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In 2018, a report from the Vietnamese media was staggering: Chinese motorcycles now have less than 1% of the market share in this once large market.
This astonishing statistic is a serious wake-up call for us.
You know, back to 20 years ago in 1998, Chinese motorcycles relied on a low price strategy to conquer this large market in Southeast Asia in one fell swoop, and once occupied an absolute dominance of up to 90%.
At that time, Vietnam's economy was rising rapidly, the infrastructure was backward, and the people had a strong demand for affordable transportation. The high pricing of Japanese automakers has won an excellent opportunity for Chinese manufacturers to enter the market.
With their price advantage, they swept the entire market in a short period of time.
Who would have thought that this initial victory would eventually turn into a bleak downfall? From glory to decline, from dominance to marginalization, people are inevitably full of emotion when looking back on the past.
Once upon a time, Chinese motorcycles were the "kings" that occupied ninety percent of the Vietnamese market. Now only a small 1% of the characters remain.
There must be many profound lessons in this tortuous course of ups and downs. It not only has great significance for the development of China's motorcycle industry, but also the entire manufacturing industry.
We cannot but learn and reflect on this past.
Back in 1995, in the mid-90s of the 20th century, China's motorcycle industry encountered a severe bottleneck in development. The domestic market is becoming increasingly saturated, and the government has also introduced a series of restrictive policies, and the future of the industry can be described as stressful.
At this critical juncture, Chinese motorcycle companies have to look for breakthroughs and new ways out. Some have managed to divert investment to northern cities; Others have set their sights on the south, increasing the pace of expansion there.
Either way, their anxiety is evident.
At this moment, a wisp of news came from Southeast Asia, giving them great encouragement and expectation like timely rain. It turned out that Vietnam's economy began to grow by leaps and bounds in those years, and it was developing at a rapid pace every day.
This has undoubtedly opened a whole new door for them.
Mr. Yin Mingshan, as the leader of Chongqing Lifan Group at that time, saw this great opportunity. He immediately joined hands with a number of well-known domestic motorcycle brands such as Jialing, Zongshen, and Loncin to make full preparations and determined to enter this emerging market with huge potential.
The price of the product was only $700, which was more than $500 less than the price of mainstream motorcycles in Vietnam at the time. Such a large preferential strategy will undoubtedly give them a huge competitive advantage in this competition.
With the advantage of low prices, the pace of expansion of Chinese motorcycle manufacturers in the Vietnamese market is like a sudden storm, which instantly swept this new territory.
The speed of their attack is rare in history. In just a few years, an astonishing breakthrough from 0 to 90% has been achieved. Vietnam's motorcycle market, which was originally firmly controlled by Japanese-funded companies, collapsed in an instant under this crazy "price killing".
This is clearly confirmed by the figures of 2002, when the market share of Chinese motorcycles in Vietnam skyrocketed to an astonishing level of 90%. It can be said that this is the most brilliant victory made by Made in China in overseas markets.
At that time, it was like a triumphant army pressing on Vietnam, and the Japanese-funded brands were defeated and retreated. The local people in Vietnam are even more excited about these high-quality and inexpensive means of transportation, and they have abandoned their original mounts to embrace these emerging Chinese brands.
In the deafening cheers, the Chinese motorcycle pursued the victory and quickly occupied the commanding heights of the Vietnamese market. Japanese car companies, which were originally regarded as invincible, suffered heavy losses in this "price war" in this short-handed battle.
For China's motorcycle industry, which has been in the doldrums for many years, this is undoubtedly a great victory for a long time. The whole industry is excited and has great confidence in the performance of the international market in the future.
However, this landslide victory has cast a hazy fog over Chinese motorcycle companies, causing them to gradually lose their sober minds in the joy of victory.
At the moment of occupying the commanding heights and beating the water dogs, some hidden dangers have begun to gradually surface. First of all, the sharp decline in corporate profit margins.
Back then, in order to seize the market, they had great sincerity and determination to lower the price of their products to an incredible extent. According to Mr. Yin Mingshan's complaints, at one time, for every motorcycle sold, they could only earn a small profit of 30 yuan.
This is simply doing business without capital, which can be called "voluntary dedication".
