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Couple revs up in motorcycle arena

By Margie Quimpo-Espino
Philippine Daily Inquirer
First Posted 21:52:00 11/08/2008

Filed Under: Economy and Business and Finance

MANILA, Philippines?Not a few businessmen have accumulated wealth by simply buying cheap goods in China and selling these in Manila for a profit. The concept of buying low and selling high is a centuries-old business model.

A Chinese-Filipino couple, however, has taken the trading business a notch higher and is working to get a chunk of the market with its Filipino-developed motorcycle brand.

Eric and Leviruth Lee of MCX Motor Phils. Inc. have been producing Filipino motorcycle models the past two years, starting with three last year and four this year.

When the couple entered the motorcycle business in 2003, it was already a pretty competitive one, dominated by Japanese manufacturers, and crowded by China-made bikes that started coming into the country in 1996. China bikes were initially a hit because price tags are about 40 percent lower than the Japanese brands?Honda, Kawasaki, Yamaha and Suzuki?which had dominated the Philippine two-wheel vehicle sector for decades.

But MCX, then called Goodyear Export Import, was getting nowhere and competition was tough. It also soon became obvious that the quality of many China-made bikes were not at par with the Japanese ones.

Eric and Levi saw this weakness and realized they had to take the business a step further to ensure getting a slice of the pie from the Japanese.

?My first concept of the business was only for trading,? Eric said. ?But we realized that this business model was misplaced, as almost all new players in the industry were into this. Customers were clamoring for better service, available parts and better quality. It was because of this clamor that we decided to go into [full-time] manufacturing.?

He invested in research and development in the Philippines, and decided to go downstream by putting up a small plant in China to ensure better quality of raw materials and parts. ?We are now also manufacturing some critical parts with our specification designed for the local market.?

The need to develop a Filipino name for the motorcycles he was developing dawned on him while taking his Master in Entrepreneurship degree at the Asian Institute of Management where he graduated with honors last year. He used to carry the brand name American Eagle, which did not suit his goal of putting a locally developed brand in the market.

Thus the company name, Goodyear Export, which his professor said ?sounds too much like a tire company,? became MCX Motor Phils. MCX, which stands for ?motorcycle extreme,? also became the new brand name.

MCX is slowly gaining ground. When it started, it had to ask dealers to carry its bikes. Today, it gets invitations from dealers who want to sell their motorcycles, which are now distributed nationwide in over 360 outlets. But this number is equivalent to only about 10 to 15 dealers, who each have several branches.

Eric says MCX sales of 12 to 15 percent this year is still ahead of the industry growth rate of 8 percent, but still way below his target of doubling sales. Sales of motorcycles in the Philippines are way below levels seen in countries like Thailand and Indonesia, where sales double every three years.

He believes the reason for the slower rate is due to the bad reputation of motorcycles.

?There is a bad perception?too many accidents daily that are highlighted in news reports.?

He says the industry, through the Motorcycle Development Program Participants Association, is trying to address this by highlighting programs on road safety.

Unfortunately, he says, about 80 to 90 percent of motorcycle accidents are caused by human error.

He says the three basic safety rules for bike riders are often not followed?wear a helmet, follow traffic rules, don?t drink and drive.

But Eric says they still see a huge potential for motorcycles in the country, brought on largely by economics?motorbikes are still the cheapest means of transportation in a country where about 15 million people survive on less than $1 a day.

Beginnings

The market challenges are there, but the husband and wife team is no stranger to the challenges of business, having both grown up in entrepreneurial environments typical of Chinese-Filipino families.

Eric?s fate seemed to have been designed in his childhood. His first income was P100 while helping out in his aunt?s bike shop when he was only seven.

?Early in my childhood days, I sold ice candies in my neighborhood. I also tried to go into piggery, but unfortunately, most of the pigs died before I could even sell them. It was then that I realized that animal husbandry is not my thing,? he recalls.

?I also sold school supplies, like pencils and paper, to some of my classmates during my elementary days. But the most memorable one was when we helped in the store of my aunt, assembling bicycles during summer. This was where I earned my first monthly salary of P100.?

Levi on the other hand was asked to help run her dad?s auto parts shop in Manila. She would be tasked to issue receipts to customers. It was a one-man business, so she saw her dad practically do everything from merchandising to delivery.

But her first income of P1,000 came from teaching swimming one summer. She was with the varsity team of De La Salle in college.

For Eric however, growing up in a family of entrepreneurs also had its lessons?he learned not to go into business with relatives.

But this attitude may also have come from having experienced hard work and independence at an early age.

?I started as a working student during my college days in 1988. Two years into my Engineering course at UST, I decided to go to Taiwan to work. Taiwan was the ?in? thing then, and after hearing of people returning home with ... fat salaries, I decided to work there myself.

?I stayed in Taiwan for three years, working in different companies, ranging from being a hotel cleaner, to an arcade attendant and a factory worker, and finally, as a construction worker. I came back to Manila in 1991.?

A brother of Eric was in the agricultural retail business manufacturing ?kuliglig??crude mini-tractors used in the provinces.

Eric helped his brother out for a while but eventually ventured into his own, using the savings from his stint in Taiwan. He imported Japanese surplus tractors under a firm called Good Harvest Machineries.

?I went into importing Japanese surplus tractors, going to Japan to talk and deal with the Japanese suppliers I could find. It was also at this time that I went back and finished my studies at UST,? he says.

But Eric says the agricultural machinery sector has become highly commoditized in the market.

?It was then that I decided to venture into other businesses. An uncle of mine encouraged me to look into the business of motorcycle.?

It was not a smooth road for the couple initially. The capital they used to put up the business was ?hard-earned money,? and did not come from some inheritance.

?There were times when we would wake up in the middle of the night because of funding problems,? Eric says. ?Sometimes, we had to source some funds from the Kamag-anak Inc. with additional interests, just to get by.?

The couple?s agri business was eventually merged with MCX Motor.

Levi laments that the melamine scare has extended to all products made in China.

?The public perception is that all products from China are bad,? she says. ?There is a generalization of the bad image of products from China. Yet all products are made in China.?

This and the issue of safety are the two major challenges facing MCX these days.

But the couple is steadfast that they will overcome this.

The goal is to eventually bring the MCX brand overseas, to Indonesia or Vietnam.

But for now they are focusing on improving the models they have created. To improve operations and production efficiency, MCX hired a German consultant.

Eric says he believes they have competent top people already. However they need middle level managers. He says a lot of workers do not want to be promoted and accept bigger responsibility. But definitely, Filipinos are good workers.

The challenge of building a Filipino brand is that consumers want ?quality for less??not an easy task, but one MCX has already started to address.



Copyright 2014 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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