FINAL REPORT

COMPANY: AL-HAJ FAW Company

For the fulfillment

Of the course

International Business

_____________________________

Submitted to

Shahzaib Khan

By

Shahnawaz Bhamani (8303)

Syed Rameez Gohar (8075)

Syed Wajahat Raza Jafri (7604)

Suleiman Salim (6116)

BBA-H
 TABLE OF CONTENTS

1. Introduction of FAW China Motors .....................................................................................

2. Introduction of Al-HAJ Group ..............................................................................................
3. AL-HAJ FAW Motors ..........................................................................................................
4. Pattern of Expansion .............................................................................................................
 Passive to Active Expansion………………………………………………………………………………………
 External to Internal Handling………………………………………………………………………………………
 Deepening Mode of Commitment………………………………………………………………………………………
 Geographical Diversification………………………………………………………………………………………
 Leapfrogging of Expansion………………………………………………………………………………………
 FAW CHINA MOTORS
Introduction:
FAW (First Automotive Works) group is one of the biggest and oldest leaders in vehicle
manufacturing industry more than 50 years of innovation. The company was initiate in 1953 and
commonly known FAW and has its headquartered in Changchun, Jilin in China. However in
1992, the name was changed to China FAW Group Corporation. The company has more than
100,000 employees all over the world and operating in 70 countries with 7 million of total sales
worldwide.

FAW has entered in to a market individually operating as a commercial truck vehicle

manufacturer and gradually expands into light trucks and car sector. FAW has a dominant
position in trucks market while their strategies have a great emphasis on car sector as well.
Moreover, FAW China is also a biggest supplier to Chinese military. The company is diversified
maker in quality vehicles and maintains the leading position in China and continuing to expand
into new International Market with planned strategies to become global organization.

FAW Company has also a joint venture business with top leading brand of vehicles in the
national and international market. Furthermore, FAW has 28 owned vehicles in which 18 are
partially owned vehicles and joint venture with following sound companies.

 FAW - Volkswagen
 FAW - Toyota
 FAW - Mazda
 FAW – General Motors

Following are the diversified vehicles on which FAW China focuses.

 Light Duty Trucks
 Medium Duty Trucks
 Heavy Duty Trucks
 Passenger Cars, SUVs & MPVs.
 Municipal Buses
 Luxury Tourist Coaches
 Custom Bus Chassis &
 Mini Vehicles
 Al-HAJGroup:
The very first AL-HAJ company was launched at Jumrud Khyber Agency in District
Peshawar, Khyber Pakhtunkhwa. The operation initially includes the process of importing and
exporting of electronic products, clothes and tires. Later, the company expands their business and
became the main dealer of Hino Pak by the name to AL-HAJ Motors. The proprietors of AL-
HAJ group have maintained a very strong relationship with neighbor countries which includes
China, Afghanistan, United Arab Emirates and throughout Pakistan as well. The Group has vast
Strategic Business Unit (SBUs), which are working with these countries.

A. Al-HAJ Transport and Logistics

 Al-HAJ Enterprises
 Al-HAJ Tankers
 Adnan Carriage Company
 Al-HAJ Ltd., Afghanistan

B. Al-HAJ Industrial Corporation (Pvt) Ltd.

 Al-HAJ Textiles
 Al-HAJTyres

C. Al-HAJ FAW Motors (Pvt) Ltd.

D. Al-HAJ Metallic Industry & Al-HAJ Tex.

E. Al-HAJ Real Estate Solutions

AL-HAJ FAW Motors:
AL-HAJ FAW Motors (AHFM) is a joint venture between AL-HAJ group and FAW
China was incorporated as a private limited Company in October 2006 and is a sole distributor
and progressive manufacturer/ assembler of FAW heavy, light commercial vehicles and
passenger car in Pakistan under the technical assistance and distribution agreement with FAW
China which allow them to import, distribute and sell FAW products in Pakistan.
The Company first product line was launched in 2006 and since it has entered in
automobile industry with long term plans to market and sale good quality, reliable, economical
and well designed vehicles to the local customers.
The local production of FAW vehicles started in August, 2011 in their state of the art
manufacturing facility located at Zulfiqarabad Main National Highway, Karachi.
The company has offered optimal automotive products to its customers who will serve
the individual user, commercial entrepreneur and multinational organizations. The company’s
prime mover vehicles has a capacity of 30 to 80 tons, whereas, FAW trucks has a capacity of 9.8
to 30 tons.

