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Subject: Taiwan's New Focus Auto to enter mainland market [Print This Page]

Author: wow    Time: 30-1-2013 10:29     Subject: Taiwan's New Focus Auto to enter mainland market

Taiwan-based automotive service New Focus Auto has teamed up with motor oil and lubricants maker Castrol to target the auto after-sales service market in the Chinese mainland worth an estimated 460 billion yuan (US$73 billion). The firm is confident it can avoid the mistakes of its US and Japanese counterparts with its greater understanding of Chinese culture.

The firm plans to invest over 200 million yuan (US$32 million) over the next two years to increase the number of its stores from 100 at present to 300, according to Raymond Nobu Chang, CEO of the auto shop chain.

The Chinese mainland auto service market has seen compound annual growth rate of 28% from 2006 to 2011. The after-sales service market may reach 766 billion yuan (US$122 billion) as the size of the country's car market is expected to grow over 100 billion yuan (US$16 billion) over the next three years, according to Shanghai's First Financial Daily. The after-sales service segment has been greatly boosted by the increasing car sales in the country, which jumped 46% in 2009 to make the mainland the world's largest auto market, according to Bloomberg.

The rapid growth has attracted international automotive services to the country but most of them have encountered severe setbacks. In 2008, aerospace, building control and safety products maker Honeywell International opened four automotive service shops in the Chinese mainland but they have all since closed.

Royal Dutch Shell and Shanghai-based SAIC Motor spent US$23 million to form the joint venture Anji-Jiffy Lube, hoping to bring the Jiffy Lube chain to the country. However, the nine stores it opened have also closed, ending its ambitious plans to have 600 outlets in the country by 2015. Japan's Yellow Hat and South Korea's Hankook Tire have also pulled out of the mainland market, according to the newspaper.

Chang said the failures of the foreign ventures were caused by cultural differences and their lack of understanding of the local market and customers. Their high costs and high prices cannot compete with the cheap private auto shops, he said.

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