In the 90s, Japanese motorcycle companies almost dominated the Vietnamese market.
But with the strong intervention of Chinese brands, they once defeated Japanese opponents and directly occupied eighty percent of the market.
However, the good times did not last long, and now when I visit Vietnam, it is difficult to see a Chinese motorcycle.
At the mention of Chinese motorcycles, locals just shake their heads.
What's going on here?
Why do Chinese motorcycle companies look to Vietnam?
In the eighties of last century, Vietnam implemented reform and opening up, with rapid economic growth and low per capita income level.
As a developing country, the income level of Vietnamese residents is not high, coupled with high taxes and fees for car purchases, and public transportation is not developed, so for the vast majority of Vietnamese residents, motorcycles have become their primary means of travel.
According to statistics, by the end of 2018, the number of motorcycles in Vietnam had reached 45 million, and almost every two Vietnamese people owned a motorcycle.
In contrast to the ban on motorcycles in many parts of China, Vietnam's domestic demand for motorcycles continues to expand, with sales exceeding 3.3 million units in 2011 and rising again after 2015, with sales reaching nearly 3.4 million units in 2018.
In Vietnam, what kind of motorcycle people choose also reflects social status and consumption level.
From the consumer's point of view, motorcycles for most Vietnamese people are not only a means of transportation, but also a fashion object to show personal style.
It is more "decent" to choose high-end motorcycles from Japanese and European and American brands, and young people from wealthy families will even buy expensive imported models, which also gives major brands opportunities.
In the nineties, Japanese and Korean motorcycles firmly occupied the Vietnamese market by virtue of their quality advantages, and mainland motorcycle enterprises faced a technological gap and a weak market position.
Until 1999, domestic motorcycle manufacturers successfully opened up the situation by using price strategies to cater to the purchase needs of low-income groups in Vietnam.
It can be said that Vietnam's motorcycle consumer market has a broad space for development, while the base is huge, the consumer group is also continuously upgrading, and the change of consumption concept is accelerating, which brings new opportunities and challenges to car companies in various countries.
As a result, in the first decade of the new century, Chinese motorcycle manufacturers have set their sights on this "motorcycle kingdom".
Chinese Japanese motorcycle brands compete in the Vietnamese market
Before the 90s of the 20th century, the Vietnamese motorcycle market was monopolized by Japanese brands for a long time.
Japanese brands such as Suzuki, Honda, and Yamaha have entered the Vietnamese market since the late 80s of the last century, with high visibility and a wide user base.
At that time, Japanese motorcycles sold for about $2,000 in Vietnam, which was too expensive for many ordinary Vietnamese families, which also created opportunities for Chinese brands to enter the Vietnamese market.
Since the mid-1990s, Chinese motorcycles began to enter the Vietnamese market, and these enterprises are mainly located in Guangxi and Yunnan provinces in southern China, bordering Vietnam and have geographical advantages.
However, the initial effect of Chinese brands entering the early stage is not smooth, due to the low visibility, many Vietnamese users do not understand Chinese brands, and sales are not ideal.
In addition, the technology and equipment used by Chinese motorcycles at that time were also relatively backward, and it was difficult to compete with Japanese brands.
However, since the second half of 1998, Chinese companies have adjusted their strategies, taking advantage of their labor costs and raw material prices, and significantly reduced prices, and some low-end models have been reduced to about $800, which is much cheaper than similar Japanese models.
With this price advantage, Chinese motorcycles have won the recognition of many Vietnamese users, but also quickly opened the Vietnamese market, in 1999-2000 Chinese brand market share has reached an astonishing 70-80%, this phenomenon is known as "China shock", for a time Chinese enterprises are excited.
However, this victory did not last long.
In the first few years of the 21st century, the glory of Chinese motorcycles in the Vietnamese market has almost disappeared.
In many motorcycle stores in large and medium-sized cities, it is difficult to see brand models from Chinese mainland.
Their impression in the minds of Vietnamese consumers has also changed from "cost-effective" to "poor quality and low durability".
Why quickly defeated
You know, at that time, in order to compete for the market, Chinese companies launched a fierce price war, and in the early days, brands were still competing with each other for a larger market share, but later evolved into crazy price reduction.
According to media disclosures, at its most violent, the price of similar motorcycles fell by more than $70 per month on average, and eventually fell to a low of about $300, less than half of the original price.
The serious price war has caused many enterprises to plummet in profits, unable to invest in product development and after-sales, can only start from compressed quality, using inferior parts assembly to reduce costs.
