American-based entrepreneurs interested in penetrating China’s burgeoning aftermarket are expressing enthusiastic optimism regarding their prospects based on what they experienced while exhibiting at the Automechanika Shanghai show in December.
Having made its debut 10 years ago with 235 booths covering 107,639 square feet of space, the event has grown to encompass more than 2 million square feet spread over 17 established halls and seven temporary display areas, making it Asia’s largest trade fair for auto parts, accessories, equipment and services. In the Automechanika portfolio of shows held in Africa, Asia, Europe and Central and South America, it is second only in size to Automechanika Frankfurt, which this year takes place Sept. 16-20 in Germany.
More than 80,000 Automechanika Shanghai attendees arrived from some 140 nations and territories to review 4,618 exhibitors representing 38 countries and regions throughout the world. The tally for the 2013 edition of the show marks a 15 percent increase in international exhibitors compared to 2012; the amount of domestic Chinese firms hosting booths – there were 4,095 of them – was up 12 percent over 2012’s totals.
“The increased exhibitor number reflects the fact that the show is well recognized as an ideal marketing platform for new and existing business relationships,” says show director Jason Cao, senior general manager at Messe Frankfurt, Ltd.
Industry executives from Australia, Poland and Tunisia manned debut pavilions at the event, joining returning pavilion delegations from France, Germany, India, Italy, Japan, Korea, Malaysia Singapore, Spain, Taiwan, Thailand, Turkey, the United Kingdom and the U.S.
Several display categories posted gains signaling a rapidly growing level of interest within certain segments: Parts & Components increased by 10 percent, Repair & Maintenance rose 20 percent, and Accessories & Tuning doubled in size.
Such dramatic rises in participation did well in reaching the goal of delivering exceptional “knowledge and networking,” according to Fiona Chiew, Automechanika Shanghai’s deputy general manager.
“The show is both a professional platform for international companies stepping into the China market and for Chinese companies wanting to expand their businesses from China to abroad,” she says.
“The show is also an excellent East/West platform for promoting industrial development, Chiew explains, “because it covers the whole automobile industry chain, including OE and aftermarket.”
“I thought it was a very successful show,” says John Sollazzo vice president of sales and marketing at Precision International, which is based in Yaphank, N.Y.
“There were a lot of customers from all over the world, and we used the show as a stage to continue meeting with people. We’re trying to penetrate the aftermarket and decide if we need to have warehousing over there,” he says.
“It’s not like you’re going to Europe and there’s an established aftermarket,” says Sollazzo. “It’s a whole different world, and we’re still trying to figure it out.”
A key plus for Precision’s prospects in China is the company’s reputation for producing high-quality transmission products, he says. “We’re looking at more of a long-term relationship,” Sollazzo notes, adding that the firm is intent on carefully establishing its Chinese business presence. “It’s a tough market – transmission parts is a tough market to get your arms around.”
Knowing China’s fleet
Automechanika Shanghai’s annually expanding ability to facilitate effective contacts with decision-makers throughout the Chinese aftermarket is being viewed as a critical element for obtaining solid results and maximizing the value of participating.
“The show continues to get better and better every year,” says Grant Kitching, vice president and general manager at California-based Walker Products. “We were able to secure new business and seek new distribution opportunities, and we were able to actually close some deals right at the show,” he reports.
Progress was additionally achieved in learning exactly what types of vehicles are currently traversing China’s roadways, a process made difficult given the nation’s differing auto registration standards and the presence of China-specific automakers.
“Getting information in China is more of a challenge,” Kitching says. “You have to identify what the car parc is in the region, and provide product for that region. It makes no sense to bring over parts for a Chevy Tahoe if they have no Chevy Tahoes in China.
“We are already selling product made in the USA for some of the Chinese national cars,” Kitching continues. “To do that is a challenge because you have to go over there, visit the car dealers and purchase sample product for these cars. We identify these parts and determine if we can reverse engineer and manufacture them to our quality standards. Many times we are able to provide a better product than what came off the car.”
The company’s line of oxygen sensors and engine management components are particularly promising sales prospects because of China’s air pollution problems. “The smog is horrendous,” says Kitching. “We’re trying to sell them quality products that we think will improve the environment.”
Navigating China’s cultural climate requires a certain amount of understanding and patience, according to Kitching. “You need to have an open mind and learn how they do business. If you go over there and think that you’ll open up a traditional warehouse distributorship like there are in the USA, you’ll fail miserably,” he cautions.
“Business in China is based on relationships, first and foremost. Secondly you must have quality products, and finally, you need to have people on the streets in China,” says Kitching. Walker has American staffers stationed in the nation along with Chinese nationals. “You need people who know and understand the culture.”
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