Chinese Whispers

Everybody's asking about the imminent Chinese two-wheeler invasion. We have the answers

When the pillars of industry begin to wobble, it's time to take a good hard look at what's happening. At their annual general meeting, Indian two-wheeler giant Bajaj Auto Limited posted what seems to be their worst year ever. At the same meeting, Bajaj also announced that their scooters sales were plummeting and the remedy was coming from abroad.

From China, to be precise. Bajaj officials have already been through the first round of negotiations and a high-level team is expected to cross the Great Wall in June to finalise a deal to manufacturer scooters, especially ungeared ones, of Chinese descent.

While the 1962 war was the most visible and violent attack, the Chinese have been battling India on a variety of fronts almost ceaselessly since. The next time you step out of your house, take a look around.

You will find a score of restaurants selling chicken chow mein. While the variously-spelt dish claims to hark from the world's most populous country, it has subsequently gathered local flavours to the point where the original item seems far removed from the dish offered.

Indian manufacturers have been battling the land of cheap labour on various fronts, with the most recent being the toy war when cheap Chinese toys suddenly found premium real estate in most toy shop displays. The kids loved the variety and the parents loved the prices. Of course, no one commented on the fact the that the toys did fall apart in short spans of time. After all, kids will be kids.

Continental fare

The Chinese are not targeting only India, though. Stories of the Chinese swarm hitting markets are all over the globe. However, in the mature European and American markets, they are regarded as cheap alternatives to Japanese techno-wizardry or Korean value-engineering, and the references are generally tinged with some humour.

Perhaps the humour comes from the ridiculously low prices, as well as the fact that most of the industry stays firmly behind the Bamboo Curtain with heavy mist surrounding the details.

Determined searching reveals staggering numbers. A recent statistic put the Chinese motorcycle production at 11.3 million in 1999. Which, we estimate, should be about half of the world's (known) motorcycle production!

A representative of Jiangmen, a manufacturer of two-wheelers nonchalantly told us that there were about 500 manufacturers at least as big as them in China. What he claimed could be true. While the annual output of 21 Chinese manufacturers exceeded 100,000 units each in 1999, at least 13 other companies were sitting pretty at 200,000 units apiece.

Other developing markets like the Indonesian and Vietnamese markets have already seen these weapons of mass-mobility wreak havoc. The former has been seriously affected, with the Japanese Big Four busy in the courtrooms trying to stem the steady defection of customers to the cheap Chinamobiles.

The Vietnamese market saw local manufacturers take after the Chinese by simply starting to copy the nearest Japanese machine and selling it for half the price. Things came to a head when Honda sued a local company called Hongda. Need we say more?

Hakka bikes

A quick on-line trip to the average Chinese bike maker is instructive. The first thing that is obvious is that while they churn out hundreds of models based on combinations of four platforms and five engines, not many grasp the Queen's language.

Motorcycles that promise to be "a star of motivity and telesthesia" abound. But jokes apart, popular engine capacities are 50, 90, 100 and 125 CC, as well as some water-cooled 250 CC twins on offer. Some manufacturers are not satisfied with selling these hundreds of bikelets.

Zongshen, for instance, participates in European endurance races on a 750. Currently, the machine of choice is a Suzuki GSX-750R, but that's only while their own 750 is being developed.

There are also reports of a Suzuki GS650 being used as a base to develop a 750 CC V-twin that will have some serious horses on tap. In fact, the firm was brazen enough to walk into a British tuning house and ask for a tuning kit that would enlarge the engine and release more ponies.

Another interesting motorcycle inhabits the Qingqi website. Called the GSX250 Zhengfuzhe, it makes no bones as to what was the inspiration for the motorcycle hell, the tank even says it's a Suzuki. There also seems to be a loyal following for one 750 CC boxer-engined bike that takes after a pre-war BMW.

So, the market out there is definitely vibrant. What will make these machines attractive to the Indian? Not the names obviously. But it's that great Chinese selling strategy make it cheap and in huge quantities.

Ask any bachelor in one of our metros and he'll swear by the economic efficiency of chicken manchurian. The bikes should be the same. For little money, you should get a huge quantity of metal. Yes, there are some pitfalls, such as the occasional upset stomach.

But the industrious Chinese are not likely to serve half-cooked motorcycles. If the invasion comes, expect dealerships and service points to come as part of the package. The prices may be throw-away, but the motorcycle may not go the same way.

Chow mean

At the IETF 2001 show in New Delhi, two Chinese firms had put up stalls. While Jiangmen Zhong-Yu could not manage to get their bikes through customs in time for the show, a look at their catalogue was enough to chill even the strongest two-wheeler industrialist's blood.

It seemed dictionary-thick, with a motorcycle in place of each and every word. Scary. The variety was even more stunning, with scooterettes, scooters, step-throughs and motorcycles of various genres on offer.

A surprise find was a motorcycle that looked exactly like our very own Eliminator for about a third of the price.The other Chinese stall belonged to Chongqing Jiangmen who had three models on display.

The first was a smart step-through with a 75 CC engine, being quoted at Rs 23,000. Right next to that was a full-on 125 CC four-stroke motorcycle, with a price tag below the Rs 35,000 mark. The motorcycle that gathered the most attention was the Meilun cruiser.

A 150 CC engine, five-speed gearbox, electric start and disc-brakes, sized to look very big and with enough chrome to support an entire electroplating industry all by itself, at a quoted price of under Rs 45,000. Sounds amazing, no? Well, all the people gathered at the stall thought so.

We found out later, that these would be the manufacturing prices, so the final street prices would be a bit higher. But they would still remain far below the normal Indian price for such a bike.

Not surprisingly, the Indian auto industry is in a tizzy. When the honourable finance minister announced the Exim policy, the initial 30 per cent duty on CBUs brought nightmares to the Indian industry.

The chiefs of various two-wheeler makers tossed and turned, envisioning evil armadas of red ships with unreadable names waiting to unload their teeming cargoes of two-wheelers. A nation where hallowed Indian names were suddenly replaced with Chongquing Zongshen, Jincheng, Locin, Sinski, Jetta, Fuyada, Zhugiang and the like.

The Society of Indian Automotive manufacturers took up the cause. They have since managed to hike the duty to a more industry-friendly 60 per cent. Not content with that, they have promised to try and raise this to 105 per cent next year. But that's only on the two-wheelers.

While Bajaj have announced their plans to join them instead of beating them, leading the Indian welcome is Delhi-based Monto Motors. The moped manufacturer has finalised all its plans and will be launching a small-capacity Chinese motorcycle by the end of June.

Monto had always intended to leverage their Alwar plant to build motorcycles via the CKD route, and the CBU duties thus do not affect them in the least. Their first product will be priced at just Rs 28,000 ex-showroom in Delhi and that is a killer price for a 90 CC motorcycle. Six months later, expect the 125 CC at Rs 33,000 and another six months down the line, a 250 CC for, hold your breath, just Rs 36,000 ex-showroom Delhi!

Ride of admission

Is it time for the consumer to rejoice? Well, that remains unclear. The Chinese have to deliver on the quality and longevity fronts. No doubt, the Chinese have hundreds of motorcycles to choose from and manufacturers who tie up with them will have a wide choice. But larger capacity machines remain somewhat alien, with most of the products being basic utilitarian tools.

The primary selling point is price, which is one of the most compelling reasons for the Indian buyer. Remember, one in five people in the world is Chinese, and if their strategy works, the Indian two-wheeler population will head the same way.