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Foton automobile plant in Mexico first step in the internationalization of the Road

Tension in the deployment of large shareholders, the acquisition Beijing Auto Group Saab, the Foton was quietly beginning their overseas strategy. As Foton Automobile Co., Ltd. is responsible for overseas business strategy director, said Shen Yang, the current trend is different, “(They) are trying to take over someone else’s brand, we want to introduce our products to.”

According to the plan, starting in 2010, Foton will expand overseas KD (knockdown, spare parts assembled) the number of partners, the business model from the original vehicle exports to the local plant. The first step is to partner KD 2010 from the original 4 to 15, KD ways to raise the sales contribution of more than 30%. The second step, the next two years, set up overseas after-sales service system with a wholly-owned or joint venture.

Mexico is the sole point of one of the pilot plant. Foton plans in India, Brazil, Thailand, Russia to build four wholly owned factories. “We want to change the past, extensive export enterprises in China car model, the project made great concern to the Mexican market after-sales service.” Foton says Vice President Ocean directors.

Over the past few years, Chinese enterprises overseas vehicle export, into the “opportunism” of the cycle, where making money on where to go, no unified planning and long-term plan. Result, many companies continue to conquer new markets, they continue to lose market. Foton also had a similar experience. Now, vehicle exports from the early to look for KD partners, and then to the local establishment of wholly-owned, China’s largest commercial vehicle of this company is exploring a new road to war. Dong Marine said, “This is a future trend.”.

“Engine” Wang Jinyu

Foton “sea” strategy of an active promoter is 48-year-old founder Wang Jinyu. Internally, the “sea” operation is not without opposition. But Wang Jinyu the overseas business as Foton an important part of the next big, it is his instincts as an entrepreneur, is also a major shareholder with the game for many years between the Beijing Automotive Group, under a choice.

Who are familiar with Wang Jinyu, said he was a real entrepreneur. Over the past 10 years, he will Shandong Foton agricultural vehicles from a company to become the largest commercial vehicle sales in China, and Beijing Automotive Group initiative attributed. Currently, BAIC Foton Group has 37.71% stake, as the first major shareholders.

While holding the right to change hands, but Wang Jinyu still firmly control the company’s business ownership. A widely circulated in the industry story of Foton’s board of directors meeting is finished, when he was concurrently chairman of BAIC Foton Group chairman Anqing Heng only received a phone call, that the meeting has ended.

Although Xu and Anqing Heng Yi’s successor is more strong, but BAIC Foton Group and still keep my distance. Foton an insider revealed that very few people Fukuda said he is Beijing Auto Group.

Wang Jinyu lung power to master the right to speak from the sales. 2009 Beijing Auto Group completed the sales of 1.21 million, of which 50% of the contribution by the Foton. To maintain the delicate power balance, Wang Jinyu need to constantly open up room for growth. As early as 1999, he proposed a “new three-step” strategy, hoping to 2006, system integration into the world automobile industry, and foreign famous automobiles and auto parts companies formed a strategic partnership. Since then, Foton is not only formed a joint venture with Cummins Engine Company, and plans to invest 6.35 billion yuan, a joint venture with Germany’s Daimler Group company, to jointly develop the international market.

In explaining why Foton “going out”, the director of marine said, first, the domestic market saturation, growth is limited; Second, the actual demand of foreign markets. And passenger cars different from driving commercial investment, closely linked with economic cycles. Foton appears in per capita GDP below 10 thousand U.S. dollars in developing countries, are faced with infrastructure investment growth.

Match with the international strategy, Foton has also developed a corresponding program to attract talent. Including vice president of Dong Ocean Foton, Wu Xuebin Foton Research Institute have joined, including a group of professionals. Currently, Foton has recruited “overseas experts” as more than 70 people, including 40 with at least ten years experience working overseas, who have become Foton backbone to develop overseas markets. The recruitment of all these people in person interview by Wang Jinyu.

Russian lessons

The second half of last year, sales of Foton’s largest commercial vehicles on to the top 20 countries and regions, as the goal, set up 20 project teams, by the 20 director-level key component, studies of local market opportunities, cost structure and government relations, legal environment, and to choose the best investment direction.

