Fleet Management News & Business Info | Commercial Carrier Journal
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COMMERCIAL CARRIER JOURNAL | MAY 2014 17 But what is unusual about this approach is that Cummins is not content to merely pawn off older technologically obsolete engines and technology to the Chinese market. Instead, the company considers China a rapidly emerging market worthy of its own diesel engine platforms. Moreover, these platforms will provide the basic build- ing blocks for the next generation of global diesels from Cummins – including engines we'll be running here in North America. According to numbers Cummins shared, the current size of the Chinese heavy-duty truck market is about 350,000 units, com- parable in size with today's North Ameri- can market. But China is still developing. Bringing the country into the modern age – and then providing the food, products and resources its 1.35-billion people will need to maintain that new standard of living – will by any reasonable estimate eventually create an annual demand for modern, clean, reliable trucks and engines that is staggering to contemplate. I hate math. And math hates me. But I'm going to put aside my loathing of this par- ticular discipline for a moment to illustrate why it seems like every company on the planet today is obsessed with China. Let's say you own a business that manufactures valve stem caps, and your valve stem cap features a universal design (not a stretch, I know): You can use them on bicycle tires, automobile tires, truck tires – anything with a tire. And let's say you make a 10-cent profit on every valve stem cap you sell. And you just sold one valve stem cap to 10 percent of the Chinese population. How much money do you have? There are 1.35 billion people living in China; 10 percent of that figure works out to 135 million people. And if you could have gotten each of those people to have given you a mere dime, you'd have had $13.5 million in your pocket. There you have it. The reality of China is that the numbers involved are so astronom- ically huge that if you have a viable product for that market, the potential rewards are stupendous. That's assuming, of course, that the Chinese actually pull off this ongoing economic miracle, the whole thing doesn't collapse in political chaos, or the Chinese decide they don't want to play by Western business rules. I've been to China twice – both times during my tenure with Randall-Reilly's con- struction magazine, Equipment World – and I've always remembered what one American executive working in Shanghai told me. The danger, he said, with investing in and trying to sell in China was pretty fundamental. "They want our money," he said. "They want our knowledge. They want our technology. And they want us to leave." That was back in the 1990s, so it's reasonable to assume that stance has mod- erated somewhat because the Chinese economic powerhouse – and Western investment in it – obviously is still going strong today. Cummins Engine has been a national player in China since the late 1970s and reaffirmed its commitment to that market during a press conference last month in Columbus, Ind., where the company showcased its new ISG engine, an inline 6-cylinder design available in 11- and 12-liter displacements. The event was even more significant in that it was held jointly with Chinese truck manufacturer Foton. It was clear that Cummins has forged significant partnerships with key strategic players in the Chinese market with an eye toward increasing its on-high- way market share there. PRODUCT REVIEWS, OEM & SUPPLIER NEWS, AND EQUIPMENT MANAGEMENT TRENDS BY JACK ROBERTS JACK ROBERTS is Executive Editor of Commercial Carrier Journal. E-mail jroberts@ccjmagazine.com or call (205) 248-1358. Cummins, China and the future of trucking EMERGING GIANT: China's population and its developing economy both are too huge to ignore. GROWTH OPPORTUNITY: Global com- panies view China as a massive, untapped customer base. ENGINE TEAMWORK: Cummins' collab- oration with Chinese truck maker Foton is just the beginning. Cummins Engine and Foton, one of China's leading heavy truck producers, last month introduced a new truck model powered by Cummins' new ISG diesel engine. Engine rollout indicates country's economic power