FAWSouthwestSalesCompanyINTERVIEWDATE:5May2025INTERVIEWERNAME:PaulGaoIntervieweeNameMr.LiuShulongPositionManagerCompanyandAddressFAWSouthwestTradingCompany,ChengduPartsCenterTelephone/Fax0-13908078822BackgroundMr.LiuhasbeenworkinginChengduforthepast10yearsasthemanagerofFAWcomponentsales.Currentlytherearefivepeople(includingMr.Liu)inChengduworkingforcomponentsales,onepersoninplanning,oneinwarehousemanagement,oneaccountantandonecashier,onemanager.AllcamefromChangchun.Thebusinessobjectiveofthecomponentbusinessistosupportwarrantyservicefirst,otherservicesecondandcomponentsaleslastIn1999,FAW-SouthwestcompanyhadcomponentsalesofRMB6.2million.Incomparison,thesalesfor1998wasRMB13million,and1997wasalsoRMB13millionTherearethreemajorsaleschannelsforcomponentsalesfromFAW-Southwestcompany:Servicestations:accountingfor75%ofsales.Thereare19servicestationsthatbuydirectlyfromFAW-Southwest.ThepricetheypayisB+2%(BisFAWTradingcompany’sbaseprice,whichalreadyincludesmanagementfeesandshippingcost)FAWauthorisedpartshops:accountingfor20%oftotalsales.Thereare12authorisedexclusiveFAWpartshops.ThepricetheypayisB+5%Largecustomers.Accountingforlessthan5%oftotalsales.ThepricetheypayisB+5toB+10,dependingonthevolume.FAW-SouthwestmaintainsapartinventoryatChengduNo.1(FAW’s“3in1”dealerinChengdu).TotalvalueisRMB3.68million,thisisafterawrite-off/shipbackofRMB3.5millionofobsoletepartstoChangchun.Thereisatotalof2,900SKUsinitswarehouse.Mr.LiuplacesorderwithChangchunFAWTradingcompanypartsdepartmenteverymonthforsmall,commonparts,andeveryothermonthforlargeparts,e.g.,cab,engines,etc.Typically,theorderprocessworkslikethis:1Atthemoment,theprocessfromplacingorderwithChangchuntomovingtheproductstoChengduwarehousetakesaround10-15days,thisassumesFAWcangetcargospaceonrailwaysonatimelybasis,otherwise,thedeliverytimeislonger.FAWdoesnotshipsparepartswithitsnewtruckdeliveryforfearofdamagingtheun-soldnewtrucks.Typically,orderfulfilmentratioatChangchuniscalculatedbasedonthecategoryofpartsordered,whichmeans,ifChengduorders10pistonringsfromChangchunandchangchunonlyships5toChengdu,inthemindofChangchun,thiscountsasanorderfulfilledFulfilmentratetocustomerordersinChengduisaround70-80%,thisiscalculatedbasedonthevaluefororderfulfilled.Mr.Liuattributesthedeclineinpartsalestocompetitionfromotherchannels,namely:FAW’spartsuppliersFAW’sFuAnCompany(componentgroup)Localcopy/counterfeitproductsONaverage,FAWTradingcompany’spartpriceis20-30%higherthansuppliers’directsalesprice(allgenuineparts).Asaresult,servicestations,partsretailerswouldonlybuypopularandhardtofindpartsfromFAWtradingcompany.Forcommonparts,theybuydirectlyfromFAWpartsuppliers.Mr.LiuusedChengDuNo.1asanexample:ofitstotalpartsalesofRMB8million,itonlybought2millionpartsfromFAWtradingcompany,including700Kforwarrantyservicereimbursement.Therestwereallsourcedfrompartsandenginesuppliersdirectly.ThereisnostandardretailpriceguidelinefromFAW,asaresult,retailpriceofsparepartsbyservicestations,dealersandpartsshopsvarysignificantly.2FAWSouthwestTradingFAWTradingCompany-partsFAWTradingCompany-partsdispatchFaxordersAllocatepopularpartsFAWSouthwestTradingNotifyofallocationChangchunRailwayStationChengduRailwayStationNotifyofcargoarrivalWarehouseMr.Liunowrequirespartshopstopayincashbeforetheycangetparts.Forservicestationswithgoodcredit,aone-monthcreditisextended.Beforenewpartsaremovedintothewarehouse,theyareinspectedandenteredintothePCdatabase,thistakesabout3daystocompleteforanordersizeofRMB500K.Whenpartsleavethewarehouse,theattendantatthewarehousemustrecordit.TherecordatthewarehouseandthatonMr.Liu’scomputerarereconciledmonthly,andonceayear,amanualcountiscarriedouttoensureaccuracyofrecords.3