Ford wants to rank among China's top three auto brands

Ford's New Chinese Puzzle If you ask today’s China, who owns the car ups and downs? The answer is: No one is popular, but everything is universal. Ford is not convinced. It aims to build a large-scale domestic production and sales system, and rank among China’s top three automotive brands. Although Ford’s name carries the character “Fu,” which is highly valued in Chinese culture, its journey into the Chinese automobile market has been extremely challenging. In the 1990s, Ford, which was ahead of competitors like Volkswagen and General Motors, actively sought joint venture partners in China. It contacted companies such as Shenyang Songliao Automobile, Dongfeng Automobile, and Xiangtan Jiangnan Alto, but failed due to cultural, ideological, and systemic differences. In 1996, Ford saw hope through a joint venture tender with Shanghai to produce sedans. However, due to General Motors’ $100 million bid, Ford had a chance to sell out at $1.6 billion. In 1995, Ford formed a strategic partnership with Jiangling Motors in Nanchang, entering the commercial vehicle sector, an emerging market at the time, producing the “Quan Shun” brand. But in China, the most popular cars are not commercial vehicles. In a way, Ford still struggled to break into the mainstream car market. It wasn’t until 2001 that Ford successfully established a joint venture with Changan Automobile Group, forming Changan Ford Motor Co., Ltd. In January 2003, it launched the small car "Fiesta," marking its debut in the household car market. However, Volkswagen, General Motors, and even newcomer Honda had already launched models and engaged in price wars, making the "Fiesta" experience a mix of challenges and opportunities. This history constantly reminds Ford’s executives that the Chinese auto market is the most vibrant and competitive in the world. Despite being a global third-largest automaker, Ford hasn’t yet entered the top tier of Chinese car sales. Moreover, last year, Ford’s global auto business (excluding finance) suffered a loss of $3.9 billion, prompting it to make significant moves in the Chinese market. This year, several news items related to Ford have emerged: Mazda 3 announced co-production of Ford’s “Fox”; Volvo, Ford’s wholly-owned subsidiary, will begin domestic assembly at Changan Ford this summer; and Mazda took a stake in Changan Ford, renaming the joint venture to Changan Ford Mazda. These moves signal that Ford is officially declaring war, adopting a multi-brand portfolio strategy similar to GM. A large-scale domestic production and sales system featuring Ford, Mazda, and Volvo is now stepping up to compete with GM’s Chevrolet, Buick, and Cadillac. Deployment Platform Strategy Ford Motor Group operates eight brands globally, including Ford, Lincoln, Mercury, Mazda, Jaguar, Volvo, Aston Martin, and Land Rover. In China, Fox, Mondeo, and Fiesta are currently sold under the Ford brand. Now, the “Mazda” brand is increasingly taking on responsibility, playing a more critical role in Ford China’s overall strategy. On April 3, Changan Ford in Chongqing announced that 15% of the 50% stake previously held by Ford would be transferred to Mazda, and the joint venture company would be renamed Changan Ford Mazda. This move not only increases the idle production capacity of the Chongqing plant but also leverages Mazda’s widely recognized brand to improve efficiency. Additionally, the joint venture will provide two major platforms for Changan Ford (Chongqing and Nanjing plants) to introduce Mazda products. According to industry sources, the Chongqing plant will also introduce Mazda3 and Volvo S40. If nothing changes, the plant will reach its capacity limit this year. With a sharp increase in production capacity, Changan Ford’s total sales plan for 2006 increased by 119% from last year to 138,000 units, including 60,000 Fox models, 48,000 Mondeo, and 20,000 Mazda3, leaving 10,000 for Volvo S40. When Shi Binde, president of Changan Ford, was interviewed, he said with regret, “We never worry about product sales. We only worry about whether the production capacity can keep up with market demand and may not be able to meet so many orders.” In Ford’s platform strategy, besides the Chongqing factory, there are also the Nanjing factory and two factories in the FAW system (the Mazda brand’s Changchun and Hainan plants), which will serve as Ford’s top three manufacturing platforms in mainland China. The establishment of these three major platforms will facilitate shared parts procurement and manufacturing equipment, allowing products to enter their respective sales systems under different brands. Liu Yiqun, a public relations commissioner of Huadong District of Changan Ford, stated that since its launch in April last year, the main building of most functional workshops in the Nanjing plant has been completed: the stamping shop, welding shop, painting shop, assembly line, and administrative office building. With scale, the relocation of the administrative building has also begun. Within three months, all employees will move into the new office. According to another supplier of parts and components, the planned Nanjing plant with a production capacity of 160,000 vehicles will introduce the new generation of Ford Fiesta and Mazda2 next year, and more Mazda models will enter the first-tier system. People will see that Ford’s clear manufacturing platform in China will carry the heavy responsibility of launching a new round of