FAWYunnanPartsCenterINTERVIEWDATE:5May2025INTERVIEWERNAME:PaulGaoIntervieweeNameMr.LiuYiPositionGeneralManagerCompanyandAddressFAWYunnanPartsCenterCompanyTelephone/Fax0-13908856801BackgroundMr.LiuhasbeeninKunmingforthepastfouryears.PriortothesetupofFAW’sPartsCenterinKunmingin1996,therewasaprivatelyownedpartsoperationsThepartscenterislocatedinYunnanNo.1RepairFactory,whoisalsoFAW’sdealer,partsdistributorandservicestations(separateoperationsunderthesameparent).Mr.LiuistheonlyonefromFAWworkingatthepartcenter.AllotherpeopleworkingforhimarefromNo.1RepairfactoryDistributionchannelsINthepastthreeyears,salesofFAWpartsaveragedRMB6millionperyearinYunnanprovince(totalFAWtruckpartsmarketisestimatedatRMB30millionperyear).Therearethreemainchannels:13servicestationsinYunnan(oneinKunming),whichaccountfor45%ofthesales9partsretailshops(sixarelocatedinKunming),whichaccountfor30%ofthesalesLargefleetcustomers,whichaccountforabout10%ofthesalesThereisalsosmallamountofretailsalesPricestructure:PricetoservicestationsisB+2%PricetopartsshopsisB+5%PricetofleetcustomersisB+7-10%InventoryMr.LiukeepsaninventorylevelofRMB2.8million(FAWrequirementisRMB3.5millionbasedonvolumeofFAWtrucksinYunnanprovinceThereare1000+SKUs,includingpartsforlighttrucksWarehouseisrentedfromNo.1Repairfactory.FAWneedstopayNo.1factory5%ofnewpartsgoingintothewarehouseeverymonth.Thiscostcoverswarehouserental,localtransportationcostfromrailwaytowarehouseProductorderingprocess1BetweenpartscenterandChangchunMr.LiuplacesorderwithFAWTradingCompanyinChangchuneverymonth:forsmallcommonpartsbeforethe25thofeachmonth;forlargeparts,e.g.,engine,beforethe5thofeverymonthDeliverytimeisnormally30-45daysafterordering.Normallyitisdeliveredthroughrailwayincontainers.FulfilmentratioinChangchunisaround80%ThePartscenterisalsoallowedtopurchasepartsfromDalianDieselandWuxiDieseldirectlyBetweenpartscenterandservicestationsServicestationsandpartscentersarerequiredtoplacetheirorder45daysbeforetherequireddeliverytime.However,inreality,thisrarelyworks,servicestationsandpartscenterswouldcometothepartscenterwhenevertheyneedpartsPartlyduetohaphazardorderingbypartsshopsandservicestations,orderfulfilmentrateatthepartscenterislow.PaymentandbaddebtsFAWrequiresallservicestationsandpartscenterstopayforthepartsbeforedelivery.Mostofthebaddebtsarepartsgiventoservicestationsasstartupinvestment.FAWgaveeachservicestationRMB100Kofpartsasstartupinvestment,andrequiresthemtopayitbackwithinthreeyears.However,only2outofthe13servicestationshavepaidbacktheparts.MajorproblemswithpartsoperationsChaoticdistributionchannels.AlmostallofFAW’ssuppliersselldirectlytothemarketplaceatlowprice,whichmakesFAWPartscenterspriceuncompetitive12outof13servicestationsarelosingmoney.BecauseallofthemareStateownedentitieswhocannotcompetewithprivateservicestationswhoareofferingbetterserviceatlowercost.Manyservicestationsrequirecustomerstopayforwarrantyserviceinadvance,andwillonlypaybackthemoneytocustomerswhentheyarereimbursedbyFAW.ThishascreatedaverynegativeimageofFAWservicequality.Mr.LiurealisesthatFAWshouldestablishservicerelationshipwiththemoreactiveprivateservicestations,however,heisconcernedaboutthebaddebtsoutstandingfromtheseservicestations.LackofcoordinationbetweenFAW’sR&D,Sales,Serviceandpartsfunctions:FAWhasdevelopedmanynewproductsinrecentyears.However,R&DandSalesfunctionshavenotpreparedthenecessarypartscatalog,repairmanualandnotifyservice/partsdepartmentsofthenewproductlaunchandpartsrequirements.Asaresult,manynewFAWproductsaresoldwithoutservice/partsreadyinthemarketplace.OneexampleisFAW’s“5tonking”truck,whichhasbeensoldtoYunnan2toalmostayear,untiltoday,thereisstillnopartscatalogfromtheR&Ddepartment.Customersarecomplainingaboutlackofaccesstoserviceparts.LiuzhouTruckfactory,whichisalsounderFAWgroup,re-fittrucksundertheJieFangbrand.ButitoftenusespartsfromoutsidetheFAWgroup.Itdoesnothaveitsownservicenetwork,andreliesonFAWforservice.However,duetothelackofcommunicationbetweenLiuZhouandChangchun,FAWservicestationsalwayshavetroublestockingparsrequiredforLiuzhoutrucks.BecausetheyarealsoundertheJieFanglabel,thishascreatedalotofproblemforFAW.3