Trek: Future Growth is in China
Trek Bicycle Corporation began direct market activities in China in 2005, launching with 20 independent retailers and two Trek Concept stores. In 2011, Trek China boasts 260 retail outlets nationwide. Whilst general economic growth has been responsible for boosting the local bicycle market, a successful local marketing program has been pivotal.
BEIJING, China – Trek Bicycle Corporation began direct market activities in China in 2005, launching with 20 independent retailers and two Trek Concept stores. In 2011, Trek China boasts 260 retail outlets nationwide. Whilst general economic growth has been responsible for boosting the local bicycle market, a successful local marketing program has been pivotal.
According to Larry Wang, Trek China’s Marketing Events Manager, “before we established our own distribution infrastructure, Chinese people weren’t willing to spend money on leisure, but it seems now that has changed. Giant, Merida, Specialized and other major market players have all followed suit in shortening the B2C supply chain, thus creating a more competitive and consumer-focused environment.”
“When Trek first came to China, they hoped it would be one of the most important locations within the entire Trek family”, explains Wang. “At the beginning, China was naturally in last place out of all the global distributors. Now we are in ninth position. Soon enough, we will be in the top five. After five more years, we should be in the top three.”
Asia is generally regarded as the main growth market for the global bicycle industry. China could very well become a top consumer of its own product. Wang seems to agree with this sentiment. “Japan is the number one Trek market in Asia. I think they currently have tripled the sales volume of China. However, we are growing fast and we are catching up. Last year, Trek Japan had eight times the sales volume of China. After five years, we are familiar with the market and with the local consumer.”
“Chinese people have become rich, and they are investing in leisure and events”, says Wang. “Local government also started encouraging people to cycle in the primary cities, like Guangzhou, Shanghai and Beijing. Now the second-level cities are following. That is an important factor in the success of cycling in China. Having a US-made bike is still very important. The wealthiest customers want a product that is not made in China.”
“In 2010, we sold 20 units of Madonna 6.9 SSL Project One road bikes. The retail price is 9,400 euro and they were shipped to many different locations in China. It’s weird, we even got a call from a company in a really tiny town, nobody knows why, wanting to buy one of these bikes!”
“We have three levels of Trek store in China – Gold, Silver and Bronze. Bronze dealer is just like a standard Hong Kong-style store, where Trek is part of the overall product mix. For Silver dealers, at least 50% of their product mix is Trek and we have a special policy and plan for them to follow. Gold dealers feature 95% Trek product and some other accessories. Out of 260 Trek stores in China, 40 are Gold level.
With increasing economic prosperity and consumer sophistication, a transition from utility to recreational cycling is taking place across the country. Whilst some of China’s nearest neighbours, South Korea for example, share very similar category profiles China now has a UCI World Tour professional road cycling race in its arsenal. How will this grow the road bike segment?