Appears in Foton, established in the local assembly plant will be a future trend. “Within ten years, including Fukuda overseas Chinese enterprises, including the main advantage is cost and price advantage. We will export the last parts, parts procurement in China to complete, in the local assembly, so that you can take advantage of low cost . “Shen Yang said.

The reason from the vehicle exports to build factories, enterprises and Chinese cars in Russia has much to collective defeat. As early as 2005, have included the Great Wall Automobile, Yutong Bus (15.39, -0.02, -0.13%), including many Chinese enterprises to go abroad car. Chinese commercial enterprises with independent intellectual property rights as in “going out” process is not subject to the foreign joint venture partner. The commercial nature of the means of production, but also makes consumers pay more attention to the price of developing countries, rather than the product of comfort. Therefore, the Chinese products in developing countries have a higher appeal, Russia, Southeast Asia, Middle East and other developing countries, China’s car market has become the target enterprise market.

Following the Great Wall, Yutong and China heavy truck and other enterprises, the Foton was soon joined, and through the subsequent brutal price war.

China’s auto exports peaked in 2006. According to statistics of China Association of Automobile Manufacturers, the year China’s auto exports to reach 600,000. But the problem quickly exposed. In 2007, the opening of export markets to attract the influx of various companies, including many of the basic row is not on the number of domestic small companies. Russian market the most obvious. “You can see here many do not see the brand in China.” Overseas business, a car company who said that “the characteristics of Chinese enterprises is the good price war.” A result, profits have not played, and the final one after another exit.

2009, 11 months, China exported to Russia and Ukraine were 05,000, down 93.3% and 91.8%, both dropped out of the top ten export markets. Here are the 2008 financial crisis and the Russian decision to impose 30% tariffs on foreign brands policies, but mainly due to Chinese enterprises infighting. In Polynesia, South Africa, similar problems also exist. Great Wall Motor, a charge of overseas business people said that the Chinese car companies in the overseas market conditions, can be used “indiscriminate investments agents just quickly disappeared” to describe.

In the South African market, in 2007 a total of more than a dozen brands to enter China. In the Polynesian market, after 2006, there are 13 Chinese enterprises to enter. Now, the two markets remaining 23 Chinese auto companies, and are struggling to maintain the.

To the South African market, for example, local consumers to buy Chinese cars now enterprise’s products, lack of access to consumer credit. In other areas, consumer complaint telephone call to the local Chinese embassy, some consumers and even putting up posters in the car: “Do not buy Chinese goods.”

“The main problem appears in the service on.” Ni all of China Association of Automobile Manufacturers, said the introduction of correspondents, service and quality, is the most prominent local dealer to reflect the problem. Ni all have been involved in the organization of Steam Association survey in 2007, and wrote a Russian market research report.

Yutong Bus Sales Company Vice President Zhao Yan had personal experience. A few years ago, a Chinese bus enterprises in government support to lower the price of a number of cars sold to third world countries. In the absence of a complete after-sales service, a few years later to the market study found that all of the passengers crawled through the window because the door is broken. Serious after-sales service, coupled with the financial crisis of national tariff and non-tariff trade barriers to increase, resulting in China’s auto exports in 2009 dropped 50%.

Sun Jian consultancy AT Kearney partner had used “hunter mentality” to describe the Chinese enterprises to “go.” Lack of a systematic strategy, no long-term planning is business “and shoot for a place to” root causes.

“Sea” of the Road

December 16, 2009, from Russia, the United Arab Emirates, Indonesia and other countries in the group of people organized by the Foton, visited the Forbidden City and other attractions. They are Foton representatives of overseas distributors.

Foton great efforts to the distributor who, behind the strategy pattern. Held in the previous Foton overseas business in 2010 at the annual meeting, general manager Wang Jinyu clearly, this year’s focus is the development of CKD (Completely knockdown, all spare parts assembly) business model. Implementation of this business model, typically looking for partners in countries of destination, set up assembly plants. China to provide technical guidance, technology transfer fee is charged, while the local partners to provide human, plant, and equipment. Compared with vehicle exports, CKD relatively low tariffs charged business, you can close relationship with local partners.

