The lucrative end of the business cycle

Bike enthusiasts look for high-end bikes at the Beijing Bike Week held in mid-March. [Zhang Wei / China Daily]

High-end bikes are making inroads into China as cities such as beijing are becoming more congested

Adynamic and energetic mob beat a path to Jinbao Place, a luxury brand shopping center in Beijing, recently, wearing down its doorstep in the process. But the visitors were not the usual suspects, decked from head to high heel in feminine chic. Instead, they were outdoor sports zealots drawn by the boutique or custom bikes on display.

Pursuing a healthy and environmentally friendly lifestyle is all the rage at the moment, and as part of that many wealthy Chinese urbanites are swapping four wheels for two.

Hardly surprising, then, that international high-end bike brands have pedaled into China, with the country's recreational consumers fully in their sights.

A report issued by the China Light Industry Machinery Association says that the value of bike imports topped $440 million (330 million euros) last year, up 36.6 percent from the previous year. But the foreign bike makers and distributors are far from satisfied with that. And when you consider the four-wheel dominance in a place like Beijing, perhaps their dissatisfaction is no surprise.

The number of cars registered in the capital exceeded 5 million on Feb 15, according to the Beijing Traffic Management Bureau.

"But high-end bike ownership in Beijing is said to be less than 10,000," says Crusade Cheng, sales manager of Iron Ore, the agent for the bike makers BMC and Cervelo, from Switzerland and Canada respectively.

Today less than 18 percent of Chinese residents are willing to ride bicycles, compared with 63 percent of commuters in 1986, the China Bicycle Association says.

With the help of Iron Ore, BMC entered the Chinese high-end bike market in 2007, and Cervelo arrived in 2008, both targeting the burgeoning middle class.

"We had our eye on the gap in the high-end market," Cheng says. "Cervelo and BMC are to bikes what Ferrari and Lamborghini are to cars."

Cervelo and BMC were not the first bike makers to figure out that the Chinese high-end market held huge potential. Thirteen years ago Holy Brother, an outdoor trading company in Beijing, started to bring the French brand Look, a winner in the Tour de France, to China. It is now the country's biggest distributor of Look and another French brand, Mavic.

"Over the past 14 years Look bikes have accounted for more than 70 percent of the professional market, which are custom bikes for athletes," says Huang Peng, sales manager at Holy Brother.

"Five years ago, when I got into the bike business, it was quite difficult for people to accept a bike could cost 10,000 yuan ($1,580, 1,190 euros). These days, real bike enthusiasts would not balk at a 100,000 yuan price tag."

As brand awareness grows, Holy Brother is looking at another avenue for growth: the retail market for recreational bike riders. Retail sales of Look products now account for less than 10 percent of its total revenue in China.

Retail sales have more than doubled in each of the past three years, Huang says, "and we've sensed bigger progress this year".

Beijing Bike Week, of which Jinbao Place was the hub, ended on March 23. Organized by the distributor Serk and Chinabikers.com, it was aimed at bringing in more international high-end cycle brands to Chinese consumers. Apart from the world's top bicycle makers such as Look, BMC and Cervelo, new brands such as Swift and Avanti all took part in the exhibition.