Going Global!

China's Auto Aftermarket is Booming!

China has the fastest growing car parc in the World. U.S. aftermarket companies are looking to international markets for future growth. China certainly should not be overlooked. AfterMarket Business World asked us to report on this amazing opportunity in their February issue.

Please click on the link below to read the full article.

http://aftermarketbusiness.search-autoparts.com/aftermarketbusiness/article/articleDetail.jsp?id=703081&sk=20821d980dd7190c415ad7fd24f04a3f   

The Article answers vexing questions such as:

*Which trade-shows are the best investment in China?

*What are the growth segments in China's aftermarket?

*How many distributors is enough in China? 

 

International Success Can Only Come From The Top

I have been focused on selling U.S. products to markets outside the U.S. for over 20 years and have sold over a half a billion dollars of U.S. products internationally.  In 2009 , I traveled from Hong Kong to the U.S.  seven times to visit over 20 U.S. companies with under $100 million in sales to explore taking them global. Unfortunately many of these companies were extremely challenging to help. What all these companies had in common was that  international expansion was not a critical focus of the owner or the CEO. In these companies they still saw their business as being U.S. based but ‘heard from friends that there was money to be made in China, Europe or the Middle East'.

Conversely I have worked with two companies that grew amazing international businesses: Loctite and Meguiar’s. The common international success ingredients in both these companies were:

*The CEO made international his job. At Loctite Ken Butterworth and David Freeman were huge zealouts of international expansion. At Meguiar’s, Barry Meguiar made going global his focus. 

*They gave international the company’s best resources.

*They put the best people in international and understood very well since international expansion is a sales and marketing focus: sales and marketing talent would be needed first. 

*They showed the entire company that they were keenly interested in growth outside the U.S, and that smart managers within the organization should support international and have the same focus if they wanted to move ahead in their careers.

*They understood the need for investment to grow an international business and were willing to invest for 5 years before expecting a return. In both companies the returns came as planned and were equivalent, even superior to those of the U.S. business.

*They realized the need to plan and created ten year plans, monitored monthly, reviewed quarterly and updated annually with presentations to the management team in HQ or international markets which they organized and always attended. 

Sadly many of the U.S. firms I visited last year do not look like they will ever earn international success on the magnitude of Loctite or Meguiar’s because:

*They see their U.S. business as their primary business and ‘export’ business as ‘gravy’. They see their future in the U.S. market. They said they ‘don’t like the food or international travel’. If the owner or CEO says this , guess what: no one in the company will spend any time helping the company expand internationally. In one company with huge potential overseas, the owner gave international responsibility  to his difficult brother to literally get him out of country because domestic managers were tired of him messing with the US business.

*They have no 10 year international plan or even a distribution policy. Some even  accept very small orders from international accounts they had never seen or had any understanding of. 

*The CEO or owner is not focused on international expansion and has given responsibility for international to customer service or the v.p. of U.S. sales. 

*They allocate resources poorly: I have seen many a  non-sales and marketing person put in charge in the early days of an international business. I worked with packaging engineers and manufacturing guys given the responsibility for growing international sales  who missed so much of their potential opportunity because of their own skill set. These companies never became #1 or #2 in their markets outside the U.S.

*They are too slow to respond to customers. I can tell you that in Asia especially, customers demand a 24 hour response. They get it from the good Asian suppliers. 

*Instead of a ‘Win/Win’ culture, they had a ‘Take it or Leave it ‘ attitude. Well as  I am sure you can guess, most international customers when presented with ‘Win/Lose’ would prefer to leave it. Customers today have a world of choices. 

CEOs/Owners: only 6% of the world’s population lives in the U.S.A.  It is time to rebuild the U.S. economy by taking advantage of the weak dollar and expanding emerging markets. It is time for you to sell your products to the other 94% of your potential customers! To be successful you must make international growth your mission!

Global Apple iPad Prices

Image via Wikipedia

Last Friday, the Asian Wall Street Journal in its Arbitrage column reported on iPad prices (64GB,WIFI) from New York ($699) to Manila ($1,132). Click on the link to see the article View this photo

German Car Makers get Sales Boost from China and the U.S.

Image via Wikipedia

BMW and Mercedes recorded double digit growth last quarter. Where is the growth coming from in this challenging economy: China and the U.S. according to an article in the Asian Wall Street Journal. Click the link for the whole article View this photo

BMW and Mercedes doubled their sales in China (now the world's biggest new car market) last quarter. In the U.S., BMW grew it's sales 6% in the first half, Mercedes grew 22% and Audi 28%.

