Chinese products are taking over the streets of the United States

Just like when shared bicycles swept Chinese cities, e-bikes are taking over the streets of the United States, and the most conspicuous position in the window of the bicycle shop has long been replaced by the most ** e-bike. As a sharp weapon, e-bike can help China's bicycle industry make a breakthrough in the European and American markets. With the help of the strong domestic first-class chain advantage, the domestic outstanding entrepreneurial team still has the opportunity to show its strength in the global market. The following is a report from China Newsweek in March 2023.

Fast enough", Ted, an American road bike rider who became obsessed with riding an e-bike after the pandemic, called his "sturdy little bike" a "beast" and a "mountain road killer". After his wife took possession of his first e-bike, he searched for it for a long time and finally bought a new wide-tire e-bike online in January this year.

Although the e-bikes they buy online are of different brands, they are all from China.

Last year, there were 7.5 million e-bikes in the world, and China accounted for 3 million 3.3 million units. Ma Yuchi, co-founder and CEO of Big Fish Zhixing, once said on **. For the market development of electric bicycles in the next few years, a number of international research institutions have given expectations for a compound annual growth rate of more than 10, exceeding the overall expected growth level of the global bicycle industry.

It is hard to imagine that in the context of sluggish global economic growth, e-bikes with a unit price of tens of thousands of yuan were once in short supply, growing rapidly against the trend, and even being rated by industry research institutions, will run out of a new track of hundreds of billions of dollars.

China has more than half of the world's bicycle production capacity, but it has been spinning in the low-end market for a long time, stepping into this wave of e-bike boom, can domestic brands enter the first echelon with the advantage of the first chain?

On March 8, in a factory in Hukou County, Jiujiang City, Jiangxi Province, employees were producing folding e-bikes for export. Figure ic

It's hotter than you think

Just like when shared bicycles swept Chinese cities, e-bikes are taking over the streets of the United States, and the most conspicuous position in the window of the bicycle shop has long been replaced by the most ** e-bike.

According to Deloitte, U.S. e-bike sales nearly doubled, from 290,000 in 2019 to 550,000 in 2021. During the same period, NPD Group, a market research agency, noted that sales revenue from electric bikes in the United States more than tripled, from 2$400 million to $7$7.8 billion.

Especially after the epidemic, e-bike has started a rapid growth mode. According to the Light Electric Vehicle Association (LEVA), the U.S. imported more than 790,000 e-bikes in 2021, up 70 percent year-on-year. In 2021, Americans already purchased more e-bikes than electric and hybrid vehicles combined.

In Europe, the largest market for e-bikes, Germany, the Netherlands and other bicycle countries have grown by more than 30 in the e-bike market in the past two years, and the European Bicycle Industry Federation (CONEBI), the World Economic Forum and other institutions**, the European e-bike market sales are expected to exceed 12 million units in 2025.

In the United States, the market share of the Chinese brand Big Fish Zhixing e-bike has reached more than 40%. Ted, an American road bike rider, bought two bikes online from this company.

In the first four years of going to sea, sales doubled every year. Tian Jinliang, general manager of Shenzhen Big Fish Zhixing Technology, told China News Weekly that last year due to the epidemic did not reach the expected target, but it was basically the same as in 2021, and the export volume of 500,000 units was realized.

Visually, e-bikes are not much different from traditional bikes, with the pedals retained and the motor usually mounted in the middle of the body or in the hub. To put it simply, e-bike is to add "three electrics" on the basis of traditional bicycles, batteries, motors and electronic control systems.

The e-bike realizes a hybrid output of manpower and electricity. Tian Jinliang said that if the manpower can't ride, add some "electricity". E-bike has both sports and entertainment functions, "making riding more labor-saving", which is also the fundamental difference between e-bike and domestic "small electric donkey" - it cannot be driven purely by electric power without manpower.

