Research highlights Chinese counterfeiting risk

Ipsos Business Consulting, a leader in fact-based business consulting, has published new research highlighting the risks posed by counterfeiters in China’s fast-growing automotive parts market.

China’s automotive components sector is set to achieve annual growth of 20 per cent for the next five years driven by demand for new cars and a growing secondary market. The aftermarket segment will become the main outlet for automotive parts as the average age of vehicles on the road continues to rise and the current total car population has already surpassed 100 million. The counterfeit auto parts market, already the world’s largest with a current value of about US$40bn, will only increase as the overall market grows.

Central government has progressed with implementing new intellectual property (IP) laws, however, application and enforcement remains inconsistent and insufficient at regional and local levels. As a result, manufacturers must develop IP protection as standard practice to counter the threat from copycats which is expected to rise as the market expands.

Rising demand in both the car and auto parts markets provide significant growth opportunities for manufacturers. Foreign-invested enterprises currently account for about one-third of the parts market’s output. They are expected to consolidate this position given foreign firms more stringent IP protection practices and their greater affinity for mergers and acquisitions, which will be a key growth strategy.

Klaus Paur, Global Head of Ipsos Automotive commented: “As the automotive vehicle fleet in China continues to grow at a fast pace and maturing in the process, the aftermarket offers an ever increasing source of profitability. Protecting this business has become a top priority for parts manufacturers to ensure sustainability.”

Lynn Morgan, Ipsos Business Consulting, Europe added: “Our research stresses the need for IP protection in what is the world’s largest counterfeit market for auto parts”.