SilverSwordAutomotiveTradingCompanyINTERVIEWDATE:Feb28th,2000INTERVIEWERNAME:BillHeIntervieweeNameMr.GongZhanfuPositionGeneralManagerCompanyandAddressSilverSwordAutomotiveTradingCompanyTelephone/Fax0472-7155127BackgroundSilverSwordAutomotiveTradingCompanyisthelargestdealerofJieFangtruckinNeiMeng.ThiscompanywasfoundedinJune1998andbeganitsoperationinSeptember1998.Theysold180Jiefangtrucksin1998and1100in1999.TheirrevenueofJieFangtruckwasRMB8millionin1998andRMB113millionin1999.Currentlytheyhave15employees:10insalesforceand5admin.Theyplantoexpandtheiroperationin2000bysettingupsatelliteofficesinothercitiesinNeiMeng.Theyonlysellnewtrucksnow.However,theyplantobea“Four-in-One”dealerbymid-July.TheywillinvestRMB1milliontobuildaservicedepartmentandrecruitretiredFAWtechniciansfromChangChuntoworkforthem.TheywillalsoinvestanotherRMB1milliontosetupthepartsdepartment.FAWputitsinventoryintheirwarehouse.Thisisahugeadvantagetheyhaveoverotherdealersinthesamearea.Whentheinventoryisreducedtoacertainlevel,theynoticetheFAWNeiMengSubsidiary,whichisinthesamebuilding.TheFAWNeiMengSubsidiarythenrequestsitsheadquarterstosendmoretrucksover.Itonlytakesfourdaystodeliverythetrucks.ThepricetheygetandthepricetheyoffertotheircustomersaresimilartoNeiMengWelfareCorporationBaotouSubsidiary,anotherdealerinthesamecity.Theircustomerportfoliois80%individualand20%enterprises.Theirbestsellertruckisthecoaldeliverytruck.Theirbestsellersegmentisthemediumweighttrucksegment:theysold200lighttrucks,860mediumweightand40heavyweighttrucksin1999.Theyalsohavelargecustomers.TheirlargecustomersdonotoverlapwiththatoftheNeiMengWelfareCoporationBaotouSubsidiary.Forthosesalesmenwhofocusonlargecustomer,theyhaveanincentivestructure.TheirmonthlybasesalaryisRMB500.Foreverytrucktheysell,theycangetRMB100bonusandthereisnouplimit.Eachsalesmanhasaquotaof10truckspermonthwhichiseasytoachieveinthepeakseason(MarchtoMayandNovembertoDecember)anddifficulttoachieveinthenon-peakseason.1Theytrainthesalesmenbeforesendingthemouttocontactlargecustomers.NosupportfromFAWinthisregard.Asadealer,theyhavetobuythetruckintheirwarehouseregardlessiftheyhavesolditornotthreemonthsafterthedeliverydate.Alloftheircustomersareendusers.Theydon’tdealwithsecond-tierdealers.TheythinkJieFangtruckhasthefollowingadvantageinNeiMengmarket:EnduserslikeJieFangtruckbecauseithashugeovercapacityintermsoftonsofgoodcanbeputonthetruckServiceofJieFangtruckisinexpensiveandconvenientPartsofJieFangtruckareinexpensiveandeasytogetTwomainusagesofJieFangtruckinNeiMengarecoaldeliveryandlongdistancedelivery.KeyIssuesThiscompanyhasrootinChangChun.ItisasubsidiaryofalargedistributorofFAWinChangChun.DowereallywantaChangChundealerinBaotou?Themostimportantincentiveforthemtobuildthe“Four-in-One”dealershipcouldbethe0.7%year-endbonusfromFAW.Giventheirvolume,theycouldgetmorethanRMB1millionsuchyear-endbonus.Virtually,itwouldbeFAW,notSilverSword,topayforthe“Four-in-One”dealership.ConclusionThisisthestrongestdealerinNeiMeng(FAWhasfivedealersinNeiMeng).ItcouldbeagoodcandidateforFAW’sfirst-tierdealerinthefuture.2