– by Wayne Xing
China’s little known special-purpose heavy-duty truck manufacturer, Anhui Hualing Automobile Co., Ltd. (otherwise known as CAMC or China Automobile Manufacturing Corp. for its truck brand) exhibited a tractor trailer and a dump truck at the recent IAA International Commercial Vehicle Show in Hannover, German. This is the 2nd time Hualing participated at the biennial event after its first appearance in 2006. In an exclusive interview at its stand with CBU/CAR, Hualing chairman described the company’s history and announced that the company had passed European whole-vehicle type approval (Euro IV) for three of its vehicles. – Editor
CBU/CAR: Mr. Liu, please tell our readers about your company.
Liu: Our company has a history of about 40 years since its founding in 1970. We began by making construction machinery. Starting in the late 1980s, we turned into making special-purpose trucks, mainly trucks for bulk cement transportation, which were in rising demand due to China’s expanding construction and infrastructure projects. At the time, cement was packaged into paper bags for delivery, which was both costly and wasteful.
We were able to utilize available 8-ton truck chassis made by FAW and Dongfeng, and later heavier chassis made by China National Heavy-Duty Truck Group Corp. (CNHTC), Shaanxi Auto and Hongyan Auto based on MAN technology. Our special-purpose truck business took off thanks to market demand and government support.
CBU/CAR: That was before Hualing Auto was established?
Liu: Yes. As China went into a boom of infrastructure and urban construction in the early 1990s, the country started to import cement mixing trucks from Japan, Korea and other countries. Obviously the use of cement mixing trucks greatly increased efficiency in the building and construction industries and bulk cement trucks were in declining demand.
An imported cement mixing truck from Japan was priced at $900,000 and China then did not have enough foreign currency to pay for the growing number of imports. We saw this as a market opportunity and started to make cement mixing trucks in the mid-1990s, with imported chassis and engines from Mitsubishi. Our finished trucks cost one-third less than an import and we were able to expand our market quite rapidly.
But at the time China still had to spend millions in foreign currency to import chassis and engines from companies like Isuzu, Hino and Mitsubishi. It was obviously not a sustainable mode of development of cement mixing trucks in China. Construction demand soared around 2000. Domestic truckmakers could not supply the much needed chassis in smaller quantities for many different models and applications. In 2002 China and Japan also had some trade disputes which affected our imports. Under such circumstances we decided to make our own chassis by introducing Mitsubishi technology.
CBU/CAR: So when was Hualing established?
Liu: We started negotiating with Mitsubishi in 2002 and entered into an agreement of licensed production in 2003. Hualing, which is a combination of the Chinese character of China (hua) and Mitsubishi (ling), was formally registered in 2004 and started trial production. Formal production began in 2005.
We became a special heavy-duty truck chassis producer for special applications. Although compared to existing heavy-duty truckmakers we started rather late, we were able to introduce advanced truck technologies that others did not have. We have therefore been able to grow in the market in face of much stronger players such as CNHTC, Dongfeng and FAW. Our strategy for survival, so to speak, is high-level technology, high quality standards, international operation and scientific management. As a result we were able to develop rapidly over the past five years, from making 8,000 trucks in 2005 to this year’s estimated 30,000, with total sales revenue reaching ¥10 billion ($1.5 billion).
CBU/CAR: That includes sales of Xingma Auto, right?
Liu: Yes, special-purpose trucks made by Xingma and chassis made by Hualing, plus our subsidiary components manufacturers.
CBU/CAR: What is your experience exhibiting in Hannover?
Liu: Hannover is the Olympics of the world’s commercial vehicle manufacturers. Over the long history of the Hannover show there was no presence of Chinese manufacturers. Thanks to the growth of China’s commercial and heavy-duty market, including the progress of the supplier industry, Chinese manufacturers are now capable of participating at international competition.
Hualing became the first Chinese truckmaker to exhibit in Hannover in 2006. We brought with us the last generation of Hualing heavy-duty truck based on Mitsubishi technology. Our first appearance created a stir here four years ago. Visitors thought that our truck was made either in Japan or Korea. We put up the national flag at our stand so as to let the world know that the truck on display was made in China.
We have returned to Hannover to again showcase our independent manufacturing capability. We have brought with us a tractor trailer and a dump truck. We are proud to be again this year’s only Chinese truckmaker on display.
Our purpose in exhibiting is to showcase our trucks as well as to learn from other truckmakers in order to improve the competitiveness of our products. We started a year ago to homologate our trucks and I am happy to tell you that right before this show, we passed the European whole-vehicle type approval for three of our models: the 6×4 dumper, the 6×4 tractor and the 4×2 tractor.
CBU/CAR: Are they compliant to Euro V standards?
Liu: These are based on Euro IV emission standards. We will continue with the Euro V certification. But we are now able to sell our trucks globally except in Western Europe and North America. The homologation was a test of our chassis technology. Our customers and visitors at our stand clearly see the significant improvement of our products compared to four years ago. We designed these trucks based on European style and standards and they should be fairly adaptable to customer preferences in Europe.
I am also pleased to see several Chinese busmakers exhibiting in Hannover plus about 100 or so components manufacturers. This shows that Chinese OEMs and suppliers are participating in international competition. To learn from our competitors, we have also brought about 70-80 people from China to visit the exhibition, our engineers, sales and marketing people and our dealers in China.
CBU/CAR: What is your export situation?
Liu: Export has been affected by the world economic crisis in the past two years. But our long-term strategy is to develop the export market. Right now our trucks are sold in about 40 countries and regions in the world, such as Russia, Eastern Europe, Southeast Asia and South America. We have tested the overseas market with our trucks and have achieved some preliminary success. But we know that we are still confronted with major challenges in areas such as technical support and training, aftersales service, distribution networks, parts supply and dealer management.
CBU/CAR: What kind of powertrains does Hualing use for the special-purpose vehicles?
Liu: We use engines made by joint venture companies in China, such as Hino and Cummins and we use ZF and Fast transmissions.
CBU/CAR: Are their products compliant with Euro V standards?
Liu: They are all working on Euro V compliance and we expect it will take another year.
CBU/CAR: Would you consider buying imported engines and transmissions, such as do Chinese busmakers for their export buses for Europe?
Liu: We will mainly source from domestic manufacturers for our engines and transmission. But we may also import engines and transmissions to meet special customer needs.
CBU/CAR: What kind of company is Hualing in terms of ownership?
Liu: Hualing is a majority State-owned enterprise controlled by the Anhui provincial government.
CBU/CAR: I have interviewed both Zuo Ya’an, chairman of Jianghuai Auto and Yin Tongyue, chairman of Chery Automobile, which are both based in Anhui. It seems all three of you share some characteristics unique to Anhui Province.
Liu: We are all majority State-owned and have a rather weak foundation because we did not receive central government support as did other leading auto groups. But we all make independent-branded vehicles and we have all made rapid growth in the market. Automotive enterprises in Anhui are very dynamic, probably due to our environment. We have nobody to turn to except to rely on ourselves and the market in our development. Anhui boasts the Hefei University of Engineering which has produced many automotive engineers. In fact Zuo, Yin and I are schoolmates. Anhui enjoys a competitive edge in labor resources. Moreover, the local governments have offered indispensible support.
CBU/CAR: When do you expect to complete the homologation of your trucks to comply with Euro V emission standards?
Liu: In two years, maybe after 2012. Western Europe and North America are the world’s toughest market in terms of technology and vehicle regulations. We must work very hard in preparation for entering these markets. It is not easy, but once you decide to sell in these markets, you must make sure that you are well prepared and able to establish yourself in the market.