Chinas bicycles: retail price 5 times higher than factory price

category:Finance
 Chinas bicycles: retail price 5 times higher than factory price


As the number of overseas new coronavirus infections soared again, the number of people who choose to travel and exercise by bike has increased significantly worldwide. In addition, with the subsidy and encouragement of some governments, the overseas sales of bicycles in China have increased sharply. According to the data of Ali international station, bicycle Gmv has doubled year-on-year growth for six consecutive months, and the order volume in October has increased by 220% compared with last year.

After the blockade was lifted in the early stage, overseas consumers have exhausted the local bicycle inventory. At the production end, a large number of overseas factories shut down and the supply of spare parts is insufficient. Therefore, overseas importers have turned their eyes to China.

Inventory bottoms out, enterprise orders to next July

Phoenixs seven production lines have been fully powered. In order to catch up with orders, they often work late into the night. Luo Shao told reporters that at the end of October, Shanghai Phoenix acquired two bicycle factories, namely Tianjin ESSEC and Tianjin Tianren, which will greatly increase the production capacity. At present, Phoenix is increasing its efforts to recruit talents, from the manufacturing side, to the marketing, and then to the management, are recruiting people.

Figure 1: seven production lines of Fenghuang bicycle are fully opened

Photo 2: late night rush of Phoenix Bicycle Factory

He said that due to the booming overseas market, bicycle exports are now facing a situation of one container is hard to find: the cost of a container has risen from $800 in the past to $3400, and businesses often cant grab the container.

Another bicycle company, e-luda, is working overtime to speed up work. The company dares not stop for a moment. It is processing and producing bicycles. Workers work overtime to more than 10 oclock every night. We have also found two local factories for processing. Li Qing, head of the company, said.

Figure 3: eloda works overtime till 10:00 p.m

In Luos view, the epidemic has fostered overseas users habit of cycling, which may last until 2022.

He said that affected by the new crown epidemic, the number of people who choose to travel and exercise by bicycle has increased significantly, and bicycle sales have increased significantly. However, after the blockade of cities in various countries has been lifted in the early stage, consumers have digested all foreign bicycle stocks for safety and fitness considerations, and it will take several years to restock the inventory. It is expected that in the next few years, foreign bicycles will usher in a new era Round good market.

And the recent overseas epidemic has been repeated again and again, which has stimulated the upsurge of consumers to rush to buy Chinese bicycles.

The export prices of Phoenix and eloda bicycles have increased by about 50% compared with that before the epidemic, but the overseas retail prices have increased several times. Compared with our ex factory price, the retail price of bicycles overseas has increased about five times. Luo said.

Another reason for Chinas overseas bicycle explosion is that overseas factories shut down and the supply of bicycle spare parts is hindered. The epidemic situation has led to the shutdown or closure of foreign factories. There is a shortage of spare parts for all overseas bicycles. Only parts made in China can be used. Now many customers have proposed to Phoenix that they hope to replace overseas parts with domestic ones. In addition, because of the soaring sales, it is also difficult for suppliers who used to rely on overseas spare parts to get supplies from Chinese factories. Luo said.

As a big country in bicycle production and marketing, China has produced more than 70% of the worlds bicycles, with a complete industrial chain from parts to vehicle assembly, mature supporting industries, stable technical workers, and orderly resumption of work and production after the epidemic, making China the mainstay to stabilize the global bicycle supply.

Luo said that Chinas current production capacity of bicycles is 70-80 million, and that of the world is 106 million. In the past few years, Chinas exports of bicycles have basically stabilized between 56 million and 59 million.

According to the data of China Bicycle Association, in 2019, the output of bicycles will be 65.002 million and that of electric bicycles will be 36.093 million. At the 2019 China bicycle industry conference, Liu Suwen, President of China Bicycle Association, introduced that Chinas bicycles, electric powered bicycles and electric bicycles have exported more than 1 billion vehicles, entering more than 160 countries and regions in the world.

Online explosion, there are more than ten times the number of enterprises receiving orders

Elodas export orders have greatly exceeded expectations. Previously, we had only one overseas buyer from South Korea, but during the epidemic period, eloda received more than 70 orders from overseas customers through the international station, which is 25 times of the customers and orders obtained by investing 500000 yuan in offline exhibitions. Li Qing said.

