Sales, ser­vice, lo­cal­iza­tion — the mantra for suc­cess

Shaanxi Au­to­mo­bile Hold­ing Group is eye­ing one-third of its ve­hi­cle sales from over­seas mar­kets

China Daily (USA) - - BUSINESS - By DUJUAN in Xi’an dujuan@chi­nadaily.com.cn

Shaanxi Au­to­mo­bile Hold­ing Group Co Ltd, the only heavy truck pro­ducer in west­ern China, has been ex­pand­ing its over­seas business on the back of its grow­ing mar­ket share in the do­mes­tic mar­ket.

As the coun­try’s Belt and Road Ini­tia­tive brings in­creas­ing op­por­tu­ni­ties over­seas, the com­pany, which is also called Shaanqi Hold­ing, will strengthen its sales and ser­vice net­works and im­ple­ment a lo­cal­iza­tion strat­egy to in­crease its mar­ket.

The com­pany sold 8,000 au­to­mo­biles, or around 10 per­cent of its to­tal sales, in over­seas mar­kets in 2015.

“Our tar­get is to raise the share of our over­seas mar­ket sales to one-third of the com­pany’s over­all sales by the end of 2020. Mean­while, one-third of the over­seas sales should be lo­cally pro­duced by then,” said Wang Yan­hong, gen­eral man­ager of Shaan­qiHold­ing.

He said the qual­ity of Chi­na­made heavy trucks has im­proved a lot in the past decade and many ex­port mod­els are wel­comed by for­eign clients in South­east Asia and Africa.

“Many of our prod­ucts have bet­ter per­for­mance than their peer group ve­hi­cles,” he said.

The com­pany has so far ex­ported its trucks to more than 90 coun­tries and re­gions. It owns three sub­sidiaries, 37 of­fices, 24 “4S” stores, 70 ini­tial deal­ers and 310 ser­vice sta­tions in over­seas mar­kets.

In some coun­tries like Ethiopia, Iran, South Africa, Malaysia and Nige­ria, the com­pany has it­sow­nassem­bly units, which has greatly in­creased its lo­cal­iza­tion level.

Tian Chao, gen­eral man­ager of Shaanxi Heavy Duty Au­to­mo­bile Im­port & Ex­port Co Ltd, a sub­sidiary of Shaanqi Hold­ing, said the per­for­mance in the last year was not sat­is­fy­ing in his view.

“Our ex­ports were af­fected by the price drop in crude oil last year. Rus­sia, the big en­ergy gi­ant that used to be our best for­eign mar­ket, re­duced its or­ders due to fall­ing oil prices,” he said.

The de­val­u­a­tion of the rou­ble has wors­ened the ex­port scene.

How­ever, Tian said the crude price will not al­ways stay low and the com­pany has been ac­tively ex­plor­ing new for­eign mar­kets.

“Viet­nam, the Philippines, Pak­istan and Africa are all po­ten­tial mar­kets for us,” he said. “The com­pany will in­crease ef­forts on brand­ing. It’s very im­por­tant. We en­tered the over­seas mar­kets 10 years ago, which was not as early as our Euro­pean com­peti­tors. Thus, some for­eign buy­ers still pre­fer to choose the sec­ond­hand Euro­pean prod­ucts than Chi­nese ones. The ma­jor rea­son is that we don’t have strong brand recog­ni­tion.” He said the com­pany will im­prove its after-sales ser­vice by in­creas­ing the num­ber of ser­vice agents abroad.

Another fo­cus area would be elec­tric ve­hi­cles or EVs.

Boosted by the Chi­nese gov­ern­ment’s sup­port­ive poli­cies for the new en­ergy ve­hi­cle or NEV sec­tor and mea­sures to re­duce car­bon emis­sions, the EV in­dus­try has achieved rapid growth in the past two years.

Ac­cord­ing to the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers, China pro­duced 70,552 EVs in the first four months, up 165.3 per­cent year-on-year. It sold 66,444 EVs dur­ing the same pe­riod, up 171.2 per­cent year-on-year.

The com­pany started EV re­search and de­vel­op­ment in 1999 when it de­signed and pro­duced the first elec­tric trac­tor which was used in Shang­hai port.

Wang, gen­eral man­ager of Shaanqi, said the com­pany will in­vest 50 to 100 mil­lion yuan in re­search and de­vel­op­ment on elec­tric au­to­mo­biles this year and in­crease the in­vest­ment ac­cord­ingly in fu­ture.

The com­pany pro­duced and sold 900 EVs in 2015. Wang ex­pects the com­pany will pro­duce and sell 2,000 EVs this year.

“The bat­tery tech­nol­ogy is the core for elec­tronic au­to­mo­biles. The gap be­tween China and Europe is nar­row­ing,” Wang said.

After rapid growth in pre­vi­ous years, China’s heavy truck man­u­fac­tur­ing in­dus­try is rid­dled with over­ca­pac­ity now: pro­duc­tion ca­pac­ity is more than 2 mil­lion units a year while de­mand is less than one quar­ter of it.

In 2015, China sold 540,000 heavy trucks. Wang ex­pects sales will grow to around 600,000 units this year.

So, the com­pany is look­ing at niche mar­kets. It has de­cided to de­velop new mod­els and of­fer bet­ter ser­vice, par­tic­u­larly for the boom­ing lo­gis­tics in­dus­try.

In the Jan­uary-May pe­riod, the com­pany’s sales of heavy trucks to the lo­gis­tics com­pa­nies rose by 50 per­cent yearon-year.

The com­pany plans to pro­duce and sell 100,000 au­to­mo­biles this year, which, if achieved, would en­sure 30 per­cent year-on-year growth.

The num­ber of coun­tries and re­gions to which Shaanxi Au­to­mo­bile Hold­ing Group Co Ltd has ex­ported its heavy-duty trucks.

WEI YONGXIAN / FOR CHINA DAILY

A woman works on a heavy-duty truck pro­duc­tion line of the Shaanxi Au­to­mo­bile Hold­ing Group Co Ltd in Xi'an, Shaanxi prov­ince.

PRO­VIDED TO CHINA DAILY

Work­ers check heavy-duty trucks in a fac­tory of Shaanxi Au­to­mo­bile Hold­ing Group Co Ltd in Xi'an, Shaanxi prov­ince.

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