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There are hundreds of electric bicycle makers and component suppliers in China. Navigating the industry and culture can require patience and some measure of luck.

Thinking of Buying Ebikes in China?

eCycleElectric founder Ed Benjamin on Sourcing E-Bikes From China

By Edward Benjamin

eCycleElectric is a consulting service provider that serves western companies that buy bicycles, electric bicycles, and components for such in Asia. We also help Asian companies establish sales of components to other Asian companies and in some cases to western companies. We do business with, or have done business with 29 different nations.

This work has had given us experience of what happens on both sides of the bargaining table. And since our team is multi national, multi lingual, and highly experienced, we have learned many lessons. This article will attempt to pass on some of those lessons.

There are several categories of USA and EU potential buyers of electric bikes in Asia.

The could be generally grouped like this:

All of these groups have some unique challenges and characteristics and also many issues that they share in common.

Asia appears, upon a casual look, to be brimming with bicycle and electric bicycle manufactures, brands, OEMs, and ODMs. At least 200 such factories exist, and some would say many more.

In addition, there are a myriad of trading companies that reach out to every conceivable customer by email, internet, Alibaba, and personal networking. Many appear to be bicycle or ebike makers - but in fact they are simply buying from such factories and reselling.

[A trading company should make communications and all transactions easier - they should be expert in the details of international business and able to solve most problems. In exchange for this, they charge a margin - as much as they think the market will bear. (This can range from a couple of percentage points to very high margins above 50%). In our experience, trading companies rarely do their job well, and we regard them as usually being impediments to business and communication, at a high cost. ]

Of the many factories that exist, most of them are focused on their own domestic market. We regard only about 39 of them as interested in, and qualified to, sell to western customers. While most factories will express an interest, these 39 factories have invested in English speaking staff, visited western trade shows, and reached out to western customers. Most of this group have several western customers and this has taught them a great deal about how to supply and work with Europeans and Americans.

Part of the challenge for these factories is this: They are approached by email and in person by hundreds of westerners every year, and asked for quotations, or asked to sell product.

Most of these contacts are from people or companies who wish to buy very limited quantities of product. Often they are asking for free samples. (Not a practice found in the bike business.) Many of them are frauds, and even those who are sincere are usually small and inexperienced. Even the sincere contacts are often long winded and need lots and lots of information and explanation.

The OEMs and ODMs of Asia have learned the hard way that a customer who has limited ability to sell product (limited access to retail distribution), limited funds, and is new to the industry — is not a profitable customer. The OEM and ODM cannot afford to teach the customer how to work with Asian suppliers, as well as supply product and service, to a customer who demands without any real leverage - a lower and lower and lower price. Or must be learn how to do their job, in both buying and selling.

Even less attractive to the OEM and ODM is the crowd funded start up. While there is a wide range of capability and funding level, the general situation for crowd funded companies could be described like this: Undercapitalized, having made promises of delivery times that are not realistic at too low of a price, a product that requires unique parts, tooling and engineering work, and operated by managers who are inexperienced and ignorant of many, many important things.

So the sales force of these factories must sort out the viable customers from the ones that just waste time. This is not easy, for the often very young sales force has rarely had much exposure or experience in the west. They do not know famous brands, and they do not understand or share many assumptions, concepts, and paradigms of western business and culture.

The result is that these sales teams are skeptical of power points, disbelieving of promises for future business, and focus on today‚'s order, today‚'s costs and today‚'s profits. And when they are not comfortable, or skeptical, their usual response is ‚.. to not respond, or to go silent.

These sales people are most interested in, and most comfortable with, business coming from established and famous brands.

Such brands have staff that is expert at buying in Asia, experienced engineers and skill at getting the product information across. As well as a budget for travel and an understanding of realistic time frames and constraints. And.. they can pay.

Of course, these famous brands are also the customers that put the most pressure on the price. But Chinese are very used to price pressure, and have many ways to accommodate demands or a lower price. Some of those ways are problematic, some are genius, and most of the famous brands know all about this situation.

Oddly, even some famous bicycle brands of the West are unknown to the sales teams of Asian OEMs, leading to some notable mistakes when young Asian salespeople decide to not respond to requests from well established brands. It is not surprising to eCycleElectric to receive an inquiry from a Chinese salesman asking if a famous company is real.

The most experienced and most successful of the Asian OEMs that serve the bicycle and electric bicycle business are Taiwanese. The Mainland Chinese OEMs and ODMs are improving and becoming more and more important - but so far, the Taiwanese still dominate this category.

Taiwanese OEMs, such as Giant, Merida, Fairly, have decades of experience. They have many English speaking staff members, and sales teams that are on a first name, old friend, basis with the buyers of hundreds of Western brand managers.

While Fairly is intently focused on both high end bicycles and electric bicycles, most of the Taiwanese OEMs are generalists and offer a wide range of bicycle product. Fairly has successfully worked to be the premier supplier of top quality and top technology electric bikes.

But today, the big OEMs no longer have a catalog of generic bicycles that can be selected and adapted by new customers. These companies rarely take on new customers, and the product they build is usually highly specific to each customer brand.