Pattern of Expansion:

1. Passive to active expansion:

AL-HAJ FAW Company has initially entered into the commercial
market of Pakistan introducing heavy truck in 2006. The Company has
quickly gain the market share and reputation and also stands with the
market leader. Their further plan was to make such efforts to compete with
Japanese dominants by introducing their new product line in light
commercial vehicles and passenger car categories. Their products
strategies in vehicles were Complete Built Units (CBUs) and in Semi
knocked Down (SKD) which could suitable for high and low tariffs.
Furthermore, when the Company starts introducing their products
into market, it has quickly gain the positive response and reputation and
their customers were quiet delight by adopting and utilizing their products
especially in FAW Carrier because it has a best deal in market. This
vehicle fulfill all their needs such as better loading capacity, better seating
capacity, roomier, better and new design, availability of parts and
professional service staff at dealership. In addition for reducing
operational cost, the Company introduced the low RPM Deutz engines
with heavy duty clutch and transmission of Eaton and to provide driver
comfort, they also introduce the spacious and luxurious cabins in Pakistan.
All these services have given a huge amount of value to its customer
against their money and established the long term relationship with them.
On the other hand, AL-HAJ FAW dealers have also shown a great interest
for a long term commitment and they also feel immense pleasure in
obtaining FAW products.Right now, dealership network of 3s (sales,
service and spare parts) is working with 2 dealers in South region, 6 in
Central region and 2 dealers in North region, More dealers are also added
 with the time for providing best customer satisfaction and long term
relationship. Moreover, Bank financing and leasing facilities are also
available for such Company’s products in the market. Their long term
plans is to produce in the market, sell good quality, reliable, economical,
more environmental friendly and well designed vehicle to local market.
The company has also faced the harsh time till they starts their production
of heavy trucks locally. Trucks are the core product of the company by
which FAW China has gained good reputation. However sales taxes were
increased on truck which has ultimately increased the prices of trucks up
to 25% which result in decreased in sales of truck in Pakistan. Reasons
were political instability and economic policies of Pakistan that has
changed rapidly and hits the truck industry with great negative impact.
From 4000 trucks annual sales, it was decreased to 1500-1600 annually.
This worst situation has also discourage their long term plan of opening an
assembly plant so that they would able to assemble and produce trucks and
other light and medium vehicles at low cost and better quality.

2. External to Internal Handling:

AL-HAJ FAW Company has received a huge positive response
from their customers and dealers in different regions of Pakistan. It also
become the dominant competitor in local market and achieved 2 nd position
after Hino Pak motors, which results in gaining 30 percent market share
and make FAW Company to expand in the market of Pakistan through
FDI. After gaining respectable impression in truck market of Pakistan, the
Company has decided to start an assembly plant near Karachi at Bin
Qasim port with 1 billion of investment with 100 percent equity financing
from owners and has signed a technical license agreement with FAW,
which allowing them to import parts and assemble locally which benefits
company in reducing cost and selling more. However, taxes on CBUs
ultimately decrease and cut off. It took a year for building the whole
infrastructure and setting up plants and machinery they have are the best in
Pakistan vehicle industry. However, it is the first automobile plant for
assembling FAW products in Pakistan. The assembly plant is equipped
with lasted machinery and equipments to manufacture FAW trucks, Prime
Mover, Light Commercial and Passenger Vehicles. The Plant has capacity
to produce 11,000 units per annum and can be extended according to
requirement and demands. With their new plant in action, the Company is
also looking to produce 1000 to 1500cc engine vehicles in near future.
On the other side, dealers of AL-HAJ FAW Company hold their
hands tightly with the company and showed positive response in
expansions. Moreover, dealers have enjoyed a good name and reputation
with the Company and also tell the reasons for joining hand with them
which are as follows.
 Well known and financially sounds group.
 Investments by its own resources.
 Young and energetic management.
  Quite old in Auto-industry with lot of experience in heavy
commercial vehicles.
 Modern plant equipped with latest machinery.
 Most popular, reliable and no.1 brand in China.
 Provide full backup support through 3s dealership nationwide.
 Believe in appointing professional and experienced staff of the
same trade.

With this assembly plant in action, the company is also planning

and targeting to introduce new vehicles and passenger car in Pakistan with
1000 to 1500cc engines capacity which will be assembled locally.

3. Deepening mode of commitment:

AL-HAJ FAW Company has become very successful with its first
launched truck in Pakistan in 2006 and become active in automobile
industry. When the Company entered in the market, huge responsibilities
also come along with them for providing best after sell service to its
customer, product safety and environmental friendly. Unfortunately FAW
China had made a partnership with group in past. The group was very
weak and did not have long term plans. This left a very bad image in
Pakistani market among customers and they switch to other existing
company’s product. It was not related to the quality of products but the
image has created the problems. However, Chinese companies have now
become smarter in choosing partners after such bad experience.
AL-HAJ FAW 3s strategy is the core thing that has completely
changes the image of Chinese products in automobile industry in Pakistan.
The Company does not focus on number of dealers; their core strategy of
3s remains same and committed. Initially, sales were low but it gradually
increases by sticking to their policy and the results started to bear fruits.
One of the biggest issues also occurs in Pakistani market that normally
people focuses on resale value rather than adopting and focusing on
features and technology that company has given.
Furthermore, buying pattern has also change and more commercial
companies are now getting involved in buying and using truck. They are
very happy with 3s facility under one roof and are interested in making
and planning long term relationship with them. Currently, AL-HAJ FAW
are providing biggest and best 3s facility in automobile industry all over
Pakistan. It has provided 1500 job to the local people of Pakistan directly
and indirectly which is ultimately increasing the job opportunities and
plays the most important role for the development of Pakistan.
The continuous modification and transmission in technology has
supported AL-HAJ FAW Company and make their customers more
encourage with their products. Related to the innovation, the new addition
have EFI and Euro 4 technology, which are still not available in other
dominants products. However, these new technology has been added to
provide comfort and affordable transport to its customers. New Chinese
 technology is also transferred to Pakistan for the advancement of locally
produced and assembled automobile. This step will enhance the efficiency
and offer cheapest form of transportation. Furthermore, Bank Alfalah has
also signed a contract with AL-HAJ FAW for providing auto financing
loan to their customers for FAW vehicles. The company believes that this
will provide people more choices with better financing solutions. For
them, customer satisfaction is the major concern and they always look for
the betterment for their customers. In addition, Chinese automobile in
Pakistani market for providing them best quality, durability, after sale
service and best customer value against their money. The Company also
received Green supply Chain Strategy award for being environmental
friendly in Pakistan.

