCP and other vested interests, however this country is part of the WTO, which means that prohibitive and artificial barriers that exist need to be dismantled/removed... it's happening but slowly, though I appreciate that it can't happen overnight. How long has PRC been admitted to the WTO?

However, my post was not so much about that, but more about positioning more appropriate models for the market, not just road orientated models, since one needs only travel a short distance in any direction here for long enough to see the state of the roads that motorcyclists here have to ride on, given the discrimination that motorcyclists have to contend with. Access to cities, Expressways if a motorcycle can meet certain restrictions (e.g. HP, speed, legality, capacity or similar) while we're at it. A whole 'nother thread though - naturally.

But no worries ZMC888, thanks for the supportive view point.

Ride on...

:riding:

Import tariffs are slightly unusual in PRC, where the lower the displacement of the engine, the higher the import duty, in order to protect the local industry, which with the exception of CFMoto’s 650cc twin-cylinder models, the Loncin LX650, and the Qianjiang-made Benelli 600 four cylinder models, sees 250cc as the capacity ceiling.

The KTM-CFMoto joint venture should have kicked off a year ago, but was put on hold when a local Chinese opportunist tried to ransom the KTM name, after highjacking it by registering King Tao Motorcycles (KTM) in PRC. Even though that company never actually produced any motorcycles/scooters, its owner sought a payoff of more than $1 million to hand over the rights to the name, which the KTM board declined to pay. Instead, the KTM board took the time needed to register KTMR2R (as in, KTM Race-to-Road) as a manufacturer in PRC. It was a tortuous legal process that took time to complete, and it’s under this name that all KTM models are sold in PRC, which explains why KTM entered the local market a year later than expected.

Interestingly CFMotos talked about adventure touring model, to be known domestically as the CF650MT, is expected to be available in the latter half of this year, then available in international markets in first half of 2015 (confirmed as of today). According to CFMoto president, Lai Guogui, Gerald Kiska, a KTM designer for the last couple of decades, has been working for CFMoto for some time on the development of a range of new motorcycle models. One of the first of Gerald Kiska designs to be released, will be a multi-functional Adventure bike using the CF650cc engine platform. This bike will be released in the second half of 2014 domestically, and will enter full production sometime in 2015, when CFMoto are satisfied with development results of the models released into the domestic market.

CFMoto 650MT IP Australia application
CFMoto 650MT IP Trademark UK application 1
CFMoto 650MT IP Trademark UK application 2
CFMoto 650MT IP Trademark Czech application
CFMoto 650MT IP Trademark EU application

To me there is something lacking....always has been since I came to China 12 years ago. I've always been asking the question 'why can't I just buy a new road legal CB500 in China that is made in China?' I used to think that it was because it was too hard for Sundiro or Wuyang Honda to make. Surely it's no harder than making a GW250, so that doesn't make sense. Then I thought 'well there isn't the demand in China' then I thought about how well the CB400 and similar bikes have sold in the past, so then that is nonsense too. Then I thought 'maybe the quality wouldn't be good enough' but then I had CBF150 and that was better quality than my current bike, and there really haven't been many problems with the GW250, so they can surely match or make better bikes than India with a Japanese management structure in China. Possibly as well as the Thais.

Then we have the final real reason. If the Japanese don't placate the Chinese with helping their bike industry or by not competing too strongly those city bike bans and regional petty bike bans will just increase and increase, because allowing big bikes would be seen as lining Japanese pockets. I think that the Japanese have realized this from dealings with Korea, you need to let a few Hyosungs/CFMOTOs survive or other North Asians have a toddler tantrum. You either do that or give away your technology for free to the Chinese as with Loncin BMW.

Also I think given the fact that Honda sell the Thai made CB500F in the UK for 5,500 pounds landed with 20% VAT, it would be prefectly possible to sell the CB500 in China if it was made here for 45,000 RMB and make a profit. However that would be seen as too aggressive and get other manufacturers upset, so they'd probably go in at 55,000 yuan.

In the end your 'open letter to the big 4' will probably fall on deaf ears, because I suspect there is more going on behind the scenes and common sense doesn't account for much.

Simply look at when the YBR250 was introduced. The YBR125 was about 8000 yuan at the time and the YBR250 was introduced at 25,000. Hardly reflective of the cost of production for the 250, but to hand the 10,000-20,000 yuan 250cc market to the Chinese manufacturers.

At the end of the day the Chinese domestic manufacturers must have at least 50% of the Chinese motorcycle market, or they'll be no market at all.

When there are possibly 3-4 Chinese adventure bikes that have some reasonable sales, that's when you'll see import bikes similar to those. When the Chinese brands are heavily established we'll see foreign brands assembled and manufactured here.

