China is poised to restrict the export of motorcycles in order to rationalize an industry that currently has too many firms producing machines that are not always of good quality.

Government institutions, including the Ministry of Commerce and the General Administration of Customs, will launch a new management regime covering motorcycle exports from March 1.

In order to conduct exports under the new system, motorcycle makers will have to pass certain quality standards.

They also must have achieved a minimum export value of US$500,000 in 2004, or must have sold over 30,000 motorcycles in the domestic market during that same year.

Trading companies will be allowed to export only when they have been authorized by qualified manufacturers.

"The move aims to rebuild good market order," said Zhang Ji, deputy director with the department of mechanic and electrical products for export and import at the Ministry of Commerce.

Competition has increased in China's motorcycle export business over the past five years. Exporters increased in number to 815 last year from 257 in 1999.

The low-price policy of some companies has led to "disordered competition" in this sector and also aroused the concern of certain target countries.

Using the new management mechanism, the number of manufacturers is expected to be reduced.

"This method will also help to protect the intellectual property rights of domestic companies," Zhang said.

He explained that some companies have been forced to participate in the price-cutting competition because of "poor practices" by competitors.

"They were not able to conduct research and development with the low profits that they have earned in the overseas market," he said, adding that a rebuilt market would encourage them to develop new products and build their own brands.

Zhang predicted the new management system would not result in a big decline in China's motorcycle exports this year.

According to the ministry's calculations, qualified motorcycle manufacturers accounted for over 90 per cent of exports, both in volume and value last year.

"Therefore, the reduction of players will not result in big changes in exports," Zhang said.

"On the contrary, there is expected to be steady growth and improvements in the quality of motorcycles," he said.

China is expected to have exported over seven million motorcycles in 2005 with a value of over US$2.4 billion.

Source: China Daily