Is Dengfu the next huge bike brand? pt 2

Mike told me yesterday that I'd have to kill it today to convince him of my thesis.  All I did yesterday was advance his side of the argument, and that that's probably all I've got space to do again today. Once more into the breach...

Obstacle #4: The Ick Factor - Ick factor is the opposite of brand pride. A big part of me thinks that the stealth look came into vgoue because people didn't know what they wanted their brand selections to say about them. Ick factor can be "I don't want to advertise that I spent $2800 on these wheels" or it can mean "I don't want to advertise that this is an anonymous frame I got from China" or it can mean "I want to feel people into thinking that this is something other than an anonymous frame I got from China." The last two are at play here - few seem eager to shout about their awesome new Dengfu. Some are, though.  

They seem to have picked up on my least favorite of the bike market's favorite words. Taken at a shop in Xingyuan

Obstacle #5: Rising Prices - This is related to the race to the bottom, but deserves a few sentences on its own. If you read internet forums, people are already talking about carbon wheels that cost $600 a pair as "getting kind of pricey" and looking for cheaper alternatives. Brand power is usually hard-earned and implies a trust that in turn commands a fair trade at the very least. Their customers, on the other hand, seem stuck at a price point (that point often being "the cheapest thing which I think won't kill me") and won't move with the brand if/as it makes its way forward. 

Obstacle #6: Lack of Innovation - This is part and parcel of the trading company phenomenon. It's hard to create a compelling product portfolio when you're fronting for whatever it is the factory is making this week. Not that many people realize how easy it is to copy a mold shape. Looking at rims for a second, every day I see evidence that people buy Chinese carbon wheels knowing nothing other than how deep they think they are. Yes you read that right. The phrase "oh, I hope I get that shape" crowds the forums. If you don't really even know what it is you're buying, who you buy it from can matter everything, or it can matter not at all. I propose that the latter dominates here. Without principled innovation, as in "we set out to provide a product with these traits and benefits, and we did it, here it is," brand doesn't work very well. And if your only innovation as such is the lowest price, go back to the race to the bottom.

Obstacle #7: Jingoism/Xenophobia - When did the quality and benefits of Japanese cars start beating the crap out of American cars, versus when Japan to shed its status as a producer of trinkets and trash? Same thing with South Korea more recently - Hyundai might make awesome cars but a lot of people remember their early cars and have the lingering snobbery/ick factor/"they can't make good stuff" prejudice that at some point is just xenophobia. Long after it became evident that Japanese cars were the smart play, people hesistated to buy them because it meant you weren't a "team player," buying 'murican. You also have to remember that WWII was a LOT more recent then than it is now. Please don't think for an instant that I think Chinese bikes in 2014 represent the market equivalent of Japanes cars in 1978 or 1983, they don't. But if (big if) they ever do, memories fade somewhat slower than quality improves.

Obstacle #8: Trust - Some of it is undoubtedly due to cultural differences, and a lot of it is, let's just call it imperfect communications, but there is a big trust gap. When I was in mainland China, I saw about a million pairs of Oakleys for sale, but didn't see a single pair of Oakleys. And this was in seemingly established bike shops (bike shops are EVERYWHERE), not on street corners. And they were terrible fakes - the kind you'd buy just to show your friends "hey look at this terrible fake!" Then you see the Specialized Epic on the wall of that shop. Yes? No? Mike and I have always been super super diligent about not only being honest to the letter of what we've represented but honest to the spirit of what we've represented. If they're willing to lie in one venue, why wouldn't they then lie to you in all venues?

This guy was incredibly nice - made us tea while we waited for a rainstorm to pass. But I wouldn't buy any Oakleys from his shop!

Obstacle #9: Anonymity - I pay more attention to all of this stuff than the average bear, but I can't really tell you the difference between Hongfu and Dengfu. They both seem to sell a lot of frames that have "FM-" prefixes. Other companies sell these "FM-" bikes, you can seemingly get them anywhere. So what role does Dengfu have in the whole thing? Who and what are they? That's a question that you maybe don't mind asking so much about the vendor of a $300 frame, or a $500 frame, but there's no room for that in a $1000 or $1500 or $2000 frame, and that's simply what stuff really costs at the low to mid range. 

That's my take on their obstacles. Admittedly, there's a ton I don't know, which is also kind of the point. Is the Chinese government subisidizing these places, and we're seeing more "dumping" at play here? Labor is essentially free in the mainland, so the economics of what things cost get skewed, but knowing what I do know, even if you take labor out of it completely, a lot of these part costs don't come close to passing the sniff test. 

Next time I will stop making Mike's arguments for him and start making my actual argument, which is that it won't be long before Dengfu is a big brand on the world stage.