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Electric bikes: Jinhua banks on strong industry chain

Makers take advantage of nearness to motor and battery suppliers to roll out upscale models that highlight power-efficiency.

Jinhua's proximity to various industry-related suppliers in Zhejiang province firms up its position as a major sourcing center for electric bikes and scooters in China. The city is currently the largest exporter of the product line, accounting for 15 to 25 percent of the country's total overseas shipments in terms of volume. It also contributes about 10 percent to revenue from outbound trade.

Makers there utilize the highly entrenched local transportation network to facilitate access to key components and processes from other areas in Zhejiang. For instance, they source electric batteries from Huzhou¡¯s Changxing and motors from Ningbo, and subcontract injection-molding services to Taizhou. These hubs are major producers of mountain, BMX and traditional bikes, and ATVs.

The city is also one of China's largest hardware manufacturing centers, allowing companies to procure various parts and accessories locally and roll out new designs faster.

These advantages have allowed Jinhua suppliers to enhance design and manufacturing capability further as they focus on upscale models that highlight comfort, style, safety and environmental friendliness. In-house R&D teams therefore direct their attention toward using motors, batteries and chargers that are more energy efficient.

Zhejiang Libahuang has invested in lithium battery development, creating models that are three times smaller, 25 percent lighter and last two or three times longer than SLA types.

Zhejiang Luyuan Electric Vehicle Co. Ltd, meanwhile, works with volume buyers and other partners such as local design houses in creating new concepts. It is one of the earliest manufacturers of e-bikes in China.

Upcoming releases from midsize and large suppliers boast spacious seats, customized handlebars, lithium-based batteries and high-tech control systems. These are mostly tailor-made according to users' age, gender and body type.

Appearance and style, on the other hand, are the central themes for small enterprises that do not have the capability to manufacture batteries and motors. They experiment with various low-cost materials in creating lightweight, yet sturdy units.

Challenges & strategies
Industry composition
Challenges & strategies

Jinhua's electric bikes and scooters industry relies mostly on the EU to drive exports. Almost half of the city's output is shipped there, the rest goes to the US, South America, the Middle East and Africa.

With the implementation of a new safety prerequisite in the region set for 2010, however, entry into the EU's booming e-bike industry has become costly for domestic players. The EN 15194 standard for electrical power-assisted cycles, together with an annex detailing EMC requirements, is forecast to hamper local suppliers' expansion there.

Sluggish export demand in recent months, compounded by the impending adoption of the CEN directive in the EU, contributed to the decline in Jinhua's overseas sales and market penetration. In the first five months of 2009, export revenue dropped to about $14 million, an almost 9 percent decrease over the same period the previous year.

Furthermore, Jinhua-based manufacturers must also contend with counterparts from other areas within Zhejiang such as Huzhou, Ningbo and Taizhou, and other sourcing hubs in Tianjin, and Guangdong and Jiangsu provinces.

Amid these challenges, Jinhua makers are looking at the domestic market and new overseas destinations, including Brazil and Turkey, to boost sales. They are also strengthening supply channels to shorten delivery time from 40 to about 30 days or less to attract more buyers. Stricter product quality testing and inspection procedures are likewise pursued.

For their part, state and local agencies have offered incentives and quality inspection assistance to local players, particularly small companies, to enhance competitiveness.

Export rebates given by the government for electric bikes and scooters have risen seven times since August 2008, reaching 14 to 15 percent in June 2009. Authorities have promised to release these refunds on time.

Moreover, the Jinhua Inspection and Quarantine Bureau has updated its quality standards to keep pace with international product safety directives, particularly those being implemented in EU-member countries. In mid-2009, the department invited T0‰5V Rhineland Shanghai to educate local manufacturers on the EN 15194 and 14764.

The Ningbo Light Industry Products Bicycle Inspection Center has likewise instructed industry players to heighten quality inspection efforts.

Industry composition

Jinhua's supplier base is dominated by small and midsize enterprises. Major players include Zhejiang Luyuan, Zhejiang Kingday and Zhejiang Libahuang.

They cater mostly to the midrange and high-end segments. Only a few makers roll out low-end versions.

Small suppliers are mostly OEM-oriented and have 30 to 100 full-time workers, including one to three R&D and three to five QC personnel. Their factories, about 1,000 to 3,000sqm, have an annual production capacity of 10,000 units. Most raw materials are sourced locally and assembled in-house.

Midsize companies cater to OEM and ODM clients and have 100 to 500 employees. R&D and QC teams are manned by three to 10 and 10 to 30 people, respectively. Bicycle and scooter frames and wheels are done in-house in 3,000 to 50,000sqm plants that have a yearly capacity of about 100,000 units. Batteries and other parts, on the other hand, are procured from domestic suppliers.

With 500 to 2,000 factory workers, large enterprises are capable of turning out 1 to 2 million units per year. They run 100,000 to 500,000sqm factories and have their own fabrication, material testing and R&D facilities. Design units of roughly 50 members allow them to accept OEM, ODM and OBM orders. Product quality is ensured by about 100 QC personnel.

This article "Electric bikes: Jinhua banks on strong industry chain" is originally posted in Global Sources.

Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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