'Most important car on earth'
A Forbes magazine story in 2010 said the Wuling Sunshine minivan is "the most important car on earth" because it is "the choice for China's small business owners and farmers.
Little-known Liuzhou is now a giant in minivans
A Forbes magazine story in 2010 said the Wuling Sunshine minivan is "the most important car on earth" because it is "the choice for China's small business owners and farmers, who use it to haul everything from electronics to sugarcane".
The birthplace of that vehicle is Liuzhou, a city far less famous than Changchun, Shanghai or Guangzhou on China's auto map.
But it ranks first among all Chinese cities in per capita automobile output.
With 1 million urban residents it now makes more than 2 million vehicles a year, nearly 10 percent of the national total, and annual production is growing 20 to 30 percent.
Shanghai-GM-Wuling and Dongfeng Liuzhou Motor are the two leading automakers in the industrial city in the Guangxi Zhuang autonomous region.
Both target a fast-growing market - the vast number of villages, counties and small cities in China. The Wuling Sunshine is the masterpiece of SGMW.
Liuzhou's two automakers produced and sold about 61 percent of the minivans in China last year at prices ranging from 50,000 yuan ($8,200) to 80,000 yuan.
Dongfeng Liuzhou, founded in 1954 with 3,000 workers, made 180,000 minivans and multi-purpose vehicles that carried the badges of Fengxing, Lingzhi and Jingyi, as well as 40,000 heavy trucks with Cummins engines, in 2013. Its sales revenues totaled 16.5 billion yuan.
Dongfeng Liuzhou did not produce minivans and MPVs until 2001.
That year its output was only 2,000 vehicles, but production has risen by 30 to 40 percent each year since.
The right market
"We focus on the right market with very competitive prices," said Ceng Juhang, sales manager at the company. "The foreign brands aim at well-off urban residents, leaving the vast rural and county markets to us."
The Chinese government wants to urbanize rural areas by developing local industries in towns and small cities instead of promoting more megacities, giving automakers like SGMW and Dongfeng Liuzhou an enormous and expanding market, analysts said.
The 300 million migrant workers working and living in cities of various size and another 300 million rural laborers set to be released from the countryside by the impending land reform and urbanization make up one of the largest and fastest-growing consumer groups in the world.
That includes buyers of vehicles like the Wuling Sunshine.
"Their needs and tastes change every two to three years. They want more comfortable and bigger cars, not only to carry goods as before, but also take their families for refreshing short trips," said Yao Liwen, general manager for marketing at Dongfeng Liuzhou. "We must be very responsive to the changes."
Yet one common thing shared by different generations of the buyers is that the car must be cheap and sturdy.
"Automobile makers win out by being different or controlling costs," said Frank Xue, director of public relations at SGMW. "We just succeed by providing reliable cars at minimum costs."
Largest automaker
SGMW, with minivans and MPVs as its core products, made 1.6 million vehicles in 2013 to become the largest automaker by output in China.
The company is a three-way joint venture with 50.1 percent owned by SAIC Motor.
Liuzhou Wuling Motors holds 5.9 percent and GM China has a 44 percent stake. The venture plans to produce 100 billion yuan worth of products next year.
Wuling starting by mimicking Citroen and some Japanese minivans in the 1970s. By the early 1980s its vehicles were well known in the country for their adaptability, capacity and low maintenance costs.
SGMW developed three models from the old design - the Sunshine, Rongguang and Hongguang.
The vehicles became bigger and more comfortable with seven-seat models like the Hongguang, which was recently classified by the China Association of Automobile Manufacturers as an "economical MPV".
"We have more than 3,000 dealers in cities and towns across the country," said Zhou Xing, an executive at SGMW. "The large marketing and service network is our big strength."
When SGMW was established in 2002, Wuling minivans had a respectable but not dominant 18 percent share of the segment.
With diversified models and improvements in technology and service, Wuling now has about 48 percent of the market.
Many grassroots Wuling dealers drive out to the countryside to offer maintenance services for consumers living far from towns.