4. Geographical Diversification:
Initially, AL-HAJ FAW Company has completely importing CBUs
vehicles from China. Though it has spread its whole networks in also other
cities of Pakistan as a dealership for vehicles and offering 3s service (Sale,
Service and Spare parts). The Company has its start from Karachi and
with the passage of time, company spread their dealers in different major
cities of Pakistan which includes, Sadiqabad, Bahawalpur, Multan,
Sahiwal, Faisalabad, Lahore, Sargodha, Gujranwala, Rawalpindi,
Islamabad, Peshawar and Mirpur with their best 3s service. This Al-HAJ
FAW Company’s expansion has helped them to gain a huge amount of
share and capture the market with their best possible vehicles. Moreover,
the expansion has also lower and diversify the risk and focusing on other
cities as well to serve and capture all possible market where its demand
exists. FAW China Vehicle especially their core heavy trucks and prime
movers has earned a great impression in Pakistani market having new
features and technology in it. The company is at 2 nd place after Hinopak
motors and offering the best 3s services in Pakistan.
Furthermore, the Company is actively involved in heavy
commercial vehicles since 2006 and was also looking to expand their
business in Karachi with introducing first FAW assembling plant in
Pakistan, which allows them to produce heavy, medium and light vehicles
and distribute them locally all over Pakistan to all their dealers in different
cities. Producing FAW vehicles in Pakistan can cost the Company low and
thus increases their sales in their core vehicles. The Company has invested
1 billion Rupees for opening assembling plant in Karachi near Bin Qasim
Port with the capacity of producing 6000 trucks and 12000 light and
medium vehicles every year. The biggest advantage for opening plant in
Karachi is the Sea port from which AL-HAJ FAW Company can import
large amount to plant, machineries and parts to assemble them locally.
Other advantage could be availability of electricity in Karachi, whereas,
other cities have a huge hours of load shedding which may disrupt the
company operations and lead them to bear losses. In addition, Karachi is
the metropolitan and one of the biggest cities in world having more and
 core advantages than other cities. Business can easily expand and grows
and AL-HAJ FAW Company has done the same job for expanding and
growing in Karachi. The Company has enjoyed great benefits from having
monopoly in the market with other brands.
Automobile industry in Pakistan contributes 30 billion in its GDP
and pays around 8 billion taxes to the government which is the biggest
contribution than other industries exist in Pakistan. Company’s
geographical diversification has also improved the communication system
through their dealers available in different cities and efficiently improving
their services in existing areas, whereas, the Company is also looking for
new opportunities available in different areas of Pakistan.

5. Leapfrogging of expansion:
In past, FAW China entered in Pakistani market but left with a bad image,
not in quality of products but the partnered group was very weak and does
not have long term plans. After such bad experience, now FAW China is
become smarter in choosing partner. In 2006, when FAW China become
partner with AL-HAJ Group the Company initially was importing vehicles
and distributes them locally under license. However, they further plans to
open an assembly plant in Karachi and plan to produce vehicles locally
without compromising on quality. This can ultimately lower their cost and
present their products in market with best possible and competitive price.
Heavy duty on CBUs vehicles and taxes on sale increases the price up to
25 % but now producing and assembling locally can reduce the prices and
encourage more customers to buy their vehicles. Providing quality features
in engine, innovative design, luxury cabin, air bags, Euro 2 and Euro 4
technology and the most important environmental friendly has its core
value in Chinese vehicles and make them different from other dominants
exist in the market.
It has created a huge impact not only on customers but also
provides the biggest job opportunity in the market. Around 1500 to 2000
people get employed directly and indirectly with AL-HAJ FAW
Company. Moreover, dealers have also got a new opportunity in market to
expand and earn good name and return. After sales service shows the
quality of the Company which they are providing under one roof in all
cities where they exist. Producing trucks locally has also encouraged
suppliers to produce best quality material to build a long term relationship
with AL-HAJ FAW Company as well. Directly or indirectly, the
expansion of FAW China in Pakistan has made a huge impact of economy
as well as on public to provide new options in the market with best
possible services. Thus, it has also encouraged the company to launch and
expands into light commercial vehicles which are also assembled locally
and presented in market efficiently. The company’s main focus is on
changing the people’s mindset about Chinese products and provide them
quality, durability and after sale 3s support against their money.