Conclusion

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C ^HAPTER Conclusion and Suggestion ⁵

Bicycle users and pedestrians are key beneficiaries of the low-carbon mobility agenda in urban China. International experience suggests that there is potential for significant gains in addressing congestion if people who have choices can be persuaded to use bicycles and walking as modes of transport, especially for short trips. On top of that, bicycle industry is also one the industry who benefits from the policy. Green policies are pursued to achieve the goals in long term and will be failed if policies were taken in short term. One or three-year carbon reduction is not the pursuing goal for the governments. The sustainable urban mobility and the promotion of cycling policies supported by central and local governments offer the bicycle industry a long term and prosperous future. The following section is to focus policies on the promotion of cycling adopted by China government and the final section is the conclusion and suggestion for the bicycle industry in China.

To cope with global warming, every nation makes commitment of carbon emission reduction by adopting green policies. The United States has adopted new fuel economy standards; the European Union has committed to a cut of 20% in its 2020 energy demand; and Japan targets on cutting 10% from electricity consumption by 2030 (IEA, 2012). Following the 12^th Five-Year Plan China is expected to achieve its target of a 20-percent cut in energy use per unit of gross domestic product (GDP) in the five years to 2010, which promotes the use of public bicycle and e-bicycles in urban cities. Ministry of Industry and Information Technology of the People’s Republic of China announced that the industry standard of specification on lithium-ion battery on electric bicycle will be put into practice starting from 1^st January of 2013.

5.1 Conclusion

China has been a pronoun as world’s factory and “sweat shop” as well. The country gained orders mostly based on the low cost of cheap and unlimited labor. The economic growth

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has been accelerated by the abundance labor. The laid off workers from the SOEs had a chance of set up their own companies through financial support from government or mostly from foreign companies. Through studying historical bicycle industry development of China we can conclude as following.

1. SMEs of bicycle industry emerge from the transformation of planned economy to free market economy

Transforming from planned economy to free market economy, the overview on bicycle development in southern, central and northern region in China gave evidence that Chinese bicycle industry grew with following the state owned enterprises and foreign funded enterprises.

Different labor division, strategies and market orientation adopt by enterprises can be seen in the three regions. Business decisions and costs are made in response to market signals, and without significant state’s interference.

After privatization of state-owned companies and introduction of foreign investments, the small and medium enterprises (SMEs) in China have achieved rapid and sustainable growth in the past two decades. SME clustering is critical to addressing social and economic objectives, the achievement of which can make them more competitive in the global economy; generating and spreading innovations; creating employment; and distributing income and welfare. Convergence of production, market and production chain comprises the main patterns of SME clusters. This essentially reflects the “one village, one product” and “one town, one industry” concept.

Many small and medium enterprises are doing affiliated production for large enterprises.

Some of them sell products in the local market, while some cater to the export market. SMEs facilitate development. Adequate infrastructure such as information technologies, excellent geographical location, favorable investment policies, cheap labor, and rich natural resources have collectively enabled the SMEs to coordinate their production to global standards and attract foreign capital and technologies. Moreover, they receive support from the local government and benefit from the collective efforts of all enterprises to pursue growth.

2. China’s bicycle industry maneuver to gain an invincible position in the global market Many Chinese SMEs are currently acting as outsourcing partners, mainly for multinational corporations (MNCs) from Europe or the USA, which represents a form of external cooperating for the SME. There is some evidence to show that these outsourcing relationships

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have promoted technological competencies in Chinese SMEs as well as providing competitive intelligence for the MNC who have invested in this relationship and acquired knowledge from the overseas SMEs. External linkage with MNCs would be more effective in transferring technological know-how from the external knowledge provider to the recipient company obtaining the knowledge.

Many MNCs see in China a manufacturing base where products can be assembled and manufactured at low costs and then shipped to customers worldwide, but it has been rare so far for both domestic and foreign companies to consider China as a host for indigenous product development or even technology research.

The three agglomerations in the Northern, Central and Southern China, combining with the local or foreign funded enterprises, continue the progressing in the industry. The competition in the regions also is created by the local and foreign funded enterprises. Xideseng is a good example which struggles to expand its brands under the sever competition from two Taiwanese brands, Giant and Merida in the local market. It is also widely recognized that many local bicycle companies design the brand with a few key components which are made by famous branded companies and then sell to the market to upgrade its design.

Taiwan bicycle manufactures moved the low end production line to China and brought in investment on facility, technology, and special knowledge to China. Taiwan benefited from this labor division and gave China a chance to build a more defined bicycle industry cluster. After the implementation of ECFA, the labor division between China and Taiwan will be more subtle, concrete and clear. China benefits from knowhow from the Taiwan funded enterprises while Taiwan enterprises make profits from gaining the share of Chinese home market.

3. Marketing strategies of bicycle firms in China turn from domestic market to a global market

Before economic reform bicycle marketing channel in domestic was held by hardware stores which distributed the bicycles to the retailers. Soon after globalization, mass marketing no longer catered the appetite of consumers. The sales on the department stores or supermarkets were decreasing. The specialty stores rose and as another channel offered more choice instead of bicycles with standard specification in the traditional supermarket. Moreover the entering of branded bicycle companies, such as Taiwanese brand, Giant or Chinese local brand, Xidesheng accelerated the competition on the sales of bicycles. These branded companies established their

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own specialty stores to promote their branded bicycles and offer more after service to consolidate their marketing strategy.

Instead of home market, the overseas market is important as well. Because China’s private bicycles companies entered the global market late China’s bicycle companies aimed at OEM orders to cooperate with foreign branded companies. This can give local companies to have a sheer understanding of global market and to precisely catch the trends of overseas market.

The invention of internet and great openings of international exhibit of bicycles and parts every year, local sellers have more contact with overseas buyers without intermediate parties to cut the profit of the sales. Global market offer China’s bicycle companies more sales opportunities and more competition.

4. Skilled labor of bicycle industry in China is mainly from state owned companies

Different from Taiwanese bicycle companies, the technical personnel were trained by the state owned companies. Especially in Tianjin, the laid off employee from SOEs in Tianjin are or have been recruited by the private or foreign funded companies because of their experienced knowledge about bicycle industry and sales marketing in China. Their long term contact with bicycles parts factories and close affiliation with sales channels are the keys for getting recruited by the bicycle companies. Tianjin is a province where located many state owned companies of heavy industry and overseas branded car manufactures. The car manufactures trained engineers who can learn from working for years and have specialties in producing battery for car, motorcycle and of course, for electric bicycle. This is one of factors that bicycle and electric bicycle industry cluster formed quickly in Tianjin. Now Tianjin can produce the largest volume of bicycles and electric bicycles production in China.