China’s biggest bus builder is back, this time under its own management based in Sydney
After testing the waters with a Sydney-based car and truck distributor in 2011, China’s biggest bus builder ― Yutong ― has returned to Australia’s shores with a fresh approach and their own management team, soon to settle into an all-purpose service facility in Sydney.
Yutong has returned, but actually never left as the past two years were spent doing ‘homework’ on the Australian market, and even with our slightly shrinking local sales figures, the bus builders from Zhengzhou believe there is enough potential business south of the equator to make the venture a long-term proposition.
But it’s not just buses Yutong will bring in greater numbers to Australia, there will also be a healthy dose of Chinese culture and a new way of thinking that will be brought to the market, with a suite of ‘Aussie-fied’ buses, including a stunning piece of product ― a low floor, aluminium-framed route service bus.
That might not be what some Australian bus manufacturers want to hear, but forewarned is forearmed, and the likely beneficiary will be the Australian operator who might take a shining to product from the high end of Chinese manufacturing, at a cheaper price.
One Australian maker remarked candidly a few years ago that if Yutong made its way to Australia in a substantial way, they might well dominate the local market as their product is admittedly ‘good’.
To remind you of the statistics, Yutong produced 51,688 buses in 2012, which was almost 20,000 units more than its nearest rival, by volume, Daimler which built 32,088 in the same year. Yutong claim a 13 percent global market share.
Popular in Africa, the Middle East, southern Asia and South America, with the notable exception of Brazil, Yutong is looking to push further into Europe and south to Australia as it forays into ‘quality’ markets. So far, Yutong’s western European market share rests only with France, although the builder continues to tote its wares at the biennial Busworld Bus Expo at Kortrijk in Belgium, where they were named Builder of the Year at the last show in 2011, so awareness of Yutong in that part of the world would be high.
Yutong sees Australia as they see Europe, given its similarly high standard of operating requirements, and longer life cycle build quality procurement needs.
The Asia-Pacific team, led by its well-versed, impeccably dressed and multilingual sales director Avi Lee understands Australian operators require vehicles that will last 20 years or longer.
Yutong management in China is also aware of the negativity that has surrounded compatriot builders and their ventures into Australia, and ― while disappointed ― they have a plan to turn around any anti-China perception that some bus operators might still harbour of product coming out of the world’s largest economy.
Although not the best of friends, China is starting to adopt and adapt the manufacturing and marketing methods of its sparring partner Japan, which extends to creating ‘value propositions’ upon which to do business with its international clientele.
The Yutong value proposition ‘Yutong for You’ is more than a marketing catch phrase, as it genuinely reflects the acknowledgement that the customer comes first through providing high value products and solutions.
“We need to understand the customer deeply, and completely,” says Lee.
Yutong Australia will act as both importer and distributor of vehicles sourcing product from its Zhengzhou base, which is home to one of the world’s largest bus building facilities, the aptly coined ‘Yutong City’.
A satellite industrial hub to the city’s south, and on the junction of the main highways crossing China’s north, south and west, linking to eastern ports on the coast near Shanghai, Yutong City occupies 112 hectares, pumping out about 150 buses a day.
Lee says having a dedicated Yutong office in Sydney means it provides better access to a dealership network currently being formed across Australia.
“Manufacturing needs to listen to customers, so by setting up Yutong Australia we are closer to the customer and closer to the dealers,” he says.
Rather than Australian dealers communicating directly with Zhengzhou in China, they can work with the Sydney office, not just for new delivery requirements, but on service and spare parts, also in Sydney.
Lee says dealers will also be required to stock spare parts in their own locations, making it even easier for operators to get a replacement part at any time.
The Yutong service team will come together in Sydney and be accessible to Australian dealers and key customers for regular training on the product range.
“We will provide training in Sydney, making it easier for both the dealer and the customer,” Lee says.
Among the dealers will be Peninsula Motors, which initiated contact with Yutong three years ago and imported a few buses but decided not to pursue a distribution arrangement.
However, Avi Lee and his team say they have continued on friendly terms with Dilip Kumar’s Peninsula Motor Group at Bankstown, which will remain in the network as a Yutong dealer.
Yutong plans to make the dealer’s job simpler by taking care of all pre-delivery requirements in Sydney at the distribution centre.
“Everything will be systematically organised in an efficient way,” Lee says.
Also part of Yutong’s homework diligently completed and soon to act on is the understanding of the Australian operator’s demand for short lead times from order to delivery.
“We know that customers want to receive their bus as soon as possible,” he says.
“We have a mechanism to activate the purchase of the key build components according to our forecasting system.”
He says the activation system shortens the lead time from build to delivery.
Lee says another point of difference between Yutong and other bus manufacturers is they are not just a bus builder, but a bus operations ‘partner’, having developed experience at home in China as a partner with the expansive Zhengzhou bus rapid transit (BRT) system.
BRTs are extremely popular in China. Having the resources to build the required infrastructure to operate effective BRTs has given China an edge in knowing what works ― and what doesn’t ― in terms of delivering efficient BRT systems.
Although Australia has a dearth of BRTs, save for Brisbane’s busways, Yutong feels it has the right kind of emerging bus operations knowledge to ‘ride the journey’ as Australia becomes an even more sophisticated bus operating environment than it is now.
