Chinese motorcycle company operating in Vietnam eyes opportunities in China-ASEA

by Han Qiao

HANOI, Dec. 25 -- In a motorcycle shop on the Tay Son Street in Vietnamese capital city of Hanoi, two young attendants were busy introducing motorcycles with the logo of Chinese brand Lifan to customers.

The motorcycles sold in this shop were all produced in an industrial zone in Hung Yen province thirty kilometers away from Hanoi. Eyeing the market opportunities in Vietnam, Chinese motorcycle company Lifan established a production base in Hung Yenseven years ago. It has now grown into an industrial zone comprising of 11 factories making motorcycle parts and assembling motorcycles.

"As Vietnam and China embrace the upcoming China-ASEAN (Association of Southeast Asian Nations) Free Trade Area (FTA) in the beginning of next year, the competitiveness of Lifan products will be further enhanced in Vietnamese market," Chen Jianyu, general manger of Lifan Vietnam told Xinhua in a recent interview.

"The FTA will facilitate the two-way trade and investment, and thus lower the operation cost of the company," said Chen.

Scheduled to take effect as of Jan. 1, 2010, the China-ASEAN FTA include China and ten Southeast Asian countries namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

The FTA is expected to become world third largest free trade area with a combined population of 1.9 billion and a combined gross domestic product (GDP) close to six trillion U.S. dollars.

Vietnam is a country known for living on motorcycle wheels. The country, with the population of 86 million, has 20 million motorcycles running on the streets. About 2.5 million to 2.6 million motorcycles are sold on average each year.

Chen said Vietnamese motorcycle market is dominated by Japanese brand like Honda and Yamaha. After seven years of development, Lifan has finally managed to set a foothold in the market. It produced 100,000 motorcycles and 300,000 motor engines for Vietnamese market last year.

"Lifan has its ups and downs in Vietnamese market," said Chen. "In the recent couple years, Lifan has been recognized by more and more Vietnamese customers as product quality improves. The products are now sold in over 400 shops all over Vietnam."

Tran Thi Hue is a young shop assistant working in the Lifan shop in Tay Son Street. "I could sell between six to seven motorbikes one day," said Hue. "Lifan motorcycle is fashionable and its quality is good. Some customers take family members or friends back to the shop."

Chen said the upcoming FTA could create good opportunity to introduce more kinds of products to Vietnamese market. According to Chen, Lifan has more than 100 kinds of motorcycles in China but only 19 kinds have been brought into Vietnam so far due to limited production capacity here. "At that time, Vietnamese people will enjoy more choices," said Chen.

Chen said in the coming weeks Vietnamese government is expected to issue some decisions on tariff and in other related areas to fulfill the China-ASEAN FTA commitment. He is paying a lot of attention on that.