After the death of Mao Zedong, the new president of the People’s Republic of China carried out a number of reforms that helped raise living standards and radically change the Chinese economy. The essence of China’s new economic policy was the desire to reduce the control of the central government over economic aspects and facilitate the mechanisms of the natural market. This decision led, among other things, to the emergence of a large number of companies that have a price advantage in the production of bicycles due to the availability of cheap labour and relatively low costs (Mao et al. 456). That is why bike production moved to China. China has a competitive edge, not only in assembling bikes, but also in producing bike parts. This is due to the fact that the raw materials from which they are produced are extracted directly in the country, and most of the raw materials are immediately sent to the technological production of China.
Detroit Bikes cannot produce a competitive product in the United States. This is due to the fact that bicycles are custom and represent a premium segment product. Since the price of Detroit Bikes is quite high, most people prefer the Chinese alternative. Minimal production costs in China make it possible to make bicycles produced there much cheaper than Detroit Bikes products. However, the globalization of production and markets can benefit Bikes Lakes in its endeavour. This economic factor will allow Detroit Bikes to successfully carry out production activities in China. It is much more profitable to organize production in China than in the USA (Mao et al. 456). Thus, bicycles produced in the Chinese branch of the company will be cheaper and more profitable for sale.
Work Cited
Mao, Guozhu, et al. “How Can Bicycle-Sharing Have a Sustainable Future? A Research Based on Life Cycle Assessment.” Journal of Cleaner Production, vol. 282, no. 1, 2021, pp. 1-12.