“Now is the establishment of KD plants, the future trend is to establish a joint venture to manufacture or sell, or even wholly-owned.” Dong said the marine, is currently negotiating with the Southeast Asian joint venture partners. As the largest commercial vehicle sales in China, Foton has made 600 000 2009 sales, up 47%; which exports 24,400, down 15.3%. However, Foton target market share in overseas raised 3 percentage points.

Up to now, Foton has four KD overseas partners, located in Iran, Pakistan, Vietnam and Indonesia. In 2009, Foton 2 million U.S. dollars investment in Russia set up a wholly-owned subsidiary, and is ready to self-built sales network and after-sales service system.

Dong Marine explained that the reason why the business model from overseas this year, vehicle exports to KD plants, with the financial crisis, many countries attach importance to the development of local entities, industry related. “KD behavious can avoid high taxes, but also can strengthen our relationships with local partners.” Dong said to the Ocean, KD KD manner than non-tariff means less than 15%, in general, KD tariff approach 5%, while the way of non-KD 20% or even 50%.

Long-term commercial business manager Li Jian Tang Kearney told the correspondents, the last two years, Chinese enterprises set up overseas KD increase in the number of factories has become a trend. In addition to Foton, China’s largest heavy truck company CNHTC and export long-term stay on top of Great Wall Motor, all have built assembly plants overseas. Great Wall Motor is now in Iran, Vietnam, Indonesia, Egypt, Russia and six other countries of the CKD factory in Venezuela, the Philippines, Ethiopia, the plant also will be completed next year.

Li Jian Tang said that China vehicle exports from commercial enterprises to set up CKD plant, the main change is that some foreign markets for the protection of the local auto industry, introduction of tariff and non-tariff barriers. To Southeast Asia, Malaysia, for instance, for the protection of local industries, often imposed on vehicle imports 60% -100% of the tariff. The Russian market also imports technical evaluation of the vehicle, resulting in the export of Chinese enterprises to spend longer hours and costs.

“Establishment of KD plants than in vehicle exports, they could develop the market, but it does not completely solve the issue of after-sales service system.” Dong said to the Ocean, in the present circumstances, to build the core competitiveness of enterprises, short-term cost advantage is a medium-term is channels of innovation and service, “to build and nurture” differentiated services, the ultimate determinants of customer satisfaction.

Foton is currently overseas gold reseller program. Dong Ocean said Foton in the consolidation of cost advantages, to use the brand in the next five years to make up for losses caused by the rising cost.

Li Jian Tang believes that the global commercial vehicle market, a relatively small amount of itself is small, so plant prior to in-depth research. In his view, Chinese enterprises have a competitive edge in areas such as the Middle East, Africa and other regions often face greater political risk. In addition, the Chinese commercial enterprises lack experience in international operations, at the local plant, the need to consider the culture, management and other issues. He suggested that the best place to start sales volume began to prepare the same time, the concept of regional strategies should take into account the plant in one country and exported to other markets, the possibility of, and supporting logistics costs and tariffs.

“Our strategy is clear, but also as the market continued to adjust.” Dong said to the Ocean. Foton’s global strategy is very clear, that “5 +3 +1.” “5″ that is, in Brazil, India, Russia, Mexico and Thailand are five overseas plant construction; “3″ through the production of high-end cars and engine products, break through the Japanese and Korean, Western Europe and North America, the three most high-end automotive market; ” 1 “is a new energy as an opportunity to realize the passenger car business by leaps and bounds. In addition, according to insiders, in 2009 Foton 1.2 billion profit, completely on its own funds in the overseas factories are not realistic, therefore, the company is also considering the introduction of private equity funds as a lever.

According to the planning Foton 2015, Futian to reach 1.8 million worldwide sales, including overseas sales of 500,000, the proportion of 28%. , “Internationalization is not smooth, but we are confident going out.” Dong said to the Ocean.