SKYTEAM

[MJH]

Jincheng really has been shrinking, they are being either hit very hard by the current conditions in the market or they are selling off production? It is not possible to determine what is happening, all of the industry is interconnected in degrees suppliers and assemblers. In theory a supplier could stop selling complete units and only sell components parts. Since there is such a high percentage of what is an industry standard, that being something everyone makes or a part everyone uses, then being a universal supplier does get an economy of scale through the volume of production. Special orders make prices go up, it takes an initial set up for production, so as a universal supplier flexibility and adaptability wins orders.


Each unit may have an OEM, then within it the parts also have OEM’s the control and accountability of the process from sources through assembly to distribution to retailing, it all has to me consistent.


In the first half of 2012 Jincheng lost 50% of its unit production, dropped from 300k to 150k, still a very large producer, but obviously if they are not utilizing that excess production capacity or have not sold it off they are a sinking ship.


Without any specialization and professional sales channels, they eventually just go away. The process is in some ways organic, it is very difficult to stop the downward slide once it begins, it becomes like a vacuum.


Beginning with simple and basic and adding to that each year, but in that process they have to build distribution, they have to embrace the channels as their own.


Sacin seems to have a decent process in place they need to refine it and also expand it, I simply believe that the vintage Honda models could do that for them. They also should consider eliminating the use of Skyteam as a brand as it is owned by an airline.


In managing the process they need to finitely document everything, the supply chain and technical specifications, because as products become more advanced it then becomes more imperative, much like learning to walk before you can run.


If an assembler is selling many motorcycles, then its suppliers need to be or have new offerings as well the suppliers need to be flexible and also have good research and development abilities. If an assembler has great sales channels then an engine supplier should work with them and take initiatives to offer to them what they need to progress and expand.


I can imagine a CMX250 engine in a retro version of a CB200T.

However before that they could offer some vintage models that would requires less effort and certainly cost less to bring to production and they are with the ACE 125, but they could and should go further and refine the marketing and branding around that effort. They can just add the Sacin brand and then eventually drop the Skyteam brand over time.