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Red Flag!

If your dealership is considering taking on a line of Chinese powersports products take care!

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General Motors sells more Buick automobiles in China
than they do in the U.S.A. They also make more
Buicks in China than they make in the U.S. IBM’s
Think Pad notebook computer is now owned by a Chinese
company named Lenovo. Think about that!

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It takes just a short visit to Wal-Mart, K-Mart, Sears, Lowes
or any of the other big boxes to see that China provides a
very large percentage of the items these stores sell. The same
can be said of the tennis shoes, cell phones, kitchen
appliances and on and on. In fact, there is a new
“factory city” created in China every week! The farm
workers are rushing to these new cities to take
better paying jobs in manufacturing.

Just about every major American
manufacturer has either a relationship with
or collaborates with a Chinese counterpart.
So what’s the problem?

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Laws, ethics, morality, responsibility and
honesty are all attributes we in the U.S.
cherish. Unfortunately, these attributes
don’t seem to be shared by very many
Chinese manufacturers. Counterfeiting in
China is a way of life that, for the most
part, goes unchallenged by their
government. Large U.S. companies dealing
with China have enough leverage to keep their playing field
level. But that leverage is limited to the big boys.

What about the U.S. powersports industry and China? We see
more and more small displacement scooters and ATVs coming
to our shores. They are products manufactured by some large
and some very small Chinese factories. Many have strange, hard
to pronounce names, others American sounding names.

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What do they have in common? Only the fact that they are
made in China. There are more disreputable than reputable
scooter, ATV and motorcycle makers in mainland China. The
trick is sorting them out. Trick two is determining if the
manufacturer is based in mainland China or Taiwan. The latter
has been working with U.S. companies for decades and most of
the less than upstanding operations have been sorted out.

The “Made In China” website lists 6,508 Chinese companies
offering complete motorcycles, scooters and ATVs as well as
those who manufacture parts. Of that 6,508, only nine are
listed “Top Ranked.” But I have no idea what “Top Ranked”
really means! According to www.globalsources.com, all 583 of
their listed motorcycle makers are “Platinum” makers. That’s
another level with no clear criteria of quality, integrity or
honesty, but it sounds good, doesn’t it?

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Next we have http://hotproducts.alibaba.com‘s motorcycle
section listing “Gold Suppliers” — defined as an online
community of premium export-oriented suppliers from China.
Pop-up ads on the site even proclaim full EEC, DOT and EPA
certification for many of these Gold-level “OEMs” (and I use
that term loosely!). Only members that have completed an
authentication and verification procedure conducted by a
third-party credit agency can be a Gold Supplier. According to
www.alibaba.com, the “Authentication” process entails a third
party credit agency confirmation that a member registered
with www.alibaba.com is legally registered and that its
business address is correct. The “Verification” comes when a
third party credit agency confirms that the contact person of a
member registered with Alibaba.com is employed or
associated with the member. All Gold Suppliers have satisfied
the payment requirements for Gold membership.

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Still, it seems to me that Gold Supplier, Platinum
Manufacturer, Top Ranked and many other meaningless
designations indicates there are no measurable
standards. For example, although Honda and Yamaha
have joint ventures with several Chinese motorcycle
manufacturers, they have still had to go to
court to stop the rampant counterfeiting of
their products. It seems that intellectual
property, patents and other inhibitors to
forgery are not a part of the Chinese
business process.

So, what’s real? No country, not the U.S.
and definitely not China, can have orderly
growth and oversight when that growth is
so exceedingly rapid. Instead of developing
an orderly marketplace with rules and
regulations, China is left with everyone
deciding their own measure of credibility.

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What all this means is caveat emptor. If your dealership is
considering taking on a line of Chinese powersports products
take care! Do your homework. Talk to other dealers who sell
that same maker’s products. Ask about insurance, replacement
parts, DOT and EPA approvals, the financial strength of the
maker. Look them up on the web.

Why is this all so important? Your customers need protection
if they are to remain your customers. It takes years to build a
reputation, but only minutes to destroy one. You must feel
comfortable that you’re dealing with a reputable company
that will assume their obligations.

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In the end, we are all buyers, sellers and customers. It’s
unfortunate that there are all too many companies in China
that don’t understand our point of view. Just as there are some
dealers who insist on taking advantage of their customers. We
cannot just accept things as being true. Instead, we must
inspect rather than expect.

For some time now I’ve been working with HawkEye Global
www.hawkeye-global.com/index.html. They are a supply
chain integrator. What that means is this company closely
examines manufacturers in Asia and determines their abilities,
philosophy and integrity. Then they work to team U.S.
buyers with the appropriate manufacturer. Unfortunately,
they only work with distributors and manufacturers. I just
wish there were a similar company in a position to do the
same things for U.S. powersports dealers.

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It’s regrettable that there will be dealers who will lose
great sums of money based on lawsuits and fines because
they accepted a manufacturer’s word. It’s happened with
domestic manufacturers, too. One only has to remember
Excelsior-Henderson and Indian. Caveat emptor, indeed!

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