HarbinFAWShenhuaAutomotiveTradingCompanyINTERVIEWDATE:March8,2000INTERVIEWERNAME:BillHeIntervieweeNameMr.WuLiang,Manager,FAWTradingHeilongjiangSubsidiaryMr.FuGuibin,GeneralManagerCompanyandAddressHarbin,HeilongjiangTelephone/Fax0451-4320161-165BackgroundHeilongjiangistheleastdevelopedprovinceinnortheastChina.Thereareabout158,000freightvehiclesinHeilongjiangbytheendof1999.Amongthem,80%areJieFangTrucks.TherestareDongFeng,YellowRiverandforeignbrands.FAWhassixdealersinHeilongjiang.ThreebigonesareShanghua,GoldenDragon,andDaqingPetroleumAdministration.Shenghuaisthemostsophisticateddealeramongthethree.GoldenDragonisasubsidiaryofChinaAgricultureBankHarbinBranch.Inordertopromoteitsautomotivefinancingprogram,thebankfoundedGoldenDragonlastyear.DaqingPetroleumAdministrationisoneoftheoldestandbiggestPetroleumAdministrationinChina.TheyonlydistributethetruckstheybuywithinthePetroleumAdministration.Therefore,theyarenotexactlyadealer.Theyareaverybigcustomer.DaqingPetroleumAdministrationistheonlybigcustomerofFAW-DeutzHeavyWeighttrucks.Lastyear,theybought300Deutztrucks.FAWplanstopromotethisHaevyWeighttruckacrossChinain2000.Onaverage,FAWcansellabout4,500newtrucksofallkindsinHeilongjiangannuallythroughallchannels.However,thesalesnumberthroughtheHeilongjiangsubsidiarywasonly1,300in1999.SinceChangchunisonly230kmawayfromHarbin,mostcustomersprefertopurchasetrucksfromChangchundirectlybecausethisisasignificantinvestmentforthemandtheywanttobeabsolutelysuretheycangettheoriginaltrucksfromthemanufacturer.Theyevendon’tmindthepricetobealittlehigher(0.5%)iftheybuythetrucksdirectlyfromChangchun.ThebestsellertrucksinHeilongjiangare“FiveTonKing”(7.2m)andDeutzHeavyWeighttruck(forDaqingonly).Amongthebuyers,80%areindividualsorprivatecompaniesand20%arestate-owncompanies(mainlyDaqing).CustomerloyaltytoFAW’struckishigh.CustomerslikethefactsthatHeilongjiangisclosetothemanufacturerandserviceisgood.Thereare24FAWservicestationsinHeilongjiangShenghuahasabout20employees.TheyhandlemultiplebrandsofFAW,Jetta,RedFlag,andJieFang.Theysoldmorethan700JieFangtrucksin11999.Theyplantobea“Four-in-One”dealerbyJuneorJulythisyear.However,theservicestationwillnotbelocatedatthesameplaceasthesalesoffice.Theybuiltaservicestationtwoyearsago.TheywanttomodifythatservicestationtomeetFAW’srequirement.FAWputitsinventoryatShenghua’swarehouseinHarbin.ThatindicatesShenghuausthemostimportantdealer’sofFAWinHeilongjiang.FAWTradingCompanyHeilongjiangSubsidiarywillworkwithbankstopromoteauto-financingprogramandauto-rentalprogramthisyear.KeyIssuesTheserviceofDeutzHeavyWeighttruck’spowertrainisdonebyDeutzBeijing,notFAW.DeutzBeijingisveryslowandinflexibleinrespondingtocustomers’urgentservicerequirements.Forthisreason,North-Benz’sheavyweighttrucksaremorewelcomedthanFAW-DeutzinDaqing.Accordingtothecustomers,North-Benz’squalityisbetterthanFAW-Deutz.Therefore,theneedsofserviceislessfrequent.ThepriceofNorth-BenzisRMB580,000whiletheFAW-DeutzisonlyRMB370,000.TheFAW-Deutztruckhasahighdemandonthequalityofthegasoline.GasolineinHeilongjiangcannotmeetthestrictqualityrequirementandthereforecauseproblemstothepowertrainfrequently.ThepriceoftheoriginalpartsfromFAWistoohigh.Somesubstitutesarealmostthesameastheoriginals.TheHelongjiangSubsidiaryofFAWTradingCompanyconcernshowitcangetcreditswhenitscustomersbuytrucksdirectlyfromChangchun?TheysuggestFAWtoinvestigatethereceiptsofthedealersinChangchunmonthly.WhenevertheyfindaChangchundealersellstoaHeilongjiangcustomer,theHeilongjiangSubsidiaryshouldgetthecreditforthesales.AccordingtoShenghua,FAWhastheadvancedtechnologyinbuildingtrucks.However,itscraftsmanshipispoor.Forexample,apowertrainbuiltbyforeignmanufacturercanlastfor600,000km.ApowertrainbuiltbyFAWcanonlylastfor200,000km.ConclusionJieFangtruckstilldominantstheHeilongjiangmarket.FAWhasgooddealersinthisarea.HowtoincreasethesalesoftheHeilongjiangSubsidiaryofFAWTradingCompanyandreduceoreliminatethenumberofHeilongjiangcustomerswhopurchaseJieFangtrucksfromChangchunremainsachallenge.2