Eurocharm’s products belong to the middle stream of the industry as the Company manufactures chassis and parts. Downstream in the motorcycle industry refers to the assembled and ready-for-sale motorcycles. With a broader definition, the middle stream can range from building engines to tire productions. Upstream is primary the manufacturing of components for the middle stream products. The company is a midstream manufacturer in the medical equipment industry, and the sales targets are medical equipment brand manufacturers.
Global Industry of Motorcycles
Asia is currently the world’s largest motorcycles sales market, including India, China, Indonesia, Vietnam, Philippines, Thailand and other countries with annual sales of more than one million vehicles, and Taiwan and Japan which has a total of about 1.2 million vehicles are sold. As to the market in China, its conventional fuel motorcycle industry had dropped significantly under the implementation of the national emission standards. This had led to India being the world’s largest motorcycle market. Meanwhile, the rapid climate change has raised the world’s awareness and concerns for greenhouse gas emissions. One of the solutions to saving this planet we live on is to replace the regular vehicles with ones powered by electricity or ones that meet the emission standard. As a result, the growth of the parts manufacturing industry should maintain the previous rising slope as the primary components will continue to be the same.
Countries in North America and Europe may hold potential growth in this electric motorcycle industry with a mature market and steady economy. On the other hand, the demand for motorcycles is gradually rising in Africa and South America as the economy develops along with its transport infrastructure. It is estimated that these two continents will be one of the leading motorcycle markets in the future.
As a whole, motorcycles are widely operated in developing countries due to that they are relatively affordable and easier to maneuver compared to an automobile. The storage compartment also provides the ease of shipping while the convenience to park nearly anywhere makes it an everyday personal transport. Asia, in particular, heavily depends on motorcycles due to its high population density and the lack of public infrastructure. According to Taiwan’s Industrial Economics and Knowledge Centre, with the continuous recovery of the global economy. The economy around the world has improved, and making consumers more willing to purchase cars than motorcycles. In addition, the promotion of shared motorcycles and market saturation have caused demand in some regions to decline. However, due to the stable demand in Southeast Asia, and the rebound of the “post-pandemic” affected by the COVID-19, the global motorcycles market is predicted to rebound to 58.75 million in 2022.
However, based on the analysis from Global Motorcycle Market Development, the increasing standard of living will lead to motorcycle buyers converting into automobile buyers. As a result, it is expected that the motorcycle market will begin to show a downward trend. In 2018, the global market sales rose 0.4% in the scale of 58.3 million motorcycles market.
Motorcycle Trends in Vietnam
Motorcycles have been the primary means of transportation in Vietnam. This is due in large part to the poor public transit system and the lack of highway infrastructure. In Hanoi and Ho Chi Ming City, the two most populated cities in Vietnam, motorcycles have undertaken more than 80% of the urban transport needs. The development of the motorcycle industry in Vietnam can be divided into 5 periods chronologically, as follows:
|Motorcycles are rarely seen, and the people rely on bicycles as their means of transportation. There were approximately 2-3 million registered imported motorcycles.||Manufacturers such as San Yang Motor and Honda realized the potential of the motorcycle market in Vietnam and began setting up factories for manufacturing and assembling. However, the general public still can’t afford to purchase a motorcycle due to the relatively low average income.||Motorcycles became a lot more common as China started to import their affordable motorcycles into the market. The industry has seen rapid growth regarding sales performance. During the peak seasons, motorcycle sales could reach 2 million motorcycles per year.||As the new policy from the Vietnamese government in effect to limit the motorcycle registration, the sales performance has seen a substantial decline. In addition, the inferior quality of Chinese motorcycles has started to show, and consumers have better and more options. Towards the end of 2015, foreign manufacturers with factories in Vietnam had raised their market share had to 53.6% altogether.||Along with the growth of the economy and the lift of limited motorcycle registration, the motorcycle market is gradually recovering. The annual sales in Vietnam are approximately 2 million.||As the average standard of living escalated in Vietnam, the government had made an estimation in 2007 that by 2020, the number of registered motorcycles will increase to 33 million.|
Medical & Healthcare Equipment Market
Eurocharm manufactures and exports various medical equipment, including patient lifts, shower chairs, commode chairs and medical beds to Europe, North American and Japan. The American market includes the United States, Canada, Mexico, and South America. On January 29, 2020, US President Trump signed the “US-Mexico-Canada Agreement” (USMCA), also known as “the North American Free Trade Agreement 2.0” (NAFTA 2.0). According to the new agreement, “the rules of origin”, the United States will implement stricter. To increase the value content of North America and restrict the use of foreign components including those manufactured in Hong Kong and China. These rules may inhibit Hong Kong and China’s exports to North America. The follow-up is worthy of attention.
