Failure To Launch

China’s motorcycle industry still has a long way to go before it reaches US buyers.

Jiajue Motrac motorcycles

For years, we have been expecting great things from China’s vast motorcycle industry, by far the world’s largest (27 million machines produced in 2012, or one for every 50 Chinese citizens). We’ve gone to the shows and seen the jet-lagged personnel trying to look perky behind lackluster models that reveal little contact with contemporary western markets.

Last week, I read Alan Cathcart's bulletin in the latest Cycle News entitled, "Chinese Market Slumps," revealing that Chinese domestic 50cc sales have "collapsed" and sales of 110 to 250cc motorbikes are "flat-lining" while sales of bigger machines rise. He summed up by saying there has been a year-on-year decrease of nine percent.

Domestic sales remain strong, Cathcart noted, so the industry shrinkage comes from “negative export growth.”

There are so many ways to fail in business! Japan’s motorcycle industry in 1955 was at a crossroads, with 200 mostly regional manufacturers, each trying to scratch market share out of its fellows. No maker had the strength to create a national dealer network, reliably supplied with product, parts, and service training. As a result, many machines just ran for a short time and were abandoned when they quit—a situation China-watchers also report. This is the kind of market in which the triad of price, quality, and service can shine. In Japan of the cutthroat early ’50s, 97 percent of the makers failed. Of the six who survived, only four managed to extend their markets abroad as a means of surviving inevitable domestic market saturation.

Junak 650

Junak 650

History also shows that cars are a deadly danger to a motorcycle transportation market. In the US as the 20th century began, Indian grew very fast, acquiring the credit to build a huge production plant. Then, whammo!, Henry Ford's low-priced Model T auto hit in 1914, rolling off a production line specifically designed to make a mass-market product, not a hand-built curiosity for wealthy sports. Indian's greatest sales year was 1913, with 30,000 machines sold. The remainder of its existence was a long decline.

After WWII, Italy and Germany followed the same pattern. Motorcycles, the easiest and quickest into production of all vehicles, proliferated wildly. Only to be knocked out as car production restarted the German industry in 1955, Italy’s a little later.

Only England's previously dominant bike industry took the crucial step of hooking itself to external markets, mainly the US and South America. Britain desperately needed cash after WWII, and her major exports were sports cars, motorcycles, and whiskey. Makers took their orders from the powerful British Board of Trade, and Triumph, for one, exported 70 percent of production.

The British industry almost made it but was stopped by failure to reinvest and retool to achieve the “world price,” which results from using the most modern production equipment. Stockholders wanted dividends now, not pennies in some future heaven, so traditional methods and outdated tooling soldiered on. Rational cost-saving schemes like those of Bert Hopwood were ignored. Too radical! And there was endless conflict with a labor force determined this time not to lose the incentives it had won in wartime. Japanese motorbikes, produced on modern tooling that Mr. Honda had traveled the world to buy, presented themselves. Reliable, stylish, well-made, and cheap, who could resist?

Sky Team Ace 125

Sky Team Ace 125

So far, not one of China’s 13 large producers seems to have studied the export market as Japan so effectively did in the ’60s. My dad rode the commuter train into New York City every morning and glanced at storefronts on his walk from Grand Central Station to the office. One day, a card of Japanese-made salmon-fishing flies appeared. Month after month, they sat there, and not one was sold although they were nicely made. Then, one day the card was replaced with a new one, this time covered in salmon flies made in the classic named patterns all salmon fishermen recognize. Being attractively priced, they quickly sold out. Someone had at last done his or her market research!

Cathcart attributes the shrinkage of Chinese motorcycle exports to strong overseas competition from higher-quality producers, such as Hero in India and Honda's Thai production lines. If axles bend when potholes are hit and fork tubes buckle in minor traffic shunts, you can forget repeat buyers. The old strategy of "hitting every sucker once" is not a long-term strategy.

US industries faced up to this in the ’20s, when domestic materials just weren’t up to the needs of sophisticated products like aircraft and refrigerators. Manufacturers desperately needed to know that the crankshaft forging they were buying actually contained the nickel and chrome necessary to prevent fatigue failure in hours. Standards were quickly established for things like steel wire, plate, bar stock, threaded fasteners, and electrical goods. Standards are essential if quality that attracts repeat buyers is to be achieved. Every national industry must make this step.

In this sense, China is paying a heavy price for her long isolation. Industries there are entirely capable of cutting-edge research, as I found out a few years ago when I searched for fifth-generation single-crystal turbine blade materials for something I was writing. What may be missing is a central organization like Japan’s Ministry of International Trade and Industry, charged with making the nation’s export goods attractive and successful in every way.

Jiajue Motrac Motorcycles

Junak 650

Sky Team Ace 125

Zongshen 150 GY

Chinese engine