Stop cheating on financial management! 610,000 companies cannot even compete with one Japanese company - in 2020, China's bicycle exports totaled approximately 23.3 billion yuan, while the annual sales of Japanese bicycle parts manufacturer Shimano reached 28.3 billion yuan. What's the problem?
Text/Daily Capital
Is he not crazy? Yes, that's why I'm crazy - I spent 360,000 yuan to buy a second-hand bicycle, and I can only look at it.
Recently, on a second-hand trading platform, a netizen posted product information: a Willier Easton aluminum alloy, Pantani version bicycle produced in 1997, priced at 368,888 yuan , and the price will increase from time to time. . Please note that this netizen specifically marked that "only sucks. "
As soon as this news came out, it immediately attracted the attention of many riders and the media.
Due to the influence of objective factors, in big cities such as Beijing, Shanghai, and Chengdu, there are not only cyclists who check in at fixed points every day, but also an army of cyclists who appear in the outer suburbs on weekends. They may travel together in dozens of groups, or in groups of hundreds of people. They are well-equipped, ranging from helmets worth a few hundred yuan to bicycles worth tens of thousands of yuan. Occasionally, they will see an uncle bending down and pedaling the "28 big bar", which triggers exclamations.
Relevant data shows that young adults aged 18 to 40 are the main group in cycling, accounting for 77.45%. The main force of bicycle consumption is concentrated in young people under the age of 30, nearly 20 million people. As an outdoor fitness sport, cycling has become as popular as camping in the past two years.
Popularity means business opportunities. During the pre-sale period of June 18 this year (May 23 to 30) on a certain platform, the cycling category including bicycles and road bikes was one of the best-selling categories. The pre-sale order volume of the entire cycling category increased by 240% year-on-year. %.
Cycling friends also pay a high price for a favorite bicycle. It is said that the entry-level price of the mid-to-high-end mountain bike is 10,000 yuan, and the "fever-level" one costs hundreds of thousands or even higher. Due to the high value retention rate, some young people have begun to use bicycles as "social currency". What’s even more bizarre is that the price of some second-hand bicycles exceeds that of new cars, so you can only look at them.
Not only that, the popularity of Chinese bicycles also extends to foreign countries. Since May this year, China’s bicycle and electric vehicle exports have skyrocketed, and orders have been queued for one month. Data from AliExpress, a cross-border e-commerce platform owned by Alibaba , show that bicycle sales in the Spanish market increased more than 22 times in May, and Italy and the United Kingdom also increased by about 4 times. The sales of electric scooters also increased significantly, with an increase of nearly 9 times in Italy, nearly 8 times in the UK, 380% in France, and 280% in Spain, which is very large in size.
Such a hot market has also made domestic bicycle manufacturers make a lot of money. "Daily Capital" inquired about the financial report and found that Shanghai Phoenix, one of the leading domestic bicycle companies, has maintained a double-digit to triple-digit growth rate in revenue and net profit since 2019, which can be described as rapid momentum. In 2021, its net profit exceeded 100 million, a new high in the past five years.
Jiuqi Shares, another company engaged in the design, research and development, production and sales of complete bicycles and their parts, is growing even more rapidly. In the past four years, its net profit has almost doubled, from 50 million to 205 million yuan in 2021, which has also reached a record high.
There is also a set of data. China's bicycle production exceeded 66% of global production in 2019. One out of every three bicycles in the world is made in China, and there are as many as 610,000 domestic bicycle manufacturers.
But like some domestic industries, China is a big bicycle country but not a powerful one. What's even more embarrassing is that 610,000 companies can't even compete with one Japanese company - in 2020, China's bicycle exports totaled approximately 23.3 billion yuan, while the annual sales of Japanese bicycle parts manufacturer Shimano reached 28.3 billion Yuan.
This is an old problem with Chinese bicycles.As early as 2016, there were public reports that almost all bicycles with a unit price of more than 500 yuan at that time used imported transmissions, 80% of which were Japanese Shimano transmissions, and some of the more expensive bicycles used American SRAM transmissions.
In addition, data released by the China Bicycle Association show that from January to April this year, bicycle output dropped by about 15% compared with the same period last year, while electric bicycle output increased by nearly 10% year-on-year. At the same time, due to the slowdown in international demand, the growth rate of bicycle exports has dropped significantly.
In the future, will the domestic bicycle industry face another large-scale reshuffle?
Anti-dumping Suppression
Things are actually worse than imagined. Starting from July 15, 2022, the EU will increase the anti-dumping tax rate for bicycles in mainland China from 30.6% to 48.5%.