"Our after-sales service business is increasing at twice the speed of our production," said Xue. "The competition among Chinese minivan and MPV makers is to see who can extend their marketing and service network to the county and township domains faster than the others. We are doing our best in some key markets like Southeast China."
Expanding overseas
He noted that GM's global manufacturing and marketing system laid a solid foundation for SGMW to explore overseas markets.
It started producing the Wuling Rongguang in Egypt in 2012 that is distributed by the GM sales network.
"We sell cars as well as our technologies," said Xue. "This is big progress in our overseas expansion. We are eyeing the Southeast Asian and South American markets now."
"Wuling is the most popular minivan brand among local consumers in Egypt and its price is even higher than its Japanese competitor Suzuki," he added.
SGMW started producing the Wuling Hongguang - which carries the Chevrolet badge - in India in 2010. The vehicle was elected the second-most popular minivan among locals in the first year it was on sale, according to Xue.
Back in China, SGMW purchased a manufacturing facility in Qingdao, Shandong province, in 2005 and started to produce Wuling vehicles there in 2008.
Its new production facility in Liuzhou began to produce the Baojun, a family car priced between 60,000 yuan and 90,000 yuan, in 2012. The plant has an annual capacity of 400,000 vehicles and 400,000 engines.
In addition to SGMW and Dongfeng Liuzhou, the city also has several other automakers producing vehicles ranging from cars to heavy trucks and special vehicles. The auto industry accounted for 37.2 percent of all industry in the city in 2012.
Solid basis
But Liuzhou's fame in the automotive industry did not come overnight.
It is the result of a solid industrial base built up in the past century and a developed vocational education system that offers strong support in quality human resources, said local officials.
Starting with sugar, iron and even coffins, Liuzhou has been a production hub in Guangxi since the late Qing Dynasty (1644-1911). In the modern era, its industries have grown to produce machinery, heavy machines and machine tools. Recently the automotive industry rose to the forefront.
Since the 1990s, the city's machinery and automobile companies rapidly modernized by importing advanced equipment, technology and investment from the United States, Germany, the United Kingdom and France.
The city's abundance in skilled labor that ranges from workers and craftsmen to technicians and engineers has proven to be another key to the auto industry's growth.
"Liuzhou people just have the genes to make and to design," said Zhou Quan, a local government official. "Do-it-yourself is a tradition in my family and many others."
There are 24 vocational schools in Liuzhou that churn out tens of thousands of well-trained young workers specializing in automobile repair, computers, benchwork and machining. "We have to control the number of students because of the limited number of teachers," said Wang Chunqiu, president of the No 1 Vocational School of Liuzhou.
Each year 800 to 900 students in auto-related programs graduate from his school.
"They are very popular with local auto companies and 99 percent of them can get job contracts before leaving school," said Wang.
"Blue-collar work is better paid and wins more respect from the society now than before." Students from rural families are exempted from tuition fees in local vocational schools due to a local government assistance program, according to the local education bureau.
In addition a variety of living subsidies are available for poor students as well as scholarships for the excellent.
"Local carmakers are more pragmatic these days. They are shifting their emphasis of recruitment from university graduates to students from vocational schools who are more hardworking, reliable and have more hands-on skills," said Pan Xuming, head of Liuzhou education bureau.
But lack of innovation in technology and management remains the largest challenge for Liuzhou's automobile industry.
"We have had the fastest improvement in management and work efficiency since we began cooperating with Nissan in 2003," said Zhan Xin, a technician with Dongfeng Liuzhou. "But many State-owned enterprises still have a long way to go before having modern management."
But even at the rapidly modernizing Dongfeng Liuzhou, its general manager for marketing Yao Liwen admitted that "we have skilled workers, but lack the talent for fundamental research".
He said that "the entire industry puts too much emphasis on output and sales, especially after China rapidly grew into the world's auto market in 2009".
