<b>China 2006:</b> Production Still Growing But…….

Sales & Trends

BEIJING, China – Despite a 16% increase in the production of bicycles and E-Bikes in 2005, the Chinese bicycle industry is not bursting with confidence about the years to come. It’s because worries are mounting on quality and image of the bikes produced; on the increased competition from countries like Bangladesh, Sri Lanka and Indonesia […]

<b>China 2006:</b> Production Still Growing But…….

BEIJING, China – Despite a 16% increase in the production of bicycles and E-Bikes in 2005, the Chinese bicycle industry is not bursting with confidence about the years to come. It’s because worries are mounting on quality and image of the bikes produced; on the increased competition from countries like Bangladesh, Sri Lanka and Indonesia and on export subsidies that are dropping year by year.
2005 was a record year for the production of bicycles in China. Looking at the production numbers issued recently by the China Bicycle Association; production climbed to 80,430,000 units; about 10% more than in 2004 and in units up 7.5 million. Electric bike production almost doubled in 2005; from 6.76 million units to 12.11 million; a big 79% increase! Adding up those numbers; the Chinese industry produced a total of 92.54 million bicycles in 2005; up 16% on the 2004 total.


Tianjin region

By far the most bicycles are produced in the Tianjin region of the vast country. And that also explains the growing popularity and importance of the Tianjin Show which is officially called the China North International bicycle show. Held last January, it was again record-breaking (see separate story on this page). In 2005 over 31 million bikes were produced in the Tianjin region. And for the years to come it is expected that this number will grow further.
In particular because it is said that the coastal provinces like Shenzhen or Guandong are getting to ‘expensive’ for companies operating in the low-tech bicycle sector and that they are switching to or planning to switch to Tianjin. Currently the Guangdong province is the second most important bike production region with about 17 million bikes produced in 2005 while the Zhejiang area stands at third place with about 14 million bikes produced in 2005.
These numbers are only on regular push bikes; the production of E-bikes is more spread around about 5 provinces with again Tianjin as the region with the most manufacturers and the biggest production; about 3.5 million in 2005. Both Jiangsu and Zhejiang catered for 2.5 million each while in the Shanghai area about 1.3 million were made.



The CBA states in its 2005 report that slightly over 6 million bikes were exported to Europe. Unfortunately the association doesn’t specify ‘Europe’ further as if it’s the ‘new’ EU-27. One thing is sure and that is that the 6 million are way off the figure of Eurostat. The EU data bureau reported that in 2005 about 1.4 million bicycles were imported from China. This number represents a 42.1% drop on the 2004 figure of 2.4 million imported Chinese bikes in the EU 25.
The Asian continent is the biggest export region for the Chinese industry with about 21 million bikes. Second comes North America with about 20 million; Europe ranks third followed by South America (3.1 million units and) and Africa (2.2 million). 
According to the CBA, China exported a total of 53.6 million bikes in 2005; 3.5% more than the year before. They were exported to over 178 countries and regions in the world. Biggest customer of China made bikes is the US. In 2005 19,165,000 units were exported to the United States (+ 5% on the 2004 total). Japan is the second best customer for China made bikes (almost 800,000 units) and Indonesia comes at third place with almost 200,000. Striking is that Russia ranks fourth also with about 200,000 units.


CBA Meeting

At its annual meeting in Tianjin, held in January in Tianjin, the CBA addressed the current problems the Chinese bike industry is faced with. The association and its members discussed patent disputes; plans on encouraging innovation; ways to push export prices and how to stimulate sales on the domestic market.
These discussed topics make it clear that awareness is rising among the Chinese producers that being the biggest and the cheapest results in confrontations with anti-dumping sanctions of countries and regions like the EU, Argentina, Japan and the ASEAN countries. Also the awareness is rising that others takes advantage of these sanctions against the Chinese industry like bike companies operating in Bangladesh, Sri Lanka or Indonesia.
Next to awareness, there are also bike makers in China that react differently on the current market situation with the huge anti-dumping duty of 48.5% on bikes exported from China into Europe. And that is by avoiding such duties by setting up shop in Europe; or in a country that is under the General System of Preferences (GSP) that makes it possible to export bicycles duty free to Europe. It is expected that more and more Chinese companies will do the same in 2007.


Record Breaking Tianjin Show

The seventh China North International bicycle show was held from 11 to 14 January in Tianjin. The show organizers report participation of 450 exhibitors sharing about 2,000 booths covering about 50,000 m² of exhibition area. Visitor numbers totalled at about 70,000 for dealers and all other (foreign) trade visitors.
Also 192,000 public visitors were counted. With that the 7th China North International bicycle show was bigger than any of the six previous editions.
The organizers’ statistics claim orders for  4.28 million bicycles (3.52 for exports), 960,000 electric bicycles and components in the value of CNY 300 million (€ 30 million). This reflects the growth of the Tianjin and China’s bicycle industry: 2/3 of the show exhibitors came from outside the Tianjin province and included foreign (Taiwanese) manufacturers; 1/3 of the exhibiting companies came from Tianjin.
Home visitors came from all Chinese provinces except Tibet. The show organizers invited scholars from major Chinese technical universities and industrials for a forum on non-ferrous metals applications of magnesium in particular.


Discussion on Intellectual Property Rights in China

Recently a Conference on Intellectual Property Rights (IPR) was held in Beijing with the goal of furthering IPR protection in China. Dahon is one of the victims of IPR violation. This year in China, over 4 million folding bicycles will be sold and well over 50% of these bicycles violate one or more Dahon patents.

The discussion on Intellectual Property Rights took place at the the Fifth Ambassador’s IPR Roundtable Conference that was held mid November in Beijing Hosted by US Ambassador Clark T. Randt, the conference was attended by political and business dignitaries from China and the United States, including China Minister of Commerce, Mr. Poxilai. Also in attendance were representatives from the leading victims of IPR violation in China – Microsoft, Honeywell and Dahon, the US based manufacturer of folding bicycles.
“It’s very encouraging to see the strong steps the China central government is taking to protect IPR,” stated Dr. David Hon, Dahon CEO. “Economic engagement has been good and China realizes the value of IPR protection, not only for continued foreign investment but for the growing number of world class Chinese companies that invest in their own R&D. But it’s also true that local compliance needs a lot more attention.”
Dahon is one of the largest IPR victims in China. With the support of the American Chamber of Commerce and various Chinese economics ministries, Dahon has been aggressively moving to stop violation of its patents. Two in-house lawyers work full time on patent protection issues. Companies that are found to violate Dahon patents are given the option of licensing the relevant patents from Dahon and many have taken advantage of this win/win approach.
During the Conference Dr. Hon presented a paper on practical barriers to IPR protection and what steps to take to overcome those barriers. Secretary Gutierrez praised Dahon’s effort in enforcing its legal rights and gave advice on how to make use of US and China diplomatic channels to enhance IPR protection.
In addition to his role at Dahon, Dr. David Hon attended the event in his dual capacity as Governor of the South China American Chamber of Commerce and Chairman of the Shenzhen Federation of Industries IPR Committee. “China has always been knocked for poor IPR protection. While that was true in the past, we’ve seen very substantial improvements in recent years and have had excellent success enforcing our patent rights so we are very encouraged by the direction China is heading on this important issue,” concluded Dr. Hon.

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