We recently caught up with Dayco’s John Bohenick to talk about the company’s first-ever Distributor Conference held this past March in China, and how the company tailors its approach to the market in China versus the U.S. Bohenick shares with AMN Global his unique insights into the differences and commonalities between customers across the globe.
Bohenick is CEO of Dayco, a global leader in the research, design, manufacturing and distribution of essential engine products, drive systems and services for automobiles, trucks, construction, agriculture and industry. Dayco has more than 4,500 employees, 23 manufacturing facilities and more than 20 distribution centers, technology centers and sales offices in 16 countries. He also serves on the board of management. Prior to joining Dayco, he was the president of SKF Sealing Solutions, a business unit of AB SKF, providing engineered seals and sealing solutions for automotive and industrial applications with 14 manufacturing locations worldwide. He also served as chairman of the board/director of SKF JV Korea from 2011-2014. Bohenick previously spent 20 years working for the Gates Corp. and was president of the company from 2007 until 2009. In addition, he has served on the board of directors for a number of large firms.
What did Dayco learn from the first-ever distributors forum in China?
Dayco learned several things from our conference in China.
First off, we learned that our distributors in China are interested in the same things distributors everywhere in the world are interested in, such as market coverage for the local vehicle parc, automotive and industrial OE presence and product quality, stable distribution and pricing policies, consistent product service levels, training and good margins.
In addition to the expectations above, Chinese distributors want to understand manufacturers’ sales and marketing plans, particularly as they relate to brand-building. Today, the China aftermarket is in its infancy phase with very few established international and local brands. Distributors are interested in associating themselves with manufacturers who have a brand-building vision and the ability to support it with local manufacturing, local manpower, product and application intelligence and marketing.
We learned that our distributors want to build long-term relationships with manufacturers they perceive to be interested in the distributor’s success and long-term viability.
Can you provide us with a little detail on the event – how many were in attendance, what was the aim of the event?
The purpose of the event was to provide an update to our distributors on the global business of Dayco, our key strategic initiatives, our commitment to the Chinese market for automotive and industrial customers and our specific investments in manufacturing, sales, application engineering and marketing for the Chinese aftermarket. We reviewed our distribution policies, sales and marketing plans and new product introductions. Our distributors were very knowledgeable of our OE business, especially the growing business with key customers in China such as VW, GM, Ford and Cummins, to name a few.
We provided detailed tours of Dayco manufacturing facilities to showcase our high-level manufacturing capabilities in the production of timing belts, accessory belts, tensioners, idlers and dampers, as well as kitting operations that provide even more value to our distributors as we continue to offer complete timing belt system kits. Our distributors were also able to tour our technical center and see how Dayco analyzes systems, completes product designs and tests products to ensure they meet customer requirements.
We were able to highlight significant new business awards and show how we continue to expand our range of products for the aftermarket.
What challenges and opportunities do you see in China for Dayco?
There are many local Chinese manufacturers and several international manufacturers vying for the great potential of the Chinese automotive aftermarket. And some of our international competitors have been operating in China longer than Dayco.
Our challenge is to be able to present a complete package of products, systems and services backed by a strong, globally recognized brand. Along with this, we focus on making our customers (distributors) even more successful. Our identity at Dayco is that Dayco improves how the world moves by creating products, systems and relationships that endure. With our distributors, we focused on all of these: products, systems and relationships.
We need to continue the rapid expansion of our product lines and coverage for the aftermarket business; to evaluate our distributor base by geographic area to ensure we have the ability to expand as the overall market grows; and to develop and retain our most important resource, the skills and intelligence of our people.
As for opportunities, they are practically unlimited. The vehicle builds in China over the past nine years have been nothing short of incredible. As those vehicles begin to enter the replacement cycle over the next 10 years, the opportunity for growth is better than any other market in the world. The average age of vehicles in China is only 3.9 years today, versus the average age in the United States of roughly eight to 11 years.
How do you approach the market differently in China than you would here in the U.S.?
Great question, Amy.
We currently have a very strong presence in North America, South America, Europe and Australia in the automotive aftermarket. Each of those markets have unique car parcs and approaches to the aftermarket.
China is looking more like a blend of those markets and approaches. Our traditional approaches to cataloging, product line development, field sales support, advertising, etc., must be reviewed and challenged, given China has a population of more than 1.3 billion people in an enormous geographic area.
A key challenge, for instance, is how to economically reach that number of people with brand-building initiatives.
The only real alternative is to employ the power of the Internet. We believe as this market develops it will skip most of the development steps we have gone through as the business developed in North America and Europe. For example, take the traditional paper catalog. To develop and print the necessary number of catalogs to service every repair facility in China is economically impossible. We must develop electronic alternatives for smartphones, tablets and laptops, which are the preferred ways the population wants to access information.
Imagine trying to provide basic installation instructions to repair shops (that support the ‘Do-it-for-Me’ (DIFM) customers) and DIY customers in China. Both of these customers want the right product at the right time to support maintenance and repair. The product is important, and the application intelligence and installation knowledge can be even more important. We must continue to quickly develop in these areas if we are to get our share of the market. The large barrier, as expected, to every market issue is language. English is not spoken at the store and garage level. Many software programs today don’t support Mandarin, the official Chinese language.
These are just a few of the many differences in the way we approach China.