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Chinese imports spook Indian motorcycle makers

At a recent motorcycle industry trade show in New Delhi, the machine that attracted the biggest crowd couldn't actually be bought in India.

And at the advertised price, the Indian-Japanese alliances that dominate the Indian motorcycle market, the second-largest two-wheeler market in the world, hope it never is.

The machine was made by a Chinese company, Chongqing Jiangmen, and its appearance sent a shiver through the Indian motorbike industry.

One leading Indian motoring magazine described the motorcycle, the Meilun cruiser, this way:

"A 150-cc engine, five-speed gearbox, electric start and disc brakes... with enough chrome to support an entire electroplating industry all by itself, at a quoted price of under Rs 45,000. Sounds amazing, no?"

By comparison the CBZ, a roughly equivalent model made and sold in India by the local joint venture of Honda Motor Co, costs about Rs 58,000, or almost a third more.

Chongqing Jiangmen was one of just two Chinese cycle makers at the IETF 2001 trade fair. The other, Jiangmen Zhong-Yu, wasn't able to get its display bikes through customs in time for the show.

But its 'dictionary-thick' catalogue alone was enough to cause a sensation, according to a senior features writer for a motoring magazine.

"The variety was... stunning, with scooterettes, scooters, step-throughs and motorcycles... on offer," he said.

He pointed in particular to a model closely resembling the Eliminator, a top-selling model made by Bajaj Auto, India's second-largest motorcycle maker, but at a third of the price.

"If Chinese-made two-wheelers are ever allowed to be sold in this country at near the cost of production, Indo-Japanese makers will get beaten up," said a Bombay-based auto analyst with a foreign brokerage, who asked not to be identified.

Mind the gap

Analysts cite a number of reasons Chinese bikes cost so much less. Export-oriented companies there get subsidised power and low-interest loans, and their labour costs are lower.

Still, similar bikes cost about the same in both countries, prompting suspicions that Chinese makers are angling to expand abroad through dumping.

"There is a lot of excess capacity because some Chinese cities have banned motorbikes," said another auto analyst.

To protect domestic manufacturers, the Indian government recently nearly doubled the basic duty on vehicle imports to 60 per cent. Total taxes now add 93 percent to the cost of an imported motorcycle.

Chinese imports

Despite the increased duties, plans to import Chinese bikes are still being laid by some companies, including Pune-based Bajaj Auto, India's largest maker of two-wheelers, a category which include motorcycles, scooters and mopeds.

After last month reporting a 57 per cent drop in profit for the year to March, Bajaj said it was pursuing plans to begin importing scooters from China.

Delhi-based Monto Motors, a moped manufacturer, has also announced plans to begin selling a Chinese-made 90cc motorcycle, and possibly a 250cc model sometime later.

With annual sales of more than 3.7 million, India is the world's second-largest two-wheeler market after China. Just over two million motorcycles, almost one million scooters and almost 688,000 mopeds were sold in India last year.

Chinese manufacturers

The speed of Chinese manufacturers in penetrating other markets heightens the Indian makers' fears.

In Vietnam, motorcycle imports tripled last year to 1.8 million, with 1.3 million from China.

In Indonesia, industry figures showed imports from China rose from nothing in 1999 to about 20-25 per cent of the world's third-largest motorcycle market in 2000.

An estimated 11.3 million motorcycles were produced in China in 1999, or about one of every two bikes made around the world.

China's many manufacturers make bikes of every size, with the lion's share in the small 50, 90, 100 and 125 cc models that dominate sales in major markets like China, India, Indonesia and Vietnam.

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