Local assemblers unhappy about Chinese motorcycles
By Tantri Yuliandini
JAKARTA (JP): The influx of Chinese motorcycles has caused waves in the country's motorbike market, threatening the domination of Japanese brands, especially in the lower end of the market.
Since the government eased regulations on the importation of completely built up motorcycles in late 1999, at least 57 brands of Chinese motorcycles have entered the market, many of them coming in last year.
Last year alone saw the importation of 173,834 motorcycles, according to data from the Ministry of Industry and Trade, a major number of them from Chinese producers.
Motorcycles with brand names such as Jialing, Jiincheng, Beijing and Sanex have become commonplace on the streets of Jakarta, as well as other parts of the country. They also compete with Japanese brands in TV advertisements, recruiting well-known figures to endorse their products.
Muliadi Harahap, branch manager of PT Indojaya Utama which distributes Beijing motorcycles, said that the main draw of Chinese motorcycles was the low price compared to locally assembled Japanese brands.
"It's really back to the problem of economics. Honda motorcycles have become too high in price to afford," he told The Jakarta Post over the weekend, explaining that a Honda Supra costs about Rp 11.8 million (US$1,242) compared to the highest price for a Chinese version of a similar model of about Rp 8.5 million ($895).
The lower prices are the main force behind the success of Chinese motorcycles acquiring more than 30 percent of the motorcycle market in Indonesia, Muliadi said.
It has also triggered allegations of dumping practices from local assemblers of Japanese motorcycles.
Indonesian Motorcycle Industry Association (AISI) chairman Ridwan Gunawan said that the eagerness of Chinese producers to export their products had prompted them to sell at a lower price.
He said that production capacity in China was more than 20 million units a year but its own market only reached about 11 million motorcycles, making Chinese producers pursue an aggressive export strategy to sell the excess capacity.
AISI groups agents and assemblers of popular Japanese brands such as Honda, Yamaha, Suzuki and Kawasaki as well as Italy's Piaggio Vespa. The association recorded domestic sales of 858,190 motorcycles and exports of 115,278 motorcycles.
According to a survey conducted by AISI, Chinese-make four- stroke cub motorcycles with 100 cc engine capacity should cost about US$520 to $560, which would become higher when factory location and transportation costs were taken into account, Ridwan said.
"However, it is a fact that some manufacturers have offered cub models for as low as $450," he said, adding that since the price offered was lower than the domestic price in China, it could be considered as leaning toward dumping practices.
The association filed a petition in August last year for the Indonesian Anti-Dumping Committee (KADI) to further investigate the allegations. Investigations are still under way.
Nevertheless, Ridwan said it was plausible for Chinese motorcycles to be marketed at a cheaper price.
He said that Chinese motorcycles used local materials for the components, some of which were not up to international standards, and that the quality of Chinese motorcycles was not as high as Japanese counterparts.
Low labor costs in China also played a part in keeping prices down, Ridwan said.
Muliadi acknowledged that presently Chinese motorcycles were of inferior quality to Japanese brands, adding that in quality Honda was still ahead.
Among the many grievances of Japanese motorcycle producers are the alleged infringements of their patents by Chinese producers.
"They could very well accuse (Chinese motorcycles of) infringements because of the fierce competition between (Japanese and Chinese) brands," Muliadi said, citing allegations that Chinese motorcycles infringed a patent on a Japanese automatic clutch system.
But he denied that Beijing motorcycles infringed the clutch patent, saying that the clutch system Beijing uses is similar but larger in size.
"If the system is the same and the size is the same, then they (Japanese motorcycle producers) could have a case of infringement," Muliadi said.
Recently, the producers of Honda motorcycle and distributor PT Astra Honda Motor reportedly found seven patent infringement cases on its decompression device, out of the nine Chinese motorcycles investigated in Indonesia.
Honda has demanded that Chinese motorcycle importers stop imports and dismantle the device from existing stock.
Ridwan foresees that in the future only a few of the 57 Chinese brands will survive, especially with the ASEAN Free Trade Area (AFTA) being implemented in 2002.
Muliadi agreed, saying that he expected only about 10 percent of the current brands to survive AFTA.
"The ones who survive will be those that have far-reaching vision and immediately invest in production facilities, such as factories and assembling plants in Indonesia," he said.