Strong sales in China and the U.S. offset weakness in Europe, particularly in Germany.

Related articles by Zemanta

• Germany's auto industry thriving again(theglobeandmail.com)
• GM's sales in China pass U.S. for first time(seattletimes.nwsource.com)
• Record sales for recession-proof luxury cars (money.cnn.com)

Standard Chartered Bank Reports a 41% increase in Lending to Hong Kong SMEs

Image by Stuck in Customsvia Flickr

Just returned last night from two weeks in the U.S. , and a small side trip to Costa Rica. Spent time in Georgia, Cincinnati, Dayton, Ohio, and Florida while in the States. In December I spoke with the president of an excellent local bank in the North Georgia mountains. He predicted a challenging summer of 2010, as the banks, real estate and building contractors, as well as home owners worked through their real estate debt. I was rather shocked when I heard this at the end of last year, but by all first hand accounts from U.S. friends and business associates: he was right. The recovery in the U.S. appears to be on track, but it varies by region and by industry. I am fortune to be deeply involved in both the automotive aftermarket and DIY consumer/retail segments which have weathered the tsunami with amazing resiliency even in the States. In Asia and the emerging markets (like Costa Rica), our segments are booming.

Fast forward to Asia and in today's Hong Kong Standard newspaper was a short article on Standard Chartered Bank boosting loans to SMEs (small and medium enterprises) by 41%. The article even went on to say the bank was adding staff to better service this expansion in lending. Click the link to read the article... View this photo    Banks in Hong Kong have fairly conservative lending practices, so this tells me that SME's are doing quite well.

Saturday as I left Chicago's O'Hare Airport, the United lounge and the bars were spilling out into the aisles with World Cup fans. Last night as I arrived home in Stanley, HK, the waterfront bars and restaurants were teeming at midnight with World Cup fans. The world gets smaller and more interconnected every day!

One Chinese Company Captures almost 1/3 of the California Solar Panel Market in Less than 1 Year

Image by richardmasonervia Flickr

When I was last in the U.S. at Christmas I saw, what I thought were stimulus funds at work repaving the highways. This was worrying. In our last serious economic event in the early 1980's the U.S. economy shifted from manufacturing jobs to service and technology, a strategic shift that worked very well for almost 30 years.

Now is the time for the U.S. to pioneer and develop alternative energy sources. Wind and Solar are great examples. While we pave the roads, the Chinese government and smart, fast, and aggressive Chinese companies are getting into solar and wind energy in a big way (often funded at the local level by U.S. or state tax credits). Click one the link  View this photo  to read how Yingli, a Chinese Solar panel company captured over 1/3 of the California market in less than a year. Now they are moving into New Jersey.

Related articles by Zemanta

• GT Solar signs new contracts worth more than $200M(seattletimes.nwsource.com)

Two Best Automotive Aftermarket Shows in China

   There are so many Automotive Aftermarket Shows in China! Often I am asked which shows in China are most effective. I have been selling products for U.S. Companies in China since 1992 and have done so many shows!

 

    My observation is that in the 1990's we were perhaps too early for the market, however our brand, Permatex is now famous due to the hard work of the Loctite China team I had the privilege to work with.

 

    Today however, the auto aftermarket in China is booming. China became the #1 new car market last year and new car sales are forecasted to grow 10% in 2010. There are still too many shows. We did over 7 shows in China last year and I can tell you from our own real world experience: two shows are the most effective in terms of adding new distribution and they are:  

 

    Beijing: The CIAACE Show www.ciaacexpo.com . This year's show was held from March 12-14. There was over 2,089 exhibitors and 66,571 buyers. This is a huge show! Over 126,000 people visited CIAACE 2010. The majority of the buyers come from Beijing and northern China. The number of exhibitors and buyers doubled this year. We invested $ 3000 for 6 x 6 meter booth. We launched:

 

Posh Pile floor mats

 

 

 

Gorilla Glue (Consumer Adhesives from the U.S.)

 

 
Vibra-Tite Aftermarket and Industrial Adhesives (also from the U.S.)

 

    CIAACE 2010 exceeded my wildest expectations. We sold 4 new Posh Pile distributors, 3 Gorilla serious prospects (and sold out of all our samples.) and one significant Vibra-Tite buyer.

 

    The CIAACE has a very professional international sales person, Ruby Yang. She can reached at ruby.yang@yasn.com.cn. Ruby is super helpful and speaks perfect English.

