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At the end of 2011, several accidents of school buses happened in China, causing tragic deaths and tolls to children and their families. After that, the State Council issued strict rules about the school buses for kindergartens and schools.
From the pure commercial viewpoint, this new requirement creates great business opportunities in China’s school bus market, which even attracts the world-known school bus manufacturer.
In the 1st China School Bus Development Seminar 2012, i.e. the International School Bus Exhibition, which was held in Beijing on February 15, 2012, not only about 20 Chinese bus companies like Xiamen Jinlong, Zhengzhou Yutong, BAIC Foton, but also the foreign companies represented by the earliest school bus maker Blue Bird Corp, the largest school bus manufacturer Navistar and component maker Allison Transmission, were present in the exhibition.
Navistar is waiting for the approval of the Chinese government for its cooperative project with Chinese local company JAC Motors. However, it is quite likely to accelerate the localization of its school buses in China via technology transfer to take the decisive opportunities in this market.
According to Cui Jiyong, deputy director of the National Office of Primary and Middle School Students’ Traffic Safety Education, said:“Presently, local governments of some cities and provinces have made their own rules about the specification and safety of school bus. They have made explorations into the standardized management and operation pattern of school buses in other countries and got some achievements. However, compared with foreign countries, we need further exploration, summarization and elevation to get more experiences.” In Cui Jiyong’s opinion, the United States, Canada, Germany and Korea all set up complete national rules about the school bus, which have clear stipulations about the main operating body of school bus and the standard of operation pattern, forming a system combining operation, management, responsibility and safety. These experiences are worth learning and borrow- ing for China.
“Compared with other manufacturers, our business outside the United States indeed takes a very small proportion. But we have the ambition and the plan to improve the proportion of our international business to the same level with our domestic business. The Chinese market undoubtedly plays an important role in this plan,” said Yang Bo, general manager of Navistar China. Though Navistar supplied China the first batch of trucks in an indirect method 50 years ago, it is still a “latecomer” in the field of internationalization compared with other commercial vehicle manufacturers.
As Yang Bo said, Navistar’s global business amounted to 14 billion U.S. dollars in 2011, of which the overseas business contributed about 2 billion U.S. dollars. Navistar has already set up goals of expanding overseas business with full efforts, in which China is an indispensable factor. In Navistar’s plan, China is expected to contribute to 20% or even more of its overseas business in the future.
This plan requires Navistar to open the Chinese market as soon as possible, which in Yang Bo’s opinion does not only affect the internationalization of Navistar, but also concerns the company’s future. The heating-up Chinese school bus market provides an unprecedented opportunity for this largest school bus maker in the United States.
What’s out of Navistar’s expectation is that the drastic increase of China’s school bus market is so fast that its cooperation project with JAC Motors, if not approved, will not catch up with this opportunity.
“We attach great importance to the new national standard of the school bus in China. We also notice that the final version of the new rule gives a one-year transitional period for all the schools and kindergartens in China to be equipped with qualified school buses. For us, the time is very urgent,” said Yan Jingde, vice president of Navistar China who is responsible for the products in China and technological R&D. Navistar is actively talking with its Chinese part- ner on the plan of introducing the school bus with the North American standard and relevant technologies into China for the localization of production in this country.
“We will not completely copy our products and pattern from the United States into China. We will make use of our technological advantages to develop products suitable for the Chinese market to keep improving our competitive power,” Yan Jingde said. Apart from bringing the high-end school buses into China through import, Navistar will work with its Chinese partner to make more products based on the features of the Chinese market with lower prices than the school buses imported from the North American market.
Presently, Navistar’s comprehensive market share in North America is about 21%. Among them, it takes 40% of the middle-sized truck market and 34% of the special truck market –both are the No. 1 in the North American market. In addition, it takes 50% of the school bus market in North America.