Under the external environment, consumer trust in Chinese brands has collapsed.
According to sales clerks, the store has not sold motorcycles of Chinese mainland brands for many years, because such cars "break in two or three years" and the quality is uneven, and consumers prefer to pay high prices for good quality Japanese and Korean brands.
At the same time, Japanese companies reflected on the lessons of their initial failures and regrouped to introduce cheaper models that were more suitable for Vietnam.
With technical strength, the quality of Japanese motorcycles is obviously better than Chinese products caught in low-price competition, and through improving after-sales service, Japanese motorcycles have regained market dominance, and Chinese motorcycles have almost withdrawn from the Vietnamese market.
Japan's Honda has also launched low-priced products to counter the mid-range market, directly impacting the share of Chinese brands.
In addition, the Vietnamese government has adopted a policy to protect domestic industries.
In 2003, Vietnam significantly increased the import tariff on motorcycles to 100%, and also stipulated that foreign-funded enterprises would ban sales if they did not invest in local factories, which forced Chinese companies to build production lines in Vietnam, resulting in overcapacity and vicious competition continued to intensify.
Some companies have also instigated Vietnamese manufacturers to use inferior components to reduce costs, which has further worsened the reputation of Chinese brands.
Under the condition of loss, many enterprises have also chosen to continue to support hard and refuse to withdraw from the market, which has led to the inability to establish a perfect after-sales service network, and a large number of quality problems have been exposed to make the reputation of Chinese brands plummet.
Under the double blow of declining quality and insufficient after-sales, the credibility of Chinese motorcycle brands in the Vietnamese market has been seriously damaged.
Some industry insiders pointed out that Chinese companies were complacent after the initial success of the Vietnamese market, overemphasizing the low-price strategy and neglecting quality control and brand cultivation.
Japanese companies understand that quality is the lifeline, and they have established a high-quality and reliable image through continuous design improvement and strict management, which is in stark contrast to Chinese companies that rely solely on low-price strategies.
Nowadays, when it comes to Chinese brands, the first reaction of Vietnamese consumers is "inferior" and "unused".
In the case of serious deterioration of word of mouth and image, Chinese motorcycles have almost completely withdrawn from the Vietnamese market, and its glory of occupying 80% of the market can only become history.
Expected to return to the Vietnamese market?
With the vicious price war between various enterprises, Chinese motorcycle brands have lowered prices to compete for the market, but at the same time, they inevitably sacrifice product quality.
Coupled with the neglect of brand building and after-sales service, Chinese motorcycle brands are clearly in the downside in the Vietnamese market, and Japanese brands have taken advantage of the trend to regain their dominant position.
In recent years, Chinese motorcycle companies are actively seeking to re-expand the Southeast Asian market, especially the traditional strength of Vietnam.
Chinese motorcycle companies reflected on the price war in the Vietnamese market in the past, which led to product price reduction and quality decline, and were determined to abandon the vicious competition model.
Enterprises will increase investment in research and development, launch products with higher quality and better performance, and win the market with technological innovation.
Specifically, Chinese motorcycle companies plan to invest at least 5% of their annual revenue in core technology research and development in the next three years, focusing on breaking through technical bottlenecks in engines and electronic controls.
At the same time, the company will also hire domestic and foreign motorcycle industry experts, establish a technological innovation team, and develop a series of new products with excellent performance that meet the needs of the Southeast Asian market.
Not only that, Chinese companies will adjust their product structure, actively expand new energy electric motorcycles, and comply with the Vietnamese government's policy orientation to encourage electrification.
The advantages of electric motorcycles such as environmental protection, energy saving and ease of use will help open up the local market.
With the improvement of living standards, Vietnam has gradually introduced some policies and measures to restrict ordinary fuel motorcycles, electric motorcycles as a more environmentally friendly choice, the market prospect is broad.
Chinese companies fully grasp this trend and vigorously explore the Vietnamese electric motorcycle market, in 2022 alone, China's electric motorcycle exports to Vietnam exceeded 600,000 units, a year-on-year increase of more than 15%, and it is expected that the share of Chinese electric motorcycles in the Vietnamese market will continue to expand in the next few years.
Of course, to truly return to the Vietnamese market, it is not enough to rely solely on production and price advantages.
Chinese companies also need to continue to work product quality and brand image, and strive to change the old impression of Vietnamese consumers on Chinese motorcycles as soon as possible.
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