China Business Development Program

SEMA News—December 2015

INTERNATIONAL

By Linda Spencer

China Business Development Program

Member Companies Develop Contacts and Expand Their Opportunities
  SEMA Garage International Measuring Session
In partnership with the U.S. Department of Commerce, SEMA organized the first SEMA Garage international measuring session in China at the 2015 SEMA China Business Development Program. The session featured seven vehicles popularly customized in China but not sold in the United States. The SEMA Garage scanned the vehicles and makes the CAD data available through the Tech Transfer program.
   

Twenty-one SEMA-member companies recently traveled to Shanghai, China, for the 2015 SEMA China Business Development Program, which included meetings with U.S. government officials in the area, tours of customizing shops, including a new shop that focuses on upgrading and distributing parts solely for Mustangs, Corvettes and other U.S. late-model musclecars, exhibiting in the SEMA section at the sold-out China Auto Salon (CAS) and, for the first time, participating in a measuring session featuring the winning vehicles in a SEMA-conducted survey of top customized vehicles in China that are not available in the United States.

“We found the SEMA China trip to be a great benefit to the Holley/DiabloSport brand,” said Michael Russo, the first-time exhibitor’s account manager. “Being able to see how the local shops operate and meet several qualified buyers in one place was an ideal scenario. We gathered a wealth of information about popularly modified vehicles in that marketplace and made contact with businesses that we look forward to having lasting relationships with.”

Customizing is alive and well in China. Among the latest developments in the dynamic Chinese automotive specialty-equipment market is a growing base of consumers interested in customizing late-model U.S. musclecars and an insatiable love among enthusiasts for large light trucks, including the Ford F-150 and Jeeps.

“Once again, China continues to amaze me in terms of how many car enthusiasts there are,” said Kevin Floody, director of international sales for air intake and air filter manufacturer aFe. “No matter where you go in China, you find recognizable cars and owners who want to increase the appearance and performance of their vehicles.”

Kyle Wickenheiser, manager of global business development for Keystone Automotive Operations, noted that China offers a strong, long-term opportunity that companies really cannot ignore.

“It has a large population with 1.3 billion individuals and a growing middle class, and it is the second-largest economy in the world,” he said. “As I traveled around China, I saw nothing but growth everywhere I looked. Where one may see one or two skyscrapers being built in other countries, in China you see groups of 10 going up at multiple spots in one city. They have a growing taste for higher-end products, such as U.S. vehicles, French wine and German beer.”

SEMA conducted a survey of 100 resellers of specialty products and enthusiast media to identify the most-customized vehicles in China. The results, separated into those vehicles also sold in the United States and those not sold in either the United States or Canada can be seen on p. 86.

Other Market Developments

Chinese Buyers by Province
Buyers attended from not only so-called first-tier cities such as Beijing, Shanghai and Guangzhou but also from throughout China.
 
   

A new feature of the 2015 SEMA China Business Development Program was a first-ever China-based SEMA international measuring session. SEMA brought together seven vehicles (above) popularly customized in China but not sold in the United States to allow members to measure vehicles in order to create product throughout the week of the show, SEMA scanned the vehicles with a cutting-edge Faro Arm, which provides 3D scanning capabilities and detailed measurements for the creation of CAD drawings.

The data for these vehicles is available to members through the SEMA Tech Transfer program in order for SEMA-member manufacturers to create export-ready products. Thanks to the U.S. Department of Commerce, which partnered with SEMA and helped to make this measuring session a reality. The session was also made possible by FB Life, China 4WD, Sinomach Automobile Co. Ltd. & China Automobile Trading Co. Ltd., Shanghai Jishen Automobile Sales Co. Ltd. and FARO.

The passion for late-model U.S. musclecars is creating a buzz in China. This new trend is most striking in Shanghai, where German models were virtually the only customizing vehicles of choice until several years ago. Musclecars and light trucks have led to a more balanced market and create significant opportunities for U.S. manufacturers of specialty products with applications for these vehicles.

Among the factors spurring the growing popularity of U.S. musclecars was the decision by Ford to export the all-new ’16 Ford Mustang to more than 100 countries, including China (see the May 2015 SEMA News article on the global reach of the new Ford Mustang). That has been a big factor and has helped to generate excitement for all late-model U.S. cars.

“American musclecars are starting to show their strength, and a lot of that has to do with the new Mustangs, Camaros and Challengers hitting the market,” Floody said. “I am really looking forward to continue developing the market in China.”

