Nanjing Aotecar: China's scroll compressor leader

Gasgoo.com: We know Aotecar was founded in 2000 and now it is the biggest scroll compressor in China. Can you give us a brief introduction to Aotecar's early days?

Mr. Qian, in his early sixties,  takes  Aotecar as important as his life.

Qian Yonggui: In some sense, I transferred to Aotecar my experience gained from a large home-use air conditioner manufacturing company. There are many similarities and differences between domestic and automotive air-conditioning systems: the two have similar operating principles, while the manufacturing of the former is more demanding but promises thinner profit margins.

We started from scratch and "borrowed" the production managing method of domestic air conditioners. At the first stage, we replaced a Japanese-brand competitor who supplied compressors for Tianjin FAW Xiali Automobile Co's small cars. So in FAW Xiali, Toyota's partner in China and our very first OEM customer, we made a breakthrough, and then tried to persuade more OEMs to try our products.

At the same time, we took our after-service seriously. We provided all types of the auto conditioners for the after-market; the taxi drivers and private car-owners were satisfied with the replacement and our products earned word of mouth. So the OEMs start to consider using our products after getting positive feedback from the consumers.

Now, almost all China's independent automakers, such as Chery, Brilliance, BYD, and Lifan, have chosen to use Aotecar scroll compressors. Our company owns independent intellectual property rights on the products and 32 categories of products have obtained patent rights. I am proud of this.

Gasgoo.com: What's the market share for Aotecar in the domestic market? What's your advantage over other types of compressors?

Qian Yonggui: Last year approximately 8.8 million units of refrigerating compressors were sold in China, and we held 12% market share. Of the all the types of air-conditioning compressors in general use in automotive applications, scroll compressors accounted for 15%, and yet the percentage is still growing.

We're likely to to produce and sell 900,000 units of compressors this year. Our new plant is now under construction, which will finally raise the production capacity to 3 million units. For the year 2008, we aim to increase the sales revenue by 50% with an increase of 20% in the profit.

Compared to the previous types such as the reciprocating compressor or rotary vane compressor, the scroll compressor has more advantages: better performance, better reliability, high volumetric efficiency, low noise, low consumption of power, short starting torque, faster cooling and so on. The scroll compressor is regarded as the most ideal compressor for automobiles and will certainly become the most popular of its kind in China in the years to come.

Gasgoo.com: What is your export plan?

Qian Yonggui: Our products have been exported to North America and Southeast Asia. But overseas business is not high on our agenda at the moment.

We have all witnessed the development of China's auto market which has been growing by an average of 20% these years. Our strategy is to gain a stable presence in the Chinese market with our advanced technology and innovation, and then explore the overseas market. So after building our local market position, we will give top priority to export business in the next five years. We'll majorly focus on the OEM market, and where that's suitable we'll cater for the after-sales market.

Gasgoo.com: how much have you spent on research and development?

Qian Yonggui: We spend about 6% of our total revenue on R&D. We have established long-term cooperation with the Herrick laboratory of Purdue University in the United States. With their help, we successfully developed our technology for general application at our early stage.

The future air conditioner will develop into more energy saving, environment protection and more responsive ones, and we'll make further investment accordingly. For example, we've started the development of the CO2 air-conditioning compressor to be used in hybrid vehicle and pure electric vehicles.

Three factors are to be changed -the working substance, the driving force and the controlling method.

Gasgoo.com: As the hybrid vehicles are getting more and more popular around the world, and the Chinese government has also advocated the development and popularization of hybrid cars. Has Aotecar been involved in this field?

Qian Yonggui: Our hermetic scroll compressors to be installed in electric vehicles have started small-volume production. For dozens of its plug-in hybrid electric vehicles, BYD has ordered these compressors for trial. As BYD plans to launch the cars in year-end, we'll also start mass production of the new compressors. '

Meanwhile, we have been in contact with several other Chinese automakers from the very early period of their development. Once they put their alternative energy vehicles onto the market, we'll surely be their OEM supplier.

Gasgoo.com: How will you cope with the situation that the manufacturing cost of the industry keeps rising and the OEMs pass pressure onto the suppliers?

Qian Yonggui: Firstly, to boost the sales. Of course, the premise is that you must have a good control of the cost, or else you'll lose more as you sell more. Larger sales would offset your additional investment. Secondly, to establish a centralized supplier system. We're committed to maintaining and improving mutual understanding and trust of our suppliers. We make every effort to convince the suppliers that we can overcome the adversity together. I told them -- "hold on!"

Thirdly, to improve efficiency. The new labor law effective early this year and the rising Chinese currency could be a deadly strike to those low-efficiency and low-technology companies, but it's a different case for us-we have been operating lawfully, and overseas business hasn't grown so big. So these are not bad news for Aotecar.

We retain our market share through improving the management efficiency and better control of cost. We hope to retool ourselves in the ordeal. Only the true hero can weather the most difficult time.