The companies that are more interested in new and smaller customers are mostly in Mainland China, with a few in SE, and South Asia. But it would be accurate to say that the bicycle factories of South, and SE Asia are likely to serve the OEMs of Taiwan, or to specialize in shipping bicycles to Europe that are free of dumping duties. They are not usually interested in smaller customers. And some of them are very large. Bangkok Cycle sells a very large percentage of all the bicycles used in the UK. Hero Export sells large numbers of bicycles to Africa and the middle east. And A2B, a unit of Hero, is perhaps the worlds first worldwide electric bike brand.

But there are many Chinese factories that are interested in the smaller customer. They are hoping to find a customer that will grow up to be a big brand. And some of the small customers of today will be the big customers of tomorrow.

So the smaller western customer often finds themselves working with the smaller Chinese OEM. Both of them inexperienced, and often lightly equipped and funded.

The symptoms created by this situation are common. Misunderstandings about product details, sales expectation, pricing,components, Bill Of Material (BOM) details, and many more. Westerners struggling to understand poor English on the phone (and often English is a second language for the European) and Chinese who take hours to write an email that the westerner would write in minutes. (I often advise my clients to imagine that they are writing to their supplier in Chinese. Looking up each character, and inevitably making many mistakes in grammar and meaning - and then consider how long it would take them to communicate. This is exactly the situation of many Chinese sales people.

So here is our advice to these various groups.

Established bike brands who are adding electric bikes to their offerings:

Buying bikes is not a problem or you, nor is credibility or understanding of the process, timing and necessary funding. But as a group, you often fumble technical things on electric bikes. And while buying a power system from a famous maker like Bosch or Panasonic may solve the technical details, you give up much of your chance to make a margin. Hire more engineering and technical help. Do your own testing and plan your product introduction far enough out that you can take at least 2 years to introduce a new electric bike model - having tested it thoroughly.

New brands that are focusing on electric bikes as their primary product.

Many of you are new to buying bikes or anything else in Asia. You often understand the product very well, but have trouble communicating what you need to your supplier. And you often place too much reliance on the engineering team of your suppliers. If you are going to be a specialist, you need your own engineers and testing. And usually, you need better sales forecasting to help your factory manage their production, and better financing.

Established ebike brands that have been assembling in Europe or the USA and are exploring buying complete bikes from OEMs.

Your life is about to get easier, and you are almost certainly going to make a better margin. But you will also give up day to day control of quality and the ability to make changes quickly. But you are in a very strong position since you already know exactly what you want to build, how to build it and how to sell it.

Established or new brands that are exploring buying ebike components in Asia and assembling in their market area.

Most bicycle component makers already have contracts with distributors in your market. So buying components in Asia will often become‚ buying components in your home market from the distributor for the Asian component maker. And that often means an unattractive high price for those parts. The bicycle parts that can be bought without this impediment are often from the no-name makers, and often not the best parts. However, most of the electric bike components like batteries, controllers, motors, etc. can be bought in Asia for import to your home market, at prices similar to those offered to Asian OEMs.

Companies like Lishen Battery, XD Motor, and others are eager to find you.

Inventors (often funded by crowd funding) that have a unique product and want it built to their specification.

The Asian factories are not impressed by your PR success, and they can instantly see on your crowd funding site that you do not have enough money. It is common for crowd funded companies to be amazed that they raised hundreds of thousands, and not realize they need millions. The media and populace in your country may be deeply impressed by your device and ingenuity, but the Asian factories simply don‚'t get it. They are focused on a simple question‚"will they make money on your first order and every one after that.?‚" They want, quite reasonably, compensation for engineering, tooling costs, a margin on each product, and they know better than you do that this is going to take more time and more interaction that you expect.

You often have very inaccurate ideas about how much time it will take, how much it will cost, and how much effort you will need to put into the communications with the OEM. And huge pressure from pre sold customers, the media, investors, and the promises you have made.

Newcomers and hobbyist businessmen who are experimenting with importing electric bikes and often have limited access to distribution.

We have referred to this group as ‚"one container importers‚" and regard the vacationing physician who decided to buy a container of ebikes from a nearby factory after being impressed by the thousands of ebikes on the streets of Shanghai as a good example. Sometimes it is a bicycle dealer who believes he can get a great price.

Buying product intended for the China domestic market, at very low prices, and importing it to the USA or EU is not usually a successful idea. The bikes are not usually correctly homologated, big enough, strong enough, or attractive enough to the market.

Most such efforts end with the bikes being closed out at very low prices through the internet or local flea market. And not repeated.

So what can be done?

Our team can often help. It would be professional of me to suggest that there are other such consulting companies‚ but so far as I know, we are the only well established and highly experienced such company that specializes in electric bikes.

So whether the task is to convince a big OEM to take on a small customer (possible), or to help choose the right OEM from the 2nd Tier, or to validate a factory as a supplier of ebikes, or to validate a western customer to an Asian factory that simply does not know if theses people are truly possible customers, we can help. We also offer inspection at the factory for quality, BOM adherence, and packing - by actual ebike experts and engineers.

Various members of our team speak, read, and write English, Mandarin, French, German, Russian, and Spanish. And we ‚"speak‚" engineering and ebike technology in these languages.

We can often smooth out a problem with a few phone calls. Most ‚"problems‚", in our experience, are simply misunderstandings.

Our experience in the manual bicycle industry spans 40 years. Our experience in the electric bike industry dates from 1997. We are based in Florida, USA, and in Shanghai, PRC.

Times Article Viewed: 3710
Published: 29-Sep-2014

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