Modularization in the Chinese Motorcycles Industry

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World's Largest Motorcycle Manufacturer Contd...

The dramatic increase in the sales of Chinese motorcycles posed a threat to global leaders like Honda3 and Yamaha4 whose market share in China and nearby countries was declining rapidly5. For instance, in Vietnam, Honda's market share had declined from nearly 90 per cent to only 30 per cent in the five years since Chinese manufacturers began selling motorcycles in that country. The average export price of a Chinese motorcycle had dropped from $700 in the late 1990s -when it was already several hundred dollars less than the equivalent Japanese model -to below $200 by 2003-04.

Chongqing, a southwest China municipality, one of the major production bases⁶ for several large motorcycle manufacturing companies in China, emerged as the key location for Chinese motorcycle exports.

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3] Japan-based Honda Motor Company manufactures a variety of motor products, ranging from small general-purpose engines to specialty sports cars. Honda produces a wide range of motorcycles, ranging between 50-cc and 1,800-cc.

4] Japan-based Yamaha Motor Company Limited was founded in 1955 by separating from Yamaha Corporation, a leading musical instruments manufacturer. The company manufactures motorcycles (world's second largest manufacturer in 2004), marine engines, boats, all-terrain vehicles, snowmobiles, golf cars, car engines, industrial robots, gas engine heat-pump air conditioners, unmanned helicopters and electro-hybrid bicycles. As on February 28, 2005, the company recorded sales of $9657.8 mn and profits of $379.8 mn.

5] Honda's motorcycle sales in China dropped by 27 per cent, while Yamaha's sales plunged by 49 per cent in 2001.

6] Other provinces are Jiangsu-Zhejiang and Guangdong. Chongqing has a good industrial foundation for motorcycles parts and accessories. The Jiangsu-Zhejiang region is the frontrunner for private sector motorcycle manufacturing, relying on flexibility, cost and massive injections of private capital. Guangdong became a motorcycle manufacturing hub after the economic reforms introduced by the Communist Government unshackled the motorcycle industry from government regulations.

7] Intellectual property rights are the rights accorded to persons for the exclusive use of creations of their minds. They are customarily divided into two areas: copyrights and rights related to copyright and industrial property. The TRIPs Agreement defines the following IPRs: (i) Copyrights and related rights; (ii) Trademarks; (iii) Geographical indications; (iv) Industrial designs; (v) Patents; (vi) Layout designs (topographies) of integrated circuits; and (vii) Protection of undisclosed information.