ShandongLinyiAutoTradingCo.LtdINTERVIEWDATE:Feb29th,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.MaRui-xiangPositionViceGeneralManagerCompanyandAddressShandongLinyiAutoTradingCo.Ltd.No.190LinXiYiRd.,Linyi276001Telephone/Fax(0539)8161564BackgroundKeyProcessesKeyIssuesConclusionsBackground.Mr.MaestablishedLinyiAutoTradingCo.in1998.CurrentlyLinyiownsaround230employees.Grossprofitfromtrucksalesreached2.6MillionRMBlastyear.Besidestruckselling,servicing,autoleasingandinformationproviding,Linyialsooffersitsprivatecustomerwithtruckinstalment,whichissupportedbylocalbanksinLinyi.AlmostallofLinyi'scustomersareprivatefleetrunners,andthoseprivaterunnersusuallyreplacetheirtrucksevery2yearsduetotheseveredamagecausedbyover-capacitytransportation.KeyprocessesCustomerinitiationForbigcustomers,Linyisendsoutsalesmentovisitthemregularly.Forsmallcustomers,Linyiuseadvertisementtoattractcustomers.InformationnetworkedLinyiinstalledSAIC'ssoftwareandisabletocheckhisinventory/salesconditionofSantanaonline.Linyisetupaoff-linemarketinformationnetworkandcollect/updatemarketinformationregularly.Amongallthetruckssoldin1999,2/3ofthetrucksaresoldthroughinstalmentmethod.Withlocalbank'sassistance,Linyiprovideamaximum3-yearinstalmentbusinessfortrucksales.AsagreedbyFAW,a1.5%flexibilityonex-factorypriceisallowedforinstalmenttrucks.1Besides,Linyialsogetsprofitfrominterestincomeinitsinstalmentbusiness.KeyIssuesPricewaristhefirstconcernofMr.Ma.From1998to1999,Linyi'stotalsalesincrease60%whileprofitonlyincreased30%.Mr.MaisverydiscontentwithFAWShandongBranch,whosetsupanew1stlayerdealerinLinyiCityin2000.Hisnewcompetitorlocatesjust0.5kmawayfromLinyiAutoTradingCo.Mr.Madoesn'tthinkthedealernetworklocationisrationalandfairtohimandworriedabouthissalesin2000Mr.MaclaimedtoconsideracooperationwithSAWifFAWcannotprotecthisbenefit.Accordingtohim,SAWhasmoreflexiblepricingpolicyandsupporting:e.g.,helptoget4-tonlicensefora8-tontruck.ConclusionLinyiAutoTradingCo.isatypicalprivate-owneddealer.Asit'slocatedinruralarea,Linyi'smainsourceofincomeistrucksales.Mr.MaisworriedaboutthepricewarandhopeFAWcanrationalisethedealernetworkandeliminatehissmall,annoyingcompetitors.2