Dealer_Zhejiang Lianhe _0302.docVIP免费

FAWZhejiangLianheCo.INTERVIEWDATE:March2nd,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.FangMingPositionGeneralManagerCompanyandAddressFAWZhejiangLianheCo.No.149ShenbanRd.,Hangzhou310015Telephone/Fax(0571)8283798BackgroundKeyIssuesBackground.ZhejiangLianheistheoneofthehonoureddealersinFAWsystem.ZhejiangLianheisonesubsidiaryofYuantonggroup,whichoriginatesfromJidiansystemaswell.YuantongalsoownsanotherSAWsubsidiary.RegistercapitalofZhejiangLianheisaround5MillionRMB.Thereare4salesmenandonesupportingstaffworkingforFAWtrucksales.Lastyear,Yuantongsoldmorethan1000FAWtrucksand691Dongfengtrucks.AmongtheFAWtrucks,576unitsof2tonkingaresold(thistruckisfamousforitsover-capacityfeature).Inadditiontothe700DFtrucks,another1000trucksfromSAWLiuzhouaresold(whichisalsofamousinover-capacity).Deliverylead-timeofFAWtrucksisaround7-10days.Transportationexpenseis2691+300RMBpertruck.ZhejiangLianhedoesnothaveservicestationscurrentlyanddoesnotexpressanyindicationforbuildingoneinthefuture.Mr.Fangthinksthattheinvestmentforaservicestationmightbehardtogetreturnedinafewyears.Customerportforliois30%corporateand70%individual.AccordingtoMr.Fang,FAWtruckssalesarebetterthanSAWinrecentyears.In1995,marketshareofFAWisonlyaround30%,butnow,incertainarea,FAWhas50%marketshare.InLishuiandQuzhouCity,themarketshareofFAWtrucksisashighas90%.KeyIssuesProfitabilityoftrucksisunsatisfactory.Netprofitoftrucksisalmostzerowhilecarsaleshaveaprofitratioof1%.WhileMr.FangadmitsthegoodbrandimageofFAW,hethinksFAWshouldbemorereactivetomarketdemand.HementionedthatLiuzhouAutousesonlyoneweektoadaptits2-tontrucksandputonmarket.ThattruckwonLiuzhouahugesalesreturn.1Mr.FangalsothinksFAWshouldregulatethepricingbystopthegreychannelcausedby"internalsettlement",or"truckfordebt".AsFAWhasencounteredsomefinancialdifficultyin1997,whenFAW'ssuppliersaskFAWtopayfortheparts,FAWgivethemtrucksinverylowpriceinsteadofcash.Totally2BillionRMBaresettledinthisway.Asthosesupplierswanttocashoutthosetrucksassoonaspossible,theysellthemonmarketatverylowprice.SometimethispricewillbeseveralthousandRMBlowerthanAnetpricetodealers,andthuspricewarislaunched.Mr.Fangsaidthatit'sunderstandableofFAW'sdifficulty,butsomesolutioncanbereachedinsteadofcuttingdealers'benefit.Hesuggests:FAWcansellallthosetrucksfordebttooneappointedlargedealerateachregion.ThedealergivescashtoFAW'ssupplierinstead.Asdealersareprofitdriven,he'llsellthosetrucksatanacceptableprice.Asthedealermightgetmoregrossmargininthosetrucks,hecansharethosebenefitswithFAW,e.g.,giveuprebate,etc.Dealernetworksetupisirrational.ToomanydealersarecompetinginHangzhoumarket.Mr.FangthinksthatFAWneedstorationaliseitassoonaspossible.2