There is also growing interest in Jeeps, fullsize pickups and other light trucks built in the United States. Among the top vehicles of choice for truck enthusiasts in China are the Ford Raptor and other F-Series trucks, Toyota Tundra and Jeep Wrangler, according to FB Life, a Chinese media giant and a platform for off-road enthusiasts and service suppliers. The online media estimates that these mostly large, U.S.-built pickups now make up 20% of the vehicles taking part in off-road events.

  Most Influential Brand
Borla Performance won a Most Influential Brand award at the 2015 China Auto Salon. A growing number of SEMA-member companies are taking the next step in growing their markets in China, whether through hiring sales staff, a greater presence at exhibitions or advertising in Chinese media.
   

While vehicles such as the Wrangler are imported officially by Chrysler, other trucks are brought in informally through the gray market and are not sold officially by the car manufacturers. These sales are not recorded in many of the available data, because the vehicles are purchased through dealers or third parties and then shipped to China.

The SEMA delegation included member companies of those who have traveled multiple times to China with SEMA and those participating on the SEMA China Business Development Program for the first time. Eight of the 21 member-company delegation traveled to China with SEMA for the first time on the 2015 trip, though some already have limited distribution but wanted to better understand the market and develop a strategic plan to grow their brands.

Powerteq was one of those whose products were in China already, and Bryce Castleton, vice president of sales, talked about the relevance of the trip for his firm.

“We had no idea of the potential for additional business there and the vibrant, enthusiastic approach to the automotive aftermarket that exists, especially for Jeep, which is a core market for us,” Castleton said. “We left China with a newfound excitement for business opportunities in that part of the world, and we look forward to capitalizing on the contacts we made.”

Justin Oltz
Justin Oltz, vice president of international at Derive Systems, participated in the opening briefing, in which the U.S. Department of Commerce and SEMA-member companies who had participated on prior overseas trips provided tips to first-time participants.
 
   

Russo said that his company’s biggest challenge was the language barrier, but that was far from a show stopper to continuing Powerteq’s efforts in the region.

Michael Sampson, director of operations and international sales for Rock-Slide Engineering, was another first-timer. Rock-Slide is a premier manufacturer of Jeep and truck bumpers and off-road accessories.

“The China Business Development Conference was great for our company,” Sampson said. “As a first-time visitor to China, it was invaluable in learning the Chinese market. I would not otherwise have been able to gain so much knowledge and meet so many possible buyers in such a short amount of time as I did at the conference. It allowed me to connect with current Chinese customers and find new customers. Awesome experience!”

Companies such as Borla Performance Industries, Injen Technology, Derive Systems, ROUSH Performance and Champion Oil make up a small but growing number of SEMA members whose multi-year investments are beginning to pay off in the Chinese market.

“We participated in the SEMA China Business Development tour for the first time in 2014,” said Tim Wheeler, vice president of global sales for ROUSH Performance and SLP Performance. “We visited many prospective speed shops and dealers who were beginning to modify Mustangs and other vehicles that line up well with our product offerings. As a result, we decided to accentuate our SEMA booth in 2015 by also staffing a ROUSH Performance display as part of the CAS Show. It was a big leap forward in a short period.”

  China Business Networking
Informal networking events allowed SEMA-member participants to meet not only with pre-vetted buyers but also each other. Each participating company came to develop or grow its brand in China as well as to compare notes with each other, which was often mentioned as a very beneficial aspect of the program.
   

Added David Borla, vice president of sales and marketing for Borla Performance Industries, “SEMA has given its members a firm foundation to build on in China. What I found different about this year’s effort is that a handful of brands have used this foundation to reach the next level by becoming more self-reliant. It’s really fun to be a part of this—watching our cultures intermingle and seeing the common language of automotive personalization prevail over politics. It makes the world a better place.”

The results are becoming evident. Borla Performance Industries, ROUSH Performance and Injen Technology had second booths in addition to the ones they had in the SEMA section. Both Borla and Injen won recognition from the CAS. Injen won an award for a Jeep JK with an Injen intake and snorkel on display in its booth, and both Injen Technology and Borla Performance won Most Influential Brand awards.

Another SEMA China participant also stepped up their efforts in the region. Derive Systems exhibited at another event taking place in Shanghai—the China International Auto Products Expo (CIAPE)—in addition to exhibiting in the SEMA section at CAS.

“It was great to focus our efforts on Shanghai this year, where many of the OEMs and leading aftermarket companies have decided to set up and expand their operations,” said Derive Systems Vice President of International Justin Oltz.

Derive Systems CEO David Thawley attended the first SEMA China event and noted the dynamic growth in the market.