The motor start wasn't jerky or sudden, it was more like a gentle push from behind by my father when I was learning to ride a bicycle at the age of five. American writer Patricia Marx wrote in The New Yorker after experiencing e-bike riding, and what surprised her even more was the "stability control of the body", when coasting downhill, the motor can keenly sense "when it is not needed", which has to mention the high-tech "torque sensor" in the e-bike.

During riding, the sensor monitors the torque and bottom bracket speed applied by the pedaling action to the bottom bottom bracket in real time, and feeds these signals back to the power control system, so as to output power according to the algorithm of the corresponding motion mode. "Before 2017, torque sensors mainly relied on imports, but in recent years, with the development of electric power assist technology, domestic torque sensors have been comparable to the international level and more cost-effective. Tian Jinliang said.

E-bikes, pedal-assisted or throttle-assisted e-bikes can be ridden at a maximum speed of no more than 32 kilometers per hour in urban cities in the United States, and in Europe, the speed of e-bikes is strictly controlled to less than 25 miles per hour. Although the speed is obviously not as good as that of the domestic small electric donkey, the e-bike still exudes a fatal attraction in the European and American markets.

After the outbreak of the epidemic, the public's fear of "public travel" and thirst for "outdoor sports" further released the market demand for e-bikes. In Berlin, Germany, it costs nearly 1,000 euros to buy a monthly metro pass for a year, while most e-bikes** cost 1000 to 3000 euros, and it may be more cost-effective to buy an e-bike for three or five years.

On the road to pursue "low-carbon environmental protection", "oil to electricity" has become an inevitable trend in the field of travel, and the subsidies of various countries have made e-bike the most economical travel solution.

On November 19, 2021, the U.S. House of Representatives passed the Build Back Better Act, which provides a tax credit of 30 for the price of a two-wheeled electric vehicle for those who purchase it. Since January 2018, the Paris Region of France has provided subsidies of several hundred to thousands of euros for the purchase of electric self-propelled "vans" (including e-bikes) in order to combat urban pollution, and more than a dozen European countries, including Germany, the Netherlands, Italy and Belgium, have launched similar subsidy programs.

In 2020, the sales of the Dutch e-bike brand Vanmoof in the European and American markets increased significantly, with the German and American markets increasing by 226 and 138 respectively. Combined with factors such as regional conflicts, energy crises, and the cost of living**, more and more residents in Europe and the United States are using e-bikes as their new preferred means of transportation.

Financial difficulties have fueled "sporty mobility".

A number of Chinese domestic brands that have been deployed in advance have just caught up with the market dividends brought by the epidemic.

Around 2017, there was a wave of small peaks of entrepreneurship in China. "We are transitioning from unicycles to two-wheelers on the track of electrification of short-distance travel. Tian Jinliang recalled that in order to avoid falling into the fierce competition in the field of traditional electric vehicles, Big Fish Zhixing further positioned the market segment of bicycle electrification.

Trinidu, a leading domestic bicycle company, has also been exploring since 2016. In May 2021, Trinidad invested in the creation of an electric bicycle brand, Tenways, which is committed to solving urban commuting, mainly for European and American consumers. According to the official introduction, in just one year after its establishment, Tenways has received more than $850,000 in IGG crowdfunding, set up a sales headquarters in the Netherlands, and laid more than 200 physical stores.

With the rapid development of the market, many emerging international brands such as Van Moff, Cannondale, and Rad Power have emerged, and old bicycle brands such as Giant, Lightning, and Trik have also begun to launch e-bike products. According to incomplete statistics, there are more than 300 independent e-bike brands.

Luxury car brands are also eyeing e-bikes. Following in the footsteps of Audi, Lamborghini and BMW, Porsche, one of the world's three major sports car brands, also released two electric bicycles, the Porsche e-bike cross and sport, priced at $9,500 and $11,750 respectively.

