(Baturu founder and CEO Zeng Wangu)

Xinhua Net Beijing, July 20 (Reporter Liao Jia) From B2C to B2B, the power of the internet is beginning to penetrate into the industrial supply chain. Recently, the news that Baturu, an all-car-parts auto parts e-commerce platform, completed a $100 million financing has drawn everyone's attention to this trillion-level "blue ocean."

As China's auto industry matures, the aftermarket is growing rapidly. According to the "China Automotive Aftermarket Supply Chain White Paper" released by global strategic management consulting firm Roland Berger, the total scale of China's auto parts market is growing rapidly, with a compound annual growth rate of 20% from 2011 to 2016, and the overall parts market size is expected to exceed 800 billion yuan by 2022.

Unlimited potential—this is the conclusion given by many industry insiders, but the competitive landscape is extremely complex. Even Baturu, which "started relatively early," does not dare to take it lightly. This company, founded in 2013, has been committed to standardizing and intelligentizing transactions and services in China's automotive aftermarket, and under the leadership of "auto parts veteran" Zeng Wangu, it has completed one thrilling leap after another, becoming a true "fast horse."

Baturu's "Gravity"

In July's Guangzhou, the scorching heat and humidity made people uncomfortable. However, for Baturu and its founder and CEO Zeng Wangu, it was a memorable key node.

On the 6th, Baturu announced the completion of a $100 million Series C financing round, led by Warburg Pincus, with existing investor Zhongding Venture Capital following on. It is understood that this is the largest single financing deal in China's automotive aftermarket supply chain sector.

Why auto parts e-commerce? Why Baturu?

Mary Meeker, known as the "Queen of the Internet," once pointed out that consumers' expectations for more effortless and efficient access to what they need will change the cornerstone of business.

For the automotive aftermarket, due to insufficient attention and investment in the past, this sector has obviously lagged behind the automotive manufacturing industry. Coupled with problems such as information opacity and numerous tiers, the overall market is fragmented and chaotic, and the sales system urgently needs reconstruction.

Against this backdrop, the market has given birth to numerous internet-based auto parts trading platforms, including B2C platforms for end-user vehicle consumption and B2B platforms for professional independent aftermarket parts and service providers. In Roland Berger's view, the latter has higher requirements for professionalism and technology, fewer market players, and remains a relatively blue ocean.

As to why choose Baturu, Xu Bo, CFO of Warburg Pincus China, summed it up in six words—right time, right place, right people. The right time is the macro environment. In his view, with the introduction of "Made in China 2025," the policy level has been promoting the integration of "informatization and industrialization"—driving industrialization with informatization and promoting informatization with industrialization. Baturu's auto parts e-commerce model perfectly aligns with the spirit of "two integrations," using big data, artificial intelligence, and other informatization means to drive the auto parts industry towards an efficient and energy-saving development model; after management and sales achieve informatization, it can further promote the deepening development of entity industry.

From a geographical perspective, Baturu is backed by Guangzhou, China's largest auto parts distribution center, making it convenient to obtain high-quality sources of goods and laying a solid foundation for national expansion.

More importantly, it's the "right people." For this, Xu Bo did not hesitate to use the term "dream team" to praise.

 "Mr. Zeng has more than 20 years of experience in the auto parts field, and the company's core team is also composed of elites from all over the world. Mr. Zeng leads this cross-industry, multi-capability dream team to integrate massive data and develop the market. This is a trustworthy, forward-thinking team. We believe that with the unremitting efforts of this team, Baturu will surely achieve more and become the Amazon of the auto parts industry."

Transforming the Supply Chain

 "No company in China's parts supply chain has a market share exceeding 1%. In comparison, in the United States, the top five auto parts sellers account for 30% of sales, with a market value exceeding $76 billion. The Chinese market has very large room for integration compared to foreign markets," said Hu Zhengwei, Executive Director of Warburg Pincus.

Although the market is huge, the entire auto parts supply chain industry is very fragmented. Non-standardized, opaque, and chaotic systems are the consensus in the industry.