ZMC is right. Here is a case study for you. A small lavender farm in small town Tasmania is producing lavender products and set up an office in HK to sell into the China market. One of his products Bobbi the lavender bear (filled with lavender and wheat) became an overnight sensation when a Chinese movie star came to tassie and his lavender farm and was given Bobbi the bear she promptly posted it on her weibo blog and it went viral overnight sales of these bears became a must have and guess what people/companies started to copy and sell them the owner of the small lavender farm started mouthing off he's going to sue all companies copying his Bobbi the bear. Bang the Chinese government banned all lavender products being imported into China. Xinjiang has one of the biggest lavender farms in the world. Funny that. Case study 2. Australia is one of the largest producers of infant milk products selling into China due to you know what. Someone must of pissed off someone in China because last week China just clamped down on all infant powered milk products entering China and now there is only four Australian companies that have accreditation to sell there product into China. There were hundreds a month ago.

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Originally Posted by bigdamo

ZMC is right. Here is a case study for you. A small lavender farm in small town Tasmania is producing lavender products and set up an office in HK to sell into the China market. One of his products Bobbi the lavender bear (filled with lavender and wheat) became an overnight sensation when a Chinese movie star came to tassie and his lavender farm and was given Bobbi the bear she promptly posted it on her weibo blog and it went viral overnight sales of these bears became a must have and guess what people/companies started to copy and sell them the owner of the small lavender farm started mouthing off he's going to sue all companies copying his Bobbi the bear. Bang the Chinese government banned all lavender products being imported into China. Xinjiang has one of the biggest lavender farms in the world. Funny that. Case study 2. Australia is one of the largest producers of infant milk products selling into China due to you know what. Someone must of pissed off someone in China because last week China just clamped down on all infant powered milk products entering China and now there is only four Australian companies that have accreditation to sell there product into China. There were hundreds a month ago.

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Exactly right. If you sell in China you must expect for your designs and ideas to be taken, you must expect for certain products to be banned, you must leave growth potential for Chinese businesses to take at least half the market, you must not complain. If you don't accept that then you'll just be banned outright, that's just how it works.

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Originally Posted by ZMC888

Exactly right. If you sell in China you must expect for your designs and ideas to be taken, you must expect for certain products to be banned, you must leave growth potential for Chinese businesses to take at least half the market, you must not complain. If you don't accept that then you'll just be banned outright, that's just how it works.

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To true.The amount of people i come a cross who want to do business with China and think it is the pot of gold at the end of the rainbow astounds me.I try and tell these people be carefull all that glitters is not gold but hey they don't want to listen(by the way bikedoc i am not referring to you) two days ago I came across a businesses man who had a good product and went to the guangzhou trade show a couple of months ago to find a company to manufacturer said product I said beaware that many at that trade show aren't manufacturers just agents and dodgey agents at that.He said" no worries we went to his factory seemed strange his factory was on the sixth floor though" i said didn't that tell you something he said " no we trust him" what pisses me off in a few months he is going to be bad mouthing China because of his own stupidity and greed. Seen it all before.

The KLX650 is not offered in Thailand, made there but not retailed there. The Ninja 650 is made in Thailand, but not sold for less due to it being made in Thailand, the 650 Ninja sells there for about 30% more then it retails for in the USA?

There is always a total picture and often much of it cannot be seen, it often does not follow the perceived common sense, it is often based on a something sought that simply cannot be seen or fully understood without the complete picture. Has to do with math, a certain sales volume to attain a certain level of profitability. Has to do with overhead slow to sell cost more, slow to sell and in low volumes cost the most to retail. Full part support adds costs…. slow to sell, overstocked and aging cost the most to sell.

If you state you’re an industry analyst and then apply personal tastes and use simple logic to gain consideration in that, it could be called wishcraft and pretty much knocks you out of getting any serious consideration.

Just dropping it into dealers cost money, to justify any forecast of demand there has to be some sort of evidence that sales would occur and that inventory would not languish.

If the sales volume of the Zongshen 250 RX3 out paces the sale of the Suzuki GW250 then there is demand domestically for that type of motorcycle in the domestic market.

The JH600 Jialing is not a hot selling model; the BMW 650 is overpriced in China and parts for it cost a fortune.

Z is correct it should be domestically made and in that it requires support, otherwise it cost so much to sell prices are too high and volumes too low. The sport bikes are always more popular

China does not have a free market economy; it’s a hybrid and its controlled. Greed drives it and it favors domestic production. Most that manufacture in china open a window of high profit that eventually closes on them, they are ok with that because they rarely offer up enough for the Chinese partner to progress independently, they may some of the them but if they do not develop products domestically they simply end up selling last years products independently. They eventually will have to address this or have to continually address inflation the imports are more costly and drive inflation and over fill government coffers with taxes that are often squandered, driving inflation further.

It is not just China that is filled with narcissistic behavior, its everywhere.