 

The other can't miss show is:

    Zhengzhou: The 7^th China Auto Accessories Trade Fair from June 30 to July 2. (Zhengzhou has a population of 7.35 million, and buyers from all over China attend this show.) This show has even more foot traffic than Beijing. We look forward to taking our 3 lines to Zhengzhou late June and adding distribution! The website is www.hdcy.com.cn. The English speaking sales person is Ms. Cong Wei Wei, email: hongdahuizhan07@163.com.

 

    If you are serious about building your China aftermarket business, check out these two shows!

 

Tom Muldowney is the Managing Director of International Market Access Ltd. He formed IMA in Hong Kong in 2000 to help take American brands global. Tom has sold more than $500 million of U.S.-made products to international markets. He has been based in Asia for 18 years working with global brands/organizations such as Loctite, Henkel, Permatex, Teroson, 3M, Meguiar's, ND Industries, and the Gorilla Glue Company. IMA just launched it's own brand of high end car mats called Posh Pile. He has set up subsidiaries in Korea and representative offices in China. Tom can be reached at: tom@intlmarketaccess.com. IMA's new Web site: www.intlmarketaccess.com.

Be a Business Owner

Flew back from an excellent trade show in Beijing Sunday night in economy on Dragonair to Hong Kong. On the video screen they had an amazing BBC business program: Evan Davis (host of the UK version of Dragon's Den) Meets Warren Buffet: The World'd Greatest Money Maker. Take 10 minutes and check out this video:

I have been investing since 1995. With the Tech Bubble of 2000 and the recent Tsunami, I now subscribe to Warren Buffet's adage: be a business owner. My two best investments by a long margin have been my own business and real estate in Asia.

This is a great documentary: don't miss Warren Buffet on 'Mr. Market' or his example of how he taught his children about money.

Bullish on Asia

Image via Wikipedia

Yesterday's papers were full of stories of GDP growth, rocketing real estate prices, and Asia's economic recovery. They included:

Recession over in Taiwan from the Hong Kong Standard. Click the link to read: View this photo  Q4 GDP in Taiwan grew at 9.22% faster than Q4 2008.  Shipments to China, Taiwan's biggest trading partner, grew at 187% in January on the heels of 96.7 growth in December. Exports to the US grew at 13.7%

Asia's Boom conceals some darker prospects from the International Herald Tribune. Click the link to read:View this photo  The article summarizes regional growth from the real estate rocket in Hong Kong, industrial boom in Taiwan, big IPOs in Japan, and of course the biggest story of them all: China's 8.7% GDP growth last year.

The article outlines some of the risks in the region while recognizing Asia is the bright spot in the world economy.  It also concedes that the biggest risks to Asia's stellar recovery may well come from outside the region in the form of a debt default in Greece for example.

The Standard had two small articles citing economic growth in Thailand and Singapore. Click the link to read: View this photo  Thailand's GDP grew at 3.6% in Q4, it's fastest pace in 10 years. In Singapore, the government is halting property tax rebates, and subsidies to employers to retain staff. Both these moves signal the return to better times.

I was very encouraged to see an industry association I have belonged to in the U.S. for more than 15 years, the OAC (Overseas Automotive Council), a group dedicated to developing international markets for U.S. auto after-market products, pick up a record number of new members in January.

Two bits of advice I always give U.S. companies going global, you must:  have a strong marketing program (we especially love brands in Asia), and be very fast (anything more than 24 hour response to emails will not get the business in today's faster international markets).

 

Related articles by Zemanta

• Five ETFs for an Asia-Centric World(seekingalpha.com)
• Taiwan, Thailand Exit Recession as Asia Leads Global Recovery(businessweek.com)
• Outsourcing to Lift Asian Chip Makers(online.wsj.com)
• Sun Hung Kai Shines after HK Real Estate Auction(dailyfinance.com)
• Hong Kong Real Estate Surges(online.wsj.com)

China Sells U.S. Treasuries

Image by ArtBrom via Flickr

The International Herald Tribune reported last Thursday that China decreased it's holdings of U.S. treasury bonds by US$34.2 billion in December. Click the link to read the article View this photo

Hong Kong's Standard  newspaper had even more to say on the subject. Click on the link for the article View this photo

Japan is once again the biggest holder of US government debt, a bit of a concern because some analysts say Japan cannot maintain their holdings too long because of their aging population.

