SHANGHAI, China – Just a few hours ago, the 18th China int’l Bicycle & Motor Fair closed its doors. Trade visitors (fewer were there compared to other years resulting in unusually quiet halls as pictured here) will travel back home with a mounting feeling of unrest which has all to do with worries on lead times, prices and credit terms.
Shortages in raw material, prices that change daily and stretched lead times, are the cause of all the unrest in the market. For some the term ‘unrest’ will not be how they would describe the current conditions in the worldwide bike market; there are purchasing, product and production managers that talk about a mounting crisis!
They call it a crisis because of companies that are forced to stop assembling bikes due to shortages in parts. There’s talk about tens of thousands of semi-finished bikes that are stocked because the right components are missing to finish them and to transport them to the customers.
In fact this year’s Shanghai Show was last month’s Taipei Int’l Cycle Show all over again, but with one distinction; the feeling expressed in Shanghai by visitors as well as exhibitors was one of increased worries that next to prices and lead times also include payment and credit terms.
The current shortages in raw material bring about another more unexpected effect. That is that component makers are more and more demanding their customers to finance the purchase of the material. This is putting a heavy burden on the liquidity of bike makers which are used to credit terms of 60 to 90 days after receiving the components. It is said that this burdened liquidity position is putting everything on hold throughout the bike business with regard to take overs or new projects.
This year’s Shanghai Show not only had to cope with the current unrest in the market, but also with other unexpected downfalls. For instance the fact that a few weeks before the show started, the Chinese government changed its visa regulations. This came to a very unpleasant surprise to many who had ‘Shanghai’ scheduled in their agenda’s and already booked the flights and hotel for it. For the first time in many years of visiting China they were suddenly refused to enter the country.
The 18th China int’l Bicycle & Motor Fair was also faced with the same discussion that dominated last month’s Taipei Show; the timing of the show. Taking place end of April is for the Shanghai Show considered by many as too late. This left its mark, not only in fewer visitors, but also in the number of exhibitors. With the 2009 Shanghai Show scheduled for May 4 – 7, 2009, that effect will undoubtedly hit ‘Shanghai’ next year even harder. However, the organizers are very aware of that danger and are contemplating on earlier dates; even a move to earlier dates than ‘Taipei’ is being considered.
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