Ford offensive. Sub-channel “Remodeling” Brand Since Ford’s four design centers in Dearborn have been operating non-stop, people have not stopped criticizing Ford’s stormy brand acquisitions in the last century. Accusations that these platform strategies are designed to integrate automotive design and manufacturing, and that Ford’s acquisition of products with distinctive features are self-contradictory. Douglas Brinkley, a writer and historian of The New York Times, mentioned in his book “Wheels for the World” that “Learning to think about issues from the perspective of parts sharing is crucial, but if it wants only another Lincoln, then the Jaguar acquisition is also a waste of money.” When these platforms came to China, the same questioning began to take place. The spearhead pointed to the Changan Ford Chongqing factory that will jointly produce Mazda3, Ford Focus, and Volvo S40 this year, and the unease has spread rapidly from the inside out. In March of this year, Volvo China began to release news to the media, stating that the vague coverage of individual domestic media about Mazda 3 and Volvo S40’s “common chassis” has seriously damaged Volvo’s high-end brand image. This statement explains that the Volvo S40 and the Mazda 3 share a chassis development platform instead of using the same chassis, and the chassis developed on this platform is completely different. Volvo emphasized that “the Volvo S40 is still a high-quality, high-security mid-level luxury car.” In fact, it is difficult to avoid the similar flaws in the less mature Chinese market. It is not clear that more than one-third of the world’s major auto companies use the platform strategy to achieve production. Ford needs to change this concern, at least, what it can do is to separate its sales channels and strengthen its own brand characteristics. “Ford’s lively and exciting” brand appeal has been very successful in Taiwan. We expect that this new mother brand spirit will continue to the product level. Changan Ford’s sales channels will be fully enhanced this year.” Chen Yinheng, Deputy Director of Marketing, Changan Ford Motor Sales Co., Ltd. Emphasize. Mazda has also established FAW Mazda Sales Co., Ltd. with FAW and will sell all Mazda brand products in the future. They will highlight Mazda’s “ZOOMZOOM” dynamic and technology-leading image. The Volvo domestic sales channel, which has successfully established a high-end car image in China, will be in line with the current import car channel, and will ultimately be dominated by Volvo China. Outside these three major domestic systems, the Ford brand high-end imported cars including Jaguar, Land Rover, and Lincoln will also independently own a certain number of networks. Ford Prototype Ford China Chairman Cheng Meiyi is trying hard to realize a new attempt to integrate the Changan Ford Mazda on the mainland and Ford Liuhe, a joint venture plant in Taiwan Province, to establish a “Great Ford” system—one that includes the human resources of both sides of the Ford Department. Flow, technical support, and shared parts planning. “Ford’s long-term strategy is to uphold the localization of talents. Teams from Ford Europe, Australia and Ford Liuhe are already well integrated with Chang’an’s team, and in particular have leveraged the advantages of Chinese cooperation.” Chang An Ford, one from Ford Six The executives of Hehe are not without pride to say that “Ford Liuhe, 35 years old, has basically no foreigners involved in management. The local president took over all management work 3 to 4 years ago. A similar trend has come for a long time. Looks will also apply to the mainland market.” General Motors and Ford’s joint-venture factories in the mainland have gathered many talents from Ford Liuhe in Taiwan, including Chen Yuanqing, president of Jiangling Motors, Ye Mingxin, deputy general manager of Jiangling Sales Co., Ltd., and Liu Yonghai, general manager of Shanghai GM’s marketing department. It is a relatively well-known number in the industry. In addition, Ford Motor Co. Ltd., the largest distributor in China, has three general managers from Taiwan. In January of this year, Liu Wei, deputy general manager of the Ford Liuhe Marketing Department, was transferred to Changan Ford to serve as vice president of sales. These sales professionals in Taiwan’s background have been valued by the industry. In the future, Taiwan’s professionals will continue to work in the mainland to strengthen their workforce and management. When the talents are in place, the replication of the marketing system, the sharing of the parts procurement system, and the promotion of the car design will naturally become the next step. Chang’an Ford’s “Live Wonderful” new brand remodeling plan comes from the successful model in Taiwan. Former Mondeo, Fox and other models have Ford Liuhe involved in the design. When Ford Liuhe President Shen Yingyi attended the Ford Liuhe Supplier Conference recently, he said that after the future cross-strait three links and free trade became a single market, Ford Liuhe will strive to become the Ford Greater China or Asia Pacific production design center, and require its parts and components suppliers to absorb advantages from both sides of the strait to enhance their competitiveness and jointly develop the Greater China market. Under the shape of “Great Ford,” Changan Ford Mazda and Ford Liuhe will determine the success or failure of Ford Asia Pacific’s new strategy.

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