WATERLOO, Wisconsin (Oct 12) -The Trek Bicycle Corp. started selling bikes in China last month, and is planning to open a manufacturing plant there that will make frames, chairman John Burke said Tuesday at a gathering of some of the state's largest private companies.
"Don't kid yourself. The Chinese have money," Burke said. "It's more affluent than you would think."
The Chinese consumer market represents a huge opportunity for Trek, Burke said in a speech at Deloitte's Wisconsin 75 luncheon.
Trek opened two retail stores in Beijing in September and has signed agreements with 20 Chinese dealers who will sell Trek bikes.
The Chinese people are riding $50 Chinese-made bikes now, but soon, as they become more affluent, they will move up to $500 and $1,000 bikes, Burke said.
Trek, which will celebrate its 30th anniversary next year, has $600 million in annual sales and 1,500 employees, including 1,300 in the United States, mostly in Waterloo and Whitewater. The company also has a plant in Germany, near Dresden.
Trek wants to open the Chinese bike plant - which is in the planning stages - because the Waterloo facility doesn't have the capacity to increase production needed for rising sales.
China was selected instead of a U.S. location because Trek needs to compete with other bike-makers who manufacture products there, Burke said.
Burke said Trek has been approached by investment bankers who want to take the company public, but he's happy to keep the business private.
"We're a small cap company," Burke said. "We won't get a lot of notice. And the markets will demand that you have profits quarter to quarter.
"In the end, you screw up the company. We can take the long term look."