ZhengzhouServiceStationINTERVIEWDATE:March4th,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.ShiGangPositionDirectorCompanyandAddressZhengzhouServiceStation,Qilihe,HangHaiEastRd.,Zhengzhou450005Telephone/Fax(0371)6881608BackgroundKeyProcessesKeyIssuesConclusionsBackgroundThereare20servicestationsinHenan,butonlyoneservicestationinZhengzhou.Amongthem,13servicestationshavegetpermissionforwholetrucksales.ZhengzhouServiceStationsignedagreementwithFAWinMay1989.TheservicestationisoriginatedfromtherepairworkshopoflocalMassTransportationCo.Thereare36permanentemployeesand10temporaryworkersinthiscompany.13employeesworkforservicingwhileothersworkforsparepartssales.AccordingtoFAW'sServiceStationstandard,Zhenghzhouservicestationinvested3MillionRMBtorelocateitselfin1999.Thenewsitewillbeputintooperationin2000.However,thereisnoplanforasparepartwarehouseinthissite.ThoughZhengzhouServiceStationsgetlicensefornewtrucksales,itseldomsellstrucks,fortherearebigdealersinZhengzhoumarket.Lastyearstotalincomeisaround1.8MillionRMB,50%fromspareparts,50%fromservicing.KeyprocessesTraining:MostofthetechniciansarenotwelltrainedfromFAW.Mr.ShiiscomplainingthatFAWdidn'tprovidethemwithenoughknowledgeofnewtruckproducts.KeyIssuesInventoryManagementCurrenttotalinventoryvalueis1.4MillionRMB,whichisactuallydepreciatedinto1.1MillionRMBduetothedamageinthestockedparts.1Atleast50%oftheinventoryisrecognisedasobsolescence.About500,000RMB'sinventoryis141GasolineEnginepartsbutnooneneedsgasolineenginepartsnowadays.Methodsforclearingthis0.5MillionRMBinventoryhavebeenthoughtof,butsincediscountwillcauseredfiguresinthatyear'sincomestatements,ZhengzhouServiceStationisnotwillingtoexposethisproblemtoitsparentcompany,ZhengzhouMassTransportationCo.CashManagementZhengzhouservicestationisfacingdifficultiesinworkingcapitalturnover.Mr.ShiclaimedthatZhengzhou'sworkingcapitalisonlyaroundseveraltenthsofthousandsRMB.Difficultyincashmanagementismainlybecauseof:FAW'slatenessinpaywarrantyserviceexpensestoZhengzhou.CurrentlyFAWTradingCo.stillowesthem300,000RMB.TheyareallowedtogetpartsfromTianjinsparepartscentreinstead,buttheycannotgetenoughpartsorrightpartsfromTianjin.Usuallyonly60%oftheexpensecanbecoveredinthisway.OtherservicestationsinHenanoweZhengzhouaround100,000RMB.TheseservicestationspurchasedpartsfromZhengzhou,butareunabletopayZhengzhounowfortheirbusinessperformanceispoor.CompetitionwithsmallpartsproducersMr.ShithinksthatFAWTianjinsparepartscentreisnotanidealsourceofpartsforthem,forthepartsarenotcompetitivetothatofsmallpartsproducers.Asthosepartsarelowintech.content,smallpartsproducerssometimecanprovidepartswithsimilarqualitybutfarlowerprice.Currentlyonly10%ofpartsarepurchasedfromFAWSparePartsCentres.Inordertocompetewithsmallpartsproducers,ZhengzhouServiceStationisthinkingofbuildingtheirownpartscentresandsourceitspartsfromFAWpartssuppliersdirectly.However,wayofcorporationwiththosesuppliersstillneedstobediscussed.OtherFuturecompetitionwith4in1.Mr.Shidoesthinkthat4in1dealerswillimpacttheirbusinessinthefuture.However,asheisnotinterestedingettingprofitfromservicing,butfrompartssupplying,hedoesn'tthinkitasaveryimportantissuetothem.Alsohethinkthateven4in1dealerswillneedcertaintimeingettingfamiliarwithserviceindustry,andthereisalsorisksforthosedealers.ConclusionZhengzhouServiceStationisslowindevelopmentandsmallinscale.ManagersofZhengzhouServiceStationdon'tthinktruckserviceasanimportantsourceofincome.ThosemanagersneedplentyofeducationtochangetheirSOEmentality.2