Direct Exhibition of Western Brands Significantly Falls Despite Record-high Number of Exhibitors
World’s Largest Bike Market Awaits Sunrise
The 26th China International Bicycle Fair (China Cycle 2016) opened its doors from May 6 to 9 in Shanghai, under the exhibition theme of “Fusion, Innovation, Development” and featuring 1322 exhibitors (with 250 new exhibitors) from 27 countries in 6853 booths, Asia Bicycle Alliance (ABA) meeting, design awards and domestic market profiles. With e-bike export picking up in China, the number of lithium e-bike exhibitors rose 25% compared to 2015 and the number of outdoor cycling equipment exhibitors increased 33%.
Show Theme: “Fusion, Innovation, Development”
Addressing the opening ceremony, Zhongchao Ma, chairman of the China Bicycle Association, said, “The Shanghai Show is a perfect place for Chinese and Asian brands to introduce innovative products and new business opportunities for the bicycle industry,” while admitting the fact that the domestic market is now needs to adjust to a slower Chinese economy.
Announced at the Fair was the establishment of China’s first Research, Manufacturing and Development Center and Demonstration Base in Shanghai, linking the industry to academia (Shanghai Second Polytechnic University), in response to the growing need for research and workforce quality in the vast bike industry. The center will apply internet, big data and handson experience to upgrade manufacturing and also produce “smart bikes” and environmentally friendly parts for the next boom.
Direct Exhibits of European, US Brands Plunge Looking at the overall number of exhibitors, this year’s show increased in scale, but the number of exhibiting companies from overseas was down from 131 last year to 110 this year, a decrease of more than 20 companies. Moreover, the majority of those who dropped out were leading European and US brands that had been exhibiting with the hope of capturing a share of China’s enormous market. These firms, which included Specialized, Colnago, Scott, Trek, and Cannondale, among others, had been quick to jump into the market in China last year when it was seeing rapid growth in domestic demand for high-grade sports bikes, and enjoyed high name recognition there, but pulled out of the show this year. In contrast, Look was back for the first time in five years. The Accell Group had focused primarily on the Ghost in its exhibits up until last year, but added other leading brands such as the Lapierre, Hibike and Koga to its lineup at last year’s show, and CEO Rene Takens himself was at the booth to greet and talk with visitors, indicating how seriously the company was taking the event. This year, however, rather than exhibiting directly, the Accell Group displayed its products at the booth of the Tianjin Golden Wheel Group, with which it has concluded a new agency contract, and limited its exhibit to the Lapierre. No personnel from the firm’s headquarters were present at the booth. Direct exhibits of European and US bicycle brands were few and far between, and there was also a plunge in the number of visitors from those regions. As evidenced by these, the burden of surplus inventories worldwide and uncertainty about China’s future economic situation cast a strong shadow over the Shanghai show this year.
Taiwanese Makers in Mainland China Struggle with Both Manufacturing, Marketing
Readers will find a detailed report describing the current situation in the bicycle industry in Taiwan under our general overview, but in a brief recap, 2016 exports have been steadily decreasing since the beginning of the year on a monetary basis, dropping 20 to 30% each month compared to the same month last year. Even at Giant, which has had strong performance figures for more than 20 years and has 5,000 stores specializing in its brand, with annual sales of 2.5 million bikes, has been seeing negative year-on-year figures since last year. Not only that, but on the production side, wages have been going up 10 to 15% a year, and companies are burdened by other expenses as well, including five different types of social insurance and costs for building dormitories, providing meals and other employee benefits, so that overall, the cost of running a plant in China has been skyrocketing. Adding in costs for environmental refurbishment such as wastewater disposal and smoke elimination, and given the difficulty in obtaining permits and approvals, foreign-owned companies have been facing steadily higher hurdles. Many of the companies exhibiting at this year’s show said that they still have expectations concerning China’s vast market, but given the stagnant situation at the moment, they have no idea where things are going to go. Taiwanese manufacturers with plants in mainland China are dealing with growing uncertainty and puzzlement regarding their future