Manufacturing News

Harley sees new market in China

About 170 Chinese cities limit or ban motorcycle use or ownership, largely because they are seen as underpowered, cheap,polluting machines that clog traffic and endanger others.

MILWAUKEE - For Ray Ma, freedom on the open road means riding his Harley-Davidson motorcycle be-hind two police cars through the Chinese countryside.

The 53-year-old Hong Kong dental surgeon and members of his 35-bike riding group had to pay 10,000 Hong Kong dollars ($1,290) per bike in escort and paperwork fees last fall to make their trip to Guilin city a reality.

"We have to follow the rules in the place where they have the rules," Ma said. "And I regard that as free."

But Ma said he yearns for the day when he can escape the cramped city for the Chinese mainland without the hassle.

For years, iconic motorcycle maker Harley-Davidson Inc. has pushed hard to find ways to sell its motorcycles in China. Now, the Milwaukee-based company says it plans to announce before summer that it will open its first retail outlet in the country since at least World War II.

The company says there are still major hurdles: About 170 Chinese cities limit or ban motorcycle use or ownership, largely because they are seen as underpowered, cheap, polluting machines that clog traffic and endanger others.

"We are not encouraging motorcycle use," said Miss Huang \, a spokeswoman for the police force's Shanghai Public Security Policy Consultation Office.

Motorcycles have been banned from almost all the main streets in Shanghai, Huang said, and the city stopped accepting motorcycle registrations in 2002.

After China joined the World Trade Organization in 2001, import restrictions, quotas and tariffs dropped? substantially against foreign motorcycle manufacturers, but municipal traffic ordinances have remained, Hoelter said.

Foreign manufacturing advocates say the policy, while somewhat justified by safety concerns, has created an unfair barrier to access.

Harley-Davidson estimates small Chinese manufacturers build about 17 million motorcycles a year - most for domestic consumption - but most are small and used in rural areas, so they evade many of the restrictions on Harley-style heavyweight bikes. Other bikes such as 1950s-era Chang Jiang 750, which are still used by the Chinese government, are considered three-wheelers because of a sidecar, Hoelter said.

In contrast, BMW, which entered the Chinese motorcycle market in April 2003, said it sold only 70 bikes on the mainland last year.

The main barriers the German company has faced are riding bans in big cities and motorways, high customs duties, poor insurance coverage and the huge gap between legally sold and illegally imported motorcycles, said Stefanie Lowenstein, spokeswoman for the BMW Group.

Liu Xintong, secretary-general of China Motorcycle Industry Association, said the result is that pent-up demand for large motorcycles is going unfulfilled.

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