Aftermarket Insider Issue 77 - (Page 20)

MARKET iNTElligENCE CheCking in with China Diversity of Auto Parts Distributors in China B Y S TEVEN H. GANS T E R, M A N A G I N G DI R E C T O R, T E C H N O M I C A S I A PrOduCt breadth There are a variety of distributor “types” operating in China which fall on a spectrum between more model/ platform focused and product type focused. In general, most are relatively small scale (<$15 million) and are regionally oriented. Many sell through both their own stores (in parts cities) and through wholesale channels. In general, these parts distributors can be segmented into these two basic types. One type is those who are considered make/model based “specialists” and tend to be bigger players who claim that they offer “one-stop-shop” for a couple makes/models. However, their actual portfolio offering is often very limited. Others are considered product line/family based “generalists” who claim that they offer “one-stopshop” for limited product lines/families which are applicable to multiple makes/models. In both cases, these distributor groups will drift outside these limits in order to survive. Many larger distributors are increasingly developing private label products to help increase margin. However, distributors are frustrated by limited volume scale and parts knowledge. There are also cases where a distributor has acquired a supplier for private label products as part of its own branding strategy. Overall, the distribution chain is “under stress” with margins tightening at all levels. These margin levels vary by a distributor’s location, quality/price tier, reputation, volume level, make/ broad longfeng 2Kilo Poton shuangling arrow Zhonglian narrow mOdel breadth Covers limited number of models and will tend to go deeper in product offering Will have wider model coverage but tends to have more limited product line depth = Example distributor broad specialist Generalist model and parts focus, management competence, etc. While some players are living by a gross/net margin of ~10 percent/2~4 percent, many others are still able to reap ~20 percent/8~10 percent. For international players trying to penetrate the Chinese aftermarket, identifying, qualifying and retaining good distributors is a major challenge. 20 | AFTERMARKET INSIDER | VOLUME 77 http://www.aftermarket.org/Publications.aspx

Table of Contents for the Digital Edition of Aftermarket Insider Issue 77

Aftermarket Insider Issue 77
Contents
President’s Message
Technology Update
Massachusetts: A State of Repair
Meet Your Future Customers and Employees: Y Should We Care ?
Member Profile
Toolbox
Market Intelligence
AAPEX News
Market Intelligence

Aftermarket Insider Issue 77