Harley-Davidson Facing The Great Wall Of China

We all know that Harley-Davidson 3rd quarter earnings fell more than 15 percent from last year because of sluggish sales and that the company had to cut production because of the difficult U.S. business environment. More than ever, Harley needs to open and penetrate new foreign markets. China is potentially the most rewarding country. Harley-Davidson officially arrived in China in April 2006 with the opening of its first authorized dealership in Beijing, but the iconic American motorcycles faced various restrictions, including prohibitive taxes. Harley-Davidson sales in China are virtually non-existent. At prices of up to 90 percent more than in the United States due to Chinese customs duties and other taxes, only the very rich can afford the bikes. In addition, many Chinese cities, including Beijing and Shanghai, ban motorcycles from city center streets and highways. China’s roads are among the most dangerous in the world, with more than 100,000 deaths a year, largely from unsafe driving and poor enforcement. And if it was not enough cities also restrict the number of licenses they issue for motorcycles! Ahead of high-level U.S.-China talks this week in Beijing, four U.S. senators urged the Bush administration on Tuesday to raise pressure on China to open its market to U.S. motorcycle maker Harley-Davidson which has struggled with sluggish sales this year. The objective is to remove the “non-tariff barriers" erected by China that have the effect of unfairly limiting access to their vast market and to oblige China to be in compliance with its obligations as a member of the World Trade Organization.

27 Responses to “Harley-Davidson Facing The Great Wall Of China”

  1. 1 Rick Dec 11th, 2007 at 10:00 am

    China’s laws that restrict sales of ANYTHING that is not MADE there. General Motors was smart. They started building cars IN CHINA for the Chinese market 8 or so years ago and now own 10% of the Chinese auto market. Ironic that a country that has taken most of the manufacturing jobs from the USA would not allow foreign trade. And we all keep shopping at Walmart which incidentally accounts for 12% of China’s GNP. Buy American, buy European, buy anything but China, if you can find it…………….

  2. 2 goldiron Dec 11th, 2007 at 10:01 am

    Since the average annual income in China was 12496 yuan, which equates to US$1687.46 per year, this seems like a lot of wind blowing across the teeth of the politicians. Even without any taxes on Harley motorcycles, they seem to be not affordable for most Chinese citizens.

  3. 3 Scott Dec 11th, 2007 at 10:03 am

    More testimony on how well free trade is really working. Maybe they would be more likely to drop the tariffs if Harley used lead based paint.

  4. 4 Paul Brunner Dec 11th, 2007 at 10:21 am

    Cyril. Your posts are always very interesting. Great work.

  5. 5 rodent Dec 11th, 2007 at 10:28 am

    Screw China, they own everything and shortly they’ll own Harley Davidson…..Almost all the non bike stuff at Harley dealers is made in China, so we might just let them make the bike also and close down the York,Kansas City, and Milwaukee and move the whole deal to China. And I almost forgot Buell, move that also.

  6. 6 ROB Dec 11th, 2007 at 10:30 am

    This has nothing to do with the unsafe roads, the amount of money on average a Chinese citizen makes. What this shows is how one sided out trade system is. Thanks to Corps. like Walmart, GE , Maytag with the large pockets to pay of our government officals thru lobbyist there is very little duty or tariff on Chinese products coming in to this country. It is time to close the borders and not just the one to the south..

  7. 7 Road King One Dec 11th, 2007 at 10:58 am

    Harley marketing strategy must be to sell a lot of tee-shirts to chinese people. Problem is that China is going to copy their shirts for 1/10th of the price. And how Harley is going to enforce trademark violations? Harley lawyers are going to face their biggest challenge ever.

  8. 8 goldiron Dec 11th, 2007 at 11:29 am

    History repeats itself. Years ago, Harley Davidson branded some bikes made by Aeromacchi. Don’t you think they are looking at a possibility of that type of arrangement with and in China?

  9. 9 Biker Dan Dec 11th, 2007 at 1:45 pm

    The Middle Class in China is almost the same size as the entire population of the USA… The low average income GoldIron cites is due to the half-billion folks living in the desperately poor countryside.

