Cycle News

FEATURE VISITING CFMOTO'S FACTORY P82 the world. But demand for motor- cycles with 400cc or larger is still very small in China, occupying less than one percent of the to- tal market with sales of just 9500 units in total in 2013, albeit rep- resenting a sales increase of 56 percent year on year. It's expected this will be ramped up still further in 2014 after products like the Kawasaki Ninja and the Honda CBR300 were introduced to the Chinese market this year – but this in- creased competition means a greater focus on export sales for CFMoto. And indeed it's these that have fueled the company's recent expansion, with turnover registering a 40 percent growth year-on-year in 2011, 55 percent >>Chinese Dukes As a further confirmation of CF- Moto's standout status in the Chinese motorcycle industry, is a small compa- ny by Chinese standards CFMoto has been chosen by KTM over other much larger manufacturers as its partner for expansion into the huge Chinese motorcycle market. In a move that further extends KTM's increasing global reach, the Austrian manufacturer inked a deal in 2012 with CFMoto president Lao Guogui to begin assembly of KTM models exclusively for sale in China – the bikes will not be re-exported, insist KTM executives. Production kicked off on March 27 this year and initially entails disas- sembled (CKD) kits of the 200 Duke and 390 Duke models being shipped there for assembly from KTM's partner Bajaj Auto's plant in Pune, India, where they're manufactured. CFMoto is also importing larger capacity Austrian-made KTM mod- els, from the 690 Duke single up to the range-topper 1290 SuperDuke R, for sale in China via a dedicated KTM dealer network that the Chinese manufacturer has established in major cities like Beijing and Shanghai. Import tariffs are slightly unusual in China, where the lower the displace- ment of the engine, the higher the import duty, in order to protect the lo- cal industry, which with the exception of CFMoto's own 650cc twin-cylinder models, the Loncin LX650, and the Qianjiang-made Benelli BN600R four, sees 250cc as the capacity ceiling. This gives no advantage to selling more expensive prestige models on a CKD basis. This joint venture should have kicked off a year ago, but was put on hold when a Chinese opportunist tried to ransom the KTM name, after highjacking it by registering King Tao Motorcycles (KTM) in China. Even though that company never actually produced any bikes, its owner sought a payoff of more than $1 million to hand over the rights to the name, which the KTM board declined to pay. Instead, they took the time needed to register KTMR2R (as in, KTM Race to Road – or even, Road to Race) as a manufacturer in China. It was a tortuous legal process that took time to complete, and it's under this name that all KTM models are sold there. "After many, many years looking for the right partner for KTM in China, we strongly feel we finally found the right company," says KTM's Director of Sales & Marketing, Hubert Trunken- polz. "Firstly, it's run by a very serious entrepreneur, Mr. Lai, and we also felt after visiting the CFMoto factory that in terms of size and in their way of think- ing, with an accent on quality, they're the perfect match for KTM. We got the strong impression we're both reading from the same page. "It was hard to find a partner in China who understood the impor- tance of quality, as CFMoto does, as opposed to focusing exclusively on low prices. It was also not so easy to find somebody who has respect for intellectual property, and trademarks. With CFMoto we found this kind of company, and in terms of an Indian maker sending bikes to China, I think this only works if those involved have a broader view of things. Our partner Rajiv Bajaj has such a wide view, and he's very much in favor of this union because he sees the opportunities it brings with it." What volumes are KTM and CF- Moto envisaging? "The bikes CFMoto is producing will only be sold in China, where the premium motorcycle market is not as big as you might think – it's pretty similar to India. The overall Indian market stands at 10 million units an- nually, but the premium market is only 200-300,000 units annually, which is about the same as China. We've also found out that if we define premium for KTM as more than 200cc in displace- ment and a higher retail price than $4000, if we apply this definition to India and China, it would result in exactly the same 10 percent market share of the premium market. So while we're looking at 5000-6000 units per year to begin with, China has the po- tential for KTM to sell 20,000-30,000 units there annually over the next five to seven years." While KTM's selection of CFMoto is an implicit recognition of the high quality of the Chinese manufacturer's own products, there's no intention to sell CFMoto's own products through KTM's dealer network anywhere out- side China. "I'm not saying that CFMoto doesn't build good bikes," states Trunkenploz. "But it would create a lot of confusion in the marketplace if we did this. So we won't." This marriage between Europe and China is a step welcomed at the top of

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