Harley-Davidson coasts into China

MILWAUKEE - For Ray Ma, freedom on the open road means riding his Harley-Davidson motorcycle behind two police cars through the Chinese countryside.

The 53-year-old Hong Kong dental surgeon and members of his 35-bike riding group had to pay 10,000 Hong Kong dollars ($1,290) per bike in escort and paperwork fees last fall to make their trip to Guilin city a reality.

"We have to follow the rules in the place where they have the rules," Mr. Ma said. "And I regard that as free."

But he said he yearns for the day when he can escape the cramped city for the Chinese mainland without the hassle.

"We really hope that we can ride through the border like anywhere else, like in the States or Canada, or Europe," he said. "So that we can just plan a weekend trip, three days and two nights in China. That is really the best for a Hong Kong rider."

For years, iconic motorcycle maker Harley-Davidson Inc. has pushed hard to find ways to sell its motorcycles in China. Now, the Milwaukee-based company says it plans to announce before summer that it will open its first retail outlet in the country since at least World War II.

"Mao said that a thousand-mile journey begins with the first step," said Timothy Hoelter, Harley-Davidson's vice president of government affairs. "I guess we're taking some baby steps already."

The company says there are still major hurdles - about 170 Chinese cities limit or ban motorcycle use or ownership, largely because they are viewed as underpowered, cheap, polluting machines that clog traffic and endanger others.

"We are not encouraging motorcycle use," said a spokeswoman for the police force's Shanghai Public Security Policy Consultation Office who gave only her surname, Huang.

Motorcycles have been banned from almost all the main streets in Shanghai, Ms. Huang said, and the city stopped accepting motorcycle registrations in 2002.

After China joined the World Trade Organization in 2001, import restrictions, quotas and tariffs dropped substantially against foreign motorcycle manufacturers, but municipal traffic ordinances have remained, Mr. Hoelter said.

"The problem is although we can now sell our motorcycles in China, the Chinese can't use them, at least if you live in an urban area," he said.

Foreign manufacturing advocates say the policy, although somewhat justified by safety concerns, has created an unfair barrier to access.

Harley-Davidson estimates small Chinese manufacturers build 17 million motorcycles a year - most for domestic consumption - but most are small and used in rural areas, so they evade many of the restrictions on Harley-style heavyweight bikes. Other bikes such as 1950s-era Chang Jiang 750, which are still used by the Chinese government, are considered three-wheelers because of a sidecar, Mr. Hoelter said.

In contrast, BMW, which entered the Chinese motorcycle market in April 2003, said it sold only 70 bikes on the mainland last year.

Liu Xintong, the secretary-general of the China Motorcycle Industry Association, said the result is that pent-up demand for large motorcycles is going unfulfilled.

"Motorcycle riding fans are still eager to get top machines like Harley-Davidsons," he said. "But the government policy seems not motorcycle-friendly at all."

For now, Harley-Davidson is going to drive around the barriers.

The company's managing director for China, Dave Foley, said the company has selected a dealer and that before summer, "more specific communication will be forthcoming."

He declined to say where it would be, but noted the Beijing area had the highest concentration of riders of imported heavyweight motorcycles in the country.

Motorcycles may not be operated within Beijing's Third Ring Road, a 30-mile highway that encircles the city, so Mr. Hoelter said a likely dealer location would be outside the city core.