A Chinese motorcycle company is betting that Cambodian and Vietnamese consumers will buy bikes assembled in Phnom Penh that cost half as much as their Japanese counterparts.
“We have imported spare parts made in China to be assembled here and sold to the local and Vietnamese market,” said Xie Yuan Ping, general manager of the MCT Motorcycle (Cambodia) Ltd.
He says the Chinese motorbikes will be only about 80 percent as good as those assembled in Japan, though 40 percent of the parts used in MCT bikes will be Japanese. But at only half the price, the bikes will be a bargain, he said.
MCT has imported $1.5 million worth of motorcycle parts for its assembly plant, which is located near Pochentong Airport and employs 50 Cambodians and 10 Chinese technicians. That’s enough parts to build 50,000 motorcycles, and the plant will be able to assemble up to 100 vehicles per day, based on demand.
The company plans to export between 8,000 and 15,000 vehicles a year to Vietnam, its primary market. The bikes are expected to compete with the popular Honda models produced in Thailand by a Thai-Japanese joint venture.
The company, however, faces several hurdles as it seeks to develop a local market. Xie Yuan Ping said one problem is the number of motorcycles currently being smuggled into Cambodia from Vietnam and Thailand.
“The government needs to find a way to stop the smuggling,” he said. “If it doesn’t, good investors will not be interested” in building plants in Cambodia.
David Chanaiwa, whose law firm represents MCT, said the company wants to set up its own financing operation so that customers can buy motorcycles on credit.
Buying on credit allows a customer to pay a percentage of the total price—typically 10 percent to 20 percent—while signing a contract promising regular payments until the full price is paid.
The advantage to the customer is, he or she can use the bike while paying for it, instead of having to pay the entire price at once. The advantage to the company is more people can afford to buy bikes under a credit system.
If a customer fails to make payments, the company repossesses the vehicle, if it can be found. Companies protect themselves from possible loss by buying insurance to cover defaulted loans.
Chanaiwa said MTC is meeting with banks and insurance companies to see if such a system can be set up in Cambodia.
He also said the government should restrict imports of used motorcycles, saying they pollute the environment. “There are too many old bikes on the street,” he said. “Our country should not be a dumping ground.”
But at least one dealer said that used Japanese motorcycles create less pollution than new Chinese vehicles do.
Kim Luch of the Sou Hak Company has imported Japanese machines for the past decade.
“I am sure that Chinese motorcycles will break down within a year,” he said, contending that a used Japanese vehicle will last between five and 10 years.
“I don’t think Chinese products are better than Japanese.”
The market for motorcycles appears strong. At least 11 companies currently import used Japanese vehicles for the Cambodian and Vietnamese markets, with each selling 60 to 80 vehicles per day.
Sou Hak imports 455 Japanese motorcycles per month and sells them for between $350 and $1,200, depending on the brand. The new Chinese motorcycles will average $500, Chanaiwa said.