Exhibitions Kintex Show

Investigating the Korean Bicycle Industry

at the Kintex Show Text & Photos: Grace S. Ruan

hanks to the Korean gov- Although 70% of all Korean bi- Ternment’s incentives to cycles are currently MTBs (pre- the cycle industry and its ac- viously as high as 80%), road tive construction of bike paths, bikes—despite their low popu- the cycling environment is very larity in —have become a good and Korean cycle industry new favorite over the last four has been enjoying good pros- years and show signs of steady ▲ has many bridges (the flows beneath). pects over the past few years. growth.

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and 1.3 million units in recent Korean President Lee Myung- decades, sales have surpassed 2 bak loves sports and cycling, million units during the past four and therefore wishes to create an years due to the government’s excellent cycling environment promotions of environmental encouraging the Korean people awareness and cycling, and the to ride bikes. South Koreans like large-scale constructions of bike to use the Internet and often em- paths (especially bike paths along ploy it to invite their friends go rivers). Additionally, anyone can out to ride bikes, so it’s unsur-

▲Full of locks and cards, the card tree signifies easily rent a bike in many parks. prising that the bicycle growth good fortune and love. The (525 rate is around 10% annually. The km) is ’s longest riv- cycling population consists of There are 50 million people er and has 389 kilometers of bike two major groups—middle aged in South Korea and 23 million in paths along its banks. The Han people who ride bikes for health North Korea. A large part of the River (514 km), South Korea’s reasons, and younger people who South Korean population lives in second-longest river, has 211 ki- do it for fun and to be trendy. The and around Seoul, which is di- lometers of bike paths. The third Korean cycle industry is geared vided into South Seoul and North longest river, the Keum-Gang towards the domestic market Seoul by the Han River. The total River (401 km), has 146 km of and has annual sales volume of population of Seoul is around bike paths, and the fourth longest around 2 million units. The aver- 10.5 million, and the popula- river, the Yeoungsan River (122 age unit price for mountain bikes tion of the greater Seoul area is km), has 133 km of bike paths. In between 20 million and 24 mil- addition, many bike paths are be- lion. The combined population of ing built in scenic areas, and the Seoul and the greater Seoul area completed bike path length has accounts for 48% of the entire already exceeded 1,000 km. population of South Korea. Road conditions in South In the past, the Korean bi- Korea can be difficult due to the cycle market depended heavily many mountains and rivers, and on imports, and the few Korean cycling can be somewhat dan- assembly plants imported frames gerous. As a result, the Korean and other parts for assembly in government has decided to sys- Korea. Although annual bicycle tematically construct bike paths sales remained between 1 million along rivers. It is said that South

▲These kilns have several hundred years of history. ▲The Han River divides Seoul into North Seoul ▲Middle-aged and elderly people in Korea and South Seoul. often ride bikes for health.

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▲Bygen frame. ▲Bygen produces some parts in Korea and also imports some ▲There are many cycling clothing manufacturers from Taiwan. in Korea.

▲Many Koreans want to own an international ▲Korea has Swallow tires, but most bikes use Taiwanese ▲These frames were developed by Korea Bicycle brand bike. tires. Research. is between US$90 and US$100. price range. Samchuly Bicycle imported (mainly from Taiwan The price range for imported bi- enjoys a market share in excess and China). Locally-produced cycles is between US$600 and of 50%, while Alton has a market frames (chiefly made using Cr- US$1,500, and the majority are in share of roughly 25%. The other Mo) are mostly used on special the US$800 to US$1,000 range. major manufacturer is Elfama, models, such as bikes used in Road bike sales are increasing; which produces mostly high-end Keirin racing. According to Na however, Korea’s unfriendly road bicycles and has an annual output Pil Sung, manager of the Kintex conditions still present problems of about 20,000 units. There is organizing group, there are 300 for people who want to give road only a handful of bicycle parts bicycle clothing manufacturers in bikes a try. manufacturers in Korea. Apart Korea, and the Korean cycle in- Korea’s two major bicycle from the relatively large tire man- dustry has around 700 companies manufacturers are Samchuly ufacturer Swallow, there is only when accessories such as lights Bicycle and Alton, and both pro- small-scale production of gears, are included. duce bicycles in the low to mid and the majority of frames are

The Korean bicycle industry has two industry associations:

One is KBMA (Korea Bicycle Manufacturer Association), which has approximately 25-30 members, including such leading firms as Samchuly Bicycle and Alton; the other is the KBIA, which has 37 members and is headed by Seung Phil Chang. Although both associations supported the Kintex show in the past, they parted ways last year and the KBMA withdrew from Kintex and shifted its support to the Spoex show. As a result, Samchuly, Shimano, and Biclo no longer attend Kintex.

