SEMA opens gateway to China: Agreement with Chinese government creates new specialty marketplace

Jan. 1, 2020
A whole new market has opened up for specialty parts and accessories manufacturers and distributors. And the Chinese streets will soon be adorned with ground effects, spoilers and other amenities sought by performance enthusiasts worldwide.
China markets SEMA specialty AAPEX
A whole new market has opened up for specialty parts and accessories manufacturers and distributors. And the Chinese streets will soon be adorned with ground effects, spoilers and other amenities sought by performance enthusiasts worldwide.

Until recently, China only allowed its citizens seven different choices of paint colors for their vehicles. But that will soon change as the Specialty Equipment Market Association (SEMA) has helped facilitate an agreement with the Chinese government to open up 500 product categories to its marketplace, essentially creating a new specialty market in China.

"We're told that this is the first time a non-government (entity) has worked with and impacted laws in China," says Peter McGillivray, vice president of communications and events for SEMA.

"We have recently passed a significant threshold ... and this is just the beginning." The new Chinese laws were facilitated by SEMA and the Chinese Ministry of Commerce.

"This pro-industry amendment sends an important signal to Chinese consumers and SEMA members that car personalization is legal and welcomed by the government of China," says Jim Cozzie, SEMA chairman.

The news of SEMA's agreement with China was so new at press time, a number of members were unsure of their strategies. Still, with China's population of nearly 1.5 billion people, it is clear that this agreement will open many doors for SEMA members, many of whom are still developing their global footprints.

"We are an organization of mostly small to mid-size businesses," McGillivray adds. "As a group these businesses have this tremendous potential to identify consumer trends and tastes and turn them into business opportunities, and that's pretty powerful thinking."

Besides, China is the world's fastest growing automotive market, he continues. Doing business with China has changed, and continues to change rapidly; so interested companies are encouraged to do their homework before embarking on a Chinese business venture.

For one thing, labor rates are increasing, making China less of a "low-cost country," and regulations differ from those in the United States. In China, a contract is only the beginning of a partnership, and some Chinese partners do not interpret a business contract literally.

One SEMA member states it may do business in China, but it will at first be a small part of future operations; another may not go to China over fitment issues. There may be some lag time before full business plans are under way, but due diligence is imperative for those seeking a Chinese venture.

Along with the change in Chinese laws, SEMA plans to conduct a program at the China International Auto Parts Expo, Nov. 12-15 in Beijing.

McGillivray says SEMA has been laying the groundwork for Chinese relations, through educational materials, research reports and a Shanghai office.

"This is something that early on our board of directors, and especially our chairman Jim Cozzie, have understood the potential over there," adds McGillivray. "We have an office in Shanghai, we have created market studies and we've put together delegations of our leadership that have visited China over the last several years. It's that type of vision and type of commitment that they have picked up on and since then, they have come to us and visited SEMA and our offices in Washington D.C. I think that that played a big role in it."

For more information, visit www.sema.org.