By Edwina Gibbs
TOKYO, July 22 (Reuters) - Sporting a metallic grey helmet, Honda Motor Co Ltd President Hiroyuki Yoshino on Monday whizzed his company's latest scooter confidently through traffic cones in the car park of a posh Tokyo hotel.
The point of the unusual exercise?
A demonstration that the 50cc scooter, the first made for the Japanese market but built in China, was just as good as if it had been assembled at home.
It's a symbolic development that highlights China's growing manufacturing power and low costs and, to the concern of some, Japan's inability to compete as a site for new production bases. For Honda, the world's largest motorcycle maker, the scooter's biggest selling point is its price.
Priced at 94,800 yen ($816.8), the company says its the first time in 15 years that it has managed to sell a motorbike for less than 100,000 yen.
"We set out to cut costs by 30 percent," Yoshino told a news conference. "Scooters have become too expensive and we have solved that by making use of our global network."
The scooter is made at the Shanghai factory of Sundiro Honda Motorcycle Co Ltd, a venture in which Honda holds 50 percent and Chinese partners Hainan Sundiro Holding Co Ltd and Tianjin Motorcycle Group hold the rest.
Honda said it is aiming for annual domestic sales of 100,000 units of the scooter, named "Today", and is looking at other markets, although the 50cc is primarily a Japan-only segment.
The scooter is only the second time that Honda has imported motorcycles from Asia for the Japanese market, having imported smaller numbers from its Thai unit in the late 1980s and early 1990s.
Also this year, Honda, Japan's second-largest automaker with its domestic plants running at full capacity, will make in Thailand a small car based on its hot-selling Fit subcompact with Japan one of the vehicle's key markets.
Yoshino said, however, that it would take much longer before Honda would build cars in China to be sold in Japan as the Chinese market was not yet large enough to give the automaker the same cost merits and developing the necessary quality standards would require more time.
Honda procured around 56 percent of the scooter's parts from local Chinese suppliers and another 28 percent from Japanese suppliers based in China, sending in engineers to work with parts markers to ensure quality standards were being met.
Only 14 percent of parts were exported from Japan, a reflection on how times have changed from just several years ago when many Japanese automakers shied away from Chinese-made parts.
Encouraged by China's entry into the World Trade Organisation last year, other Japanese automakers, Mazda Motor Corp in particular, have said recently that they were looking to increase the procurement of parts from China to help cut costs.
Honda is targeting annual global motorcycle sales of 11 million units over the next three years, a jump of five million units or 57 percent from current levels with growth coming mainly coming from Asian countries.
Honda's shares climbed 2.21 percent to close at 5,090 compared with a 0.13 percent decline in the Nikkei benchmark average .
($1=116.06 Yen)