FleetWatch Online - 13-Chinese Connection

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Past Issues

Nov\Dec 2005

THE CHINESE fleet is old and first priority is to upgrade - but then beware the world market.

Although there have been Chinese trucks available on the South African market for a number of years, there is a great sense of anticipation in the transport industry that a much greater flood of Oriental products is about to break over us. Daily rumours abound about "who is talking to the Chinese" so, this month, Frank Beeton, our regular WorldWatch correspondent, attempts to shed some light on the makeup of the truck and component manufacturing industry in that enormous country, particularly with respect to those companies that have international links and are, therefore, likely to be the sources of familiar-looking products on offer to prospective export customers.

n the ground in China itself, transporters are racing to shake off the legacy of a past when many thousands of Russian-pattern petrol-engined trucks formed the core of mainland China's transport infrastructure. Progressively, the national fleet has been renewed and supplemented, firstly with trucks made locally by domestic producers such as FAW, Dong Feng and BAC - most of which have been recycled, license-produced versions of recently obsolete Japanese designs - but lately the products of global manufacturers such as Volvo, Renault and Mercedes-Benz have started to play an increasing role.

Chinese legislation requires that foreign suppliers with ambitions to access the local market must team up with indigenous joint venture partners with the added pre-condition that the local interests own at least 50% of the resulting manufacturing operation.

Although the main carrot drawing international manufacturers to China has been burgeoning domestic demand, the magnitude of manufacturing capacity now being put in place will, inevitably, lead to the creation of export capacity, a factor which has been expressly identified by the Chinese government as a business development objective.

As the Chinese market waxes and wanes, local manufacturers will look increasingly to export sales as a means of balancing their inventories and will expect foreign partners, with their international distribution networks, to become part of that solution.

At some time in the near future, many South African operators will be faced by someone trying to sell them a Chinese truck. If that truck comes from a reputable manufacturer and is backed by appropriate technical and parts support infrastructure, then the purchase decision-making process can proceed as normal. If any parts of this "chain" are missing, however, it might be just as well to consider some of the following points, before committing:

If the vehicle on offer looks very similar to a familiar and established make but carries a different badge, it could be risky to assume that all the "underskin components" are also interchangeable with those of the well-known brand. In some cases, Chinese products with familiar "faces" turn out to be totally unique in respect of their mechanical aggregates and may even comprise a mélange of components sourced from several other manufacturers.
While it could be reasonably anticipated that vehicles produced by a joint venture between a Chinese manufacturer and a foreign partner comply with international standards of quality and backup, it should be noted that most products of such liaisons are aimed primarily at the Chinese domestic market. There is no automatic guarantee, therefore, that they will comply with South African legislation or be suitable for our operating conditions. "Leaky" distribution arrangements could also result in products of legitimate manufacturing partnerships finding their way into export markets that were not intended in the original terms of the partnership. The fact that illegally-imported used vehicles sometimes find their way into South Africa, despite the constraints of the NaTIS system, should serve as a "heads-up" to local operators when considering an "alternative" source of supply.
The most important aspect of dealing with an established, legitimate supplier, is the benefit to be derived from the upstream manufacturer's experience of South African conditions and the proven product support infrastructure and technical lines of communication that have already been put in place. Dealing with a completely new supplier which is inappropriately represented in the local market - no matter how good its product may be - exposes the buyer to non-existent, or at best, untested backup infrastructure. If the manufacturer has no strategic intention of servicing the local market, or is even unaware that its products are being sold here, rest assured that the first time a serious technical problem arises, the truck will become an expensive static ornament in the buyer's back yard.

In order to at least partially clarify this potentially confusing situation, we feature here FleetWatch's matrix of Chinese international partnerships and domestic production arrangements involving global truck manufacturers and major aggregate component suppliers. If readers are not sure of the legitimacy of the linkage between any Chinese product and an apparently related international marque, this should help in giving some logical direction to the investigative process.

Global Manufacturer	Chinese Partner	Nature of Partnership	Products Involved
BPW	BPW Mezhou Axle.	Joint Venture	Trailer Axles
Cummins	Dong Feng Cummins	Joint Venture	B & C Series Diesels.
Cummins	Wuxi Holset Engineering	Joint Venture	Turbochargers
DaimlerBenz	Yaxing Benz	Joint Venture	Buses and Coaches
DaimlerBenz	Fujian Automobile Corporation	Joint Venture	Sprinter/Vito/Viano
Dana Corporation	Dong Feng Motor	Technical Agreement	Commercial Vehicle Axles.
Eaton	FAW Eaton Transmission	Joint Venture	Medium Truck Transmissions.
Eaton	Shaanxi Fast Gear	Joint Venture	Heavy Truck Transmissions.
Eaton	Dandong Shugang Axle	Joint Venture	Locking Differentials
Hino	Shanghai Diesel Engine	Joint Venture	10,5 litre Diesels.
Hino	Shenyang Shenfei Hino	Joint Venture	Buses
Hyundai	Guangzhou Motor	Joint Venture	Commercial Vehicles
Hyundai	Anhui Jianghuai Automobile	Joint Venture	Buses and Trucks
Hyundai	Yanbian Huatai Hyundai	Joint Venture	Light Buses
Hyva	Hyva Mechanics (Yangzhou)	100% Owned Subsidiary	Hydraulic Cylinders.
Isuzu	Guangzhou Motor Group	Joint Venture	Buses
Isuzu	Qingling Motors	Development Agreement	F Series Trucks.
Iveco	Changzhou Bus (CBC)	Joint Venture	Buses
Iveco	Naveco	Joint Venture	Daily Vans
Iveco	Changjiang-Iveco Bus	Joint Venture	Buses
MAN	China National Heavy Truck (CNHTC)	Joint Venture	Trucks
MAN	Xiamen Golden Dragon	Joint Venture	Buses
MAN	Shaanxi Heavy Duty	Technology Agreement	Steyr Trucks/Cabs.
MAN	Zhengzhou Yutong – Lions Bus Company	Joint Venture	Neoman Buses.
MAN	Jinhua Neoplan	Technical Agreement	Trucks and Buses.
Marcopolo	Changiang Bus	Joint Venture	Bus Body Components.
Nissan	Zhengzhou Nissan	Joint Venture	Light trucks
Nissan Diesel	Dongfeng Nissan Diesel	Joint Venture	Trucks/Coach Air Suspensions.
Nissan Diesel	Shanxi Datong Gear	Technical Agreement	Medium/Heavy Transmissions.
Nissan Diesel	Anhui Jianghuai Automotive	Technical Agreement	Medium Truck Transmissions.
Renault	Dong Feng Luizhou Motors	Joint Venture	Trucks and Components.
Toyota	Sichuan Toyota	Joint Venture	Coaster Light Bus.
Voith	Voith Turbo Power	100% Owned Subsidiary	Drivetrain Components.
Volvo	China National Heavy Truck (CNHTC)	Joint Venture	FM9/FM12 Trucks.
Volvo	Shanghai Sunwin Bus	Joint Venture	Buses.
ZF	FAW	Joint Venture	Axle and Chassis Components.
ZF	Suzhou ZF	100% Owned Subsidiary	Driveline Components.

FleetWatch has carefully researched the information from public domain sources published over the past five years. Despite our efforts to ensure accuracy, we are unable to take responsibility for its currency, or completeness. We would welcome input from any of the companies listed in this matrix, clarifying the terms of their Chinese partnerships.