Serving the World's Largest Emerging Automobile Market
Home > Interview > Face to face with Xu Gang

Face to face with Xu Gang

Editor: Could you tell our readers about your operations this year and your expected sales for 2005?

Xu Gang: (hereinafter as Xu) So far this year Shanghai Maple has sold 16,000 units of cars.  This means we have already fulfilled our sales target set at the beginning of the year. We expect to increase our goal for 2005 to 24,000 units. Considering the fact that we have already accomplished two-thirds of the new goal, we don¡¯t see much of a problem fulfilling the new target.


Editor: You sound quite optimistic. Why?

Xu: Mainly because we have a good product lineup, especially the Marindo 303. Customers love the car because of its outstanding performance to price ratio. The price for the 1.5-liter model, for example, is only ¥65,888. Sales have been better than expected.


Editor: Which makes and models are you trying to compete with, the 1.5-liter Fookang made by Dongfeng-Peugeot-Citroën?

Xu: No. Marindo 303 competes with the Elysee from Dongfeng-Peugeot-Citroën, the Fengyun from Chery, the Fiesta from Chang¡¯an-Ford, and the Siena from Nanjing-Fiat.


Editor: What about Shanghai-GM¡¯s Sail?

Xu: The price of the Marindo 303 is about the same as that of the Sail, but I think Marindo is of a higher grade. They have different wheelbases and chassis.


Editor: How many units of the Marindo 303 have you sold so far this year?

Xu: They account for more than 80 percent of the 16,000 units we have sold so far.


Editor: There was an interesting phenomenon this year. The economy Xiali made by FAW-Tianjin, especially its hatchback models, sold extremely well. How is the sales performance of your hatchbacks?

Xu: In the first half of this year we sold about 3,000 units of our hatchback model, the Biaofeng. Sales were slightly lower than expected. This may be due to the fact that our marketing efforts were concentrated mainly on the Marindo 303. But on August 4 we came out with a new hatchback model called the Marindo 205. It is powered by a 1.3-liter engine and sells for ¥52,900. I believe it will be a competitive car like the Marindo 303.


Editor: I heard you say on one occasion that Shanghai Maple will make mid-grade cars for consumers. Isn¡¯t the mid-grade you talked about in fact lower mid-grade vehicles?

Xu: That is for the purpose of marketing to our target customers. We are now developing a new model called the Marindo 506 in cooperation with Jiaotong University. The car is expected to debut next year. That will be a genuine mid-grade car, with a 1.8-liter engine, 2,640 mm wheelbase and total length of 4.5 meters.


Editor: Does Shanghai Maple have a long-term plan to make higher-grade cars, for example, cars powered by 2-liter engines, like what Chery Automobile has been doing?

Xu: For the next two to three years at least, our aim is to establish a firm foothold in the market with our existing models. For us, survival still comes first, as I mentioned at your international conference. Development comes afterwards. Our target in 2007 is to make and sell 50,000 cars. Of this number, to be frank, 80 percent, or more than 40,000 units, will continue to have the 2,540 mm wheelbase. As for long-term goals, yes, we would like to make cars that are powered by 2.0-2.4 liter engines and have a length of 4.7 meters. But that will happen later.


Editor: As a private company, you are now competing against multinationals and new state-owned carmakers. In what areas do you see your competitive advantage?

Xu: In terms of brand, technology and scale, we don¡¯t have much of an advantage. I have emphasized all along core competitiveness, something others do not have and are unable to copy. One part of our core competitiveness is what I describe the ¡°Shanghai Style,¡± which is the cultural connotation of Maple as a brand.


Editor: But it will take time to cultivate a cultural connotation.

Xu: That¡¯s right. We¡¯ve been making efforts in this direction. In my view, the Shanghai Style consists of two essential elements. First, it must represent an exquisite, high-quality and affordable product. Second, the Shanghai Style means a pooling of the best from all available sources. We cannot make everything on our own.  We are going to absorb the best technologies, the best modeling and the best devices from all over China and all over the world. That is what the Shanghai Style means. Our cars are not necessarily high-grade, but they will be meticulously manufactured, highly fashionable and reliable.

Another part of our core competitiveness is a superior product lineup and good service. We have three product series called the Marindo, Hisoon and Hysoul. The Marindo has a classic flavor and looks dignified. It comes in 303, 205 and 305 versions. The Hisoon is a sporty model, a coupe. The Hysoul emphasizes individuality. We will market, for example, in early 2006 a Hysoul for young ladies.


Editor: Does the Hysoul target similar consumers as Chery¡¯s QQ?

Xu: It will be of a higher caliber than the QQ. While the QQ is a car for an ordinary girl, Hysoul¡¯s owner will probably be a white-collar worker, the QQ girl¡¯s supervisor, so to speak. The Hysoul will be priced between ¥60,000-¥70,000.


Editor: If you want to compete successfully against multinationals and state-owned automakers, does this mean that you need to do a better job in controlling manufacturing costs?

Xu: Absolutely. We now have an independent parts supply system. But within the Geely Group, we have a mutually complementary relationship for parts supply. In technology and procurement, we cooperate with three groups of companies. First, in modeling, testing, dies and other areas, we cooperate with international specialized engineering companies. Second, for R&D, we cooperate with well-known domestic institutions of higher learning. And third, for parts and components, we cooperate with a number of core suppliers. Today, joint venture companies supply 15-20 percent of the parts we need. About 40-50 percent of the parts originate in Zhejiang Province.


Editor: The Geely Holding Group is developing its own engines. Is Shanghai Maple doing the same?

Xu: Yes, we have set up an engine plant right here in Shanghai. We make four types of engines with displacement ranging from 1.3 to 1.8 liters. All our cars are equipped with engines we made on our own. This has made it possible for us to lower costs.


Editor: What about transmission?

Xu: Geely¡¯s Ningbo plant is now able to supply us with manual transmissions. An automatic transmission has just been successfully developed but it is still in the testing stage. I expect the plant to begin supplying us with a small number of automatic transmissions early next year.


Editor: Did you develop the automatic transmission entirely on your own, through reverse engineering?

Xu: Yes, entirely on our own. I think it was a wise decision made by our chairman, Li Shufu. Li was able to convince the top engineer leading the country¡¯s research project on automatic transmissions to come and work at Geely.


Editor: What is Shanghai Maple¡¯s plan for export?

Xu: We expect to export close to 1,000 cars this year. This is still exploratory in nature. Also, our export business has been included in Geely Group¡¯s export plan so far. But we will start exporting cars independently from the beginning of next year. We¡¯ll go slow and steady in this regard. We won¡¯t go to a new market, for example, until we have established a firm foothold in the previous one.

Leave a Reply