Producing motorcycles in China should be like printing money. The ownership rate is just six per 100 households, several times below the world average, and the price - as low as 3,000 yuan (about HK$2,784) - is low enough for millions of households to afford.
So thought hundreds of officials and companies across China - and the result is savage price competition, wasted capacity, falling profits for most companies, and impending bankruptcy for many.
Last year, national motorcycle output was 9.29 million, up 18.6 per cent from 1995, and sales were 8.98 million, up 14.95 per cent.
However, production capacity already surpasses 15 million. Stocks at the end of last year reached three million.
Worst hit are the six biggest producers, whose combined output last year accounted for 53 per cent of the total.
For 1996, sales of all but one of the six grew less than the national average as they lost market share to mopeds and cheaper models selling for as little as 2,000 yuan.
The whole industry is in bad shape, says an official of China Jialing Industry Group - the number two producer in 1996 - which cut its prices by more than 10 per cent at the start of the year.
