An Interview with YU Chunying from Zhongtong
2009-05-04 Source：english.chinabuses.com
Summarize：Note: YU Chunying is Deputy General Manager and Secretary of the Board of Directors of Zhongtong Bus Holding Co., Ltd. (hereinafter referred as Zhongtong for short)
Zhongtong has been working hard t ...
Note: YU Chunying is Deputy General Manager and Secretary of the Board of Directors of Zhongtong Bus Holding Co., Ltd. (hereinafter referred as Zhongtong for short)
Zhongtong has been working hard to beef up its exports and has made remarkable achievements in this area in recent years. Starting its export business in 2003, the company witnessed a continued rise in its export volume, which accounted for one third of its total sales volume in 2008. Some high officials from Zhongtong also indicated that the company aims to up its export income to 50% of its total income by 2010.
The unexpected financial tsunami has almost reshaped the overseas market in a short period of time. What will Zhongtong do to walk well on its internationalization road? Recently, YU Chunying, Deputy General Manager and Secretary of the Board of Directors of Zhongtong took an interview with the media.
Journalist: in the first quarter, the domestic coach market shrank by one third. Could you tell us how the overseas market was faring?
YU: the overseas coach market was not faring well, either. The export volume and value were down by 72% and 15.8% respectively. The scale of the contraction is definitely out of our expectation. In fact, the financial crisis has affected our enterprise in two aspects. One is that the recession of the real economy pushed down the market demand. The other is the fluctuations of the exchange rates of many foreign currencies. While the currencies of most countries were depreciating, some countries were appreciating dramatically. For example, South Korean Won was devalued by 30%. For this reason, Daewoo and Hyundai from ROK once squeezed out of China are making a grand comeback. In the meantime, the appreciation of Chinese yuan has lifted up the prices of the domestic products and undermined their competitiveness in the overseas market. As the price was up by over 30% to 50%, the international market can hardly take the much increased price.
Journalist: given the poor start in export business this year, what’s your expectation for the whole year in terms of export? What measures Zhongtong have taken to combat the declining demand?
YU: the overall market environment is indeed not quite encouraging. However, there are still some bright spots. Under the current circumstances, we did not scale down our export objective. Even though our sales volume was not quite satisfying in the first quarter, we will redouble our efforts in the coming months. Some adjustments have already been made in terms of market strategies, distributions and development. To be specific, we will focus ourselves in the following areas. First, we will continue to strengthen our overseas marketing and post-sale service networks. Second, we will explore new ways of financing. In the past the payments were only settled in TT and L/C on account of risk control. This year, however, we will take full advantage of the government’s favorable policies and explore ways in international financing. Last, as the demand for high-end tourist coaches and long-distance coaches made a nosedive this year, we believe that the bus export is likely to rise slightly. So we will direct our efforts to the export of buses. In the meantime, the adjustment of the export of coach types will probably bring some changes to our ways of doing export business. Take Egypt for example, the country boasts very rich tourism resources. In order to boost its tourism industry, the country imposes 5% tariffs on imported high-end tourist coaches. However, the tariff rate on other types of vehicles is as high as 40%. Given this, we already decided to seek cooperation with the local businesses instead of direct sales in that country. Besides, we will make all efforts to explore new markets to minimize our export risks.
Compared with the previous years, I should say this year provides us a golden opportunity to better standardize our export business and solidify our overseas market.
Journalist: Russia has set up more barriers for imported vehicles in an attempt to protect its domestic auto industry. Do you think such protectionistic moves will be modeled by other countries or regions around the world? Is it feasible right now to build factories in foreign countries?
YU: internationalization has now become a buzzword across the industry. It not only refers to the export of products, but also the export of technologies and management, overseas investments, establishment of foreign branches and brand export, etc. For example, Germany-based Volkswagen has already realized total localization in China. Apart from buying raw materials and employing local people in China, the company also sells its products in China. The internationalization of the company is represented by the international influence of its brand.
Currently, the internationalization of China’s bus & coach industry is still at its preliminary stage given that it is chiefly involved in selling bus & coach products. The tightening policies imposed on imported complete vehicles by a rising number of countries will sure force Chinese bus & coach builders to invest overseas in the future.
However, the way of establishing joint ventures will surely be fraught with twists and turns. For instance, there is no successful case for setting up factories in Russia for any bus & coach builders from China. Some internationally famed brands like Scania, Volve, and Man may probably afford to lose money for two to three years given the strong financial backup from their parent company. However, enterprises from China do not have such powerful financial teeth at present.
Journalist: it is reported that Liaoning Government will provide some subsidies to those enterprises which make purchases of overseas R&D centers. A handful of coach builders have already made their forays in the overseas market. Does Zhongtong have similar plans?
YU: according to the varied characteristics of different regional markets, the overseas R&D centers can hardly help Chinese enterprises enhance their technological level substantially. It only works for those brands which have a big market share in the target market. In my opinion, the acquisition of overseas R&D centers has been somewhat exaggerated by the media.
However, we welcome well talented people from all around the globe. Right now our company as most of our domestic counterparts, suffers a lack of talents who can execute our development strategies.
Journalist: the export volume has accounted for one third of Zhongtong’s total sales volume. While your company’s products have already made their presence in the overseas markets, how’s your post-service network?
YU: we are now backed up by the service networks of our key parts & accessories suppliers. For example, our coaches are generally equipped with engines manufactured by Yuchai or Weichai, both of which have already set up their offices and service networks abroad.
In addition, we are now actively involved in building our own service networks. While choosing our overseas dealers, we attach great importance to their post-sale service capabilities. We also send our employees to provide training programs at our overseas service stations and dispatch some technicians to do the repair work if needed. In addition, we have set up our parts inventories at our major export markets to handle the emergency needs.
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