HenanZhongyuanAutoTradingGroupINTERVIEWDATE:March3rd,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.ZhangJintianPositionGeneralManagerAssistant,SAWsideCompanyandAddressHenanZhongYuanAutoTradingGroup,Zhengzhou450000Telephone/Fax(0371)6510089BackgroundKeyIssuesBackground.HenanZhongyuanAutoTradingGroupisoriginatedfromKaiFengJidianSystem.ZhongyuanAutoTradingCo.isabig,non-exclusivedealerwhoownsdifferentsubsidiariessellingFAWandSAWtrucksrespectively.ThesubsidiarysellingSAWtrucks,namedHenanDongfengLianyingCo.,wasestablishedin1994,andrelocatedfromKaifengtoZhengzhouin1996.Totalregistercapitalisaround10MillionRMB.HenanDongfengLianyingCo.nowhas48salesmen(incl.6managers)and13repairmen.ItisabigDF"3in1"dealerwithservicestationandsparepartscentretogether.Lastyear,around3,300trucksweresoldinHenanDongfeng.Lighttrucks:300Mediumtrucks:2800-2900Heavytrucks:100Bestsellingtrucksare5TonCoalTransportationKing(EQ1094)and2TonKing(EQ-D1)Mr.ZhangthinksthatthebiggestadvantageofDFtrucksisitsCumminsengine.ComparedwithFAWDalianandWuxiengine,Cumminsengineuseslessfuel.AlsotheexternaldesignofDFisbetterlookingwithMitsubishiTech.BecauseofthegoodqualityofDFtrucks,morelargecustomerschooseDFratherthanFAW.LocalCorporateCustomersincludeLuoYangErYunCo.,HenanHeat-electricFactory,andCoalFleets.However,Still75%ofcustomersareindividual.HenanLianyingdoesnotsellto2ndlayerdealers.However,ithas17outlets/salesofficesineverykeycityinHenan.AsDFprovidesHenanLianyingwithlargeamountofturnovertrucks(100-300units),HenanLianyingdoesn'tneedtoorderdeliveriesfromDFbasein1Hubei.Asamethodoffavouringpolicy,DFdoesn'taskHenanLianyingtosubmit30%depositforturnovertrucks.Salesmenherearetrainedandtestedeverymonth.Therearethreelevelsofsalesmen:Junior,MiddleandSenior.Salesteamsaregroupedbyproduct.HenanLianyingprovides24-hourservice.KeyIssuesMr.ZhangissatisfiedwithDF'spricingpolicy.Accordingtohim,DFpaidalottostop"greychannels"fortrucks,andnowdealerscanmakereasonableprofitsfromDFtruckselling.Profitpertruck:2000-3000RMBRebatesystemofDFismoreflexiblecomparedwithFAW.SAW'srebatearedividedaccordingtosalesvolumeandtrucktypes:Below50units51-100units101-200units201aboveAveragerebateratioisaround1%.Mr.ZhangthinksFAWtrucksarequickertomarketdemands(e.g.,FAW's2tonkingisoneyearaheadofSAW's2tontrucks)Theso-called2-tontruckscanactuallybeovercapacityto10ton.FAWuses5tonchassisfor2tontrucks.However,asFAWhastoomanyplantsproducingsimilartrucks,it'sveryhardforFAWtocontrolitssaleschannel.2