Having struggled in the auto parts industry for more than 20 years, Zeng Wangu has a deep understanding of the above "pain points." "I have done parts trade and manufacturing for more than 20 years, and I clearly know the chaotic and disorderly state of the automotive aftermarket. The root cause lies in the supply chain."

In the link of reconstructing the sales system, B2B has become a key part. With this original intention, Baturu was established. This name originates from the Mongolian word for "hero," which was given as a title to warriors with outstanding military achievements during the Ming and Qing dynasties. This is also Zeng Wangu's expectation for the company—to boldly explore and innovate with the fearless spirit of a warrior, breaking away from conventional thinking. In a sense, this is also an adventure for this auto parts veteran.

He formulated two strategic directions for the company's development: one vertical and one horizontal. First, penetrate and solidify the auto parts supply chain, which is vertical and foundational; second, extend horizontally to promote the development of existing ecosystems in the automotive aftermarket.

To this end, Baturu has built a database that matches vehicle models, parts, and Chinese names; digitized all-car-parts auto parts; established an informatization trading system that effectively and precisely connects upstream suppliers' product libraries with downstream customers' needs; and built a closed loop from central warehouse to distribution and last-mile delivery, forming a supply chain system of self-built warehousing + third-party logistics + city partners.

Data shows that Baturu's all-car-parts trading B2B service platform "Auto Parts Shop" currently covers more than 60 car brands, 100,000 mainstream models (95% of domestic market models), 200 million parts matching relationships, 4 million tradable parts types, and has served more than 50,000 auto repair shops cumulatively.

Starting from August 2016, Baturu began extending services to the insurance industry, successively cooperating with insurers such as Pacific, Earth, Sunshine, China, Anxin, and Dinghe for direct parts supply.

From 0 to 1, from 1 to N

Baturu's rapid growth has validated Zeng Wangu's logic, and he is even more convinced that automotive aftermarket services will surely become simpler and more convenient in the future.

Zeng Wangu has a "secret weapon"—the all-car-parts central warehouse.

Baturu's first central warehouse was officially built and put into use in South China (Guangzhou) in July, with goods from some suppliers already warehoused. The 200,000 square meter central warehouse will cover parts for all models of all passenger cars, marking that Baturu's warehousing and logistics have truly achieved informatization and are advancing towards intelligence.

This is no easy task; Zeng Wangu has been planning it for a decade. "This is the turning point for all-car-parts trading from traditional decentralized mode to intensive e-commerce mode, and also the key turning point for Baturu to complete from 0 to 1," Zeng Wangu said excitedly.

According to the plan, after the Guangzhou central warehouse is established, it will better assist aftermarket merchants to grow bigger and stronger, and also prepare core resources for Baturu's replication and development across the country. After completing central warehouse layouts in the other six major regions nationwide based on the South China central warehouse, Baturu can truly help upstream suppliers sell goods to any repair shop in the country.

This is also the significance of the Series C financing—after helping Baturu complete the from 0 to 1 infrastructure, it begins to achieve another leap from 1 to N.

Hu Zhengwei said: "The auto parts supply chain is an important upstream link in the entire automotive mobility sector, with a huge but extremely fragmented market. Baturu is the most innovative company we have found in China's auto parts supply chain field and will be an integrator and leader on the auto parts supply chain that cannot be ignored. Baturu's founding team has rich experience and super execution in auto parts, technology, and internet fields. We will also fully utilize Warburg Pincus's experience and resources in the mobility field to support Baturu's development."

"Baturu will further strengthen the company's refined operations, improve the offline warehousing and logistics system, and quickly push market coverage nationwide," Zeng Wangu said.

 "Next, Baturu will continue to deeply cultivate the three major areas of database, system, and supply chain. At the same time, adhering to the concept of open and win-win, it will connect other fields in the automotive aftermarket, such as insurance, supply chain finance, auto repair technology, brand and product marketing channels, auto culture, etc., fully unleash the value potential of big data, and provide more services for the industry." (Xinhua Net · Liao Jia)

(Original link: Baturu's "Ambition": Reshaping the Auto Parts Supply Chain)