China Consumer

Bicycle kingdom

E-bike maker AIMA can finally go public


More than just pedal power

In 2009, electric bike company AIMA appointed Jay Chou to be its spokesperson, offering the Taiwanese pop star Rmb30 million ($4.6 million) for a two-year deal. That was money well spent. Still acting as AIMA’s spokesperson, Chou has helped the e-bike maker gain widespread popularity. And AIMA is finally ready for a money-spinning IPO early next year in Shanghai.

AIMA focuses on making electric two-wheelers, principally e-bikes but also mopeds. It has been trying to go public from as early as 2012 but that plan was cancelled due to a disagreement between shareholders, news website 36Kr noted.

Another listing application in 2018 was rejected by the China Securities Regulatory Commission (CSRC). Last year AIMA tried again but the IPO was also derailed by litigation over a patent right.

On November 26, AIMA finally obtained the CSRC’s approval to go public. Nevertheless a number of competitors have already raced ahead in the equity market. After listing in Hong Kong in 2016, main rival Yadea is now worth more than $5.2 billion. Niu Technology, a six year-old start-up, also went public on Nasdaq in 2018.

AIMA was founded 20 years ago by Zhang Jian. In 1990, he graduated from university and began working at a state-owned enterprise in his hometown of Shangqiu in Henan province. In September 1999, he established Tianjin Taimei Bike and rebranded it 10 years later as AIMA.

E-bikes have traditionally resembled standard bicycles – except they are fitted with a battery and a motor. AIMA’s latest models look a bit more like mopeds (but have pedals). The category experienced a breakthrough around 20 years ago and the vehicles became increasingly popular with consumers, though not always with city officials, mostly on safety grounds (see WiC44).

AIMA became better known through its aggressive marketing strategy, such as its lucrative deal with Jay Chou. The Rmb30 million deal was a record, 36Kr noted, breaking the Rmb20 million fee paid by shampoo maker Bawang to pop diva Faye Wong in the same year.

AIMA’s former general manager Yu Lin explained at the time that the Rmb30 million deal was good value. “Our marketing budget is Rmb500 million, Rmb30 million is only a small fraction of it,” he said at the time. “Jay Chou increases our brand awareness, which can amount to Rmb2 billion in brand value over a single year.”

The association with Chou has lasted 11 years, though other high-profile endorsers hired by AIMA have included actress Fan Bingbing.

However, as the industry has matured, AIMA can no longer rely on celebrity star power alone to sustain its marketing. In the last few years AIMA’s place as the leading electric e-bike and moped company in China has been surpassed by Yadea.

To keep pace, AIMA will have to adapt to a new national standard on electric two-wheelers imposed last year (e-bikes must have pedals, travel at maximum speeds of 25km per hour and sound alarms when the reach 15km per hour). “China has 300 million electric two-wheelers, and about 70% of them do not meet the requirements of the new national standard. There are 210 million bikes to be replaced, which will become a blue ocean market worth over Rmb100 billion,” 36Kr reported.

From 2016 to 2018 sales increased from 3.6 million units to 4.6 million AIMA’s prospectus reveals. In 2018 AIMA’s operating income was Rmb8.99 billion and its net profit was Rmb430 million.

The Chinese Association of Market Information and Research estimated that between 2006 and 2019, AIMA’s global sales were over 41 million e-bikes.

Sales have increased this year as consumers opted for e-bikes rather than public transport, owing to the coronavirus pandemic.

On December 1, the company hosted its AIMA 2021 Innovation Event in Guangzhou and announced it will focus on “user-centric innovation and will venture into intelligent smart travel”. AIMA also said it is partnering with Midea Group, a leading Chinese appliance manufacturer, in marketing efforts.

That all sounds promising, but when the IPO does happen next year investors will have to evaluate whether e-bikes have as much growth potential as electric cars (see WiC521).

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.