According to Allied Market Research**, the global e-bike market size will reach $118.6 billion by 2030, growing at a CAGR of about 10 percent from 2020 to 20305％。

Ma Yuchi, co-founder and CEO of Big Fish Zhixing, once made a more optimistic estimate, "the current industry pattern is undetermined and fragmented enough", according to an average of $1,000 an e-bike, 1 million shipments mean a $1 billion company, "By 2025, at least 20 such companies can be accommodated at the same time around the world." ”

Capital is moved. According to CVSOURCE's investment data, since July 2021, in less than two years, more than 20 two-wheeled electric companies, including electric motorcycle companies and e-bike projects, have received financing, with a total amount exceeding 10 billion yuan. The highest single financing amount was the C round of financing of the Dutch brand Vanmoof led by Hillhouse, which reached 1At $2.8 billion, Vanmoof is known as the "Tesla of electric bikes". In addition, Hillhouse has also participated in two investments by Tenways.

Competition between modes of travel is also an economic issue, and the economic crisis has always contributed to the development of bicycles. French economist Frédéric Herland explained in "The Return of the Bicycle: 1817-2050" that as long as the bicycle always maintains its best advantages, and is easy to care for and easy to use, then, once there are financial difficulties, from decision-makers to users, they will rush to the bicycle as the first choice to solve economic problems. Once the economic crisis turns into a historic recession, the capital that was intended to be invested in the automotive industry may instead be invested in so-called "sporty mobility", namely walking and cycling.

Investing in innovative companies in a fast-growing emerging track is essentially investing in the future of the brand, hoping that it will have a greater voice and premium space. Li Jinning, investment director of Haofang Venture Capital, told China News Weekly.

Why the European market?

The technology of the electric bicycle is not complicated, but it is just "electrified" for the traditional bicycle, why did it turn over in the overseas market, especially in Europe? Some Chinese entrepreneurs have entered this track by mistake.

After being forced to transform into the e-bike field to start a business, Zhu Dankui, a "post-60s" foreign trader, encountered a strange thing: a customer placed an order twice within a month, bought the same product online, and sent it to the same address. Doing 2B business all year round, Zhu Dankui's first reaction was "Is the user wrong?" Finally, after the customer placed an order for the third time, the team couldn't help but ask for the answer, it turned out that the customer had a good riding experience and repurchased two for his family.

E-bikes can't replace bicycles, but they do solve some of your travel needs. For example, Zhu Dankui said that many small towns in Europe have narrow streets, many corners, and complex road conditions, which are more suitable for two-wheeled travel, and e-bike is a good choice for the elderly with poor physical strength and office workers who commute thirty or forty kilometers daily.

A survey data from the European Union shows that from 2014 to September 2017, the number of e-bikes exported by China to the EU more than tripled, and the market share rose to 35, while the average ** fell by 11. On July 19, 2018, the European Union decided to impose a temporary tax rate of 21 on electric bicycles imported from China8％~83.6 Anti-dumping duties.

This high barrier to entry has instead provided shelter for Chinese start-ups to survive in Europe. "High taxes will be a lot of brands that want to play the best strategy out of the door, players who stay in the market will not slide so quickly to the situation of low price involution, high taxes correspond to high pricing, reasonable returns are more conducive to enterprises to continue to focus on product research and development, relying on products to stabilize the market. Zhu Dankui said.

According to the statistics of the Oriental ** Research Report, as the largest consumer market for e-bikes, the product penetration rate in Europe has reached 20. The Netherlands, Germany, Belgium, Denmark and other countries have a long history of bicycle riding culture, with perfect infrastructure construction such as bicycle paths, high public acceptance of e-bikes, and still considerable market space.

European consumers are not sensitive to **, with a high repurchase rate and strong hands-on ability, which reduces the difficulty of assembly. Zhu Dankui told China News Weekly that at present, the company does not have offline stores overseas for after-sales, and can only mail "semi-finished products" to customers, and assemble them by themselves after receiving them, so users have the most problems in the assembly process, and may even return them due to high assembly difficulty rather than product quality problems.

