Special Report

September 25, 2008

Loncin wants to manufacture Motorcycle engines in Pakistan

An Exclusive Interview with Min Li Zhi & Andy Gong, Vice Presidents, Loncin Industries Limited, China

By Nasir Mahmood

MOBILE WORLD Magazine - September-2008

Mr. Min Li Zhi and Mr. Andy Gong; the two Vice Presidents of M/s Loncin Industries Limited, China visited Pakistan last month for exploration of investment opportunities here.

In an exclusive interview replying to various questions both the officials disclosed that since cost of production is increasing in China, we have a plan to produce various auto parts from outside China. But we are not sure in which country we should invest the money for manufacturing our products. For this purpose we have started study visits of various countries around us. We are interested to install a manufacturing plant of those parts, which are not produced in Pakistan. Till now we have no such plant outside China. It would be the first venture for us. We have three production bases for auto parts and vehicles like motorcycles, scooters and also power generators in different parts of China. We have more than ten factories there.

Our study is in the process and that’s why we have come to Pakistan. In addition to Karachi we are also going to visit Hyderabad, Lahore and Islamabad to get useful information for this purpose. There is no doubt that Pakistan market is very promising but business uncertainty is a cause of fear to us. We are looking for suitable business opportunities here because we are keenly interested to work here, they said.

Replying to a query they stated their major market is Mexico, Pakistan and African countries. “We are manufacturing motorcycles ranging from 50cc to 350cc. strategically we have close cooperation with BMW Company. Now BMW Company Germany has listed Loncin as registered supplier of 650cc BMW engine for its products and Loncin is the sole Chinese supplier of BMW and right now this engine is being widely used all over the world. According to test reports it is much more satisfactory than those engines which were produced in Europe.”

In November 2007 a co-operation agreement between Loncin and BMW Motorrad was announced at EICMA motorcycle fair in Milan. Since then Loncin has become the exclusive engine supplier for BMW G650 X Country. On June 26th 2007, the first series production engine finished online test and got ready for delivery to Germany.

For CNC projects and for the dye-casting CNC machines we have very good infrastructure. We have our CNCCenter our R&D provides very good support for the long term business. Loncin Company is also a holding company for other businesses. Besides this year Loncin has attended the Motor GP which is equal to like F1 of the cars in automobile sector. In motorcycle sector it is called GP. This year we have participated in 125cc segment of Motor GP Race and got a good result.

These championship races were started from Qatar on 9th March this year and are continued to be held in 17 different places of Spain, Portugal, China, France, Italy, Great Britain, Netherlands, Germany, USA , Czech Republic, San Marino, Japan, Australia, and Malaysia. It would be completed on 26th October 2008. The first factory racing team LONCIN LLC from China will participate at fifty-one station matches in three seasons from 2008 to 2010, competing with top world brands.

Mr. Min Li Zhi said; “We want to know about the government facilities for foreign investment in Pakistan. So far we have not much information whether government of Pakistan had any preferential policy for investors coming from China or there were some particular departments to provide guidelines in this regard”.

Loncin wants to manufacture Motorcycle engines in Pakistan-4Mr. Min Li Zhi, Vice President, Loncin Industries Limited is a well experienced person of the company having more than 20 years experience in this field. Mr. Andy Gong is Vice President and General Manager of Import and Export Department of the Company. He has visited many countries all over the world for business promotion.

Min Li Zhi earlier visited Pakistan in 2006 while Andy come first time. Comparing his previous visit Mr. Min said the industry in Pakistan has developed very much during last two years. Here I see very tough competition within motorcycle industry and top ten companies in this field have developed themselves very much. In future too the competition will by much more tough. Because companies would prefer quality products and a very good price offer.

Min said earlier, in Pakistan market Japanese Honda was No.1 selling motorcycle and it was charging higher price but now its market share has come down from ninety percent to fifty percent only due to entrance of Chinese motorcycles in this market. Chinese suppliers provided not only good quality but very economic priced motorcycles with a better performance. They fulfilled the requirement of Pakistani people like in China who were not so rich but in order to have a job and save money they have to buy motorcycle which enables them to reach their job easily without spending big money. So there is a wide chance for Chinese models of motorcycles to come here and provide economical motorcycles to Pakistani buyers.

Second thing is that local assemblers in Pakistan don’t have much technology and experience, they need such support. Therefore, China with Pakistan being a good friend could extend its technical support for them. Chinese motorcycle companies are quite open for such coordination with local assemblers and vendors. We hope that our long relationship will help them in obtaining the required technological support. We are already providing technological support to our local partners in Karachi for maximum localization of most imported products. In future they will also get more cooperation from our side, he said.

Loncin wants to manufacture Motorcycle engines in Pakistan-2Mr. Andy Gong informed that they are also producing three wheeler auto rickshaws in China and interested to install a plant in Pakistan or provide assistance to local partners. This rickshaw could be used not only for passengers but for cargo purposes too. “We are manufacturing two-stroke and 4-stroke auto rickshaw in China. If Pakistani market demands only 4-stroke CNG rickshaw we can provide. We have already signed some agreements with local partners in this regard.”

He further said; “We have come to know that in Pakistan there are already 400,000 two-stroke auto rickshaws in use while government of Pakistan has imposed ban on two-stroke rickshaw which is to be finally implemented in year 2010. We can successfully introduce an engine of 4-stroke which can be fitted in your two-stroke rickshaw. The question is if local owners would be prepared to replace those engines and is there a promising market?”

Andy disclosed; “In 2005 we started production of environment friendly engines of Euro standards. China has already launched Euro-II standard engine. Now all the engines produced in China are conforming to the Euro-II standard. In year 2008 now China are producing all the engines conforming to Euro-III for motorcycles while our car engines are up to the standard of Euro-4.”

To another question Mr. Min said; “We are already No.1 exporter of auto parts of China to Pakistan market. We entered this market in 2004. We are quite satisfied with present volume of business with local companies. We are supplying all engine parts to local customers while some of the parts were already localized here. In addition to engines we are also exporting some other motorcycle parts which are not produced locally.”

We are the biggest motorcycle company in China while in domestic market we are number one in terms of turnover and in export we are also number one exporter, Min Li informed. Chinese engineering sector and industry is much more advanced than Pakistan, therefore, we want to meet people here who are interested to get our franchises and also we want to establish our own factories here, he added.

-Published on pages # 10-11-12 September 2008 issue of MOBILE WORLD Magazine

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