FAWJinanNo.1ServiceStationINTERVIEWDATE:Feb29th,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.ZhouYangshenPositionDirectorCompanyandAddressFAWJinanNo.1ServiceStationNo.194DaodeNorthRd.,Jinan250022Telephone/Fax(0531)7955345BackgroundKeyProcessesKeyIssuesConclusionsBackgroundNo.1ServiceStationisstate-ownedandwassetupinthebeginningof90's.Ithasmorethan280employeeswhileonly80areworkingforFAW.No.1evenownsaprofessionalschool.CurrentlyNo.1isunderprocessofrestructuring.Mr.Zhou,whoisthedirectorofNo.1ServiceStation,isplanningtobuyittogetherwithsomeothermanagers.Besidesserviceandsparepartsselling,No.1alsosellsnewtrucks.Salesperformancefor98and99is9899Newtrucksales(Volume)N/A809Sparepartssales(Value)12Million1000MillionWithinwarrantyservice(unit)N/A809Outofwarrantyservice(unit)48002100Withinwarrantyservice(Value)2MillionRMB1.5MillionRMBOutofwarrantyservice(Value)5MillionRMB4MillionRMBThesharpdecreaseofsalesisdueto:Competitionfromotherprivate-runservicestations,esp.Lubin.No.1moveditsservicebasetoanewlocationin1999.CustomersarenotfamiliarwithNo.1'sservicebase.Ownershipchange/futureinvestmentMr.Zhouisplanningtoinvest10Millionforanewmaintenanceplant/servicebase.1TheplanwillonlybeactivatedaftertheapprovalofprivatizationofNo.1ServiceStation.70%ofservicecustomersareprivatetruckowners.KeyprocessesSparepartsinventoryvalueisaround4MillionRMBwithmorethan1000SKU.AsFAWupdatesitsproducttypes,considerablepartofthisinventoryturnstobeobsolescence.No.1hopestogetridofthoseobsolescenceinfollowingways:ReturntoFAWasrepaymentofdebt.FAWthencancoordinateandsendthosepartstootherservicestationsthatneedthoseparts.Writeoffandsplitfromthenew,privateownedcompanyafterNo.1'srestructure.ServiceincomewithinwarrantyisfromFAW.FAWsetsupworkstandardforeachkindofservice.No.1servicesthecustomerandfillinthewarrantycompensationform.TheformaresenttoFAWandsettledregularly.ServiceexpenseWithinwarranty:10RMBperhour+17%tax=11.7perhourOutofwarranty:Lowerby10-15%percent.Around8-9RMB/hour.KeyIssuesCurrentpartspriceisnotcompetitiveatall.Ruralpartsproducerscanofferpartswithaprice40%-50%lower.No.1thinksthatatleast20%price-cutshouldbemadesoastobecompetitivetothosesmallpartsproducers.Fornewtrucksales,althoughit’sencouragedbyFAW,thereisnofavouringpolicygiventoservicestations.Noturnovertrucksarelocatedinservicestation.Thus,whencustomerscomeandwanttobuytrucksimmediately,theycannotprovidetrucksrightaway.ConclusionsAstheearliestFAWstate-ownedservicestationinJinan,No.1Servicebearsheavyfinancialburdens.Moreover,managersofNo.1onlyhopeFAWtogivemoreandmorefavourstotheminsteadofsolvingproblemsthemselves.2