This is where the Yutong low floor comes into the frame. It’s not just a whim that Yutong is ‘putting it out there’ to see if operators are interested. They have already made a calculated assessment of what Australia’s future needs will be, and with such compliance rules involving disability access coming more strongly into focus, and the penchant for operators to buy less weightier vehicles with greater carrying capacity ― and at a competitive price ― Yutong could have a trump card to throw down on the bus market tendering table.
The 12.5 metre right hand drive low floor bus ― model number ZK6131HG, in case you are interested ― comes as a result of years spent studying the Australian market, and will soon roll off the Zhengzhou production line and into a series of tests to validate it’s compliance to Australian Design Rule standards. Expecting an ADR seal of approval, the low floor could be in Sydney by the end of the year.
City buses are something of a Yutong specialty, born out of a need to provide ‘solutions’ and not just products.
“Yutong is a solutions provider, not just a products provider,” Lee says.
The low floor city bus will be added to the current suite of three units, which include a shuttle style minibus, a small school or charter bus and a midsized coach, which will round out the standard mixed fleet requirements reflecting typically small to medium-sized Australian bus operations.
Again Yutong has done its homework, but there is more research into the Australian ‘way’ to be done by the well-travelled Yutong sales and marketing executives.
Almost as part of a cultural condition, Yutong takes its corporate citizenry very seriously, engaging in numerous charitable organisations in China.
Lee expects Yutong to take the same approach in Australia, after it gets to know the local cultural conditions more deeply.
But like Australia as elsewhere, the customer comes first.
“Without the customer, there is no work,” says Lee.
BUILDING REPUTATIONS
China is in the process of transforming, and Lee is aware that the recent past of low labour costs led to producing low cost products, and ― unfortunately ― often translated into low quality goods.
He says those manufacturers who remain stuck in a production cycle of low labour costs will die out in China.
“Only those who produce quality and meet customer satisfaction will ‘live’,” says Lee.
It’s important, very important for everyone involved in the Yutong enterprise to be happy, whether a customer, dealer, or ― just as importantly ― employee of the company. There’s almost a science to the degree of happiness Yutong wants to engender, as Lee refers to a ‘happiness index’, which is used to rate employee satisfaction at Yutong City where more than 30,000 staff are employed.
“The satisfaction level at Yutong, and the salary level, is comparatively higher,” Lee says.
“If you have a happy employee you will have a happy customer; if you have a sad employee it’s difficult to have a happy customer, and this is a key point in Yutong’s corporate culture.”
Lee says Yutong has a sense of passion and a mission, which leads to the need to continually innovate.
The electrophoresis facility, which electroplates all chassis and the predominantly steel bus frames, is world-leading, and another value-add point of difference that can’t be overstated.
To allay something of a myth in Australian bus operating circles that Chinese bus builders don’t consider operating life cycle costs, think again.
Yutong has its own campaign to manage in China, offering vehicles at a higher price than its own domestic operators have been used to paying, but just as in Australia, have dug a bit deeper to invest in vehicles that will last longer.
“Our prices in China are higher than our competitors, but still customers select Yutong, and the reason is very simple, because they know Yutong can bring them lower life cycle costs,” Lee says.
Yutong offers a premium product, at the ‘high end’.
Even so, high volume production keeps costs under control and lowers the price, still within the premium quality range.
“The cost structure at Yutong is different to other manufacturers in China,” says Lee.
“We believe price is not determined by manufacturing, but by the market, and the customer is ready and willing to pay a higher price for better value.”
SUBHEAD: SYNCHRONISED EUROPE
Henan province, of which Zhengzhou is the capital, has a population more than four times that of Australia. One wonders why a province of 100 million would connect through a bus giant like Yutong to a relatively small country like Australia.
“What we are doing now in Australia is in the same synchronised step with what we are doing in Europe,” says Lee.
“We want to seek the business of quality.
“Australia is more selective, with a high standard, and has customers who manage their business in a sophisticated way.”
Already steeped in knowledge of the Australian operating environment, Yutong’s recently promoted International Business Vice-President Kent Chang is excited with the prospects for Australian operators who stand to be among the first in line to receive buses from the organisations new alternative energy factory.
The new factory is three times larger than Yutong City and from all reports is something to behold. There will be more on that later and left for another day, as this facility will potentially streamline the supply of units coming into Australia, particularly as Euro 6 environmental obligations kick into gear within the next few years.
“Bus manufacturing is a sunrise industry with a bright future,” says Chang.
And rather than being the imitator, as was Japan at the start of its industrial dawn, Yutong will innovate and lead, and place greater emphasis on alternative energy bus manufacturing.
Through this, Chang sees Yutong as taking an environmentally responsible approach, seeking to improve people’s lives with greener, cleaner buses, not just for China, but across the globe.
Like all stories from the middle kingdom, this epic has a dynastic feel with more chapters to write as the enterprise gets even larger and as Yutong’s alternative energy mega factory gradually comes online.
But until that matures a little further, the value proposition stemming from Zhengzhou and the ‘high end’ of China’s manufacturing base remains enticingly compelling to the Australian operator, as ‘Yutong for You’ could soon translate to you and your Yutong.