I don’t know if you have noticed but….
After Shanghai show there was an onslaught of articles and reviews talking about how Chinese bike brands are coming, how they have learned storytelling and brand building. There was a lot of praise and excitement about this.
To start with a disclaimer here, this is not a political article but rather a pure business analysis. All is fair in business, all companies are competitors in the market and they take the decisions which ensure a promise of a better future/profit for them, short or long term.
I must say that the reports look to be true, there are a lot of very nice bike brands, be it complete bikes or component groups, coming out of China, with a strong marketing campaigns. I can’t go on YouTube without one review of these bikes or components being suggested to me. The press is all over them sponsoring some major teams. Bankrupt and insolvent brands are all being bought up quickly. Attention, as important commodity, is definitely being dominated recently by these new players.
Hats off to them for playing the long game and moving fast, I really respect capable people.
But…. what does this mean to European industry?
Until now, similar to automotive, we have heavily relied on component suppliers from China and Asia in general. We did it because it was easy and profitable for us. Same as in the 80’s we thought this will never end and we will always have easy time getting what we want, this has made us lazy and complacent.
As economy goes the real wealth comes from adding value to the raw materials. The more value you add to the raw material and sell it the more wealth you gain. The Chinese, being business minded as they are, understand this very well. So, as an example, at first they added value to steel to make tubes, than weld them into frames, then they added value and painted it, they they added stickers, then made composite material frames, then they made eco system of components and then they decide to come with complete bikes…but here’s what’s happening now, they are taking the added value with the brand! Same situation as we see in the automotive industry, the complete value of the product has been taken. In the last 20 years we were the owners of this “value of the brand”.
This is changing! Until now our faithful suppliers and partners decided to come and take this last piece of value. And rightfully so, it is business and competition.
What can this mean for us in the future?
It is important to understand that if your supplier is competing with you in the same market he has all of the leverage over you!
He can play with the price, he can play with delivery time, he can play with the quality levels, he can withhold the technology and be more advanced, he can survive without you… For me the point of time we are in is very very scary!
The question here is how do we proceed?
Well first step is being aware of this trend.
Secondly to make our business decisions according to this knowledge and think more strategically in the long term.
We must choose business allies are and know who our business adversaries are. To survive in the future, you must choose a supplier who is not adversary or an ally of your adversary, even if this means short term loss.
Think strategically! We need strong bold leaders in the European bike industry who will bring awareness and transparency towards the end consumers. End consumers in Europe need to understand what they are investing in and what’s in it for them.
Business is fun and much like chess, there are so many paths and outcomes that it gets me excited every time I start to think about it.
My mission is to make the European bike industry independent and strong!