The EU’s unreasonable suppression of China’s bicycle industry has been going on for a long time. As early as 1992, the EU conducted a so-called "anti-dumping" investigation into bicycles originating in China. Soon, it began to impose a 30.6% anti-dumping tax rate on Chinese bicycle companies. After
, the EU repeatedly conducted various anti-dumping reviews and secondary anti-dumping investigations against Chinese bicycle companies. What is more exaggerated is that in August 2019, the EU announced that the anti-dumping tariffs imposed on Chinese bicycles would be extended for another five years, and in January 2019, it decided to impose anti-dumping duties on Chinese electric bicycles, with the highest tax rate reaching 79.3%. "Daily Capital" searched for relevant keywords and found that there were relevant reports in 2012, 2017, 2018, 2019, 2020, 2021 and other years.
It must be noted that in 2004, China exported less than 3 million bicycles to the EU, with a total value of less than 100 million US dollars. The EU's market size at that time was 20 million bicycles, and China's export volume did not constitute a substantial threat..
With the EU as a bad example, some countries have also taken similar measures against Chinese bicycle companies.
The website of the Ministry of Commerce shows that on April 1, 2022, the Mexican Ministry of Economy issued an announcement in the official gazette, making the first anti-dumping sunset review final ruling on imported children's bicycles originating in China, and decided to maintain the December 2015 decision. The measures determined by the original trial final ruling on the 21st will continue to levy an anti-dumping tax of and of US$13.12 per piece on the products involved starting from December 22, 2020, which will be valid for five years.
On May 11, 2021, Argentina decided to launch an anti-dumping sunset merger review investigation on bicycles originating in China. In addition, the United States and other countries have also imposed tariffs or launched anti-dumping investigations on Chinese bicycles or bicycle-related products.
In addition to the troubles of tariffs and anti-dumping, Chinese bicycles have many unexpected aspects in the international market - for example, the country that exports the most bicycles to the EU is Cambodia , which reached US$181 million in the first half of 2019. For another example, there are a huge number of domestic bicycles, but the global mid-to-high-end bicycle market is dominated by Japan and Taiwan.
"Stuck in the neck" needs to be solved
From the many "unexpected things", it is easy to draw a conclusion: domestic bicycle companies are stuck in the core technology.
As we all know, bicycles are composed of more than 200 types and more than 1,000 parts. Unfortunately, most of the key parts of the vehicle need to be imported domestically. For example, the transmission is the "heart" of the bicycle, the core part of the bicycle, and also the most profitable part. The small transmission accounts for 40% of the entire vehicle price..
Please note that 90% of domestic transmissions come from Japan's Shimano, and the higher-end ones come from American companies.
Take SAVA, a bicycle merchant owned by Alibaba’s AliExpress, as an example. It is not very well-known in China. In order to enter the European market, SAVA chose to build a factory in Poland for assembly and set up overseas warehouses because the labor cost there is relatively low in Europe.
Secondly, SAVA is positioned as high-end, focusing on carbon fiber bicycles . Parts suppliers are all over the world. The frame is produced in China, and the transmission and other parts come from Japan, Malaysia , Thailand and other places. SAVA's mainstream models are priced at over US$1,000, which is actually about half cheaper than local bicycles of the same quality. It has an absolute price advantage, so it is one of the targets of local rush-buying.
To put it simply, in the future, if Chinese bicycles are to become mid- to high-end and strive for a larger global market, they must solve the problem of localization of core components. Only when costs are reduced can we become more competitive. There are many cases where the core technology of
has been manipulated. "Daily Capital" learned from many domestic construction machinery companies that domestic excavators below 5 tons can use hydraulic systems with , but those above 5 tons basically rely on imported Japanese products. In other words, how many hydraulic systems Japan provides determines how many large excavators domestic companies can make.
For another example, on September 3, 2012, Weichai Power acquired 25% of the shares of the German Kion Group and 70% of the shares of its subsidiary Linde Hydraulics for 738 million euros. This is to break the foreign monopoly of high-end hydraulic systems, and it is also the reason why Tan Xuguang dares to shout "Rebuild Weichai".
It is understood that Japan’s Shimano and American SRAM have applied for a total of about 2,400 patents in the Chinese market. It is not uncommon for technology companies to use their patent sticks to suppress companies. For example, an important reason why HTC mobile phone was put down that year was that the company was frequently sued for patent infringement by apple and Samsung , which caused the company's cash flow to be tight.
The good news is that many media have reported that there is now a domestic company in Zhuhai, which has broken the monopoly of foreign companies on transmissions and is regarded by the industry as a cooperative supplier of domestic alternative transmission solutions. However, because the company is unlisted and cannot obtain more data and financial indicators, we cannot draw arbitrary conclusions.
However, what is certain is that for the overall improvement of China's bicycle industry, it is not just the breakthrough of one or a few companies in a certain component, but also the systematic improvement of the domestic industry. Therefore, the development of Chinese bicycles still has a long way to go.
[The article is for communication only, not investment advice. Please be aware of investment risks. Code words are not easy. If your mobile phone still has power, please like and forward it. Thank you very much】
