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Foton eyes international development by developing KD partnerships

On April 27, China National Heavy-Duty Truck Group Co., Ltd. (Sinotruk) loaded 500 units of its HOWO A7 vehicles onto a ship from Qingdao to Port Cabello, Venezuela. The consignment ceremony took place at the port of Qingdao. The deal is the first large-scale export for a Chinese heavy-duty truck maker to Venezuela’s market.

The contract between Sinotruk and Venezuela National Petroleum Company, signed earlier this year, includes 750 units of oil tanker semi-trailers and 750 units of 6×4 HOWO A7 tractors. A representative from the Venezuelan company said the quality of Sinotruk’s products is good and the service is timely, so they expect further cooperation with the Chinese truckmaker.

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Dongfeng Commercial recently revealed that a 5,000-kilometer road test for its heavy-duty truck was carried out last year in Siberia, Russia. The purpose of the test, held by Dongfeng Commercial and Russia’s auto dealer Intekra, was to demonstrate the Chinese truck’s durability in extreme conditions. Dongfeng Commercial expects to build up its brand image and obtain more export opportunities. The cold resistance test went from last November to December, across five regions of west Siberia. The Chinese truckmaker also took the chance to visit 50 potential company clients including construction and oil firms.

The vehicle tested was a 6×4 AWD dumper with a designed payload at 20 tons. It is powered by a 375-horsepower diesel engine from Dongfeng Cummins, and equipped with a 6-speed Allison transmission box.

As revealed, Russia’s oil and gas giant Lukoil and SurgutNefteGaz, which are interested in the truck product, are in talks with Dongfeng Commercial to hash out further details.

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According to a recent report from auto.sohu.com, Beiqi-Foton (Foton) is considering building a light and heavy-duty truck manufacturing base in India, with annual production of 100,000 units. “The company has formed a research group to spot the right location in the country,” said a source. The Indian project will start in 2011 at the earliest, covering product lines of light trucks, heavy-duty trucks and multi-functional vehicles. Officials from Foton refused to comment on the news. When asked whether Foto’s German partner would be involved in the project, a Daimler Truck (China) spokesperson replied that their priority lies in the China market, while Foton may be gunning for international development.

Setting up shop in India is not Foto’s only plan for overseas expansion. Shen Yang, Foto’s oversea market executive, discussed the company’s trial project in Mexico in a telephone interview. As Shen explained, Foton is looking for the right international approach, when other Chinese manufacturers are bringing foreign brands into China. So far, the largest commercial vehicle manufacturer in 2009 has begun expanding overseas knockdown (KD) production, aiming to explore alternatives to finished vehicle export strategies. The Beijing-based automaker currently has four overseas KD operations in Iran, Pakistan, Vietnam and Indonesia. Last year, the company also invested ¥2 million ($294,118) in Russia, to form a fully-held subsidiary that will develop a local sales and aftersales network in the country.  

According to Shen, the first step of Foto’s overseas expansion strategy is to bring up the number of KD production partners in foreign countries from the current four to 15, and increase the proportion of vehicle sales of these overseas facilities to over 30 percent of Foto’s total sales by the end of 2010. Then in the next two years, the automaker expects to establish overseas wholly-owned factories or joint ventures with aftersales services. Taking the Mexican and upcoming Indian projects as trials, Foton also eyes Brazil, Thailand and Russia on its expansion map.

 

 

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