SEMA News - May 2010
U.S. Manufacturers to Be Matched With Buyers From the World’s Largest, Fastest-Growing Automotive Market
The specialty-equipment market in China today is strikingly similar to the U.S. market in the early days of the car customizing scene during the ’50s and ‘60s. As had been the case 40 to 50 years ago in the United States, the laws and regulations governing the industry in China are just being written; the distribution system is still being established; and the knowledge and skill levels of installers, distributors and consumers are on a sharp learning curve. Even so, the excitement for the future is high among stakeholders.
There are positive signs in the Chinese economy. A now definable and growing so-called middle class is currently estimated at 100–150 million people. Strong car sales exceeded the sales volume of the United States in 2009, and China has become the world’s third-largest market for luxury goods behind Japan and the United States. SEMA has therefore created a unique program designed to assist its members in exploring the sales potential for their products in China.
The SEMA China Business Development Conference will be held September 23–26 in Beijing in conjunction with the China International Auto Parts Expo (CIAPE). Utilizing a one-on-one, appointment-based approach, the conference is a low-cost way for SEMA members to explore business potential in China and connect with the leading players in the market. U.S. manufacturers will be paired with relevant decision-making-level Chinese buyers in up to a dozen private, pre-scheduled meetings. The program includes exclusive networking events and a VIP tour of CIAPE.
Registration for the event is now available here. A single, low fee provides each exhibitor with a private meeting space, meeting furniture and equipment, a professional interpreter, most meals and hotel accommodations for the duration of the event. The only cost not included is airfare.
“The Chinese vehicle customization market is in its infancy, but it’s quickly growing,” said Chris Kersting, SEMA president and CEO. “It presents the single biggest potential opportunity for members looking to expand overseas. Given that the market is still early in development, we have built a low-cost program that is high in potential return.”
The SEMA China Business Development Conference enjoys the endorsement of CIAPE and the Chinese government.
“We welcome SEMA members to participate in the first SEMA China Business Development Conference,” said Rengui Li, CIAPE chairman. “SEMA manufacturers will discover that there is a high demand for vehicle accessorization and tuning in China. Participants will hear directly from Chinese buyers and learn how they can succeed in the country.”
Now is the time for savvy international companies to explore what promises to be the world’s largest specialty-equipment market. On October 1, 2008, the Chinese national government approved the legal installation and marketing of 506 automotive parts and accessories, though, the use of many other products is still in limbo. Many are technically illegal but are often installed on vehicles. The Chinese Ministry of Commerce (MOFCOM) has been a strong supporter of liberalizing regulations regarding specialty-equipment products and has been working for the last three years with the relevant Chinese ministries to legalize the installation and use of a wide range of specialty products.
“MOFCOM supports the growth of the automotive specialty-equipment market in China,” said Zhi Luxun, deputy director general of the department of mechanic, electronic and high-tech industry for the Ministry of Commerce. “MOFCOM has been working with the relevant agencies in China to continue the process begun several years ago to open this market. There is definitely a desire among Chinese consumers to personalize their vehicles, and the expected further law changes will enable this industry to grow here in China.”
Participants in the SEMA China Business Development Conference, to be held September 23–26, 2010, in conjunction with the China International Auto Parts Expo, will have the chance to network with Chinese buyers and distributors, in addition to attending private, pre-arranged, one-on-one meetings with key Chinese retailers and wholesalers.
China is already the third-largest export market in the world. U.S. exports of goods to China totaled $71.5 billion for the year in 2008. There is substantial market potential for all goods, but the potential for automotive-related products specifically is huge. With only 10 cars per 1,000 people (compared to 940 per 1,000 in the United States), all of the world’s major car companies are making large investments in the Chinese market and are counting on sales there to bolster weak sales elsewhere in the world. While foreign companies for a wide variety of brands are increasingly familiar with the sales potential in such coastal cities as Beijing, Shanghai and Guangzhou, the possibilities extend well beyond those sites. China has nearly 100 cities with populations exceeding 1 million people, and there are 10 cities the size of New York. It’s these other cities—growing at an average 11% annually—that are expected to generate the greatest potential for sales.
In a recent report entitled “Doing Business in China: 2009 Country Commercial Guide for U.S. Companies,” U.S. government officials noted that “…China often lacks predictability in its business environment. A transparent and consistent body of laws and regulations would make the Chinese market more predictable. However, China’s current legal and regulatory system can be opaque, inconsistent and often arbitrary. Implementation of the law is inconsistent. Lack of effective Chinese government protection of intellectual property rights is a particularly damaging issue for many American companies—both those that operate in China and those that do not have had their products stolen by Chinese companies.”
The SEMA China Business Development Conference, coupled with research by companies, can assist in a careful and deliberate entry into the Chinese market to help avoid the common pitfalls befalling U.S. companies, including intellectual property rights violations, neglecting to properly vet local business partners or customers and being unaware of Chinese laws.
Additional details about the SEMA CIAPE China Business Development Conference are available here. Broader resources for SEMA members interested in expanding their overseas sales or for additional information on the SEMA CIAPE China Business Development Conference are available by contacting Linda Spencer.