When trying to describe the state of the automotive aftermarket today in the “Far East,” it is not unrealistic to compare it to the “Wild, Wild West” during the Gold Rush.

This was seen firsthand by the 20 attendees of the inaugural class of Leadership 3.0 held earlier this month in Shanghai. The seven-day program, hosted by the University of the Aftermarket, included a number of site visits in Shanghai to automotive “4S” dealerships, repair shops, warehouse distributors and what is known as an “Auto Parts City” – a condensed neighborhood of more than 1,000 independent parts stores.

The automotive aftermarket in China in 2017 is still wildly undeveloped, but holds immense opportunity for anyone with a pioneering spirit and an entrepreneurial mindset. Case in point, Robert Zhu, CEO of Wohn Industries and local faculty member for the program, put it best when he said, “Today’s problem is not tomorrow’s problem in China.” Having a visionary mindset is key to thriving in this fast-paced market.

As was shared in last week’s introductory article, the agenda for the program combined a mix of class work, international networking and the aforementioned field trips. Classroom presentations by industry veterans currently working within the automotive aftermarket in China helped set the stage for the site visits. A few key themes seemed to run like a thread throughout the presentations that were given over the week. Among them was the emphasis on the young and fragmented nature of the automotive aftermarket in China.

In short, if you are a U.S. business that wants to set up shop in China, don’t bring your well-established, organized American business model with you and think it will work seamlessly in China. It won’t. According to one of the week’s presenters, one major U.S. programmed distribution group tried three times before they packed up their tent and finally returned stateside.

That’s not to say each company has to re-invent the wheel. In fact, Leadership 3.0 presenter Steve Ganster, director, Solidiance, and author of “The China Ready Company,” said he expects to see more U.S. investment in the Chinese aftermarket in the coming years. Opportunities exist – you just keep a few keep points in mind, he says.

“China is a huge market, but it’s not easy to make money,” said Ganster. “It takes time and you have to be here personally.”

The car parc in China in 2016 was comprised of some 158 million light vehicle/passenger cars, roughly 7 million heavy trucks and buses and another 2. 2 million medium trucks and buses. The vehicle parc continues to age. In 2015, roughly 41 percent of the vehicles on the road in China were one to three years old. By 2020, it is expected that 66 percent will be about 7.5 years old. This is good news for the automotive aftermarket; however, just as in the U.S., automotive dealers in China are becoming much more focused on parts and service and China is not a DIY market in general, Ganster says. The annual parts and service market in China is estimated to be around $110 billion (USD) or roughly $700 a vehicle.

Ganster and several of the other Leadership 3.0 presenters pointed out the critical importance of making sure you establish a team of trusted experienced locals (particularly a good local lawyer), alongside Americans from your company to set up your business in China. According to Foreign Commercial Service Officer Robin Garfield, also guest speaker at the event, 50 percent of U.S. companies considering doing business in China hold back simply due to intellectual property rights concerns. Having the right local contacts in place, who know the industry and its players, will add an important level awareness and insight you are not likely to have if working just with an American staff.

Ganster noted that there will be 150 million new urban middle class consumers in China within the next 10 years. There are more than 170 cities in China that have more than 1 million people living in them. So, its not just cars that are seeing a boom in China; it’s also technology in general. China is the No. 1 internet user in the world, and has more 1.35 billion cellphone users.

When it comes to technology, Ganster noted that China is very focused on indigenous development and growth, but there is still a thirst for strong brands as well. Bringing your well-known and respected brand name with you, and having a few great local execs in place, may be the key to getting in the door.

Editor’s Note: Stay tuned as we continue our series on the Chinese aftermarket throughout the week, with a closer look at market segmentation, branding and distribution.