    There are PLENTY of rich folks in China who would buy a Harley Davidson…if it made sense to do so, financially. The USA, on the other hand, is getting poorer and poorer (of course, we’ve done this to ourselves with decades of deficit spending, and not buying from our own).

    It’s a bit early yet for Harley to start building bikes there, but they will. Though I wonder how the Unions would feel about that… What would stop them from building cheap Harleys in China and then shipping them back here? Say buh-bye to EVERY plant in the US, when that happens…

  10. 10 Bert Dec 11th, 2007 at 1:54 pm

    Biker Dan say ” What would stop them from building cheap Harleys in China and then shipping them back here? ”

    YOU & US ! ! ! ! we have the same problem here in europe . . . .
    you have an advertising at the right of this response saying :
    “Say hello to iphone ” ( made in China ) just say ” Goodbye “

  11. 11 Jeremy Dec 11th, 2007 at 4:19 pm

    Harley Dealerships are already packed with after-market China parts. Only Victory is a pure american brand. For how long?

  12. 12 TROY Dec 11th, 2007 at 6:59 pm

    If the Chinese make bowling pins, Harley could be in trouble again! The trend is poor quality turned into expensive product and that has never worked for very long. The only way to stop it is don’t spend your money on Chinese junk. The steel and aluminum made in China is inferior to say the least, and you are probably risking life and limb if you ride a bike made in China.

  13. 13 gustian Dec 11th, 2007 at 9:03 pm

    The day that we can buy a Harley “made in China”, that will be “la fin des haricots” (Cyril knows the expression) It means “that’s the end of all” .

    I agree with Rick, buy American, buy European, buy anything but Chinese. I’m proud to have still a Fender Telecaster “Made in America”. I want it that way with my Harley too. Jesus, let’s be proud of what we make. Keep it in own hands……..

  14. 14 goldiron Dec 11th, 2007 at 10:23 pm

    We went through this same thing after World War 2 with Japan. We know the painful experience that we went through with their inferior products. On the European front, we could not get service nor parts in those days. Harley gained prominence over Indian when they cheated (in a brilliant business move) on a defense contract during world war two I believe. They also have been outsourcing to Mexico for years and have plans to build plants in China. The “Fat Boy” is from Brazil. They left their definition as the “American” motorcycle long ago. HOG is nothing more than a venue by which a bad boy wanna be can perpetuate their delusion. Their stock manipulations and the treatment of their dealers is all geared towards one thing. Money and Power.

  15. 15 Nicker Dec 12th, 2007 at 1:28 am

    “…American motorcycles faced various restrictions, including prohibitive taxes. Harley-Davidson …”

    Makes one wonder why the Hell we’ve given them “most favorite nation” status.

    Oh ya, i forgot, it was Bill Jeff and Ron (got-a trade mission seat to sell) Brown.

    “… trend is poor quality…”
    Yep, just got 40 feet of Chinese water pipe from Home Despot and the ID dimensional stability sucked.

    Buy American when and where you can.


  16. 16 Scott Dec 12th, 2007 at 9:25 am

    Great comments by all. I have been on the buy American bandwagon for years. Having worked in an industry devastated by unfair foreign trade, I have seen the affects of unbalanced trade first hand. Unfortunately if the Motor Company were to strike a deal with China and build bikes there for import to the USA, they would be successful. History would repeat itself. Most of us here on the board would definitely not but one the masses would eat up $10,000 big twins.

    I have always believed that we as consumers are king. I spend every dollar as a vote of confidence to the retailer and the manufacturer of the items I buy. It would be totally up to us to send the message to Harley Davidson or any other manufacturer that enough is enough. Before you pay for your next purchase at the mega big box store look at where it is made and decide if you truly need it. You may be surprised at what you really don’t need.
    I will get off of my soapbox now.

  17. 17 Rogue Dec 12th, 2007 at 3:06 pm

    I am happy to say that the Mayor of Palm Bay Florida where I live has told the city not to buy products from China.
    It has caused quite a stir BUT he has my support and that of many others.

  18. 18 Rick Dec 12th, 2007 at 3:28 pm

    Just to set the record straight. George H. Bush was the first to grant most favored nation status to China. Ironically it was right after The Tienanmen Square incident. The only letter I have ever sent to a president. I sent the picture of the kid standing in front of the tank, I called Bush a “Wimp”!! We have been sold down the river by both parties folks!

