In a market where industry giants like Juli and Shuangli faced declining demand and eventually went bankrupt, China Wind Farm Group, the leading manufacturer of agricultural vehicles in China, finally received approval from the National Development and Reform Commission for commercial vehicle production. This milestone marks the realization of a five-year dream for the Fengfeng Group. However, despite this achievement, industry experts remain cautious, noting that the transition to light trucks is not without challenges.
The journey of transformation has been long and arduous. For over five years, the company had been waiting for the opportunity to enter the commercial vehicle sector. Lin Lianhua, Deputy General Manager of Shifeng Group, who oversees commercial vehicle production, expressed calm confidence. He stated that the company is now fully prepared, having secured the necessary approvals and resources.
Established in 1993, Shifeng Group has built a strong foundation in the agricultural vehicle market. With an annual production capacity of 1 million three-wheel vehicles, 200,000 low-speed trucks, and 1.2 million engines, the company has consistently ranked among the top producers in the industry. By 2005, it achieved sales revenue of RMB 11.6 billion, with its low-speed trucks leading the market for six consecutive years.
Despite its past success, the shift to light trucks was not easy. In 2002 and 2003, the company explored partnerships with Yantai Automobile Manufacturing Plant and China National Heavy Duty Trucks to expand into the light truck segment. However, these efforts were hindered by national policies and failed to materialize.
The turning point came in 2004 when new traffic regulations significantly increased the cost of agricultural vehicles, leading to a sharp decline in sales. Faced with this crisis, the group decided to pivot towards light trucks as a strategic move. In December 2004, Shifeng invested heavily, allocating half of its human resources and a significant portion of its capital to establish Shandong Shifeng Commercial Vehicle Co., Ltd.
Looking ahead, the company plans to launch five self-developed light truck models by 2006, with a projected annual production capacity of 10,000 units. The models will range from 1-1.5 tons, priced between 3 to 5 million yuan. Over time, the focus will gradually shift from low-speed trucks to light trucks, with the goal of reaching an annual production capacity of 80,000 units and entering the top five in the light truck market.
However, the road ahead is uncertain. Analyst Zhang Xin from Guotai Junan pointed out that the competitive landscape is tough, with over 40 companies already in the market, many of which have established dominance. Companies like Beiqi Futian and Dongfeng hold a large share of the economical light truck market. Shifeng's main distribution channels are currently concentrated in rural areas, making the challenge of expanding into urban markets even greater.
Despite these obstacles, the company remains committed to its transformation strategy. Lin Lianhua emphasized that the shift to commercial vehicles is part of a broader vision for the future, including the development of passenger cars in the next five years. As the company gains experience and scale in the light truck segment, it aims to leverage this as a stepping stone toward becoming a full-fledged automaker.
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