Apparently there is an active debate in China as to if it should strengthen it's currency, or raise it's domestic wage rates. It is felt higher wages could further stimulate China domestic consumption, while putting more funds in the hands of the people.

The article in The Standard points to the opinion I hear frequently in business circles in Asia, that China will enlarge it's gold reserves over time. Most of my business colleagues in Asia are long on gold.

Related articles by Zemanta

• Hong Kong Prepares for a Yuan World (online.wsj.com)
• U.S. Warships in H.K. in Sign of Easing Tension (time.com)

China Exports Jump

Image by kaiyanwong223via Flickr

Yesterday's edition of the International Herald Tribune sited a 21% increase in Chinese exports for January, while imports surged 85%. Exports rose a bit less than the expected 28%, but hint at an export recovery for China. Please click here to read the complete article View this photo

The U.S. and the EU are putting pressure on China to strengthen the RMB, while China is now considering raising domestic wages while keeping it's currency stable as a way to put more money into it's citizen's hands. This would continue a trend of government initiatives to further encourage domestic demand.

One thing we have already seen in our business is dramatic increases in freight rates out of China.

A related article also in the Herald Tribune reports a surge in the U.S. trade deficit for December because of increased demand for imports. The article forecasts an increasing deficit in 2010 as demand for imports out-paces U.S. export sales. Click to read the entire articleView this photo

Related articles by Zemanta

• China now the world's top exporter (cnn.com)
• China exports show trade recovery on track (seattletimes.nwsource.com)
• China's export prowess confirmed (news.bbc.co.uk)

U.S. Exports Grow at an Annual Rate of 28% in Q4

Image via Wikipedia

This is according to to the National Association of Manufacturers cited in the February 1st issue of the Wall Street Journal. click the link for the complete article:View this photo

The article goes on to say that this is the fastest increase and the largest contribution to U.S. economic growth in 30 years. In November exports made up 26% of U.S. manufacturing shipments up from 19%  just 5 years earlier. Half of those exports now go to emerging markets.

Related articles by Zemanta

• Commerce secy to detail push to double exports (seattletimes.nwsource.com)
• New trends in Pharma: Growth in emerging markets and BRIC (pharmastrategyblog.com)
• Obama Export Goals Doable, Job Creation Tougher (abcnews.go.com)
• U.S. Economy: Factories Expand at Fastest Pace in Five Years (businessweek.com)

Middle East: a Great Market for U.S. Products

Image via Wikipedia

Greetings from Dubai:

 I am here setting up distribution for several U.S. lines. It is amazing how many great business people you meet here that really want to sell U.S. products. Of course, the products must have a demonstrable advantages over other products in the market ,typically from Europe or China. I have built two successful brands/businesses in the Gulf Region.

As you go global, don't over look the Middle East! There are some amazing opportunities in this region.

You have to be there

Image by airgapvia Flickr

The SEMA/APPEX Shows just ended today in Las Vegas. Combined they are the biggest automotive aftermarket shows in the world. According to the cabbies (and taxi drivers know everything that happens in any city), SEMA/APPEX drew bigger crowds this year than the CES (Consumer Electronics Show). The CES has been the biggest trade show in the U.S.  for several years.

 So what does this say about the automotive aftermaket? The booth space at both shows was down 30-50%, and the attendance was down 10-30%, depending on who you talk to. Although this sounds bad, it is dramatically less bad than the CES turnout in February. And at SEMA the aisles were crowded. It seems to me the U.S. buyers that came to SEMA this year and the ever-growing buyers from international markets seeking U.S. products,came  to find and buy new things. They all had confidence the worst was behind us and 2010 would be better than 2009.

Many of my friends in various parts of the U.S. aftermarket told me 2009 was a tough year for them, but they all reported growth. Many of them suggested that drivers are repairing their vehicles instead of replacing them.

But you cannot find the opportunities in today's aftermarket if you are not there! 

iPhone 3G Prices

Caught the excellent Arbitrage column in this weekend's Asian Wall Street Journal. It featured the pricing on Apple's iPhone 3G in five major international cities. Prices ranged from U.S $566 in London to $738 in Paris (8GB phone without service commitment). Click on the photo link to see the column: View this photo

For some of the reasons for differences in price between international markets,please look at our earlier bog on August 3rd: "How can Underwear Cost more than Twice as Much in Rome as it does in Seoul".

That being said, my wife got an iPhone  in Hong Kong in January and the phone was free with a 24 month commitment.

The big news for the iPhone is it will soon be offered in the world's biggest mobile phone market: China through China Mobile.