Figure 5: Mr. Li Qing, head of eloda, and European customers

The key to the performance explosion is the explosive growth of overseas orders online. Our online layout was earlier and focused on online operation. In the past, the year-on-year growth rate was between 50% and 60%. After the outbreak of the epidemic, this growth rate has become 150% - 160%

In Li Qings opinion, the epidemic has stimulated online business in two aspects: first, offline exhibitions were suspended or cancelled after the epidemic, which stimulated a large number of buyers to move to the online market; second, after the epidemic, foreign consumer behavior changed significantly, and transactions on e-commerce platforms increased rapidly. Even if the offline exhibition can still be held as scheduled, businesses will also consider the cost of acquiring customers and accelerate the transformation to online.

Since the second quarter of this year, bicycles on cross-border e-commerce platforms that focus on the C-end have seen explosive orders. For example, in May this year, the sales of bicycles in the Spanish market on the Express Express Platform increased by more than 22 times compared with that of last year, and the Italian and British markets also increased by 4 times. In the third quarter, with the further increase of overseas consumption demand and the bottom of merchant inventory, b-end business also began to accelerate the online migration.

Photo 6: bicycles on the streets of Europe

Luo said that the type of consumers in online business is changing. In the past, C-end customers were the main customers, but now many of them are small B (merchants)

He said that 90% of the new overseas customers of Fenghuang bicycle came from the international station. In September, the Gmv of Fenghuang bicycle increased by 150% on the international station platform. These purchasing countries are mainly distributed in 14 countries, including Romania, the United States, Peru, Georgia, Bolivia, Uruguay, Chile, the United Kingdom, Morocco, South Korea and Nepal.

It is worth noting that compared with the offline large-scale export trade, online trade has the characteristics of small batch, multi batch and fast return order, which gives more flexibility and flexibility to bicycle production, and can even customize bicycles according to customer needs and continue to iterate.

The rapid turnover of online business is also conducive to coping with the sharp fluctuation of exchange rate this year.

Li Qing told reporters that the recent rapid appreciation of the RMB has brought considerable pressure to domestic export enterprises. In particular, the traditional foreign trade merchants who sign long-term fixed unit price contracts will be greatly affected. The revenue at the time of signing the contract may be reduced with the exchange rate, directly offsetting the gross profit of the enterprise. However, most of the online business is small batch and multi batch orders, so it is more flexible to deal with the change of exchange rate. Each batch of orders ends quickly. The price of the next order will be adjusted according to the exchange rate, so as to ensure the gross profit of the enterprise. In the more frequent interaction with overseas consumers, Chinas bicycle manufacturers have begun to consciously promote product upgrading. Phoenix bicycle will launch more new products according to the needs of overseas consumers. For example, in big cities with 10-30 km of activities, our lithium tram is becoming the first choice of consumers. We have also launched bicycles with body fat rate detection, mobile phone Bluetooth and other functions, which are more popular with overseas young people. Luo said, the epidemic has brought a window period for Chinas bicycle industry to seize the overseas market, which is a good opportunity for the bicycle industry to do quality, research and development and public praise. Source: editor in charge of economic report in the 21st century: Zhong Qiming_ NF5619

Li Qing told reporters that the recent rapid appreciation of the RMB has brought considerable pressure to domestic export enterprises. In particular, the traditional foreign trade merchants who sign long-term fixed unit price contracts will be greatly affected. The revenue at the time of signing the contract may be reduced with the exchange rate, directly offsetting the gross profit of the enterprise. However, most of the online business is small batch and multi batch orders, so it is more flexible to deal with the change of exchange rate. Each batch of orders ends quickly. The price of the next order will be adjusted according to the exchange rate, so as to ensure the gross profit of the enterprise.

In the more frequent interaction with overseas consumers, Chinas bicycle manufacturers have begun to consciously promote product upgrading.

Phoenix bicycle will launch more new products according to the needs of overseas consumers. For example, in big cities with 10-30 km of activities, our lithium tram is becoming the first choice of consumers. We have also launched bicycles with body fat rate detection, mobile phone Bluetooth and other functions, which are more popular with overseas young people. Luo said, the epidemic has brought a window period for Chinas bicycle industry to seize the overseas market, which is a good opportunity for the bicycle industry to do quality, research and development and public praise.