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Samchuly Bicycle

This company is the largest bicycle manufacturer in Korea, with annual sales volume of 1 million units. The company has a small-scale assembly plant, and Cello and Black Cat are its two major brands. Samchuly chiefly imports bicycles from China, and the greater part of these are from Tianjin Fujida (500,000 units). It also imports high- end bikes from Bo-an (Shenzhen). The company used to import bicycles from Merida’s Shandong plant; however, it has now turned to Ming Cycle. Although Samchuly Bicycle long focused on low-end models, it established a high- end bike department in 2006 in order to expand into the high-end market. The company sells bikes under its in-house brands, Cello and Black Cat, and distributes European brands such as Colnago. In addition, Samchuly Bicycle is one of the two Shimano distributors in Korea. Shimano and Samchuly Bicycle didn’t take part in Kintex show this year; they chose to participate in Spoex instead. With regard to Bo-an (Shenzhen)’s financial troubles and delayed payments, a reliable source has stated that Bo-an has Samchuly Bicycle’s support. According to ▲Suk Hwan Kim is the president of Samchuly Samchuly Bicycle spokesman Peter, Bo- Bicycle. an does indeed have Samchuly Bicycle’s backing. The company has used L/C to order bicycles from Bo-an.

◄Samchuly's bikes mostly consist of practical, mid-/low price models.

Alton

Alton has always maintained close ties with Taiwanese firms, and it was one of the first Korean companies to establish a plant in Shenzhen. It later moved its plant to Tianjin in 2008. Apart from exporting to countries apart from Korea, it also sells bikes in the Chinese domestic market. Although its sales volume has not been large over the last few years, Alton achieved good results last year with a VIP marketing campaign in conjunction with a bank and promoting environmental protection. According to Alton President Park, the company produces approximately 60,000 bicycles annually. Alton has grown considerably after acquiring Corex last year, and it was listed on the Korean Stock exchange in April 2011. Apart from selling bikes under its Alton brand in Korea (accounting for roughly 25% of its sales), Alton also serves as an agent for numerous foreign brands. Alton is producing bikes in a joint venture with Pusan Steel. There are a growing number of importers and distributors in Korea. Some major business groups have established sports departments under the government’s incentive policy, and some baseball equipment and bicycles are provided to branded companies ▲Alton is the Korean sales agent for Raleigh. under licensing arrangements. Foreign brands in South Korea include Giant, Merida, Scott, Specialized and Trek; Scott and Giant both have set up subsidiaries in South Korea. Scott’s Swiss subsidiary sent a representative ◄An e-bike exhibited by Alton. to Spoex this year.

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SIS International L.S. (Biclo)

Seung Phil Chang is the CEO Although the manager of L.S. is and the chairman of the Korea the cousin of the CEO of LG., L.S. Bicycle Import Association (KBIA). At is not an affiliate of LG. L.S. is an present, there are 37 members in the agent for high-end European and association. Kintex has a cooperation American brands, such as BMC and relationship with the KBIA. Chang has Meddy, and sells roughly 10,000 been in the cycle industry for 13 years. high-end bikes annually. According SIS International also distributes to Executive Vice President Byung- numerous brands. Chang said that the Sang Cho, the company sells around number of people came to the show 8,000 bikes via B2B channels on the opening day was better than he and 2,000 via B2C channels. L.S. expected. has roughly 70 employees and

▲Seung Phil Chang is the head of Korea's KBIA, 14 distributors. Is one of the most and is also president of SIS International. influential and financially sound companies in the Korean cycle industry, and hopes to achieve 20% growth this year. However, Cho feels that the measures taken by Giant the Korean government two years ago to support the bicycle industry, Giant established a Korean subsidiary March 2009. This company has 19 although originally thought to be employees, and general manager Ok Lee is Korean. According to Lee, Giant imports quite substantive, have turned out 10 or more foreign brands, and sells large numbers of both high-end and low-end to be little more than slogans, and bikes. Its most inexpensive models fetch US$80-100, while its high-end bikes bear no concrete assistance has been prices as high as US$1,000-3,300. Giant sold more than 30,000 bikes in Korea in given. 2011, and the average unit price was approximately Won $1 million. These bikes consisted of 50% MTBs and 50% road bikes. GM Lee noted that high-end imported brands have enjoyed significant growth over the past few years. He also remarked that because the Korean government has built bike paths on both banks of the Han River, many city-dwellers have begun cycling. Koreans have high regard for brand names, so bicycles from good brands are selling well.

▲According to Executive Vice President Byung-Sang Cho of LS (Biclo), LS has 14 bike shops.