"It is worrisome to see our foreign counterparts studying solar-energy vehicles when we still regard a car run on a battery as 'green'. We are simply spoiled by the easy market and will be eventually hurt by our short-sightedness," he said.
A Forbes magazine story in 2010 said the Wuling Sunshine minivan is "the most important car on earth" because it is "the choice for China's small business owners and farmers, who use it to haul everything from electronics to sugarcane".
The birthplace of that vehicle is Liuzhou, a city far less famous than Changchun, Shanghai or Guangzhou on China's auto map.
But it ranks first among all Chinese cities in per capita automobile output.
With 1 million urban residents it now makes more than 2 million vehicles a year, nearly 10 percent of the national total, and annual production is growing 20 to 30 percent.
Shanghai-GM-Wuling and Dongfeng Liuzhou Motor are the two leading automakers in the industrial city in the Guangxi Zhuang autonomous region.
Both target a fast-growing market - the vast number of villages, counties and small cities in China. The Wuling Sunshine is the masterpiece of SGMW.
Liuzhou's two automakers produced and sold about 61 percent of the minivans in China last year at prices ranging from 50,000 yuan ($8,200) to 80,000 yuan.
Dongfeng Liuzhou, founded in 1954 with 3,000 workers, made 180,000 minivans and multi-purpose vehicles that carried the badges of Fengxing, Lingzhi and Jingyi, as well as 40,000 heavy trucks with Cummins engines, in 2013. Its sales revenues totaled 16.5 billion yuan.
Dongfeng Liuzhou did not produce minivans and MPVs until 2001.
That year its output was only 2,000 vehicles, but production has risen by 30 to 40 percent each year since.
The right market
"We focus on the right market with very competitive prices," said Ceng Juhang, sales manager at the company. "The foreign brands aim at well-off urban residents, leaving the vast rural and county markets to us."
The Chinese government wants to urbanize rural areas by developing local industries in towns and small cities instead of promoting more megacities, giving automakers like SGMW and Dongfeng Liuzhou an enormous and expanding market, analysts said.
The 300 million migrant workers working and living in cities of various size and another 300 million rural laborers set to be released from the countryside by the impending land reform and urbanization make up one of the largest and fastest-growing consumer groups in the world.
That includes buyers of vehicles like the Wuling Sunshine.
"Their needs and tastes change every two to three years. They want more comfortable and bigger cars, not only to carry goods as before, but also take their families for refreshing short trips," said Yao Liwen, general manager for marketing at Dongfeng Liuzhou. "We must be very responsive to the changes."
Yet one common thing shared by different generations of the buyers is that the car must be cheap and sturdy.
"Automobile makers win out by being different or controlling costs," said Frank Xue, director of public relations at SGMW. "We just succeed by providing reliable cars at minimum costs."
Largest automaker
SGMW, with minivans and MPVs as its core products, made 1.6 million vehicles in 2013 to become the largest automaker by output in China.
The company is a three-way joint venture with 50.1 percent owned by SAIC Motor.
Liuzhou Wuling Motors holds 5.9 percent and GM China has a 44 percent stake. The venture plans to produce 100 billion yuan worth of products next year.
Wuling starting by mimicking Citroen and some Japanese minivans in the 1970s. By the early 1980s its vehicles were well known in the country for their adaptability, capacity and low maintenance costs.
SGMW developed three models from the old design - the Sunshine, Rongguang and Hongguang.
The vehicles became bigger and more comfortable with seven-seat models like the Hongguang, which was recently classified by the China Association of Automobile Manufacturers as an "economical MPV".
"We have more than 3,000 dealers in cities and towns across the country," said Zhou Xing, an executive at SGMW. "The large marketing and service network is our big strength."
When SGMW was established in 2002, Wuling minivans had a respectable but not dominant 18 percent share of the segment.
With diversified models and improvements in technology and service, Wuling now has about 48 percent of the market.
Many grassroots Wuling dealers drive out to the countryside to offer maintenance services for consumers living far from towns.
