Brand casts competitiveness Zhejiang auto parts excavate automobile after market gold mine
The dawn of the 21st century marked a new era for China's automotive industry, witnessing an explosive growth in both car manufacturing and the auto parts market. According to official data, the Chinese automobile manufacturing sector has been expanding at an average annual rate of 24.5%. By 2005, the total number of civilian vehicles on the road had surpassed 29 million. This booming consumer market has become a powerful driver for the auto parts industry, making the automotive aftermarket one of the most promising sectors in the industry—often referred to as the "final gold mine."
With such immense potential, the field is vast and ripe for development. The richness of the opportunity depends entirely on how effectively it is tapped. In Zhejiang, the region’s vibrant economy has sparked a surge in entrepreneurial activity within the auto parts market. Billions of dollars have flowed into this sector, leading to the emergence of large-scale auto parts markets covering over 100 million square feet. As time passed, more merchants joined, and business opportunities flourished.
Seizing the moment, the automotive aftermarket is expanding rapidly. The growing demand for automobiles naturally fuels the entire supply chain, with auto parts playing a central role. Today, the annual turnover of the auto parts industry reaches 500 billion yuan. When people think of Chinese auto parts, Zhejiang often comes to mind, as it accounts for about one-third of the national auto parts industry. Most of China’s auto parts exports come from Zhejiang, with major manufacturers like FAW, Dongfeng, and SAIC sourcing 50% of their components from the region. Hundreds of spare parts are exported to Europe, the Americas, and Southeast Asia each year.
Zhejiang Auto Parts City has emerged as a key player, leveraging its industrial advantages to establish itself as a major hub. Its rapid development highlights the city’s competitive edge in the auto parts market. According to General Manager Chen Yunneng, the market has evolved through three distinct phases: from 1991 to 1994, it focused on basic training and service improvement; from 1995 to 1999, it emphasized brand building and quality management; and after 1999, it relocated to create a more clustered and efficient market. By 2005, the market achieved a turnover of 5.086 billion yuan, with over 600 operating households, representing 60-70% of Zhejiang’s auto parts trade.
In addition, Hangzhou Motor City has also made significant strides in developing its auto parts market. According to General Manager Xin Cheng, the market has attracted over 100 new merchants in recent years, showing strong growth potential. With the shift from car sales to post-sales services, the need for a centralized auto parts market became evident. The result has been a stable and growing business environment for merchants.
As the industry evolves, traditional trade models are being replaced by more modern, integrated systems. The old auto parts markets, once housed in greenhouses and warehouses, are gradually being phased out. Newer developments, like Zhejiang Auto Parts City, now offer better infrastructure, improved logistics, and a more professional business environment. General Manager Chen noted that the market has shifted from retailing to wholesale and logistics distribution, creating a more efficient and scalable model.
Yiwu Auto Accessories Street, recently opened, represents a new trend in the industry, combining production, branding, and internationalization. With over 150 businesses and thousands of product varieties, it aims to become a one-stop solution for auto parts. Sun Meide, the head of the street, mentioned that chain stores and professional service providers will play a key role in the future, with plans to build an international brand within five years.
Similarly, Taizhou Auto Parts City has invested heavily to create a modern commercial hub, featuring 380 shops, a large parking area, and underground garages. Deputy Mayor Zhang emphasized the importance of rational resource use and government support to build a strong international auto parts market.
Hangzhou Auto City hosts annual auto shows during the West Lake Expo, boosting the visibility of its auto parts market. These events not only attract car enthusiasts but also promote the local auto parts industry.
Despite the growth, challenges remain. In the Hangzhou region, the number of auto parts markets has increased from four to over 70, leading to issues like disorderly competition and rising costs. General Manager Chen Yunneng urged the government to implement macro-control measures, arguing that without regulation, the market could become saturated and lead to unhealthy competition.
Yiwu serves as a successful example, where the government has imposed strict regulations to ensure market order. This approach aligns with Chen’s vision of controlled growth, allowing the industry to develop sustainably while maintaining profitability.
Strong branding is essential for long-term competitiveness. Zhejiang Auto Parts City has built a strong reputation, becoming one of the top 50 most competitive markets in China. The city continues to invest in e-commerce, logistics, and brand expansion, aiming to become a global auto parts hub.
Through strategic partnerships, e-commerce platforms, and logistics centers, the market has significantly boosted online sales and reduced operational costs. Additionally, the city is expanding its reach through chain operations, establishing new markets in cities like Suzhou and Qufu, which have seen impressive sales and rental rates.
Overall, Zhejiang’s auto parts specialty markets are leveraging their industrial strengths to position themselves as key players in China’s auto parts distribution network. With continued investment and smart policies, the region is well on its way to becoming a national leader in this dynamic industry.
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