Fifteen years ago, Chinese automotive businesses were intensely interested in joint venture agreements with overseas companies. Not anymore.

Opportunities in China are still abundant for U.S. auto parts manufacturers and distributors, but the game has changed, according to Timothy Weckesser from Sino Consulting, who led a seminar Monday on doing business with China.

For one, the previous joint venture system has been adopted by the smaller Chinese companies, but generally wholly owned foreign enterprises have become the norm.

China’s aftermarket parts distribution system is ever complicated, so those seeking Chinese partnerships should do their homework, Weckesser says.

The China automotive market has grown dramatically, but that has posed its share of problems along with the boon in business.

“There are 130 car companies in China, and that’s too many,” Weckesser states, adding that the top 10 Chinese auto manufacturers account for 80 percent of the country’s automotive production. Automotive sales have already surpassed this year’s estimate of 10 million vehicles in China, with nearly 15 million vehicles projected to be sold in 2013.

Auto parts distribution is convoluted and finding firm data is difficult, says Weckesser, who adds there are currently more than 5,000 auto parts manufacturers, which pulls in $80 billion annually.

Those looking to break into parts distribution in China should target “parts cities,” which are large parks where hundreds of sellers converge and retail space is subleased.

Other distribution avenues in China include 4S shops, licensed by OEMs, as well as large retailers.

Another piece of advice is to set up shop away from China’s major cities, where the costs can be significantly less. China’s once rural landscape is becoming ever more developed, with some farm-scapes transformed into bustling cities that rival New York City.

The issue of intellectual property violations and counterfeiting is being addressed by Chinese officials, but Weckesser says, “China’s very serious about IP protection.” However, “it’s not as good (at enforcement) as the U.S. It will be another generation before it matures.”
                                                                                  Source: SearchAutoParts.com