Suzhou Kinglong, the major domestic bus manufacturer, plans to increase its product exports to half of its total sales within two years, while the main battlefield for exports is Russia.
Export plans account for half of sales
When Sheng Guoqiang, deputy general manager of Suzhou Golden Dragon Sales Co., Ltd., was interviewed by an interview with reporters last week, Suzhou Jinlong Bus started operating its export business in 2006. In 2007, the sales volume of Suzhou Jinlong Haig Bus was 16,090, with sales of 4.664 billion yuan, of which, 2,842 were exported, amounting to US$173 million, and exports accounted for nearly 30% of total sales. Hager buses are mainly exported to Southeast Asia, the Middle East, Africa, Russia, Eastern Europe and other places. "We plan to increase our exports to half of our total sales within two years."
According to reports, Haig Bus exports are currently aimed mainly at Russia and the Nordic market. The reason is that Russia has important defects in the production of passenger cars, leaving a huge market space. Suzhou Jinlong’s product sales in the United States and other regions are generally outsourced to local companies. In Russia, Suzhou Golden Dragon has sent a large number of sales and customer service personnel, set up offices in the local area, and recruited dealers. At present, Suzhou Jinlong and Russia signed 1200 Hager passenger cars.
Relevant statistics show that the amount of auto exports to the Russian market has continued to grow steadily in recent years. In 2007, the auto sales in this market exceeded 2.5 million. Russia, which is expected to become Europe's largest market in 2010, is more concerned with Chinese manufacturers than other foreign markets. In 2007, Chinese auto manufacturers exported more than 50,000 vehicles to Russia, and Russia has become the largest overseas market for Chinese auto exports.
However, as the Russian side has gradually strengthened the management of imported cars and raised the threshold for imports, the difficulties in domestic automobile exports to Russia since the beginning of the year have been increasing. The volume of trade in the first quarter has dropped by 43% year-on-year. In addition, the appreciation of the renminbi and the rise in raw material costs have also made car exports chilly. According to Sheng Guoqiang, because of the above factors, passenger car exports have lost more than 40 million yuan in the first half of this year. China's passenger car exports have also encountered the slogans of Mercedes-Benz, Volvo and other brands. "We have a long way to go compared to Mercedes-Benz and other branded products."
Bus profit rate as low as 2%
Sheng Guoqiang introduced that in the automotive industry, the bus industry has the lowest profit margin, only about 2%. In 2007, sales of Suzhou Jinlong exceeded 4 billion yuan, but the profit was only about 100 million yuan. At present, raw material prices have increased costs by at least 10%. For this reason, domestic bus companies are in urgent need of developing new markets at home and abroad.
The current "security-oriented" clear strategy established by Suzhou Jinlong has enabled its brand to be upgraded. Since 2006, Suzhou Jinlong has strengthened product and management safety, and promoted safety awareness among drivers and other people in the community to enhance its brand safety image. At the same time, the transformation of Suzhou Golden Dragon focuses on the mid- to high-end bus market. The products cover the fields of passenger transport, tourism, public transport and group cars. Sheng Guoqiang believes that the current medium-sized passenger cars are under fierce competition and have lower profits.
The developed South China area is a major market for bus companies. At present, Suzhou Jinlong's sales in South China reached more than 600 million yuan per year, ranking the second in the passenger car industry, of which sales in Shenzhen reached 260 million yuan in 2007. The sales target for Guangdong in 2008 is 400 million yuan, and Guangzhou plans to sell 100 million yuan.