LiuzhouTezhongAutoPlant(Liute)INTERVIEWDATE:14March2000INTERVIEWERNAME:JaneXuIntervieweeNameMr.YuRenyi;ViceGeneralPlantManagerMr.TangYaming;SalesManagerCompanyandAddressNo.26ShewanRd.LiuzhouTelephone/Fax0-13707721955BackgroundLiutebecameasubsidaryofFAWin1994,annualproductioncapacityis10,000.1999productionvolumeis4,074;salesvolumeis4,068,salesreachedtoRMB400million,profitRMB15million.Operatingcapital:6millionTotalheadcount:495Liutemainlyproduces“GaiZhuangChe”and“BianXingChe”basedontheChangchunJiefangtruck,majorproductsis“ZiXieChe—1092,1111,1150,1170and“5PinChai”(totalproductionvolumereachedto2,600in1999)KeyIssuesProductionLiuteusestruckcomponents(exceptlargepartsliketruckcase)transportedfromChangchunandassembletheminLiuzhou.1800trucksareassembledaccordingtoclients’orderin1999,Liutenameditas“menuorder”service,allthecustomizedorderwillbefulfilledin7days(fromthetimeLiutereceivedclients’deposittothecustomizedtruckbeendeliveredtoclient)‘YellowCard’and‘GreenCard’operationAfterLiutereceivedacustomizedorder,itwillcheckwhethertheorderedtrucktypecouldbefoundininventoryorcouldbecoveredbythecurrentmanufacturingplan,ifthereisnoinventoryavailablebuttherehasthesametypetruckwhichiscurrentlyunderproduction,Liutewilldispatchagreencardtoworkshop,workshopwillputthegreencardonthattruckandspeedupeveryworkprocessforitIfthereisnoinventoryandmanufacturingplanforthetruck,Liutewilldispatchayellowcardindicatethecustomizedrequirementtocomponentdepartment,aftergettingallthepartsneededready,componentdepartmentwillsendthepartsandyellowcardtogethertoworkshopforassembly.Onseeingtheyellowcard,workshopwillaccelerateeveryprocessinproducingthetruckandsentittoinventoryassoonaspossibleNotes:Sometimethedeliverywillbedelayedby1to3daysduetothelackofpropercomponentLiuteaimtoexpandthe“menuorder”serviceto50%ofitstotalproductionvolumein20001¾oftheengineLiuteuseisfromXichai,other¼fromDachai.Mr.YuissatisfiedwithLiute’scooperationwithXichaibecauseofitsquickreaction.XichaiprovidecustomizedenginetoLiuteaccordingtoclient’srequestandtheaveragedevelopandproducecircleisonly2months.Note:AveragedevelopandproducecircleforFAWChangchunisatleast6to12monthsContainertruckhasabrightfuture,Liutewilltakeitasamajorproductin2000Sales&ServiceLiuqi’ssalesnetworkiscurrentlyseparatedfromFAW’s.Liuqi’ssalesvolumeisnotunderthetitleofFAWprovincialbranch’sannualsalesvolumeLiutehasaltogether200+dealersinChina,mainlyinYunan,GuizhouSichuanandotherprovincessouthofYangZiRiver,itwillexpanditsnetworktoShandong,Shanxi,HubeithisyearLiutestarttosubmitalltheprofittoFAWChangchunthisyearLiuqi’ssalesnetworkislike:PartyA:LiutePartyB:ExclusiveLiutedealerPartyC:In-exclusiveLiutedealersPartyBmanagenumbersofpartyC,PartyB’sannualperformancemeasurementisbasedonthetotalsalesvolumeofPartyC.PartyC’sperformanceisbasedonitsownsalesvolumeThereare6levelsalesfavoringpolicy:1.Ifthesalesvolumereaches25units,PartyB/CcouldgetRMB250pricedeductionpertruck2.Salesvolumereaches50units,PartyB/CcouldgetRMB500pricedeductionperunit……6.Salesvolumereaches150units,PartyB/CcouldgetRMB1,500pricedeductionperunit,ifthesalesvolumeexceeds150units,favoringpolicykeepthesameasdeductionRMB1,500perunitNote:AccordingtoMr.Tang,allabovesalespolicyisonlyfitforthehigh-priced“ZiXieChe”producedbyLiute,afterpricededuction,theannualpricepe...