Asia-Pacific, Economy & Trade, Headlines

CHINA: Wings of the ‘Flying Pigeon’ Bicycle Clipped by Reforms

Rajiv Chandra

TIANJIN, China, Feb 28 1996 (IPS) - For almost fifty years, the bicycle known as the Flying Pigeon has ruled the roads in China.

Just after the Communist victory in 1949, the Flying Pigeon, a sturdy, iron workhorse produced by the Tianjin Bicycle Factory, became China’s most widely used velocipede and a necessity in every family.

First introduced into China by the Japanese during World War II, the bike was once called “tianmao” or “iron bolts”. It was renamed Flying Pigeon by a worker to symbolise hopes for peace during the Korean War and was often presented as a souvenir to visiting world leaders.

“At that time, the common people called it the aspirin bicycle because at that time the technology was backward and the bicycle was very heavy and difficult to ride. So one became tired and sweaty while riding and often needed to take an aspirin,” says Sha Yunshu, an official at the Tianjin Bicycle Factory, situated in this coastal Chinese city south-west of Beijing.

How times have changed. Today, Flying Pigeon is no longer king of the road. As one of China’s largest state-run enterprises, Tianjin Bicycle Factory has been hit by market-style reforms and is being urged by the government to make its own way without public subsidies.

The company’s profits have taken a nose dive as the bicycle industry in China, a kingdom of 360 million bicycles, has been invaded by foreign producers, become intensely competitive and become overcrowded with more stylish, lightweight bikes.

Until 1989, bicycles were still rationed and could only be purchased with a special coupon. Now hundreds of companies produce forty million bikes for a market that sells thirty million bicycles yearly. Its wings clipped, Flying Pigeon is struggling to compete, company officials say.

“In this market, competition is harsh and everything depends on quality, technology and color,” says Sha, the company official. “This is a large, state-run factory, and now China is encouraging reform and change in the management.”

Reforming troubled state enterprises is the thorniest economic problem facing China today. More than two-thirds of the 100,000 state companies lose money and almost half are deeply in the red, Chinese economists say.

Fearing widespread unemployment will lead to social unrest, the government struggles to contain joblessness. State-run companies employ almost 100 million people, at least one-fifth considered unnecessary.

Officially, China’s unemployment rate is only about three per cent. But Chinese and international economists say some industries suffer unemployment rates of twenty per cent or more. By the turn of the century, China could have fifty million jobless urbanites and another 100 million without steady work in the countryside, according to a Western economist.

Although the government has tightened up on enterprise hand- outs and many companies can no longer pay employees, China’s conservative leaders insist that bankruptcies and mass lay-offs are not an option. China lacks a comprehensive social security system, not covering pensions, medical care and unemployment insurance.

“If China were to use such capitalist methods (lay-offs and bankruptcies), it would shirk its responsibility to the people, and it would trigger social unrest,” Prime Minister Li Peng has been quoted saying in the Chinese press.

China’s bicycle industry has been hit from all sides by economic change, tougher competition, changing consumer needs and protectionist concerns overseas. Where forty years ago China had a handful of bike manufacturers, including Flying Pigeon, today there are hundreds.

Overseas producers have swept into China in recent years, bringing state-of-the-art technology and stylish and colourful innovations like the mountain bike to appeal to increasingly affluent Chinese consumers.

The explosion in the Chinese bicycle industry has flooded the urban market where demand has stagnated. Prosperity is slowly pushing the bicycle off city streets to make way for growing fleets of cars and motorcycles.

Subway systems under construction in a half-dozen major Chinese cities are also relegating the bicycle to the sidelines. In a twist previously unthinkable in China’s bicycle kingdom, bikes are being banned in some city centres.

The intense bicycle competition has spilled over into the international marketplace where Chinese producers face a protectionist wall.

Last year, three U.S. bicycle manufacturers filed a complaint with the U.S. Commerce Department, charging Chinese companies were dumping bikes on the U.S. market at prices below costs. Shenzhen China Bicycle, the country’s largest exporter, said it would fight to overturn the imposed anti-dumping taxes.

In its drive to enter the World Trade Organisation (WTO), China announced import duties will be lowered on imported bicycles effective April 1. The move is likely to further tighten competition domestically.

In Tianjin, a bicycle manufacturing hub, the makers of Flying Pigeon struggle to adapt. The industry’s largest employer with 8,000 workers, Tianjin Bicycle cannot streamline itself as easily as foreign joint venture competitors.

Still, the company is making changes. No longer able to sell what is regarded as the Model T of bicycles, the company has imported foreign technology and now produces Flying Pigeons in a variety of lighter-weight models and colours. It is also changing its management structure in hopes of soon selling stock shares to the public.

“Even in the countryside, farmers are asking for lightweight bicycles in special colours,” says Sha.

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