China now requires helmets for its hundreds of millions of motorcycle and e-bike riders, creating great economic opportunities.
Photo from CFP
By CHENG Di
Motorcycles and electric bikes are everywhere on China’s streets. Helmets were effectively optional until last year. Once seen as racing gadgets or fashion items outside the biggest cities, Helmets are set to become everyday items, with one in almost every home that rides on a daily basis. It is estimated that 200 million new lids will be needed, kickstarting an industry. A new race between manufacturers, retailers, and investors has begun.
Until recently, helmets made in China were mostly sold overseas. Many factories have contracts with international brands. Domestically, helmets have long been a luxury in the 1990s, not a necessity. They are more Hong Kong-gangster-movie than everyday-commute. Helmets are also expensive. Leading brands cost thousands of yuan.
Domestic sales picked up in 2019 when helmet rules began to be enforced. Then in April 2020, a road safety campaign urged local authorities to pass rules for motorcycles and e-bikes. By June, riders in many provinces were wearing helmets or paying fines.
In less than two months, helmet use increased from under 20 percent to 90 percent in some cities. Helmet prices more than doubled. Shares in publicly traded manufacturers went limit up for several days after the first rules were imposed.
The growth of delivery-based industries is a firm base for the new demand. There are over 10 million delivery workers in dense urban areas. Bikes are the only way to beat traffic. Big delivery platforms brand staff helmets for marketing purposes. This practice may be prohibited under the new rules.
It is a big opportunity for manufacturers and suppliers, especially at the low end. From 2015 to 2020, the market for ABS, a robust, inexpensive plastic used for cheaper helmets, increased fivefold to 6 billion yuan (US$930 million). In two years, the number of helmet makers increased from 200 to 500. Production is up tenfold. Some factory owners are already concerned about declining margins. Others worry that unqualified competitors will flood the market with unsafe helmets.
For manufacturers, competition will be on all fronts, from technology and supply chain to financing and marketing. For hundreds of millions of riders, price and quality still matter most.
The outlook is even brighter at the high end. Prices and margins will remain high thanks to technological barriers. High brand recognition also helps.
Smart new products will soon feature safety cameras, voice control and noise-canceling as the norm rather than a novelty. Further off yet, helmets look set to become the control center when autonomous driving inevitably overtakes the motorcycle industry.