China:

Raw materials:
1. Bauxite/Aluminium: China is the largest producer of Aluminium in the world which
means there is not much transportation costs to be incurred.
2. Steel : Iron ore procured from Australia, Brazil and China itself. Owing to the new
RCEP(Regional Comprehensive Economic Project) which is under talks and is
initiated by China, it will help China to procure raw materials through sea ways
easily.
3. Carbon fiber : Same as above sources

Labour Costs:
Although China’s labour cost is 4% cheaper than in the US, it’s on a continuous rise.
Chinese factory workers are now getting paid more than ever: Average hourly wages hit
$3.60 last year, spiking 64 percent from 2011, according to market research firm
Euromonitor. That’s more than five times hourly manufacturing wages in India. Also with
the implementation of new wages law 2019, its bound to spike more. Labour costs of
different countries in ascending order in manufacturing sector is:
India, Vietnam, China, Thailand, Malaysia

Labour skillset:
China’s academic, examination-orientated college system routinely fails to prepare
students for the demands of the employment market. Vocational schools have likewise
long been criticized for not producing the skilled or semi-skilled workers businesses
need. However attempts by the government to make the system more effective by
promoting privatization and encouraging greater corporate involvement have yet to yield
any positive results.

Demographics: According to 2015 census the age group of 15-64 years formed the
majority of the population with 72.04% which will be our targeted population for our
bicycle business.

Competition:
Giant (China) Co., Ltd., Tianjin FUJITA Group Co., Ltd., Shimano Group, Ming Cycle
Industrial Co. Ltd. and Guangdong Tandem Industries Co., Ltd

Environmental regulations:
Perhaps the biggest concern has been the poor air quality in China. Beginning in
2013, the Chinese government began to target pollution with its “Atmospheric
Pollution Prevention Action Plan,” seeking a reduction in harmful particulates in an
effort to improve air quality to certain benchmark levels.

While the regulations did have a positive impact, the country seeks to further the
policy of balancing economic growth with environmental preservation. China’s
government has now turned to manufacturers in an effort to better preserve its
natural resources for future generations.
We can build up on these regulations and use them to our advantage as bicycles are
environment friendly and promote government's agenda.

Market conditions:
Total revenue : $14bn (2019)
Annual growth : 3.7%
Industry employment :150583
The bicycle market is on the rise in China and has enough space to accommodate
new players into the market who can provide newer designs in affordable costs!

Tying up with a local partner will help speak the language, understand Chinese customs,
and know how to manage employee relations. The benefits of pairing up with a local
partner in China is the potential for constructing and capitalizing on a retail bicycle
network.

Since China is a has a rich history in Olympics and staying fit, people from around
the world will be looking for distribution channels, and they would pay to be able to form
a part of the network.

The World Bank’s Doing Business Index for 2020 along with its individual
parameters is shown below in the graph:

Sources: cnbc.com , clb.org.hk, Wikipedia, ibisworld.com, world bank official website

https://www.ibisworld.com/china/market-research-reports/bicycle-manufacturing-
industry/
https://mazarsusa.com/ledger/increased-environmental-regulations-on-chinese-
manufacturing-considerations-for-u-s-companies/