FAWSouthwestSalesCompanyINTERVIEWDATE:5May2025INTERVIEWERNAME:PaulGaoIntervieweeNameMr.WangZhengPositionGeneralManagerCompanyandAddressFAWYunnanSalesCompanyTelephone/Fax0-BackgroundMr.Wangisnewtohisposition,whoonlycametoKunminginJanuaryofthisyear.Priortohisnewposition,MrWangworkedfor5yearsinFAWTradingCompany’saftermarketserviceandsalesplanningfunctions.Therearefourpeople(includingMr.Wang)inFAWYunnanSalesCompany,onemanager,onepersoninchargeofvehicleinventory,onepersoninchargeofinchargeofservice,andonepersoninchargeofsales.FAWTradingCompanyalsohasasparepartscenterinKunming,butitislocatedinadifferentlocation,andMr.Wanghasnocontroloverthepartscentre.Mr.WanghasanoperatingbudgetofRMB200kperyear(excludingsalary,¼ofthebudgetcanbeusedasannualsalesbonusandsharedbyMr.Wangandothersalespeople),inaddition,hegetsRMB70Kinadvertisingbudget.DailyallowanceisRMB40perdaywheninKunming(increasefromRMB30lastyear),andisincreasedtoRMB100perdaywhentheyaretravellingoutsideKunming(theallowancecoversallmealsandlodgingcosts).ThisismuchlowerthanFAW-VWallowanceofRMB170perday.BrandinvestmentandadvertisingMr.Wangfeelsthattheadvertisingbudgetistoolow,incomparison,FAW-VW’sadvertisingbudgetinKunmingwasRMB800Kto1millionlastyear.HefeelsGuoAnAdvertisingisnotdoinganeffectivejobinhelpingFAWwithlocaldealerleveladvertising.DistributionchannelsTherearefourFAW-JieFangdistributorsinYunnan,allofthemarelocatedinKunming.NoneofthemisexclusiveJieFangdistributors,twoofthemareexclusiveFAWdistributorswhoalsosellHongQiandJetta,anotheroneisavehiclerepairfactory,whoalsoselltrucks(itishowevernota“3in1”dealerbecausethevehiclesales,serviceandpartsbusinessareindependentofeachotherunderthesameparent).FAW’srecentsalesinYunnanareasfollows:FAW-ChangchunLiuzhouQingdao19983001199958624092000(target)735(includingQingdaotrucks)Thesalesbreakdownbydistributorsare:ConstructionMaterial179MechanicalandElectrical147No.1RepairFactory22FAWYunnanTruckMarket146Direct39Noneofthedistributorsisa“3in1”distributors,infact,onlyonehaslargedisplayareas(theothersdonotevenhaveshowtrucks),butmanyareplanningtoaddserviceandpartsfunctionbecause:DealersmakeaboutRMB1,400innetprofitaftersalesrebate.ManyofthemsellthetruckatthesamepricetheygetfromFAW,hopingtomakethe1%rebate.ButthiswillchangeasFAWhaschangeditssalesrebatepolicyAllofthesedistributorsaregoingthroughorganisationalrestructuringwhichwouldallowthemtobecomeindependentfromtheirSOEparents.Infact,thebiggestsellerlastyear,ConstructionMaterial,isalreadyprivatelyownedFAWchangeditssalesrebatepolicywhichfavorsdistributorswithservicecapabilities(withoutservicecapabilities,thehighestsalesrebateratiodistributorscangetis0.7%,comparedto1.2%iftheyhaveservicecapabilities.Lastyear,thesalesrebatemarginwas1%)ThebestsellingFAWtrucksinYunnanis“5-tonKing(a9-tontruckindisguise)”.HeavytrucksdidnotsellverywellinYunnanbecauseYunnanisverymountainousandhighwaysystemisnotwelldeveloped.Ifthevehicleistoolong,itisdifficulttocontrol.However,duetoitshighaltitude,ithashigherrequirementforengines,asaresult,FAW’sDeutzpoweredtrucksoldwellinKunminglastyear(23)(Deutzenginesareveryreliable,however,serviceandsparepartscostishighandthereislongdelaysforserviceandpartsdeliverycoordinatedthroughDeutzBeijingoffice)Thereare12servicestationsinYunnan,only1isincludedinKunming.The11servicestationsinotherpartsofYunnanarenote...