“The growth of the SEMA/CAS/CIAPE shows over the past five years is extremely impressive,” he said. “They’ve transformed from small-venue events in their infancy to enormous, full-scale productions.

Champion Oil
Champion Oil has invested time and money into growing the Chinese market for its specialty lubricants. Karl Dedolph (right front), Champion Oil’s director of international sales, met with the company’s China-based distributors. “Thanks to the SEMA China Business Development Program, Champion Oil has been able to increase sales in this fast-paced international market,” Dedolph said. “It’s a small start, but we have increased our exposure over the last three years in China by adding 15 Champion-branded quick-lubes and repair facilities, two warehouses, 80 Champion-branded on-site oil-change vehicles, fleet customers, plus semi-trailer wraps, billboards and even a Champion Oil car club."

 

 

  China Conference Networking
Dennis Simmons (left), commercial officer, and Jessica Tan (right), trade policy specialist at the U.S. Embassy in Beijing, chatted with Harry Kleinsasser of Thermalblade, based in Muncy Valley, Pennsylvania. Members of the U.S. Department of Commerce provided an overview of the Chinese market at the opening session of the 2015 SEMA China conference and then met one on one with the SEMA members for more in-depth discussions.
US Department of Commerce
The U.S. Department of Commerce has provided invaluable support to SEMA and its member companies. A delegation of officials from the U.S. Embassy in Beijing and the U.S. headquarters attended the entire SEMA program, which was headlined by a U.S. government briefing on the opening night of the 2015 event. Dan Green (center), director of the Trade Facilitation Office of the U.S. Embassy, talked one on one with representatives from a SEMA-member company.
 

Traversing Offroad Visit
The SEMA delegation posed with Traversing Offroad staff outside on a day of shop tours.

 

 

 

George Shepherd Royal Purple
The SEMA delegation spent a day touring specialty-equipment shops. George Shepherd, international sales manager for Royal Purple, took pictures of some on the many Jeeps and other trucks on display at one of the shops.
 

Roush Performance and Petty's Garage
ROUSH Performance Vice President of Global Sales Tim Wheeler (left) and Jeff Whaley (center) of Petty’s Garage checked out a vehicle in a new shop that deals only in U.S. musclecars. “We participated in the SEMA China business development tour for the first time in 2014,” Wheeler said. “We visited many prospective speed shops and dealers that were beginning to modify Mustangs and other vehicles that line up well with our product offerings.”

 

 

Ray Crunk and Jeff Whaley
Ray Crunk (left), bulk-modifier/export Midwest for DiabloSport LLC/Holley Performance, and Jeff Whaley, chief operating officer of Petty’s Garage, observed some of the customized vehicles at the shops visited by the delegation.

 

 

  Royal Purple
George Shepherd (right), Royal Purple international sales manager, showing Royal Purple’s products to a Chinese buyer.
Borla Performance Industries
Josh Abbott (facing camera, white shirt), international sales manager for Borla Performance Industries, met with local professionals. “It’s fascinating to witness this traditional and long-established culture fall in love with the personalization of cars and trucks,” said David Borla (not pictured), the company’s vice president of sales and marketing. “This market is rising right in front of our eyes from complete nonexistence to prominence, and there is no collection of brands more sought-after by Chinese enthusiasts than the group of SEMA members who have used the resources made available by SEMA to build relationships in China over the past few years.” 

 

Injen Technology
Ron Delgado (center), president, and Edward Rossi (far right), vice president of sales for California-based Injen Technology. “In 2010, Injen decided to leap into the Chinese market and explore its infinite possibilities! Today, the Injen brand is widely recognized and is selling well throughout China. My advice to all the new manufacturers thinking about jumping into the Chinese market would be to listen to the needs and wants of the young generation. Do not expect to be able to conduct business the American way. Familiarize yourselves with their customs and culture, develop friendships and be patient, “ said Delgado.

Injen Tech SEMA Booth
Injen Technology exhibited both in the SEMA section and a second booth on the CAS floor. They received two CAS awards—Most Influential (Effective) Brand and Most Modified Vehicle in the Booth (Jeep JK with the Injen Intake and Snorkel).

