Now it’s time to take a close look at a small but competitive business making a difference for the Korean economy. This week’s spotlight is on Velostar, maker of electric bicycles.

Electric bicycles, marked by low maintenance costs and no worries over gas emissions, have grown immensely popular in European countries like Germany and the Netherlands, but not so much in Korea yet. This new and unfamiliar means of transportation is still in its infancy in Korea, but Velostar is an industry vanguard pioneering the electric bicycle market in Korea and getting ready to enter the global stage. Here’s one of Velostar’s department managers, Choi Seung-ho, to explain more.

Velostar is Korea’s first manufacturer of electric bicycles. Since batteries must be exchanged every two years, the electric bicycle business can be sustained for a long time. I believe the future of the eco-friendly electric bicycle market is quite promising. When electric bicycles were first introduced to Korea in 2009, most of them were low-end products made in China, and were heavy and could travel only a short distance, with poor maintenance services. Back then most of the customers were older people who bought the bicycles priced between 600 to 700 dollars to travel short distances. But the shoddy products broke down after only a few months and the sellers vanished, saddling older customers with expensive broken bicycles. Looking at this situation, our company decided to make long-lasting electric bicycles with full warranty and high quality.

As the world grew deeply concerned over global warming and began to pursue low-carbon green growth, well-being and environmental protection became the keywords defining the latest market trend. Against this backdrop, Velostar started making electric bicycles in 2008. Unlike conventional bicycles, which are human-powered and pedal-driven, electric bicycles are powered by an electric motor and batteries, making it much easier to ride. In fact, an electric bicycle can travel 20 to 40 kilometers on a single charge, it’s really affordable, costing an average of only 1,000 won, or less than a dollar a month to maintain, and its battery can be charged at home like a cellular phone. But low-end, shoddy, Chinese-made electric bicycles made it into the Korean market in the late 2000s, disappointing Korean consumers with frequent breakdowns and poor customer services. Fighting such negative product images, Velostar strove to produce high quality electric bicycles to turn customer opinions around.

Velostar produces the frames and wheel sets, the hardest-to-make and most important components of an electric bicycle. We are trying to enter the global market with high-performing and safe bicycles, equipped with a central motor and a Samsung SDI battery. We commissioned an award-winning Korean design firm to design our bicycle frames, and used top-grade parts and components to earn consumer recognition. We make such key components as the frame, the wheel set, and the battery, and other visually pleasing elements locally, elevating the percentage of locally produced parts to over 60% of the finished product. Our bicycles satisfy the basic requirements for an export item.

In trying to meet the dual goals of high quality and safety, Velostar has its hands in all the processes, from frame design to production to assembly. Velostar also invested about a year’s time and 600 million won, or around 541,000 dollars, in research and development to locally produce more than 90% of the parts. Its bicycle frames are strong and sleek-looking, as well as safe and durable enough to meet European and Japanese standards. The company’s relentless R&D efforts yielded the Dokdo89, Korea’s first electric bicycle, in 2011. With that, Velostar won the recognition it needed. The company was selected to supply its bicycles to the Seoul Metropolitan Government and other public agencies, and opened a number of distributors nationwide. Their business efforts are now focused on entering the overseas markets this year.

We are getting ready to export to Europe, where the electric bicycle market is growing 30% every year. We focus first on quality and the components appealing to European consumers. Even if our bicycles are priced 20% higher than our Chinese or Taiwanese competitors, Korea’s FTA with the EU is going to eventually make our bicycles more price competitive in the European market. We learned of the European market trend at the Euro Bike Show 2012, and we are working hard to develop products fit for export. We are also working with our German partners to customize our bicycles to suit their customer preference.

With its skills and confidence manifested in high-end electric bicycles, Velostar is ready to take on the world’s electric bicycle market, which is growing at an annual rate of 8%.