Cummins Remanufacturing has More Opportunities in China

Recently, Mr. Sean Zweigger, the head of two remanufacturing businesses of Cummins – Director of Production Operations of Cummins Global Parts Business, and Ms. Lin Jing – General Manager of Cummins (China) Accessories Business, held in Beijing in 2016 At the 6th China Remanufacturing Summit, the latest and most comprehensive introduction to the opportunities and challenges of Cummins remanufacturing in China was presented.
The 6th China Remanufacturing Summit 2016 The 6th China Remanufacturing Summit 2016

As the world's largest independent engine manufacturer, Cummins is one of the earliest western diesel engine companies to produce engines locally in China. Cummins has been manufacturing remanufactured products in China for many years, and in 2010 it invested and built a remanufacturing production base in China. Like many international companies that are engaged in remanufacturing businesses in China, Cummins has also encountered a series of challenges in meeting the needs of remanufacturing products in domestic and foreign markets.

Unmatched Cummins Engine Unmatched Cummins Engine

1 What brand of original remanufactured Cummins?

Globally, Cummins provides original new parts and original remanufactured parts under the brand name ReCon in the aftermarket. "Most Cummins customers in the world need us to provide remanufactured products." Zweiger explains why Cummins remanufactured products are welcomed by customers around the world. "Customers can spend less in the middle and later stages of the equipment life cycle. The same remanufactured product with the same performance as the new product, so many times the customer voluntarily requested us to provide remanufactured products."

Cummins uses remanufactured products in North America and other regions to meet customers' needs for replacement of damaged parts during the Three Guarantees period, but this does not work in China. Lin Jing explained: “In North America, the remanufactured products can be used for the Three Guarantees period, which is promoted and encouraged by the government and accepted by the channel. However, at present, China lacks similar policy encouragement mechanisms and the market lacks sufficient Therefore, the universal education of the users outside the Three Guarantees period has become one of the challenges for Cummins remanufacturing in China.

2 What is the difference between remanufactured parts and repair parts in the original Cummins?

At present, the sales of remanufactured products are concentrated outside the Three Guarantees Period. “But the competition in the aftermarket parts market after the Three Guarantees period is fierce. End users often cannot tell the difference between the original remanufactured parts and repair parts,” Lin Jing further pointed out. The original remanufacturing is a large-scale operation and mass production.Because the original manufacturer holds the design details of the product and the latest production technology, the performance and durability of the original remanufactured product are stable and reliable; , sometimes referred to as refurbished parts, using refurbishment processes that are not certified by the original manufacturer, and their technical standards and production processes are not the original standards. Currently, the technical level of domestic maintenance companies can be said to be uneven and repair parts. Product quality and durability are insecure."

End-users lack awareness of the value of remanufactured products, not only in China. However, in countries and regions where remanufactured products like the United States can be used within the three-period period, the remanufactured products are often promoted by maintenance-oriented engineers and maintenance technicians, who usually understand the value of remanufactured products more easily; In China, due to the limitations of the policy, remanufacturers need to use different methods of publicity and promotion to do more and win end-user approval.

3 Market Situation of Original Cummins Remanufactured Parts

When asked about whether remanufactured products have already accounted for a certain proportion of the aftermarket in recent years, Zweig and Lin Jing said: “Users’ awareness of remanufactured products has improved. Remanufacturing global development trends will guide and Stimulate demand from Chinese customers so that more Chinese customers are willing to try and accept remanufactured products.”

“We hope to provide the team users with remanufactured products so that they can gradually realize that their vehicles will not be idle for maintenance for too long.” Zweigel further explained the original intention of Cummins. “Car owners will gradually realize that 'Remanufactured products can minimize equipment downtime, use remanufactured products, and my vehicles will be able to return to normal working conditions quickly.'" Although reducing repair time is a great advantage of remanufactured products relative to repair parts One, but it is difficult for the market to understand this advantage. "At present, the Chinese market has not been effectively regulated, and it is still focused on price competition rather than value competition," Lin Jing explained.

4 Development and Opportunities of Original Cummins Remanufactured Parts

In order to make Cummins remanufacturing achieve long-term development in China, the establishment of old recycling channels is another important challenge. Lin Jing said: “We are trying to establish an old-fashioned recycling model for end-users directly with OEMs.” This model is often referred to as “replacement mode” or “change to old” and Cummins is providing remanufacturing to users. At the same time as the product, the old parts that can be used for remanufacturing can be recycled to complete the entire remanufacturing cycle. "It takes a lot of hard work, but it is worth it." Lin Jing said optimistically. "In the past, many users did not know that there was such a product choice. They did not know how to obtain such original remanufactured products. ”

In addition to selling remanufactured products in the Chinese domestic market and importing old parts from foreign countries in the form of processing trade, exporting remanufactured products to overseas markets after China remanufacturing is also a great opportunity. However, in the process of importing old parts, new problems were encountered. Old parts are defined as "used products" and are currently banned from import in China. Zweiger further pointed out the rationality of imported old parts: “A lot of the Cummins engines produced by China’s joint venture companies are installed on equipment and exported to overseas markets. Cummins needs to be responsible for the after-sales maintenance of these equipment or engines. Of course, the most ideal situation is to ship these old engines back to China for maintenance."

By participating in activities such as the 2016 China Reman Summit, Cummins can well understand the professional interpretation of policies by the Chinese government and various experts. In many cases, some policies do not have clear "yes" and "no," which also makes it possible to import and export parts and old parts in the future.

"I think that there are many regions and organizations in the world that are paying attention to the remanufacturing industry." Zweigger further explained the 2015 Federal Motor Vehicles Cost Savings Act of 2015 and the European Circular Economy Act of 2015. “Any trend of globalization and development of remanufacturing industry will make remanufacturing the mainstream and more present to the public. This will also make Chinese policy move towards the goal of internationalization.”

Economics, quality and environmental protection are the main aspects of remanufacturing products that benefit owners. Opportunity, scale and potential also make China an ideal remanufacturing market. Although the obstacles are still there, but under the trend of globalization and the promotion of relevant departments, China's remanufacturing will surely usher in a splendid future. Cummins, as a leading manufacturing enterprise in China for 40 years, is now a benchmarking company for domestic remanufacturing, and will work together with other companies to develop local remanufacturing and witness the remanufacturing of a better future. As Zweigger said, "Let's wait and see."

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