  19. 19 Nicker Dec 12th, 2007 at 10:23 pm

    “…We have been sold down the river by both parties folks…”

    Yes, for different reasons, but the result is the same.

    Vote with your $$s


  20. 20 Nicker Dec 13th, 2007 at 12:36 am


    Congress reviews MFN status annually to decide if China should be granted MFN status for the next year.
    (The term ‘MFN’ has been replaced by ‘Normal Trading Relations’)

    The US House of Representatives voted in May 2000 to grant China ‘Permanent NTR’ status, ending the annual debate.

    Big mistake in may book.


  21. 21 Nicker Dec 13th, 2007 at 1:08 am

    Oooops almost forgot:

    When the U.S. reestablished full diplomatic relations with China in 1979, it granted MFN status to China at the same time, subject to the provisions of the Jackson-Vanik amendment. China’s MFN status has been renewed every year since.


    President Clinton severed the link between China’s human rights practices and MFN renewal in 1994 declaring that:

    “…we are far more likely to have human rights advances when it is not under the cloud of the annual question of review of MFN. This is not about forgetting about human rights. This is about which is the better way to pursue the human rights agenda…”

    (and Presidential Library contributions…???)


  22. 22 Sid Dec 13th, 2007 at 2:31 pm

    I agree about saying no to:

    -poor Chinese quality
    -lame Chinese business practices
    -atrocious human rights & environment impact from the Chinese (US needs to shape up too)
    -don’t forget the Chinese people do not elect their leaders

    It is also time to say no to the over-priced goods and services in N. America & Europe, too. I’m not suggesting to lower any standard of living – just recognize over-priced items. Find great quality at a fair price. Not an easy task, but if everything & everybody has a reality-check about high prices in every aspect of our existence, perhaps the cost of doing business could be more manageable. We could then be competitive with prices, not just quality (before its too late).

    Unfortunately, the “invisibe guiding hand of supply and demand” doesn’t work in controlling the greed stemming from hot capitalist markets.

  23. 23 Nicker Dec 13th, 2007 at 3:03 pm


    “…“invisible guiding hand of supply and demand” doesn’t work …”

    It works if you don’t buy.

    That’s the beauty of the system, you get to decide.

    You vote with your $$$s.

    If there isn’t a market for “poor quality-overpriced” goods, how can they continue to be made…???


  24. 24 Dave Dec 17th, 2007 at 12:00 am

    Well screw them if they don’t want our stuff! There is a simple solution to the China problem, Don’t Buy China-Made Products! Don’t keep supporting a Chinese government that is a one-way deal! Buy local, & buy American whenever possible, or buy products from one of our European friends that have good quality & similar interests in our riding/customizing culture such as Penz, Kodlin, Walz, etc.

  25. 25 Dhammer Dec 24th, 2007 at 4:06 pm

    People are catching on and I believe that when bikers proud to own a Harley made in America? read the genuine Harley labels made in China make us think twice, Who’s Harley trying to fool? Will Harley proudly fly flags from China and Taiwan along with the American flag in front of their manufactures to represent the 99% of products that Hartley markets as American? What’s genuine about our parts we put on our bikes made in china or Taiwan?…..Nothing. I would pay more for Harley parts made in USA, although Harley charges top dollar for china labor and materials you would think they would have American union workers build it here in the US. it’s time people speak out and Quit supporting a company that claims to be American ( read some of you shirts) and not go in your local Harley shop and buy their Chinese products hanging all over the walls. The whole grass roots of Harley Davidson,the sound of aftermarket pipes that make a Harley sound like a Harley the passion of being on the road , the American dream. I say bring it back Home!!!!! Proudly make it in the USA!!!!!! Say it Harley Proudly built in the USA!!!

  26. 26 Greg Dec 24th, 2007 at 5:25 pm

    Only Victory can affix the sticker “Made In America” on their bikes. Harley-Davidson can’t, for evident reasons.

  27. 27 Jon Feb 20th, 2008 at 11:39 pm

    Actually some honda models, the VTxs can have the “Made in America” Tag. Assembled in ohio by the vast majority of US made parts

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