Facing market turndown, Sinotruk to get more SPV market

With development of globalization, correlative dependence among different countries is increasing day by day. The financial crisis started from United States already has a clear impact on many industries, especially in manufacturing and export industries, in China. It is estimated that impact of the crisis to the financial industry is decreasing while impact on manufacturing and many other industries has just begun. Growth of China's economy is expected to be much slower compared with the last several years.

Closely related to development of national economy, heavy truck industry may be severely impacted by the dramatic economic crisis in the following one or two years. To diversify risk of heavy truck market, Dongfeng, FAW and some other enterprises are prepared to develop new types of light trucks which are favored on the huge rural market.

As one of the top heavy truck maker in China, Sinotruck doesn't have so many choices as Dongfeng or FAW. Then, what will they do?  On the 2008 International Forum on Chinese Automotive Industry Development, Ma Chunji, Chairman of Sinotruck, says the economic crisis does bring challenges to China Truck industry. If it was fall of industry now, then, the industry would enter winter next year. But how much the industry will be affected is still unknown. He said that "though there're so many difficulties ahead, Sinotruk’s long term aim to make China Heavy Duty Truck Industry  "bigger and stronger" have never changed. In his opinion, development of enterprises is not only relied on sales or production volume, but also need a better internal mechanism. The crisis makes it possible for them to find and solve their own problems.

Facing the risk of heavy truck industry, Mr. Ma says there are three points in his minds and they are: potential of international and domestic market for heavy duty truck is huge; The Chinese government has the ability to macro-control the economy; The crisis not only brings challenges to them but also opportunities. Sales of dumper and tractor may be down next year, but market of SPV is huge in China.

Sinotruk's strategy to minimize the risk is as follows:
1. To understand heavy truck market discipline and develop risk control measures.
2. To develop "Upstream and downstream industries," Upstream industry refers to the key components of the assembly, such as engine, gearbox and etc; downstream industries mainly refer to the Special Purpose Vehicle, as well as high-power trucks. Now that many enterprises are nearly to be broken, there may be good opportunities for them to do mergers &acquisitions.

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