On the one hand statistics show the incredible growth of the car market in China in 2009 and so far in the New Year, with the authorities in Beijing to continue offering tax breaks and promoting easier car financing this year to further drive such recession-defying sales, on the other hand, and superficially at least, the downstream car parts trade in Guangzhou is changing rapidly. And with Toyota reporting the southern province as a key segment in China, the auto parts business there looks set for a bright future. Also potential car buyers in Guangzhou reportedly demand top-end luxury models more than popularly-priced counterparts, which shows the level of local affluence that is critical to a sustainable auto parts sector.


With Guangzhou apparently being home to a sizable segment of upscale car buyers who are reportedly savvy owners, ones who actually care about cost-to-performance ratios as part of the buying process, as well as a segment with substantial volumes of new cars sold in China, insiders claim that Guangzhou has the potential to create an auto parts/accessory market valued at over US$14.64 billion in 2010.

Over 1,000 auto parts and accessory wholesalers, including dozens of sizable market clusters, dot the major southern China city, few of which are even equipped with integrated modern business tools that enable efficient management of information, transaction, display, and logistics.

First Step
Various levels of governments in Guangzhou are dedicated to promotion of the “Guangzhou Auto Parts and Accessories Global Sourcing Center,” a strategy that includes an integrated approach that also offers information and logistics services.

With continued tax breaks for new cars and easier financing promoted by China, record-setting car sales are expected to continue for some time. Coupled with fast rising car ownership, there is sure to be a demand for bigger, better organized car parts and accessories outlets in Guangzhou, according to most observers.

Another promising development is that all the top-three Japanese auto brands—Toyota, Nissan and Honda—have set up assembly lines in Guangzhou, helping to drive further the automotive supply chain, with a beneficial side-effect to push to the forefront the faster, more effective development of auto-parts services in this major city.


A Reality
Now a reality, the Guangzhou Auto Parts and Accessories Global Sourcing Center is the first and only auto parts/accessory transaction center equipped with in-house product testing/inspection lab, with the center being sizable enough to accommodate businesses for both domestic and export sales. Establishing an enviable model with world-class facilities, the Center is a specialized venue for auto parts business in Guangzhou, helping the major southern city to better serve global auto parts/accessory buyers.

Financed and constructed by the China-based Huamei International Investment Group, the Guangzhou Auto Parts and Accessories Global Sourcing Center occupies 170,000 square meters and costs over US$234.2 million, as well as being multifunctional as a globalized exhibition, conference, transaction, logistic, and information center in southern China. In addition, the Center is certified by the China Federation of Logistics and Purchasing (CFLP) as the pioneer platform for auto parts and accessory business.

Being the sole auto-parts/accessory exhibition and business center in Guangzhou also strengthens the city’s lead in the sector in China. With many districts in Guangzhou having been major collecting and distributing points, the auto parts trade has been changing rapidly, where now the market consists of auto parts/accessory malls, 4S (sales, spare parts, service, and survey) stores, chain-stores, or chained hypermarkets, instead of conventional, smaller shops.

Increasingly more automakers are diversifying into the aftermarket segment by developing 4S networks to stay with new market developments. These automakers may authorize established independent outlets or sell management skills, or invest directly as partners to rapidly, effectively expand market shares.

Global auto parts brands have also been trying to tap the massive potential in China by partnering with hyper-markets, auto-parts supermarkets, auto-parts chains etc., while increasingly more domestic enterprises are also trying to vertically or horizontally integrate partners for joint business development.

Outdated Mode
The older and conventional business models used by auto-parts companies in Guangzhou, in fact, can no longer keep up to rapidly-changing demand and development, industry insiders say.

Chairman of Zhejiang Auto & Motobike Parts Chamber of Commerce L.X. Huang says that the increasing car ownership in China is creating huge opportunities for aftermarket parts and accessories operators. But sustainable development of the parts and accessory business hinges on increasing number of sizable business venues, as well as larger manufacturers capable of meeting higher-standards in production, transaction and sound operation.

The Guangzhou Auto Parts and Accessories Global Sourcing Center, Huang adds, expects to attract 3,000 to 5,000 domestic auto-parts and -accessory companies to move to the huge facility. Many auto parts enterprises are keenly interested in setting up operations in the Center, according to the chairman.



(by Quincy Liang)