 

 

  Bill Miller and FB Life Rep
SEMA Senior Vice President of Operations Bill Miller (left) recognized a representative of FB Life for assistance in providing vehicles for the first-ever SEMA international measuring session in China. 
Borla Performance Industries
Matt Cordato (right) demonstrated vehicle scanning using the state-of-the-art Faro Edge ScanArm HD on a VW Scirocco while David Borla, vice president of sales and marketing for Borla Performance Industries, watched. The first-ever China-based SEMA international measuring session featured vehicles such as this popularly accessorized model. Such vehicles are highly customized in China but not sold in the United States.
  Dynocom Industries
“The SEMA trip allows us to network with buyers for our products in the China market,” said Allison Blackstein (center), COO of Dynocom Industries Inc. “The trip also provides insight into the current and future Chinese market and visits to shops to gauge their interest and assess their automotive progress, needs and wants and demo the latest American tech tools.”
Keystone Autotmotive Operations
“China is a strong, long-term opportunity that companies cannot ignore,” said Kyle Wickenheiser (right), manager of global business development for Pennsylvania-based Keystone Automotive Operations. 
  CAS Project Vehicles
Twelve project vehicles were on display at the CAS show near the SEMA section. Exhibitors teamed up with local consumers or distributors to show off their products on locally customized vehicles. 
China Business Conference Booths
Each SEMA exhibiting company had a 3x3 meter booth (about 10 sq. ft.). 
 

Roush Performance
Tony Marszalek (left), director of global dealer sales for ROUSH Performance.

 


 

DiabloSport
Michael Russo, (far left) DiabloSport LLC account manager. 
  China Auto Salon Buyers
China Auto Salon buyers viewing the exhibitor project vehicles on display.
MSDP Group
Tom Bennett (second from right in black shirt), chief marketing officer of MSDP Group LLC talks to buyers visiting his booth. “The SEMA China trip this year was extremely productive and valuable for us. Already selling into China, we had no idea of the potential for additional business there and the vibrant, enthusiastic approach to the automotive aftermarket that exists…especially for Jeep, which is a core market for us. We left China with a newfound excitement for business opportunity in that part of the world and look forward to capitalizing on the contacts made,” said Bryce Castleton (not pictured), Powerteq vice president of sales.
  Rock-Slide Engineering
“The China Business Development Conference was great for our company,” said Michael Sampson (center in black shirt), director of operations and foreign sales for Rock-Slide Engineering. “As a first-time visitor to China, it was invaluable in learning the Chinese market. I would not be able to gain so much knowledge and meet so many possible buyers in such a short amount of time as I did at the conference. It allowed me to connect with current Chinese customers and find new customers. Awesome experience!”
Mike Spagnola SEMA Garage
Mike Spagnola (left), SEMA vice president of OEM and product-development programs, illustrated the highly detailed CAD designs generated by the FaroArm scanning tool at the first China-based SEMA international measuring session. “The SEMA Garage team scanned seven vehicles popularly customized in China but not sold in the United States. We spent the week producing 3D scans of these vehicles, converting these scans to surface and CAD data. It’s exciting to be able to add very high-resolution scans of these international vehicles to the extensive list of more than 50,000 CAD files available to members via the SEMA Technology Transfer program. Each year members develop thousands of new products using the SEMA Garage Technology Transfer program. It’s the fastest, most accurate and efficient way to develop new products at a fraction of the normal R&D costs.”
 

Dynojet Research
Dynojet Research Inc. and the other 20 companies exhibiting at the sold-out China Auto Salon were provided with 3x3-meter turnkey booths in the SEMA section. Each company was provided with an interpreter to facilitate communication with buyers. Carl Chastain (left), international accounts manager for Dynojet Research Inc., talked about the universality of the factors that make for a specialty-equipment industry: the need for enthusiasts and for innovative manufacturers of specialty products and equipment. “We all have one thing in common: individuality,” he said. “And for us to be individuals, we need businesses like Dynojet, SCT, K&N, Borla and so on to develop new products for vehicles in our markets and tools to measure their gains. It doesn’t matter if you are American or from any other country.”

 

 

 

SuperFlow
Scott Giles (second right), CEO of SuperFlow, and Chris Mann (far right), SuperFlow project manager, provided information on their high-performance automotive test and remanufacturing equipment to Dennis Simmons (left) and Jessica Tan from the U.S. Embassy in Beijing. “We believe that the Chinese market has huge potential,” Giles said. “SEMA makes it very easy to come to China for your first time by eliminating the logistics and language hurdles. The support SEMA introduces through its government contacts is invaluable.”

 

 

 

 

 

aFe Power
“No matter where you go in China, you find recognizable cars and owners who want to increase the appearance and performance of their vehicles,” said Kevin Floody (center), director of international sales for aFe Power. “I was surprised to learn how popular the European vehicles are, especially BMW. Volkswagen is also one of the top-producing OEs, but American musclecars are also starting to show their strength and a lot of that has to do with the new Mustang, Camaro and Challenger hitting the market. I am really looking forward to continue developing the market in China.”

 

 

 

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