As a reminder, two years ago the management of LLC «ASA «Astra» decided to conduct market research to identify reliable manufacturers of alternative spare parts that could be considered as partners for expanding the company’s product range. Read about the results in an interview with Vitalii Mietolkin.
AgroPravda.com – Vitalii, please tell us about the results of the research conducted and the achievements related to expanding the company’s product range through supplies of alternative spare parts.
Vitalii Metiolkin – Based on the research conducted, numerous surveys of farm technical specialists and other market participants, we identified several manufacturers with the best price/quality ratios, trust levels, and brand recognition. We then singled out a few of the best and focused our attention on working with them. Already at the start of last year, we were able to expand our product range through our first deliveries and received the first positive feedback from our clients. It was precisely this balanced and carefully planned approach that let us avoid the unpleasant surprises that usually come with companies developing new business directions.
AgroPravda.com – which manufacturers would you highlight, and how do you plan to develop cooperation with them going forward?
Vitalii Metiolkin – Among the manufacturers of alternative spare parts, I’d like to highlight the Greek company Kouimtzis, whose products are well known under the ALPHA PARTS and Kouimtzis brands, as well as the Chinese company Ningbo Combine Machinery Co., Ltd., whose products are well known worldwide under the COMBINE, GOTECH, and Seed Magic brands. During 2016, we successfully delivered the first batches of their products and got excellent results selling them through our own trading network.
This year we increased the volume of supplies from these companies. This became possible thanks to the stable financial position and capabilities of the international business group that LLC ASA ASTRA belongs to. We were able to secure cheap financing from leading global financial institutions to carry out deliveries already this season. Put simply, unlike last year, we no longer need to tie up our own funds for 6 months to place a production order, ship it by sea, then sell the product and recoup the costs. Today we have enough time to sell this product. This gives us the opportunity not only to meet the demand of our own trading network, but also to expand our dealer network already this year.
AgroPravda.com – why is it important to expand the dealer network, given that Astra already has its own well-developed retail network for selling spare parts, and a large number of service engineers who service agricultural machinery in every region of Ukraine?
Vitalii Metiolkin – thanks for the question. Today in China you can get everything: high product quality and low prices. But that’s only possible when placing large production batches. Agricultural-machinery manufacturers of world-famous brands, or large wholesale warehouses based in the EU or US, have long enjoyed these privileges. It’s precisely them who can put together large orders. For us to get a low price with high product quality, we need to rely not only on the needs of our own trading network, but also to find favorable conditions for cooperating with dealers our size or smaller, in order to place a consolidated order in time. Judge for yourself. One dealer might be able to order 200 units of a certain part for a combine that’s very common on the Ukrainian market. But after submitting a request to the manufacturer, they get rejected because the minimum production batch for that part is five hundred units. A few days later, another Ukrainian dealer needs to order three hundred units of that same part, but also gets rejected by the Chinese manufacturer. And there are plenty of such items on any importer’s list. This doesn’t let companies bring in a wide range of high-quality spare parts from China at low prices. Each of them is forced to settle for placing production orders only for the parts that have sufficient volume to meet the minimum order. Dealers usually have to buy the rest in Europe, sometimes overpaying significantly. A consolidated order opens up new opportunities for absolutely all participants, from the spare-parts manufacturer to the dealer. And the one who benefits most from this is the end consumer, since it affects the final price, meaning it saves them money.
AgroPravda.com – what do you plan to offer your dealers to interest them in taking part in this project?
Vitalii Metiolkin – there are several advantages. First, we’re completely open in sharing all the information about the manufacturers. This information is important for companies that have no experience working with China. Second, we’re already offering the opportunity to sell COMBINE and Kouimtzis spare parts on favorable dealer terms, drawing on stock we already have in our warehouse. This offer can be of interest both to newcomer companies that need to get quality feedback from their own clients before negotiating a large order, and to other dealers who already successfully cooperate with the above-mentioned companies without our involvement. This way, the former get a chance to test the new product, while the latter get the chance to expand their product range and meet their clients’ needs already this season. Third, when placing a consolidated order, our dealer can partially take advantage of our capabilities as an international group to help finance the deliveries. That means we can offer interested dealers the following terms:
- an advance payment of up to 30% of the goods’ customs value – by 09/15/2017;
- payment of 20% of the value, for customs clearance of the goods – by 01/30/2018
- delivery deadline by 01/30/2018;
- payment of the remaining balance within 60 days from the date the goods are shipped to the dealer.
These are the basic terms of cooperation for placing a consolidated order at a Chinese production facility. Individual terms are negotiated case by case, taking into account the potential partner’s needs, financial capabilities, and counter-proposals.
AgroPravda.com – how do you plan to manage pricing policy, and how can a potential dealer find out prices and cooperation terms?
Vitalii Metiolkin – the new online store www.altparts.com.ua has been running since 02/01/2017, and you can find the available product range there. Stock levels are updated weekly. Prices are automatically recalculated in hryvnias whenever the NBU exchange rate changes. The store only lists the recommended retail prices at which ASTRA’s sales representatives and our dealers sell the goods. The wholesale price list is provided to potential dealers during negotiations.
AgroPravda.com – How can a dealer find out spare-parts prices under a consolidated order placement for deliveries in January 2018?
Vitalii Metiolkin – My contact details are listed below, and also on our online store www.altparts.com.ua. After you reach out, we can arrange a meeting at our office or the potential dealer’s office for negotiations and a presentation of product samples. Applications to take part in the consolidated order are accepted until 08/15/2017. To do this, a potential dealer needs to submit a request specifying the list and quantity of parts they’re interested in. After reviewing the request, the dealer will be provided with a commercial proposal.
AgroPravda.com – What plans does Astra have for further developing the alternative spare-parts business?
Vitalii Metiolkin – This is a promising direction, and of course it has further stages of development ahead. We’re continuing to work on identifying new manufacturers from different countries around the world to expand our range of alternative spare parts. This year we signed new contracts, under which we plan to receive, already this season, the first batches of products from several Chinese manufacturers whose goods are well represented and in high demand in many leading countries around the world, but which will be entering the Ukrainian market for the first time. We intend to keep developing this line of business and are ready to build partner, mutually beneficial relationships with all market participants.
Vitalii Mietolkin
Coordinator of the working group
for promoting OEM/ALT spare parts
and developing the dealer network
LLC «Agrobudivelnyi Alliance «ASTRA»
v.mietolkin@astra-group.com.ua
+ 38 099 918 20 99
