One step at a time

MANILA, Philippines - God created the world in seven days; the rest was made in China.

I’m not sure who first coined that phrase, but mention it to the top brass of any top five car company in the world and you’ll get a nervous laugh in exchange. Sure, the Chinese may not be anywhere near the Japanese or Koreans in terms of brand equity or build quality, but it wasn’t that long ago when the they were the butt of much crueler jokes – and anyone who has even the slightest understanding of math will know that it’s only a matter of time before the joke is on the rest of the world.

Basically, what took the Japanese forty years to do, the Koreans managed in about twenty. Using that precedent, its only logical then, given today’s rapid technology transfer and globally shared resources, to expect the Chinese to do it in around ten.

But which of the countless Chinese manufacturers will fly the flag? If you think about it, just because Korea has been accepted as one of the top automotive manufacturers in the world, it’s really only the Hyundai/Kia group pulling all that weight. The others aren’t even on the radar. The same goes with the Chinese, although given their size, there’s obviously room for three or four.

I’ve spent a great deal of time mulling this question over, and after a recent trip to the Auto Shanghai 2011, my money’s on Foton. To be completely honest, at first I thought Chery would be the one. At least locally. They introduced a relevant product at the perfect time. But they blew it. Perhaps they underestimated their own potential or didn’t quite understand the industry, but they failed to provide the proper after sales support and the eventual lack of parts, service, and dealer support left a sour taste and gave the other Chinese brands a much steeper hill to climb.

Foton Philippines president Rommel Sytin and Foton VP for Overseas Operations Wang Xiangyin at Auto Shanghai 2011

Although the lack of consumer confidence that it created with Chinese brands will no doubt affect Foton, they are a bit more immune to it because aside from the fact that they are the world’s second largest commercial vehicles manufacturer, they have a far more sensible and well-thought out business plan that takes a far more honest approach to themselves and their customers.

Firstly, unlike the other players that have positioned themselves as cheap alternatives to the established brands, Foton have no intention of taking on the Japanese or Koreans head on. Instead, they have their sights set on the used truck market. In a segment that cares little about image and brand equity, and more about a bottom line, Foton believes that they are well placed to steal sales of the used truck industry by breaking down ownership costs into a daily operating rate and matching that with a brand new equivalent that comes with warranty and more competitive financing. And seeing that the owners of Foton already own the country’s largest used commercial vehicle and truck auction house (United International Auctions) that already outsells the new truck industry 10-1, it is almost as simple as putting the money from one pocket to the other.

So why bother then? If it is just a question of transferring the money from your left hand to your right, why go through all the hassle, not to mention the massive new investment with all the headaches of marketing and brand building? The idea is that as the Philippine market matures, which all signs seem to point quite clearly to, the Filipino consumer will outgrow the used truck merry go round, and Foton, with their partnership with Daimler, want to have a front row seat when that time comes and be in a prime spot to replace them with brand new, proudly Philippine-made, Foton trucks.

As it stands now, Foton Motor Philippines are in talks with their principals as well as the Philippine government to build a left hand drive market assembly plant in Subic. Sounds crazy? Yes. So did the joke about Hyundai becoming number three in the country.