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Construction Equipment Industry Agents Offer Insights and Proposals to Jointly Discuss Stable Industry Development
Release date:
2018-07-04
Source:
According to forecasts from the China Construction Machinery Industry Association, the construction machinery industry as a whole is expected to grow by approximately 15% in 2018, with excavating machinery seeing growth rates between 20% and 30%. As for the future development of the dealer network, what reflections have dealer companies already made? Industry insiders have shared their insights on key considerations, such as whether the current booming market trend has truly solidified. This report compiles their perspectives for our readers.
According to China Construction machinery Industry associations predict that the construction machinery sector will see overall growth of around 15% in 2018. Excavator Mechanical growth is projected to range from 20% to 30%. Looking ahead at the future development of the agency sector, what reflections do agency businesses have? Industry insiders also shared their insights on key considerations, such as whether the current booming market trend has truly solidified.
Cao Weiguo, Chairman of Zhejiang Liyang, shares insights on the fundamental issues for agents' steady growth.
First, the fundamental issue underlying an agent's steady growth lies in its core decision-making and management capabilities. When business performance falters, companies look to management for the root cause—and if today’s problems arise, they trace them back to yesterday’s decisions. A mature, well-managed company should possess: refined management practices, streamlined and highly efficient operations; a robust process-control system equipped with process-control KPIs that enable proactive forecasting and early warnings; and built-in flexibility along with safeguarded risk-management buffers. The era of agents pursuing growth through loose, undisciplined strategies is long gone—today, only precision and efficiency can ensure survival and sustainable development.
Second, manage the company with financial awareness and capabilities. Key decision-makers and executives must leverage their financial acumen to steer the company—not just as a marketing entity. Ultimately, the company’s primary metrics should be return on investment and sustained, healthy growth.
Third, a proper sense of right and wrong in business is essential. An agent operates as a completely independent entity, and the only accurate perspective on right and wrong is from the standpoint of the company or its owner. It’s crucial not to adopt a one-sided view based solely on what’s right or wrong from the customer’s, employee’s, or manufacturer’s perspectives. Of course, the company’s and the owner’s viewpoint must always balance the interests of all three parties—customers, employees, and manufacturers—ensuring mutual success for everyone involved. This approach aligns perfectly with objective economic principles as well as the timeless rules of Western market-based business practices.
Fourth, it’s crucial to build core competencies. While the agency model is a proven and successful business approach—and one that will continue to thrive sustainably over the next several years—it’s important to ask yourself: What are your company’s key resources, unique strengths, and competitive advantages? Is it your geographic presence, brand identity, product offerings, talent, management capabilities, service and maintenance expertise, financial resources, or perhaps your ability to nurture strong customer relationships? Remember, you should first "stay true to your principles" before looking for innovative ways to "stand out from the crowd."
Du Mingwei, Assistant to the Chairman of Anhui Nanya, Discusses Risk Management for Construction Machinery Industry Agents
Du Mingwei, Assistant to the Chairman of Anhui Nanya, suggested that distributors and manufacturers should establish a mutual trust-based risk-response mechanism and proactively implement an effective debt-management system.
In establishing a risk-response mechanism built on mutual trust and shared responsibility, it is essential to optimize the repurchase guarantee mechanism. When vehicles cannot be towed back, the financing company authorizes its agents to file a lawsuit; if the lawsuit proves unsuccessful, repurchase would then be considered—but only after the financing company has first ensured that the agent retains the right to pursue recovery. Additionally, the company must promptly hand over lessee-related documents and provide all necessary information. If, in the end, the ultimate repurchaser is unable to recover the asset, a risk-sharing mechanism will be put in place, with all parties bearing the financial loss according to predetermined proportions.
To establish a proactive and effective debt management mechanism, Du Mingwei suggests adopting the approach used by state-owned asset management companies—specifically, setting up an accounts receivable management company focused on construction machinery. This company would consolidate all challenging debts from dealerships, handing them over entirely to professional management. The asset management firm could then select, via competitive bidding, a dedicated team of lawyers and third-party debt-collection agencies to fully commit to recovering these outstanding payments. In this way, dealerships can concentrate on their core business without being distracted by debt-collection efforts. Sales Work.
Second, promptly issue the trailer authorization when signing the annual cooperation agreement to streamline the relevant procedures. Additionally, flexibly require agents to maintain dynamic monitoring of their customers—specifically, instruct them to immediately retrieve vehicles if payments are significantly overdue, thereby minimizing losses. The manufacturer or financing company will jointly share the costs of debt collection with the agents, while also organizing dedicated debt-collection teams to prioritize settling outstanding debts. Afterward, depending on the actual situation, the agents may be asked to advance the payment or even repurchase the vehicles as needed.
Zhang Xianfeng, Chief Operating Officer of Fergus (Beijing) Information Co., Ltd., Discusses Leasing Business Exploration
In recent years, numerous distributors have also been exploring and experimenting in the leasing sector. Zhang Xianfeng noted that customer needs have evolved—from a simple procurement model to one that now requires comprehensive equipment solutions. As a result, leasing is becoming an inevitable trend for distributors as well.
Zhang Xianfeng pointed out that leasing offers several key benefits for agents: First, it serves as an important way to promote products; second, it strengthens the bond between agents and their customers; third, leasing helps customers better understand the agent’s offerings, effectively turning competitors’ clients into loyal customers; fourth, leasing acts as a buffer for equipment manufacturers, allowing them to manage production capacity more flexibly and generate additional revenue beyond regular sales; and fifth, it enables agents to develop differentiated products that can compete effectively with those of rivals.
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