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Business Insight

Gearing up in Pakistan

Masaki Suda

With a population of 180 million people, Pakistan is an attractive market for foreign investors. While some firms have avoided it because of worries about security, others see potential. A Japanese motorbike manufacturer is determined to make inroads into the nation.

Yamaha Motor's new factory started operating last week in Pakistan's largest city, Karachi.

The assembly of motorbikes has already begun at one factory. The initial plan is to produce 40,000 bikes annually. The 200,000-square-meter facility could boost Yamaha's output in Pakistan by up to 10-fold in 5 years. The company is trying to make a comeback in Pakistan 7 years after pulling out of a local joint venture.

Many foreign companies have shied away from the country because of worries about security. But others see massive potential. 70 percent of the population is age 35 or younger. GDP per capita is rising. Sales of motorcycles are expected to double in 5 years to 3 million units a year.

Yamaha Motor's CEO Hiroyuki Yanagi says the motorcycle market is expected to grow as the size of the younger generation increases.

Yamaha's biggest rivals are Chinese brands. Japanese motorbikes used to be the leaders in Pakistan. But Chinese competitors selling bikes costing 30 percent less expanded their market share, overtaking the Japanese in 2009.

One customer says Chinese motorbikes are high-performance and fuel-efficient.

To regain its edge, Yamaha rolled out a model offering a bigger engine and more comfortable ride, targeting customers who want a higher-grade motorbike. It opened repair and maintenance shops with better follow-up services, hoping customer service could set them apart from Chinese rivals. Yanagi says he aims to strengthen customers' trust in his company with such services.

Japanese and Chinese motorcycle makers see huge potential in this growing market. They need to prepare themselves for stiff competition along the road to success in Pakistan.

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