Yamaha Motor Co. has been battling counterfeiters in China for a long time. Masayuki Hosokawa, the company's chief representative in Beijing, said some years ago that five out of every six bikes with the Yamaha brand in the country were fake.
Although the problem inside China has improved somewhat, Masuyuki has a new headache: The nation is becoming a big exporter of knock-off motorbikes. For example, 18 months ago, Shanghai customs officials spotted and stopped a shipment of 67 YB100 Yamaha bikes bound for Dubai, cleverly disguised as another brand.
Hosokawa spoke to BusinessWeek Asia correspondent Frederik Balfour in Beijing recently about his fight against counterfeiters. Here are edited excerpts of their conversation:
Q: How are counterfeiters able to sell their motorbikes so cheaply, and are the parts they use fake, too?
A: Some components they use are of inferior quality. Sometime we find fake parts with the Yamaha brand illegally used.
Q: How is the counterfeit bikes' quality? Has it improved with time?
A: The quality of design in parts' appearance has improved, so they're almost at the same level as genuine parts, except for some details. The appearance and design are of high quality, but the engine and chassis -- that's another story, especially braking and acceleration and cornering ability. The casting and alignment aren't proper, and we're afraid this gives Chinese consumers less safety.
Q: How do you compete with counterfeiters who are using cheap parts?
A: In order to realize an economical motorbike with competitive costs to the counterfeiters, we have done our best to develop new models with higher integration of local parts and other cost reductions, but even so we can't make them as cheaply because we have to consider a certain level of quality and safety so as to keep our brand image. Their cost is between $120 and $180, and ours is $280 to $340.
Q: Where do counterfeiters get the technology?
A: I can't say with hard evidence. But my personal guess is component subcontractors bought sample bikes and disassembled them to make copy parts, then they started selling to counterfeit assemblers. And as China's economy has developed, they have become rich and can afford to buy high-tech machinery, such as computerized three-dimensional display systems, etc. That has made their capabilities to copy considerably high. Also, initially we had technical cooperation agreements with local manufacturers, who then worked with subcontractors and gave them technical drawings that may have leaked out.
Q: Four and half years ago you said five out of every six motorbikes with the Yamaha name in China were fake. Is the problem still so bad?
A: In terms of fully built-up motorbikes, we made raids on the Tianjin Gangtian Group and Huatian Motorcycle Co. in 2000 and 2001. Infringement of trademark has drastically decreased since then. But we think the export of fakes has been increasing though we have no hard data on that.
For spare parts, we think fakes have increased both in China and for export. The exporters are very sneaky and cunning. For example, they put their own name over the top of ours on the crankcase and then peel it off later. So they don't put our name on it when it's being exported, and that's frustrating customs officers and making it difficult to stop.
Q: How helpful is the government in the anticounterfeiting effort?
A: Don't blame the government, I'm very happy with Shanghai customs. They seized a shipment of 67 fake bikes destined for Dubai voluntarily -- for this I have much appreciation. This never would have happened before [that customs would seize fakes on its own initiative]. The Chinese authorities and customs officers are very eager and serious about making raids, but in some areas, there's still a problem of local protectionism.
Q: What countries are the bikes getting shipped to?
A: At the moment, [there aren't so many fakes in] Europe and America.
In the Middle East and south, central America, the regulations are not so strict -- counterfeit machines can [be] registered even though [they've] been exported as a completely different machine from China. The market [in these countries demand] the cheaper [bikes].