Entering the Ukrainian Market: Electric Bike Expansion Strategy

Introduction

This research paper examines the expansion that Hangzhou Yongheng hopes to make into the Ukrainian market and how that expansion might be structured. The goal of the manufacturer is to produce a product that is easily modifiable upon shipment, so that the company does not incur the added costs associated with redesigning products for new locations. This paper profiles the company and the products it already ships. The markets where the product is currently available — such as Western European countries — are also examined to determine how successfully Hangzhou has expanded beyond the Chinese market in the past.

The situation in Ukraine is then analyzed to identify the difficulties Hangzhou might face when entering this market. Finally, all of these considerations are brought together to assess whether Hangzhou's reliance on product diversity will actually be sufficient, or whether the company will need to provide dealers with the means to modify its bikes to suit the Ukrainian market.

Hangzhou Yongheng Electric Bikes

The company in question is formally named the Hangzhou Yongheng Car Industry Company, Ltd. — a designation that reflects the language differences between the company and English-speaking audiences. The primary focus of the company is to produce top-quality two-wheeled electric conveyances for the local market and for customers worldwide. The firm produces "electric bicycle, electric scooter, electric motorcycle, electric tricycle, [and] electric mobility scooter" (Hangzhou Yongheng, 2012). These electric bicycles and related vehicles have been manufactured for the Chinese market since 2002, and the company has been making inroads into the European market since that time, with more than "40% of [their] product export to overseas market" (Hangzhou Yongheng, 2012). The company is involved in a broad range of businesses in China and has been one of the strongest companies in the Xiaoshan District for nearly two decades (Tonghengio, 2012).

The company remains relatively small for an international manufacturer of electric bicycles and related products, but it needs to expand outside China because domestic competition is so intense. The expansion into Western Europe and other regions has been reasonably successful in terms of sales, but the challenge is that too many consumers in those markets already own cars. Growing environmental consciousness is boosting sales of these types of products, yet there remains a pressing need to seek out markets that may be more naturally receptive to them.

The reason Hangzhou Yongheng has decided to venture into the Eastern European market is partly that many people in these countries cannot afford to purchase a new car, and therefore rely on bicycles for everyday transportation. This gives Hangzhou a ready-made market for its products. Special emphasis is placed on electric bicycles because they are less expensive than motorized alternatives and offer the same core benefits as a conventional bicycle. People in Ukraine also have access to household electricity at a reasonable cost, meaning they can readily afford the modest additional expense of recharging their bicycles.

The European Market

Two distinct marketplaces have existed in Europe since the Soviet Union collapsed in the early 1990s. The wealthiest is the Western European market, which was not subject to Soviet-bloc economic constraints, and which has benefited from largely free-market economies for well over a century. The countries of Eastern Europe have enjoyed economic freedom for only the past two decades, and many of their populations have found it difficult to adapt to the new system. The transition to market economies has also been accompanied by widespread corruption in many formerly Soviet-affiliated countries, giving rise to large informal or black-market economies. While Western European nations have admitted many Eastern European countries into the European Union, others have been excluded due to governmental weakness and economic instability.

Conclusion and Recommendations

Hangzhou Yongheng Car Industry Company, Ltd. has considered what expanding into additional territories can offer in terms of sales and profits. The expansion is a good idea: the company is well-positioned to enter Eastern European markets with a product that gives consumers greater mobility than a conventional bicycle. The marketing strategy is sound in most respects, with one significant exception — the company's resistance to allowing greater product customization.