Reponse on Joshua’s Blog of “Threats of Substitutes”
Nov 13th, 2012 by Shawn Li
As my classmate Joshua has mentioned in his blog post, it is true that bicycle is making automobile more elastic and causing an increase in the threat of substitute part of the automobile industry.
I mostly agree with the analysis of this blog since it well demonstrates several key ideas of our course such as the Porter’s 5 Forces, price elasticity, and the idea of substitutes. However, I have some different opinions on his further look on the issue in America. Joshua has stated that people are less willing to buy bicycles in U.S. because of less financial incentive and further distances to commute. It is fairly true. But in my opinion, bicycle is less of a substitute to cars in America is because of not only the economic and geographical outlook of U.S. but also the traditional mindset of its people.
China is similar to US in some degree since it is large in size and has increasing affordability of automobiles. However, people there tend to ride bikes. It is easy to see thousands of people biking home after work in many Chinese cities. Why? Because Chinese people have a stronger bond with bicycles while cars have only become more popular in the past decade. It is true that bicycle was not invented by Chinese, but for almost a century it has been acting as a necessity for almost every Chinese family. On the other hand, people in the US have been driving automobiles for centuries and the culture of riding a bike disappeared long ago. People there in nature trust cars more than bikes. And that nature is hard to reverse which additionally contributes to the less threat of substitute of bicycles towards automobiles in America.