Preface
The mainland is one of the world's largest motorcycle producers and sellers, once recorded an export volume of 1.92 billion yuan in Vietnam, winning 80% of Vietnam's motorcycle market.
However, Japanese motorcycles have gradually taken away the Vietnamese market, while domestic motorcycles can only hold on to a meagre 1% share.
Why did Chinese motorcycles lose to Japan? What are the mysteries of this?
The Vietnamese market, which has been gained and lost
Since 1998, China's motorcycle industry has developed rapidly, and it has been widely favored by the market for its exquisite craftsmanship and affordable prices, and China has become one of the world's largest motorcycle producers and sellers.
Soon, the influence of domestic motorcycles spread to the whole of Asia, and Vietnam, which is adjacent to China, has become an "iron fan" of domestic motorcycles.
At the beginning, Chinese motorcycles could provide almost the same experience at less than half the price of Japanese motorcycles, and quickly seized the Vietnamese market from Japanese companies:
As of 2002, Chinese motorcycle brands once accounted for 80% of the Vietnamese motorcycle market, and it can be said that they successfully "landed" on the corpse of a Japanese car
However, the good times did not last long, and for various reasons, the market share of Chinese motorcycles fell rapidly, and now only 1% is left, and Shengsheng has "returned" the market to Japan.
Among them, what are the ups and downs of China's motorcycles? Why can Vietnam attract the two giants of China and Japan to compete for the market?
The glory of the past
China's manufacturing industry has always been a feared existence in the world, as long as China sees and has the ability to manufacture products, almost all can subvert its market structure.
This includes motorcycle exports, and China's first stop in the world is neighboring Vietnam.
Although Vietnam is a "small country" of only 329,000 square kilometers, it has a population of more than 100 million, and coupled with the country's geographical characteristics, motorcycles have become the country's main means of transportation.
According to statistics, at the end of 2009, the number of motorcycles in Vietnam reached an astonishing 60 million, almost one per person.
Faced with the monopoly of 98% of the Vietnamese market by Japanese car companies, China's Jialing Group took the lead in making a move, and in 1997 sounded the clarion call to enter Vietnam with half the price of Japanese cars: $800 per unit.
Due to the development of China at that time, the labor cost was very low, coupled with the advantage of bordering Vietnam, 800 US dollars was "earned".
As a result, a number of Chinese motorcycle companies have followed suit and quickly occupied the Vietnamese market.
The ugliness of human nature
After Chinese car companies defeated Japan, Japan called China's motorcycle industry a "price butcher", but Chinese car companies gladly accepted this "ugly" title.
It's just that when the "external enemy" was eliminated, the butchers began a new round of battle, that is, "involution".
In order to seize more markets in Vietnam, major car companies do not hesitate to continue to reduce prices and fight each other, without considering the issue of win-win cooperation, just wanting to kill others and monopolize the market.
According to statistics, from the first entry into Vietnam in 1997 of 800 US dollars, to 99 years of squeezing out of Japan of 492 US dollars, and then to 200 US dollars in 2001 in the era of involution, many Chinese motorcycle companies have "no lower limit".
At that time, the motorcycle industry laughed at itself: if domestic motorcycles were sold by catties, they were not as expensive as pork ribs.
Due to the endless price war, the profits of motorcycle companies have also plummeted, from the initial "eating and drinking" that can earn more than 200 US dollars by selling one, to the "making a shout" with a single profit of only 30 yuan.
There are also bitter words among car companies, all waiting to "boil to death" their opponents first, and the results caused by too low profits have directly accelerated the "decline" of domestic car companies in Vietnam.
First, in order to maintain already negligible profits, car companies began to "cut corners".
This includes the replacement of relatively cheap parts, lax quality inspection and the reduction of after-sales investment, and Chinese car companies, which once held high the banner of cost performance, have since become synonymous with only focusing on "price comparison" rather than "performance".
Subsequently, more and more domestic motorcycles are becoming more and more frequent, and due to the control of after-sales investment, they are getting worse and worse.
On the other hand, because all the money is used to "reduce prices and make profits", how can there be funds for research and development, when Japan, such as the main "low fuel consumption" of "new cars" sent to the Vietnamese market one by one, Chinese car companies can only "take a step back" in price: or I will send you a spare rearview mirror......
With the gradual popularity of Japan's "small pedal", which is more in line with Vietnam's people's landform, Chinese motorcycle companies that lack R&D capabilities are completely suppressed by Japanese companies, and only some people who "really have no money" will occasionally patronize Chinese motorcycle brands.
The straw that broke the camel's back
Just when a number of domestic brands think that they can "row the river and rule" with Japan, Japan sells high-end, domestic products sell low-end, and they are all right, it is a sunny day, and another hammer is hammered to Chinese car companies.
That is, in order to protect the development of the local industry, Vietnam decided to increase the import duty on motorcycles.
This knife is the main artery, so a number of domestic car companies have chosen to withdraw directly from the Vietnamese market, and only a small number of car companies plan to build factories in Vietnam to do their death throes.
In order to "wipe out" Chinese car companies, Japanese companies led by Honda have even begun to launch "low-end products" and launched a loan purchase plan with a down payment of 30%.
