Dahon's bicycle distribution business in China, launched three years ago, grew by over 100 percent in 2004.
"Our bikes are expensive compared to the average bike sold in China so we never expected such
rapid progress," said Dr. David Hon, Dahon president.
"But what we found was that Chinese consumers are tired of all the really cheap Dahon clones on the market and are ready to pay more for quality. It's interesting because China has always been viewed as a manufacturing base but it
is rapidly developing a cash-rich middle class with a thirst for quality products.
"We were shocked when we brought over a few of our premium US $2000 bikes and our dealers were literally fighting for the bikes. We ended up selling more of our top end model in China than in any other
Hon founded Dahon in 1982 and has seen his company grow year by year, with the expansion in China the latest in a run of success:
"But building a distribution network from ground zero in China is not easy," said Hon.
"It is an immense country and there are so many dealers out there. It's very difficult to separate the good from the bad but we've developed some pretty innovative ways to sift through the daunting number of dealers and find the ones that are the most entrepreneurial and successful. We insist on cash payment in advance: 30 percent deposit at the time of order and 70 percent before shipment. We realise those are tough terms but payment collection is critically important in China and only the best dealers can meet these terms."
Dahon China wants to branch out in 2005 and offer additional bicycle and component brands to its network of Chinese dealers.
Global Dahon sales hit a record high in 2004: 230 000 unit sales compared to 160 000 units sold in 2003. Dahon makes folding bikes for numerous bicycle companies around the world. The latest to add a Dahon-produced folder to its range is Saracen.
"We're pretty happy with our sales numbers but the reality is that 2004 wasn't an easy year," said Hon
"Raw materials and component shortages were a big problem. Wild swings in raw material pricing also proved to be a challenge. Looking forward, 2005 is shaping up to be a very good year and we're very encouraged that the popularity of folding bicycles continues to boom."
Sales grew in all major markets: the US, Europe, and Asia. Dahon managed to double sales in the UK for a second consecutive year and attributes continued success here to the successful implementation of the London congestion charge which has seen cycling in the UK capital grow by 20 percent per year since the introduction of the charge in 2003.
With many more European cities considering a congestion charge, Hon said he expects solid, long-term growth in Europe.
Dahon has invested heavily to boost manufacturing capabilities. Last year, Dahon tripled the size of its main China
factory to 45,000 m2, added a second China factory, and doubled capacity at its Macau factory.
Integrated into Dahon's main China factory is a new aluminum frame facility. This facility will supply frames to Dahon as well as outside customers. Dahon also has a new facility dedicated to machining, butting, and forging. Dahon now employs over 700 employees worldwide, almost twice as many as a year ago.
In a side swipe at America's refusal to sign up to the Kyoto accord, Dr. Hon said:
"The Bush administration has claimed that global warming has not been definitively established as fact - we respectfully disagree. We feel that global warming poses a very real threat to the earth's ecosystems and people in every country need to move to more sustainable forms of transportation. Folding bicycles are an integral part of a green mobility solution and I think we've only really started to see the tremendous potential of this market."