<b>China 2011:</b> Rising E-Bike Price Inhibits Consumer Spending
After over 10 year’s rapid growth, the China e-bike industry experienced its first sales slide in 2011. It is estimated that 1 to 2.5 million fewer e-bikes were sold in China in 2011 compared with 2010. Besides the price increase in raw materials and shortage of lead-acid battery supplies, consumers’ high sensitivity to price also contributed to the shrinking market.
SHANGHAI, China – After over 10 year’s rapid growth, the China e-bike industry experienced its first sales slide in 2011. It is estimated that 1 to 2.5 million fewer e-bikes were sold in China in 2011 compared with 2010. Besides the price increase in raw materials and shortage of lead-acid battery supplies, consumers’ high sensitivity to price also contributed to the shrinking market.
Top 3 Export Countries 2010 – 2011
|Bicycles||1. US||1. US|
|2 Japan||2. Japan|
|3 Indonesia||2. Indonesia|
|1. The Netherlands||1. Germany|
|2. Turkey||2. The Netherlands|
|3. Japan||3. Japan|
Source: China Bicycle Association
In spite of the ever-expanding e-bike consumer demographics in China, the majority of consumers are still part of the low to middle income category. Therefore they are still very sensitive to price levels. In 2011 the average retail price of an e-bike increased by €37, which is 10% of the average income in a small to middle sized Chinese city.
Back in 2004, 40% of e-bike buyers were owners of high-end consumer goods such as automobiles. However, in recent years, the middle to high income consumers started to rely more on cars for both daily transportation and weekend get-aways. Today, the major e-bike consumer group lives in urban areas and includes commuters with low-mid income, migrant workers, and delivery people. The price increase has significantly inhibited their buying behavior. The same was true with consumers in rural areas.
Government policy changed business
Besides the shrinking market, the policy changes of the Chinese government made 2011 even tougher for the e-bike industry and affected all businesses and consumers using e-bikes as a means of transportation in China.
In March 2011, the Chinese government announced it would gradually eliminate e-bikes over 20km/h in speed or 40 kilograms in weight, resulting in big social disputes. As one of the first cities to implement this decision, Shenzhen had to close down 150 local e-bike factories in less than a year.
Closing down factories
In May 2011, the Chinese government started to inspect lead acid battery factories. Up until July 31st, 2011, 1,598 factories were closed down or forced to stop production, accounting for over 80% of all 1,930 factories inspected. Until Q3 of 2011, lead acid battery shortages went up to over 80% and the price increased by over 20%.
According to the China Bicycle Association, from January to August, 2011, the 47 major e-bike manufacturers in China produced 7.466 million units of e-bikes, an increase of only 5.2%. This is a very low growth rate compared with the previous years.
The export market was not optimistic as well. In 2010, China exported 585,000 e-bikes with an increase rate of 44.6% and at the average unit price of US$409, while from January to October of 2011, China exported 526,000 e-bikes with an increased rate of only 2.9% and at the average unit price of US$421.70. In 2011 Germany surpassed the Netherlands and became the number one importer of Chinese e-bikes.