Western Europe remains the second-largest market in the world. As the world’s elderly top ten countries are mostly concentrated in the six countries of Western Europe, and the Central and Eastern European countries are affected by population migration and rapid aging, the proportion of the population over 65 in Central and Eastern Europe has exceeded 14%, becoming an advanced society country, expected to be in the elderly population under the influence of the continuous increase, the demand for medical care in Europe will continue to grow. Europe will also be affected by the COVID-19 in 2020 and become a high-impact area of COVID-19. As of May 31, the number of confirmed cases worldwide top five countries, except the United States is the top one, Spain, Italy, France, and England are second to fifth. This will not only affect future economic growth, but is also expected to bring up the demand structure change.
The medical market in the Asia Pacific region is still dominated by Japan. Due to the impact of the COVID-19 in 2020, the Tokyo Olympics in Japan is expected to be postponed to 2021. Coupled with the impact of the pandemic on Japan’s economic performance in 2020, subsequent changes in the Japanese medical equipment industry still need to be continuously observed.
Another major market in the Asia-Pacific region is China. The GDP growth rate of China will continue to decline in 2020. China has been promoting the medical reform policy for ten years, but it is still facing problems such as insufficient overall medical resources and large differences in medical resources between urban and rural areas. In the future, China will continue to encourage the development of the medical and health industry. In addition, after the economic situation improves, it also raises national health awareness and promotes medical quality expectations and increases medical consumption expenditures. It has also optimized the structure of China’s medical industry, especially the high-end medical equipment industry, which has gradually realized import substitution policies. It is expected to continue to reduce the proportion of import supply and gradually expand the export performance in the international market.
Current Status and Future Development
Medical Equipment Industry
Current status and development of the industry
Motorcycle development moved to ASEAN countries
As global warming and air pollution continue to simmer, automotive manufacturers are launching environmentally-friendly products to help preserve the planet. With the current research and development towards advanced technology, automotive manufacturers are exchanging ideas with their long-term suppliers who are the parts manufacturers. This is beneficial to both the upstream and middle stream companies as they can apply newly developed technologies to manufacture higher quality products and, at the same time, reduce the processing waste to ease off the pollution.
In addition, the demand for motorcycles has been rising over the years as countries in Southeast Asia, starting to develop economically. Manufacturers such as Honda, Yamaha, Piaggio, and Suzuki had already taken this opportunity to invest in factory establishments and the relatively cheap labor costs in Southeast Asia. Besides supplying the motorcycle needs domestically, the factories also export to neighboring countries with the country’s competitive shipping cost. A few of the fast-growing countries in Southeast Asia, including Indonesia, Vietnam, and Thailand, are valued as markets with the most potential. Their economy and public infrastructures are maturing and would allow them the capacity to consume motorcycles. In Vietnam, Eurocharm has established its place for being the major motorcycle parts supplier. Besides seeking other potential markets for export or investment, the Company has begun to shift its focus from trading domestically to shipping the products internationally. Along with the idea of the Association of Southeast Asian Nations (ASEAN), Eurocharm wishes to increase its competitiveness by adding more machinery such as the laser 3D cutting system to enhance the product quality.
Global medical device Development
Influenced by the increasingly ageing population, equipment such as hearing and mobility aids are popular among seniors with self-care capability. Issues associated with sub-replacement fertility also continue to affect the world’s population structure. Also, due to the shortage of labors and caretakers, the demand for self-care medical devices and equipment will continue to surge. In the US, the focus remains on taking care of the ageing population, the prevalence of chronic diseases and President Trump’s healthcare reform. Due to the impact of the COVID-19, Japan’s Tokyo Olympics is expected to be postponed to 2021, and Japan’s economy will be greatly affected in 2020, which will affect the overall growth rate of the medical device industry in the next few years. The Company’s primary target markets for medical equipment are advanced countries such as Japan, Europe, and the United States. Therefore, medical care policies in these markets are conducive to the sales growth of medical equipment in the future.