So far, the Vietnamese motorcycle market has officially been "recaptured" by Japan, and a number of Chinese motorcycle companies have returned.
Therefore, the loss of Chinese motorcycles in the Vietnamese market, although there are "external troubles" due to Japan's scientific and technological progress, and "internal worries" due to the adjustment of the Vietnamese government's policies, the fundamental reason for the failure of Chinese motorcycles in the Vietnamese market is the "involution" of the greed of many state-owned enterprises.
The business that takes "low price" as its core competitiveness is destined to be difficult to last, and this has to remind me of two things related to "low price".
"Low price" is by no means the best way to compete
Chinese EMUs have been squeezed out due to "ultra-low prices".
On February 16, 2024, the Financial Times reported that the European Commission considered CRRC's participation in the tender for the Bulgarian Ministry of Transport and Communications to be suspected of using state subsidies to compete at ultra-low prices.
According to the Financial Times, China's offer is 47.5 percent lower than that of rival Spain, and even 46.7 percent lower than Bulgaria's local cost estimates.
As a result, after being charged with the title of "harming the market", CRRC was kicked out of the competition with a market value of 610 million euros per month.
Although the recent suppression of China's development by Europe and the United States is not uncommon, the overly "exaggerated" offer provided by CRRC in order to succeed in the bid is indeed a good idea.
And relying on low-price competition is not only happening in international trade, it has long been full of life for you and me.
Bad money in the food delivery industry drives out good money
In recent years, the entire takeaway industry has been shrouded in the news of "semi-finished product processing", "cooking packages", and "no kitchen stores", and this is the involution caused by blind low-price competition.
By visiting some physical stores, a shopkeeper who "withdrew" the cabinet on the takeaway platform complained of grievances:
"We can't do it at all, people use semi-finished products, and the microwave oven will be served as soon as it is heated, cheap and fast, and we have to go to the kitchen to ramen, sprinkle the ingredients, and pack it. ”
"Compared with others, the rent of my store, the salary of the chef, I go to the market to buy vegetables by myself, and then count the deductions on the platform, these are all costs, how can I sell them. ”
The "people" in the mouth of the owner is the "cooking bag" that has become more and more rampant on the takeaway platform in recent years, and with the popularity of the cooking bag, many stores do not reproduce it but choose semi-finished products.
This has led to concerns about the food hygiene and safety of cooking packages, after all, these cooking packages contain a large number of food additives.
If we do not stop this kind of competitive behavior of blindly reducing prices, then the ultimate victim will be the vast number of consumers.
Reflections on Chinese automakers
Fortunately, after experiencing the "defeat" in Vietnam, Chinese car companies have also carried out a deep reflection and realized that simply fighting price is not a long-term solution, and more energy is invested in product development and quality control.
With the spread of global new energy forces, Chinese car companies seem to have ushered in a turnaround in the Vietnamese market.
Compared with motorcycles, electric vehicles have the advantages of being more environmentally friendly, quieter and more energy-efficient, while the disadvantages of electric vehicles in terms of power and range compared to motorcycles are almost "negligible" in Vietnam.
With the traffic management regulations issued by the Vietnamese government in April 2022, it has decided to implement "motorcycle restrictions" in the next few years, which is a major benefit to Chinese electric vehicle manufacturers.
According to statistics, the total sales of electric two-wheelers in Vietnam in 2021 and 2022 will be 41,900 and 60,300 respectively, and in addition to 2 local Vietnamese companies, China's Dibao and Yadea have quietly climbed to the top of the sales list, and there is a trend of "big march".
Compared with the pure low price of the motorcycle industry, Chinese tram companies are obviously more prepared.
More advanced batteries, more reliable quality control, more comprehensive product selection and reasonable pricing system, this set of punches can be described as the gospel of Vietnam's "student party" and "office party".
We also have every reason to look forward to the development of domestic electric vehicles in Vietnam and the whole of Southeast Asia.
epilogue
From the Waterloo encountered by Chinese motorcycles in Vietnam, to the fact that Chinese trams can kill back the horse gun, the positive and negative just confirm how to really gain a foothold in the market.
The ultra-low-price strategy can indeed cause an impact for a time and conquer the city, but this kind of competition method that is like a large army pressing the territory and not growing an inch of grass will not only eliminate the "enemy army" in the end, but also destroy its own reputation and market, and the final result is that it is difficult to continue in the sick market.
Only by devoting more energy to product research and development and quality control, forming healthy competition with opponents, and jointly creating a fair and healthy market environment, is the way for the development of enterprises.
Resources
The scope of the EU's countervailing investigation into China has been expanded to extend from the automotive sector to the train sector – The Economic Observer
Qianbilou丨Domestic cars, there is a mirror called "domestic motorcycles"-Xinhuanet
What does the development of China's auto industry tell us - China Business News
20 years ago, why did Chinese motorcycles "fold" Southeast Asia?—— global network
The Vietnamese government asks five municipalities across the country to stop or restrict the use of motorcycles after 2030 - China Business News
Two-wheelers in Southeast Asia: The resonance of supply and demand, companies accelerate the pace of exports - the financial world
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