“Prediction is very difficult, especially if it’s about the future.”
–Nils Bohr, Nobel laureate in Physics
China is the second largest economy in the world and the United States is the second-largest export destination. This is the world we are familiar with. But world markets continue to evolve.
It has been predicted that on its present course, by 2015 China will lose its cost advantage for manufacturing goods, and will have costs about equal to American companies. This slowing pattern subtracts from the country’s growth and is a troublesome development for not only Chinese profits, but additionally for those who depend on their products.
Manufacturers in China, notable for low-cost products, are being squeezed by multiple factors. Increasing labor wages, the rising value of China’s currency, shipping costs to customers, and increasing environmental demands are eroding the cost advantages they once enjoyed. Their domestic consumers as well as global customers are pressing for better quality control and improvements to “dirty” operations using cheap coal and iron ore. At the same time, manufacturers are trying to keep up with customer demands for fresh styles and new relevant products.
In October 2012 I reported in this column frustrations hearing “not possible” when I described to factory reps some needed modifications to vehicles, a few of which involved safety issues. I was losing money because I could not satisfy shoppers, and the factory was losing business that went to Japan, Europe, or Korea.
In January 2013 I responded to Dave McMullan’s earlier article (December 2012) with complete agreement regarding the deplorable lack of support and service China extends to American businesses.
My August 2013 column directed attention to the repeated appeals for 250 cc ranch/utility quads I made to manufacturers who listened with interest and ignored the need. I get customer requests every week, and I have nothing to offer them. There is a strong market that exists here, now, and we ignore it at our peril. We are sending buyers to other brands.
These were signs of limitations imposed by problems in the Chinese pipeline that I have had trouble understanding.
I believe there is cause for optimism. China’s leaders seem now to be paying more attention to the business challenges of today and in the future. Concerns about factories that may contribute to environmental degradation has led to new regulations for safe management of hazardous chemicals, like the law enacted December 1, 2013 that affects any business involved in the production and use of hazardous chemicals, and any business importing or transporting chemicals into China. The Chinese government is ramping up support for financial institutions that can bring tax breaks for small businesses.
Confidence in China remains strong as we see the announcement that automaker Fiat-Chrysler will begin producing three American brand Jeep sport utility vehicle models in 2015, including one specifically designed for the Chinese market. This is a joint venture with Guangzhou Automobile Group Co. at a new manufacturing branch in the southern city of Guangzhou.
A proven key to success in any marketplace is listening.
In my dealership I listen every day to customer desires, needs, and complaints. In my most respectful and emphatic manner, I pass this valuable information to Chinese distributors and factories. I would like to report to you, my readers, that the years I have spent owning and riding motorcycles, ATVs, scooters, and go carts and my years importing, selling and servicing these vehicles, and my success as a business owner has granted me the credentials and reputation to bring about even tiny changes from my manufacturers. But that is not the report I have for you.
Chinese ATVs, motorcycles, scooters, and dirt bikes have for the last twelve years represented what China assumes Americans want. Contrast this with the practices of Japanese companies, who have found in their forty to fifty years in this country a system that is extremely responsive to the wishes of their customers. The introduction of new models is followed by surveying their dealers and buyers on specifically what works and what doesn’t, and suggested improvements. Representatives of the company go to race tracks and events where they can watch the product in action and listen to consumers. All this data is reported to Japan, where products are re-developed as needed to bring in new riders and keep current consumers happy.
Besides listening, success also depends a great deal on what has been called long-term thinking. This is the theme of Jeff Bezos, the man who invented Amazon. No one would argue he is not successful. He looks to the future with market research and an intuitive sense of the needs of the future. He looks forward.
China is entering a new business chapter requiring new thinking and planning. We are all adjusting to evolving trends of consumer tastes, new technologies, and the challenges of cost containment. Slower growth is to be expected as changes are being made to accommodate the demands for sustainable, efficient, and cleaner production while responding to consumer trends.
Trends we are watching today include vehicles designed to suit women, all ages, all ethnicities, electric vehicles of all types, small vehicles, powerful vehicles… and ideas we can’t even see on the horizon yet.
Slowdown in just one small segment of China’s economy, the manufacture and service of powersport vehicles, is a heavy weight that contributes to the drag on profits. Every business in every sector of the larger economy must look forward if they are to stay relevant and successful. Manufacturers succeed as long as they produce goods people want, at a price that gives fair value. Those who best meet consumer needs will step profitably into the future.
I hope I can report back to you soon about the positive changes Chinese manufacturers are making to current vehicles like the following items……
- Custom Exhaust that is not only powerful, and sounds good, but meets all countries new emission standards.
- Bearings in the steering shafts, and swing arms
- Solid Delrin or Nylon rod to be used for bushings in swing arms, A arms, and all pivitol points where bearings can not be used.
- High quality marine materials used for seat covers… and a black gripped material for the tops… so riders do not slide off.
- 250cc Automatic CVT 2×4 ranch quads.
- Custom sport quads built special for the sand with longer rear swing arms.
- Custom graphics for all dirt bikes and ATVs designed by pro race tem designers in the USA.
- 4 wheel disk brakes on all kids and adult ATVs.
- Custom Color matched gel grips on all vehicles, color matched high quality bar pads, and matching aluminum handle bars.
I look forward to YOUR thoughts and comments.