HOG to Start Making Bikes in China while Apple May Move Away


Yesterday, US legacy motorcycle pioneer Harley-Davidson (HOG) announced its partnership with China’s Qianjiang Motorcycle Company. Under the partnership, Harley-Davidson and Qianjiang Motorcycle would collaborate to launch a small premium 338cc motorcycle targeted for Chinese and other Asian markets.

HOG to Start Making Bikes in China while Apple May Move Away

The companies plan to co-develop the new small premium motorcycle, which is likely to be available by the end of 2020. Harley is planning to make these small bikes mainly for the Chinese market, but the company also expects to start exporting the bikes to other Asian markets at a later stage.

Harley moved part of its production to Europe

Harley-Davidson’s recent announcement that it would start building motorcycles in China comes nearly a year after the company announced that it would shift part of its production to Europe. With this move, the company aimed to save on tariffs imposed by the European Union on US motorcycles as a result of the ongoing global trade war.

Europe remains one of the key markets for Harley-Davidson—its largest geographical revenue segment after the US.

Apple is considering to move away from China

Meanwhile, according to a recent Nikkei report, Apple (AAPL) wants to move about 15% to 30% of its production out of China. The company has asked its “major suppliers to evaluate the cost implications of shifting.”

HOG to Start Making Bikes in China while Apple May Move Away

Apple’s reported plan to move some of its production out of China could be an attempt to protect itself from a potential escalation in US-China trade tensions. If the US imposes tariffs up to 25% on Chinese goods, including Apple’s made-in-China products, it could badly hurt Apple’s profitability.

Still, investors are still hopeful about a near-term solution to the ongoing US-China trade dispute. These hopes, along with investors’ confidence in Apple’s newly launched services, have taken Apple stock up 25.4% in 2019 so far. Meanwhile, Harley-Davidson stock has seen just 2.3% gains. It continues to struggle to revive its declining motorcycle sales.