Mountain bikes

	Kespor's model KS20B50 BMX bike comes with a 6061 aluminum alloy frame.

While competitive pricing remains a key strategy, makers are also releasing high-performance and electric units to boost revenue.

With metal costs on the rise once more, bicycle suppliers in China are intensifying efforts to avoid competing solely on price. For some, this is a turnabout from the past few months, when cutting quotes became the primary method of stimulating external demand.

A number of businesses can no longer continue to reduce their rates or even keep these at current levels because the outlay for steel and aluminum alloy has increased. Spending for key manufacturing inputs are on the upswing again, due in part to China’s fiscal stimulus program, a two-year $586 billion package that includes expenditure for infrastructure and reconstruction.

Nonetheless, suppliers are keen on minimizing price adjustments because demand remains relatively weak compared with the previous year. While buyers are renewing their inventories, most are trading down and negotiating for lower quotes amid the economic crunch. At many companies, exports from January to May 2009 are down more than 30 percent from the same period in 2008.

Facing this business climate, several enterprises are keeping price increases to within 5 percent in hopes of boosting orders in coming months. To mitigate the effect of this strategy on overall profitability, makers are trying to improve their sales mix by releasing high-performance designs in aluminum alloy or carbon fiber. At a number of factories, electric models are in the pipeline.

For better competitiveness, suppliers are adjusting their production systems to be able to offer shorter lead times and smaller MOQ. For the former, the norm is now 25 days instead of 35. Most companies have also brought down their ordering requirement to as low as 50 units per color instead of 200.

	Model TDE26001 from Zhejiang Enze is a 6-speed electric mountain bike fitted with an Li-ion battery.

Mountain bikes constitute the majority of bicycles shipped from China. In the past three years, the category accounted for more than 50 percent of export sales and volume in the nonmotorized category.

The selection includes cross-country, dirt jump, downhill and freeride styles. Of these constructions, cross-country is the most popular, accounting for about 70 percent of exports.

Most models have iron, steel or aluminum alloy frames, 26in wheels and straight handlebars. Many companies offer 18, 21, 24 and 27-speed units with locally sourced derailleurs, gears, thumb shifters and spring suspension systems.

Drum, disc and cantilever brakes are commonly adopted, with the last being the most popular. Other parts and accessories such as mudguards, dynamo lighting sets, carriers, frame bags and water bottles are incorporated according to buyers’ requirements.

Prices start at $40 and increase depending on the materials and specifications.

Models below $80 are considered low-end. These come with 18 or 24 speed options, steel or aluminum alloy frames, and caliper or cantilever brakes. Spring suspension is optional.

In the midrange, units can be priced up to $150 each. These are fitted with aluminum alloy frames, cantilever or disc brakes, and mechanisms supporting 21 to 27 speed levels. Front, rear or full suspension systems are found in most designs.

Mountain bikes between $160 and $400 have aluminum alloy frames, hydraulic disc brakes, and full suspension systems. Units feature 21, 24 or 27 speed options.

Higher-priced designs are often electric. This segment accounts for about 10 percent of mountain bike output and its share is expected to grow with the product’s popularity as an alternative to fuel-based vehicles.

BMX models are an auxiliary line at many companies offering mountain bikes. The selection consists mainly of basic racing and freestyle versions, which are used to perform high jumps and aerial stunts.

Designs below $65 are generally for the low-end segment. These steel constructions have 16 or 20in wheels with 13 or 14-gauge spokes, which reach 32 in number, and butyl rubber tires. Materials and components are procured primarily from domestic suppliers.

Units that go for as much as $85 have frames and forks made of high-tensile steel or aluminum alloy. The 16, 18 or 20in-diameter wheels are and fitted with 10, 13 or 14-gauge spokes 36 to 48 in number.

Front and rear brakes, and full suspension are used in most designs. These and other mechanisms are procured locally or in Taiwan.

For higher-priced BMX bikes, aluminum alloy frames and forks are the mainstream.

Wheels are typically 20in in diameter with 48 to 68 spokes in 10, 13 or 14 gauge. Brakes, suspension systems and other components carry the Shimano trademark or another known brand.

Mainland China’s supplier base for mountain and BMX bikes consists of about 1,000 companies. Seventy percent are owned by local entities, and the rest are Hong Kong-, Taiwan- or foreign-invested.

More than 29 million pieces worth $1.4 billion were sent overseas in 2008. OEM orders, mostly from clients in the US and other developed countries, constituted the bulk of exports. Models carrying in-house brands were shipped primarily to South America and the Middle East.

Guangdong province and Tianjin were the top export sources, together accounting for more than 60 percent of volume and value. Products from the former consist mainly of midrange and upscale designs, while those from Tianjin are often for the low end and midrange.