CHINA: Chinese dealers implement Volvo CE’s after-market strategy to drive professionalization, differentiation and profitability
by Michele Travierso
Surrounded by the attractive bamboo forests of Moganshan in the Zhejiang Province, the Li Yu Shan Mining Co Ltd stone quarry produces small and medium-sized pebbles of mainly 20-25mm and 50-60mm. Thirty per cent of the quarry’s output has ended up under many of the high-speed railway tracks that criss-cross China. A relatively cheap commodity, the product sells for 48-50 RMB (€6.5/$7.4) per tonne.
This part of Zhejiang, 60km from the provincial capital Hangzhou and 200km from Shanghai, is known for its cool temperatures during the region’s scorching summers and is a popular destination for people looking to escape the heat.
Although the quarry is a large one employing some 60 people – last year it produced one-and-a-half million tonnes of pebbles – the machines on site are not brand new and the fleet, while well-maintained, is older than usually found on the average construction site. But herein lies one of the key reasons why Volvo Construction Equipment thrives in China, even after the slump in China’s construction equipment market.
Yuan Jian Zhong, the 47-year-old operations manager at Li Yu Shan quarry, has been buying and operating quarry equipment for more than 15 years.
Careful and periodical maintenance, such as that provided by Volvo CE dealership Zhejiang Liyang Machinery, based in Deqing, Zhejiang, is helpful for owners of older equipment, enabling them to obtain more mileage from it.
“I switched to Volvo CE on the advice of friends and colleagues who highlighted their better performance and after-sales service,” says Yuan, adding that he was also prompted by the legendary low fuel consumption of the Volvo machines.
“Volvo excavators usually burn 14-15 liters per hour, but a competing product can reach 19 liters or more,” he explains. During the course of a year, this means that operating a Volvo machine for about 500 hours a month can translate into significant financial savings.
Operator Shen Dong Min, 45, cites comfort as one of the reasons he enjoys working with Volvo excavators.
Since 2010, Yuan has purchased six EC210B excavators and two EC240B models for the company, and this year he bought another EC210B. The company has also just put down a 3m RMB (€400,000/$450,000) deposit for the first three of a batch of 15 machines for a new mining project, all EC380D models. Lou Li Hai, Service Director at Zhejiang Liyang Machinery says the company offers their customers three-year payment instalment plans to make sales easier.
The prize-winning dealership, owned by Cao Wei Guo, has been working with Volvo CE since the year 2000. Managing the maintenance of more than 1,000 machines in Zhejiang alone, it uses simple GPS telematics to alert customers to impending maintenance deadlines.
“This enables Volvo CE dealers to help customers extract an extra 200.000 RMB (€26.600/$30,000) out of the lifetime of a machine, even in the harsh conditions of a quarry,” says Cliff Zou, regional service manager at Volvo CE China.
It was out of financial necessity that the system was developed in China when the construction equipment market started to suffer the results of the global
When the Chinese economy boomed, construction companies mushroomed. But as the crisis hit, thousands of these companies folded, leaving projects unfinished, jobs unpaid and, of course, equipment-leasing fees outstanding.
As the first mines and construction companies defaulted, financial institutions requested some sort of control over the equipment. Basic telematics installed on machines warned customers that payments were due. But construction equipment dealers realized the system could be used to monitor both working hours and the location of machines, enabling them to alert customers to impending maintenance deadlines.
Owners of older equipment who logged more than 100 working hours in a month were recommended to take special care of their machines, least they suffer unexpected breakdowns, the bane of the industry. Over time, this led to a virtuous circle of more regular maintenance, scheduled ahead of time, thus reducing down time to a minimum for customers and increasing sales of parts, a major source of revenue for dealers.
In 2013, this blossomed into CareTrack – a global solution that benefits Volvo CE customers worldwide. CareTrack, which runs parallel to the system used in China, has more advanced capabilities. It generates a wide range of reports – including fuel consumption, operational hours and geographical location – via a web portal, as well as sending SMS/email alerts. Fleet managers can reduce fuel costs, optimize machine and operator performance, and proactively manage service and maintenance to maximize uptime. Dealers can also troubleshoot faults remotely.