In search of greener pastures

As the Chinese government determined to transform the economic growth pattern from investment-driven to consumption-driven, the truck industry, which is closely related to the construction sector, is finding it hard to regain the growth rate it enjoyed three years ago.

Wu Yuejun, president of Beijing Foton Daimler Automotive Co, believes the market will not grow significantly for a long time, and the industry faces consolidation.

"Currently, there are more than a dozen truck companies in China, but in 10 years, the number may shrink to three or four," he says.

Zhao, Foton's vice-president, says they "have to go abroad to expand our market", adding that India, Russia, Brazil, Mexico and Indonesia are still fast-growing markets.

"Starting from the ground up is not easy, so we select the best international resources, and partner with them," he says. A joint venture with Cummins Inc, a US-based engine manufacturer, formed in 2008, recovered investment last year and began to make a profit, he adds.

As the biggest engine manufacturer in the world, Cummins has been keeping in line with European emission standards.

"As Foton is designed for the global market, a greener engine will help us enter a mature market with stringent emission standards," Zhao says.

Daimler is another partner that helps accelerate Foton's international progress. In February, the two companies formed a joint venture aiming to produce medium-sized trucks fitted with a Mercedes engine.

The partner not only brought reputation and technologies to Foton, but also global networks. "In the future when the joint-venture products are exported, Daimler can provide established distribution networks around the world," Zhao says.

But Foton will be very careful in terms of overseas expansion, says Zhao. "The cost to build a factory overseas is very high, so we have to wait until the market reaches a certain volume, or else, the after-sales service will not catch up."

With emerging markets such as Brazil and Russia attracting investment from many Chinese companies , Zhao says they should avoid another round of price competition at home.

"We have to differentiate the Foton brand from other brands which are generally labeled as made in China," Zhao says.

The five overseas markets listed in the 5+3+1 strategy will not be developed at the same time, he adds, but will be explored one by one.

"Once the market is mature, it will be handed over to the management team recruited locally, as they know the market better," he says.

wangchao@chinadaily.com.cn