SEMA-Member Companies Go to China to Pursue Qìche GaizhuAng (Car Customization) Business

SEMA News—December 2017

INTERNATIONAL

SEMA-Member Companies Go to China to Pursue Qìche GaizhuAng (Car Customization) Business

Some of the largest distributors in China participated on a panel discussion with the U.S. delegation during a recent trip to the burgeoning China market. Each of the buyers talked about the growing distribution system and their business plans.

A customizing car culture is blossoming in China, and a group of SEMA-member companies flew to Shanghai to check it out. They spent a week at the China Auto Salon promoting their brands and gaining insights into how Chinese enthusiasts obtain products and use their vehicles in the market of 1.4 billion people. The U.S. delegation saw many signs of the developing Chinese car culture and eagerness among Chinese enthusiasts to upgrade their rides to take them to the race track or off-roading.

The 15 U.S. companies spent a busy week exhibiting at the largest automotive specialty-equipment show in China. They also visited specialty-equipment shops, being briefed by U.S. government officials in the region as well as some of the local industry pioneers—some of the largest trade buyers—who provided insight into the growing nationwide distribution system and the active off-road and racing scenes.

The U.S. delegation also took part in the first SEMA educational session on the vehicle customization industry, which was designed to provide the newest Chinese reseller companies with a sense of how the market developed in the United States and the similarities and differences with vehicle customization in China. Buyers traveled from throughout China to meet with the U.S. delegation and to participate in the inaugural educational session, which was co-sponsored by the U.S. government.

“The visiting U.S. delegation was struck by how widespread vehicle customization is in China,” said Nickolaus DiBlasi, global product manager for Race Winning Brands. “After meeting with potential buyers, seeing shops, and getting to know the local people, we soon realized that there is a car culture much greater than we had thought. All the popular cars in the United States have made their way to China and have made a grassroots movement. Every town has a performance shop, and people are looking to modify.”

Though the market is still emerging, the increasingly interested middle class and burgeoning motorsports events are leading to significant year-to-year growth.

“China’s aftermarket auto industry is larger than we ever anticipated,” said Jack Tese of Kooks Headers & Exhaust. “It looks to be increasing in size year in and year out. It was amazing to see how much they valued the quality and craftsmanship of American products.”


From the left, Michael Mangelson, intellectual property attaché for the U.S. Consulate General in Shanghai; Leon Skarshinski, commercial officer for the U.S. Embassy in Beijing; and Kevin Floody, director of international sales for aFe Power. “The Chinese market holds increasing market potential for U.S. specialty auto part producers who have high-quality products available for SUVs, performance cars and off-road vehicles leading the pack,” said Skarshinski. One of the participants in the meeting, Dee Zee Vice President of Sales Jason Mrachina (not pictured) noted, “We were grateful for the opportunity to meet with people from the U.S. government during out time in Shanghai. We gained a lot of insight on the proper ways to trademark our brand and products as well as what we need to look for before doing business in China.”	SEMA Chairman of the Board Wade Kawasaki (left) provided a certificate of completion to one of more than 100 buyers who attended the first SEMA educational session held at the China Auto Salon. The session was co-sponsored by the U.S. Department of Commerce.

Fox was represented at the show by Dan Moser (back center), international sales specialist, and Jeff Hermann (back right), product manager of powered vehicles. “Chinese motorists are looking to upgrade and not looking for inexpensive Chinese products,” Moser said. “They want U.S.-made name brands and are not hesitant to pay for them.”	“Chinese enthusiasts crave American-made parts,” said Robert Scheid (second left), director of business development for McLeod Racing LLC. “Knowing what they are looking for and finding credible distribution takes participating in this huge market in person.”

“China’s aftermarket auto industry is larger than we ever anticipated and looks to be increasing in size year in and year out,” said Jack Tese (second left), international business manager for Kooks Headers & Exhaust, who attended the show with Chris Clark (left), the company’s vice president of sales and marketing. “It was amazing to see how much they valued the quality and craftsmanship of American products. This trip was the best way to immerse yourself in the Chinese aftermarket industry in an unintimidating and well-organized manner. SEMA takes out all the guesswork and little nuisances to ensure that you are focused on one thing: growing your brand in the market by understanding it and gaining new dealers.”	Each SEMA-member company was provided with a 3x3-meter turnkey booth and an interpreter at the Shanghai-based China Auto Salon. For the first day of the show, The SEMA section was trade-only for the first day of the show. The following day allowed exhibitors to interact with both buyers and consumers.