You know, at the beginning of this price war, the wholesale price of motorcycles in Vietnam was $1,200. However, as soon as Chinese companies frantically "killed at low prices", this figure was unexpectedly dropped by more than $600 overnight, leaving only a little more than $200.
For enterprises, such profit margins are really a bit too thin and reluctant.
Secondly, product quality problems also began to occur from time to time. Due to meager profits, enterprises are stretched thin in terms of after-sales service outlets and human and financial resources, and cannot give sufficient support and guarantee.
Once there is a quality problem, it is difficult to deal with it in a timely and proper manner, which will inevitably seriously affect the trust of consumers and brand reputation.
Sure enough, the enthusiasm of Vietnamese locals for these "cost-effective" products is beginning to wane. They begin to doubt the quality of these low-priced products, and if they encounter problems, they will lose their trust in the brand.
The decline in word-of-mouth eventually led to the sales of Chinese motorcycles in Vietnam falling into a sluggish quagmire.
Faced with an increasingly severe business environment, Chinese motorcycle companies have to take some self-help measures to try to turn things around. However, their approach was somewhat hasty and reactive, and in the end it backfired, and instead suffered a more severe blow.
At that time, some companies chose to build large-scale new production bases in Vietnam, thinking that by building factories in Vietnam, they could avoid the burden of high tariffs and obtain greater profit margins.
At the same time, some manufacturers are trying to expand their market territory by acquiring local brands in Vietnam.
However, none of these approaches can fundamentally solve the immediate needs. In order to fully protect the development of local industries, the Vietnamese government has resolutely implemented a series of strict trade barrier policies, completely cutting off the upstream channels of Chinese enterprises.
They are constantly raising tariffs on imported motorcycles and mandating that all motorcycles sold in Vietnam must be 100% locally produced before they can be marketed.
This is undoubtedly a blow to the head of Chinese motorcycle companies, curbing their rampant footsteps in the local area.
In the short term, profit margins have been greatly compressed, and Chinese enterprises can only survive in place. In the long run, if they insist on taking root in Vietnam, they must unconditionally follow the rules of the game by the local government and completely localize production.
In stark contrast, some Japanese brands are visionary. From the outset, they were aware of the frenzied expansion of Chinese rivals in the Vietnamese market with their low-cost killer features, but they did not blindly follow suit.
The most important thing is that no matter what method is adopted, Japanese car companies will adhere to the high-quality development route and will never compromise on product quality. As a result, although their products are slightly inferior to Chinese car companies in terms of price, they still maintain strong market competitiveness.
Now, looking back on this experience, people deeply feel that there are too many lessons worth learning and experiencing again and again for every Chinese enterprise.
One of the most critical points is that companies cannot overrely on the "double-edged sword" of price wars. Low prices are of course conducive to rapid market expansion, but if you blindly pursue and ignore product quality and service levels, you will only hurt yourself in the end.
As the bitter lesson of Chinese motorcycles in Vietnam shows, they once occupied the commanding heights with their low price advantage, but soon fell into the dilemma of plummeting profit margins and inability to maintain quality.
The trust of local consumers in them has also evaporated, making the former "king" finally collapse.
In stark contrast, Japanese automakers are far-sighted. They have never blindly followed the low-price competition of Chinese companies, but chose to stick to product quality, win the favor of consumers with reasonable prices and high-quality services, and finally hold on to this important overseas market.
It can be said that the failure of China's motorcycle companies reflects the general shortcomings of the development of many domestic enterprises: too much focus on short-term scale expansion, and ignore the foundation of sustainable development; Blindly pursuing low-cost competition, but little is known about the systematic cultivation of comprehensive strength.
This is one of the major challenges facing Chinese enterprises and the manufacturing industry today. In order to remain invincible in the tide of globalization, we must comprehensively strengthen our own comprehensive strength, and we cannot fight alone.
Only in this way can we truly move towards the broad road of high-quality development, instead of blindly chasing the low-end market. Only by concentrating resources to deepen the construction of brand, quality, service, scientific and technological research and development, industry self-discipline, etc., can Made in China win the sincere support of consumers around the world, so as to take the initiative in a higher level of competition.
As the saying goes, "suffering is a blessing", although this lesson is cruel, it just gives us a shot in the arm. Only by drawing strength from our losses will we be able to avoid repeating the mistakes of the past and ultimately overtaking in the global market.