In addition to the manuals, we have also done a special teaching**. Zhu Dankui is also learning how to become a better e-commerce.

In fact, Zhu Dankui's entrepreneurship originated from a "not so pleasant experience". At that time, he was still in the foreign trade business, providing procurement, transportation, account release and other services for cross-border e-commerce. In 2020, the sudden epidemic cut off the customer's capital chain, and boxes of goods were stranded in warehouses after being shipped overseas, and no one received them.

The unit price is high, the sales volume is good, and the cost of trial and error in the market is small. Zhu Dankui and her partner quickly identified market opportunities. In Europe, pure electric drive vehicles with power greater than 250W and speed greater than 25km h are classified as L1E models, and products entering this framework need to be certified, and they need to take a driver's license, buy insurance, wear a helmet when they go on the road, and cannot ride on non-motorized roads. This means that in the European electric two-wheeled travel market, the more competitive "domestic small electric donkey" is blocked from the door, and the e-bike can just bypass these policy obstacles, save the complicated road procedures, and is popular with European and American cyclists.

In 2021, Zhu Dankui and his partner officially created the e-bike brand Fafrees, which sold more than 10,000 units last year and is expected to continue to double this year.

Zhu Dankui is eager to establish a more direct connection with users. Since the creation of the brand, he has not been to Europe, the company is headquartered in Shenzhen, the market is overseas, and the growth path of most overseas brands is similar, fafrees has also created an independent station, and stationed in Amazon and other platforms, do online sales, has been through the Internet and international express delivery to maintain close contact with users.

Bicycles are different from other manufacturing products, riding is inevitably bumped, often need to be repaired, to improve consumer experience, maintain brand loyalty, line inspection and after-sales service has become particularly important.

From the perspective of e-commerce, it may be a maintenance problem, but from the user's point of view, it may be hindered in this day or even the next week. Zhu Dankui, who is not confused, laughs at himself for not keeping up with the trend, does not understand e-commerce, and has not learned the step of marketing and promotion, and the growth of the brand in Europe is the result of natural growth by word of mouth. Fafrees does not have a store for the time being, and in the event of a need for repair, the customer service has the authority to directly send 30 100 euros to the consumer after judging that it is indeed a product quality problem, so that the user can go to the store for repair.

"Most of the competitors are domestic brands".

For domestic brands, the perfect domestic chain system has added another fuel to the popularity of e-bike in overseas markets.

Compared with Europeans' pursuit of riding quality, the North American market shows greater tolerance for cost-effective products. According to Amazon US data, the mainstream sales of e-bikes on Amazon are wider and have a lower floor price of $400 2000, and the top five brands have a combined market share of 393％。

The intuitive experience of the consumer side is the ultimate cost performance, at the same price, domestic e-bike can provide more services, or under the same quality, domestic e-bike** is lower. Hao Fang venture capital investment director Li Jinning pointed out that in the past few years, China's rapid development of new energy vehicles brought about by the technology spillover for e-bike to create technical conditions, three electric technology continues to improve, so that e-bike has both lightweight, stable, long-lasting endurance and other performance. At the same time, as a big bicycle country, a mature manufacturing base and a perfect chain provide a cost advantage.

As an extension of the bicycle category, the mainstream sales channel of e-bike is still offline. The influencing factors of users' purchase decisions are mainly hard indicators such as experience, configuration parameters, and after-sales costs. According to data from people for bikes, the North American market accounted for 55% of the sales of independent bicycle dealers and market malls in 2020, and DTC accounted for about 32 in terms of sales model.