Nickolaus DiBlasi (center), global product manager for Race Winning Brands, was surprised at the size and potential for U.S. specialty equipment products in China. “The aftermarket potential in China is completely opposite from what I had thought going into the SEMA China Business Development trip,” he said. “[Our pre-conception] was only a high-end aftermarket that catered to exotics such as Lamborghinis, Porsches and other $100,000-and-over vehicles. After spending time in China, we found that there is so much more. We were pleased to see Camaros, Mustangs, VWs, Audis and Toyotas.”	Kevin Floody (second right), director of international sales for aFe Power, said that he has been coming to China for several years, and the market continues to expand. “There are a lot of aftermarket products available, and the people have become very knowledgeable,” he said. “They know what they want and know all of the right questions to ask. With the number of American vehicles being imported into China, as well as many European vehicles, the market is right for our product offering.”

Chinese consumers are enthusiastic about their booming car culture and are continually looking to the United States for new trends and products, according to Jay Crouch, director of global business development of California-based Injen Technology.

“These new products and trends are increasingly being reflected in their vehicles, which reinforces the fact that U.S. products are in high demand in China,” Crouch said. “From U.S.-branded trucks and Jeeps to Euros and sport compacts, every aspect of the aftermarket is represented well in China, and they are yearning for aftermarket support.”


Dee Zee has participated on SEMA’s trips to the Middle East, Russia, Australia and China. Attendees from the company this year included General Manager China Division Jon King (second left, red shirt) and Vice President of Sales Jason Mrachina (back center). “It’s nice to be able to focus on developing new customers and learning about the local market instead of why your booth isn’t at the show or how you are going to hire a translator,” Mrachina said.	Injen Technology attendees at the show included Ron Delgado (standing), president and CEO, and Jay Crouch, director of global business development (second right). Crouch said that Injen Technology has exported cold-air intakes and exhaust systems into the Chinese market for about a decade. “Chinese consumers are enthusiastic with their booming car culture and are continually looking to the United States for new trends and products,” he said. “These new products and trends are increasingly being reflected in their vehicles, which reinforces the fact that U.S. products are in high demand in China. From U.S.-branded trucks and Jeeps to Euros and sport compacts, every aspect of the aftermarket is represented well in China, and they are yearning for aftermarket support.”

Mrachina answered questions at the education session, providing distributors, retailers and installers from throughout China with information about some of the latest trends in truck customization and responded to questions on everything from how easy is it to install a product to how to connect with U.S. manufacturers. “We were grateful for the opportunity to meet with people from the U.S. consulate and various trade organizations during our meetings in Shanghai,” said Mrachina. “We gained a lot of insight on the proper ways to trademark our brand and products as well as what we need to look for before doing business in China.”	“For our company, it was a matter of being in the right place at the right time with the right product,” said Doug MacMillan (third left), co-founder of Hondata Inc. “Prior to traveling, we had our software professionally translated. As a result, our booth was up to three deep in potential buyers. We found that the market for our programming software and hardware is potentially larger than the U.S. market but is completely undeveloped.”

Each member of the SEMA delegation was provided with a car, a driver and an interpreter for a day, along with a list of top specialty-equipment shops to visit and meet with the owners at their leisure.	“The China market is growing and evolving at a very quick pace,” said Bill O’Roake (back left), international sales manager for Mickey Thompson Tires & Wheels. “I believe that the car culture is taking hold in China, and it is a great time to be involved. The brands that can establish a presence today will be the market leaders for many years.”

Dan Moser, international sales specialist for Fox Factory’s truck and off-road division, concurred. “Chinese motorists are looking to upgrade and are not looking for inexpensive Chinese products,” he said. “They want U.S.-made name brands and are not hesitant to pay for them.”

The SEMA delegation represented many product categories. One participant, Kevin Floody, director of international sales for aFe Power, was pleased with demand for the sort of performance products his company manufactures, including performance air filters, intercoolers and turbochargers.

“Performance has become a very big market there, and individuality is also extremely important,” Floody said.

The desire for personalization and the increasingly passionate enthusiast in the China market bodes well for U.S. companies. Bill O’Roake, international sales manager for Mickey Thompson Performance Tires & Wheels, advises that now is the time for U.S. companies to enter the market.

“The China market is growing and evolving at a very quick pace,” O’Roake said. “I believe that the car culture is taking hold in China, and it is a great time to be involved. The brands that can establish a presence today will be the market leaders for many years.”

To find out more about SEMA’s international programs and resources, including overseas business trips to China, the Middle East and Australia, as well as networking events at the SEMA Show and make/model data, visit www.sema.org/international, or contact Linda Spencer at lindas@sema.org.

2017 SEMA China Business Development Program Exhibitors