Because the relaxation of market barriers to entry into the Chinese market have only recently come down, the potential for return for a first-mover like Harley Davidson is enormous, particularly as it already has strong brand name recognition. Yet there is also great risk if local governments continue to place restrictions on motorcycle use and construction, such as engine size (Nakashima, 2006, p.1). Furthermore, "a population with a restricted but expanding disposable income will be a challenge" ("Harley-Davidson roars into China" BBC News, 2006). The Chinese business culture remains "fast-changing, enigmatic and anything but transparent, China is a nation where local corruption and shifting rules abound" (Schmid 2004). At present unlicensed, unauthorized Harley Davidson dealers are now operating in China, catering to local enthusiasts, but if the company does not act now it could lose the brand integrity and recognition it has worked so long to build around the world, as these dealers capitalize upon the name without giving money to Harley Davidson, and sell an inferior product, diluting the Harley brand name's reputation for quality as well as speed (Schmid 2004).

International risks

If the company does not make a move now, it also runs the risk of losing out to international competition such as BMW, which is striving to build its motorcycle market in China (Nakashima, 2006, p.1). Honda has also begun a joint venture in the nation...

Volvo has decided to move car production to China as have other foreign auto manufactures, making the country the world's largest auto market ("Harley-Davidson roars into China" BBC News, 2006; Schmid 2004). Chinese consumers clearly are seeking vehicles with more power.
China is a global economic powerhouse that Harley and other American enterprises can no longer afford to ignore. U.S. imports from China averaged $163 billion in 2003 and only $28 billion worth of American goods were sold in China (Schmid 2004). To redress this balance, American companies like Harley Davidson must act now, and seek lobby to change unfair national laws that limit motorcycle use.

Works Cited

Harley-Davidson roars into China." BBC News. 24 Mar 2006. 24 May 2007. http://news.bbc.co.uk/2/hi/business/4842736.stm

Harley Davidson USA. Official Website. 2007. 24 May 2007. http://www.harley-davidson.com/wcm/Content/Pages/home.jsp?locale=en_US

Harley Davidson China. Official Website. 2007. 24 May 2007. http://www.harley-davidson.cn/

Nakashima, Ryan. "Harley-Davidson Plans China Dealership." AP Wire. CBS News. 19

Jan 2006. 24 May 2007. http://www.cbsnews.com/stories/2006/01/19/world/main1223010.shtml

Schmid, John. "Harley-Davidson's struggles illustrate both the promise and peril of China." JC Online. 8 May 8, 2004. 24 May 2007. http://www.jsonline.com/story/index.aspx?id=228039