Analysis of China Bus Export in 2009 and Strategy in 2010 Ⅱ (Part B)

www.chinabuses.org: Part 4 Summaries of bus export in 2009 and suggestions in 2010

　
1. Summaries of bus export in 2009

a. Analysis of the main reason of slump bus export in 2009. Sales volumes of all kinds of bus export decreased 46% with export amount decreased about 40% for the 28 bus builders with export business. Currently, the financial crisis is continuing, development pace is still rather slow. China bus industry encountered high risk and chanciness.

Apart from international economic environments and exchange risks, each process of bus export faces risks.

Trade protectionism is alarming for bus export. Since joining WTO, China encountered plenty of anti-dumping and anti-subsidies adjustment, such as the tire special protection act by the U.S. last year. Facing the serious global financial crisis, trade protectionism has been taken as a life-saving straw by many countries.

Since bus export is still new in China, it features great chanciness. And that is due to that foreign buyers are not familiar with Chinese bus builders, and another reason is that bus builders are not so sensitive with international bus supply and demand information.

Quite a few bus builders encountered extreme unstable bus export conditions, and that is for unblocked information channel. These enterprises have no clear export plan and target markets, only trying their fortune by attending Guangzhou Trade Fair and many kinds of auto expo.

Currently, chanciness is popular in domestic bus export, showing that they have neither firm grasp of export markets nor developing promising markets. In the global financial crisis, bus export is rather unstable, so bus manufacturers cannot pay too much attention on exporting.

In bus export markets last year, there were only two countries saw great changes. One is Iran, export volumes of buses to Iran in the first ten months were 300 units, down 95%; another is Russia, the number was just 60 units, down 97%. The two countries used to be rather important bus export markets for China bus builders. Currently domestic commercial vehicle manufacturers have to pass the following obstacles to Iran:

First, Iran government rules that local dealer have to get import license by Commerce Department of Iran. And the license can easily be taken as trade barrier.

Second, import approve standards have to be strictly carried out. Iran related organization have to check if the import bus meet import approve standards, and some compulsory regulations will expire until March 20, 2010. The great slump of China buses to Iran is closely related to this regulation.

Third, High tariff. Iran has decided to increase tariffs for imported auto and spare parts to prevent importing auto products. Since Iran is not belonging to WTO, they have taken high tariff for many years to protect their domestic auto industry.

Russia shares similar obstacles in these aspects.

In a word, the tough international conditions caused the terrible export slump last year.

a. The slump bus export made many bus builders uneasy.

According to statistics of bus export, up to 50% decrease undoubtedly wounded many bus builders. It is natural for the manufacturers to worry about their bad export performance. Domestic bus builders have to treat overseas markets prudently, and they can never try to develop international markets over-hastily.

3. Some bus builders export just for fame but interests.

The decreasing export lessened benefits of each bus builder. Some bus builders just export for advertising. The overseas markets of domestic bus builder are mainly developing countries; the narrow markets force fierce competition between domestic bus builders. On other hand, quite a few bus builder hope to improve popularity of their enterprise and brand which also intensify cut-throat competition.

b. Some bus builders pay much attention on sales but after-sales services

Many bus builders are talking about exporting, and they rarely pay much attention on after-sales services. Actually most domestic bus builders stop over small batch of bus exporting, and this kind of activity may result with no clear results. Anyway after-sales services are rather important to both the company and china bus industry.

c. Some bus builders only weight sales orders but the whole exporting strategy

Currently the financial crisis is global, and the common ways of domestic bus builders is to wait buyers to make inquiry positively, and they will do everything possible to get the order with out considering the results. Few bus builders actively explore overseas markets, this is due to shortage of international trade talents, and the inner reason is lacking long-term global strategic plan.

2. Suggestions on China bus exporting in 2010.

a. Bus builders have to adjust their export development strategy. They may consider layout of overseas markets to re-make export strategy. They may divide the global markets into South America, Commonwealth of Independent States, Middle East, Asia-pacific, Africa, and the West, and Cuba, Jamaica, Chile, Peru, Rumania, and Slovakia can be classified as the main exporting countries.

b. Products structures can be changed according to changes of exporting markets. Quantitatively speaking, percentage of large buses are increasing, and last year decreasing width of large buses were the least, showing that bus builders can do more in this segment market.

c. Consulting marketing strategy to international customers. In brief, bus builders have to not only sell buses, but also provide sales strategy to profit. Bus builders have to analyze their rival competitors to know the real difference. Providing low costs services and creating values for your own company, consult marketing can also profit your customers.

d. Price strategy can be adjusted. Bus industry have only small profit rate, 4% is already a rather good profits. The whole bus industry face rather severe market condition as rising costs and many unstable international factors, so bus builders may adjust price strategies accordingly.

e. Bus builders have to highlight brand influence and form brand value. Currently bus builders achieved a lot in domestic brand constructions, but they need more efforts in international markets. Since the influence has clear marketing effects with strong demonstrating role in customers.

f. Global financial crisis still influence bus exports, and domestic bus builders should have enough mental preparation.

 
g. Bus builders have to strengthen risk prevention mechanism in international markets when signing contracts, paying front money, products delivery, and payment recovery to prevent some fraud activities to reduce the exporting risk to the least.