ZhejiangYiqiAutoSales&ServicesCo.Ltd.INTERVIEWDATE:March2nd,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.ZhangZhentingPositionViceGeneralManagerCompanyandAddressZhejiangYiqiAutoSales&ServicesCo.No.301DaiguanRd.,Hangzhou310015Telephone/Fax(0571)8010213BackgroundKeyIssuesBackground.ZhejiangYiqiisestablishedinNov.1997.TotalinvestmentofZhejiangYiqiis3MillionRMB,FAWTradingCo.invested10%andKangQiaoGroup,aprivateruncompany,investedtherest90%.ZhejiangYiqibuiltanewFAWdemonstrationroominMarchlastyear.Italsoownsoneservicestation,butthisservicestationisnotarecognisedFAWtruckservicestation.ZhejiangYiqiisplanningtobuildatruckservicestation.Mr.Zhangestimatedaninvestmentof2.5MillionRMBincludingland,plantandequipment.ThereisaMiddlewarehouseinHangzhou.UsuallyMr.Zhangwillordertrucksfromthiswarehouse.ZhejiangYiqi'sinventoryisaround1timepermonth.Thereismorethan50employeesinthiscompany,18ofthemaresalesmen.Newsalesmenarerecruitedfromcolleagueandsalaryinprobationaryperiodis600RMB.After6monthsbasesalaryareadjustedto800RMBCommissionisgivenat80RMBpertrucksold.Abovethebaseprice,ifasalesmancanmake2000RMBmargin,he'llhave200RMB;ifhecanmake5000RMB,thenhe'llhaveadditional600RMB.ZhejiangYiqiallocatedthe4thfloorofthebuildingasZhejiangFAWBranch'soffices.AccordingtoMr.Zhang,FAWtrucks'sellingisincreasingtheseyears.Before1998,FAWtrucks'marketshareisonlyaround10-20%.Now,forsomebestsellingproducts,marketsharehasreached60-70%.1KeyIssuesIrrationalnetworkconstructionimpactedMr.Zhang'ssales.Thereare6FAW1stlayerdealersinZhejiang,with4ofthemlocatedinHangzhou.Theretendstobepricecompetitionbetweenthose4dealerssincethismarketistoosmall.Dongfengonlyassignedtwobigdealershere,andbothdealerscanhaveitsown2ndlayerdealers.Mr.Zhangthinksitasabettermethodtocontrolthetruckprices.FAWrebatesystemisalsounattractive.FAWdeterminestherebateonlybylargeamountofsales.AsZhejiangisacomparativelysmallmarket,ZhejiangYiqiisveryhardtoreachtheminimallineforrebate.Thushegetnothinginreturn.FAW'srealisationofrebateistooslow.Usuallyitwilltake6monthsfordealerstogetpaid.Dongfenggiverebateatdifferentlevelfordifferentsales.Evenifonlyonetruckissold,dealerwillgetpaidimmediately.AccordingtoMr.Zhang,DFdealerscangetrebateashighas4000-5000RMBperunit.ThenearbyDFSalesCosoldout3000DFtruckswhileMr.Zhangonlysold200-300FAWtrucks.TherearenospecifictrainingprogramsdesignedfortrucksellingandproductfeaturesfromFAWTradingCo.TurnovertrucksassignedforZhejiangYiqiisonly4-5units,whichisnotasfavourableasDFalso.2