▲According to Ok Lee, general manager of ▲Giant's Korean subsidiary has 19 employees, Giant's Korean subsidiary, brand name bikes including the Taiwanese woman Liu Yun-ju (left) are very popular in Korea. who is married to a Korean man; also shown are Ray Choiu (center) and Grace Lee (right)

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Kintex

Originally held in Seoul, the Kintex show moved to a new venue in the suburbs this year. Beginning with 55 exhibitors in 2003, Kintex is now in its 10th year. This year’s show occupied approximately 11,348 m2 and had 82 exhibiting firms. There were 12 foreign exhibitors, including companies from Hong Kong, Japan, and Taiwan (Giant), as well as approximately 70 Korean distributors and companies, of which 40% were involved in whole bicycles and 60% in parts and accessories. According to Seoul Fairs Manager Mr. Na Pil Sung, Kintex is Korea’s sole bicycle industry trade show.

▲According to Na Pil Sung, manager of Kintex organizer Seoul Fairs Co., the number of vendors at the show has grown ▲Posters, publicity materials, and even name cards at ▲Maxxis tires were displayed by their Korean distributor. by 10% annually, and viewers number of the Kintex show were usually in Korean. approximately 25,000 persons.

▲A look at the Kintex venue. ▲Whole bicycles accounted for 40% of items at the ▲According the organizer of Kintex, more show, and parts and components accounted for 60%. visitors than expected showed up.

Spoex

Held at the Samsung-dong Exhibition Center near Seoul, the Spoex show chiefly focuses on outdoor sporting goods. It is quite large and attracts many outdoor sporting goods manufacturers. It is held for four days (February 23-26), one day more than Kintex (February 24-26). Spoex is more appealing to consumers with its wide array of products, however, only 12 bicycle firms exhibited at Spoex this year. Of these, Samchuly Bicycle had the largest booth, and the Cello booth was also quite spacious. Apart from introducing relatively high- priced Cello and Black Cat brand bikes, Samchuly Bicycle also displayed bikes by Colnago and other foreign brands. The Spoex show was held in buildings A and B; although most bicycles were in building A, Alton was in building B.

▲Spoex was held at the Coex exhibition hall. ▲Shimano chose to participate in Spoex because ▲Accell Group displayed its Ghost Asia at Spoex. this show focuses on consumers.

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▲The Scott booth was large and featured ▲Caron is a marketing company and sells the LG TwinS (far ▲Italy's Bianchi had a spacious booth. understated colors. left) under license

▲Shown here with his wife, Akira Ninomiya, head ▲Look, Lazer, and Continental were displayed by their of Japan's Aki Corporation, has high hopes for the distributor at Kintex. Korean market.

◄High-end branded bikes are winning over more and more consumers.

Although most leading Over the past two decades, Tianjin Fujida, Bo-an (Shenzhen), members of the cycle indus- the Korean government has pro- and Ming Cycle, and only as- try, such as Samchuly Bicycle, vided subsidies amounting to $50 sembles a small number of bikes. Shimano, and L.S. previously billion Korean Won in an effort Samchuly only assembles 100- participated in the Kintex show, to spur the development of the bi- 200 bikes daily from frames and KBMA’s decision this year to cycle industry. Although the gov- parts imported from China; these support Spoex instead led to ernment originally even set the bikes mostly bear the Cello and widely diverging opinions about goal of surpassing Taiwan, Kore- Black Cat brands names. Alton the latter’s effectiveness. While an bicycle manufacturers are still also imports bikes from China. Samchuly Bicycle, L.S., and Shi- few in number, and there are few Because of this situation, many mano all felt that Spoex let them parts makers. Most bicycles are Korean bicycle industry person- get closer to consumers, Alton imported from China these days, nel have attended the Taipei and believed that Spoex lacked the and only a few are assembled in Shanghai cycle shows during energy that they had experienced Korea. Samchuly Bicycle, for in- the most recent four years. After at Kintex. stance, mostly imports bikes from Alton acquired Corex last year,

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◄◄Many cyclists were seen at Kintex.

◄Japanese cyclist Yuki Kusaka is passionate about Keirin racing. That's also him on the cover he is touching.

the competition between this firm riders. The main Keirin tracks that because there is no need to and Samchuly has intensified, are outside of Seoul, in Busan, intentionally run into opponents and the latter decided not to at- and in Changwon. According to in Korea, Keirin racing is more tend the Kintex show. Japanese professional rider Yuki intense and dangerous in Japan. Keirin track sprint racing Kusaka, he has participated 350 is a form of legal gambling in races over 26 years; he claimed Japan and Korea, and both in- door and outdoor Keirin races are held. There are approximately 3,000 Keirin riders in Japan, and the top nine riders win prizes at Keirin races. For instance, first place may win US$3,500, and so on down to US$600 for ninth place. Japan’s biggest Keirin race—the Granpri—is held an- nually on December 30. An ex- tremely large amount of money is at stake in this race, and single bets of as high as ¥1 billion are common. Some individuals even bet their entire salary. Successful gamblers win 75% of total bets, the government receives 22%, and riders get 3%. There are 650 Keirin riders in Korea, and ▲Even foreigners like to have their photographs ▲Korean theatrical marketers are highly skilled; there are another 1,500 semi-pro taken with these park performers. shows are even held in the Seoul airport.

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