FAWHunanTradingCompanyINTERVIEWDATE:5May2025INTERVIEWERNAME:JaneXuIntervieweeNameMr.JiangZongpinPositionGeneralManagerCompanyandAddressFAWHunanTradingCompanyTelephone/Fax0-13908487368ShortSummarySincethespecialgeographiclocation,HunanmarketismainlytakenawaybyDongFengproducts.FrequentchangeoftheFAW’sprovincialmanagerhascausedplace’sunhealthynetworkdevelopment,togetherwiththeirrationalrebatingsystem,allhasresultinthefadingsalesenthusiasmamonglocaldealersBackgroundFAWHunanTradingCompanyisasubsidiaryofHunanJiDianEquipmentCompany.LatterisnowthelargestAuto-dealerinHunanprovincewith40,000m2showroomspace,itleasetheplattoitssubsidiarieslikeFAWHunan,SVWHunan,etc.FAWHunanTradingCompanyiscurrentlythejointventureofHunanJiDian(70%)andFAWSalesCompany(30%)FAWHunansellalltheFAWbrand,currentlythereisnowell-designedshow-roomforJieFangTruck(BigdifferencebetweenotherFAWproductswhichareplacedinwell-decoratedhall).Mr.Jiangsaidhewillbuiltaopenshow-roomforJieFangataround2000m2Thereare12peopleinthetrucksalesdepartmentand13peopleinpassengercardepartment,financialandhumanresourcesfunctionsaresharedbetweenthetwoHunanisthebackyardofDongFengtruck,lastyearthesalesvolumeofDongFengtruckisaround4,000whileJieFangisonly1,060unit.BestsoldDongFengtrucktypeare:“FanDouChe”;mainlyusedforroadconstructionandDongTingHuTreatmentProjectBestsoldJieFangtrucksaresmalltypestruckwhichcouldfitforthelocalenvironment(2TonWang,5TonWang,PinTouChe),mainlyusedfortransportation(Pig,localaquaticproducts,wood,etc.).chassisarecurrentlynotpopularinHunanmarket.KeyissuesHunanTradingsoldalltheFAWbrand,JieFangonlycountsaminorpartofthewholebusiness(salesvolumeofJettain1999is1,400,JieFangis390)Keyreasons:11.Lowsalesprofitability:JieFang’s1,000profitperunitismuchlowerthanthatofJettaandHongqi’s2.IrrationalRebatingpolicyJettaRebatingpolicyin1999—3.6%to4.8%ofsalespriceTruckRebatingpolicyin1999—0.7%to1.2%ofAnetworkpricewiththerequirementoftotalsalesreachRMB4,000,000thatyearSincethepolicyisadaptedtoallthedealers,thosewhoselllargetruckwithrelativelyhigherunitprice(likethedealerinNorth-east)couldeasilyachievethethresholdbysellingsamevolume,FAWHunanTradingfeelunfairoftherebatingsystemwhichwasbuildonsalesrevenueratherthanthevolume.Mr.JiangsuggestFAWSalesCompanycouldfigureoutamorereasonablerebatingsystemMajorCostBreakdown1999(Truckpartonly)PlatLeasing:240KSalary:350KCapitaloccupationandinterest:35KAdvertisement:15KTotalCost:RMB640KMajortruckcustomers/end-users2/3ofthetotalsalesgoestoindividualsin400-500km2aroundarea,mainlyusageofthetruckistransportation1/3ofthetotalsalesgoesto2ndtierdealers(13)attachedtoFAWHunanTradingCompanyPriorityofthedecisioncriteriaforlocalend-usersinpurchasingprocess:1)Price;2)Quality;3)Service;4)ComponentMajorreasonsforend-userchoosingJieFangtruckinHunanareit’shighqualityandwelldesigneddrivercab(largerandcomfortablethanDFM’s,especiallyin“PinTouChe”)Attitudetoward“3in1”Mr.Jiangthinktheprofitabilityoftruck“3in1”isnotattractiveastothosepassengercar’s.HeiscurrentlybuildingaserviceandcomponentcenterforJettaandHongqibesidetheplacewherethecarsaresold,totalinvestmentis5million(excludetheplat),amongwhicharound1.5millionareequipmentinvestment(reparationequipmentofthetwoproductsareprettyclose)2ComplaintsToomanyun-scaleddealersintheprovincehasseverelyhurttheoverallprofitabilityofJieFangtruck,wishFAWSalesCompanycouldrechecktheexistingdealernetworkinHunanandreorganizeitassoonaspossibleFAWalwayschangeditsmanagerofprovincialcompany(FAWchangethemanagerofChangshaagaintwoweeksago,nowthemanagerisformerthemanagerofHaerbing),thedirectresultisnoneofthemanagerreallycarethelocallong-terminterests,thishascausedhugelossforFAWtruckbusinessinHunanMr.Jiangsaiditshardtopredictwhatthenextordercouldbelike,thereisnospecialfunctioninhissalesteamtopredictand,thedemandfromtheindividualend-userisunpredictableatallThereisabranchofBankofAgricultureinthewholesalesbuildingespeciallyworksforthecarfinancing,amongthe390trucksoldlastyear,only15truckdealsaredonethroughthefinancing(30%firstpaymentandpaybackother70%infollowing5years),mostoftheend-usersarereluctantofdoingsosincethewholeprocessisovercomplex3