Jiangsu Yiqi Lianghe Trading Co. LtdINTERVIEW DATE:March 13th, 2000INTERVIEWER NAME:Anne WangInterviewee NameMs. Tian Xiao JiePositionDirector of Marketing and Sales Company and AddressJiangsu Yiqi Lianhe Trading Co. Ltd.No. 48 Dong Fang City, Nanjing 210042Telephone/Fax(025) 5472358BackgroundKey ProcessesKey IssuesConclusionsBackground.n Jiangsu Yiqi originally belongs to Jiangsu Jidian Group. Jiangsu Jidian Group undertook a restructure in 1993 and set up Jiangsu Yiqi.n The Jiangsu Yiqi is one of the 6 auto-trading companies that have FAWs direct investment. 50% of the investment comes from FAW, another 50% comes from the employees and managers. Thus the ownership of Jiangsu Yiqi is now cooperative, not State-run.n Jiangsu Yiqi owns a loose dealer network of its own in Jiangsu province. Some of the 2nd layer dealers are former Jidian dealers, some of them are individuals, and some of them are service stations. There are totally 14 dealers beneath Jiangsu Yiqi, while 6 of them are very important to Jiangsu Yiqi: Ganyu, Lianyungang, Xuzhou, Suzhou, Changzhou and Huaiyin.n Last year, Jiangsu Yiqi alone sells 1200 truck in Jiangsu Province. Sales of this year continue to grow steadily.n Exclusive of 2nd dealer employees, there is only 6-7 salesmen in Jiangsu Yiqi who faces client directly.Key Processes / Operationsn Market investigation method includes the local policy collection, previous year demand in transportation/engineering projects, refitting No. and Local economic conditions.n Last year, in order to get more market share, price margins are given to 2nd dealers while Jiangsu Yiqi get rebate. In some case, even 50% of the rebate is shared with 2nd layer dealers to attract the dealers in small sales volume.n Jiangsu Yiqi had built 3 in 1 functions in a way of cooperation with the land owners:- Jiangsu Yiqi discussed with land owners and agreed that, Jiangsu Yiqi will provide trucks as investment while land owners provide service plant and land. Profit of service station is then shared among the two parties. By this cooperation, Jiangsu Yiqi saved most of its investment in Capex.- All those functions are not put into use now. Ms. Tian claims that those functions would be put into use in March or April this year.Key Issuesn Coordination with local service stations tends to be difficult. When there is some quality problem, Jiangsu Yiqi asks customer to go to the service station, but service station is unable/unwilling to service. Thus customers are discontent and damages dealers image.n Coordination with Headquarter Logistics / Service Department is difficult. Orders and enquires are processed slow and inflexible. Delivery of trucks is unstable in time and quality.n Last year, the nearby Shandong Linyi City sold a considerable part of trucks in Jiangsu realm. As Linyi is closer to FAW, there is no transportation fee problem concerned. As a price war is launched in Jiangsu, business of Jiangsu Yiqi is somewhat impacted.ConclusionsJiangsu Yiqi is one of the few auto-trading companies that have FAWs direct investment. With new investments in Servicing, Spare parts and demonstration room this year, Jiangsu Yiqi is confident in Jiefang Brand. It remains to be seen, however, whether the 3 in 1 functions will be successful or not.2