Yesterday, Cycling iQ explored the development of emerging bicycle brand UCC in its home territory of China. Though UCC produces 50,000 self-branded bicycles each year, another 400,000 units are produced in its factories for other well-known bicycle brands. The most enduring relationship of this kind is with Australasian brand, Avanti. Welcome to the world of Original Equipment Manufacturing.
Positioned in the commoditised AUD2,000-3,000 price band of the Australasian bicycle market, even a modest road bike like the Avanti Cadent is a luxury item in the Chinese consumer market
Avanti Bikes, for the benefit of households sans Pavlova, is a highly established bicycle brand in Australia and New Zealand. Whilst Avanti enjoys healthy market share (disclaimer: long-term aggregate observation in lieu of specific data) in Oceania, it is neither locally-made nor truly global. In sponsoring NZ-based professional road cycling team PureBlack Racing, Avanti does, however, have an international agenda. Helping push this along is their China-based manufacturing partner, UCC.
In the third and final installment of this series, Richard Lin and Tony Wu of UCC discuss the challenges of international expansion for their own brand and provide insight to the Avanti connection.
Foreign brands get excited about sales potential for high-end bicycles in China. Distinguish between a highly developed, sophisticated market like Shanghai or Beijing and a second- or third-tier city is it a different set of challenges?
RL: Of course, Shanghai and Beijing are well developed. People have the ability to buy and are more knowledgeable about the sport. The problem is those people are too busy with business. In the outlying cities, there is more leisure time. People are not as rich but the business is much better.
China is a big market; every brand is trying to get a piece of cake. But it is not easy. We are from Taiwan, so at least there is a cultural and language understanding.
Why is UCC not found in more international markets outside China?
RL: We have long relationships with customers (who have their own brands in established international markets) and I don t want to compete against them. We do ship UCC directly to Indonesia though.
So, for example, if I am a customer from Australia offering to buy 100,000 UCC bicycles from you, you wouldn t think carefully about that?
RL: No I don t think so. In this case, it would be Avanti s market, and they are more like family. Since we are OEM for Avanti [Cycling iQ: since 1995], I don t want to be their competitor. It s the same with all of my customers; I don t want to be in those markets.
Also, one thing that s very important is service. You have to make sure everything is good. I cannot service Australia and New Zealand. If there s an equipment problem, you need to send everything back to China. I can t do that. So, I ve got a good partner. Avanti takes care of everything. I don t need to worry about marketing or service.
But in China, we re okay. Tony is in Beijing; he takes care of all domestic sales. And UCC can concentrate as a manufacturer, although we do warranty from the factory because we are based here.
But being an OBM (Original Brand Manufacturer) like Giant and Merida is a very powerful position to be in. Has it never crossed your mind that you could be taking market share from those brands in international markets?
RL: I never think about that.
TW: For the next two years at least, we want to focus on China. Maybe after that, UCC can consider developing globally.
Rapid Trading, UCC s China distributor, also distributes Avanti in China. Is that once again the family philosophy?
RL: Yes, that s right. They ve got some really nicely designed bicycles. I like their product. They do a lot of high-end road and triathlon bikes, their design is good, and we produce for them. They are also ambitious to go into the international market. They even went to Europe (Eurobike trade show in Germany) this year in search of a distributor.
Tony Wu National Sales Manager for Rapid Trading and therefore responsible for Avanti s sales development in China
How is Avanti performing in China?
RL: When they (Avanti) wanted to get into China, we said we could help. I said for the first five years, we couldn t do much for (Avanti) because I need to concentrate on our UCC brand. Now I can develop two brands. Some of Avanti s high-end models now fit with the market, but it s a step-by-step process.
On the retail side, do you believe in concept stores or are you more of an independent bicycle retailer (IBD) type of guy?
RL: We already have a budget with Rapid Trading to set up concept stores. A lot of people think we should go direct, and save a lot of expenses in the middle. But I don t think so. I d rather help our distributor find retailers in each major China territory and help them open up concept stores.
TW: We do have a couple of concept stores in Guangzhou with UCC and Avanti.
Are UCC taking new OEM customers or focused on its own brand and existing customers?
RL: We don t seek more customers. Now it is balanced. We can focus on our own brand and work well with customers.
Does the Avanti connection give UCC any leverage in its own brand?
RL: Without a doubt, but I really want to promote the Avanti brand. We don t need to produce the same bicycle. It s a win-win. I think once the PureBlack racing team gets to the Tour de France it will help the brand too. China is a big market, so we welcome partners who have a sales plan in this country.
Avanti-sponsored team PureBlack Racing has an objective to become a UCI ProTeam by 2015. If Tour of Beijing is granted a WorldTour licence renewal beyond 2014, the Kiwi team will be in the picture.
Is there another bicycle brand that you look at and admire?
RL: I admire any successful brand. I admire Giant but they are so big. I don t want to be the same. I m happy with what we have today. Maybe I m not so ambitious. Once you make a good product and meet nice people, you can be happy.
Intellectual property is a problem in China. Are you concerned about impersonators?
RL: Oh yes, we already have some people copy our product! But we can t do anything about it. If it s not a 100% copy, the government can t help. We should feel happy that people copy us it s better than nobody caring enough to copy! It gives us more energy. We also work with some US- and EU-based designers to look for ideas.
Do you have any commercial interests outside China and Taiwan?
RL: We have a joint venture with a Dutch company. In Europe there s a lot of electric bicycles. We picked up the brand TDR from former manager of Rabobank, Theo De Roy. We spent two years on it so far, and we got an iF award at Eurobike this year. Everybody is very proud, but it gives us a lot of pressure! Awards may come easy, but then you have to produce!
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