MengkaiAutomotiveTradingandService(Group)CorporationINTERVIEWDATE:Feb29th,2000INTERVIEWERNAME:BillHeIntervieweeNameMr.ZhaoYongsheng,Chairman&PresidentMs.AnPinglian,Manager,MengKaiAutomotiveSalesCorporation,Ltd.(Mengkai)Address12YimeiRoadDongSheng,Yimeng,NeimengguTelephone/Fax0477-83226370477-8562666BackgroundTheChinesegovernmentdecidedtokickoffthedevelopmentofChina’swestregionthisyear.Thecentralgovernmentwillinvestheavilyinavarietyofbigprojectsinthisregion.YimengisinthewestregionofChinaandisfamousforitsnaturalresources.MengkaiAutomotiveTradingandService(Group)Corporationisaholdingcompanywithsevenfinanciallyindependentsubsidiaries.ThisholdingcompanyisinYimeng,thelocationofthebiggestcoalminesinChina.Mr.ZhaoistheChairmanandPresidentoftheholdingcompany.MengkaiAutomotiveSalesCorporationisonesubsidiaryofMengkaiAutomotiveTradingandService(Group)Corporation.ThiscorporationonlysellsJieFangtrucks.Inthepastyear,theysold92JieFangtruckswitharevenueapproachingRMB11million.TheyalsosoldRMB600,000inparts.EventhoughtheyarenottheauthorisedservicestationofFAW,theyhavebeenproactivelyhelpingcustomerstogetservicesfromtheFAW’sauthorisedservicestation.TheyalsoinvestedsignificanttimeinmarketingJieFangtrucks.MengkaiAutomotiveTradingandService(Group)CorporationhasanothersubsidiaryfocusingonDongFengtrucks.ThemainusageoftruckinYiMengiscoaldelivery.Thedevelopmentofthecoalminingindustryhascreatedahugedemandfortransportationbusiness.Trucksdomostofthetransportation.Thedemandofcoaldeliverytruckhasbeenincreasedinthepastseveralyears.Theannualnewpurchaseisatleast1,500.Forexample,theannualnewpurchasewas2600,2035JieFangand391DongFeng,and156others.Bytheendof1999,thereare7080JieFangtrucksandabout5000DongFengtrucksontheYimengmarket.Giventheabovenumbers,wecansaythatYimengisabigtruckmarketwithintensivecompetition.Before1993,DongFang140dominatestheYimengmarketeventhoughitwasaboutRMB10,000moreexpensivethanthecomparableJieFangtruck.Since1993,JieFang141,142begantoentertheYimengmarket.Because1theywerebetterthanotherbrand’scomparabletrucksrehorsepower,reliability,andcostefficiency,JieFang141and142tookoverthemarketcompletely.However,thedominanceofJieFangtruckonlylastedfiveyears.NowDongFengtrucktakesoveragain.DongFenglearnedalessonfromthefailureofits140anddevelopedEQ1094F6D(AKADongFengFiveTonKing).DongFengFiveTonKingissuperiorinover-weightcapacity,stronghorsepower,andoil-efficiencycomparingtoJieFangtrucks.MengkaihasalreadysentRMB1milliondeposittoFAWand12JieFangtruckswillbedeliveredtoitsnewlyleasedwarehouseverysoon.KeyIssuesYimengmarketissospecialthatasingleproductcandominatethewholemarket.ThishasbeenprovedbyhitslikeJieFang141&142in1993andDongFengFiveTonKingin1999.AccordingtoMengkai,evenwithDongFengFiveTonKing,theend-suersstillpreferJieFangtruckifwecanmakeafewmodificationsonthetruck,namelyreplacingthecurrent7-tonrareaxlewitha9-tononeandputtingaair-compactvalveinthepowertraintoincreaseeffectivehorsepowerandreducepollution.TheNeimengsubsidiaryofFAWTradingCompanykeptreportingtheverysameissuemanytimesoverthepastoneyear.Unfortunately,noactionhasbeentakenbyFAWsofar.Mengkaiisagooddealerwithqualifiedmanagementteam.Theyfullycommittothe“Four-in-One”dealershipmodel.However,itsparentcompanyhasasubsidiarysellDongFengtrucks.Eventhoughtheyarefinanciallyindependenttoeachother,isFAWcomfortabletodesignateMengkaiasitsfirsttier“Four-in-one”dealerinYimeng?ConclusionYimengisamarketwithgreatrepresentation.Thetruckpickedbythismarketcouldbeapostboytoothersimilarmarkets.Forthisreason,Yimengisahighlycompetitivemarket.FAWmayneedtoinvestsignificantlybysupportingahighqualitydealerinthismarket.2
