Nov 24 - 30, 2008

While emergence of Chinese motorcycles in the automobile industry of Pakistan has no doubt given a sigh of price relief to consumers and to a larger extent provided a broad space to local vendors and accessories manufactures to expand their supply networks nationwide, spreading of Chinese-made motorcycle parts widely over auto spare parts sector has not done good to local manufacturing base which is confined only to supplement spare parts not imported from China. Like in other segments of automobile industry, aim of localization of essential parts in motorcycle sector has yet not achieved despite repeated claim of engineering development board.

Before entry of Chinese two wheelers in Pakistan, Japanese brands were monopolistically relishing huge motorcycle market share and determining prices of their motorcycles on market economics rather than on cost factors. They were victoriously supplying spare parts known as original equipment manufacturer (OEM) in the market at much higher price and out of ordinary rate. On one hand high price of motorcycle made purchasing a dream for common person and after sales service and especially engine parts replacement proved a substantial burden over the pocket on the other.

Breaking perennial monopoly of Japanese motorcycle brands, Chinese entry initiated a prosperous competition in the market, not only making price of two wheelers affordable for low income group riders but also easing hefty cost of post purchased services. In a subsequent effect, a boom in motorcycle and allied industry took place producing a multiplier effect in income generation as well. This impact was alike vertical and horizontal. Rise in buying of bikes increased capacity utilization of assembling plants and also stirred up whole sale and retail auto spare parts business. Over and above that, what was earlier an expensive spare part to buy became affordable following the arrival of Chinese made parts.

Earlier, Taiwanese motorcycle parts were giving substitute to Japanese or OEM. But the stigma associated with the quality distanced customers from using them as always. Despite that the similar perception is still attached with the Chinese made spare parts and motorcycles, people are perhaps not taking it in account. This has been evident from the sale results of Chinese manufactured bikes and parts. Although, prices of Chinese motorcycles are jacked up owing to present economic conditions they are still far below than competitors'. This entry has also beneficial for indigenous allied industry. Since except engine and other important parts rest of the components is entirely manufactured locally, a significant boost to local manufacturing and employment was observed. Beside accessories manufacturers, over 59 assemblers are operating across the nation to contribute in the expansion of motorcycle industry.

From China, a whole range of spare parts is imported. Assemblers are supplied parts from different Chinese manufacturers. Few companies of China have maintained domination over spare parts supply network in the country. Spare parts from these companies have not only gained popularity in the market due to price suitability but they have secured a competitive edge over traditional market players like Honda and Yamaha. Lifan which is a known Chinese name in Pakistan's motorcycle spare parts market is providing low price parts ranging from carburetor, connecting rod, magneto, timing chain to wheel hub, chain sprocket, CDI, and plug.

Developing unique way of expanding supply network of its items, Lifan has stimulated war of competition amongst various motorcycle parts importers of Pakistan. It does not restrict its supply agreement with a single importer but many to allow them all to market Lifan products with their local brand names viz. ABC Lifan, XYZ Lifan, etc. After all, sale of company's products is being promoted rather in multitudes. Whether or not complying with national patent law, the selling strategy is remarkably innovative.

Although Chinese approach of manufacturing products according to buying power worked well, it furthered laxity in capability to gain self-reliance in local manufacturing of spare parts. In presence of imported parts, manufacturing parts locally is considered full of hassle. Investors are also reluctant to come forward and invest in manufacturing because of poor market response and several other hurdles. The buying tendency of foreign made products is a discouraging sign for investors to invest in local manufacturing. Buyers in Pakistan are happy in purchasing foreign products inconsiderate of quality, whereas, they can not neglect fault in local made products.

Lack of technology is also one of the prime stumbling stones in achieving objective of localization of auto spare parts. Manufacturing of auto parts require impeccable sophistication in design as mechanical items fail to operate in case of a minor flaw. This sophistication can only be developed through machineries giving accurate results. A Chinese motorcycle assembler said investors from China are ready to transfer technology in motorcycle industry of Pakistan. But, they have no pleasant memories in Pakistan whenever they visited there to seek official assistance. He said domination of rival group in the market was intolerant to Chinese which might conquer further market share.

Arrival of Chinese motorcycles gave impetus to local vendor industry reeling under lifeline in past. Increasing numbers of motorcycles on roads expanded their income earning from auto spare parts. In majority, local vendors are involved in designing plastic and decorating parts for bikes. These parts are not originally essential for running a bike but beautified its look. This is why Pakistan's vendors industry is seriously bearing the brunt of high inflation and liquidity crisis. As people are cutting short budgets by restraining additional expenditures routinely incurred over beautifying bikes, vendors are afflicted with sale crunch.

Motorcycle sale in Pakistan is nearing saturation and new market for export is logically sought after. However, until motorcycles are manufactured indigenously Pakistan will be no more than a via-destination to export imported bikes. China's overpowering of motorcycle industry of Pakistan is a model to be emulated by locals to get hold of market shares.