U.S. remains 'strategically important' to Chinese manufacturers, as Lifan executives tell Mike Vaughan it must have a U.S. presence to be successful as a worldwide manufacturer.
CHONGQING, China - Over the years I’ve had the opportunity to tour a fair number of manufacturing facilities. In 2007 I toured Kawasaki’s Akashi plant and prior to that KTM's, and years ago spent a week working on the production line at Triumph’s original plant in Hinckley (it was part of my orientation at the company).
That being said, the typical plant tour merely shows you that the plant is clean, laid out in nice straight lines, and building product. The real meat is in the briefing, which usually comes afterward.
I didn’t know much about Lifan, only that it made a lot of small-displacement scooters and motorcycles. I don’t see many (none, actually) on the roads back home. But since I’ve been in China it's apparent that Lifan is quite popular here, and that it builds other products as well.
Lifan's Chongqing plant is located about a 40-minute drive from the city’s center in a well-kept industrial park. Like most factories, the exterior is nondescript, just endless concrete walls punctuated by occasional doorways and red signs announcing the company name and some slogans.
Inside, the factory is neat, clean, orderly -- and massive. I don’t think I’ve ever been in a motorcycle factory this large. I was told that it covers more than 2.1 million square feet and is one of three plants dedicated to motorcycle production. It’s a bit like stepping into the warehouse in the last scene from “Raiders of the Lost Ark.”
The factory seemed to have more people working in it than most, and the production line seemed to move a bit slower than I recall at KTM or Triumph. But I was told a bike pops off the production line every 30 seconds or so, so things are moving at a pretty good pace.
The facility has three production lines but only one was running during our visit, and like all good production lines it was producing a three or four variations of the 20 to 25 models that are built by Lifan. When the factory is running all three production lines, it can produce 1,000 units a day and 1 million per year, not counting its capacity to crank out 3 million engines annually.
One thing that stands out in my mind is how quiet it was. Most factories I’ve been to are pretty noisy, but this one was remarkably quiet, probably attributable to the fact that only one line was running and the building is enormous.
After a brief tour of the factory we had a Q & A with Bob Yang, vice president and general manager, Zhu Ziaoman, vice general manager, and Tang Xiao Dong, secretary of the board. A kickoff video provided some background information on Lifan.
Lifan builds and sells motorcycles, cars, trucks, vans, generators, engines and a variety of industrial goods. It employs almost 16,000 workers, 8,000 of which have either a college or technical school background. In 2011 it produced and sold over a quarter-million cars, 1.8 million motorcycles, and over 4 million engines of various types. Lifan is Chongqing’s leading exporter, with a net income of over $3 billion, and one of China’s top 500 companies.
In 2011 Lifan signed an agreement with MV Agusta forming a strategic partnership which, according to our hosts, will lead to exchanges of technology and prepare Lifan to enter the world market of big bore, 600-plus cc, and sport and “leisure” motorcycles as well as lift the level of quality and sophistication of motorcycles slated for domestic sales.
When asked about a re-entry into the U.S. market, Mr. Yang indicated that they planned to do so in 2014, with small displacement ATVs and some off-road motorcycles. In a brief one-on-one conversation, Yang acknowledged that the company's first entry into the market was handled poorly, that the product quality, parts supply and back up were not adequate, and that the next attempt would be handled in a more professional manner.
Yang further stated that though the U.S. market was difficult in terms of consumer demands and regulations, it was a “strategically important” market, and that Lifan must have a presence in order to be successful as a worldwide motorcycle company.
The Chinese motorcycle manufacturers are starting to recognize the need for improved quality, better technology, and better service, not just in overseas markets but to domestic markets as well, and the execs at Lifan echo that refrain.