Harley-Davidson will make small motorcycles in China with a new partner

Harley-Davidson has found a new partner in China as it ramps up efforts to sell more motorcycles abroad.

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Julia Horowitz
, CNN Business
CNN — Harley-Davidson has found a new partner in China as it ramps up efforts to sell more motorcycles abroad.

The company said Wednesday that it's teaming up with Qianjiang Motorcycle Company to make a small motorcycle that will go on sale in the country next year. Qianjiang is a subsidiary of Geely, which owns Volvo and has a joint venture to assemble cars in China with Mercedes Benz parent company Daimler.

For Harley, China is a major growth market.

Sales in the country increased 27% in 2018 compared to the previous year, according to the American motorcycle maker.

Growing internationally

Harley-Davidson wants half of its sales to come from international markets by 2027. This strategy aims to offset declining US sales as its customer base there gets older.

The company has been increasing production in places like Thailand to make that happen.

But tariffs have also played a role in its plans to make more bikes in Asia.

The company said last year it was moving some manufacturing to Thailand due to European Union tariffs on motorcycles shipped from the United States. The European Union raised its 6% tariff to 31% last June in response to the Trump administration's tariffs on steel and aluminum imports.

"It's unfortunate, but we're pushing forward with our strategy to make sure that we preserve the integrity and the growth potential within the European market," CEO Matthew Levatich said on the company's most recent earnings call.

The Thailand plant also makes motorcycles for sale in Asia. It will begin shipping motorcycles to China by the end of the year.

Harley's shift overseas has angered President Donald Trump, who last year encouraged consumers to boycott the company as a result.

"Most other companies are coming in our direction, including Harley competitors," he tweeted at the time. "A really bad move! U.S. will soon have a level playing field, or better."

It's not clear if the Harley motorcycle that will be made in China would have been subject to Chinese tariffs had it been manufactured in the United States. A spokesperson did not immediately respond to a request for comment.

Trump and Chinese President Xi Jinping are due to meet on the sidelines of a G20 summit in Japan later this month as they seek to avoid further escalating their damaging trade war.

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