"Our after-sales service business is increasing at twice the speed of our production," said Xue. "The competition among Chinese minivan and MPV makers is to see who can extend their marketing and service network to the county and township domains faster than the others. We are doing our best in some key markets like Southeast China."
Expanding overseas
He noted that GM's global manufacturing and marketing system laid a solid foundation for SGMW to explore overseas markets.
It started producing the Wuling Rongguang in Egypt in 2012 that is distributed by the GM sales network.
"We sell cars as well as our technologies," said Xue. "This is big progress in our overseas expansion. We are eyeing the Southeast Asian and South American markets now."
"Wuling is the most popular minivan brand among local consumers in Egypt and its price is even higher than its Japanese competitor Suzuki," he added.
SGMW started producing the Wuling Hongguang - which carries the Chevrolet badge - in India in 2010. The vehicle was elected the second-most popular minivan among locals in the first year it was on sale, according to Xue.
Back in China, SGMW purchased a manufacturing facility in Qingdao, Shandong province, in 2005 and started to produce Wuling vehicles there in 2008.
Its new production facility in Liuzhou began to produce the Baojun, a family car priced between 60,000 yuan and 90,000 yuan, in 2012. The plant has an annual capacity of 400,000 vehicles and 400,000 engines.
In addition to SGMW and Dongfeng Liuzhou, the city also has several other automakers producing vehicles ranging from cars to heavy trucks and special vehicles. The auto industry accounted for 37.2 percent of all industry in the city in 2012.
Solid basis
But Liuzhou's fame in the automotive industry did not come overnight.
It is the result of a solid industrial base built up in the past century and a developed vocational education system that offers strong support in quality human resources, said local officials.
Starting with sugar, iron and even coffins, Liuzhou has been a production hub in Guangxi since the late Qing Dynasty (1644-1911). In the modern era, its industries have grown to produce machinery, heavy machines and machine tools. Recently the automotive industry rose to the forefront.
Since the 1990s, the city's machinery and automobile companies rapidly modernized by importing advanced equipment, technology and investment from the United States, Germany, the United Kingdom and France.
The city's abundance in skilled labor that ranges from workers and craftsmen to technicians and engineers has proven to be another key to the auto industry's growth.
"Liuzhou people just have the genes to make and to design," said Zhou Quan, a local government official. "Do-it-yourself is a tradition in my family and many others."
There are 24 vocational schools in Liuzhou that churn out tens of thousands of well-trained young workers specializing in automobile repair, computers, benchwork and machining. "We have to control the number of students because of the limited number of teachers," said Wang Chunqiu, president of the No 1 Vocational School of Liuzhou.
Each year 800 to 900 students in auto-related programs graduate from his school.
"They are very popular with local auto companies and 99 percent of them can get job contracts before leaving school," said Wang.
"Blue-collar work is better paid and wins more respect from the society now than before." Students from rural families are exempted from tuition fees in local vocational schools due to a local government assistance program, according to the local education bureau.
In addition a variety of living subsidies are available for poor students as well as scholarships for the excellent.
"Local carmakers are more pragmatic these days. They are shifting their emphasis of recruitment from university graduates to students from vocational schools who are more hardworking, reliable and have more hands-on skills," said Pan Xuming, head of Liuzhou education bureau.
But lack of innovation in technology and management remains the largest challenge for Liuzhou's automobile industry.
"We have had the fastest improvement in management and work efficiency since we began cooperating with Nissan in 2003," said Zhan Xin, a technician with Dongfeng Liuzhou. "But many State-owned enterprises still have a long way to go before having modern management."
But even at the rapidly modernizing Dongfeng Liuzhou, its general manager for marketing Yao Liwen admitted that "we have skilled workers, but lack the talent for fundamental research".
He said that "the entire industry puts too much emphasis on output and sales, especially after China rapidly grew into the world's auto market in 2009".
"It is worrisome to see our foreign counterparts studying solar-energy vehicles when we still regard a car run on a battery as 'green'. We are simply spoiled by the easy market and will be eventually hurt by our short-sightedness," he said.
