Aftermarket Insider Issue 80 - (Page 17)

CHeCkiNg iN witH CHiNA MARKET inTElliGEnCE A Look into chinese Service Garages – Part III B Y S T Ev E N H . GA N S T E R, M A N A G I N G DI R E C T O R , TE C H NO M I C A SI A It is usually not a simple thing to find the part you want, or to be sure it is what it is advertised or claimed to be. On a simple level, parts are generally segmented into three types in China’s aftermarket. OEM parts (Zheng Chang Jian), non-OEM parts (Fu Chang Jian) and fakes (Jia Jian). However, some practitioners further segment non-OEM parts into branded (Pin Pai Jian), higher quality value parts and lower quality substitute parts for price differentiation. Each of these has a place in the market and falls in a separate space in the price-quality continuum (see graph) though in many cases actual transaction prices (between sellers and buyers) may not necessarily reflect the segment differences. A key influence in part selection is the specific car class. Luxury vehicle owners tend to be less price sensitive than compact car owners, who are often the purchasers of fake or “good enough” local equivalents. “Zheng Chang Jian” 100% oEM PArTs (gENuINE) rElATIvE PrICINg In the last two issues, we described the development of service garages in China and took a look at how a typical independent service garage sources parts in China. In this issue, we want to take a closer look at the kind of parts it buys. 80% brANdEd 60% “Fu Chang Jian” 40% 20% vAluE “Jia Jian” subsTITuTE FAkEs 0% rElATIvE quAlITY lower level parts which were supposed to be genuine or branded. Increasingly, particularly in more competitive bigger cities, service providers would check with their customers about what types of parts they prefer if they have them available. Generally speaking, garages that can offer a broader depth of parts types and price points have obvious competitive advantage. Knock-offs, or counterfeit parts, remain a problem, especially for highvolume parts like spark plugs and Thanks to improving access to informa- brake pads. In some cases, countertion, the acquisition of parts of different feits can reach up to 20-25 percent types is becoming more transparent, of parts sold. In recent years, the particularly in many bigger urban government has been launching nationcenters. But challenges still exist. As it wide campaigns to crack down on is difficult to discern immediate quality knock-offs and unauthorized sales of differences between OEM (genuine), OEM and branded parts. This has branded and fake, some garages had some effect though the problem have had bad experiences of paying a persists. Ironically, the tougher availpremium and still getting knock-offs or High ability of counterfeits has caused some inconveniences to certain garages. Most leading foreign parts suppliers in China have distinct structures to serve the OES (original equipment service) and IAM (independent aftermarket) channels. Their OES business emerged first in response to their OEM customers’ needs. These days many are also going after the more fragmented and difficult to control IAM channel where they need to address this pricequality continuum of parts and higher volumes of counterfeits. In response to the channel’s needs for variation in parts types and price points, some foreign parts suppliers are actively exploring different parts sourcing approaches, including more active outsourcing to local Chinese suppliers who can offer lower costs. Their ability to effectively supply a broad spectrum of parts to the IAM channel can be a key to their success in China. AFTERMARKET INSIDER | VOLUME 80 | 17 http://www.technomicasia.com/

Table of Contents for the Digital Edition of Aftermarket Insider Issue 80

Aftermarket Insider Issue 80
Contents
President’s Message
Association News
Government Affairs
Government Affairs
Head of the Class
Head of the Class
Member Profile
Toolbox
Impact Award
Market Intelligence
Market Intelligence
Executive Perspective

Aftermarket Insider Issue 80