Entering the North American market, Big Fish Zhixing chose to join forces with Costco, the leading supermarket chain in the United States. "Initially, e-bikes and electric scooters were laid out as electronic sports products, with small size and high appearance, and supermarkets were the best display and sales scenarios. Tian Jinliang recalled that after many contacts, the company finally chose Costco, which also respects cost-effectiveness. In order to enter overseas supermarkets, on the premise of ensuring quality, Big Fish Zhixing further optimized the cost, and invested more than eight months in certification and audit, becoming the first batch of Chinese brands in the United States to obtain UL2849 certification and the first to enter Costco.

There are shared bicycles and electric vehicles in China, and the market has always been unenthusiastic about e-bikes, and after the new e-bike was a hit, sales in China gradually shrank, and going to sea was almost the only way out for Big Fish Zhixing at that time. Tian Jinliang said that now it seems that this step was the right step at that time. In 2018, Costco ordered 8,000 e-bikes from Big Fish Zhixing, and by April of the following year, it had placed an additional order for 20,000 units, "and the market was opened."

In the three years of the epidemic, domestic e-bike brands have also survived the crisis from "waiting for containers" to "waiting for containers". "But with more finalists, the competition will be fiercer. A practitioner told China News Weekly that one of the tried and tested ways for Chinese companies to enter the market is to kill others through the ultimate cost performance, and then start to think about making money and live after death.

Li Jinning analyzed that it is not difficult to make products with the help of the existing domestic first-class chain advantages and technical reserves, but the difficulty is how to make differences and maintain characteristic advantages, and these depend on the entrepreneurial team's first-class chain integration ability and comprehensive management ability in brand operation in the future.

For example, an e-bike priced at 1,000 euros has a domestic procurement cost of about 400 euros, a shipping fee of 200 250 euros, and an e-commerce commission of 15 20 euros. ”

The concentration of head brands in the bicycle field is low, but there are many types of products, and there are many standards and dozens of sizes for tires alone, which leads to the dispersion of manufacturing in each link, and many procedures still rely on manpower. According to the practitioner's analysis, how to further reduce manufacturing costs and improve the level of intelligence may require "dimensionality reduction integration" from forces outside the industry.

Internet companies and traditional manufacturing companies have joined the e-bike track. At the end of 2021, Xiaomi entered the market in an ecological chain model and took a stake in Suzhou Tantu, a new electric travel company, whose main business includes electric motorcycles, electric scooters, bicycles, etc. In April 2022, Midea announced the acquisition of 55 shares of Wuhan Tianteng Power, officially entering the field of two-wheeled electric vehicles.

Product advantage is not equal to brand advantage. Li Jinning analyzes that as the e-bike market kills from the blue ocean to the red ocean, whether it can provide differentiated services has become a must for brands, from product positioning, marketing strategy formulation, sales channel layout, to the understanding of local consumption habits, how to provide after-sales service, and even on what platform, how much to spend, and who to ask for endorsement.

Can the current overseas market accommodate more Chinese brands? According to the statistics of the Oriental ** Research Report, the North American market started late, and the current penetration rate is low, only 2 in 2020. The popularization of low-carbon environmental protection and policy subsidies, as well as people's pursuit of a healthy life after the epidemic, have shown greater potential in the North American market. Judging from Amazon's data in the United States, more than 50 brands have been on the shelves for no more than 1 year, and the concentration of the e-bike market is low, leaving many opportunities for new brands, but time is running out.

North America is the largest geographical market, which is conducive to enterprises to increase profits through scale effect, and most brands are in the early stage, with obvious competitive advantages, and the North American market is relatively more likely to run out of the head enterprises in the next three to five years. Li Jinning analyzed that e-bike, as a sharp weapon, can help China's bicycle industry cut a breakthrough in the European and American markets. With the help of the strong domestic first-class chain advantage, the domestic outstanding entrepreneurial team still has the opportunity to show its strength in the global market.

Issued in 20233.27. The 1085th issue of China News Weekly magazine.

Magazine title: E-bike fire, made in China to go to sea new track?

Reporter: Li Mingzi.

Editor: Min Jie.