Understanding People in Markets Brings Better Insight and Better Decisions, the Case of Chinese Bicycles

I've been thinking about bicycles a lot lately, just part of the Summer and Fall litany of hobbies that keep me from getting too ummmm, robust. Plus, I just plain like riding bicycles. Since I also think about selling things in China a lot, the two subjects converged and fell in love with each other in my head. Seems like everyone rides a bike in China, from kids to great grandmothers. It's not a game for Lance Armstrong wannabes, kids and psycho trail junkies, it's the principal form of transportation for the Proletariat masses. So, you'd think that non-Chinese bicycle manufacturers should be licking their collective chops about the market, all those riders mean big business, right? Not necessarily.

The most popular bike in China,the Flying Pigeon one speed costs about $35 bucks on the street in Beijing, or Tianjin, the bike manufacturing capital of China. But some will tell you that it isn't worth buying a bike since they are so often stolen, brazenly stolen. Some guys treat stealing and reselling bikes like it's their job, and it is. You can buy a slightly hot Pigeon for about ten bucks. In fact, think of it as a different business model, you are actually paying money to rent a community bike and the thieves are really just ensuring appropriate circulation of the bikes, not committing any crimes. Given this social context, it doesn't make a lot of sense to think of China as a burgeoning bike market for a company like Santa Cruz or even Trek bikes who produce some of their low-end stuff in China.

Sometimes we get caught up in our own way of looking at the world and forget that though we are all human beings with similar hardware, human societies can work in very different ways. If you want to understand how a market works, study the people and beware of market reports and market researchers that look only at the numbers. Lots of statisticians are socially challenged (I'm one of them so I can make that joke), it's no excuse for failing to consider how the market really behaves. In this case, considering the underlying traditions and the numbers you might want to consider exporting "liberated" bikes rather than importing your most expensive two wheeled rockets.

If you're interested in Chinese attitudes toward bicycle ownership and you're in the mood for a good indie film, check out Bejing Bicycle by Xiaoshuai Wang.