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FAWTradingCompanyJilinSubsidiaryINTERVIEWDATE:March13,2000INTERVIEWERNAME:BillHeIntervieweeNameMr.NiuBinyu,SalesManager,FAWTradingJilinSubsidiaryCompanyandAddressChangchun,JilinTelephone/Fax0431-7652883BackgroundTherewere11firsttierdealersandabout30secondtierdealersinChangchun.Fromthebeginningofthisyear,thereisnosuchthingasfirstorsecondtierdealers.TheJilinSubsidiaryofFAWTradingCompanyhassignedtheletterofintent(LOI)oftrucksaleswith13dealersthisyear.Allofthe13dealerssoldmorethan500JieFangtrucksin1999.Amongthem,8dealershavesoldmorethan1,000and5havesoldmorethan1,500,and2havesoldcloseto3,000trucksin1999.TheJilinSubsidiaryoftheFAWTradingCompanysold26,000truckslastyear.Thisnumberwasalittlemorethan25%ofthetotalnumberofJieFangtruckssoldin1999.Thisnumberincludedthechassistrucks(about13,000).TheJilinSubsidiaryplanstosell23,900JieFangtrucksin2000.ThepricetoJilin’sdealeris0.5%higherthandealersinanywhereelse.Only6,000ofthe26,000truckstheJilinSubsidiarysoldin1999werepurchasedbyendusersinJilin.Therestaresoldtoendusersinotherareas,mainlyHeilongjiang,Hebei,Shangdong,Neimeng,Liaoning,andShanxi.Changchun’sdealershaveofficesinotherprovinces.TheChinesecustomershaveaverystrangeintent:theywanttomakesurethetruckstheybuyareoriginalonefromthefactorydirectly.Theydonotbelievetheirlocaldealers.Theyalsobelievetheycangetthebestpricefromthemanufacturerdirectly.Therefore,manycustomerscometoChangchuntopurchasethetrucks.Thisistheaveryimportantreasonforinter-territorysales.ThisiswhyJieFangdoesnothavestrongdealersinsomeprovinceswhileitdominatesthemarketinthoseprovinces.Thedealersusedtobestate-runMechanicsandElectronicsCompanies.Moreandmoreprivatecompaniesbecomedealersnowadays.Ingeneral,privatecompaniesaredoingbetterthantheMechanicsandElectronicsCompanies.Therearetoomanydealersnow.Thecompetitionamongdealersisbasedonprice.Thistypeofcompetitionis“zerosum”competition.FAWtriedtostopthe“pricewar”lastyear.However,whenthedealerwhoinitiatedthepricewarwasfoundinChangchun,FAWdidn’tpunishit.Manydealersarelosingmoneywhensellingthetrucksnow.TheycanonlymakeverythinprofitbytheendoftheyearwhentheygetrebatefromFAW.1Weonlyneed3to5dealersinJilin.AudiA6onlyhasonedealerinthethreeprovincesinNortheastChina.ThisdealercanonlysellinNortheastChinaaswell.ForotherdealersinJilin,theyhavetotakecareofthemselves.Wedon’tneedtogivethemanypolicysupport.Thereisonlyone“Four-in-One”dealerinChangchunnow.ItisJilinFAWTrading&RentalCo.,Ltd.However,somebigdealersarebuildingorplantobuildits“Four-in-One”facilitiesnow.Ifwecangiveupthefreightfee,itmightreducetheinter-territorysales.TheY-T-DsalesnumberoftheJilinSubsidiaryiscloseto6,000trucks.Marchisthetraditionalpeakperiodintrucksales.Theresourceislimitednow.WeshouldsellmostofthelimitedresourceinJilinbecauseFAWcanget0.5%moreinprice.ThereisalmostnoDongfengtrucksinJilin.ThereisonedealerandoneservicestationofSAWinChangchun.Theycanonlysellabout300DongfengtrucksinJilineveryyear.InMr.Liu’sopinion,thefollowingdealersarethestrongestonesinChangchun:JilinFAWTradingandRentalCo.,Ltd.JilinLinyuanAutoSalesCo.,Ltd.ChangchunXingmingMaterialTradingCo.,Ltd.JilinJindunAutoTradingCo.,LtdJilinAutoCityCorporationFAWDirectSaleCenter(FAW’ssubsidiary)HeilongjiangistheleastdevelopedprovinceinnortheastChina.Thereareabout158,000freightvehiclesinHeilongjiangbytheendof1999.Amongthem,8...