We have limited Portuguese content available. View Portuguese content.

Video

Raymond Tsang: New Opportunities for Europeans in China's Truck Market

European players can gain a competitive edge in China's truck market.

Video

Raymond Tsang: New Opportunities for Europeans in China's Truck Market
en

Recent surveys show that Chinese truck buyers are beginning to focus on total cost of ownership—an advantage for European truck makers. Raymond Tsang, a partner with Bain's Industrial Goods & Services practice, explains why European players are poised to gain a competitive edge in China’s truck market.

Read the Bain Brief: China's Truck Market: New Opportunities for Europeans

Read the transcript below.

RAYMOND TSANG: We have been tracking the China truck market for over 15, 20 years now. And it has been a very difficult market for European imported trucks, because of the very high price point and the very premium products. However, based on our more recent surveys, there seems to be some good news.

We have actually heard that the Chinese truck buyers are increasingly focusing on the total cost of ownership, which will actually give some advantage to the European truck player, given the longer durability of their products and also the better fuel economy.

So out of the respondents that we surveyed, over 20% of them would consider to upgrade their truck in the next three years. And of course, the majority of them will consider first the stronger domestic brand, or the JV brands. But still, about one-fifth of them will consider to buy the European imported truck because of the quality, the fuel efficiency and the durability.

And of course, even with that, it's still going to be pretty difficult and challenging for the European player to win in this game. So what [they would] really need to do is to first still drastically work on the cost, to make their product more localized and more compatible. And at the same time, trying to produce them in lower-cost geographies, to make sure that they are truly cost competitive.

And secondly, they have to also improve on their sales and service network, which has been a major complaint of the local customers, given the lack of—the dense network, and relatively high service cost, and parts availability.

And of course, finally, just given the recent feedback, we believe that the foreign players will need to further emphasize their sales approach on the total cost of ownership, to make sure that their customer truly understands the total economics picture, for them to make more informed decisions on buying their trucks.

This is still going to be a long journey for the European truck maker, but we are seeing some very positive signs for them to win in this market. And they will just need to continue to invest, to make sure that their product and their capabilities are truly competitive in this local market.

Read the Bain Brief: China's Truck Market: New Opportunities for Europeans

Tags

Quer saber mais?

Ajudamos líderes do mundo todo a lidar com desafios e oportunidades cruciais para suas organizações. Juntos, criamos mudanças e resultados duradouros.